LIVERMORE, Calif. -- The U.S. Environmental Protection Agency announced today that it has notified the U.S. Department of Energy that it could face escalating fines if it doesn't immediately resume cleanup of toxic waste at the Lawrence Livermore National Laboratory.

In a letter sent Tuesday to the Department of Energy, the EPA said the recent failure of a large treatment unit at the laboratory has resulted in off-site groundwater contamination that could spread beneath nearby neighborhoods.

The laboratory, which is operated by the University of California for the Department of Energy, is contaminated with solvents, radioactive waste, heavy metals, polychlorinated biphenyls (known as PCBs) and fuel hydrocarbons, which pose a significant health risk to nearby residents and the environment, according to the EPA.

The Department of Energy signed an agreement in 1988 detailing remedial action it would take to clean up the superfund site and prevent off-site contamination.

Part of that agreement was that the laboratory would continuously operate a series of groundwater and soil vapor treatment facilities on the property.

In 2007, the EPA certified that the Department of Energy had built the necessary treatment systems to clean up the contamination. The cleanup was expected to take several decades.

The laboratory, however, began shutting down and ceasing to repair the treatment facilities in February after Congress reduced funding for the cleanup effort.

According to the EPA's letter, the Department of Energy allegedly failed to properly request funding from Congress and then, after being notified that funding had been reduced, the department allegedly waited nearly six months before it requested reprogramming funds.

Although the department received the money to operate the facilities in July, it still hasn't resumed cleanup, according to the EPA.

The EPA's letter noted that the Department of Energy sent a letter in December to Sen. Barbara Boxer, chair of the Senate Committee on Environmental and Public Works, stating that it could take until the end of fiscal year 2011 to restart all of the treatment systems.

In the meantime, the number of treatment facilities that have been shutdown has actually increased since the Department of Energy received funding, resulting in a groundwater plume that has spread off-site, according to the EPA.

The Department of Energy has 15 days to dispute the EPA's claims or it will be fined $105,000 for its failure to resume cleanup efforts from when it received funding in July through September.

The department could be fined an additional $10,000 per week from Oct. 1 until it resumes cleanup efforts, according to the EPA.

John Belluardo, public affairs director for the National Nuclear Security Administration at the Livermore Site Office, issued a statement this afternoon saying that the department has kept the EPA informed about the budget shortfall throughout the process and was "surprised and disappointed that EPA has chosen to issue a fine regarding these activities."

"DOE feels the fine is unjustified and will appeal it through the dispute resolution process," Belluardo said.

Meanwhile, the department will continue to work with the lab to restart the cleanup facilities. That work includes hiring and training personnel to replace staff who were terminated due to budget cuts, evaluating the treatment facilities to ensure their proper operation and procuring replacement components for the facilities, according to Belluardo.

"The prevention of spread and offsite migration of contaminants is the highest DOE priority for the treatment facility restart program," Belluardo said.