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          United States
          Environmental Protection
          Agency
                    Office of
                    Inspector General (2441)
                    Washington DC 20460
               EPA-350-K-02-002
               November 2002
         Office of Inspector General
         Semiannual Report
         to the Congress
          April 1 - September 30, 2002
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                             EPA Inspector General
                              Vision Statement

    We are agents of positive change striving for continuous improvement in our Agency's
    management and program operations, and in our own offices.
                                    Mission

    The Inspector General Act of 1978, as amended, requires the Inspector General to:
    (1) conduct and supervise audits and investigations relating to programs and operations
    of the Agency; (2) provide leadership and coordination, and make recommendations
    designed to (a) promote economy, efficiency, and effectiveness, and (b) prevent and
    detect fraud and abuse in Agency programs and operations; and (3) fully and currently
    inform the Administrator and the Congress about problems and deficiencies identified
    by the Office of Inspector General relating to the administration of Agency programs
    and operations.
                         Strategic Plan Goals

             1.   Contribute to improved environmental quality and human health.

             2.   Improve EPA's management and program operations.

             3.   Produce timely, quality, and cost-effective products and services that
                 meet customer needs.

             4.   Enhance diversity, innovation, teamwork, and competencies.
* S Environmental Section
^ion 6. library (PI-12J)
TTW-st Jackson Boulevard, Utn
CM»io. 51  60604-3590
Cover Photo: Grand Canyon
Photo by Alan Melberger, EPA OIG

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A
I long with important financial and information technology audits, this
semiannual report contains summaries of significant program evaluations and
 investigations.
Our review of the two states with the most active air emissions Open Market Trading
programs found several factors hindering program success. Chief among these were
lack of safeguards to prevent questionable credits,  use of data of uncertain quality,
and limited regulatory agency oversight.

Without adequate oversight controls for assistance funds, the public may not benefit
from EPA-funded projects. Our work showed that EPA did not sufficiently prioritize
assistance agreement oversight.  Consequently, EPA did not ensure grant specialists
and project officers effectively monitored agreements and senior resource officials
did not fully meet their responsibilities as stewards of government resources,
including ensuring adequate controls over assistance agreement funds and compliance
with policies.

Several reviews noted problems related to Superfund. Reviews of the effectiveness of
EPA oversight at Department of Energy,  Savannah River and Oak Ridge Superfund
facilities disclosed that potential risks were not adequately ranked, and potential
contaminants of were not sufficiently addressed. Our review of data accuracy in
EPA's official database for Superfund site activities found that over 40 percent were
based on inaccurate or inadequately supported data.

The EPA OIG was an integral part of a two-year undercover investigation of software
piracy, conducted jointly with the United States and Canadian law enforcement, called
Operation Bandwidth. The investigation documented the activities of a group known
as "Rogue Warriorz", which  illegally accessed EPA computer systems and also
pirated more than 8,400 software programs, 350 movies, and 430 computer games
worth approximately $7 million. To date, Operation Bandwidth has produced
21  indictments and multiple convictions.

We accelerated our report on Agency management challenges to coincide with EPA's
annual budget submission. The Agency made progress in two areas we previously
reported, cost accounting and information security. However, the Agency faces
significant challenges in 1) Linking Mission and Management; 2) Information
Resources Management and  Data Quality; 3) Employee Competencies; 4) Use of
Assistance Agreements to accomplish Its Mission; 5) Protecting Critical
Infrastructure from Non-traditional Attack; and 6) Addressing Air Toxics Program
Phases 1 and 2 Goals.

With the assistance of Inspectors General across the federal government, we
developed a Compendium of Federal Environmental Programs. The Compendium
identifies the numerous environmental programs that contribute to cleaner air, purer
water, and better protected land. It illustrates the complex relationships and
partnerships that must work effectively to protect the environment.
                                            Nikki L. Tinsley
                                            Inspector General

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                        Profile of Activities and Results
                                 April 1, 2002 to September 30, 2002
Audit Operations
OIG-Managed Reviews
(Reviews Performed by EPA, Independent Public Accountants, and
State Auditors)
April 1,2002 to
September 30, 2002 Fiscal 2002
(dollars in millions)
Questioned Costs *
- Total
- Federal
Recommended Efficiencies *
- Federal
Costs Disallowed to be Recovered
- Federal
Costs Disallowed as Cost Efficiency
- Federal
Reports Issued - OIG-Managed Reviews
- EPA Reviews Performed by OIG
- EPA Reviews Performed by
Independent Public Accountants
- EPA Reviews Performed by
State Auditors
Total
Reports Resolved
(Agreement by Agency officials to
take satisfactory corrective actions)***
$4.2 $7.2
$3.7 $6.4
$.2 $.23
$1.3 $6.9
$0 $0
26 50
0 0
0 0
26 50
63 149
Investigative
Operations
Fines and Recoveries
(including civil) ****
Investigations Opened
Investigations Closed
Indictments of Persons or Firms
Convictions of Persons or Firms
Administrative Actions Against
EPA Employees / Firms
Civil Judgments
$1M $20M
60 85
42 64
25 35
7 20
14 19
4 6
Audit Operations
Other Reviews
(Reviews Performed by Another Federal Agency
or Single Audit Act Auditors)
April 1,2002 to
September 30, 2002
(dollars in millions)
Questioned Costs *
-Total $7.1
- Federal $7.1
Recommended Efficiencies *
- Federal $0
Costs Disallowed to be Recovered
- Federal $.1
Costs Disallowed as Cost Efficiency
- Federal $0
Reports Issued - Other Reviews
- EPA Reviews Performed by
Another Federal Agency 84
- Single Audit Act Reviews 53
Total 142
Agency Recoveries
Recoveries from Audit Resolutions
of Current and Prior Periods
(cash collections or offsets to
future payments) ** J 2.2M
Fraud Detection and
Prevention Operations
Hotline Complaints Received
Hotline Complaints Closed
Legislative and Regulatory Items Reviewed 31
Fiscal 2002
$7.7
$7.7
$0
$1.0
$0
186
134
320
$12.8M


1,018
821
48
Questioned Costs and Recommended Efficiencies, which are from our Inspector General Operations Reporting System, are subject to change pending
  further review in audit resolution process.
Information on recoveries from audit resolution is provided from EPA Financial Management Division and is unaudited.
Reports Resolved are subject to change pending further review.
Total includes actions resulting from joint investigations.

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Table  of Contents
              Goal 1: Contribute to Improved Environmental Quality and
              Human Health	 1

              Goal 2: Improve EPA's Management and Program Operations 	8

              Goal 3: Produce Timely, Quality and Cost-Effective Products
              and Services That Meet Customer Needs 	21

              Goal 4: Enhance Diversity, Innovation, Teamwork and Competencies  .... 22

              Congressional and Public Liaison Activities
              EPA Ombudsman Responsibility Transferred to OIG  	25
              Funding Needs for Superfund Sites	26
              Hotline Activities 	26

              Audit Report Resolution and Summary of Investigative Results
              Status Report on Perpetual Inventory of Reports in Resolution Process    	27
              Status of Management Decisions on Inspector General Reports  	28
              Inspector General Issued Reports With Questioned Costs	28
              Inspector General Issued Reports With Recommendations that Funds Be
               Put to Better Use	29
              Summary of Investigative Results	30

              Appendices
              Appendix 1- Reports Issued 	31
              Appendix 2- Reports Issued Without Management Decisions (Available upon request)
                     Printed with vegetable oil based inks on 100% recycled paper (minimum 50% postconsumer)

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                           ImprowH
                         The work of the OIG is designed to assist EPA in achieving its
                         environmental goals, thus contributing to environmental
                         improvements. The following illustrates results achieved under
                         this OIG goal.
Open Market
Trading Program
for Air Emissions
Needs
Strengthening
Our review of the two states with the most active air emissions Open Market
Trading (OMT) programs in the United States found that several factors hindered
the two programs in achieving their goals. Chief among these were the lack of
safeguards, use of data of uncertain quality, and limited regulatory agency oversight
of trading activities. As a result, many sources have opted not to participate, and the
problems in New Jersey have  become so significant that it has announced its
intention to terminate its program.

EPA's OMT program was created to provide sources of air pollution greater
flexibility in meeting Clean Air Act requirements by allowing them to use emissions
credits generated from past emission reduction efforts.  Of the three states with
OMT programs, we reviewed  the two with the most active programs, Michigan and
New Jersey.

Both states' OMT programs lacked key safeguards primarily because EPA's basis
for proposing approval of these programs was non-binding guidance instead of
regulations.  EPA Regions did not require the two states to implement all the
safeguards that EPA's guidance  indicates are needed to minimize the risk of invalid
and questionable credits. For  example, although the public is supposed to have the
opportunity to participate in the OMT decision-making process, neither state
provided the opportunity for public comment on proposed trades.

Although accurate, reliable, and  complete emissions data are essential  to the success
of EPA's OMT program, the lack of approved quantification protocols (which detail
credit generation activities and measurements for producing emission credit
calculations) and the use of questionable emissions measurement methods
contributed to the use of data of uncertain quality.

EPA performed little compliance assurance, enforcement, or other oversight
activities of the two OMT programs. However, in response to our evaluation of
specific trades, EPA took action  against the trading activities of one source and New
Jersey took action against another. EPA reached a settlement in 2002 wherein one
New Jersey source agreed to retire about 18,600 tons of pollutants it had generated
as OMT credits, valued at over $16 million. At the other source, New Jersey
assessed and collected a $140,000 fine in 2002 for improperly using OMT credits.
                                                          PAGE 1 - APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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                          We issued our final report (2002-P-00019) on September 30, 2002.  In responding to
                          our draft report, the Deputy Assistant Administrator for Air and Radiation indicated
                          the report will help EPA strengthen its OMT program. A response to the report is
                          due December 31, 2002.
 Improvements
 Needed in
 Louisiana's Public
 Participation
 Process for Issuing
 Air Permits and
 EPA's Oversight
Louisiana Department of Environmental Quality's (Louisiana) public participation
activities met requirements for issuing air permits under Title V of the Clean Air
Act. However, Louisiana's process and Region 6's oversight need improvement to
allow more meaningful public participation. An effective process enables citizens
to make informed judgments about environmental issues in their locality.

Louisiana's public records were often unorganized, incomplete, missing, or
inaccessible. Louisiana also did not clearly define the role of its public participation
group, and issued multiple permits to facilities without providing the public with
complete information. As a result, the public was unable to, or had difficulty in,
accessing key records needed to effectively review, evaluate, and comment on
facilities' proposed operations. Improvements would provide for a more effective
process and help address the perception among citizens that industry in Louisiana
has an unfair advantage during the permitting process.

Region 6 did not perform adequate oversight of Louisiana's activities. Except in
controversial cases, Region 6 did not review public comments on proposed permits
until after the permits were issued. In some instances, Region 6 allowed Louisiana
to miss deadlines and commitments that had been negotiated.  In addition, Region 6
had not performed a thorough on-site review at Louisiana.

We recommended that EPA Region 6 work with Louisiana to make the public
participation process for air permits more effective, with emphasis on records
completeness and accessibility, clarification of roles, and outreach improvement.
We also recommended that the Region require staff to review public participation
issues, define responsibilities, perform a thorough on-site review of Louisiana's air
permits program, establish a tracking mechanism for permits reviewed, and review
the required number of Louisiana's proposed Title V permits prior to issuance.
Region 6 plans to review Louisiana's air permits program, records management, and
public participation in future program reviews.

We issued our final report (2002-P-00011) on August 7, 2002.  In responding to the
draft report, Region 6 agreed with most of our findings and recommendations.  A
response to the final report is due November 5, 2002.
HTTP /AYWW.EPA.GOV/OIGEARTH - PAGE 2

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Barriers and
Promising Practices
for Reducing
Combined Sewer
Overflows
Identified	
Combined Sewer Overflows (CSOs) are the total discharges into water bodies of
untreated domestic, commercial, and industrial waste and wastewater. An estimated
$44.7 billion is needed nationwide for CSO abatement efforts.  Individual CSC)
projects are often expensive, and raising sufficient funding from rate payers alone is
one key barrier for many communities. The Clean Water State Revolving Fund, a
major funding mechanism for low to zero interest loans, cannot meet the demand.
Another key barrier to implementing a CSO project is finding suitable sites for
needed facilities. In many of the communities we visited, such issues as land
availability, community opposition, competing land usage (including economic
development), and land ownership complicated matters.

Despite the barriers noted, states and communities demonstrated numerous
promising practices that could be employed in the CSO programs to improve
operations and reduce costs. These promising practices included a variety of
technical approaches and innovations, state grant programs, government cooperative
efforts, public education initiatives, and neighborhood improvements. However,
EPA needs to develop a central mechanism to disseminate this information to
communities. The CSO communities we visited had varying amounts and types of
data to show the success of their CSO projects. EPA needs to work with CSO
permitting authorities and communities to perform interim reviews of water quality
during CSO project implementation to assure that the communities' significant
expenditures were well invested.

While CSO discharges are a significant pollution source, eliminating them will not
always ensure that water quality standards will be met.  Sanitary sewer overflows,
storm water, pollution from up or down stream sources, and concentrated animal
feeding operations can also impair water bodies. As a result, EPA needs to take  a
leadership role in encouraging the use of watershed approaches and continue its
work with states and communities to work together to attain clean water.

We issued our final report (2002-P-00012) on August 26, 2002. A response to the
report is due from the Assistant Administrator for Water on November 25, 2002.
Brownfields
Performance
Measures Can be
Improved	
The Brownfields program for cleaning up facilities needs improved performance
measures. The program involves cleaning up for reuse abandoned, idle, or
underutilized industrial or commercial facilities with real or perceived
environmental contamination to protect human health and the environment.
Congress has authorized $200 million a year through fiscal 2006 to promote
Brownfields redevelopment.

EPA's fiscal 2003 Annual Performance Plan identifies Brownfields program
performance measures as cumulative site assessments, jobs generated, and
leveraging of cleanup and redevelopment funds. However, these measures generally
do not indicate EPA's progress in reducing or controlling risk to human health and
the environment.
                                                           PAGE 3 - APRIL 1,2002 THROUGH SEPTEMBER 30, 2002

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                          EPA can improve performance measures. EPA's data quality/management work
                          group can review existing Brownfields performance measures and consider how
                          provisions of the Brownfields Act and Government Performance and Results Act
                          impact the quality, reporting, evaluation, and collection of Brownfields program
                          data. Also, EPA could identify short-term or intermediate outcome measures, since
                          it may take years for some Brownfields activities to have a noticeable impact on
                          human health and the environment. Some possible short-term or intermediate
                          measures EPA may consider adopting are acres of Brownfields remediated and
                          redeveloped, and the population protected by Brownfields cleanup actions.

                          We issued our final report (2002-M-00016) on May 24, 2002. EPA concurred that
                          action was needed to improve performance measures for the Brownfields program.
                          The Agency is reviewing the measures we suggested in addition to others, and has
                          requested our continued involvement with their efforts to implement new measures.
 Improvements
 Needed in EPA's
 Oversight of
 Department of
 Energy Superfund
 Cleanups	
We evaluated the effectiveness of EPA Region 4 oversight of cleanup actions at the
Department of Energy's (DOE's) Savannah River and Oak Ridge nuclear facilities.
These sites, respectively, have the second and fourth highest estimated Superfund
cleanup costs of all DOE facilities.

For both locations, the Federal Facility Agreement between EPA, DOE, and the
applicable State are generally consistent with Superfund statutes and regulations.  In
addition, cleanup remedies approved under the agreements generally comply with
Superfund statutes, regulations, and other applicable requirements. However, we
noted the following:

Savannah River Site

Improvements are needed in EPA Region 4's oversight of DOE's implementation of
cleanup actions at the Savannah River site, near Aiken, South Carolina. From 1996
through 2002, DOE discontinued evaluating or ranking sites on potential risks to the
environment and human health. Although such rankings are required, EPA did not
ensure they were conducted. This is particularly of concern because 80 percent of
the sites receiving remedial action since cleanup agreements were reached were in
the low risk category. Further, more than half (about 52 percent) of the estimated
cleanup construction costs for Savannah River were used for  low-risk sites.
According to DOE, it has been necessary for them to focus their resources on low
risk, presumably easier sites, in order to meet their internal goals associated with the
number of cleanups completed per year.

Also, we found several instances where cleanup actions at Savannah River sites had
been delayed because EPA has been late in responding to DOE cleanup decision
documents.  EPA was late in responding to 85 percent of the primary cleanup
documents, due primarily to personnel shortages. Further, EPA did not properly
review and comment on the last official DOE  five-year review of the protectiveness
HTTP //WWW EPA.GOV/OIQEARTH - PAGE 4

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of Savannah River cleanup remedies, and has not determined the total long-term
estimated costs for Superfund cleanup actions at the Savannah River facility.

We made recommendations to the Region 4 Administrator to address the issues
noted, including establishing improved oversight procedures to ensure that cleanups
are properly prioritized based on risk and that there is sufficient Region 4 staff to
provide oversight of cleanup actions and agreements. Further, we made
recommendations to improve the five-year review and site evaluation processes, and
to assist Region 4 in determining whether funding levels are adequate. We issued
our final report (2002-P-00014) on September 26, 2002. In  responding to our draft
report, Region 4 agreed to improve oversight and, if available, allocate additional
staff.  A response to the final report is due in December 2002.

Oak Ridge Site

Studies conducted by the State of Tennessee at this facility,  located in Oak Ridge,
Tennessee, have identified potential contaminants of concern that may not be
accounted for in existing Federal Facility Agreement documents and DOE cleanup
actions. Reviewing and evaluating the State reports, and comparing their results to
existing information on contaminants at Oak  Ridge, will improve EPA oversight of
the facility.

In 1999, the Tennessee Department of Health issued a series of reports that showed
that, in some cases, levels of pollutants being released from Oak Ridge were
substantially higher than  previously acknowledged by the government. These
reports were issued after  EPA's review and concurrence with DOE's remedial
investigations. However, neither DOE nor EPA had evaluated the impact the
reports may have on current cleanup activities or decisions.  Consequently, EPA
Region 4 cannot be assured that on-going and proposed remedial actions are
addressing all contaminants of concern and that relevant risks to human  health and
the environment are being addressed. In April 2002, during our review,  EPA
initiated a comparison of the State reports with all contaminants evaluated in the
DOE remedial investigations and other relevant baseline assessments. However,
because of limited contract resources, EPA estimated it would take at least two
years to complete the review.

In addition, we noted that DOE had not acquired sufficient funding to support
compliance with  approved work plans and milestones  specified in cleanup
agreements for fiscal  2002 through 2004.

We recommended that the Region 4 Administrator expedite completion  of the
review and comparison of potential contaminants of concern identified in the State
reports with past remedial investigation documents, and continue working with
DOE to obtain a level of funding sufficient to perform required work. We issued
the  final report (2002-P-00013) on September 26, 2002. The Region concurred with
the recommendations. A response to the final report is due  in December 2002.
                                   PAGE 5 - APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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 EPA Should
 Ensure Consistency
 and Transparency
 When Issuing
 Guidance/or
 8-Hour Ozone
 Designations	
EPA needs to provide more specific guidance for 8-hour ozone designations to
ensure consistency between the various EPA Regions, as well as to ensure the
designations are transparent for stakeholders.

EPA's 1990 guidance for 1-hour ozone designations was not specific as to how
stakeholder participation should be used in the ozone designations. The guidance
for the preliminary 8-hour ozone designations is more comprehensive in that it
acknowledges the importance of stakeholder participation, and lists 11 criteria states
should consider if proposing larger or smaller metropolitan nonattainment
boundaries. However, the preliminary 8-hour ozone guidance did not provide a
methodical process for the Regions and states to use when considering the 11
criteria.  Without a consistent Regional approach, the ozone designations may not be
fair or equitable throughout the nation.

Region 3 used the Multi-criteria Integrated Resource Assessment (MIRA) decision
approach to address the preliminary 8-hour ozone designations, and having all
Regions use this or a similar multi-criteria approach could be useful in achieving
consistency and transparency. MIRA is a decision making methodology that
documents stakeholders' interests and can assess the impacts of a given set of
criteria simultaneously.  MIRA is not a substitute for the decision maker and is not
set up to convince people that there is only one decision; rather, MIRA allows for
the comparison of the impacts between two or more options, and empowers decision
makers and stakeholders to create and test options.

We recommended that the Director of Office of Air Quality Planning and Standards
instruct the EPA Regional offices when determining the 8-hour ozone designations
to use a multi-criteria approach such  as MIRA that offers: (1) documentation and
transparency of EPA's decisions to meet requirements; (2) consistency in
considering any criteria  identified; and (3) development of new options that reflect
stakeholder and decision maker interests. We issued our final report (2002-S-
00016) on August 15, 2002.  A response to the final report is due November 13,
2002.
 Official Sentenced
 for Submission of
 False Monitoring
 Reports for
 Treatment Plant
On May 9, 2002, James R. Miller, former Superintendent of the Corry Sewage
Treatment Plant, Corry, Pennsylvania, pleaded guilty in the Court of Common Pleas
of Erie County, Pennsylvania, to eight Pennsylvania misdemeanor counts of
tampering with public records, unlawful conduct, and pollution of waters.  Miller's
plea concluded an investigation initiated based on allegations that the plant had
submitted falsified discharge monitoring reports to EPA and the Pennsylvania
Department of Environmental Protection.

Miller's guilty plea stemmed from a January 22, 2002, complaint filed by the
Commonwealth of Pennsylvania charging Miller with several counts of submitting
falsified discharge monitoring reports to the Pennsylvania Department of
Environmental Protection.
HTTP.//WWW.EPA.GOV/OIGEARTH- PAGE 6

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Miller was further charged with allowing substances that were poisonous to fish to
empty into a local creek in Pennsylvania without notifying the Erie County Health
Department or the State Department of Environmental Protection. The charges
stemmed from conduct that occurred during 1997 and 1998.

On May 9, 2002, Miller was sentenced to 2 years probation, $1,243  in fines and
court costs, and 50 hours of community service.

This investigation was conducted by the EPA OIG and the Pennsylvania Office of
the Attorney General - Bureau of Criminal Investigation.
                                    PAGE 7 - APRIL 1, 2002 THROUGH SEPTEMBER 30, 2002

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Goal 2: Improve EPA's Management and Program Operations
                         The OIG assesses EPA's management and program operations to
                         identify best practices, areas for improvement, and cooperative
                         solutions to problems.  The OIG's work is designed to promote
                         efficiency and effectiveness within EPA. The following illustrates
                         results achieved under this OIG goal.
Additional Efforts
Needed to Improve
EPA's Oversight of
Assistance
Agreements
Weaknesses continue to exist in EPA's oversight of assistance agreements.
Oversight is an important component of managing assistance agreements which the
Office of Inspector General identified as a significant management challenge and
recommended as a material weakness under the Federal Managers' Financial
Integrity Act.  Without adequate oversight controls for assistance funds, EPA and the
public may not be receiving anticipated benefits from EPA-funded projects. Further,
EPA's ability to achieve its environmental mission and goals through these assistance
agreements is limited, and assistance agreement funds may not be safeguarded
against misuse.

Although EPA had developed corrective actions to improve oversight controls for
assistance agreements, weakness continued because EPA had not sufficiently
prioritized oversight as a necessary and important part of managing assistance
agreements. Specifically, we noted (1) inconsistent performance of monitoring
responsibilities, (2) inadequate preparation of post-award monitoring plans, (3)
incomplete compliance assistance reports, and (4) a lack of sufficient on-site
evaluations.

Further, Senior Resource Officials (such as Deputy Assistant Administrators and
Assistant Regional Administrators) did not fully meet their responsibilities as
stewards of government resources, including ensuring adequate controls over
assistance agreement funds and compliance with policies. Also, these officials did
not emphasize the importance of post-award monitoring, nor ensure a sufficient level
of personnel, training, and travel funds.

We made various recommendations to improve EPA's oversight of assistance
agreements. They included improving policies, taking more timely actions, requiring
needed training, and clarifying roles.  The agency generally agreed to take the actions
recommended, and indicated it will develop a long-term plan for grants management.
We issued the final report (2002-P-00018) on September 30, 2002. A response to the
final report is due December 20, 2002.
 HTTP://WWW.EPA.GOV/OIGEARTH - PAGE 8

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                          In addition to the overall oversight weaknesses noted above, reviews of specific
                          cooperative agreements noted problems that could have been prevented with better
                          EPA oversight:

                          •   In a special report on the oversight of a cooperative agreement with the
                             Coordinating Committee for Automotive Repair (CCAR), we noted the project
                             officer and grants specialist did not coordinate a monitoring plan to oversee
                             CCAR's cooperative agreements.  Further, EPA did not provide oversight to
                             ensure CCAR properly managed cooperative agreement funds. We also
                             questioned all $2,026,837 of costs claimed because CCAR did not account for
                             funds in accordance with Federal rules, regulations, and terms of the agreement.
                             We issued two CCAR reports (2003-S-00001  and 2003-S-00002) on May 29,
                             2002, and August 22, 2002, respectively. Responses to these reports are due on
                             September 26, 2002, and November 20, 2003, respectively.

                          •   We also issued an adverse opinion on the Washington, D.C., Department of
                             Health's claim for reimbursement of $603,895 under a Superfund cooperative
                             agreement because it did not have an adequate financial management system.
                             The recipient did not meet cost sharing requirements; employee time records
                             were not sufficiently specific; and progress and financial status reports were
                             often  late or incomplete. We issued the final report (2002-1-00184) on
                             September 26, 2002. A response to this report is due on January 24, 2003.
EPA Needs to
Improve Accuracy of\
Superfund Data
Base
Over 40 percent of the site actions (activities) we reviewed in EPA's Superfund data
base were inaccurate or not adequately supported. This data base - the
Comprehensive Environmental Response, Compensation, and Liability Information
System (CERCLIS) - is the official repository for all Superfund site data. As a result
of weaknesses noted, users of CERCLIS data did not have accurate and complete
information regarding the status and activities of many Superfund sites, which can
adversely impact planning and management.

CERCLIS is used by EPA to track site activities, support financial statements and
other reports, maintain an inventory of hazardous waste sites, and project dates and
costs. However, we identified actions with inaccurate dates, as well as actions  not
supported by appropriate documentation or approval signatures. Also, the status
codes in CERCLIS were often incorrect for the National Priorities List (NPL), non-
NPL, and archive field data elements. Further, we found, primarily at non-NPL
sites, inconsistent use of NPL and non-NPL status codes, active sites without any
actions entered for at least 10 years, and frequent use of a non-descriptive status
code.  These weaknesses were caused by the lack of an effective quality assurance
process over CERCLIS data quality and inadequate internal controls.

We recommended that EPA develop and implement a nationwide quality assurance
process for CERCLIS data, and a process to review older sites that have not had any
actions entered for a reasonable amount of time. We also recommended that EPA
update policies and procedures.
                                                             PAGE9-APRIL 1,2002THROUGH SEPTEMBER 30,2002

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                          We issued our final report (2002-P-00016) on September 30, 2002.  EPA did not
                          agree with our overall findings, and questioned the study's design. We believe our
                          audit methodology and conclusions were valid and objective; we consulted with
                          General Accounting Office statisticians throughout the development of our sampling
                          plan, and while EPA officials were given opportunities to comment during the audit
                          process they did not express concerns that would have resulted in a different
                          methodology.  EPA officials have indicated they are committed to developing a
                          replacement for CERCLIS, and plan to reevaluate and institute data quality
                          processes. A response to our final report is due December 30, 2002.
                          EPA'S Chief Information Officer (CIO) has sufficient authority to shape and direct
                          informatjon Resources Management activities. However, past CIOs had not provided
Implement the        H the leadership needed to fully implement the changes required by the Clinger-Cohen
Clinker-Cohen Act   p Act.
                      l
                      a
                      H
                      p
                         With regard to the fiscal 2002 budget, EPA was not funding IT investments that
                         helped maximize the efficiency of IT operations, such as resolving the long-standing
                         problem of integrated environmental data. EPA reported IT investments totaling
                         more than $449 million for fiscal 2002. Our review showed that EPA continued to
                         spend millions on IT investments that appeared to be  making minimal or insignificant
                         progress.

                         Senior program managers were using outdated and unauthorized IT acquisition
                         practices because existing Agency IT policies conflicted with the Act's requirements
                         and the CIO's authority. Also, the Agency was still developing its Enterprise
                         Architecture Plan, and establishing a formal management chain of command for IT
                         investments.  In addition, the Agency needs  to expand its Capital Investment
                         Planning Control process to include performance-based measurements for monitoring
                         and evaluating IT projects.

                         EPA's new CIO recognizes the importance of the issues raised  in this report and has
                         begun taking  aggressive steps to address the Act's fundamental components. During
                         late 2001 and early 2002, EPA implemented an Information Technology (IT) cost
                         accounting system; established  a Chief Technology Officer position to coordinate,
                         implement, and advise on key IT investment activities; approved a new Information
                         Resources Management Strategic Plan; and  issued a formal policy regarding the IT
                         Capital Investment Planning Control process.  However, institutionalizing the
                         structured, centralized controls and oversight processes envisioned by the Act will
                         take additional resources.

                         We issued our final report (2002-P-00017) on September 30, 2002. The CIO agreed
                         with our emphasis on an effective IT investment management program, and stated
                         that EPA will continue to aggressively address issues identified in the report. A
                         response to the final report is due by December 30, 2002.
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Actions Under
Federal Financial
Management
Improvement Act
Ongoing
Since our audit of the fiscal 1999 financial statements, we have reported that EPA
did not substantially comply with the managerial cost accounting standard. In our
fiscal 2001 report, we stated that the Deputy Chief Financial Officer, while
acknowledging the desirability for continuing improvements with the standard,
continued to disagree with our conclusion that EPA did not substantially comply with
the standard.

On September 24, 2002, the Chief Financial Officer provided us with two action
plans to expand and  improve the understanding and availability of cost and other
financial information within EPA. Both plans provide an ambitious integrated
phased approach with milestones for completing major actions for expanding and
improving the understanding and availability of cost and other financial information.
These action plans meet the intent and thrust of our audit report recommendations
and should result in substantial compliance with the standard.
Agency's Security
Program Shows
Progress	
Our review, required by the Government Information Security Reform Act,
determined that EPA has made progress in strengthening its computer security
program. Agency efforts include updating its information technology policy,
integrating its information technology security program with its critical infrastructure
protection responsibilities, establishing stronger technical controls, and establishing
some oversight for EPA's complex security information systems network. However,
weaknesses continue in the areas of risk assessments, independent verification and
validation, and training of Agency employees with significant security
responsibilities.

EPA must continue to implement regular, effective oversight processes, so that
management can rely on its many components to fully implement, practice, and
document security requirements. A strong program will also restore the faith of the
public and Congress in how well the Agency plans for and protects its information
resources.  We suggested EPA expand the number of systems that perform risk
assessments; make improvements to its oversight reviews, security training program,
and monitoring of program and regional offices; and ensure that weaknesses are
reflected in plans of action and milestones.

We issued the final audit report (2002-S-00017) to EPA's Administrator and the
Office of Management and Budget on September 16, 2002. The Agency
simultaneously issued an executive summary of its annual review findings. Both
documents reported similar program weaknesses.
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Potential Misuse of
$19 million in Clean
Water SRF Funds
Averted
The State of Missouri had inappropriately planned to use the Clean Water State
Revolving Fund (SRF) to retire $19 million in non-SRF bonds. However, in
response to our report and efforts by the EPA Office of Water, the Governor of
Missouri assured EPA that SRF funds would not be used for that purpose.

We had received information that the Missouri legislature was taking steps to use
about $19 million from the Missouri Clean Water SRF to retire a portion of its
general obligation bonds that were not a part of the SRF. Missouri issued general
obligation bonds to fund their match obligations.  However, the proceeds from the
bonds were not deposited in the SRF.  Therefore, using SRF to retire Missouri's
general obligation bonds is not an authorized use of SRF funds, and would violate
the Clean Water Act.  According  to the Office of Water, SRF funds to retire non-SRF
bonds could reduce future long term assistance for critical water projects by as much
as $86 million because of Missouri's leveraging process.

Prior to our report, EPA had  threatened to suspend review of two future SRF
capitalization grants of about $37 million each should Missouri enact the proposed
legislation.  However, we did not believe the threatened actions sufficiently
represented all the actions EPA could take if Missouri had inappropriately used the
SRF funds. EPA could have threatened to withhold future SRF payments or awards;
or, suspend or terminate the SRF  program, or withhold future awards payments for
other continuing environmental programs. In addition, there were other more severe
remedies available to EPA.

We issued a special report (2002-M-0026) on June 21, 2002, recommending that
EPA take immediate action to prevent Missouri from using  SRF funds for any
purpose not authorized by the Clean Water Act. We also issued the report, in part, to
deter other states from considering similar actions that could threaten the financial
integrity of the SRF program. As noted, the Governor of Missouri assured EPA that
SRF funds would not be used to retire the general obligation bonds.
EPA Should Require
Program Results
Data Fields for
Effluent Guidelines
Program	
We noted in connection with our ongoing evaluation of EPA's Effluent Guidelines
Program that EPA does not have the data needed to evaluate the program's
effectiveness. EPA needs such information as (1) the universe of facilities covered
by each effluent guideline promulgated, and (2) the basis on which pollutant limits
are established in permits, to determine how often each effluent guideline is being
used.  The Permit Compliance System, which is currently being modernized, does not
contain a mechanism by which the agency can track this information. We
recommended that EPA develop required fields to capture this information as part of
its Permit Compliance System modernization effort.
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Employees
Sentenced for
Conspiracy and
Theft from Tribal
Organization
Three employees of the Oglala Sioux Tribe payroll office of the Pine Ridge
Reservation, South Dakota, were sentenced to prison terms on April 29, 2002, in U.S.
District Court for conspiracy and theft of money from a tribal organization. The
three - Estelle Goings, Vonnie Goings, and Carol Vitalis - were each found guilty on
February 5, 2002.

The three individuals were all employed in handling government grant monies
awarded to the tribe, including more than $2 million in EPA grants since 1997.  A
five-count indictment on April 25, 2001, charged them with devising a conspiratorial
scheme that operated from 1996 through  1999 and resulted in the embezzlement of
approximately $196,000. The funds were diverted from the tribe and converted to
the three employees' own personal use under the guise of payroll and overtime
advances.

Estelle Goings and Carol Vitalis were each sentenced to 27 months in prison, 2 years
probation, and a $500 special assessment. Vonnie Going was sentenced to 15
months in prison, 2 years probation, and a $500 special assessment. Further,
restitution was ordered in the amount of $99,411.90, with joint liability for
repayment applicable to all three defendants.

This investigation was conducted jointly by the EPA OIG,  the Federal Bureau of
Investigation, the Department of Interior OIG, and the Department of Veterans
Affairs OIG.
Accountant Pleads
Guilty to Concealing
Information and
Accessory to
Embezzlement of
Funds
On June 3, 2002, Alfred S. Garappolo, a certified public accountant, agreed to plead
guilty in U.S. District Court to one count of accessory after the fact to embezzlement
and one count of concealing and covering up a material fact in connection with a
criminal investigation. The guilty plea was pursuant to a criminal information
against Garappolo charging him with offenses related to his position as an accountant
for the Ironworkers Apprenticeship and Training Fund, Washington, D.C. The Fund
periodically received Federal program grants, including $1.2 million in EPA grant
money, to establish or undertake certain skills and safety training.

The director of the Fund, Raymond J. Robertson, previously pleaded guilty on
March 28, 2002, to a criminal information charging him with one count of
conspiracy, one count of theft, and six counts of embezzlement from the
organization.   That information charged  Robertson with conspiring to conceal from
the other trustees of the fund and contributing union members the nature and amount
of thefts by Robertson and his daughter, Kerry J. Tresselt, from approximately April
1998 until January 1999. The information further charged Robertson with
embezzlement for using the Fund credit card for personal  purchases.

The June 3, 2002, information charged Garappolo with making statements to the
Fund trustees assuring them that the Fund's financial operations and controls were in
order, as well as approving the Fund's 1999 final audit report, despite having
knowledge of the thefts and problems associated with Tresselt's bookkeeping.
                                                             PAGE 13 - APRIL 1, 2002 THROUGH SEPTEMBER 30,2002

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                          This investigation was conducted jointly by the EPA OIG; the Department of Energy
                          OIG; and the Department of Labor Pension,  Welfare, and Benefits Association.
 Woman Sentenced
for Wire Fraud and
Impersonating an
EPA Employee
On June 17, 2002, Cheryl A. Burnette of Newburyport, Massachusetts, was
sentenced in U.S. District Court to 2 years in prison and 3 years probation, fined
$200, and ordered to pay $49,588.86 in restitution. The sentencing stemmed from an
October 5, 2001, conviction for wire fraud and impersonating an EPA employee.

Burnette had been charged with stealing products and services by pretending to be an
EPA employee. She falsely represented to victims that the products and services she
received from them would be paid for by EPA. The conduct included the renting of
homes in Massachusetts and the procurement of groceries, computer equipment,
office supplies, and such luxury items as Rolex watches.

Burnette was indicted by a federal grand jury on September 15, 1999, and arrested in
Hartford, Vermont, by special agents from the EPA OIG on September 28, 1999.
Burnette had used assumed identities and her fictitious affiliation with EPA to steal
goods and services totaling more than $75,000 from individuals and businesses
throughout the county. Burnette's scheme included the use of fictitious government
procurement numbers and purchase orders to establish direct billing accounts with
victims who believed they were doing business with EPA.

This investigation was conducted by the EPA OIG.
Twenty-three
Charged in Nation-
wide Software Piracy
Scheme.
On June 11, 2002, 21 members of a software piracy group known as the "Rogue
Warriorz," a secretive underground organization dedicated to the illegal reproduction
and distribution of copyrighted software, movies, and games over the Internet, were
charged with conspiracy for criminal infringement of a copyright.  The charges were
filed in U.S. District Court, District of Nevada, Las Vegas, Nevada, after the
conclusion of a 2-year long undercover operation known as "Operation Bandwidth"
conducted by federal law enforcement officers from the Federal Bureau of
Investigation, Defense Criminal Investigative Service, and EPA OIG. The group,
founded in 1997, extended across the United States and into Canada. At least 18
members of the group were hackers who had illegally accessed EPA computer
systems.  Between June and July 2002, two additional members of the group, Robert
Maersch and Russell Mutschler, pleaded guilty to two separate informations
charging them with  one count each of conspiracy for criminal infringement of a
copyright by reproducing and distributing at least 10 infringing copies of one or more
copyrighted works with a total retail value of over $2,500.

This investigation was conducted by the Federal Bureau of Investigation, the Defense
Criminal Investigative Service, and the EPA OIG.
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Key Management
Challenges	
The OIG identified the following 10 items as key management challenges
confronting EPA.  Most of the challenges correspond to the President's Management
Agenda Initiatives.

TIER ONE

1. Linking Mission and Management

EPA must develop more outcome-based strategic and annual targets in collaboration
with its partners. EPA has output data on activities (specific tasks accomplished),
but few environmental performance goals and measures, and little data supporting the
Agency's ability to measure environmental outcomes and impacts (actual
improvements to the environment).  Reliance on output measures has made it
difficult for EPA to provide regions and states the flexibility needed to (1) direct
resources to the highest priorities, or (2) assess the impact of Agency work on human
health and the environment. This November, the Administrator plans to issue a
report that brings together national, regional, and program office indicator efforts to
describe the condition of critical environmental areas and human health concerns. In
response to the need for reliable cost information, EPA has purchased a financial
management business intelligence reporting tool to help management better analyze
cost data and make improvements.  Also, EPA has begun linking costs to goals, but
needs to work further in this area.

2. Information Resources Management and Data Quality

EPA faces a number of challenges with the data it uses to make decisions and
monitor progress against environmental goals.  Those challenges include: using
enterprise and data architecture strategies to guide integration and management of
data; implementing data standards to facilitate data sharing; and establishing quality
assurance practices.  Data reliability is another major area that needs improvement.
EPA and most states often apply different data definitions in their own information
systems, and sometimes input different data, resulting in inconsistent, incomplete,
and obsolete consolidated national data. EPA acknowledges data management as an
Agency-level  weakness and has specifically targeted various components for
improvement. However, despite a robust data management program, this remains a
complex and elusive effort.

3. Employee Competencies

One of the Agency's greatest challenges is the development and implementation of a
workforce planning strategy that links employee development to its goals.  The
General Accounting Office (GAO) reported that EPA needs to implement a
workforce planning strategy to determine the skills and competencies essential for
meeting current and future needs. Also, a number of OIG reports highlighted the
need for improved training, and the Agency has taken steps in this area.  GAO
recently testified that EPA has made substantial progress in developing a strategy to
                                                             PAGE 15 - APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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                          manage its workforce, although EPA still needs to implement the strategy.  The
                          Agency recognized human capital as a key Agency priority in its FY 2001 Strategic
                          Plan. While progress has been made and additional work planned, this area
                          continues to be a key challenge.

                          4. EPA's Use of Assistance Agreements to Accomplish Its Mission

                          Assistance agreements constitute approximately half of the Agency's budget.
                          However, our audit work has repeatedly  identified problems in this area. We
                          recently reported that some assistance agreement recipients did not have adequate
                          financial and internal controls. As a result, EPA had limited assurance that EPA
                          funds were used in accordance with work plans and met negotiated environmental
                          targets. Further, in May 2001, OIG reported that EPA did not have a policy for
                          competitively awarding $1.3 billion  in discretionary assistance funds and, as a result,
                          the Agency is drafting a policy to address competition. Also,  although EPA has
                          taken several actions to improve its oversight controls over assistance agreements,
                          recent OIG reports and ongoing work indicate that Agency efforts in this area have
                          not been uniformly effective.  In May 2002, we recommended the Agency elevate
                          this issue from an Agency-level weakness to a material weakness under the Federal
                          Managers' Financial Integrity Act.

                          5. Protecting Critical Infrastructure From Non-Traditional Attacks

                          In 2001 we reported that EPA had yet to fulfill its responsibilities under Presidential
                          Decision Directive 63 regarding the development of a national framework for
                          protecting critical physical and cyber-based infrastructures. In the past year, the
                          Agency reported that it had made significant progress.  However, the attacks of
                          September 11, 2001, greatly increased the scope and priority of EPA's mission in
                          protecting critical infrastructure. EPA must be prepared to fulfill crisis and
                          consequence management responsibilities in the wake of a terrorist incident; and it
                          must be prepared to help detect, prevent, protect against, respond to, and recover
                          from a terrorist attack against the United States. Moreover, Public Law 107-188, the
                          Public Health Security and Bio-terrorism Response  Act, signed in June 2002,
                          specifically tasked EPA with funding and overseeing water system vulnerability
                          assessments and the resulting response.

                          6. Challenges in Addressing Air Toxics Program Phases 1 and 2 Goals

                          Toxic air pollution remains one of the most significant health  and environmental
                          problems in the United States. Despite the potential for serious harm, EPA has not
                          fulfilled its statutory responsibilities for  issuing all Phase 1 air toxics standards by
                          November 2000. Of 176 air toxics categories that EPA is  required to regulate, it has
                          issued standards for only about 82 categories.

                          Of even more importance  is that Phase 1 is solely a technology-based approach to
                          emissions reductions, and  may not provide acceptable health protections. EPA will
                          assess the health risks of the 188 toxic air pollutants in the second phase. The air
                          toxics program's heavy reliance on industry emissions data is also a concern.
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TIER TWO

7. EPA's Working Relationship With the States

The states have the authority to implement an estimated 80 percent of environmental
programs, and states provided about 65 percent of the financial resources to EPA's
35 percent. However, the Agency and states have been unable to agree on such
issues as the roles and extent of federal oversight; priorities and budgets; and
measures, milestones, and data. EPA can improve its working relationship with
states by establishing a structure to mutually set direction, establish goals, provide
training, oversee accomplishments, and ensure accountability. The National
Environmental Performance Partnership System established EPA-state working
partnerships, but a series of O1G audits noted the system's principles were not well
integrated into EPA.  While the Agency is working in this area, we believe much
remains to be done.

8. EPA's Information Systems Security

EPA's goal is to make information on its computer systems available but still protect
the confidentiality and integrity of its information.  The Agency has substantially
enhanced its Information Security Program through an improved risk assessment and
planning processes, major new technical and procedural controls, issuance of new
policies, and initiation of testing and evaluation processes. However, the Agency
still needs to continue working to implement a formal incident response plan,
establish a robust quality assurance program, and implement an organizational
structure under which Information Security Officers are accountable directly to the
Office of Environmental Information.

9. Backlog of National Pollutant Discharge Elimination System (NPDES)
Permits

NPDES permits expire in 5 years and are to  be "administratively continued" if a
backlog results in their not being renewed prior to expiration. "Backlogged" permits
are a major concern because conditions may have subsequently changed since the
original permit was issued,  but new restrictions would not be applied. The Agency
recognizes that the backlog of NPDES permits is a nationwide problem and has
developed a corrective action plan to streamline the process and provide assistance to
the states. However, steps to date have not had sufficient success, and planned
corrective actions for permits with the most significant environmental impact are not
expected to be completed until the end of FY 2005. The Agency realizes it needs to
make improvements in the NPDES program or the problem will increase, and is
working in that area.
                                    PAGE 17 - APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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                           10. Management of Biosolids

                           Approximately 6 million tons of sewage sludge ("biosolids") are produced annually
                           by sewage treatment plants in the United States. With inadequate treatment, these
                           biosolids may contain a wide variety of chemicals and pathogens that may adversely
                           impact public health. However, EPA has not conducted the basic research needed to
                           determine the risk associated with certain biosolids disposal practices. The Agency
                           has taken the position that biosolids management is a low-risk activity, and has
                           diverted compliance and enforcement resources away from this program. As a result,
                           EPA has failed to adhere to its commitment to comprehensively assess the extent of
                           the risk. In June 2002 the National Academy of Sciences recommended additional
                           research. EPA is currently studying those recommendations, and has committed to
                           producing a research work plan by the end of 2003.
Review of
Legislation and
Regulations
Section 4(a)(2) of the Inspector General Act of 1978, as amended, directs OIG to
review existing and proposed legislation and regulations relating to Agency programs
and operations to determine their effect on economy and efficiency and the
prevention and detection of fraud and abuse.  During this semiannual period, we
reviewed 1 legislative and 30 regulatory items. The most significant items reviewed
are discussed below.

S. 2530, Proposed  OIG Law Enforcement Authority Legislation

We endorsed a Department of Justice letter to Senator Thompson regarding S. 2530,
to award statutory law enforcement authority to certain OIGs.

Under current administrative procedures, OIG agents are granted "blanket special
deputations" by the Attorney General, who may rescind or suspend the police powers
of individual OIG agents for failure to comply with Attorney General guidelines
governing the exercise of the special deputation police powers. The Department of
Justice letter endorsed enactment of the measure, but expressed concern about a
provision that would require the Attorney General to rescind or suspend the police
powers of an entire OIG office, rather than the individual agent, upon determination
of noncompliance with applicable guidelines.  We agreed with the contention of the
Department of Justice that taking such an action against an entire OIG could severely
disrupt ongoing criminal investigations, and endorsed a recommendation that the
Attorney General's current authority to suspend police powers of individual agents
be incorporated into the bill instead.

Proposed  New EPA Order, Policy on Compliance, Review and Monitoring

We requested resolution of several concerns regarding the proposed policy's value
and effectiveness in addressing weaknesses in the oversight of grants identified in
OIG reports and EPA internal reviews:
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•   We were concerned that the proposed policy (1) did not include a statement
    outlining the need for post-award monitoring; and (2) was unclear on how
    minimum levels of advanced monitoring were developed, how many grantees
    would require advanced monitoring, and whether the proposed level of advanced
    monitoring would be sufficient to improve oversight.

    We did not agree with allowing pre-award and technical and management
    assistance activities to substitute for advanced monitoring, since this substitution
    could further reduce oversight.

•   We did not agree with substituting "other designated personnel" for grant
    specialists or project officers, since the policy did not specify whether the
    experience or qualifications of the "other designated personnel" would be
    equivalent to that of project officers and grant specialists.

 Subsequently, we met with Agency officials who agreed to revise the draft policy to
 address our  major concerns.

 Approval of Draft Records Schedules

 We did not concur with the draft disposition instructions for Grant and Other
 Agreement Oversight records. Since many Superfund cooperative agreements with
 the states are site-specific and subject to cost recovery, we recommended revising the
 retention period  from 7 to 30 years.

 We also  did not  concur with draft records disposition instructions that called for
 destroying EPA's Integrated Grants Management System records after 7 years. We
 were concerned  that Superfund Interagency Agreement records would be destroyed
 at the same  time since they are processed through the Integrated Grants Management
 System.  We recommended that Superfund Interagency Agreement records, like grant
 records,  be retained for 30 years, to prevent site-specific records covering many
 billions of dollars from being deleted in only 7 years.
                                     PAGE 19 - APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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                 While EPA is making progress in resolving its Major Management Challenges, several have been
                 longstanding problems. The following table shows which challenges have been listed from
                 1997 through 2002 and their relationship the President's Management Agenda (as numbered).

                        EPA's Top Management Challenges as Reported by OIG (Historical Perspective)
Management Challenge R9
Bivironrrertal C6ta Quality (2)
Bnission Factcr Cevelopmert
Year 2000 IVbdification en InfcrrrBtion ^sterns
Ooseott of Cbnstruction Grant Program
Iraxmastenf O/ersight BTforoemert Aiivities
CXality Assurarce'Rans
Use rf Inefficient Cortract Types
IVbnagerialCbstArcunting (1&4)
Automated Inforrraticn System Security Rans/S3curity (2)
CVersJght/UfeecfAssistarceAgreerrBnts (4)
Agency Ftelationshipwith Cbntractors
BTvironrrertal Data IrforrrBtion Systems
Acoouitability (1)
Backlog Nation'l Pollutant Dscharge Bimin. System Perrrits
Ehharae Employee Corrpetercies/Human Capital (3)
Process for Preparing Financial Staterrents
Superfurd Five- Year Fteviaws
Greet Lakes Prog-am
Quality of Laboratory Cata
Information Resources IVbnagemert (2)
Wrking Relationships with States & Otter Partners (1)
Ftesults-Based Information Technology Project IVanaganert
Protecting Critical lifrastocture fiom NonTraditional Attacks
Bicsolids
Air Toxics Prog-am
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 President's Management Agenda
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HTTPV/WWW.EPA.GOV/OIGEARTH - PAGE 20

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Goal 3: Produce Timely, Quality and Cost-Effective Products and Services That
         ]\feet Customer Needs	          	__^^_
                           The OIG is a customer-driven organization in which customer
                           needs serve as the basis for work planning and the design of OIG
                           products and services.  All OIG work is based on anticipated
                           value to Congress and EPA.  The following illustrates results
                           achieved under this  OIG goal.
     Scoreboard of Results Compared to FY2OO2 Goal Targets        Reported
    Business Line Goals, Objectives and Measures from OIG Strategic Plan 2001-2005
Goal 1. Contribute to Im proved Environm ental Quality and Hum an Health

                              vaas^AEfffivifAxffixrfcrfrffffifffam^ene^/Jtmfr^cff or ftrevtarrffrtfr £. a
                                                                                                   as of 9/30/02
    Environmental Legislative Changes/Decisions
    Environmental Regulatory Changes/Decisions
    Environmental Policy, Directive, Process or Practice Changes/Action
    Example of Environmental/Health Improvements or Impacts
    Best Environmental Practices Implemented
                                                                              0
                                                                              0
                                                                             11
                                                                              0,
                                                                              1
            Environmental Risks Reduced/Eliminated
            Environmental Certifications A/ alidations/Ver if ications
            •«w , :     ,        ..    -;«r ^ ^ '         *
                            x:. Bsof FSratzffa&x artctf&xfc
    Recommendations for Environmental Improvement
    Environmental Best Radices Identified
    Environmental Risks Identified
                                                                     16
                                                                      2
                                                                             4S
                                                                             16
                                                                             52
                                                                            tie
        Goal 2. Improve EFWs Maiagem enl. Accountability and Program Operations

                                ffi JSS fftst/ae* /roar JSarftravfxt '&uxfrM&cx
    Questioned Costs (includes items not in Audit Resolution)
    Recommended Efficiencies (includes items not in Audit Resolution)
    Fines, Recoveries, Civil Settlements, Restitutions
                                     *
                                                                     $15,881,789
                                                                     $19,478,829
                                                                     $19.800.000
                                                                               • Goal Taf set
            Criminal, Civil, Administrative Actions
            (Cer tif icalions A/alidations/V er if ications
            Examples of Process/Practice/Policy Changes or Actions
            Corrective Actions on Management Challenges/FMFIA Issues
            Best Practices Implemented
                     '
                                                                      79
                                                                      3O
                                                                      32
                                                                      12
                                                                      14
            Percent EPA QRPA Rating Increase from OIG Influence
                                                                            16%
             Recommendations for Management Improvement
             New FMF1A/Management Challenges Issues Identified
             Best Practices Identified
                                                                     265
                                                                      25
                                                                       5
                                                                                       6th to 4th of 24
                                                                                          oal Tai,j8*»t,-ss* ,,»«; 'iwr
                                                                PAGE 21 - APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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Goal 4: Enhance Diversity. Innovation.  Teamwork and Competencies

                         The OIG is committed to improving performance by recruiting and
                         maintaining a diverse and highly competent workforce.  The OIG
                         promotes continuous learning and is expanding its use of
                         technology and multi-discipline teams.  The following illustrates
                         results achieved under this OIG goal.
New Assistant
Inspector General
for Human Capital
The OIG selected Ms. Bennie Salem as the Assistant
Inspector General for Human Capital. Under her
direction, the Office of Human Capital (OHC) will
be expanded to coordinate all human capital and
human resource activities within the OIG. In
addition, field offices will be consolidated to reduce
the number of Resource Centers from 15 to 5. OHC
has responsibility for workforce planning,
recruitment, and development, to include mentoring
and coaching staff on career management and providing career development
opportunities.

Ms. Salem has a Bachelor's Degree in English from Millsaps College and Accounting
from Auburn University.  She also has a Masters Degree in English from the
University of Alabama and she is a Certified Public Accountant.  Her Federal work
experience includes the Department of Agriculture's Office of Inspector General, and
the EPA OIG as Audit Manager and Divisional Inspector General.
Innovative Tool Put
On-line to Identify
Cross-Agency
Environmental
Efforts	
To fully understand and resolve environmental challenges, we determined it is
necessary to look beyond the boundaries of EPA, and consider other sources of
information, research, and innovative tools in the field of environmental protection.

To address this challenge, EPA OIG developed an on-line Compendium of Federal
Environmental Programs to identify the various federal agencies that participate in
environmental protection. With the support of the President's Council on Integrity
and Efficiency (PCIE), EPA OIG coordinated with OIGs from other federal agencies
to verify our environmental research. Specifically, we identified 29 federal agencies
that collectively share responsibility for clean air, clean and safe water, and better
waste management.

We organized our research into a web-based data base accessible from EPA OIG's
home page. Placing our research on the Internet  allows various stakeholders
(e.g., the public,  Congressional staff, and other federal agencies) to access the
information.  For example, by linking to the various agencies' source documents, the
 HTTP://WWW.EPA.GOV/OIGEARTH - PAGE 22

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                          Compendium website allows users to quickly learn about the 10 federal agencies that
                          participate in environmental security or the 14 that conduct Brownfields-related
                          activities.

                          After previewing our web-based data base to Administrator Whitman, the PCIE, the
                          Executive Council on Integrity and Efficiency, and EPA senior managers,  we
                          launched the data base on September 25, 2002. To access the data base and
                          accompanying narrative report, click "Compendium of Federal Environmental
                          Programs" on our home page, www.epa.gov/oigearth.
OIG Applies Two
Systems to Improve
Effectiveness^	
The OIG has recently put into place two innovative systems designed to help improve
the effectiveness of our staff and increase competencies.

360 Feedback System: We designed, developed, and implemented a universal "360
Feedback System" within OIG to provide individuals and the organization feedback
on how we were positively impacting the  culture to support our strategic direction.
The web-based system was designed around our High Performance Leadership
philosophy and reinforces our corporate values. The 360 System also provides
meaningful information on continuous learning and customer service. The System,
in concert with other performance-based systems, provides OIG managers and
employees with direct and relevant feedback on their performance and behavior.

Knowledge and Skills Inventory System:  As a means to  better assess the
competency and proficiency of staff and better staff assignment teams, the OIG
acquired, modified, and implemented a Knowledge and Skills Inventory System.
This system measures the effectiveness of our training and  development program, as
well as the diversity and proficiency of our skills, and assists us in the staffing of
assignments. Given the increasing use of interdisciplinary  teams and the matrix
nature of the organization, this system has already proven its value.
EPA IG Chairs the
President's Council
on Integrity and
Efficiency
Government
Performance and
Results Act
Committee Round
Table to New
Heights	
Nikki Tinsley, EPA IG, assumed sponsoring leadership and chairmanship of the
President's Council on Integrity and Efficiency (PCIE), Government Performance
and Results Act (GPRA) Coordination Committee Round Table, and quickly
expanded its scope to include the President's Management  Agenda initiatives.
Through monthly meetings, including with prominent experts, this group has become
one of the most active entities within the PCIE community, and is recognized by
other external organizations as a forum for sharing current  information on
government performance and accountability. The PCIE GPRA Round Table also
produced a Compilation of Functions Considered for Competitive Sourcing by the IG
Community, and a SWOT  (Strengths, Weaknesses, Opportunities and Threats)
analysis of the new OMB PART (Program Assessment Rating Tool), which was
presented by invitation at the National Association for Public Administration.
                                                            PAGE 23-APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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                         This group, previously led by the Department of State OIG since 1997, now regularly
                         attracts representatives of about 40 Federal agencies. Recent meeting topics and
                         speaker/discussion leaders have included the following:

                         Congressional Perspectives of GPRA and the Presidential Management
                         Agenda/Program Assessment Rating Tool: featuring Henry Wray with other senior
                         Congressional staff members; and Paul Posner of GAO, representing the Comptroller
                         General

                         Strategic Future Governance and the OIGs: Featuring David Rejeski of the
                         Woodrow Wilson Institute Center and Paul Light, Brooking Institution.

                         New Performance Integration and Reporting Dimensions: featuring Maurice
                         McTigue, Director, Mercatus Center; and Marcus Peacock, Associate Director OMB

                         Strategic Planning of Human Capital: featuring Marta Perez, Deputy Director,
                         OPM and Edward Stephenson, GAO

                         Competitive Sourcing Objectives & Initiative: featuring David Childs, Associate
                         Director, OMB
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Congressional and Public Liaison Activities
EPA Ombudsman
Responsibility
Transferred to PIG
J
EPA's National Ombudsman function was transferred from the Office of Solid Waste
and Emergency Response (OSWER) to the OIG in April 2002. Responsibility for
reviewing the Regional Superfund Ombudsmen was also transferred at that time.

In conjunction with this transfer, the OIG created an Office of Congressional and
Public Liaison, to consolidate the OIG's Congressional and public liaison activities
into a single organization.  This included integrating Ombudsman and OIG Hotline
activities. The OIG Hotline receives allegations of fraud, waste, and abuse regarding
EPA personnel, programs, and operations. EPA's Ombudsman traditionally focused
on citizen complaints regarding hazardous waste management and cleanup
operations.

In the consolidated Office  for Congressional and Public Liaison, OIG uses both the
Ombudsman and Hotline functions to identify potential areas for review, analysis,
and recommendations for Agency program improvement.  Complaints, allegations,
concerns, and inquiries received are researched and analyzed to assess their validity
and priority. Priority cases are staffed as work assignments and typically result in
OIG reports. Ombudsman assignments incorporate, and are intended to function
within, existing OIG operating policy and procedures.

One of the initial tasks of the acting OIG Ombudsman was to identify and research
the potential open cases transferred from OSWER's National Ombudsman. We
identified 25 potentially open cases from the prior National Ombudsman and
received an additional 7 requests for assistance. The OIG  had previously initiated
and is conducting an assignment for  1 of the 25 transferred cases: World Trade
Center. We estimate that an additional five cases will be recommended for a
comprehensive fieldwork assignment. As of September 30, 2002,  we have closed
five cases, including three  transferred cases and two new cases.  We are making
significant progress and plan to close many of the transferred cases by the next
reporting period.

EPA Inspector General Nikki Tinsley recently testified before the Senate
Environment and Public Works Committee on the progress being made  on
implementing and operating the EPA Ombudsman function in the OIG,  assuring the
Committee that Ombudsman work will be conducted "with independence and
professionalism." The Inspector General also pointed out  that the OIG would be able
to undertake a much larger range of work. "As part of the transfer, we have
expanded the services of the Ombudsman to include all EPA administered programs,
rather than limiting it to only Superfund and hazardous waste issues," Tinsley
testified.  She also noted the Ombudsman will  be able to draw from OIG's large pool
of resources.
                                                             PAGE 25 - APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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Funding Needs for
Superfund Sites
    On April 17, 2002, Congressmen Dingell and Pallone of the House Energy and
    Commerce Committee requested that we summarize the funding needs of non-
    Federal National Priority List sites for FY 2002. On June 24, we reported that, at the
    time of our review, regions had requested $450 million for remedial actions and EPA
    Headquarters planned to allocate approximately $224 million.  For long-term
    response actions, the regions requested $46.7 million and $33.2 million was planned
    for distribution. On July 31, the Inspector General testified on these results before
    the Subcommittee on Superfund, Toxics, Risk, and Waste Management of the Senate
    Committee on Environment and Public Works.
                          On August 26, the Chairs of the Committee and Subcommittee requested that we
                          update this information to provide a complete picture of FY 2002 funding.  On
                          October 25, we reported that, after assessing changing site conditions, the regions
                          estimated a need of $417 million for remedial actions and EPA obligated
                          $320 million, a difference of $97 million. For sites needing long-term response
                          actions, regions estimated a need of $60 million and obligated $43 million, a
                          difference of $17 million.
Hotline Activities
I
                                                                Hotline Complaint Referral Distribution
                                                                   Criminal Investigations
                                                                       2.6%
During the reporting period, the OIG's Fraud, Waste, and Abuse Hotline became part
of OIG's Office of Congressional and Public Liaison. This new office, which also
includes the Ombudsman,
serves as the central hub for
Agency and general public
communications.
Complaints received by both
the OIG Ombudsman and the
Hotline are evaluated by a
review panel consisting of
investigators, auditors,
analysts,  engineers, and
counsel.  The panel
officiates program area or
external agency referrals,
which are then monitored by
                                       Other Federal Agencies
the Hotline Coordinator.                     5.9%
                                                       EPA Program Offices
                                                           41.4%
                           The Hotline Coordinator maintains communications with complainants, referral
                           offices, and the review panel until the complaint has been resolved. In addition to the
                           creation of a state agency information directory, direct mailing campaign, and EPA
                           program area resources, the Hotline continues to promote the identification of
                           significant matters warranting investigative, audit, or management intervention.

                           The Hotline took 1,018 calls and closed 821 during the reporting period. Complaints
                           that did not warrant review panel action will be used to identify trends or patterns of
                           potentially vulnerable areas warranting future consideration. Regional and EPA
                           program offices were reviewing the remaining 197 complaints prior to the end of the
                           semiannual reporting period.
 HTTP 7/WWW.EPA.GOV/OIGEARTH - PAGE 26

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Audit Report Resolution
Status Report on Perpetual Inventory of Reports in Resolution Process for Semiannual Period Ending
September 30, 2002

Report Category



A. For which no
management decision was
made by April 1, 2002*
B. Which were issued
during the reporting period
C. Which were issued
during the reporting period
that required no resolution
Subtotals (A + B - C)
D. For which a
management decision was
made during the reporting
period
E. For which no
management decision
was made by
September 30, 2002
Reports for which no
management decision was
made within six months of
issuance
No.
of
Reports


93


168

114


147
63



84



38



Report Issuance
(Dollar Value in Thousands)

Questioned
Costs
$45,624


10,769

0


56,393
1,516



54,877



43,975




Recommended
Efficiencies
$32,190


158

0


32,348
28,726



3,622



3,465



Report Resolution Costs Sustained
(Dollar Value in Thousands)

To Be Recovered










$1,403












As Efficiencies










$0











Any difference in number of reports and amounts of questioned costs or recommended efficiencies between this
report and our previous semiannual report results from corrections made to data in our audit tracking system.
                                                                       PAGE 27 - APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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Status of Management
Decisions on IG Reports

This section presents statistical
information as required by the
Inspector General Act Amendments of
1988 on the status of EPA
management decisions on reports
issued by the OIG involving
monetary recommendations.
As presented, information contained
in Tables 1 and 2 cannot be used to
assess results of reviews performed or
controlled by this office.  Many of the
reports were prepared by other
Federal auditors or independent
public accountants. EPA OIG staff
do not manage or control such
assignments.  Auditeesfrequently
provide additional documentation to
support the allowability of such costs
subsequent to report issuance. We
expect that a high proportion of
unsupported costs may not be
sustained.
Table 1 —Inspector General Issued Reports With Questioned Costs for Semiannual Period Ending
September 30, 2002
Report Category
A. For which no management decision was
made by April 1,2002"
B. New reports issued during period
Subtotals (A + B)
C. For which a management decision was made
during the reporting period
(i) Dollar value of disallowed costs
(ii) Dollar value of costs not disallowed
D. For which no management decision was
made by September 30, 2002
Reports for which no management decision was
made within six months of issuance
Number of
Reports
37
14
51
16
12
4
35
20
Questioned Costs*
(Dollar Value in Thousands)
$45,624
10,769
56,393
1,516
1,403
113
54,877
32,833
Unsupported Costs
(Dollar Value in
Thousands)
$15,936
2,734
18,670
1,330
1,272
58
17,340
14,606
 * Questioned costs include the unsupported costs.

 **Any difference in number of reports and amounts of questioned costs or recommended efficiencies between this report and our
 previous semiannual report results from corrections made to data in our audit tracking system.
 HTTP./AVWW.EPA.GOV/O1GEARTH-PAGE28

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Table 2 - Inspector General Issued Reports With Recommendations That Funds Be Put To
Better Use for Semiannual Period Ending September 30, 2002
Report Category
A. For which no management decision was made by April 1, 2002
B. Which were issued during the reporting period
Subtotals (A + B)
C. For which a management decision was made during the
reporting period
(i) Dollar value of recommendations from reports that were
agreed to by management
(ii) Dollar value of recommendations from reports that were
not agreed to by management
(Hi) Dollar value of non-awards or unsuccessful bidders
D. For which no management decision was made by
September 30, 2002
Reports for which no management decision was made within six
months of issuance
Number of
Reports
5
2
7
2
0
2
0
5
2
Dollar Value
(In Thousands)
$32,190
126
32,348
28,726
0
28,726
0
3,622
3,211
Audits With No Final Action As Of September 30, 2002
Which Are Over 365 Days Past OIG Report Issuance Date
Audits
Programs
Assistance Agreements
Contract Audits
Single Audits
Financial Statement Audits
TOTAL
Total
23
76
18
16
0
133
Percentage
17
57
14
12
0
100
                                                                PAGE 29 - APRIL 1,2002 THROUGH SEPTEMBER 30,2002

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 Summary of Investigative Results
Summary Of Investigative
Activities
 Pending Investigations as
 of March 31,2002

 New Investigations
 Opened This Period

 Investigations Closed
 This Period

 Pending Investigations as
 of September 30, 2002
163
 60
 42
181
Prosecutive and
Administrative Actions

In this period, investigative efforts
resulted in 7 convictions and 26
indictments (does not include
indictments obtained in cases in
which we provided investigative
assistance). Fines and recoveries,
including those associated with civil
actions, amounted to $1 million.
Fifteen administrative actions were
taken as a result of investigations.
Terminations            2
Suspension              1
Written Warnings        2
New Procedures          1
Suspension &
Debarments             6
Recoveries              2
Cost Savings             1

TOTAL                15
                          Profiles of Pending Investigations by Type
            General EPA Programs
              Total Cases =128
                                Superfund
                            Total Cases = 53

                                                                                        31
                  Contract                  • Employee Integrity H Other
                  Assistance Agreement  ^ Program Integrity
HTTPy/WWWEPAGOV/OIGEARTH - PAGE 30

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Appendix 1 -- Reports Issued
THE INSPECTOR GENERAL ACT REQUIRES A LISTING, SUBDIVIDED ACCORDING TO SUBJECT MATTER, OF EACH REPORT ISSUED BY
THE OFFICE DURING THE REPORTING PERIOD AND FOR EACH REPORT, WHERE APPLICABLE, THE DOLLAR VALUE OF QUESTIONED COSTS
AND THE DOLLAR VALUE OF RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE.

Questioned Costs
Final Report Ineligible Unsupported Unreasonable
Report Number Title Issued Costs Costs Costs
2002-P-OOOll Louisiana Air Permits 07-AUG-02
2002-P-00012 Controlling and Abating Combined Sewer Overflow 26-AUG-02
s
2002-P-00013 EPA REVIEW OF CONTAMINANTS AT OAK RIDGE 26-SEP-02
2002-P-00014 IMPROVEMENT NEEDED IN EPA OVERSIGHT AT SAVANNAH 26-SEP-02
RIVER
2002-P-00016 Quality of CERCLIS Data 30-SEP-02
2002-P-00017 EPA MANAGEMENT OF IT RESOURCES UNDER THE CLINGE 30-SEP-02
R- COHEN ACT
2002-P-00018 EPA's Oversight Controls for Assistance Agreeme 30-SEP-02
nts
2002-P-00019 Air Emissions Trading 30-SEP-02
2002-M-00016 Observations on EPA's Plans for Implementing
Brownfields Performance Measures 24-May-02
2002-M-000013 Clean Air Design Evaluation Results 23-Apr-02
TOTAL PERFORMANCE REPORTS = 10 0 0 0
2002-1-00119 Red Lake Chippewa Assistance Agreements 24-MAY-02 $12,224 $252,416 $0
2002-1-00135 IDEM Financial Management System 05-AUG-02 $0 $0 $0
2002-1-00136 Audit of the State of Oregon FY2001 CWSRF Fin. 15-AUG-02
Statements
2002-1-00184 Superfund Cooperative Agreement Washington, D 26-SEP-02 0 $603,895
C.
TOTAL ASSISTANCE AGREEMENT REPORTS = 4 12,224 856,311 0
2002-3-00078 Hamlin Public Service District ll-APR-02
2002-3-00079 Ute Indian Tribe ll-APR-02
2002-3-00080 Center for Clean Air Policy 24-APR-02
2002-3-00081 South Fork Band Council 24-APR-02
2002-3-00082 Red Lake Band of Chippewa Indians 25-APR-02
2002-3-00083 Sauk-Suiattle Indian Tribe 25-APR-02
2002-3-00084 Tribal Assoc . of Solid Waste & Emergency Respon 25-APR-02
se
2002-3-00085 Galveston County Health District 25-APR-02
2002-3-00086 Lovelace Clinic Foundation and Subsidiary 25-APR-02
2002-3-00087 Rollingstone , City of 25-APR-02
2002-3-00088 Ontario, City of 25-APR-02
2002-3-00089 Flandreau Santee Sioux Tribe 25-APR-02
2002-3-00090 Eastern Shoshone Tribe of Wind River Reservatio 30-APR-02
n
2002-3-00091 Shoshone and Araphaho Tribes Joint Prog. Wind R 30-APR-02
iver Reserv.
2002-3-00092 Virgin Valley Water District 02-MAY-02
2002-3-00093 Chautauqua, County of 02-MAY-02
2002-3-00094 South Londonderry Township 02-MAY-02
2002-3-00095 Springfield Library and Museums Association 02-MAY-02
2002-3-00096 Howard University 07-MAY-02
2002-3-00097 Denver, University of (Colorado Seminary) 07-MAY-02
2002-3-00098 Burlington, City of 07-MAY-02
2002-3-00099 Burlington, City of 07-MAY-02
2002-3-00100 Lake Michigan Direcxtors Consortium 08-MAY-02
2002-3-00101 Jefferson Parish 08-MAY-02
2002-3-00102 National Tribal Environmental Council 09-MAY-02
2002-3-00103 North Dakota Rural Water System Association and 09-MAY-02


Recommended
Efficiencies
(Funds Be Put
To Better Use)















0

0




0





























                                             PAGE 31 - APRIL 1, 2002 THROUGH SEPTEMBER 30,2002

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  Report Number
                                     Title
Final Report
    Issued
Ineligible
  Costs
                                                                                          Questioned Costs
                                                             Recommended
                                                            Efficiencies
Unsupported
   Costs
Unreasonable  (Funds Be Put
   Costs	To  Better Use)
               Subsidiary
  2002-3-00104  Aurora,  City of
  2002-3-00105  Chalkyitsik Village Council
  2002-3-00106  Trees  Forever, Inc.
  2002-3-00107  Grayson, Town of
  2002-3-00108  Wyoming  Association of Rural Water Systems
  2002-3-00109  Burns  Pauite Tribe
  2002-3-00110  Laguna,  Pueblo of
  2002-3-00111  Guam,  University of
  2002-3-00112  Omaha  Tribe of Nebraska
  2002-3-00113  Oklahoma, University of  (Health Science Center
  2002-3-00114  Western  Michigan University
  2002-3-00115  Emeryville, City of
  2002-3-00116  Cut Bank, City of
  2002-3-00117  Orangeville, City of
  2002-3-00118  Grand  Portage Reservation Tribal Council
  2002-3-00119  Xavier University of Louisiana
  2002-3-00120  Clarksburg, City of
  2002-3-00121  Lac Courte Orielles Band of Chippewa Indians
  2002-3-00122  THREE  AFFILIATED TRIBES
  2002-3-00123  Sac and  Fox Nation of Missouri
  2002-3-00124  South  Fork Band Council
  2002-3-00125  Massachusetts, University of
  2002-3-00126  Kingdom  City, Village of
  2002-3-00127  BALTIMORE COUNTY
  2002-3-00128  Blair  County Convention & Sports Facility Autho
               rity
  2002-3-00129  BLAIR  COUNTY CONVENTION & SPORTS FACILITY AUTHO
               RITY
  2002-3-00130  Forest County Potawatomi Community
  2002-3-00131  Valdese, Town of
  2002-3-00132  Bad Axe, City of
  2002-3-00133  Hot Springs, Town of
  2002-3-00134  Church Point, Town of
  2002-3-00135  Northwood, City of

                  TOTAL SINGLE AUDIT REPORTS = 58

  2002-1-00109  ICF Consulting-Accounting System Review
  2002-1-00110  ICF Consulting Billing System Review
  2002-1-00175  ICF Consulting Group - Disclosure Statement Ade
               quacy  Review
  2002-1-00176  ICF Consulting Home Office - Disclosure Stateme
               nt Adequacy
  2002-1-00185  CY 2002 Labor Floor Check
  2002-1-00186  ICF Consulting Financial Capability CY 2002
  2002-1-00187  ICF Consulting-Estimating System Review
  2002-1-00188  FY 2002 Floorcheck
  2002-1-00189  E&E FY 99 Incurred Cost
  2002-1-00190  E&E FY 2000 Incurred Cost
  09-MAY-02
  09-MAY-02
  09-MAY-02
  10-MAY-02
  21-MAY-02
  21-MAY-02
  21-MAY-02
  21-MAY-02
  30-MAY-02
  30-MAY-02
  05-JUN-02
  05-JUN-02
  05-JUN-02
  12-JUN-02
  12-JUN-02
  12-JUN-02
  18-JUN-02
  18-JUN-02
  20-JUN-02
  20-JUN-02
  25-JUN-02
  26-JUN-02
  10-JUL-02
  28-AUG-02
  12-SEP-02

  12-SEP-02

  12-SEP-02
  12-SEP-02
  13-SEP-02
  13-SEP-02
  13-SEP-02
  27-SEP-02
 ll-APR-02
 ll-APR-02
 19-SEP-02

 19-SEP-02
 $61,950
                    $61,950
     $0
                   $0
                                  $0
26-SEP-02
26-SEP-02
26-SEP-02
30-SEP-02
30-SEP-02
30-SEP-02


$568,643
$125, 982


$0
$0


$61,604
$38,052


$89,484
$68,407
                  TOTAL  DIG ISSUED CONTRACT REPORTS
                                                        10
                                                                             $694,625
                                                                                                         $ 99,656.
                                                                                                                        $157,891
 2002-1-00101 Integrated Labotatory Systems-FY2002 Floorcheck Ol-APR-02
 2002-1-00102 Grace Analytical Labs, Inc-FY2000 Incurred cost Ol-APR-02
 2002-1-00103 SAIC-CACS 68-W2-0026                            Ol-APR-02
 2002-1-00104 ICES Ltd-FY2000 Incurred cost                Ol-APR-02
 2002-1-00105 Midwest Research Institute-FY2001 A-133         09-APR-02
 2002-1-00106 Gannett Fleming Inc-Labor Cost Charging & Alloc 09-APR-02
              ation Review
 2002-1-00107 Bionetics Corporation-FY2000 Incurred cost      10-APR-02
 2002-1-00108 EC/R Incorporated-FY98 Incurred cost            10-APR-02
 2002-1-00111 Black & Veatch SPC-1998 ARCS Annual Closeout 68 12-APR-02        $3,416
              -W8-0064
 2002-1-00112  Louis Berger & Associates,  Inc-FY98 Incurred CO  12-APR-02
                st
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                                                                                          Questioned Costs
  Report Number
                                      Title
                                                             Final Report
                                                                  Issued
   Ineligible
      Costs
Unsupported
    Costs
Unreasonable
    Costs
 Recommended
Efficiencies
(Funds Be Put
 To Better
 Use)
2002-1-00113 Earth Tech Remediation Svcs-FY98 Incurred Cost  12-APR-02
2002-1-00114 Marasco Newton Group LTD-FY2002 Floorcheck      21-AUG-02
2002-1-00115 Technology Planning & MGMT-FY2000 Incurred cost 12-APR-02
2002-1-00116 ABT Associates, Inc-FY2000 Incurred cost        12-APR-02
2002-1-00117 Zedek Corporation-FY99 Incurred cost            12-APR-02
2002-1-00118 Lockheed Martin Service, Inc-Disclosure Stateme 12-APR-02
            nt Rev 4
2002-1-00120 SAIC-FY 2000 Incurred cost                      18-JUN-02
2002-1-00121 SAIC-CACS 68-W9-0011                            19-JUN-02
2002-1-00122 Battelle Memorial Inst-FY99 Budget & Planning I 19-JUN-02
            CR
2002-1-00123 Cadmus Group Inc, The-FY 1999 Incurred cost     19-JUN-02
2002-1-00124 CH2M Hill Inc-FY2001 CAS 420                    19-JUN-02
2002-1-00125 CH2M Hill Inc-FY2001 CAS408                     19-JUN-02
2002-1-00126 FEV Engine Technology, Inc-Preaward PR-CI-02-10 19-JUN-02
            014
2002-1-00127 CDM Federal Programs Corp-FY2000 Incurred cost  19-JUN-02
2002-1-00128 ROY F WESTON-FY 1997 ARCS Closeout 68-W9-0022   19-JUN-02
2002-1-00129 ROY F WESTON-FY 1996 ARCS 68-W9-0018            19-JUN-02
2002-1-00130 Bechtel Systems & Infrastructure-FY2001 Pricing 19-JUN-02
             Rates
2002-1-00131 Battelle Memorial Inst-Bidding k Billing FCCOM  19-JUN-02
            Rates
2002-1-00132 Portage Environmental, Inc-FY2002 Indirect bill 19-JUN-02
            ing rates
2002-1-00133 Portage Environmental, Inc-F2002 Accounting Sys 20-JUN-02
            tern Review
2002-1-00134 Camp Dresser i Mckee, Inc.-FY 92-97 I/C (Grant  08-JUL-02
             X995743-01)
2002-1-00137 Gunther F Craun & Associates-Proposal PR-NC-01- 16-AUG-02
             12372
2002-1-00138 CH2M Hill Inc-D/S Revisions 9c,9d, lOa, & lOb   16-AUG-02
2002-1-00139 CH2M Hill Companies Inc-D/S Revisions 9b,9c,10a 16-AUG-02
             ,10b,10c,10d
2002-1-00140 CH2M Hill ItE Business Groups-D/S Revision 5a,5 16-AUG-02
             b,6a & 6b
2002-1-00141 GCI Information Services-FY1998 & 1999 Incurred 28-AUG-02
              cost
2002-1-00142 Bechtel System & Infrastructure-FY2002-03 Forwa 16-AUG-02
             rd Pricing
2002-1-00143 HydroGeoLogic,  Inc-FY2000 Incurred cost         16-AUG-02
2002-1-00144 HydroGeoLogic Inc-FY99 Incurred cost            16-AUG-02
2002-1-00145 Versar, Inc-CACS 68-01-7053                     26-AUG-02
2002-1-00146 B&V Special Project Corp-FY1998 RAC Closeout 68 16-AUG-02
             -W5-0004
2002-1-00147 GeoLogics Corporation-FY2000 Incurred cost      16-AUG-02
2002-1-00148 DPRA-FY2001 Incurred cost                       16-AUG-02
2002-1-00149 IT Group-FY2000 Incurred cost                   16-AUG-02
2002-1-00150 FEV of America-FY2000 Incurred cost             16-AUG-02
2002-1-00151 Roy F Weston-FY97&98 RAC 68W70026               16-AUG-02
2002-1-00152 Gunther F Craun & Associates-Accounting System  28-AUG-02
             Review
2002-1-00153 ABT Associates Inc-CAS 404                      24-AUG-02
2002-1-00154 Roy F Weston-FY2001 Accounting System Controls  28-AUG-02
2002-1-00155 ManTech Envmtl Tech Inc Div-Disclosure Stmt 1 & 29-AUG-02
              5
2002-1-00156 Battelle Memorial Institute-Cost of Money Forwa 29-AUG-02
             rd Pricing
2002-1-00157 Technology Planning & MGMT-FY 1999 Incurred cos 29-AUG-02
             t
2002-1-00158 CET Environmental Services Inc-FY 1999 Incurred 29-AUG-02
              cost
2002-1-00159 Environmental Health & Engineering-FY99 Incurre 29-AUG-02
             d cost
2002-1-00160 Scientific Consulting Group,  Inc-FY98 Incurred  30-AUG-02
             cost
2002-1-00161 Scientific consulting Group,  Inc-FY 1999 Incurr 30-AUG-02
   $17,511
$6,652,985
  $118,846
                                                                                       PAGE 33 - APRIL 1,2002 THROUGH SEPTEMBER 30, 2002

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                                                                                       Questioned Costs
                                                                                                                       Recommended
                                                                                                                      Efficiencies
Report

2002

2002

2002

2002

2002
2002
2002
2002
2002

2002

2002

2002

2002
2002
2002
2002
2002
2002

2002

2002

2002
2002
2002

2002
2002
2002
2002
2002
2002
2002
2002
2002

-1

-1

-1

-1

-1
-1
-1
-1
-1

-1

-1

-1

-1
-1
-1
-1
-1
-1

-1

-1

-2
-2
-2

-2
-2
-2
-4
-4
-4
-4
-4
-4
Final Report
Number Title Issued

-00162

-00163

-00164

-00165

-00166
-00167
-00168
-00169
-00170

-00171

-00172

-00173

-00174
-00177
-00178
-00179
-00180
-00181

-00182

-00183

-00013
-00014
-00015

-00016
-00017
-00018
-00007
-00008
-00009
-00010
-00011
-00012
ed cost
Scientific consulting Group, Inc-FY 1999 Incurr
ed cost
GET Environmental Services Inc-FY98 Incurred Co
st
Foster Wheeler Environmental Corp-FY2000 Incurr
ed cost
International Fuel Cells Corporation-FY2000 Inc
urred cost
URS Corp-FY98 Incurred Cost
Metcalf & Eddy Inc-FY99 Incurred cost
SCS ENGINEERS-FY 1998 Incurred Cost
Perrin Quarles Associates-FY2000 Incurred cost
Lockheed Martin Services, Inc-FY2000 Incurred co
st
Pacific Environmental Service Inc-FY99 Incurred
cost
Trinity Engineering Associates-FY2001 Incurred
cost
Trinity Engineering Associates-FY2000 Incurred
cost
CH2M Hill Inc-FY2001 CAS 416
Marasco Newton Group LTD-FY2000 Incurred cost
SCS Engineers-FY1999 Incurred cost
SCS Engineers-FY2000 Incurred cost
Perrin Quarles Associates-FY2001 Incurred cost
Tetra Tech NUS, Inc-FY1999 & 2000 RAC 68-W6-004
5
Black & Veatch Special Projects Corp-FY99 RAC 6
8-W9-9043
Black & Veatch Special Projects Corp-FY99 Incur
red cost
IT Group-DACA45-97-D-0012 #
CH2M Hill Inc-FY1998 i 1999 RAC 68-W9-8225
CH2M Hill Inc-FY95 & 96 Automated Log & Applica
tion Menu Sys
IT Group-Agreed-upon DACW45-94-D-005 D0tt29
IT Group-DACA45-98-D-0003 #8 CACS
IT Group-DACA45-98D-0003 #11, CACS
I T Group-FY2002 Financial Capability
CH2M Hill Inc-FY2001 Forward Pricing Rates
ABT Associates Inc. -CAS 409
CH2M Hill Inc-FY2001 CAS 412
Tetra Tech EMI-FY2002 CAS 420
Tetra Tech EMI-FY2002 CAS 409

30-AUG-02

ll-SEP-02

13-SEP-02

13-SEP-02

13-SEP-02
13-SEP-02
16-SEP-02
16-SEP-02
16-SEP-02

16-SEP-02

16-SEP-02

16-SEP-02

18-SEP-02
20-SEP-02
23-SEP-02
23-SEP-02
23-SEP-02
23-SEP-02

23-SEP-02

23-SEP-02

15-APR-02
15-APR-02
16-AUG-02

16-AUG-02
16-AUG-02
16-AUG-02
26-AUG-02
15-APR-02
10-SEP-02
13-SEP-02
16-SEP-02
20-SEP-02
Ineligible Unsupported Unreasonable (Funds Be Put
Costs Costs Costs To Better Use)



$19, 160





$2,088
$250


$203,148































                 TOTAL DCCA CONTRACT REPORTS  =84
                                                                          $7,017,404
                 TOTAL FINANCIAL STATEMENT REPORTS  =  0

2002-S-00016 Review of  the Agency's 1-Hour Ozone Designation 15-AUG-02
2002-S-00017 Government Information Security Reform Act (200 12-SEP-02
             2)
2003-S-00001 Region 7  Grants  Proactive                       29-MAY-02
2003-S-00002 Region 7  Grants  Proactive                       22-AUG-02
$149,509    $1,877,328
                 TOTAL SPECIAL REVIEW REPORTS  =  4

                 TOTAL REPORTS ISSUED =   168
$149,509    $1,877,328

$7,935,712  $2,733,639
   0        0

$99,656  $157,891
HTTP //WWW.EPA GOV/OIGEARTH - PAGE 34

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                        OIG MAILING ADDRESSES and TELEPHONE NUMBERS
                               OIG HOTLINE  1-888-546-8740 or (202) 566-2476
Headquarters
Environmental Protection Agency
Office of Inspector General
1200 Pennsylvania Ave. NW (2410T)
Washington, DC 20460
(202) 566-0846

Atlanta
Environmental Protection Agency
Office of Inspector General
61 Forsyth Street, SW
Atlanta, GA 30303
Audit: (404) 562-9830
Investigations: (404) 562-9857

Boston
Environmental Protection Agency
Office of Inspector General
One Congress St.
Suite HOO(Mailcode)
Boston, MA 02114-2023
Audit: (617) 918-1470
Investigations:(617) 915-1481

Chicago
Environmental Protection Agency
Office of Inspector General
77 West Jackson Boulevard
13th Floor (IA-13J)
Chicago, IL 60604
Audit: (312)353-2486
Investigations: (312) 353-2507

Cincinnati
Environmental Protection Agency
Office of Inspector General
MS : Norwood
Cincinnati, OH 45268-7001
Audit: (513) 487-2360
Investigations: (312) 353-2507 (Chicago)

Dallas
Environmental Protection Agency
Office of Inspector General (6OIG)
1445 Ross  Avenue, Suite 1200
Dallas,  TX 75202-2733
Audit: (214) 665-6621
Investigations: (404) 562-9857 (Atlanta)

Denver
Environmental Protection Agency
Office of Inspector General
999 18th Street, Suite 500
Denver, CO 80202-2405
Audit: (303) 312-6872
Investigations: (312) 353-2507 (Chicago)
Kansas City
Environmental Protection Agency
Office of Inspector General
901 N.  5th Street
Kansas City, KS 66101
Audit: (913) 551-7878
Investigations: (312) 353-2507 (Chicago)

New York
Environmental Protection Agency
Office of Inspector General
290 Broadway,  Room 1520
New York, NY  10007
Audit: (212) 637-3080
Investigations: (212) 637-3041

Philadelphia
Environmental Protection Agency
Office of Inspector General
1650 Arch Street, 3rd Floor
Philadelphia, PA 19103-2029
Audit: (215) 814-5800
Investigations: (215) 814-2361

Research Triangle Park
Environmental Protection Agency
Office of Inspector General
Mail Drop N283-01
Research Triangle Park, NC 27711
Audit: (919) 541-2204
Investigations: (919) 541-1027

Sacramento
Environmental Protection Agency
Office of Inspector General
801 I Street, Room 264
Sacramento, CA 95814
Audit: (916) 498-6530
Investigations: (415) 744-2465 (SF)

San Francisco
Environmental Protection Agency
Office of Inspector General
75 Hawthorne St. (IGA-1)
7th Floor
San Francisco, CA 94105
Audit: (415) 947-4521
Investigations: (415) 947-8711

Seattle
Environmental Protection Agency
Office of Inspector General
1200 6th Avenue, 19th Floor
Suite 1920, M/S OIG-195
Seattle, WA 98101
Audit: (206) 553-4033
Investigations: (206) 553-1273
                                                                                 HTTP:/AVWW.EPA.GOV/OIGEARTH- PAGE 35

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U S  Environmental Protection Agency

Region 5. Library (PL-12JJ
77 West Jackson Boulevard, 12th f\&*
OHWBO.IL  60604-3590

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PS YOUR ENVIRONMENT
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