United States
Environmental Protection
Agency
Office of
Inspector General (2441)
Washington DC 20460
EPA-350-K-99-002
November 1999
Office of Inspector General
Semiannual Report
to the Congress
April 1,1999 through
September 30,1999
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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."
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
O Help EPA achieve its environmental goals by improving the performance and integrity of EPA
programs and operations, by safeguarding and protecting the Agency's resources, and by dearly
reporting the results of our work.
Foster strong working relationships.
© Operate at the highest performance level.
U.S. Environmental Protection A
Region 5, Library (PL-12J)
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Foreword
Di
Iuring this semiannual period we continued to work with the Agency to
improve operations and help achieve enhanced environmental program
results. We emphasized consulting with Agency officials in our planning
initiatives and on-going audits to identify where we can help EPA accomplish its
mission through increased value from our work. At EPA's request, we reviewed the
Great Lakes Program. EPA and its partners have been slow in restoring and
maintaining the integrity of the Great Lakes basin. Without systematic and
comprehensive ecosystem plans in place, EPA will not be assured that it and others
are doing the right, most cost effective, and highest priority activities needed to
protect the Great Lakes.
We reported that EPA needs to formally recognize and act on the significance of the
growing backlog of Five-Year Reviews of Superfund sites where contaminated wastes
remain on-site. Some Five-Year Reviews have found that further corrective actions
are needed on-site to protect human health and the environment.
Although we issued an unqualified opinion on EPA's Fiscal 1998 Financial
Statements, we are concerned about the Agency's problems in implementing new
accounting requirements. It is critical that managers have timely, accurate, and useful
financial and management information to make decisions to improve the economy,
efficiency, and effectiveness of government. EPA submitted Fiscal 1998 Financial
Statements submitted to OMB six months late.
Our performance partnership grant (PPG) audits showed that these grants are not
providing all the benefits anticipated. Three PPG audits identified that while
recipients realized some administrative savings, flexibility was limited, partnerships
needed strengthening, and environmental results were unknown or could not be
demonstrated. EPA regions should emphasize PPG work plan accountability by
clearly defining commitments, and including defined core performance measures in
work plans.
Our criminal investigations focused on prosecuting individuals and companies that,
through fraudulent actions, undermine the integrity of the data that the EPA relies on
to carry out its mission to protect public health and safeguard the environment.
Falsified or altered environmental test data and fraudulent claims for clean up work
never performed negatively affect the ability of the EPA and its partners in state and
local government and in the private sector to make sound decisions concerning
environmental risks and pollution control. In one case, a North Carolina laboratory
supervisor and a chemist each pleaded guilty to falsifying reports on sampling data
from Superfund sites nationwide. In another case, a Virginia company, specializing in
computer-aided technology to assess and remediate soil and groundwater
contamination, and its owner were indicted for submitting claims to EPA for work not
performed.
UOJL: I .
Nikki L. Tinsley (j
Inspector General
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Profile Activities and Results
April 1,1999 to September 30,1999
Audit Operations ($ in millions)
OIG Managed Reviews:
Reviews Performed by EPA, Independent Public
Accountants and State Auditors
Audit Operations ($ in millions)
Other Reviews:
Reviews Performed by Another Federal
Agency or Single Audit Act Auditors
April 1,1999to Fiscal
September 30,1999 1999
Questioned Costs *
-Total
- Federal
Recommended Efficiencies*
- Federal
$12.9
8.7
0.1
Costs Disallowed to be Recovered
- Federal $ 23.5
Costs Disallowed as Cost Efficiency
- Federal $ 0
Reports Issued - OIG Managed Reviews:
- EPA Reviews Performed By OIG: 57
- EPA Reviews Performed by
- Independent Public Accountants: 1
- EPA Reviews Performed by
State Auditors: 0
Total 58
$124.9
75.4
0.1
$34.9
$ 0
92
9
0
101
Questioned Costs *
-Total
- Federal
April 1,1999 to
September 30,1999
$2.5
2.5
Recommended Efficiencies*
- Federal $ 0
Costs Disallowed to be Recovered
-Federal $ 0.9
Costs Disallowed as Cost Efficiency
-Federal $ 0
Reports Issued - Other Reviews:
- EPA Reviews Performed by
Another Federal Agency: 123
- Single Audit Act Reviews: 71
Total
194
Fiscal
1999
$3.9
3.9
$1.7
$1.4
$ 0
224
135
359
Reports Resolved (Agreement by Agency officials to
take satisfactory corrective action.) *** 62 148
Agency Recoveries - Recoveries from Audit $66.8M
Resolutions of Current and Prior Periods
(cash collections or offsets to future payments.)**
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
$0.2M
34
46
15
7
16
5
$0.8M
75
82
20
11
35
7
Fraud Detection and Prevention Operations
Hotline Cases Opened 67
Hotline Cases Processed and Closed 69
Personnel Security Investigations
Adjudicated 74
Legislative and Regulatory
Items Reviewed 38
138
140
287
56
* Questioned Costs and Recommended Efficiencies subject to change pending further review in the 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.
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Table of Contents
Section 1-Helping EPA Achieve Its Environmental Goals
Program Audits and Investigations 1
Financial Management 10
Assistance Agreement Audits and Investigations 13
Contract Investigations 16
Employee Integrity Investigations 17
Hotline Activities 19
Section 2-Fostering Strong Working Relationships
Advisory and Assistance Services 20
Committee on Integrity and Management Improvement 21
Section 3-Audit Report Resolution and Summary of Investigative Results
Status Report on Perpetual Inventory of Reports in Resolution Process
for the Semiannual Period Ending September 30, 1999 23
Status of Management Decisions on IG Reports 24
Inspector General Issued Reports With Questioned Costs 24
Inspector General Issued Reports With Recommendations that Funds Be
Put to Better Use 25
Summary of Investigative Results 26
The complete text of selected audits is available through the EPA OIG
internet home page, http: // www.epa.gov/oigearth
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Section 1- Helping EPA Achieve Its Environmental Goals
Program Audits and Investigations
Backlog of
Superfund Five-
Year Reviews Has
Increased Nearly
Threefold
The Superfund statute requires that remedial actions, where hazardous substances,
pollutants, or contaminants remain on-site, be reviewed every five years to assure
that human health and the environment continue to be protected. Some of EPA's
five-year reviews have found that corrective actions were needed.
In March 1995, we reported that EPA had not performed a substantial number of
reviews because of the low priority Agency management gave them. Our follow-up
audit found that the backlog of reviews had increased from 52 to 143 overdue
reviews. Further, a growing number of sites will require the reviews since the use of
containment remedies has been increasing. To effectively address the backlog, EPA
may need to spend approximately $1 million above the current spending level each
year for the next three years.
As of March 1999, EPA issued 63 percent of reviews an average of 17 months after
required due dates. As a result, EPA did not inform those in affected communities
or the Congress about whether corrective actions were warranted as early as it should
have.
In nine of 32 five-year reports we examined EPA did not conclude on the
protectiveness of site remedies or did not adequately support the conclusions made.
Half of the reports reviewed which contained recommendations did not identify who
was responsible for taking corrective actions.
We recommended that the Assistant Administrator for Solid Waste and Emergency
Response (AA) designate the backlog of five-year reviews as a weakness under the
Federal Managers' Financial Integrity Act (FMFIA); establish a Government
Performance and Results Act (GPRA) performance measure for the reviews; and
ensure that reports contain an adequately supported statement of protectiveness.
Agency Action
The final report was issued (1999-P-218) to the AA on September 30, 1999. In
response to the draft report, the AA generally agreed with the findings and most of
the recommendations. The AA disagreed with establishing a GPRA performance
measure at this time, but indicated that five-year reviews would be included as a
target in the Superfund Comprehensive Accomplishments Plan. The AA agreed to
declare five-year reviews as an Agency weakness under FMFIA. A response to the
final report is due December 29, 1999.
PAGE 1 - APRIL 1,1999 THROUGH SEPTEMBER 30,1999
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At the Beacon Heights Landfill site in Connecticut, a technical representative for the responsible
parties explains the operation of the leachate collection system to EPA, state, and industry
representatives.
Key Great Lakes
Strategy and
Activities Need
Improving
In 1972, the U.S. and Canada signed the Great Lakes Water Quality Agreement to
restore and maintain the chemical, physical, and biological integrity of the Great
Lakes basin ecosystem. The basin is home to more than one-tenth of the U.S.
population, and has some of the world's largest concentrations of industrial capacity.
Environmental challenges include contaminated sediments, the effects of exotic
species, and loss of habitat. At EPA's request we reviewed the Great Lakes Program.
EPA and states need to improve Lakewide Management Plans (LaMPs) and
Remedial Action Plans (RAPs) which were established as systematic and
comprehensive ecosystem approaches to address the Great Lakes as a whole, and
specific areas of concern, respectively. LaMPs and RAPs are taking longer than
expected to complete. For example, while a draft LaMP for Lake Michigan was first
published in 1992, it was never finalized; thereby, not meeting the statutory deadline
of January 1, 1994. Officials currently plan to issue this LaMP by April 2000. The
statutory deadline for incorporating RAPs into state water quality plans was January
1, 1993. To date no U.S. RAPs have been fully implemented. Without these plans,
there is no assurance that EPA was doing the right, most cost effective, and highest
priority activities needed to protect the Great Lakes.
To improve the LaMP process, EPA needs to place a priority on issuing written plans
during FY 2000, and work with its partners to identify and implement ways to make
the LaMP process more efficient. To improve the RAP process, EPA needs to
establish a coordinator to better organize the RAP liaisons. In developing the next
Great Lakes 5-year strategy, the program office should strive to obtain buy-in and
commitment from all parties, focus on goals, include performance measures, and
provide accountability for implementation.
OFFICE OF INSPECTOR GENERAL - PAGE 2
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Agency Action
The final report (99P00212) was issued to the Regional Administrator, Region 5, on
September 1, 1999. In responding to the draft report, the Regional Administrator
agreed with the recommendations, or proposed alternative actions to address the
findings, and stated the following actions will be taken by April 2000: LaMPs will be
completed for Lakes Michigan, Erie, and Superior; a report describing the
environmental problems in Lake Huron will be issued; and a new Great Lakes
Strategy will be completed. Region 5's actions, when completed, will address the
findings and recommendations in our report.
EPA had not reauthorized New Jersey's new RCRA (Resource Conservation and
Recovery Program) base program more than two and one half years after New Jersey
submitted it. By not elevating action to a higher management level earlier, Region 2
allowed the application process to be delayed. Federal regulations divested EPA of
its enforcement authority for certain RCRA program activities. Federal authorities
unnecessarily delayed or did not pursue enforcement against violators who illegally
shipped hazardous wastes to landfills; improperly stored chemicals near a residential
neighborhood; and buried flammable paint and waste solvents on private property.
Such violations potentially harmed not only the environment but nearby residents.
Region 2 needed to improve its timeliness in issuing enforcement actions and
follow-up on violators' return to compliance. The region did not initiate appropriate
enforcement actions within 90 days or document the justification for the delays for 9
of 31 cases we reviewed. Region 2 did not follow up on a facility's return to
compliance in 12 of the 31 cases. Twenty-five cases had untimely or inaccurate
Resource Conservation and Recovery Information System (RCRIS) data. As a result,
resources were not being used efficiently to carry out program goals, facilities may
not have been treated consistently, violators may have received unfair economic
advantage, and facilities were not returned to compliance as expeditiously as
possible.
We recommended that EPA develop a process to prevent a lengthy period where its
civil and/or criminal enforcement authority would be adversely affected, establish
time frames for the process, elevate persistent problems, withdraw state authorization
or federal grant funds as appropriate, and improve quality control procedures to
ensure reliability and integrity of RCRIS data.
Agency Action
We issued the final report (1999-1-224) to the Regional Administrator, Region 2 on
July 21, 1999. In response to the draft report, the Assistant Regional Administrator
for Policy and Management agreed with a number of the report's recommendations
and believed they had implemented many of them. They believed other
recommendations would not have reduced the difficulty experienced during the
reauthorization process. A response to the final report is due October 20, 1999.
PAGE 3 - APRIL 1,1999 THROUGH SEPTEMBER 30,1999
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Region HI and
Virginia's RCRA
Enforcement
Program Needs
Improvement
EPA advocates taking effective enforcement action against the most serious violators
of the Resource Conservation and Recovery Act (RCRA). The most serious violators
are known as "Significant Non-Compliers,"(SNCs) or facilities that cause an actual
or potential release of hazardous waste; are recalcitrant; experience recurring
violations; or significantly deviate from RCRA regulations.
EPA Region III and the Virginia Department of Environmental Quality (DEQ) did
not adequately classify facilities with serious violations as SNCs. Although Region
III and DEQ usually took appropriate enforcement actions, these actions were unduly
delayed, sometimes for several years. These situations occurred because the Region
and DEQ did not incorporate EPA's Enforcement Response Policy (ERP) into their
enforcement screening processes, and because DEQ emphasized compliance
assistance over escalated enforcement. Also, Region Ill's screening process to decide
the type of enforcement can take up to a year. Region III allowed state agencies to
almost double the number of days to consider classifying serious violators as SNCs
and initiating formal enforcement action.
As a result of these conditions, the most significant violators were unaware of the
gravity of their violations, enforcement was unduly delayed, and facilities remained
non-compliant which may have increased the potential for harm to human health and
the environment. We recommended that the Region III Administrator ensure that
DEQ and Region III personnel adhere to EPA's ERP policy regarding classifying
SNCs and taking expeditious enforcement action.
Agency Action
We issued the final report (1999-P-00215) on September 20, 1999 to the Region III
Administrator. In response to the draft report, most of the Region III
Administrator's comments met the intent of our recommendations. The response,
however, did not specifically agree to require states to classify serious violators as
SNCs in accordance with ERP timeframes. A response to the final report is due by
December 19, 1999.
Mississippi
Provides Basic
Protection for its
Waters,
Longstanding
Problems Still
Exist
Clean and safe water capable of sustaining human health and aquatic life is one of
EPA's ten strategic goals. Under the Clean Water Act, EPA and states have
developed water quality standards and programs that monitor and report the quality
of state waters. Generally, Mississippi's standards provided basic protection for most
of its waters. However, certain state water quality criteria had been inconsistent with
EPA guidance for ten years or more. In addition, the state had not produced
acceptable antidegradation implementation procedures to ensure water quality
protection and maintenance for its highest quality waters.
Since 1997, Mississippi's monitoring program has seen tremendous growth in both
staff and monitoring activities. However, its monitoring program did not use trend
analysis to track the degradation or improvements in water quality. The state also
made limited use of advanced monitoring techniques such as biological monitoring
and habitat studies. These techniques provide the primary indicators of the
ecological condition of watersheds and are needed to maximize the effectiveness of
the state's monitoring program.
OFFICE OF INSPECTOR GENERAL - PAGE 4
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Although Mississippi generally provided complete and accurate water quality reports,
reports were submitted up to two years late. Significantly late reports decrease their
usefulness and effectiveness as a management tool for both EPA and the state.
Region 4 also did not provide sufficient oversight and technical assistance to the state
to resolve longstanding deficiencies in water quality criteria and antidegradation
procedures. As a result, Mississippi's water quality program had not been as
effective and protective of its waters as it could have been.
We recommended that the Regional Administrator, Region 4, emphasize resolving
problems with Mississippi's water quality program by strengthening its oversight and
technical assistance; assisting in developing a long-term monitoring strategy; and
developing regional procedures that ensure a timely review and decision on water
quality standards.
Agency Action
The final report (1999-P00219) was issued to the Regional Administrator, Region 4
on September 29, 1999. In response to the draft report, the Region generally agreed
with the recommendations and indicated actions had been initiated to enhance
regional oversight of state water quality standards and monitoring programs. The
Region's response to the draft report was considered adequate to resolve all of the
recommendations and the report was closed upon issuance.
Federal facilities, including buildings, industrial operations, and military bases, must
comply with all federal environmental statutes and regulations, as well as applicable
state and local requirements. EPA has concentrated its inspection, enforcement, and
compliance assistance activities where it has penalty authority. As EPA gained
additional authority to impose penalties, environmental compliance for federal
facilities improved. For example, the federal facility compliance rate for the
Resource Conservation and Recovery Act (RCRA) increased 13% from 1992 to
1996. Conversely, under the Clean Water Act (CWA) with no penalty authority,
there was a 17% decrease in compliance in the same period.
In 1998, Yellowstone National Park had four separate spills of thousands of gallons
of sewage into pristine park waters. Although penalties were assessed by the state of
Wyoming as an enforcement action against the Park, the lack of penalty authority
against federal facilities means it is questionable whether the penalties will result in
return to compliance.
Region 6 developed a Federal Facilities Risk Impact Analysis. The Impact Analysis
could help EPA determine its federal facilities inspection and enforcement program
priorities if it proves successful and is applied on a national scale.
EPA compliance assistance for federal facilities involves workshops, training, use of
Internet and print resources, telephone assistance, and on-site Environmental
Management Reviews. However, EPA cannot determine the effectiveness of its
compliance program because EPA lacks adequate feedback mechanisms.
PAGE 5 - APRIL 1,1999 THROUGH SEPTEMBER 30,1999
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We suggested that the Director, Federal Facilities Enforcement Office (FFEO), seek
penalty authority for the Clean Water Act and other environmental statutes; evaluate
Region 6's Impact Analysis initiative as a method to prioritize compliance and
enforcement activities; and develop a mechanism to assess effectiveness of
compliance assistance activities.
Agency Action
The final report (1999-P-00209) was issued to the Director, FFEO, on June 14, 1999.
FFEO generally agreed with the memorandum report and suggestions, and we closed
the report on issuance.
Defendants
Sentenced to
Prison for
Attempted Theft,
False Statements,
and Forgery
On April 22, 1999, Gary L. Jones and Nadine E. Starks were sentenced in Superior
Court, Fannin County, Georgia, following a March 1999 jury trial in which each was
found guilty of one count of criminal attempt to commit theft by deception, one
count of making false statements, and two counts of first degree forgery. Jones will
serve a ten year sentence, 5 years in prison and 5 years on probation. He was also
ordered to pay a $1000 fine and perform 80 hours of community service. Starks will
serve 10 years probation, pay a $1000 fine, and perform 240 hours of community
service. Jones and Starks were tried on charges that Jones represented himself to an
Ellijay, Georgia, homeowner as an employee of Atlanta Testing, Inc. (ATI); told the
resident that ATI had contracted with EPA to locate and remove canisters containing
toxic waste; and stated that he had been directed by EPA to perform soil tests under
the concrete slab in their garage. Further, Jones presented to the homeowner a
business card and letter purportedly from an EPA employee but which had been
forged by Starks, stating that Jones had been directed to perform the remedial work.
This investigation was conducted jointly by the EPA OIG and the Fannin County
(Georgia) Sheriff's Office.
Two People
Indicted and
Arrested For
Scheme Using
Fraudulent EPA
Purchase Orders
On September 15, 1999, a female defendant who uses variations of the name "Cheryl
T. Burnette" was indicted in U.S. District Court, District of New Hampshire, on
charges of wire fraud and impersonating a government employee. On September 28,
1999, the United States Attorney's Office in New Hampshire filed a criminal
complaint against a male defendant who uses the name "Michael Tamulis," charging
him with conspiracy to commit wire fraud. The two individuals, whose true
identities are still unknown, were arrested in Hartford, Vermont. According to the
charges filed, the defendants falsely represented themselves as employees of the EPA
through a sham business entity known as United States Environmental. Allegedly,
both individuals used their assumed identities and fictitious government affiliation to
steal more than $75,000 in goods and services from individuals and businesses
located in New Hampshire, Massachusetts, Vermont, Washington, D.C., Georgia,
and several other states. The alleged scheme included using fraudulent government
procurement numbers and purchase orders to establish direct billing accounts with
victims who believed they were doing business with and would be paid by the
Federal government. This investigation was conducted jointly by the EPA OIG; the
New Hampshire Attorney General's office; the Salem, New Hampshire, Police
Department; and the Hartford, Vermont, Police Department.
OFFICE OF INSPECTOR GENERAL - PAGE 6
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Man Sentenced in
Postage Scheme
That Falsely
Represented EPA
to Businesses and
Private Citizens
On August 20, 1999, Charles E. Bungard pled guilty in United States District Court,
Eastern District of Virginia, to one count of counterfeiting U.S. postage stamps. He
was sentenced to serve six months in prison with credit for time served and charged a
$100 special assessment. This investigation was based upon a citizen complaint to
EPA's Public Liaison Division and a return to EPA from the U.S. Postal Service of
approximately 150 first class letters containing an EPA return address along with
apparent counterfeit government postage indicia. The letters, addressed to a variety
of commercial businesses and individuals, contained pornographic pictures, rambling
anti-government narrative, and references to other business entities. The
investigation determined that Bungard had mailed approximately 2000 such pieces of
mail, using variously a counterfeit Department of Treasury mailing permit, a
counterfeit 32 cent stamp, and a counterfeit postage meter stamp. In 1987, Bungard
had been indicted for the same offenses but was never located. The outstanding
warrant was quashed in 1996. As a result of this recent investigation, an arrest
warrant was issued in March 1998. During the course of the investigation, Bungard
continued to make threatening mailings using counterfeit postage. He was arrested
on October 2, 1998, by the Gaithersburg City (MD) Police, based on the federal
warrant. He was extradited to the Eastern District of Virginia where he was as taken
into federal custody. This investigation was initiated jointly by the EPA OIG and the
U.S. Postal Inspection Service and joined by the Federal Bureau of Investigation, the
U.S. Secret Service, and the Maryland State Police.
En vironmental
Consulting
Company and
President Debarred
for 20 Years
On June 10, 1999, Safety Management Institute, Inc. (SMI), of Roaring Spring,
Pennsylvania, and Christopher Tate, SMI president, were each debarred for a 20 year
period measured from their initial suspension on July 28, 1997. Tate and SMI have
been debarred from participation in federal assistance, loan, and benefit programs,
and by reciprocal effect, from federal procurement. The debarment action was taken
as a result of the criminal prosecution of Tate and SMI based on an investigation
conducted jointly by the OIG and the Pennsylvania Office of the Attorney General.
In February 1998, Tate pled guilty in Blair County, Pennsylvania, to felony charges
of violating the Pennsylvania Solid Waste Management Act and was sentenced to 10
to 24 months in Blair County Prison and 5 years probation with the condition that he
not engage in any environmental work. Tate also pled guilty in Dauphin County,
Pennsylvania, to felony charges of tampering with public records and misdemeanor
charges of violating the Pennsylvania Underground Storage Act. He was sentenced
to 9 to 24 months imprisonment and 5 years probation to be served concurrently with
the sentence imposed in Blair County. SMI was a contractor engaged in the removal
of underground storage tanks in Hanover, Pennsylvania, during 1994 when Tate
committed the violations and failed to report that he was previously debarred from
government contracting until March of 1995. That previous period of debarment
followed an OIG investigation that resulted in Tate's conviction in U.S. District
Court, Western District of Pennsylvania, of providing falsified certifications to the
EPA in an application for approval of an asbestos abatement course. Tate's conduct
in this action was also imputed to SMI. The current extended period of debarment
was determined to be warranted by Tate's and SMI's recent and earlier criminal
conduct.
PAGE 7 - APRIL 1,1999 THROUGH SEPTEMBER 30,1999
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Audit Update
Rhode Island
Makes Major
Improvements in
RCRA
Enforcement
Idaho Makes
Major
Improvements in
Air Enforcement
Superfund Sites
Inappropriately
Deferred to RCRA
In January 1999, the OIG reported that the Rhode Island Department of
Environmental Management (RIDEM) was inadequately enforcing federal RCRA
(Resource Conservation and Recovery Act) regulations, and recommended actions to
improve enforcement. Rhode Island did not take formal enforcement action on
serious violations, such as leaking battery acid and drums of hazardous waste. EPA's
Region 1 Administrator has since reported that RIDEM had satisfied the nine criteria
EPA designed for Rhode Island to demonstrate that it could administer a credible
RCRA program. RIDEM adopted EPA's RCRA Enforcement Response Policy
until its own policy is approved; was properly identifying and initiating formal
enforcement actions against RCRA significant non-compliers; conducted timely
follow-up inspections for newly concluded cases; and established the necessary
tracking and policy mechanisms to ensure that proper escalation of a case can and
will occur. The Regional Administrator determined that withdrawal of the RCRA
program was not warranted, and planned for regional and state staffs to continue to
meet monthly.
In September 1998, the OIG issued an audit report sharply critical of air enforcement
activities in the State of Idaho. EPA Region 10's lack of oversight, minimal penalties
that did not deter noncompliance, and recalcitrant polluters with histories of repeated
violations were discussed as areas needing improvement. Since the report was
issued, Idaho agreed to include economic benefit considerations in its penalty
assessments. Two violators have agreed to penalty settlements of $200,000 and
$187,000, and a settlement of about $100,000 is pending with another significant
violator. Idaho's imposition of such substantial penalties are unprecedented.
Region 10 and Idaho has finalized a new Compliance Agreement. The new Director
of the Idaho Division of Environmental Quality introduced a plan which empowers
employees in regional offices to conduct inspections, issue permits and make
decisions on air, water and waste issues. The 1998 OIG audit report recommended
that EPA require Idaho to develop and implement policies and procedures that are
consistent with EPA enforcement and inspection guidance, and, if Idaho is unable or
unwilling to comply, EPA assume enforcement responsibility. From the actions
taken subsequent to our report, it appears that EPA and Idaho have been successful in
addressing these air enforcement issues.
A March 1999 OIG report found that hundreds of the 3,000 sites transferred from SF
to the Resource Conservation and Recovery Act (RCRA) program did not meet
EPA's criteria for transfer, and that less than two percent of deferred sites have been
cleaned up. Sites inappropriate for deferral have been in EPA's inventory an average
of 17 years. EPA requested regional offices to reevaluate their plans for how to
prioritize sites to be added to the National Priorities List (NPL) after OIG and GAO
reports identified thousands of sites that still need to be addressed by the Superfund
(SF) program. EPA developed concepts for a national plan to help regions balance
their priorities and identify which sites should be added to the NPL right away, and
which should be deferred to other programs or issued a no further action decision.
Also, EPA is considering issuing guidance next year after additional feedback is
collected from the regions. We recommended strengthening deferral procedures, and
improving communications and collaboration between the SF and RCRA programs
for deferring sites from one program to another. ^^
OFFICE OF INSPECTOR GENERAL - PAGE 8
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EPA Terminated
an Inappropriately
Awarded Grant
In March 1999 the OIG reported that EPA awarded a noncompetitive grant to the
Center for Chesapeake Communities (CCC) without adequate justification. The
award created an appearance of preferential treatment that compromised the integrity
of the Chesapeake Bay Program. In June 1999, Region III terminated the grant to
CCC. In order to support the Chesapeake Bay Program's continuing need for local
government and community assistance, Region III issued an open public request for
grant proposals, and competitively awarded a new grant to another organization.
Region III also developed a management plan for competing nonprofit grants for the
Chesapeake Bay Program Office, and initiated a vulnerability assessment for that
office.
PAGE 9 - APRIL 1,1999 THROUGH SEPTEMBER 30,1999
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EPA Receives
Unqualified
Opinion On
Financial
Statements,
However, Further
Process
Improvements Are
Needed
We issued an unqualified opinion on EPA's fiscal 1998 Financial Statements.
However, weaknesses in the Agency's process for preparing financial statements
prevented it from producing reliable financial statements by the legislatively
mandated March 1 deadline. The statements were finally submitted to OMB on
September 30, 1999. The Agency experienced delays in obtaining some
information and problems in implementing new accounting standards and OMB
reporting requirements. In particular, the Agency encountered significant
difficulties in preparing the Statements of Budgetary Resources and Financing due
to weaknesses in: (1) the Agency's deobligation process, (2) conversion of
accounting information from EPA's predecessor accounting system, and (3) errors
in recording various accounting transactions.
Process improvements are needed to ensure accurate data is available to prepare the
annual financial statements and to manage EPA's program activities on an ongoing
basis. Improvements in the Agency's deobligation process could result in additional
funds being made available to support its environmental goals.
The Federal Financial Management Improvement Act (FFMIA) requires that we
determine, during our annual financial statement audits, whether EPA's financial
management systems substantially comply with Federal financial management
system requirements, applicable accounting standards, and the Standard General
Ledger. We identified two noncompliance issues: (1) As discussed above, material
weaknesses existed in the Agency's process for preparing financial statements. (2)
As of September 30, 1998, management had not approved security plans for seven
financial or mixed financial systems, and the approved security plans for the
remaining eight systems did not comply with the requirements of OMB Circular A-
130, Management of Federal Information Resources. As a result, the Agency
lacked reasonable assurance that existing controls would prevent unauthorized
disclosure or manipulation of data, or the loss of data in the event of a disaster or
accidental or intentional damage.
During our fiscal 1997 financial statement audit, we also reported security planning
as an FFMIA non-compliance issue. At that time, EPA did not have security plans.
Subsequently, EPA developed a remediation plan and completed security plans for
its core financial systems. However, weaknesses in these security plans combined
with missing mixed financial system security plans continued to place the Agency in
noncompliance with FFMIA.
We recommended the Chief Financial Officer (CFO) update procedures for
preparing financial statements, establish quality review processes, and develop
reports for annual reviews of obligations that highlight older open obligations.
We also recommended the CFO develop a remediation plan to address the critical
security controls outlined in our report.
OFFICE OF INSPECTOR GENERAL - PAGE 10
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Agency Action
We issued the final report (99B0003) to the CFO on September 28, 1999. In
response to the draft report, the CFO indicated her office is committed to continued
improvements in financial management with specific emphasis on improving the
process that produces the Agency's financial statements. With respect to FFMIA
compliance, the CFO believes the Agency is in substantial compliance, and steps are
' being taken to remedy the deviations from procedural requirements we noted. The
Agency's response to our final report is due by December 28, 1999.
EPA is responsible for reassessing the safety of older pesticide registrations against
modern health and environmental testing standards. The Food Quality Protection
Act (FQPA) requires tolerances (the maximum legal limit of a pesticide allowed on
food) to be reassessed as a part of the reregistration program. EPA deposits fees for
reregistration and tolerance activities into the Pesticides Reregistration and
Expedited Processing Fund (FIFRA Fund). Each year the Agency prepares FIFRA
financial statements that include information about EPA's progress in reregistering
pesticides and reassessing tolerances.
The fiscal 1998 FIFRA financial statements were fairly presented. However, we
identified weaknesses in the Agency's reporting of its performance measures.
FQPA mandates that EPA reassess, over a 10 year period, nearly 10,000 existing
tolerances and tolerance exemptions, giving priority to those pesticides posing the
greatest possible risk. During fiscal 1998, tolerances were manually tracked by
program officials within one of the four divisions that reassess tolerances. As a
result, the Agency could not be assured it had captured all of its program
accomplishments. In addition, the Office of Pesticide Programs needed to report the
program accomplishment data required by FQPA more timely. FQPA requires we
audit this data by March 1 of the subsequent year. However, as of September 1999,
the data had not been published. Further, the performance information included in
the FIFRA financial statements did not include all of the information FQPA requires
the Agency to report.
We recommended the Office of Pesticide Programs develop a standardized process
for compiling data to ensure data reported to Congress, the public and EPA's
stakeholders is accurate, complete and timely. We also recommended the office
incorporate the additional FQPA required data into its annual financial statements.
Agency Action
The final report (9910283) was issued to the CFO and the Acting Assistant
Administrator for Prevention, Pesticides, and Toxic Substances on September 27,
1999. In response to the draft report, the Acting Deputy Director for Pesticide
Programs reported the office had developed and was implementing standardized
procedures for annually tracking and reporting on its program accomplishments. In
addition, the office plans to compile all of the FQPA required data within 30 days
after the end of the year and include the data in the FIFRA financial statements. A
response to the final report is due by December 27, 1999.
PAGE 11 - APRIL 1,1999 THROUGH SEPTEMBER 30,1999
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Superfund Special
Accounts Severely
Understated
During fiscal 1999, EPA was implementing costs accounting procedures to align its
budget and accounting data with data about its environmental results. We continued
to work with the Agency on this project by participating in a work group and
reviewing draft procedures. We provided to Agency managers suggestions for
strengthening controls and ensuring consistent, reliable and useful data to use in
carrying out their environmental programs.
In October 1995, EPA announced its intention to encourage greater use of special
accounts as a means to ensure that settlement funds received, and interest earned,
were available for future response actions for a specific site. This administrative
reform assists in providing an incentive for early settlement with Potentially
Responsible Parties (PRP) and, thereby, reducing litigation costs. Through June
1998, 112 special accounts with settlement receipts of $383 million, an additional
$64 million in earned interest, and $41 million in disbursements. Since the reform
was implemented, the number of accounts opened increased 35 to 112 or 320
percent, with continued growth expected in the future.
We found that EPA's general ledger balances did not agree with its special account
data base, earned interest had not been posted for six months, there was inconsistent
use of the accounts between regions, and PRP settlement documents did not always
delineate between what should be past or future cost receipts. General ledger
balances were understated by $93 million in settlement receipts, $8 million in
earned interest, and $96 million in disbursements. Also, regional personnel were not
always aware of special accounts.
Of the PRP settlement documents reviewed, 26 percent did not clearly delineate
between past and future cost payments. EPA has long recognized this problem.
EPA policy required that cost recoveries be deposited to the Superfund Trust Fund
and future cost receipts be deposited to Superfund special accounts. If settlement
documents did not specify receipts as either past cost recoveries or future cost funds,
Agency personnel had difficulty in determining where receipts should be deposited
and how they should be used.
We made recommendations to the Chief Financial Officer (CFO) and to the
Assistant Administrator for Enforcement and Compliance Assurance (OECA) that
would improve the use and administration of special accounts.
Agency Action
The final report (1999-P00214) was issued to the CFO and Assistant Administrator
for OECA on September 28, 1999. In response to the draft report, the CFO agreed
with our recommendations and provided planned corrective actions. The CFO has
begun reconciling the special account general ledger accounts. OECA agreed to
instruct regional staffs about special accounts. A recent Office of General Counsel
opinion indicated that EPA has the legal authority to retain cost recoveries in a
special account. Therefore, delineation of past and future costs in settlement
agreements may no longer be an issue. A response to the final report is due
December 27, 1999.
OFFICE OF INSPECTOR GENERAL - PAGE 12
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Assistance Agreement Audits and Investigations
EPA Paid In Full
For Limited Work
Completed Under a
Grant
Regional PPGs
Implementation
Needs
Improvement to
Achieve Program
Goals
With Congressionally earmarked funds, EPA's Office of Small and Disadvantaged
Business Utilization (OSDBU) awarded the National Association of Minority
Contractors (NAMC) a grant to assess the adequacy often state programs for
making contracting opportunities to small and disadvantaged contractors, and to
provide 10 conferences to inform contractors of impending EPA contracting
opportunities. Although NAMC completed only a small portion of the required
work, OSDBU allowed NAMC to draw down all of the $750,000 in grant funds.
This occurred in part because OSDBU did not adequately monitor NAMC's
performance.
Moreover, EPA approved an amendment to the grant allowing NAMC to replace
conferences with "needs assessments." EPA is allowed to receive only incidental
benefit from a grantee's efforts. Had EPA adequately monitored NAMC's work, it
would have realized that NAMC conducted "needs assessments" primarily at EPA
regions, and that EPA received more than incidental benefit from this work. As a
result, EPA allowed NAMC to inappropriately conduct contract work under the
grant.
We recommended that EPA project officers ensure recipients comply with the terms
of the agreement; that the draw down of federal funds is proportional to the
recipients' rate of progress; and that EPA monitor recipients' work to ensure that
contract work is not completed under a grant.
Agency Action
We issued the final report (1999-00213) to the Directors of OSDBU and Grants
Administration Division on August 23, 1999. In response to the draft report, the
Agency partially agreed with our findings and recommendations. The Agency
contends that it cannot ensure draw down of funds is proportional to recipients' rate
of progress. A response to the final report is due by November 22, 1999.
Performance Partnership Grants (PPG) is a multi-program grant made to a state or
tribal agency from funds previously provided only through grants for individual
environmental programs. PPGs are intended to: (1) reduce recipients' administrative
burdens and costs, (2) provide recipients flexibility, (3) strengthen partnerships, and
(4) most importantly, improve environmental results.
We completed three separate audits of PPGs in Regions 4, 6, and 8. Each of the
three regions could have more effectively implemented its PPG program. In Region
4, some grant recipients had misconceptions about the benefits and requirements
which discouraged them from participating in the program. Regional and state
officials in Region 6 did not always agree on individual roles and responsibilities
regarding PPGs, especially enforcement. In Region 8, some staff disagreed with
how senior regional management chose to implement the program and did not
actively participate in the PPG process.
PAGE 13 - APRIL 1,1999 THROUGH SEPTEMBER 30,1999
-------
While recipients have realized some administrative savings, flexibility was limited,
partnerships needed strengthening, and environmental results were unknown or
could not be demonstrated. Some recipients did not realize anticipated
administrative savings because of state reporting requirements. Recipients took
limited advantage of PPG flexibility because funds were generally viewed as
insufficient to address both core program requirements and other state
environmental priorities. In Regions 6 and 8, disagreements between regional and
state officials weakened the partnership for some programs, but generally
partnerships had improved. In all three regions, PPG work plans continued to
contain primarily output measures rather than outcome measures resulting in regions
having difficulty demonstrating improved environmental performance. Recipient
and regional officials recognized the need for a better mixture of output and
outcome measures, but cited barriers as lack of resources, baseline data, and good
examples of outcome measures.
All three regions needed to improve PPG work plan accountability by clearly
defining PPG commitments. Without work plans that clearly demonstrate adequate
accountability, regions and recipients could not determine or demonstrate improved
environmental performance. The regions needed to ensure required core
performance measures were included or clearly identified in the work plans.
We recommended that each Regional Administrator develop a strategy to address
the barriers to accomplishing the four PPG program goals within their region. We
also recommended that the regions develop work plans with recipients that include a
better mixture of output and outcome measures and clearly identify core
performance measures.
Agency Action
The final reports were issued to the respective Regional Administrators: Region 4
on September 27, 1999, Region 6 on September 22, 1999, and Region 8 on
September 29, 1999. In response to the draft reports, the Regional Administrators
for Regions 6 and 8 generally agreed with the majority of the recommendations.
Region 4 did not provide written comments to the draft report. Responses to all
three final reports are due in December 1999.
Region 10 Needs to
Improve its
Administration of
WESTAR Grants,
and Cost
Questioned
The Western States Air Resources Council (WESTAR) is a nonprofit association of
state air regulatory agencies created to discuss and resolve regional air issues of
common concern. Region 10 awarded three grants to WESTAR under Section 103
of the Clean Air Act (CAA). Among other uses, Section 103 authorizes grant
awards to nonprofit organizations to conduct training for individuals related to the
causes, effects, extent, prevention, and control of air pollution.
Of the $3,217,677 WESTAR claimed under the three grants, we questioned
$907,168 of ineligible and unsupported costs. The majority of the costs questioned
relate to non-training activities, including inspections and emissions inventories
which are not authorized under CAA Section 103, but are the responsibility of EPA
or the selected air pollution control agencies. Also, we questioned the costs
associated with the Pollution Prevention Permitting Pilot Program because it is not
authorized under Section 103.
OFFICE OF INSPECTOR GENERAL - PAGE 14
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We questioned the costs that WESTAR budgeted as indirect cost, but claimed as
direct costs without EPA's prior approval as required by Federal regulations. The
claimed costs were adjusted for program income and credits and rebates which
WESTAR had not credited to the grants.
We identified a number of Region 10 grant award and administration weaknesses
which caused or contributed to findings in the audit of WESTAR or were contrary
to EPA policies/procedures or good grants management practices. As a result, we
issued an advisory report to Region 10. To reduce financial losses and legal
vulnerabilities, we recommended that Region 10:
(1) assure that grants include only tasks authorized under Section 103 of the
CAA.
(2) award grants and amendments that exclude tasks that should have been
obtained under contract where the tasks are for the direct benefit of EPA, or
EPA directs the work of WESTAR's subcontractor;
(3) avoid direct influence in matters related to WESTAR's
subcontract award and administration responsibilities;
(4) eliminate like tasks with overlapping periods of performance;
and
(5) eliminate grant provisions that permit both the direct and
indirect charging of administrative activities.
In response to our draft reports, WESTAR and Region 10 contended that the
projects questioned were eligible under the Clean Air Act and further that the work
was appropriately funded as a grant, not a contract. WESTAR generally agreed to
correct its accounting and procurement internal control weaknesses. Region 10
agreed to implement recommendations in our advisory report for improving grant
management practices.
PAGE 15 - APRIL 1,1999 THROUGH SEPTEMBER 30, 1999
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Contract Investigations
Environmental
Company and
President Charged
With Defrauding
Customers
On April 22, 1999, Environmental Systems & Technologies, Inc. (EST), of
Blacksburg, Virginia, and its president and owner, Jack C. Parker, were indicted in
U.S. District Court, Western District of Virginia. The indictment charges EST and
Parker with conspiracy, making false statements, submitting false claims, and mail
fraud. EST, an environmental company specializing in the development and
application of computer-aided technology to assess and remediate soil and
groundwater contamination, and Parker allegedly engaged in a scheme to defraud
their customers by mischarging and over billing. Parker is charged with directing
and encouraging his employees to falsify their time sheets by mischarging hours
spent on a particular project in order to maximize the hours spent on each customer's
contract to receive full payment under the contract regardless of the actual work
accomplished. EST, as a subcontractor to IT Corporation (IT) on a contract with
EPA, allegedly mischarged 123 hours on timesheets it submitted to IT which
submitted the alleged false claim to EPA for payment.
Chemist and
Supervisor Pled
Guilty to
Falsifying
Laboratory
Analyses
On July 21, 1999, Valerie Smith, a laboratory chemist, and Mark Bevan, a
laboratory supervisor, each pled guilty in United States District Court, Eastern
District of North Carolina, to making a false statement and aiding and abetting
others in the commission of making a false statement. In May 1999, Smith and
Bevan, employees of CompuChem Environmental Corporation of Gary, North
Carolina, were charged with conducting improper gas chromatograph/mass
spectrometer analyses on samples taken from hazardous waste sites nationwide and
falsely certifying that the analyses complied with all EPA contract requirements.
The EPA relies on the testing data provided by laboratories participating in the
Contract Laboratory Program to assess threats to public health and the environment
and to determine where and when remedial action is needed.
OFFICE OF INSPECTOR GENERAL - PAGE 16
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Employee Integrity Investigations
Former EPA
Employee
Sentenced to
Prison, Home
Detention, and
$56,197 in
Restitution
On June 16, 1999, Gwendolyn Wilder Manson was sentenced in U.S. District Court,
District of Maryland, to serve 4 months in prison, 3 years probation which includes
4 months of home confinement, and to pay $56,197.18 restitution. The restitution
will be made to EPA in the amount of $53,997 and to two private individuals in the
amount of $1,200 and $1,000, respectively. Under the restitution schedule, Manson
will forfeit to EPA her interest in her retirement account and Thrift Savings Plan. In
March 1999, Manson pled guilty to one count of theft of government property.
While an EPA employee, the defendant, a GS-14 Information Management
Specialist, made unauthorized purchases of computers and computer-related
equipment using a Government-sponsored business account VISA card. She also
stole computers that were legitimately purchased for EPA. Manson then sold the
purchased and stolen computers and equipment for cash for personal use. The sales
were made to local pawn shops and individuals. In two instances, co-workers were
victimized by the defendant selling them converted equipment that the employee
represented as personal property. Investigative efforts have led to the recovery of
over $10,000 worth of the equipment from local pawn shops and individuals. Based
upon the facts disclosed by the OIG investigation, Manson was terminated from
employment with EPA. ^^
Former Employee
Sentenced to
Probation, Home
Detention, and to
Repay $31,000
Employees
Charged With
Conspiracy,
Obstruction of
Justice, and
Perjury
On April 28, 1999, Rochel Haigh Blehr, a former EPA employee, was sentenced in
U.S. District Court, Northern District of Georgia, to serve 5 years probation which
will include 6 months of home confinement; perform 100 hours of community
service; pay $25,000 in restitution; and pay a $6000 fine. In January, Blehr pled
guilty to a one count information charging her with making a false statement to
obtain benefits under the Federal Employees' Compensation Act (FECA). Blehr
had filed a benefits claim for loss of work due to exposure to formaldehyde in the
office environment. Blehr, a former EPA computer data technician, is the sole
owner and publisher of a local newspaper incorporated in the State of Georgia as a
domestic for profit corporation. The information charged that Blehr falsely
represented that she had turned over all responsibilities for overseeing the
newspaper to a vice president of the company when, in fact, she knew she had not
done so. This investigation was conducted jointly by the EPA OIG and the
Department of Labor OIG.
On August 24, 1999, an EPA attorney and an EPA environmental specialist were
indicted in United States District Court, Eastern District of Wisconsin, on charges of
conspiracy, obstruction of justice, and perjury. The indictment charges that the
defendants conspired to deceive the federal courts by providing false statements,
affidavits, and testimony in conjunction with separate lawsuits brought by the State
of Wisconsin and other parties challenging the EPA's decisions to grant the
Menominee Indian Tribe (Menominee), the Oneida Tribe of Indians of Wisconsin
(Oneida), and the Lac du Flambeau Band of Lake Superior Chippewa Indians (Lac
du Flambeau) TAS status (i.e., treat in the same manner as a state) as provided for
under section 518 (a) of the Clean Water Act. The Menominee, Oneida, and Lac du
Flambeau sought TAS status in order to develop a water quality standards program
to determine the quality of surface waters within their respective reservations. On
January 25, 1996, EPA approved the three applications for TAS status. The
PAGE 17 - APRIL 1,1999 THROUGH SEPTEMBER 30, 1999
-------
indictment charges that the primary object of the alleged conspiracy and subsequent
criminal acts was to deceive the federal courts into believing that three documents
(factual analyses of substantial effects of non-Indian activities within each
applicant's reservation) were created in January 1996 and were relied on by the EPA
to make its decisions when, if fact, the defendants created these documents in May
1996 after the lawsuits were filed. The TAS lawsuits were subsequently dismissed
and the EPA was ordered to pay the State of Wisconsin and other parties
approximately $389,000 in attorney's fees and court costs.
Former Employee
Received a
Suspended
Sentence,
Probation, and
Ordered to Pay
Restitution
On May 11, 1999, Michelle Morris, former secretary, Federal Facilities Restoration
and Reuse Office, Office of Solid Waste and Emergency Response, pled guilty in
Superior Court of the District of Columbia to one count of second degree theft. As
secretary, one of Morris' duties was to process claims for reimbursement for
expenditures relating to official business. During November and December of 1998,
Morris submitted seven fraudulent claims for reimbursement on which she forged
variously the signatures of the claimant, approving official, or the initials
authorizing her to pick up the cash reimbursement from the imprest fund. Three of
the fraudulent claims, containing three forgeries, were discovered by office
personnel before they were approved. Morris received cash payments on the other
four fraudulent claims. Based on these facts, an arrest warrant had been issued in
April 1999 charging Morris with uttering. In response to the warrant, Morris
voluntarily reported to the Metropolitan Police Department, was placed under arrest,
and was released on personal recognizance while she awaited disposition of the
case. On June 21, 1999, Morris received a 60 day suspended sentence, two years
probation, and was ordered to pay restitution and a special assessment that will be
applied to the fund for Victims of Violent Crime. Morris resigned from EPA
effective May 13, 1999. This investigation was coordinated with the Metropolitan
Police Department, Washington, D.C.
Former Temporary
Employee
Sentenced for
Personal Long
Distance Calls
From Work
On May 5, 1999, Carlos Antonio Ramirez, a former student temporary employee in
the Facilities Program Office, Region 9, was sentenced in U.S. District Court,
Northern District of California, to three years probation, 83 hours of community
service, and ordered to pay $17,477 restitution to EPA and a $25 special assessment.
The sentencing followed acceptance of Ramirez' guilty plea to a misdemeanor
charge of conversion of property by a government employee. An internal review by
office personnel discovered that an inordinate number of international calls were
placed to Nicaragua from Ramirez' work site. Ramirez, a Nicaraguan native,
acknowledged that he had placed the unofficial calls which amounted to the total
restitution ordered.
OFFICE OF INSPECTOR GENERAL - PAGE 18
-------
Hotline Activities
During this reporting period, the OIG Hotline opened 67 new cases and closed 69,
including eight from the previous reporting period. The pie chart shows the
distribution of the 67 opened cases.
Hotline Case Referral Distribtuion
Hqrs. Offices
4
Other Federal Agency
1
OIG Investigative Offices
13
Criminal Investigations Division
5
OIG Audit Divisions
27
Regional Program Offices
17
Complaints continue to be reviewed by a team of auditors, evaluators, and criminal
investigators as conditions warrant. All matters significant enough to require a
response are monitored until the necessary resolution action is planned or taken.
Complaints are analyzed to identify trends which should be considered in the audit
and investigative planning processes. During the next reporting period, we will
complete our efforts to revamp and expand the OIG Hotline Web page.
PAGE 19 - APRIL 1,1999 THROUGH SEPTEMBER 30,1999
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Section 2-Fostering Strong Working Relationships
Advisory and Assistance Services
Assistance
Provided to
Improve Start-2
Contracts
The OIG conducted a review to assist Agency management in developing contract
provisions and a statement of work to foster more effective START-2 (Superfund
Technical Assessment and Response Team) contract performance. START
contracts support EPA's site assessment, response, prevention and preparedness, and
some technical support activities. START-2 is the second round of these contracts.
We suggested EPA address several areas during the START-2 acquisition process to
help optimize contractor performance:
EPA should not dictate the use of dedicated staff in START-2. Dedicated
staff may not always be kept busy and use of dedicated staff does not further
OMB's performance based-strategy of specifying the tasks to be performed
rather than the staff or method to perform the task. The Agency believes
some dedicated staff is necessary but will work to reduce the use of
dedicated staff based on the contract requirements.
EPA should develop incentives to encourage exceptional contractor
performance. The Agency believes that the performance-focused statement
of work and the use of multiple awards provide the contractor with
sufficient incentives to perform well.
EPA should include contract provisions which address the requirement for
the contractor to implement an EPA approved quality management plan. It
is important to have a system in place to ensure the quality of the data
provided under the contract since the data is used as the basis for EPA's
decision making and enforcement actions. The Agency included data
quality requirements in the contract clauses and solicitation.
Performance
Partnership Grant
Joint Review
Identified Areas
for Improvement
EPA designed Performance Partnership Grants (PPGs) to encourage improved
environmental performance by linking program goals with outcomes and by
increasing the use of environmental indicators and performance measures.
In July 1999, the OIG and EPA Region 10 completed a Joint Management
Assistance Review of the 1998 Alaska PPG. The purpose was to determine the
effectiveness of the Performance Partnership approach and whether it improved
environmental results, provided the state with greater flexibility, improved public
understanding of environmental conditions and choices, and enhanced
accountability to the public and taxpayers.
Although sufficient time had not elapsed to determine if environmental results were
improved, the Performance Partnership approach provided the state with greater
flexibility and fostered better working relationships between the region and the state.
The joint review identified several areas needing improvements: (1) ensuring that
EPA priorities were included in agreements and that agreed upon priorities were
completed, (2) involving the public in establishing priorities, (3) including
applicable Core Performance Measures, and (4) accumulating data for reporting on
results.
OFFICE OF INSPECTOR GENERAL - PAGE 20
-------
The Committee on Integrity and Management Improvement (CIMI) was established
by EPA Order 1130.1, dated August 9, 1984, to coordinate the Agency's effort to
minimize the opportunities for fraud, waste and mismanagement in EPA programs
and activities, and to advise the Administrator on policies to improve the efficiency
and effectiveness of the Agency. CIMI strives to continually enhance employee
awareness and understanding of various Agency policies and procedures and to
improve the economy, efficiency, and effectiveness of Agency operations. Chaired
by the Inspector General, the Committee is comprised of senior managers from EPA
program and regional offices.
CIMI sponsored a series of events and exhibits in observance of Public Service
Recognition Week to convey to EPA employees our appreciation for their
remarkable contributions to protecting public health and the environment and their
commitment to the highest standards of Government service. The highlight of these
events was a special ceremony honoring the EPA work force, at which Deputy
Administrator Peter Robertson presented the "EPA Employee Recognition Award"
to 28 employees from 11 Headquarters offices whose outstanding community
service has helped to foster a positive image of Federal employees. Two group
awards were also presented. Inspector General Nikki L. Tinsley hosted the
ceremony; several EPA employees provided musical entertainment; and Norman O.
Taylor, Director of the Combined Federal Campaign of the National Capital Area,
provided the keynote address. Following the ceremony, the Administrator and the
Inspector General hosted a reception for the 1999 awardees and ceremony attendees.
Jeff Hart, Audit Manager for the Denver Office, was honored on June 23, 1999 at
the Association of Government Accountants (AGA) Professional Development
Conference in New Orleans. AGA National President Tom Roslevitz presented Jeff
with an award for exceptional service as AGA's Vice President of the Southwestern
Region.
PAGE 21 - APRIL 1, 1999 THROUGH SEPTEMBER 30, 1999
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Review of Region 5
Laboratory
Operations
During Fiscal Year 1998, Region 5 program officials identified questionable data
being produced by their Central Regional Laboratory (CRL). Upon further
inspection by the Region it was determined that data quality and chain of custody
were compromised when CRL chemists circumvented the lab's standard operating
procedures. As a result, data were provided to the regional program offices for
decision making and enforcement actions that were of unknown quality and
indefensible. In September 1998, the Inspector General's Office of Investigations
(OIG, OI) was informed of the alleged improprieties regarding the laboratory data.
OI initiated a criminal investigation and recommended that the laboratory cease
accepting samples until an independent management and technical audit could be
performed at the laboratory, hi September 1998, the Region 5 Quality Assurance
Core Group initiated a Management Systems Review (MSR) of the laboratory's
operations. This review was undertaken, in part, to address the concerns raised
regarding the data produced by the lab. The MSR identified 23 areas of concern
grouped into 6 major finding areas: 1) need to strengthen management of the lab, 2)
a need for improved communication, 3) a need to strengthen the lab's policies and
procedures, 4) a lack of understanding of quality assurance and quality control, 5)
problems with chain of custody as well as sampling and data handling problems,
and 6) a need for improved training for lab personnel. To address these findings,
laboratory management developed an action plan which included 41 actions to
correct the problems identified.
hi May 1999, Region 5 requested that the OIG, Office of Audit conduct an audit of
the CRL to determine the status, and to the extent possible, the effectiveness, of the
corrective actions taken to address the findings from the MSR, and to identify
actions the laboratory might take to help restore the integrity of the lab. Our review
showed that while some actions have been completed, many had either not been
addressed or did not adequately address the findings from the MSR. Of the 41
corrective actions planned, about 30 remain to be completed. As a result, many of
the findings identified by the MSR continue to exist and the quality of the results
that the lab is producing remain questionable.
In September 1999, the OIG, Office of Audit briefed the Regional Administrator
and provided recommendations to help the Region address the remaining corrective
actions from the MSR and help to restore the integrity of the lab. The Region
agreed with the recommendations and on October 12, 1999, provided a written plan
outlining the actions ongoing and planned to address the recommendations.
M
OFFICE OF INSPECTOR GENERAL - PAGE 22
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Section 3-Audit Report Resolution
Status Report on Perpetual Inventory of Reports in Resolution Process for Semiannual Period Ending
September 30,1999
Report Category
A. For which no
management decision was
made by April 1, 1999
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 March 31,1998
Reports for which no
management decision was
made within six months of
issuance
No.
of
Rpts
119
252
144
227
62
165
47
Report Issuance (Dollar Value in
Thousands)
Questioned
Costs
$153,871
11,168
0
165,039
67,511
97,528
84,648
Recommended
Efficiencies
$1,658
95
0
1,753
1,658
95
0
Report Resolution
Costs Sustained (Dollar Value in Thousands)
To Be Recovered
$24,415
As Efficiencies
$1*58
As part of the OIG reinvention initiative, the OIG was in the process of switching to a new Performance and Accountability
System during this reporting period. Until the system is thoroughly tested, some of the statistics reported may not represent the
final results of our operations as of the time the report was printed.
PAGE 23 -APRIL 1,1999 THROUGH SEPTEMBER 30,1999
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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. Auditees frequently
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 30,1999
Report Category
A. For which no management decision was
made by March 31, 1999 **
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, 1999
Reports for which no management decision was
made within six months of issuance
Number of
Reports
62
33
95
39
31
IS
56
30
Questioned Costs* (Dollar
Value in Thousands)
$153,871
11,168
165,039
67,511
24,415
43,096
97,528
84,648
Unsupported Costs
(Dollar Value in
Thousands)
564,449
3,063
67,512
40,141
708
39,433
27^71
21,412
* Questioned costs include the unsupported costs.
** As part of the OIG reinvention initiative, the OIG was in the process of switching to a new Performance and Accountability
System during this reporting period. Until the system is thoroughly tested, some of the statistics reported may not represent the
final results of our operations as of the time the report was printed.
OFFICE OF INSPECTOR GENERAL -PAGE 24
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Table 2 - Inspector General Issued Reports With Recommendations That Funds Be Put To Better Use
for Semiannual Period Ending September 30,1999
Report Category
A. For which no management decision was made by April 1, 1999
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
(iii) Dollar value of non-awards or unsuccessful bidders
D. For which no management decision was made by March 31, 1999
Reports for which no management decision was made within six
months of issuance
Number of
Reports
1
1
2
1
0
0
1
1
0
Dollar Value (In
Thousands)
$1,658
95
1,753
1,658
0
0
1,658
95
0
* As part of the OIG reinvention initiative, the OIG was in the process of switching to a new Performance and Accountability
System during this reporting period. Until the system is thoroughly tested, some of the statistics reported may not represent the
final results of our operations as of the time the report was printed.
Audits With No Final Action As Of 9/30/99-Which are over
365 Days Past OIG Report Issuance Date
Audits
Programs
Assistance Agreements
Contract Audits
Single Audits
Financial Statement Audits
TOTAL
Total
44
113
36
7
5
205
Percentage
21.5
55.1
17.6
3.4
2.4
100
PAGE 25 -APRIL 1,1999 THROUGH SEPTEMBER 30,1999
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Summary of Investigative Results
Summary Of Investigative
Activities
Pending Investigations as
of March 31, 1999
New Investigations
Opened This Period
Investigations Closed
This Period
Pending Investigations as
of September 30,1999
204
34
46
192
Prosecutive and
Administrative Actions
In this period, investigative efforts
resulted in seven convictions and
Fifteen indictments.* Fines and
recoveries, including those
associated with civil actions,
amounted to $159,302. Sixteen
administrative actions were taken as
a result of investigations.
Resignations 3
Terminations 1
Suspensions &
Debarments 5
Compliance
Agreement 4
Other 3
TOTAL 16
* Does not include indictments
obtained in cases in which
we provided investigative
assistance.
Profiles of Pending Investigations by Type
General EPA Programs
Total Cases = 123
42
Superfund
Total Cases = 69
DContract ^Assistance Agreement ^Employee Integrity
fflProgram Integrity raOther
OFFICE OF INSPECTOR GENERAL - PAGE 26
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OIG MAILING ADDRESSES and TELEPHONE NUMBERS
OTG HOTLINE 1-888-546-8740 or (202} 260-4977
Headquarters
Environmental Protection Agency
Office of Inspector General
401M Street, SW(2441)
Washington, DC 20460
(202)260-3137
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
JFK Federal Building (OIG)
(office at 1 Congress St)
Boston, MA 02203
Audit: (617) 565-3160
Investigations:^ 17) 565-3928
Chicago
Environmental Protection Agency
Office of Inspector General
77 West Jackson Boulevard
13th Floor (IA-13 J)
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) 366-4360
Investigations: (312) 353-2507 (Chicago)
Dallas
Environmental Protection Agency
Office of Inspector General (6OIG)
1445 Ross Avenue, Suite 1200
Dallas, TXs 75202-2733
Audit: (214) 655-6621
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
Office of Inspector General
290 Boardway, 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, NC
Environmental Protection Agency
Office of Inspector General
Catawba Building
Highway 54, Mail Drop 53
Research Triangle Park, NC 27711
Audit: (919) 541-2204
Investigations: (919) 541-1027
Sacramento
Environmental Protection Agency
Office of Inspector General
650 Capitol Mall, Suite 6309
Sacramento, CA95814
Audit: (916) 498-6530
Investigations: (415) 744-2465 (SF)
San Francisco
Environmental Protection Agency
Office of Inspector General
75 Hawthorne St (1-1)
19th Floor
San Francisco, CA 94105
Audit: (415) 744-2445
Investigations: (415) 744-2465
Seattle
Environmental Protection Agency
Office of Inspector General
12006th Avenue, 19th Floor
Suite 1920, M/S OIG-195
Seattle, WA 98101
Audit: (206) 553-4033
Investigations: (206) 553-1273
PAGE-27 APRIL 1, 1999 THROUGH SEPTEMBER 30, 1999
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