\
Office of Inspector General
Report of Audit
Ohio LUST Cooperative Agreements
E3PLD5-05-0134-6100095
February 5, 1996
-------
Inspector General Division
Conducting the Audit:
Region Covered:
Regional Offices Involved:
Northern Audit Division
Chicago, Illinois
Region 5
Resource Management Divsion
Office of UST/LUST
-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF THE INSPECTOR GENERAL
NORTHERN DIVISION
77 WEST JACKSON BOULEVARD
CHICAGO, IL 60604-3590
February 5, 1996
MEMORANDUM
SUBJECT: Audit Report No. E3PLD5-05-0134-6100095
Ohio LUST Cooperative Agreements
FROM: ^Anthony C. Carrollo
Divisional Inspector General for Audits
Northern Division
TO: Valdas V. Adamkus
Regional Administrator
Region 5
This report contains findings and corrective actions Region 5 has proposed to take from
our review of Ohio's management of LUST cooperative agreements.
This report contains findings that describe problems the Office of Inspector General
(OIG) has identified and corrective actions Region 5 has taken or proposes to take.
The audit report represents the opinion of the OIG. Final determination on matters in
the audit report will be made by EPA managers in accordance with established EPA
audit resolution procedures. Accordingly, the findings described in the audit report do
not necessarily represent the final EPA position.
Action Required
In responding to the draft report, Region 5 provided corrective actions, including
milestone dates, for each of the findings and recommendations. Therefore, we are
closing this report in our tracking system. However, please track any planned
corrective actions in the Management Audit Tracking System.
We have no objections to the further release of this report to the public.
Should you or your staff have any questions or need additional information, please
contact Audit Manager Charles Allberry at (312) 353-4222.
U.S. environmental Fraction A.vr.fy
Region 5,U'?:?,'V iVL-10.!)
77 Wo^t Ja^L-ro C?u!e^yj, 12th Floor
Chicago, IL 60504-3690
-------
-------
Ohio LUST Cooperative Agreements
EXECUTIVE SUMMARY
Ohio's Bureau of Underground Storage Tank Regulation (BUSTR) was doing a good
job of managing leaking underground storage tank (LUST) activities and directing its
limited resources to cleanup high priority sites. Specifically, BUSTR used two systems
to identify and cleanup high priority sites. The first system identified emergency sites
requiring immediate action. The second evaluated the long term effects of each
release. These systems allowed BUSTR to identify and cleanup the sites that posed the
greatest threat to human health and the environment.
BUSTR needs to make improvements in the area of reporting of program
accomplishments and cost recovery. BUSTR did not accurately report program
accomplishments, including the number of confirmed releases, cleanups initiated,
cleanups completed, and sites with enforcement actions. Also, BUSTR had not
recovered federal and state funds spent to cleanup 121 LUST sites and did not keep
complete cost documentation records.
AGENCY COMMENTS AND ACTIONS
The Regional Administrator, Region 5, had taken or agreed to take the actions needed
to address the findings in our report. The corrective actions include:
1. Meeting with BUSTR to obtain a better understanding of how to report program
accomplishments.
2. BUSTR's implementation of a new data management system to generate site
specific data to support reported accomplishments.
3. BUSTR's implementation, by June 30, 1996, of a comprehensive cost recovery
program including maintenance of cost documentation records.
For details on the purpose and background of the report, see page 1.
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
This page was intentionally left blank.
11
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
TABLE OF CONTENTS
EXECUTIVE SUMMARY i
CHAPTERS
1 INTRODUCTION
Purpose 1
Background 1
Scope and Methodology 2
Prior Audit Coverage 4
2 MANAGEMENT OF LUST RELEASES 7
Background 7
Resources Directed to High Priority Sites 7
More High Priority Sites Need Ranking 9
Requirement of 20 Assigned Sites 9
Conclusion 9
Draft Report Recommendations 10
Agency Actions 10
OIG Evaluation 10
3 IMPROVEMENTS NEEDED IN THE REPORTING
OF PROGRAM ACCOMPLISHMENTS 11
Background 11
LUST Activities Overstated 12
Conclusion 15
Draft Report Recommendations 15
Agency Comments and Actions 15
OIG Evaluation 16
4 COST RECOVERY PROGRAM NEEDED 17
Background 17
Cost Recovery Program 18
Cost Documentation Records 18
Conclusion 19
Draft Report Recommendations 19
Agency Actions 20
OIG Evaluation 20
111
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
TABLE OF CONTENTS
APPENDICES
1 Region 5 Response to Draft Report 21
2 Abbreviations 25
3 Distribution 26
IV
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
CHAPTER 1
INTRODUCTION
PURPOSE
The Office of Inspector General (OIG) has performed an audit of the State of Ohio's
administration of the Leaking Underground Storage Tank (LUST) program. We
performed our work in conjunction with LUST cooperative agreement (CA) audits
being performed by our Western Audit Division. Our objectives were to determine
whether:
• regions and states were directing resources to high priority sites and effectively
overseeing the cleanup of leaking underground storage tanks (tanks),
* accounting system and cost recovery procedures were adequate to ensure
recovery of LUST Trust Fund expenditures from responsible parties,1 and
• state reporting procedures assure accurate and timely reporting of LUST
program performance data.
BACKGROUND
In 1984 and 1986 Congress passed Underground Storage Tank legislation under Subtitle
I of the Resource Conservation and Recovery Act (RCRA). The Superfund
Amendments and Reauthorization Act (SARA) of 1986, which amended RCRA,
established the LUST Trust Fund to finance the cleanup of petroleum releases and
assure rapid and effective responses to the releases.
Tanks containing petroleum products are generally found at gas and service stations,
bus depots, and government facilities. In 1988, EPA estimated that the United States
had 5 to 7 million tanks, of which EPA regulated about 2 million.2 An estimated 15 to
25 percent of regulated tanks may be leaking. Leaks from tanks can cause fires,
explosions, and contamination of drinking water. The state of Ohio has about 60,000
1 Responsible parties are generally tank owners and operators.
2 The remaining tanks are mainly on farms and other locations where they contain heating oil for on-site
consumption. These tanks are exempted by law.
1
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
registered tanks. Since 1988, there have been about 17,000 confirmed releases from
tanks in Ohio.
Responsible parties are expected to pay for the cleanup of a release from a leaking
storage tank. However, if the responsible party is incapable of taking the corrective
action, the state can use trust fund monies to cleanup the release. States can then
attempt to recover the trust fund monies used to cleanup releases from the responsible
party. The state can then use the recovered funds to pay for future LUST activities.
The LUST program is primarily a state-run program. EPA provides funds to the states
through cooperative agreements, which also include a workplan describing the proposed
activities and outputs. States may use the trust fund monies to:
• cleanup releases,
• take enforcement action to compel responsible parties to cleanup releases,
• oversee responsible party activities,
• recover trust fund monies from responsible parties, and
• administer the LUST program.
Ohio's LUST program is administered by the Ohio Department of Commerce, State
Fire Marshall's Office, Bureau of Underground Storage Tank Regulation (BUSTR),
located in Reynoldsburg, Ohio.
Region 5's Office of UST/LUST is responsible for overseeing the state's activities.
Regional personnel provide oversight through bi-weekly phone calls, and mid-year and
year-end program reviews. The region also distributes guidance to the states.
SCOPE AND METHODOLOGY
During our audit, we focused on LUST activities completed under two CAs awarded in
FY 1994 and FY 1995. These CAs were selected because they were active during the
time of our audit.
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
CA Name
FY 1994 LUST Program
FY 1995 LUST Program
CA Number
L005987-05
L005987-06
Funds
Awarded
$2,548,680
$1,888,900
To accomplish our objectives, we reviewed EPA and BUSTR policies and procedures,
and EPA's FY 1994 and FY 1995 mid-year LUST program reviews. We also
interviewed responsible LUST program officials at EPA and BUSTR. As criteria we
used the Code of Federal Regulations (CFR) Title 40, Part 31; Office of Management
and Budget (OMB) Circular A-87; Office of Solid Waste and Emergency Response
(OSWER) Directives 9610.10A and 9650.10A; and the general and special conditions
contained in each cooperative agreement.
In planning and performing our audit, we considered relevant aspects of the internal
control structure in order to determine our auditing procedures. The significant
controls we reviewed included financial management, program accomplishments, cost
recovery, and management of LUST releases. For these internal controls, we obtained
an understanding of the relevant policies and procedures and whether they had been
placed into operation. The single audit report, prepared by the Ohio Auditor of State,
for the period of July 1, 1992 through June 30, 1993, did not identify any findings
related to BUSTR. Internal control weaknesses in the areas of reporting of program
accomplishments and cost recovery are discussed in chapters 3 and 4. Significant
weaknesses relating to financial management are discussed hi Report No. 5400095,
which is summarized on page 4, Prior Audit Coverage.
To determine whether BUSTR was directing resources to high priority sites, we
reviewed procedures for prioritizing and ranking potential cleanup sites. We reviewed
20 site files to determine if BUSTR provided the proper level of oversight and
effectively used its enforcement authority to get responsible parties to cleanup sites.
Each of the site files we reviewed were discussed with site coordinators.
In regards to cost recovery, we discussed with BUSTR officials their efforts to
establish a cost recovery program. We also reviewed BUSTR's cost documentation to
determine if all incurred costs were calculated on a site-specific basis.
To verify the accuracy of reported accomplishments, we reviewed BUSTR's quarterly
Strategic Targeted Activities for Results System (STARS) reports for January through
March 1995. We selected a statistical sample from a universe of 522 completed
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
cleanups using an 80 percent confidence level and a 10 percent precision level. The
universe of completed cleanups was obtained from BUSTR's database; however, we did
not perform any testing of the controls over the database. To verify the accuracy of
the reported accomplishments, we compared the information in the database to site
files.
We could not verify the accuracy of the number of cleanups initiated, confirmed
releases and sites with enforcement actions because BUSTR's database did not maintain
the site specific information to support the numbers reported to EPA. However, we
reviewed the process used to compute these numbers.
We conducted limited audit work on BUSTR's accounting system by reviewing the
supporting documentation for the first quarter FY 1995 financial status report. The
results of this review were discussed in Report No. 5400095, issued August 29, 1995,
to the Regional Administrator, Region 5, and are summarized below.
We issued two position papers to Region 5 and BUSTR on September 25, 1995, and a
third position paper to both offices on October 10, 1995. We discussed the position
papers with Region 5 on October 23, 1995, and with Ohio Department of Commerce
and BUSTR on October 27, 1995. BUSTR also provided additional information on
October 31, 1995, which was incorporated in the findings of our report.
The draft report was issued to the Regional Administrator, Region 5 on November 22,
1995. The Regional Administrator's response, dated January 24, 1996, is attached as
appendix 1, and is incorporated in the each of the chapters of the report.
We performed our audit in accordance with the Government Auditing Standards. 1994
Revision promulgated by the Comptroller General of the United States and included
tests of the accounting records and other auditing procedures as deemed necessary. We
conducted our fieldwork from May 24, 1995, to November 13, 1995. During our
fieldwork, we conducted audit work at BUSTR's office in Reynoldsburg, Ohio.
PRIOR AUDIT COVERAGE
BUSTR's financial management system was inadequate to support the costs it claimed
under LUST CAs with EPA. BUSTR's financial management system did not permit
the tracing of expenditures to establish that funds were being used hi accordance with
laws and regulations or allow for the preparation of accurate financial status reports.
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
Because of the significance of BUSTR's financial management system weaknesses, we
issued Report No. 5400095, recommending that the Regional Administrator, Region 5,
take immediate action to require BUSTR to submit documentation supporting future
costs claimed before disbursing Federal monies. We also recommend that the Regional
Administrator require BUSTR to:
1. Maintain time records for all employees.
2. Maintain documentation of employees charged to the cooperative agreement,
such that it will permit tracing of labor charges to supporting documentation.
3. Correct weaknesses in its accounting system so that it can generate accurate
financial status reports.
4. Repay the ineligible costs of $63,183.
5. Submit documentation to determine the eligibility of the $69,594 of unsupported
costs.
6. Submit documentation supporting the costs claimed on all past LUST CAs that
have not been closed out. Based on the documentation provided, Region 5
should determine the eligibility of the costs.
Since issuance of the report, BUSTR had taken the following actions to improve its
financial management system:
• since September 1995, all employees have been required to maintain time
records, and
• by January 31, 1996, BUSTR will implement a system that will produce the
necessary summary records to permit the tracing of labor charges to supporting
documents and provide accurate financial status reports.
Region 5 and the OIG are continuing to work to resolve the remaining issues relating to
the eligibility of costs claimed.
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
This page was intentionally left blank.
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
CHAPTER 2
MANAGEMENT OF LUST RELEASES
BUSTR did a good job of managing LUST activities and directing its resources to
cleanup high priority sites. Since more than 8,000 sites needed cleanup actions,
BUSTR used two systems to identify the most significant sites and took enforcement
actions to clean them up. BUSTR agreed to complete, by April 1996, the ranking of
all high priority sites.
BACKGROUND
OSWER Directive 9650.10A requires states to develop a priority system to address
LUST petroleum release sites. The system should address:
• releases that pose the greatest threat to human health and the environment, and
• sites for which the state cannot identify a solvent responsible party who will
undertake action properly.
The priority system ensures that trust fund monies provide the greatest positive impact
on human health and the environment
RESOURCES DIRECTED TO HIGH PRIORITY SITES
BUSTR effectively used two systems to identify and cleanup sites that posed the
greatest threat to humans and the environment. The first system identified emergency
sites requiring immediate action. The second evaluated the long term effects of each
release. By prioritizing sites, BUSTR was able to use its limited resources at sites that
posed the greatest risk.
Priority System
BUSTR assigned a priority of 1 or 2 to each release based on the immediate impact to
human health and the environment.
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
• Priority 1 (high priority) - emergency sites that presented imminent and
substantial threat to human health and the environment and safety due to
drinking water contamination and fire or explosion hazards.
• Priority 2 (low priority) - all other sites.
On priority 1 sites, BUSTR issued notice of violation letters to the responsible parties
requiring them to take immediate action to eliminate the threat. BUSTR closely
monitored the responsible parties cleanup activities on priority 1 sites. BUSTR also
required the responsible party to submit additional data to decide the necessary long
term corrective action. If responsible parties were not identified, BUSTR took
emergency response action to eliminate the imminent threat. For priority 2 sites,
BUSTR also issued notice of violation letters notifying responsible parties of their legal
responsibility to cleanup the site and requesting additional information. BUSTR did not
monitor cleanup activities on priority 2 sites.
The priority system allowed BUSTR to take short term remedial action against the most
significant sites. We reviewed case files for 10 priority 1 sites and found that BUSTR
or responsible parties took immediate action to address the release. By using the
priority system, BUSTR identified and responded to the most significant sites where
there was an imminent threat to human health and the environment.
Ranking System
BUSTR developed a second system to rank LUST releases based on the additional
information collected in response to the notices of violation. The system focused on
long term corrective action oversight at the most significant sites.
In January 1995, EPA approved BUSTR's use of a ranking system for LUST releases.
BUSTR developed a worksheet to assign a numerical ranking based on the incident's
impacts on (1) drinking water, (2) ground water, and (3) soil. The worksheet allowed
BUSTR to rank releases between 1 (low) and 60 (high), with a ranking of 20 or above
considered a high priority. The system helped BUSTR consider the release's overall
impact and assisted in assigning sites for corrective action oversight.
BUSTR was addressing high priority sites first. We reviewed the case files of 10 high
priority sites that BUSTR ranked 20 or above to evaluate its management of LUST
releases. In each file we found evidence that BUSTR issued corrective action letters
notifying responsible parties of their liability to cleanup the sites. Also, the files
showed that BUSTR site coordinators continually monitored the responsible parties
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
cleanup progress. BUSTR effectively used the ranking system to direct its limited
resources to the most significant sites.
MORE HIGH PRIORITY SITES NEED RANKING
BUSTR can improve its management of LUST sites by ranking high priority sites first.
BUSTR had over 8,000 releases that needed ranking, including more than 800 high
priority sites. As of June 1995, BUSTR had ranked over 1,000 sites. However,
BUSTR ranked both high and low priority sites instead of ranking just high priority
sites. As a result, BUSTR risked not assigning the most significant sites for oversight
first. Ranking high priority sites first ensures that BUSTR addresses the most
significant sites. BUSTR agreed to complete, by April 1996, the ranking of all high
priority sites.
REQUIREMENT OF 20 ASSIGNED SITES
The LUST cooperative agreement requires each site coordinator to oversee the cleanup
of at least 20 primarily high priority sites. BUSTR had a list of the top 20 assigned
sites for each site coordinator. However, the list did not represent the sites the
coordinators were working on or the highest priority sites. BUSTR had assigned about
280 sites to its site coordinators. Of these sites, about 100 were ranked as low
priorities with a ranking score below 20. We found that site coordinators were
generally not actively overseeing the low priority sites. Since our review found
BUSTR was adequately managing sites, Region 5 should reconsider whether the
requirement for assigning a specific number of sites to site coordinators is necessary.
Regardless of their list of assigned sites, site coordinators were taking action to oversee
or cleanup all high priority sites within their assigned geographic area.
CONCLUSION
BUSTR was doing a good job of using its resources to manage LUST releases.
BUSTR's two systems for (1) prioritizing and (2) ranking releases helped identify and
cleanup the most significant LUST releases. Consistent use of the systems helps ensure
cleanup of the most significant sites first.
9
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
DRAFT REPORT RECOMMENDATIONS
We recommended that the Regional Administrator:
1. Work with BUSTR to ensure it ranks, by April 1996, all high priority sites for
corrective action oversight.
2. Reconsider the workplan requirement to assign 20 sites to each site coordinator
for corrective action oversight.
AGENCY ACTIONS
Region 5 agreed to take the following actions in response to our recommendations:
1. BUSTR will complete, by June 30, 1996, the ranking of all high priority
corrective action sites.
2. Region 5 and BUSTR agreed to eliminate the requirement of 20 assigned sites.
PIG EVALUATION
Region 5's actions, when completed, will address the findings and recommendations.
10
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
CHAPTER 3
IMPROVEMENTS NEEDED IN THE REPORTING
OF PROGRAM ACCOMPLISHMENTS
BUSTR was not reporting program accomplishments in accordance with EPA
definitions. Actual accomplishments were less than what was reported for confirmed
releases, cleanups initiated, cleanups completed, and enforcement actions taken.
BUSTR has recognized that it needs to correct its methodology for reporting these
program accomplishments.
BACKGROUND
OSWER Directive 9650.10A requires states to submit quarterly progress reports
(STARS reports) on LUST program activities. Region 5 and EPA Headquarters used
the reports to:
• monitor program progress,
• provide program information to Congress, and
• determine states' share of LUST funding.
The CA required BUSTR to include, among other statistics, the following performance
data:
Performance
Measure
Confirmed
releases
Cleanups
initiated
Cleanups
completed
Enforcement
action
EPA Definition
State or local agency had verified a
release
Physical activity had begun at a site
No further cleanup activity was
necessary
Enforcement action had begun at
the site
11
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
BUSTR used its LUST data tracking system to (1) maintain information for each
reported incident and (2) prepare the quarterly progress reports. When a site was
reported to BUSTR, it entered the information into the tracking system. As the site
progressed, BUSTR updated the status in its system. For example, the site may go
through the following status categories:
• Reported
• Confirmed
• Initial Corrective Action
• No Further Action
EPA used the statistics each state reported to determine national LUST Trust fund
allocations. Confirmed releases are one factor in the initial funding need allocation.
EPA used cleanups initiated and completed to allocate a performance based pool of
funds.
LUST ACTIVITIES OVERSTATED
BUSTR overstated the number of confirmed releases, cleanups initiated, cleanups
completed, and enforcement actions taken. The overstatements occurred because
BUSTR was not correctly applying the EPA definitions.
Cleanups Completed
BUSTR required responsible parties to obtain a permit prior to removing tanks. After
the responsible party removed the tank, he or she submitted a closure report for
BUSTR's review and approval. When BUSTR approved the closure report, it reported
the site to EPA as a completed cleanup. Even though a tank was removed, there was
not necessarily a release of petroleum that needed to be cleaned up. Ohio required
responsible parties to remove tanks that have been inactive for 12 months even if there
is no evidence that a release has occurred.
As shown in the table, by including clean tank removals3, BUSTR overstated by 35
percent the number of cleanups completed during January through March 1995. We
selected our sample using statistical sampling methods which allowed us to project the
results of our sample.
3A clean tank removal, for purposes of our review, is defined as a site where contamination was not above
authorized action levels and the excavated soil could be returned to the tank cavity.
12
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
Clean Tank Removals Counted as Completed Cleanups
Number of Cleanup
Completions Reported
Number of Items Sampled
Number of Errors Found
Number of Errors Projected
in Universe
Confidence Level
Lower Limit
Upper Limit
522
40
14 (35%)
183 (35%)
80%
131 (25%)
235 (45%)
Based on our review, BUSTR should have reported about 339 (522 - 183) cleanups
completed for January through March 1995. Because our sample was limited to one
quarter, we could not project our results to the cumulative number of cleanups
completed BUSTR reported. However, we know the number of completions was
overstated because BUSTR routinely included clean tank removals.
Confirmed Releases and Cleanups Initiated
Even though we could not verify the reported accomplishments for confirmed releases
and cleanups initiated to specific sites, we found the BUSTR's database supported
significantly fewer accomplishments than it reported for January through March 1995.
BUSTR's data tracking system did not identify the specific sites reported for these
accomplishments. BUSTR also could not provide an explanation of the methodology it
used to compute the accomplishments. While BUSTR's solution to the data system
issue is implementation of EPA's new data system during 1996, BUSTR should review
the methodology it currently uses to report quarterly the number of confirmed releases
and cleanups initiated.
Data System Issues
When a site was reported to BUSTR, it entered the site into the data tracking
system and assigned a code to reflect the current status (i.e., reported or
13
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
confirmed). Once BUSTR assigned a status, an internal counter in the system
added an additional incident to that status category. BUSTR used the counter as
the basis for computing quarterly accomplishments. As the site progressed
through the cleanup process, the system updated the status and the counter, and
wrote over previous entries. As a result, specific sites were not associated with
the confirmed releases and cleanups initiated, and we could not verify the
accuracy of the reported statistics.4
Region 5 and BUSTR have long sought a data management system that would
generate accurate, site specific data for the LUST program. BUSTR has
explored at least two alternatives to the current system, and has opted to
implement EPA's ACCESS system, which is projected to be completed in June
1996. Ohio is currently first on EPA's list to install the ACCESS system.
Methodology Issues
BUSTR could not provide an explanation or documentation of how it computed
the number of confirmed releases and cleanups initiated for the January through
March quarterly report. We agreed with BUSTR on what types of actions
should be reported as accomplishments. However, actual data from BUSTR's
data system showed that BUSTR did not use the correct methodology in
preparing the quarterly report. Neither BUSTR nor the OIG could reconstruct
how the number of confirmed releases and cleanups initiated were computed .
For confirmed releases, BUSTR should be reporting all sites where a release
had been confirmed and the site was eligible for LUST Trust Fund spending.
For cleanups initiated, BUSTR should be reporting all sites where initial
corrective actions were started and are eligible for LUST Trust Fund spending.
Using this methodology and information from BUSTR's data system, BUSTR
overstated the number of confirmed releases and cleanups initiated for January
through March 1995.
Data
System Reported Overstatement
Confirmed releases 151 360 209
Cleanups initiated 174 360 186
4 We were able to verify completions because that is the last status, and that status does not change.
14
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
Without knowing how BUSTR computed the reported accomplishments, it could
not be determined the exact reason for the overstatement.
Enforcement Actions
BUSTR overstated the number of enforcement actions by reporting the total number of
enforcement letters issued and not the total number of sites with enforcement actions.
BUSTR was reporting the number of enforcement letters issued, which resulted in sites
with multiple letters being counted more than once. While BUSTR may need to take
more than one enforcement action at a site, EPA defined this accomplishment as the
number of sites where enforcement actions had taken place. We could not quantify the
overstatement because BUSTR did not identify the accomplishments to specific sites.
CONCLUSION
BUSTR overstated its FY 1995 accomplishments for confirmed releases, cleanups
initiated, cleanups completed, and sites with enforcement actions. The overstatements
provided EPA with an inaccurate basis for comparing Ohio activities to other states.
During the audit, BUSTR recognized that it needs to relook at how it is reporting
program accomplishments.
DRAFT REPORT RECOMMENDATIONS
We recommended that the Regional Administrator work with BUSTR to ensure that:
1. It reviews its methodology for computing the number of confirmed releases,
cleanups initiated, cleanups completed, and enforcement actions taken to ensure
the methodology meets EPA definitions.
2. The new information system will generate site specific data to support reported
accomplishments.
AGENCY COMMENTS AND ACTIONS
The Regional Administrator stated that BUSTR did not intentionally intend to deceive
or overstate accomplishments. The problems described in the finding were the result of
a lack of clarity regarding EPA definitions and how BUSTR was defining LUST
15
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
accomplishments. Region 5 had taken, or will take, the following actions to address
the draft report recommendations:
1. The Region and BUSTR met in December 1995 and obtained a better
understanding of EPA definitions. Region 5 will continue to work to provide
guidance in this area.
2. BUSTR expects its new data management system, which is to be implemented
by January 31, 1996, to be able to generate site specific data to support reported
accomplishments.
PIG EVALUATION
Region 5's actions, when completed, will address the findings and recommendations.
16
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
CHAPTER 4
COST RECOVERY PROGRAM NEEDED
BUSTR has not recovered Federal and state funds spent to cleanup 121 LUST sites and
did not keep complete cost documentation records.5 Funds were not recovered because
BUSTR had not completed the development of its cost recovery program. The cost
recovery program, when completed, will be an important source of funding for future
LUST activities.
BACKGROUND
The Solid Waste and Disposal Act states that whenever costs have been incurred by the
Administrator, or by a state for undertaking corrective action or enforcement action
with respect to the release of petroleum from a tank, the responsible party shall be
liable to the Administrator or the state for such costs. OSWER Directive 9610.10A
requires states to develop a cost recovery program, and allows them to use the
recovered funds to pay for future LUST cleanups.
OSWER Directive 9610.10A requires states to establish a cost accounting system to
support cost recovery claims in a judicial action, and provide evidence that costs
claimed are reasonable and necessary. States must document site specific costs where
they have:
• performed an emergency response,
• begun a detailed site investigation, or
determined that a responsible party is or is likely to be recalcitrant.
COST RECOVERY PROGRAM
BUSTR did not regularly attempt to recover costs incurred to cleanup LUST sites
because it had not completed the development of a cost recovery program. Since 1988,
5 For purposes of this report, we considered only sites where BUSTR was performing the cleanup, which
represents only a small fraction of the LUST sites in Ohio. Responsible parties generally perform cleanup activities,
with BUSTR overseeing the work. We did not include these sites in our review because the cost of recovering the
funds used to oversee responsible parties activities is generally greater than benefits, or actual costs recovered.
17
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
BUSTR has only recovered funds spent to cleanup two sites. In 1992, BUSTR
recovered a total of about $93,000 in costs and penalties from the responsible parties of
these two sites. We were unable to estimate the costs associated with 121 sites because
BUSTR did not maintain complete cost documentation records as discussed in the
following section.
Even though EPA had given BUSTR funds to develop a cost recovery program during
each of the past three years, Region 5's FY 1994 and 1995 mid-year evaluation reports
stated that BUSTR did not have a cost recovery program. In January 1995, BUSTR
initiated a pilot cost recovery program with the Ohio Attorney General's Cost Recovery
Unit. The pilot showed that it was not cost effective to initiate cost recovery efforts to
recover amounts less that $250. With the knowledge obtained from the pilot program
and EPA guidance, BUSTR will develop a comprehensive program that attempts to
recover LUST monies upon approval by Region 5. BUSTR has prepared draft cost
recovery procedures and submitted them to Region 5 for review and approval.
BUSTR's goal is to have cost recovery procedures in place and operational before the
end of calendar year 1995.
COST DOCUMENTATION RECORDS
BUSTR was not maintaining complete information on the cost of LUST cleanups.
The cost documentation records did not summarize time charges for some employees
who worked at LUST sites and did not convert these time charges into actual payroll
costs. Incomplete cost documentation prevents (1) identification of sites with the
greatest cost recovery potential and (2) full recovery of actual Trust Fund expenditures.
BUSTR used the cost documentation records to accumulate cost information for sites
where it performed the cleanup. Cost documentation records included (1) a summary
of employee hours charged to each site and (2) contractor invoices. However,
BUSTR's cost documentation records did not include the time charges for all
employees.
• In two files that we reviewed, the field activity report showed that employees
visited a site, but the visit was not charged on their timesheets.
• The files did not include costs incurred on sites before BUSTR decided to
perform the cleanup. BUSTR starts tracking costs only after it decides
responsible parties will not perform the cleanup.
18
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
• Management and administrative support employees, not working full time on
LUST cleanups, do not prepare time sheets. Only employees who spend all
their time on LUST cleanups prepare timesheets. Without timesheets, the cost
documentation records did not include all employee time charges. Beginning
September 27, 1995, BUSTR instructed all staff members to maintain
timesheets.
Also, BUSTR's records did not translate employee hours spent at each site into payroll
costs. Therefore, BUSTR did not have comprehensive cost data on its completed
LUST sites. All costs must be documented to be recovered during judicial actions.
BUSTR management also needs complete cost information to decide which sites have
the greatest cost recovery potential. That is, which sites have the highest ratio of
potential costs recovered versus the cost of pursuing recovery efforts.
CONCLUSION
BUSTR's ability to recover funds spent to cleanup sites is important to ensuring that
funds are available to pay for future LUST cleanups. Complete cost documentation
records are vital to ensure the recovery of all costs. BUSTR needs to continue to
develop a cost recovery program and begin maintaining complete cost documentation
records.
DRAFT REPORT RECOMMENDATIONS
We recommended that the Regional Administrator work with BUSTR to:
1. Develop and implement, by the end of calendar year 1995, a comprehensive
cost recovery program that attempts to recover LUST Trust Fund money.
2. Maintain complete cost documentation records.
AGENCY COMMENTS AND ACTIONS
The Regional Administrator had taken, and agreed to continue to take, the following
actions:
1. In November 1995, Region 5 staff visited BUSTR to assist in the development
of a cost recovery program. In December 1995, BUSTR met with the Ohio
19
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
Attorney General to coordinate details of the program. BUSTR will complete a
comprehensive cost recovery program by June 30, 1996.
2. Region 5 will continue to work with BUSTR to provide guidance on maintaining
cost documentation records as part of the development of a cost recovery
program.
PIG EVALUATION
Region 5's actions, when completed, will address the findings and recommendations.
20
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
APPENDIX 1
Page 1 of 3
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION 5
77 WEST JACKSON BOULEVARD
CHICAGO, IL 60604-3590
January 24, 1996
REPLY TO THE ATTENTION OF:
R-19J
MEMORANDUM
SUBJECT: Region 5 Response to the Office of Inspector General
Draft Report on Ohio's Management of Leaking Underground
Storage Tank Cooperative Agreements
Report No. E3PLD5-05-0134
FROM: Valdas V. Adamkus
Regional Administrator
TO: Anthony C. Carrollo, Divisional Inspector General
for Audits, Northern Division
Thank you for the opportunity to respond to the draft report on
Ohio's management of leaking underground storage tank cooperative
agreements. Our response to each of the recommendations that
appear in the report is attached.
If you have any questions concerning these comments, please call
Howard Levin, Region 5 Audit Coordinator, at (312) 886-7522.
Valdas V. Adamkus
Attachment
21
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
APPENDIX 1
Page 2 of 3
Region 5 Response to the Office of Inspector General
Draft Report on Ohio's Management of Leaking
Underground Storage Tank Cooperative Agreements
Listed below are the Region's responses to each recommendation in
the report.
Work with BUSTR to ensure it ranks, by April 1996, all high
priority sites for corrective action oversight.
Region 5 Response: We agree with the recommendation of working with
BUSTR to rank all high priority corrective action sites. However,
BUSTR has indicated that, due to budget cuts, they now expect
completion of this corrective action to be delayed until June 30,
1996.
Reconsider the workplan requirement to assign 20 sites to each
site coordinator for corrective action oversight.
Region 5 Response: We agree with the recommendation, this
requirement will be eliminated from future agreements. The Region
met with BUSTR to discuss the issue of 20 sites and BUSTR agrees
that this requirement should be eliminated.
Work with BUSTR to ensure that it reviews its methodology for
computing the number of confirmed releases, cleanups initiated,
cleanups completed, and enforcement actions taken to ensure the
methodology meets EPA definitions.
Region 5 Response: We believe that BUSTR did not intentionally
intend to deceive or overstate accomplishments. These problems,
referenced in the draft report, were the result of a lack of
clarity regarding EPA definitions and a result of how the Bureau
was defining LUST accomplishments. BUSTR met with the Region in
December of 1995 and obtained a better understanding of EPA
definitions. We will continue to work with BUSTR to provide
guidance in these areas.
22
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
APPENDIX 1
Page 3 of 3
Work with BUSTR to ensure that the new information will generate
site specific data to support reported accomplishments.
Region 5 Response: It is acknowledged that, under BUSTR's existing
data management system, site specific activity tracking is
difficult. BUSTR has informed us that they are moving ahead to
implement a new system that should correct this problem. The
target date for implementation of the new system is January 31,
1996. Additionally, Ohio BUSTR is scheduled to be the first state
converted to the UST-ACCESS system. This EPA sponsored data
management system, expected to be implemented in June of 1996,
should be helpful in providing adequate reporting information.
Work with BUSTR to develop and implement, by the end of calendar
year 1995, a comprehensive cost recovery program that attempts to
recover LUST Trust Fund money.
Region 5 Response: In November 1995, Region 5 staff visited BUSTR
to assist in the development of this program. BUSTR is presently
working on the development and implementation of this program.
Since the Region's meeting in November, 1995, BUSTR has instituted
a new personnel timesheet to more accurately record staff hours
worked on LUST Trust Fund projects. All staff persons, whether
state or Trust funded, are required to track their time. In
December, 1995, BUSTR met with the Ohio Attorney General's Cost
Recovery Section to coordinate details relating to the Ohio
Attorney General's office acting as BUSTR's collection agency.
BUSTR's latest report indicated that a comprehensive cost recovery
program should be developed and implemented by June 30, 1996.
Work with BUSTR to maintain complete cost documentation records.
Region 5 Response: We will continue to work with BUSTR to provide
guidance in this area of Cost Recovery.
23
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
This page was intentionally left blank.
24
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
APPENDIX 2
Page 1 of 1
BUSTR
CA
CFR
EPA
FY
LUST
DIG
OMB
OSWER
RCRA
SARA
STARS
ABBREVIATIONS
Bureau of Underground Storage Tank Regulation
Cooperative Agreement
Code of Federal Regulation
U. S. Environmental Protection Agency
Fiscal Year
Leaking Underground Storage Tank
Office of Inspector General
Office of Management and Budget
Office of Solid Waste and Emergency Response
Resource Conservation and Recovery Act
Superfund Amendments and Reauthorization Act
Strategic Activities for Results System
25
Report No. E3PLD5-05-0134-6100095
-------
Ohio LUST Cooperative Agreements
APPENDIX 3
Page 1 of 1
DISTRIBUTION
Region 5
Regional Administrator
Team Leader, CAST-PAAS (Followup Coordinator) (MFA-10J)
Chief, Office of UST/LUST (HRU-8J)
Library (PL-12J)
Public Affairs (P-19J)
Intergovernmental Relations Officer (R-19J)
Headquarters
Agency Followup Official (3101)
Attn: Assistant Administrator, OARM
Agency Followup Coordinator (3304)
Attn: Director RMD
Director, Grants Administration Division (3903F)
Director, Office of Underground Storage Tanks (5401W)
Associate Administrator for Communications and Public Affairs (1701)
Office of Inspector General
Inspector General
GAO Issue Area Planner
State of Ohio
Ohio Department of Commerce
Bureau of Underground Storage Tank Regulation
Auditor of State of Ohio
U S. Environment! Protection A
'
26
-nn !-
77^51 Jackson e.rj!warjd, 12th Floor
Chicago, 11 60604-3590
Report No. E3PLD5-05-0134-6100095
------- |