EPA/510/R-89/001
es
tal Protection
Office of
the Comptroller
Washington, DC 20460
March 1989
Financial Management Didivison-Fiscal Policies and Procedures Branch
Leaking Underground
Storage Tank Trust Fund
State Financial Management
Handbook
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United States Office of March 1989
Environmental Protection the Comptroller
Agency Washington, DC 20460
Financial Management Didivison-Fiscal Policies and Procedures Branch
vvEPA Leaking Underground
Storage Tank Trust Fund
State Financial Management
Handbook
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Pagei
TABLE OF CONTENTS
Page Number
I. INTRODUCTION 1
A. Purpose of this Handbook 1
B. Structure of the Handbook 1
C. Overview of the Leaking Underground
Storage Tank Trust Fund 2
II. STATE LUST TRUST FUND FINANCIAL REQUIREMENTS 4
A. Overview 4
B. LUST Trust Fund Financial Requirements 4
1. Financial Management System 4
2. Site-Specific Accounting 4
3. Cost Documentation and Recordkeeping 4
4. Financial Reporting 5
5. Letter of Credit Drawdown 5
6. Cost Sharing 5
7. Notifying EPA of Cost Recovery Actions,
Settlements and Payments 5
8. Disposition of Recovered Funds 5
in. STATE LUST TRUST FUND FINANCIAL PROCEDURES 6
A. Introduction 6
B. LUST Accounting for Direct and Indirect
Costs 6
1. LUST Accounting Objectives 6
2. Categories of Costs 6
3. Accounting for Direct Costs 7
4. Allocating Non-Site-Specific Direct Costs 8
5. Accounting for Indirect Costs 8
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TABLE OF CONTENTS
Page Number
C. Financial Reporting 8
1. Financial Status Reports 10
2. Federal Cash Transactions Reports 10
3. Exception Site Reports 10
D. State Cost Share 10
1. Acceptable Contributions 10
2. Records 11
IV. COST RECOVERY AND DOCUMENTATION GUIDANCE 12
A. Overview 12
1. Legal Basis for Cost Recovery 12
2. Cost Recovery Objectives 12
3. Cost Documentation Objectives 13
B. Cost Recovery and Documentation Functions 13
1. State Functions 13
2. EPA Functions 19
C. Documentation of Legally Defensible Costs 19
1. Records to Document Expenditures 19
2. Reasonable and Necessary Expenses 19
3. Documentation Submitted as Evidence 20
D. Site Filing Procedures 20
1. Site File Establishment 20
2. Suggested Records for Retention 20
3. Site File Reconciliation 23
4. Site File Storage 23
5. Record Retention 24
E. Cost Recovery Package Preparation 24
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TABLE OF CONTENTS
Page Number
F. Procedures for Collecting and Handling
Recoverable Costs 25
1. Notification of Debtor 25
2. Interest on Recovered Funds 25
3. EPA Notification Requirements During Recovery 25
4. Disposition of Recovered Funds 26
V. EPA FISCAL REVIEW PROGRAM 27
A. Introduction 27
B. Objectives of the LUST Fiscal Review 27
C. Timing of Reviews and Organization of the Review Team 27
D. Fiscal Review Procedures 27
E. Content of Fiscal Review Work Session 28
APPENDICES
A. Location of EPA Regional Offices and States Serviced
B. LUST Trust Fund Activity Codes
C. Instructions for the Preparation of Request for Funds, TFS 5805
D. Recommended Methodology for the Allocation of GS&M Costs
E. Financial Reports
F. Cost Documentation Checklist
G. References
front cover artwork by:
Priscilla J. Thate, 1988.
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Introduction
Pagel
I. INTRODUCTION
A. PURPOSE OF THIS HANDBOOK
The purpose of this handbook is to describe
the financial management and related cost
recovery responsibilities of States participating
in the Leaking Underground Storage Tank
(LUST) Trust Fund program. Each State enter-
ing into a LUST Trust Fund Cooperative
Agreement must comply with certain financial
management and cost documentation require-
ments specific to the LUST Trust Fund. These
LUST-specific requirements cover the follow-
ing areas:
Site-specific accounting
Reporting to EPA
Drawing down funds on a Letter of Credit
Cost sharing
Documenting costs for cost recovery
Accounting for recovered costs.
This handbook describes these require-
ments in more detail in Chapter n. Subsequent
chapters discuss suggested procedures that
States can use to meet the requirements as well
as to structure the overall financial management
of their Trust Fund program. The handbook is
designed to provide States with a basic under-
standing of conditions that must be met as part
of operating a State LUST Trust Fund program,
and to offer suggestions that are based upon
sound accounting principles for satisfying these
conditions.
B. STRUCTURE OF THE HANDBOOK
The handbook is organized into five chap-
ters:
The remainder of this introductory chapter
presents an overview of the LUST Trust
Fund program
Chapter n describes the financial require-
ments of States participating in the LUST
Trust Fund program
Chapter III provides procedural guidance
on accounting for direct and indirect costs,
reporting to EPA, drawing down funds on a
Letter of Credit, and fulfilling the cost
share requirement
Chapter IV suggests cost documentation
and cost recovery procedures as well as
procedures for collecting and handling
recovered costs
Chapter V presents an overview of EPA's
LUST fiscal review program.
In addition, the handbook contains seven
appendices:
Appendix A lists the EPA Regional Offices
and their addresses
Appendix B describes the LUST Trust
Fund activity codes
Appendix C describes how to complete
Form TFS 5805
Appendix D contains suggested procedures
for allocating general support and manage-
ment costs to sites
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Introduction
Page 2
Appendix E contains copies of the
Financial Status Report, Federal Cash
Transactions Report and Exception Site
Report
Appendix F is a cost documentation check-
list
Appendix G contains a list of available ref-
erence materials applicable to the LUST
Trust Fund program.
C. OVERVIEW OF THE LEAKING
UNDERGROUND STORAGE TANK
TRUST FUND
There are approximately 1.7 million under-
ground petroleum storage tanks in the United
States subject to regulation by EPA. According
to EPA estimates, as many as 200,000 of these
underground storage tanks are leaking. These
leaks occur at an average rate of seven gallons
per day. In an effort to clean up petroleum
leaks and to prevent further contamination of
soil and groundwater, Congress established the
LUST Trust Fund (Fund) in October of 1986.
Although the Fund was established under the
Superfund Amendments and Reauthorization
Act of 1986 (SARA), this law amended Subtitle
I of the Resource Conservation and Recovery
Act (RCRA), which governs Federal regulation
of underground storage tanks (USTs).
The LUST Trust Fund is financed by a
1/10 of one cent per gallon tax on gasoline,
diesel, and aviation fuels, and is expected to
raise $500 million over a five-year period. The
Fund is to be used for the following purposes:
To inspect and identify suspected releases
To develop and enforce corrective action
orders
To conduct corrective actions including:
Exposure assessments to determine
potential effects
Cleanup of petroleum releases
Provision for safe drinking water
Relocation of residents, temporarily or
permanently
To recover costs of Fund-financed correc-
tive actions from responsible owners and
operators.
RCRA authorizes EPA and States with
Cooperative Agreements to order tank owners
or operators to clean up petroleum leaks. The
program has also established distinct policies
for EPA and State cleanup authority, which are
contingent upon promulgation of technical, cor-
rective action and financial responsibility regu-
lations required under Section 9003 of RCRA.
Prior to the effective date of the regulations,
EPA and States used the Trust Fund to conduct
cleanups when considered necessary to protect
human health and the environment. Since the
effective date of the regulations, EPA and States
are now authorized to conduct cleanups if such
an action is necessary to protect human health
and the environment and EPA or the State
determines that an owner or operator is inca-
pable of carrying out corrective action properly.
Section 9003(h)(6) of RCRA's Subtitle I
stipulates that whenever costs are incurred by
EPA or the State for "corrective action or
enforcement action with respect to the release
of petroleum from an underground storage tank,
the owner or operator of such tank shall be
liable to the Administrator or the State for such
costs". In addition to providing the authority
for cleanup of releases from underground stor-
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Introduction
PageS
age tanks, the statute gives EPA and States
under Cooperative Agreements the authority to
recover incurred costs. States are expected to
have adequate legal authorities to undertake
cost recoveries either by acquiring their own
authorities or by certifying that they are able to
use Federal authorities.
The large number of leaking petroleum
tanks makes it impossible for the Federal gov-
ernment to be directly involved in the majority
of cleanups. States are better able to respond
quickly and effectively to leaks due to their
proximity to and experience with local site con-
ditions; therefore, States are expected to play
the primary or lead role in managing the
cleanup process. Accordingly, EPA is transfer-
ring the majority of the LUST Trust Fund
monies to States through Cooperative
Agreements.
Under Cooperative Agreements, States
assume responsibility for all legal, program-
matic, and administrative activities necessary to
recover their expenditures from the LUST Trust
Fund. This responsibility extends to required
reporting and recordkeeping, including docu-
menting that Trust Fund recoveries are used for
additional eligible activities under State
Cooperative Agreements. EPA will provide
financial management guidelines as set forth in
this manual and in the manuals referenced in
Appendix G. EPA will also make funding
available for LUST-specific actions, assess the
performance of State cost recovery programs,
and provide support and assistance to States
which need to improve their LUST-related
financial management capabilities. Although
EPA will provide primary funding for the LUST
Trust Fund program, States are expected to
share program costs as well. Cooperative
Agreements awarded or amended after the
effective date of the Federal Financial
Responsibility Rule will require that each State
pay ten percent of the total program expen-
ditures covered by the State's LUST
Cooperative Agreement.
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State LUST Trust Fund Financial Requirements
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IL STATE LUST TRUST FUND
FINANCIAL REQUIREMENTS
A. OVERVIEW
A major objective of the LUST Trust Fund
program is to give States maximum flexibility
in managing the program within their jurisdic-
tions. Therefore, States may develop their own
financial management procedures as long as
they meet the minimum LUST financial man-
agement and cost documentation requirements.
These requirements, which are described below,
are necessary for monitoring the transfer and
use of LUST Trust Fund dollars and ensuring
the proper cost documentation for cost recovery.
Guidance for meeting these requirements is pro-
vided in Chapters III and IV of this manual.
B. LUST TRUST FUND FINANCIAL
REQUIREMENTS
1. Financial Management System
A State must account for LUST Trust
Funds in accordance with State laws and proce-
dures. Fiscal control and accounting procedures
must be sufficient to:
Permit the preparation of financial and
quarterly progress reports
Demonstrate that recovered funds are
retained and used for additional eligible
activities or satisfy State cost share require-
ments
Permit the tracing of funds by site and
activity.
2. Site-Specific Accounting
To ensure that a State can effectively recov-
er their costs from responsible owners and oper-
ators, States and their contractors must establish
a cost accounting system which tracks the cost
of cleanup and enforcement actions on a site-
and activity-specific basis. States are not
required to begin site-specific accounting for
cost recovery until one of the following
thresholds has been reached:
An emergency response is initiated by the
State or its contractors
A detailed site investigation is initiated by
the State or its contractors
The State has determined that the owner/
operator is or is likely to be recalcitrant
(i.e., a solvent owner/operator who refuses
to comply with corrective action orders).
Guidance on State accounting for LUST
Trust Fund direct and indirect expenditures is
provided in Chapter HI, Section B.
3. Cost Documentation and Recordkeeping
States and their contractors must work
together to maintain supporting documentation
and appropriate records in support of cost
recovery actions. Contractors must bill on a
site-specific basis for enforcement and correc-
tive action activities. States must maintain hard
copies of all original cost documents for at least
three years from completion of the final expen-
diture report (Financial Status Report, SF-269)
or for the length of time required by the State,
whichever is longer. If any litigation, audit, or
other action has been started before the expira-
tion date of the three years, the records must be
retained until completion of the action or reso-
lution of all issues.
States may develop their own recordkeep-
ing system as long as the State can access
records quickly enough to meet litigation
schedules. Cost documentation and record-
keeping are discussed in Chapter IV.
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State LUST Trust Fund Financial Requirements
PageS
4. Financial Reporting
Each State must submit financial reports to
support its use of LUST Trust Fund monies and
to reconcile EPA and State records. These
reports are as follows:
Financial Status Report (SF-269)
Federal Cash Transactions Report (SF-272)
Exception Site Report (included in the
State Quarterly Report)
Procedures for preparing and submitting reports
are provided in Chapter in, Section C.
5. Letter of Credit Drawdown
Each time a State requests funds, it must
identify the correct EPA activity code on the
Letter of Credit drawdown. The three codes
are: "7" - General Support and Management,
"E" - Site Cleanup Actions, and "4" -
Enforcement. A description of each activity
code is contained in Appendix B. General pro-
cedures for drawing down funds on a Letter of
Credit are described in The Letter of Credit
Treasury Financial Communications System
Recipients Manual published by EPA. The
form to be used by States requesting Federal
funds, TFS 5805, is included as Appendix C
and contains LUST-specific instructions.
6. Cost Sharing
Cooperative Agreements awarded or
amended after the effective date of the Federal
Financial Responsibility Rule require that each
State pay ten percent of the total program
expenditures covered by the State's LUST
Cooperative Agreement. States may use the
LUST Trust Fund recoveries to meet their cost
share requirements. Recovered costs, in-kind
contributions and cash payments used to satisfy
the State's cost share must be verifiable from
the State's records.
Cost sharing is discussed further in Chapter
m, Section D.
7. Notifying EPA of Cost Recovery Actions,
Settlements, and Payments
States are required to notify EPA's Regional
Counsel within one week after filing judicial
recovery actions in State or Federal courts.
States must also report to EPA in quarterly
reports any amounts received from the
owner/operator, or agreed or adjudged to be
owed by the owner/operator as a settlement for
site cleanup.
8. Disposition of Recovered Funds
States may retain any Trust Fund monies
they recover for use on additional Fund-eligible
cleanups and for satisfying the State cost share
requirement. States must maintain appropriate
accounting of recovered funds in order to docu-
ment the reuse of recovered funds in accor-
dance with 40 CFR 31.25 or 40 CFR 30.525
and applicable requirements of the Cooperative
Agreements in Quarterly Reports.
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State LUST Trust Fund Financial Procedures
Page 6
IH. STATE LUST TRUST FUND
FINANCIAL PROCEDURES
A. INTRODUCTION
This Chapter presents accounting and
financial management guidance for States
entering into LUST Trust Fund Cooperative
Agreements. The intent of this guidance is both
to assist States in meeting the LUST-specific
requirements described in the previous chapter
and, more generally, to assist States in manag-
ing their LUST Trust Fund dollars effectively.
The Chapter provides guidance in the following
areas: accounting for direct and indirect costs
for purposes of cost recovery, reporting to EPA
on LUST Trust Fund expenditures, and fulfill-
ing the State's cost share requirement.
B. LUST ACCOUNTING FOR DIRECT
AND INDIRECT COSTS
1. LUST Accounting Objectives
The LUST accounting objective is for
States to be capable of producing reports that
identify costs by site and by activity. In order
to produce detailed, accurate and complete
reports, State accounting systems should record
site (when site-specific accounting has begun)
and activity information with each accounting
entry. States may use their own activity codes;
however, EPA activity codes must be used for
drawdown requests and Financial Status
Reports (SF-269).
The following section defines various types
of costs and provides guidance on accounting
for major categories of direct costs. It also
includes guidance on the allocation of non-site-
specific costs to sites.
2. Categories of Costs
This section provides definitions of direct
and indirect costs.
Direct Costs include such things as payroll,
travel, equipment and contractor costs
which directly support and benefit the
LUST program. These expenditures
should be directly charged to the LUST
Trust Fund program in the State's account-
ing system. EPA has defined three activity
codes for LUST direct costs that should be
used in all cost reports submitted. The
activities and their EPA codes are listed
below and described in Appendix B.
E - Site Cleanup Actions
4 - Enforcement
7 - General Support and Management
Once site-specific accounting has begun
and an identifier has been established, expendi-
tures for site cleanup actions ("E") and enforce-
ment activities ("4") must be charged by site as
well as activity. General support and manage-
ment expenditures which benefit the State's
overall LUST program, rather than particular
sites, should be charged to the appropriate
activity code ("7") only.
Indirect Costs represent State overhead
costs, such as rent and utilities for staff
office space and payroll and benefits for
agency and division directors and adminis-
trative staff which support multiple pro-
grams. Unlike general support and man-
agement costs which are charged directly
to the LUST appropriation, indirect costs
are initially charged to a non-LUST cost
pool. Indirect costs are distributed to bene-
fiting State programs using an indirect cost
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State LUST Trust Fund Financial Procedures
Page?
rate. Each State negotiates an indirect cost
rate annually with its cognizant Federal
agency, under the terms of Office of
Management and Budget (OMB) Circular
A-87.
3. Accounting for Direct Costs
The following section provides guidance
on accounting for the major categories of direct
costs.
a. State Salary Costs
All State staff who charge time to LUST
general support and management activities, or
to sites in which no site-specific identifier has
been established, must indicate the amount of
time charged by activity code in the State's
timekeeping and accounting systems. Once a
site-specific identifier has been established,
employees must reference both the site and
activity code. Staff may charge time directly
both site-specifically and non-site-specifically
depending on the nature of their work during a
given time period. For example, a staff mem-
ber may charge 30 hours to general support and
management and the rest of his or her time to
specific sites.
b. Travel Expenses
All transportation, meal and lodging
expenses charged to the LUST Cooperative
Agreement must be recorded on an activity-
specific basis. Once a site-specific identifier
has been established, costs must be charged
site-specifically. Depending on circumstances,
site-specific travel costs can be charged in sev-
eral ways. Expenses for travel to multiple sites
should be divided among the sites in a logical
way and charged directly to each site. In most
cases, apportioning the total travel cost between
sites based on the relative amount of time spent
at each site is acceptable. The State's travel
vouchers should provide space for charges to
multiple sites. Travel which does not directly
benefit any one site and cannot be divided in a
logical way among multiple sites should be
charged by activity only.
For successful recovery of these costs, it is
essential that all employee timesheets and travel
vouchers agree. If an employee submits a
voucher for travel charges related to a LUST
site, and the employee's timesheet does not
show any time charged to the LUST site for that
day, the charges would not be accepted in cost
recovery litigation. In addition, both the salary
and the travel charges could be disallowed in an
audit.
c. Equipment Costs
Trust Fund monies may be used to pur-
chase equipment if the equipment is necessary
for LUST Trust Fund corrective action or
enforcement activities. When equipment is pur-
chased for corrective action at a single site, its
cost should be charged only to that site. When
equipment which costs over $10,000 is used for
corrective action at multiple sites, the cost
should be allocated among the sites where the
equipment is used. An exception to this is
equipment which is used at such a large number
of sites that it would be impractical to allocate
costs to individual sites. In these cases, the
equipment should be charged by activity only.
Equipment which costs less than $10,000 and is
used at multiple sites should be charged to the
site that predominately benefits.
Each State may develop a "usage rate" for
the equipment to facilitate allocating these costs
to sites. The rate should be based on the esti-
mated life of the equipment. For example, if a
piece of equipment is expected to last 1,000
hours, and its cost (purchase price, plus estimat-
ed maintenance, less salvage value) equals
$10,000, then the usage rate would be $10.00
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State LUST Trust Fund Financial Procedures
Page8
per hour. States should set up a system to
record by site the hourly usage of each piece of
equipment and then apply the equipment usage
rates to calculate direct equipment charges.
d. Contractor Costs
Contractor costs always should be accoun-
ted for on an activity-specific basis and should
also be accounted for by site, when appropriate.
Contractor invoices should be organized in such
a way that State staff reviewing the invoices for
payment can quickly identify which charges
apply to which sites (when appropriate) and, if
the contractor has not already done so, mark the
invoices with designated site codes for input
into the State accounting system.
4. Allocating Non-Site-Specific
Direct Costs
To the extent that they are legally able,
States should allocate to sites Trust Fund
expenditures which have not been directly
charged to sites, i.e. GS&M costs, for the pur-
pose of cost recovery. States may develop their
own methodology for allocating these costs or
may use a methodology developed by EPA.
Appendix D contains the methodology suggest-
ed by EPA.
States may want to add non-site-specific
cleanup ("E") and enforcement ("4") costs to
the GS&M cost pools for allocation. They
should consider the size of both the GS&M cost
pool as well as the non-site-specific ("E" and
"4") cost pool when deciding which costs to
allocate. Exhibit III-l graphically depicts the
costs available for recovery if the States allo-
cate GS&M costs and non-site-specific ("E"
and "4") costs.
5. Accounting For Indirect Costs
Each State agency has a negotiated indirect
cost rate with the Federal government which is
used to charge indirect costs to the LUST
Cooperative Agreement. Each indirect cost rate
agreement specifies the "cost base" to which the
rate is to be applied. This information is usually
found under the heading "Basis for Appli-
cation" on the indirect cost agreement. Typical
examples are:
"Basis for application: Direct salaries and
wages plus applicable fringe benefit costs."
"Basis for application: Total direct costs
including applicable fringe benefit costs
but excluding equipment and subcontract
costs."
The indirect cost rate is applied to the cost
base of the Cooperative Agreement to deter-
mine the amount of indirect costs assignable to
the Cooperative Agreement. Recovery of indi-
rect costs is up to the discretion of each State.
If a State plans to recover indirect costs, it may
want to use a methodology similar to the one
suggested for allocating GS&M costs in
Appendix D.
C. FINANCIAL REPORTING
State recipients of funds under a
Cooperative Agreement are responsible for pro-
viding EPA with Financial Status Reports and
Federal Cash Transactions Reports. In addition,
the LUST Trust Fund program requires States
planning to spend more than $100,000 at a sin-
gle site to submit an Exception Site Report.
Each of these required financial reports is dis-
cussed below.
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State LUST Trust Fund Financial Procedures
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State LUST Trust Fund Financial Procedures
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1. Financial Status Reports
To support adequate tracking of financial
transactions, each State must submit to the
appropriate Regional Financial Management
Office (FMO), listed in Appendix A, a Finan-
cial Status Report (SF-269 or SF-269A) in
accordance with 40 CFR Part 31.41 or 40 CFR
Part 30.505. The Financial Status Report must
be completed to show the amount requested for
each drawdown by activity, using the activity
codes described in Appendix B, and filed with-
in 90 days after the close of the budget period.
If the budget period is longer than one year, the
report must be submitted annually on the date
of the budget period. Final reports will be due
within 90 days after the expiration or termina-
tion of the Cooperative Agreement. The SF-
269 report and instructions for its preparation
are contained in Appendix E.
2. Federal Cash Transactions Reports
In order for EPA to monitor cash advanced
to States and obtain disbursement information,
States are required to submit a Federal Cash
Transactions Report (SF-272 or SF-272A) to
the appropriate Regional FMO listed in
Appendix A. The format of the report may be
adapted, as appropriate, when automatic data
processing equipment is used to produce the
report.
States must submit the report no later than
15 days after the end of every calendar quarter.
The SF-272 and instructions for its preparation
are contained in Appendix E.
3. Exception Site Reports
Whenever a State program manager plans
to spend or actually obligates more than
$100,000 at a particular site, the State must
complete an Exception Site Report. The main
objective of this report is to obtain information
on total Trust Fund site costs to help EPA plan
and budget for the LUST Trust Fund program.
This information will allow EPA to:
Develop more accurate pricing factors for
corrective actions
Track major site activities and Trust Fund
accomplishments
Assist in future budget justifications for the
Trust Fund
Respond to Congressional and other
inquiries.
Reporting will continue as States obligate
or encumber Trust Fund monies in accordance
with these plans. The following information is
to be included for each such site:
State designated site number and name
Total planned Trust Fund expenditures
Cumulative Trust Fund obligations
Cumulative Trust Fund outlays
Cost recovery and settlement data.
States should prepare this Exception Site
Report as a part of the quarterly Trust Fund
report and address it to the Regional UST
Program Manager according to the schedule for
quarterly reporting in their Cooperative
Agreements. A sample Exception Site Report
is provided in Appendix E with an explanation
of these required data elements.
D. STATE COST SHARE
1. Acceptable Contributions
As stated in Chapter II, Cooperative
Agreements awarded or amended after the
effective date of the Financial Responsibility
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State LUST Trust Fund Financial Procedures
Page 11
Rule will require that each State pay ten percent
of the total allowable costs of the program cov-
ered by the State's Cooperative Agreement.
The ten percent payment may be satisfied with
any of the following:
In-kind contributions, e.g., non-LUST
State program staff or legal services in a
cost recovery case
Allowable costs incurred by the State or its
contractor
Recovered Trust Fund monies if specified
in the terms of the Cooperative Agreement.
States do not have to match Federal costs
on a site-by-site basis. However, any costs
incurred by the State to satisfy its cost share
requirement must be eligible under the State's
LUST Trust Fund Cooperative Agreement.
2. Records
Direct and in-kind contributions from the
State used to satisfy the cost sharing require-
ment must be verifiable from State or contractor
records. These records must show how the
value placed on in-kind contributions is
derived. Documentation should include the fol-
lowing:
Supporting documentation for all direct,
non-Federal expenses
Specific amounts claimed as in-kind contri-
butions
Worksheets showing how the value of in-
kind contributions was derived.
These records will be used to verify that
the State has satisfied its cost share require-
ment.
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Cost Recovery and Documentation Guidance
Page 12
IV. COST RECOVERY AND
DOCUMENTATION GUIDANCE
A. OVERVIEW
The fundamental purpose of the cost recov-
ery and documentation portion of this handbook
is to provide State managers with suggested
financial management procedures in order to
facilitate effective recovery of LUST Trust
Fund dollars. In addition to this overview, the
chapter has five sections covering issues related
to cost recovery:
Cost recovery functions
Documentation of legally defensible costs
Site filing procedures
Financial management case preparation/
referral
Procedures for collecting and handling
recoverable costs.
1. Legal Basis for Cost Recovery
RCRA Section 9003 (h) (6) stipulates that
whenever costs are incurred by EPA or a State
for "corrective action or enforcement action
with respect to the release of petroleum from an
underground storage tank, the owner or opera-
tor of such tank shall be liable to the
Administrator or the State for such costs." The
statute gives EPA and States the authority to
respond to releases from underground storage
tanks and to recover direct and non-direct costs.
Recoverable costs are those incurred as a result
of responding to petroleum releases subsequent
to award of the Cooperative Agreement.
Specifically, RCRA Section 9003 (h) stipulates
that Fund monies may be used for the following
activities:
Enforcement
Corrective action
Cost recovery.
2. Cost Recovery Objectives
The primary purposes of cost recovery are
to provide incentives for owners and operators
to comply with the technical and financial
responsibility requirements, and most impor-
tantly, to clean up releases from their own
tanks. EPA expects that State-lead cleanups
followed by cost recovery will occur in a
minority of cases, because most cleanups will
be conducted by owners and operators.
Necessary cost recoveries will generate income
for additional cleanups.
Cost recovery, as practiced under the
LUST Trust Fund, will depart significantly
from approaches taken in other environmental
response programs. Consistent with the State-
centered design of the underground storage tank
program, States will implement and have con-
siderable discretion in operating cost recovery.
States will directly benefit from successful
recoveries by using recovered costs for subse-
quent cleanups.
The two most innovative aspects of EPA's
cost recovery policy for the LUST Trust Fund
should provide States with the autonomy and
the incentive necessary to pursue cost recover-
ies aggressively and efficiently. First, States
with Cooperative Agreements will litigate and
settle cost recovery claims without routine
involvement or concurrence of EPA or the
Department of Justice. Second, States may
retain any Trust Fund monies they recover for
use on additional Fund-eligible cleanups and
activities.
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Cost Recovery and Documentation Guidance
Page 13
3. Cost Documentation Objectives
In order to pursue cost recovery actions
effectively, States must be able to provide docu-
ments that are capable of proving that: 1) the
party was the owner/operator of the tank or oth-
erwise liable under Federal or State law; 2) the
work performed was reasonable and necessary;
and 3) the charges were accurately documented.
In their cost recovery packages, States must be
able to document all Trust Fund expenditures
and all corrective action and enforcement costs
on a site-specific basis. Additionally, States
must be able to delineate both direct and indi-
rect costs in the documentation package. This
package should detail how the subtotals were
delivered.
B. COST RECOVERY AND
DOCUMENTATION FUNCTIONS
This section provides a systematic
overview of the major cost recovery and docu-
mentation functions. The term "systematic"
applies, because successfully meeting objec-
tives in these areas requires coordinated action
by staff in several functional areas over a long
period of time. In order to initiate and maintain
coordinated activity, staff and management
need to be able to view specific functions as
part of a larger process. The legal and program-
matic responsibilities of States and EPA in cost
recovery are more fully described in the "Cost
Recovery Policy for the LUST Trust Fund"
(OSWER Directive 9610.10).
1. State Functions
Exhibits IV-1 to IV-4, on the following
pages, depict a hypothetical or "model" finan-
cial management and recordkeeping system that
meets all cost recovery documentation objec-
tives, with an emphasis on cost documentation
for successful cost recovery actions. The sys-
tem depicted in the exhibits is not "the answer"
to meeting State cost recovery objectives.
Functions as displayed in the exhibits may in
some cases be performed by other offices. For
example, either the program office or the legal
office may be responsible for preparing the
demand letter or notifying EPA of how recov-
ered funds will be used. There is no one answer
applicable to all States; each State has devel-
oped or will develop its own system, according
to its own management, structure and internal
procedures. The aim of the exhibits, and of this
section, is simply to start managers thinking
about financial management and recordkeeping
objectives in a systematic way.
Activities in the financial management and
recordkeeping model generally occur in four
phases, which can be characterized as:
Initiation - the initial steps taken to assign
the site-specific identifier (Exhibit IV-1)
Ongoing Activity - the day-to-day financial
management and recordkeeping activities
that take place during site work (Exhibits
IV-2(a) and IV-2(b))
Cost Documentation Package Preparation -
the preparation of an up-to-date summary
of costs and collection of supporting docu-
mentation (Exhibit IV-3)
Collection and Handling of Recoverable
Costs - the distribution of the demand letter
and the disposition of recovered funds
(Exhibit IV-4). In addition to establishing
cost recovery procedures, State managers
should ensure that staff roles and responsi-
bilities are clearly defined. The cost recov-
ery and documentation process encompass-
es six functional areas: legal, contracts
administration, program office, record-
keeping, accounting, and paying. The typi-
cal staff duties in the cost recovery process
are summarized below and depicted in the
exhibits.
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Cost Recovery and Documentation Guidance
Page 14
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-------
Cost Recovery and Documentation Guidance
Page 15
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-------
Cost Recovery and Documentation Guidance
Page 16
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-------
Cost Recovery and Documentation Guidance
Page 17
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Cost Recovery and Documentation Guidance
Page 18
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Cost Recovery and Documentation Guidance
Page 19
Legal: Reviews cost documentation pack-
age for completeness; proceeds with legal
action and negotiates settlement
Contracts Administration: Handles site-
specific invoices from contractors; drafts,
awards, and administers contracts
Program Office: Initiates site work,
approves invoices, initiates cost documen-
tation package preparation, drafts demand
letter, maintains contact with EPA
Recordkeeping: Establishes site file,
retains original copies of cost docu-
mentation, reconciles cost documentation
with accounting system cost summary
Accounting Operations: Generates site-
specific identifiers, loads costs into
accounting system, requests drawdowns,
files financial reports, develops cost sum-
mary based on accounting system, receives
and accounts for recovered funds
Paying Agent: Pays staff salaries, travel
expenses, and contractor and forwards
proof of payments to Recordkeeping.
State managers should determine which
offices have responsibility for each of these
functional areas and should ensure that person-
nel are assigned to perform the functions out-
lined above.
2. EPA Functions
EPA's principal financial management
responsibilities for cost recovery are to set gen-
eral policies and to provide States with funding
and guidance, oversight, and assistance in cost
recovery of the LUST Trust Fund monies.
Additionally, the Regional FMO will receive
notification from the State via the Regional pro-
gram office of all recovered funds that are to be
used as program income.
The Agency will generally be bound by settle-
ments and judgments reached in States, but
reserves the right to pursue recoveries indepen-
dently in exceptional cases. Also, EPA may
pursue recoveries in those rare cases where the
Agency has performed a Federal-lead response.
C. DOCUMENTATION OF LEGALLY
DEFENSIBLE COSTS
1. Records to Document Expenditures
States may incur costs for labor, travel,
supplies and equipment, contractor efforts, and
administration/overhead associated with work
on a site. A legally defensible State cost docu-
mentation package should demonstrate for each
category of costs that:
The work or purchase was authorized by
the State per applicable procurement proce-
dures
The work or purchase was completed
The State was billed for the work or pur-
chase
The State actually paid for the work or pur-
chase.
Section D.2. provides further guidance on what
types of records should be retained.
2. Reasonable and Necessary Expenses
In some cases, States pursuing recoveries
may be challenged to demonstrate that costs
were "reasonable and necessary." For example,
States procuring property and services under a
Cooperative Agreement must follow the the
same policies and procedures used for procure-
ments with non-Federal funds. Costs incurred
in violation of State policies and procedures
may be challenged in court, since their reason-
ableness and necessity may not be evident.
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Cost Recovery and Documentation Guidance
Page 20
States should also seek to ensure that other
expenses are adequately justified. For example,
travel authorization forms which delineate the
purpose of trips should be retained.
3. Documentation Submitted as Evidence
States should ensure that documents sub-
mitted as evidence are authentic, reliable, com-
plete and accurate. States should:
Produce a document concurrently with
occurrence of expenses
Produce necessary documentation during
the normal course of business
Be prepared to provide an expert witness to
testify to the document's authenticity and
reliability.
For example, timesheets should be prepared
within the timeframe in which the work was
performed.
D. SITE FILING PROCEDURES
1. Site File Establishment
States are required to maintain supporting
documentation and appropriate records in sup-
port of any cost recovery efforts. As long as a
State can access records by site quickly enough
to meet litigation schedules, the State may
develop its own recordkeeping system. An
effective, simple process which allows for
speedy access of State expense records is active
site filing. Under this system, a separate file
containing copies of all pertinent documents is
established for each site. Active site filing is a
concept used in Superfund cost recovery docu-
mentation, and is discussed in detail in Section
III.A.3 of the State Superfund Financial
Management and Recordkeeping Guidance,
published by Office of the Comptroller, EPA.
States using the active site filing system
should establish site files 24 hours after a site-
specific identifier is established. In developing
this recordkeeping system, managers should
consider issues such as:
Identification of staff responsible for col-
lecting and filing records
Accessibility of original documents
Document protection from fire and water
damage
Development of cost-effective and safe
long-term documentation storage proce-
dures.
States should develop a "filing protocol" to
ensure that documents are filed in a consistent
order. For example, file folders should be
marked with the site identifier and filed sequen-
tially. The site file may begin with employee
timesheets (by pay period, division and employ-
ee number) followed by employee travel costs,
etc.
2. Suggested Records for Retention
This section outlines the recommended
documentation that States need to have avail-
able for cost recovery as well as the documents
that should be accessible, but not necessarily in
site files. Exhibits IV-5 and IV-6, on the next
two pages, give examples of documents located
in and out of site files. The following types of
documentation should be retained for cost
recovery purposes:
a. Payroll
Individual time and attendance records, as
well as any adjustments to the timesheets, can
be retained in site files. Position titles and
salaries should be readily available for those
staff who charged to that site.
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Cost Recovery and Documentation Guidance
Page 21
EXHIBIT IV-5
Summary of Documents for Retention in Site Files
AREA OF COST
SUGGESTED DOCUMENTATION
Payroll
Travel
Contractor
Services
Supplies and
Equipment
GS&M Costs
Indirect Costs
Other
Time attendance records
Time attendance amendments
Worksheet showing fringe benefit calculations
(if not calculated by accounting system)
' Authorizations (including purpose of trip)
Vouchers showing:
Starting point and destination
Transportation method
Number and names of persons on trip
Receipts, (airline, hotel, etc.)
Proof of payment1
Contractor invoices
Project officer approval of invoices
Proof of payment!
Invoices
1 Proof of payment1
Hourly records of equipment use
Worksheets showing calculations,
if appropriate
' Worksheet showing calculations (if not calculated by accounting
system)
Reports of site visits
Proof of payment should be documented for each expense charged to a site. Generally, a copy of a
payment schedule which includes the check number and the amount is sufficient.
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Cost Recovery and Documentation Guidance
Page 22
EXHIBIT IV-6
Summary of Documents for Retention But Not Necessarily in Site Files
AREA OF COST
SUGGESTED DOCUMENTATION
Payroll
Contractor
Services
Supplies and
Equipment
GS&M Costs
Indirect Costs
CAand
Amendments
Position titles of staff
Salary of staff (annual or hourly rate)
Methodology for determining fringe benefit rate
Proposal
Contractor cost data (EPA form 5700-41)
Cost price analysis of proposal
> Proposal evaluations
Contract
Reports on contractor work
Audits of contractor
Type(s) of materials and supplies furnished
Type(s) of equipment
Contracts
Leases
Purchase orders
Receiving reports
Explanation of "usage rate" calculation
> Allocation Method
> Rate Calculations
Rate agreement
Rate documentation package
Cooperative Agreement
Amendments
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Cost Recovery and Documentation Guidance
Page 23
If a State accounting system does not auto-
matically calculate fringe benefit charges, the
State should document and make accessible an
explanation of how fringe benefits were calcu-
lated. If an allowable fringe benefit rate is not
specified in the State negotiated indirect cost
rate agreement, the calculation of indirect costs
also should be documented.
b. Travel and Reports of Site Visits
States are encouraged to place travel autho-
rizations, travel vouchers and receipts in site
files. These documents will provide proof that
employees traveled to specific destinations for
specific purposes and that costs were paid.
Results of site visits by State personnel
should be documented in site files. The records
will be helpful in verifying contractors' requests
for payment, auditing of contractor services and
recovering costs.
c. Contractor Services
Site files should contain contractor invoic-
es, project officer invoice approval, and proof
of payment. In addition, States are advised to
retain other types of records such as:
Contractors' proposals and cost data
Contracts, statements of work,
work/ change orders
Technical progress reports.
d. Supplies and Equipment
Site files should contain equipment pur-
chase invoices, contractor invoices or equip-
ment lease bills. States are also encouraged to
retain documentation on the types of materials
or supplies purchased for site uses. When pur-
chased equipment is shared between sites, a
"usage rate" should be developed.
e. General Support and Management
Costs
States may elect to allocate general support
and management costs to sites for cost recovery
purposes. Whenever such costs are allocated,
the files should include any worksheets that
detail the calculations used for distributing
costs. The State should also retain a copy of the
cost allocation methodology used.
f. Indirect Costs
If a State does not automatically calculate
indirect charges, its site files should contain
worksheets which outline indirect cost alloca-
tions. The State also should have available a
copy of the Federal indirect cost agreement as
well as the annual indirect cost rate proposal
document.
g. Other
States also may wish to maintain copies of
other documents in site files, including audit
reports, site visit reports, and financial transac-
tions.
3. Site File Reconciliation
States are encouraged to reconcile site files
periodically with accounting system summary
reports. This procedure will allow the State to
identify and file records which were not includ-
ed in site files.
4. Site File Storage
If possible, States should store original site
files in locations protected from fire and water.
Once activities relevant to a particular site have
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Cost Recovery and Documentation Guidance
Page 24
been completed and the statute of limitations
has expired, provisions may be made for long-
term storage. States may wish to microfilm
original expense records. Technical standards
for microfilming are provided in the Hardcopy
Standards Set, referenced in Appendix G.
5. Record Retention
States must retain hard copies of all origi-
nal cost documents for at least three years from
the final expenditure report (Financial Status
Report, SF-269) or for the length of time
required by the State, whichever is longer. If
any litigation, audit, or other action has been
initiated prior to the expiration of the three-year
period, the records must be retained until com-
pletion of the action and resolution of all issues
which arise from it. Before disposing of any
cost documentation, State staff should consider
carefully its relevance to future cost recovery
efforts.
E. COST RECOVERY PACKAGE
PREPARATION
Cost recovery package preparation begins
when the program office decides to initiate a
cost recovery action and requests staff responsi-
ble for recordkeeping and accounting to prepare
cost information for the site. The key document
of the cost recovery package is the cost sum-
mary. The summary, which should be placed in
the front of the cost recovery package, should
identify costs by cost category (salaries, travel,
supplies and equipment, etc.). The rest of the
package is divided into sections containing sup-
porting documentation for each of the cost cate-
gories listed in the summary. For example,
direct staff costs could be portrayed by listing
the hours spent by individual staff on the site.
States should comply with appropriate State
privacy act requirements for redacting; a pro-
cess by which sensitive information contained
in the documents is removed. Costs for each
category should be developed using cost infor-
mation obtained from both site files and the
State accounting system. A critical aspect of
cost documentation preparation is reconciliation
of cost information pulled from both sources.
The cost summary should not be forwarded to
the legal office until the figures obtained from
file copies and the accounting system agree
completely.
At a minimum, each document in the cost
document package should demonstrate that:
Costs are properly charged
The site-specific identifier and account
number agree with the site name
The timesheets indicate appropriate social
security numbers, hours, and account num-
bers
The account numbers and costs are recor-
ded in the State's accounting system
Travelers charged appropriate travel time
to the site, particularly when one or more
sites are visited
Contractor invoices reference the specific
site.
States should appoint a Cost Recovery
Coordinator to assist during the cost recovery
phase. The function of the coordinator is to
track anticipated actions and accomplishments
as well as to review cost documentation pack-
ages for completeness before forwarding to the
State's legal staff. A Cost Recovery Checklist
similar to the one in Appendix F may be useful.
This checklist will aid the coordinator in
reviewing the completeness and financial accu-
racy of the assembled package.
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Cost Recovery and Documentation Guidance
Page 25
F. PROCEDURES FOR COLLECTING
AND HANDLING RECOVERABLE
COSTS
1. Notification of Debtor
Once the cost recovery package is complet-
ed, the State must notify the owner/operator
through a written notice or demand letter of the
amount of funds to be recovered. The State
legal staff should ensure that any letter or other
official notice to the owner/operator includes
the amount due, payment schedule, and interest
rate. Section 2 provides guidance concerning
the interest rate.
2. Interest on Recovered Funds
States will assess interest on recoverable
funds in order to deter responsible parties from
resisting payment in an effort to gain an inter-
est-free loan on uncollected expenditures.
Because States may retain recovered funds for
additional cleanups and recoveries, they may
also retain any recovered interest for additional
eligible activities. As part of their responsibili-
ty for settling claims, States may elect not to
pursue all or part of the collection of interest.
States may decide not to collect interest if the
responsible party is in financial distress, or if
the cost of collection the interest will be more
than the amount collected.
Annually, EPA will notify each State of the
minimum usable interest rate. The minimum
interest rate for the following fiscal year is pub-
lished in the Yearly Percentage Bulletin in
December. The rate of interest assessed will be
equal to the average investment rate for the
Treasury tax and loan accounts. It represents
the current value of funds to the United States
Treasury, and is published by the Treasury
Financial Management Service.
A State may assess a higher rate of interest
if it reasonably determines that this rate is nec-
essary to protect expenditures from the Trust
Fund. The rate of interest will remain fixed for
the duration of the indebtedness, except where
the debtor has defaulted on a repayment agree-
ment and seeks to enter into a new agreement.
New agreements should reflect the current
value of funds to the Treasury at the time of the
new agreement.
Interest shall begin to accrue from the day
the notice of the amount of debt and interest
requirements is mailed or hand-delivered to the
responsible party. Interest should not be
charged if the amount due is paid within 30
days after the notice was post marked or deliv-
ered to the owner/operator. However, the States
may decide, on a case-by-case basis, to extend
the thirty day period.
3. EPA Notification Requirements During
Recovery
If the cost recovery effort proceeds to judi-
cial action, the State must send a copy of the
complaint within one week after official filing
to the EPA Regional Counsel's office. Once a
settlement is reached, the State must report to
EPA the agreed upon amount. If the State is fil-
ing a quarterly Exception Site Report, the State
may satisfy the notification requirement by
entering the amount in the "Settlement" column
of the report. Additionally, when a State
receives payment from a liable owner/operator,
the State must report to EPA the amount
received. If the State is filing a Exception Site
Report, it may satisfy the notification require-
ment by entering the amount in the "Cost
Recovery" column of the report.
4. Disposition of Recovered Funds
When States make successful recoveries at
sites where Trust Fund monies were spent, they
can retain the Trust Fund share as program
income in accordance with Office of Manage-
ment and Budget (OMB) Circular A-102 and
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Cost Recovery and Documentation Guidance
Page 26
40 CFR Part 31.25 or 40 CFR Part 30.525.
States may use program income for additional
Fund-eligible cleanups and activities under their
Cooperative Agreements as long as they
account for and document their expenditures in
accordance with 40 CFR Part 31.25 or 40 CFR
Part 30.525. States may also use program
income to meet their cost share requirements
under Section 9003 (h) (7) (B), Subtitle I of
RCRA. States that intend to apply recovered
funds to the State cost share should first make
certain that they are eligible to do so under their
Cooperative Agreement. States also should
arrange with Regional EPA programs to use
recovered funds for eligible activities as quickly
and efficiently as possible.
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EPA Fiscal Review Program
Page 27
V. EPA FISCAL REVIEW PROGRAM
A. INTRODUCTION
The Fiscal Policies and Procedures Branch
of the Financial Management Division at EPA
has developed a fiscal review program for
assessing State management of LUST Trust
Fund monies. The Regional Servicing Finance
Offices (SFOs) use this guide to structure their
reviews of State LUST Trust Fund financial
accounting, recordkeeping, reporting, cost shar-
ing, and cost recovery practices.
This Chapter provides an overview of the
fiscal review program in order to increase the
States' understanding of the review process.
States may also request to examine the review
guide, which can be obtained from the Regional
SFO.
B. OBJECTIVES OF THE LUST FISCAL
REVIEW
The objectives of the LUST fiscal review
are to:
Assist the State recipient to manage its
LUST Trust Fund dollars effectively
Assist the State recipient to meet the finan-
cial management requirements of the
LUST Cooperative Agreement
Elicit State recipient recommendations for
new or revised EPA guidance or policy
In order to achieve the review objectives,
the Regions will rely on reviews of financial
reports and State records, interviews with State
personnel, and group meetings.
The emphasis of a LUST review is to assist
the recipient's overall capability to manage
LUST Trust Funds and to ensure that the LUST-
specific financial management requirements are
met. The review begins with a series of ques-
tions posed to the recipient. Recipient respons-
es are then used to open discussions of issues
and problems.
C. TIMING OF REVIEWS AND
ORGANIZATION OF THE
REVIEW TEAM
The Regional SFO staff will conduct bien-
nial LUST fiscal reviews for each State with a
LUST Cooperative Agreement. The first
review will be an in-depth examination of rele-
vant LUST financial management issues.
Subsequent reviews will revisit these issues and
will follow up on problem areas identified dur-
ing previous reviews, as appropriate.
Participants in the review are drawn from
both EPA and State financial management orga-
nizations. The team leaders from both sides are
key participants in the review, particularly
since, in some cases, for the two team leaders
may be able to complete the review tasks with-
out further assistance from other financial man-
agement personnel.
D. FISCAL REVIEW PROCEDURES
The LUST fiscal review comprises three
major parts:
Pre-planning phase in which the review
team gathers preliminary data, initiates
contact with the State, and tailors the
review to State recipient needs (two
months prior to the on-site visit for the
review session).
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EPA Fiscal Review Program
Page 28
On-site review ~ in which the EPA and
State review teams meet to discuss perti-
nent financial management issues in depth
(1-2 days). The on-site review comprises:
Introductory session ~ introduction of
review teams and review agenda;
State presentation of LUST financial
management organization and issues
Work sessions discussion in work
groups or interviews focusing on
particular financial management issues
Discussion of results participant
"brainstorming" on opportunities to
improve State LUST financial man-
agement.
Post-review phase in which the EPA
team writes and distributes a summary of
review findings and follows up on State
progress in addressing any problem areas
noted during the review session (3-6 weeks
subsequent to review sessionfollow-up as
needed).
E. CONTENT OF FISCAL REVIEW
WORK SESSION
Although State reviews may vary slightly,
the following financial management topics,
including requirements and recommended prac-
tices, will be covered during the on-site review
activities:
Overall accounting procedures, accounting
system structure and capabilities --
includes issues such as system automation
and documentation; overview of cost
accounting
Budgeting ~ examines authorization for
deviations in budgeted amounts in
Cooperative Agreements; procedures for
changing authorized budgets
Funds control and cash control covers
responsible officials; automation of con-
trols; approval processes for purchases;
methods of accounting for disbursements
Site-specific accounting - reviews time-
frames for establishing site-specific identi-
fiers; methods of incurring and recording
costs at sites
Program-related income covers sources
and methods of accounting for program-
related income
Accounting for direct costs, LUST general
support and management costs, and indi-
rect costs ~ covers payroll and timekeep-
ing; travel charging; use of contractor ser-
vices, equipment, and supplies; allocating
and documenting GS&M costs; calculation
and application of indirect cost rate
Filing and reconciliation procedures cov-
ers issues such as records labeling, storage,
and retention practices; methods of record-
ing and reviewing necessary reconcilia-
tions
Letter of Credit drawdowns and verifica-
tion of cost share examines procedures
for correct use of activity codes; proce-
dures for minimizing the elapsed time
between transfer of funds from the Federal
account and final disbursement; accounting
for cost share; documentation of calcula-
tion of cost share; items included in deter-
minations of in-kind contributions
External reports covers areas such as
responsibility for report preparation and
timely filing; documentation of calcula-
tions forming the basis for financial report-
ing
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EPA Fiscal Review Program Page 29
Procedures for recovering costs and ban- As mentioned above, States may request to
dling recovered costs covers areas such examine the fiscal review guide, which is avail-
as costs used in determining recoverable able from the Regional SFO.
costs; interest assessed on outstanding
costs; procedures for crediting recovered
costs to the State LUST Trust Fund
account; methods for tracking recovered
costs; use of recovered funds for the State
cost share.
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Page A-1
APPENDIX A
LOCATION OF EPA REGIONAL OFFICES AND STATES SERVICED
Region 1
JFK Federal Building
Boston, MA 02203
Mail Codes:
Financial Management Officer: PFS2003
UST Coordinator: HPUCAN2
(617) 565-3715
Connecticut, Massachusetts, Maine, New
Hampshire, Rhode Island, Vermont
Region II
26 Federal Plaza
New York, NY 10278
Mail Code:
Financial Management Officer: 2PM-FIN
UST Coordinator: 2AWM-HWPB
(212)264-2515
New Jersey, New York, Puerto Rico,
Virgin Islands
Field Component
Caribbean Field Office
P.O. Box 792
San Juan, PR 00909
(809) 725-7825
Region III
841 Chestnut Street
Philadelphia, PA 19107
Mail Code:
Financial Management Officer: 3PM31
UST Coordinator: 3HW31
(215) 597-9800
Delaware, Maryland, Pennsylvania, Virginia,
West Virginia, District of Columbia
Region IV
345 Courtland Street, NE
Atlanta, GA 30365
Mail Code: *
UST Coordinator: GWP-3
(404) 347-4727
Alabama, Florida, Georgia, Kentucky,
Mississippi, North Carolina, South Carolina,
Tennesse
Region V
230 South Dearborn Street
Chicago, IL 60604
Mail Code:
Financial Management Officer: 5MFF14JCK
UST Coordinator: 5HR-13-JCK
(312) 353-2000
Illinois, Indiana, Michigan, Minnesota, Ohio,
Wisconsin
* No mail code is necessary when addressing the Financial Management Officer.
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Appendix A
Page A-2
Region VI
1445 Ross Avenue
Dallas, TX 75202
Mail Code:
Financial Management Officer: 6M-PG
UST Coordinator: 6H-A
(214) 655-2200
Arkansas, Louisiana, New Mexico, Oklahoma,
Texas
Region VH
726 Minnesota Avenue
Kansas City, KS 66101
Mail Code: *
UST Coordinator: WSTM-RCRA-STPG
(913) 236-2800
Iowa, Kansas, Missouri, Nebraska
Region VHI
One Denver Place
999 18th Street
Denver, CO 80202-2413
Mail Code:
Financial Management Officer: 8PM-PF
UST Coordinator: 8HWM-RM
(303)293-1603
Colorado, Montana, North Dakota, South
Dakota, Utah, Wyoming
Region IX
215 Fremont Street
San Francisco, CA 94105
Mail Code:
Financial Management Officer: P-4
UST Coordinator: T-2-7
(415)974-8071
Arizona, California, Hawaii, Nevada, American
Samoa, Guam, Palau, Marshall Islands,
Federated States of Micronesia, Northern
Marianas
Field Component
Pacific Islands Office
P.O. Box 50003
300 Ala Moana Boulevard
Room 1302
Honolulu, ffl 96850
(808) 546-8910
Region X
1200 Sixth Avenue
Seattle, WA 98101
Mail Code:
Financial Management Officer: MD-109
UST Coordinator: WD-139
(206)442-5810
Alaska, Idaho, Oregon, Washington
Field Components
Alaska Operations Office
222 West 7th Ave.
Office #19
Anchorage, AK 99513
(907) 271-5083
Alaska Operations Office
3200 Hospital Drive
Juneau,AK 99801
(907) 586-7619
No mail code is necessary when addressing the Financial Management Officer.
-------
Appendix A
Page A-3
-------
Page B-l
APPENDIX B
LUST TRUST FUND ACTIVITY CODES
"7" - General Support and Management -
includes all internal State agency support
and management direct costs which benefit
the overall LUST Trust Fund program.
Also includes external, e.g., contractor,
costs associated with general management,
administrative support, program guidance
and implementation, training, general com-
munity relations support, report and pro-
posal writing, contingency planning, and
contractor support.
"E" - Site Cleanup Actions - includes all
costs associated with site responses taken
to prevent or mitigate threats to public
health, welfare, or the environment posed
by a release (or suspected release) of
petroleum from an underground storage
tank, including emergency responses, site
investigations, exposure assessments, the
planning and design of corrective actions,
and the conduct, management and over-
sight of long-term remedial corrective
actions.
"4" - Enforcement - includes all activities
necessary to identify a potential owner
/operator, such as owner/operator searches,
title searches, and financial assessments.
Also includes activities involved in
issuance of letters, notices and orders to
owner/operator's to provide information,
test tanks, correct leaks and conduct
cleanups associated with petroleum releas-
es from an underground storage tank.
Includes oversight of owner/operator
cleanups, whether taken in response to an
enforcement action (e.g., letters, notices,
orders, orders on consent decrees, judicial
decrees, etc.) or not. Includes all activities
associated with the development and sup-
port of cost recovery cases.
-------
Page C-l
APPENDIX C
INSTRUCTIONS FOR THE PREPARATION OF "REQUEST FOR FUNDS"
(TFS FORM 5805)
The recipient organization shall complete the TFS Form 5805 as follows:
1. PC
2. TO
3. TYPE
4. FROM
5. CL
6. REF
7. AMOUNT
8. SPECIAL HANDLING
INSTRUCTION
9. SENDER
10. ROBANK
11. RECEIVER
(PRIORITY CODE) Leave blank.
The nine-digit routine symbol, 021030059, of the U.S.
Treasury. This item is a constant and must be reflected on all
messages. (If not preprinted, ENTER this number).
The type/subtype code 1031 identifies the message as a
Request for Funds. (If not preprinted, ENTER this code).
Enter the nine-digit identifier of the sending financial institu-
tion as shown on the Letter of Credit.
(CLASS) Leave blank.
(REFERENCE NUMBER) Leave blank.
Enter the total dollar amount of Federal funds requested. This
amount must be properly punctuated to include the cents digits
and must not exceed fourteen (14) positions, including com-
mas and the decimal point. For example, total amount
requested: $1,179,025.00.
(REQ FOR FUNDS) is used to Indicate the purpose of the
the message. (If item is not preprinted, ENTER).
(Sending Financial Institution Name) Enter the telegraphic
abbreviation of the sending financial institution as shown on
the Letter of Credit.
(STATE'S FINANCIAL INSTITUTION) If the State's finan-
cial institution is not the sending financial institution, i.e., the
sending financial institution is acting as a correspondent bank
for the State's financial institution, enter the nine-digit
identifier of the State's financial institution as shown on the
Letter of Credit. If the State's financial institution is the send-
ing financial institution, enter the word SAME in this field.
The telegraphic abbreviation, TREAS LOG, is required on all
messages sent to the U.S. Treasury. (If not preprinted,
ENTER).
-------
Appendix C Page C-2
12. TOO (AGENCY LOCATION CODE OF TREASURY DISBURS-
ING OFFICE) If not preprinted, ENTER (XXX) the three digit
code as shown on the Letter of Credit (SF-1193A). The code
must be entered in parentheses.
13. FPA (AGENCY LOCATION CODE OF THE FEDERAL PRO-
GRAM AGENCY) Enter the eight-digit Agency Location
Code for the EPA office issuing the Letter of Credit as shown
in block 4 of the Letter of Credit, excluding any dashes and/or
spaces.
14. LCN (LETTER OF CREDIT NUMBER). Enter the eight-digit
Letter of Credit number as shown on the Letter of Credit,
excluding any dashes and/or spaces.
15. ACN (STATE'S COMMERCIAL BANK ACCOUNT NUMBER)
Enter the account number at the financial institution to be
credited with the funds, as shown on the Letter of Credit. Do
not include dashes and/or spaces.
16. RQN (REQUEST NUMBER) Enter the number assigned to this TFS
Form 5805. TFS Forms 5805 are to be numbered consecutive-
ly starting with 001. If a TFS Form 5805 is rejected, the next
TFS Form 5805 is assigned the next consecutive number.
17. BOH (BALANCE ON HAND) Enter the total amount, to the nearest
dollar, of EPA funds on hand at the time of submission of the
TFS Form 5805 that is applicable to the award(s) funded
through the Letter of Credit This amount must be in whole
dollars and include commas, not to exceed eleven positions.
For example, $10,787.52 would be shown as 10,788.
18. DLR (DATE OF LAST REQUEST) Enter the date on which the
TFS Form 5805 immediately preceding this TFS Form 5805
was submitted for payment under the Letter of Credit. Sample
entries are illustrated as follows: November 13, 1981, is
entered as 111381; January 8,1982, as 010882.
19. RON (RECIPIENT ORGANIZATION) Enter State name as shown
in the "Treasury Checks To Be Made Payable To:" block on
the Letter of Credit.
-------
Appendix C
Page C-3
20. THIRD PARTY
INFORMATION
21. DATE
22. SIGNATURE/COUNTER
SIGNATURE
23. TITLE
24. DISTRIBUTION OF
TFS FORMS 5805
Enter the first eight digits of the Assistance Identification Num-
followed by an asterisk and the applicable LUST Trust Fund
activity code and corresponding dollar amount. For example,
if the State drawdown is being requested for activity code "7",
General Support and Management, Third Party Information
might show: 00400981*7$ 10,000. If more than one activity
code supports the drawdown, successive information might
show: *E$20,000 (for Site Cleanup Actions) and *4$5,000
(for Enforcement). The Assistance Identification Number
does not have to be repeated if only the activity code varies. If
a drawdown covers more than one assistance agreement, each
project drawdown should be separated by a slash (/). The sum
of all project/activity drawdowns in item 20 must equal the
total amount requested in item 7
Enter the date the TFS Form 5805 is signed.
Signature of a representative authorized on the SF-1194
(signature card) on file at the recipient organization's financial
institution.
Enter the title of the individual signing the TFS Form 5805.
The TFS Forms 5805 are distributed as follows:
The original and duplicate copies will be presented to the
financial institution as early in the day as possible.
The triplicate copy will be retained by the State. (All financial
records and supporting documents will be retained in accor-
dance with established Federal requirements).
Any additional copies may be used as necessary by the State.
-------
Appendix C
Page C-4
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-------
PageD-1
APPENDIX D
RECOMMENDED METHODOLOGY FOR THE ALLOCATION
OF GENERAL SUPPORT AND MANAGEMENT COSTS
A. Introduction
Below is a methodology developed by EPA
for allocating general support and management
(GS&M) costs to sites for cost recovery. The
methodology includes a description of cate-
gories of costs not previously discussed in the
manual and step by step procedures for allocat-
ing GS&M costs in the first and subsequent
years of the Cooperative Agreement. Each step
includes an example calculation using the hypo-
thetical figures presented on pages D-5 and D-6
of this appendix.
B. Categories of Costs for Allocation
Methodologies
In reviewing this allocation methodology,
some distinctions between various types of
costs should be kept in mind:
Start-up costs are the GS&M costs associ-
ated with establishing the State LUST pro-
gram and include such things as costs asso-
ciated with developing a PC notification/
facility tracking system or performing title
searches on potential sites within a State.
For purposes of this example, all start-up
costs are incurred in the first two years of
the Cooperative Agreement
On-going costs are all GS&M costs asso-
ciated with cleanup and enforcement
actions which are not start-up costs. For
the purposes of this methodology, on-going
GS&M costs are determined by calculating
the total amount spent under the
Cooperative Agreement on cleanup and
enforcement activities as a percent of total
Cooperative Agreement costs and multi-
plying this percent by the amount spent on
GS&M costs.
C. Procedures For Allocating GS&M Costs
to Sites in Year 1
Below are the step by step procedures for
allocating GS&M costs.
(1.) Distinguish start-up costs from on-going
costs
Add the amount charged to "E" and "4";
divide by sum of "E", "4" and "7" to determine
the percent of the total amount spent under the
CA for cleanup and enforcement activities.
($170,000 + $10,000) / ($980,000) = 18.3674%
Multiply the resulting percent by the
amount charged to "7" to determine the amount
of GS&M attributable to on-going GS&M.
(This assumes that the amount of on-going
GS&M costs is directly proportional to the
amount of direct site costs in a given year.)
Z% x "7" = on-going GS&M
18.3674% x 800,000 = 146,939
Subtract the amount of on-going GS&M from
the total charged to "7" to determine start-up
GS&M costs.
"7" - on-going GS&M = start-up GS&M (S)
$800,000 - $146,939 = $653,061
(2.) Amortize start-up costs over the life
oftheCA
-------
Appendix D
Page D-2
Amortize GS&M start-up costs over the
life of the Cooperative Agreement by applying
to the total amount of start-up costs a fraction
which increases from year to year. This allows
start-up costs to be allocated equitably over
sites worked on during the course of the CA
assuming that the number of sites increases
each year. The numerator of the fraction is
equal to the number of years from which the
start-up costs were incurred. The denominator
is the same for each year and is equal to the
sum of all numerators. Since on-going costs
generally increase from year to year, the ratio
of start-up costs to on-going costs will remain
constant.
YEARS
12345
Sxl/15 Sx2/15 Sx3/15 Sx4/15 Sx5/15
$653,061 x (1/15)
$653,061 x (2/15)
$653,061 x (3/15)
$653,061 x (4/15)
$653,061 x (5/15)
$43,537
$87,075
$130,612
$174,150
$217,687
Total = $653,061
(3.) Determine the total amount of GS&M
costs to be used to determine the cost rate
Add the portion of start-up costs for year 1
calculated in step 2 to the on-going GS&M
costs for year 1 to determine the total GS&M
costs used in year 1
(S x 1/15) + on-going GS&M
= total GS&M (Year 1)
$43,537 + $146,939 = $190,476
(4.) Calculate the appropriate cost rate
Divide the GS&M costs calculated in Step
3 by the amount of direct site expenditures for
that year
GS&M(Year 1) / ("E" + "4") = cost rate
$190,476/ ($170,000 + $10,000) = 105.8200%
(5.) Apply the cost rate to the direct costs for
each cleanup or enforcement site
Multiply the cost rate by the amount of
direct site expenditures
cost rate x Site E = GS&M(Year 1) for Site E
cost rate x Site 4 = GS&M(Year 1) for Site 4
1.0582 x $85,000 = $89,947
1.0582x $5,000= $5,291
D. Procedures for Allocating Costs in
Year 2
(1.) For every year with start-up costs, same
formula as Year 1
("E" + "4") / ("E" + "4" + "7") x "7"
= on-going GS&M
"7 "-on-going GS&M = S
$285.000. $15.000
$1,000,000
$700,000 - $210,000 = $490,000
-------
Appendix D
Page D-3
(2.) For every year with start-up costs, same
formula as Year 1
S x 1/10
$490,000 x 1/10 = $49,000
(3.) Add the portion of start-up and on-going
costs to be allocated to sites cleaned up in
the current year
S(2/15) + S(l/10) + on-going GS&M
= GS&M(Year 2)
$87,075 + $49,000 + $210,000
= $346,075
(4.) Calculate the appropriate cost rate
Divide the GS&M costs for year 2 calculat-
ed in Step 3 by the amount of direct site expen-
ditures for year 2
GS&M(Year 2) / ("E" + "4") = cost rate
$346,075 / ($285,000 + $15,000) = 115.3583%
(5.) Multiply the cost rate by the amount of
direct site expenditures
cost rate x Site E = GS&M(Year 2) for Site E
cost rate x Site 4 = GS&M(Year 2) for Site 4
1.153583 x $71,250 = $82,193
1.153583 x $3,750 = $4,326
-------
Appendix D
Page D-4
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-------
Appendix D
Page D-5
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-------
PageE-1
APPENDIX E
FINANCIAL STATUS REPORT
(Short Form)
(Follow instructions on the back)
1. Federal Agency and Organizational Element
to Which Report is Submitted
2. Federal Grant or Other Identifying Number Assigned
By Federal Agency
OMB Approval
No.
0348-0039
Page
pages
3. Recipient Organization (Name and complete address, including ZIP code)
4. Employer Identification Number
5. Recipient Account Number or Identifying Number
8. Final Report
D Yes Q No
7. Baas
QCash O Accrual
8. Funding/Grant Period (See Instructions)
From: (Month. Day, Year)
To: (Month, Day. Year)
9. Period Covered by this Report
From: (Month, Day, Year)
To: (Month. Day, Year)
lO.Transactnns:
Previously
Reported
II
Tins
Period
III
Cumulative
a. Total outlays
b. Recipient share of outlays
c. Federal share of outlays
d. Total unliquidated obligations
e. Recipient share of unliquidated obligations
f Federal share of unliquidated obligations
g. Total Federal share f Sum of lines c and f)
h. Total Federal funds authonzed for this funding period
i. Unobligated balance of Federal funds (Une h minus line g)
11. Indirect
Expense
a. Type of Rate (Place "X" in appropriate box)
Q Provisional D Predetermined
Final
D Fixed
d. Total Amount
e. Federal Share
12. Remarks. Attach any explanations deemed necessary or information required by Federal sponsoring agency in compliance with governing
legislation.
13. Certification: I certify to the best of my knowledge and belief that this report is correct and complete and that all outlays and
unliquidated obligations are for the purpose* set forth in the award document*.
Typed or Printed Name and Tide
Telephone (Area code, number and extension)
Signature of Authonzed Certifying Official
Date Report Submitted
Previous Editions not Usable
SUndird Form 269A (REV <-M)
Prescribed by OMB Oculars A-102 and A-110
-------
Appendix E
Page E-2
FINANCIAL STATUS REPORT
(Short Form)
Please type or print legibly. The following general instructions explain how to use the form itself. You may need
additional information to complete certain items correctly, or to decide whether a specific item is applicable to this
award. Usually, such information will be found in the Federal agency's grant regulations or in the terms and
conditions of the award. You may also contact the Federal agency directly.
Item Entry Item Entry
1, 2 and 3. Self-explanatory.
4. Enter the employer identification number
assigned by the U.S. Internal Revenue Service.
5. Space reserved for an account number or other
identifying number assigned by the recipient.
6. Check yes only if this is the last report for the
period shown in item 8.
7. Self-explanatory.
8. Unless you have received other instructions from
the awarding agency, enter the beginning and
ending dates of the current funding period. If this
is a multi-year program, the Federal agency
might require cumulative reporting through
consecutive funding periods. In that case, enter
the beginning and ending dates of the grant
period, and in the rest of these instructions,
substitute the term "grant period" for "funding
period."
9. Self-explanatory.
10. The purpose of columns, I, II and III is to show the
effect of this reporting period's transactions on
cumulative financial status. The amounts
entered in column I will normally be the same as
those in column HI of the previous report in the
same funding period If this is the first or only
report of the funding period, leave columns I and
II blank. If you need to adjust amounts entered
on previous reports, footnote the column I entry
on this report and attach an explanation.
lOa. Enter total program outlays less any rebates,
refunds, or other credits. For reports prepared on
a cash basis, outlays are the sum of actual cash
disbursements for direct costs for goods and
services, the amount of indirect expense charged,
the value of in-kind contributions applied, and
the amount of cash advances and payments made
to sub-recipients. For reports prepared on an
accrual basis, outlays are the sum of actual cash
disbursements for direct charges for goods and
services, the amount of indirect expense
incurred, the value of in-kind contributions
contributions applied, and the net increase or
decrease in the amounts owed by the recipient for
goods and other property received, for services
performed by employees, contractors,
subgrantees and other payees, and other
amounts becoming owed under programs for
which no current services or performances are
required, such as annuities, insurance claims,
and other benefit payments.
lOb. Self-explanatory.
lOc. Self-explanatory.
lOd. Enter the amount of unliquidated obligations,
including unliquidated obligations to subgran-
tees and contractors.
Unliquidated obligations on a cash basis are
obligations incurred, but not yet paid. On an
accrual basis, they are obligations incurred, but
for which an outlay has not yet been recorded.
Do not include any amounts on line lOd that have
been included on lines lOa, b or c.
On the final report, line lOd must be zero.
lOe, f, g, h and i. Self-explanatory.
lla. Self-explanatory.
lib. Enter the indirect cost rate in effect during the
reporting period.
lie. Enter the amount of the base against which the
rate was applied.
lid. Enter the total amount of indirect costs charged
during the report period.
lie. Enter the Federal share of the amount in lid.
Note: If more than one rate was in effect during the
period shown in item 8, attach a schedule
showing the bases against which the different
rates were applied, the respective rates, the
calendar periods they were in effect, amounts
of indirect expense charged to the project, and
the Federal share of indirect expense charged
to the project to date.
-------
Appendix E
Page E-3
FINANCIAL STATUS REPORT
(Long Form)
(Follow instructions on tfie back)
i Federal Agency and Organizational Element
to Which Report a Submrtted
2 Federal Grant or Other Identifying Number Assigned OMB Approval Page of
By Federal Agency No
0348-0039
pages
3 Recipient Organization (Name and complete address, including ZIP code)
4. Employer Identification Number 5 Recipient Account Number or Identifying Number 5 Ftnai Report
Q Yes Q No
8. Funding/Grant Penod {See instructions)
From: (Month. Day, Year) To- (Month, Day, Year)
10 Transactions:
a. Total outlays
b Refunds, rebates, etc.
c Program income used in accordance with the deduction alternative
d Net outlays (Line a. /ess the sum of lines b and c)
Recipient's share of not outlays, consisting oft
e Third party (in-kind) contributions
f Otner Federal awards authorized to be used to match this award
g Program income used in accordance with the matching or cost
sharing alternative
h All other recipient outlays not shown on lines e, f or g
i Total recipient share of net outlays (Sum of lines e, f, g and h)
j Federal snare of net outlays (line d less line i)
7 Basis
QCash Q Aocmal
9. Penod Covered by this Report ,
From: (Month, Day, Year) To. (Month, Day. Year)
1
Previously
Reported
k Total unliquidated obligations ts^SWs^fe^y^
1. Recipient's snare of unliquidated obligations JliiiiHiBiilBlil
J^ftMaBMnBMiMBg^pi
m Federal share of unliquidated obligations HHHi^HttB
H^HH^B
o Total federal funds autnotued for Itiis funding penod JSIHJIilillSSS
R|ijllll«^|yHi|»^^^^p
p Unobligated balance of lederal funds (Una o minus line n) 1HB1|||||||||||
KK"5WlST'W!yGh'W3**R3iP
Program income, consisting of IH^H^MttM
q Disbursed program income shown on lines c and/or g above HaBJ^mmlBliJil
ii
This
Penod
! liiKliliiiiSiil
iiS^sflaliOisSrai
il£g£«£|fffifgflHg|[g
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raira^HHi
ill
Cumulative
r Disbursed program income using the addition alternative ^^^j^^^a^fmm^^^^^^^^iM
B^^Wli^BBBiBSBml^ffi^^Wi^^^H^^^^^^B
s Undisbursed program income ^^BmpE|m^BBHiiBiii^^teHH^B
t Total program income realized (Sum of lines g. r and s) 1^3ji^||^^BI^EraHH569i^^9H
QBnHI^HraaHi^nBlH^^^H^^^^BBH^Hi^^l
1 1 Indirect
Expense
a. Type of Rate (Place "X" in appropriate box)
Q Provisional D Predetermined Q Final "Q Fixed
b Rate c
Base d. Total Amount e. Federal Share
12 Remarks Attach any explanations deemed necessary or information required by Federal sponsoring agency in compliance with
governing legislation
13 Certification
I certify to the test of my knowledge and belief that this report is correct and complete and that all outlays and
unliquidated, obligations are for the purposes set forth in the award documents.
Typed or Printed Name and Title
Signature of Authorized Certifying Offcial
Previous Editions not Usaote
Telephone (Area code, number and extension}
Date Report Submitted
Standard Fotm 269 i«EV i aa
Prescnbed by OMB Orcuars A ioi anu A i u
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Appendix E
Page E-4
FINANCIAL STATUS REPORT
(Long Form)
Please type or print legibly. The following general instructions explain how to use the form itself. You may need
additional information to complete certain items correctly, or to decide whether a specific item is applicable to this
award. Usually, such information will be found in the Federal agency's grant regulations or in the terms and
conditions of the award (e.g, how to calculate the Federal share, the permissible uses of program income, the
value of in-kind contributions, etc.). You may also contact the Federal agency directly.
Jlan Entry item Entnt
1, 2 and 3. Self-explanatory.
4. Enter the employer identification number
assigned by the U.S. Internal Revenue Service.
Space reserved for an account number or other
identifying number assigned by the recipient.
5.
6. Check yet only if this is the last report for the
period shown in item 8.
7. Self-explanatory.
8. Unless you have received other instructions from
the awarding agency, enter the beginning and
ending dates of the current funding period. If this
is a multi-year program, the Federal agency
might require cumulative reporting through
consecutive funding periods In that case, enter
the beginning and ending dates of the grant
period, and in the rest of these instructions,
substitute the term "grant period" for "funding
period."
9. Self-explanatory.
10. The purpose of columns, I, II and III is to show
the effect of this reporting period's transactions
on cumulative financial status. The amounts
entered in column I will normally be the same
as those in column III of the previous report in
the same funding period. If this is the first or
only report of the funding period, leave columns
I and II blank. If you need to adjust amounts
entered on previous reports, footnote the
column I entry on this report and attach an
explanation.
lOa. Enter total gross program outlays. Include
disbursements of cash realized as program
income if that income will also be shown on
lines lOc or lOg. Do not include program income
that will be shown on lines lOr or 1 Os.
For reports prepared on a cash basis, outlays are
the sum of actual cash disbursements for direct
costs for goods and services, the amount of
indirect expense charged, the value of in-kind
contributions applied, and the amount of cash
advances payments made to subrecipients. For
reports prepared on an accrual basis, outlays
are the gum of actual cash disbursements for
direct charges for goods and services, the
amount of indirect expense incurred, the value
of in-kind contributions applied, and the net
increase or decrease in the amounts owed by the
recipient for goods and other property received,
for services performed by employees, contrac-
tors, subgrantees and other payees, and other
amounts becoming owed under programs for
which no current services or performances are
required, such as annuities, insurance claims,
and other benefit payments.
lOb. Enter any receipts related to outlays reported
on the form that are being treated as a
reduction of expenditure rather than income,
and were not already netted out of the amount
shown as outlays on line lOa.
lOc. Enter the amount of program income that was
used in accordance with the deduction
alternative.
Note: Program income used in accordance with other
alternatives is entered on lines q, r, and s.
Recipients reporting on a cash basis should
enter the amount of cash income received; on an
accrual basis, enter the program income earned
Program income may or may not have been
included in an application budget and/or a
budget on the award document. If actual income
is from a different source or is significantly
different in amount, attach an explanation or
use the remarks section.
lOd, e, f, g, h, i andj. Self-explanatory
10k. Enter the total amount of unliquidated
obligations, including unliquidated obligations
to subgrantees and contractors.
Unliquidated obligations on a cash basis are
obligations incurred, but not yet paid On an
accrual basis, they are obligations incurred, but
for which an outlay has not yet been recorded
Do not include any amounts on line 10k that
have been included on lines lOa and lOj
On the final report, line 10k must be zero
101. Self-explanatory.
10m. On the Final report, line 10m must also be zero.
lOn, o, p, q, r, s and t. Self-explanatory.
1 la. Self-explanatory.
lib. Enter the indirect cost rate in effect during the
reporting period.
lie. Enter the amount of the base against which the
rate was applied.
lid. Enter the total amount of indirect costs charged
during the report period.
lie. Enter the Federal share of the amount in 1 Id.
Note: If more than one rate was in effect during the
period shown in item 8, attach a schedule
showing the bases against which the different
rates were applied, the respective rates, the
calendar periods they were in effect, amounts of
indirect expense charged to the project, and the
Federal share of indirect expense charged to the
project to date.
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Appendix E
Page E-5
FEDERAL CASH TRANSACTIONS REPORT
(See instructions on the back. If report is for more than one grant or
assistance agreement, attach completed Standard Form S7S-A.)
2. RECIPIENT ORGANIZATION
Name
Number
and Street
City, Stole
and ZIP Code:
3. FEDERAL EMPLOYER k
IDENTIFICATION NO. "
11. STATUS OF
FEDERAL
CASH
(See specific
instructions
on the back)
12. THE AMOUNT SHOWN
ON LINE 11J, ABOVE,
REPRESENTS CASH RE-
QUIREMENTS FOR THE
ENSUING
Days
Approved by Office of Management and Budget, No. 8O-RO182
1. Fcdirel ipantorlni umcy ««d ouinliitlonil iltmmt to which thii (.port
it lubmittid
4. Ftdtnl irtnt or other idintlflca-
lion number
6. Letter of credit numb«r
5. RKipiint't iccount number or
identifying number
7. lilt piymint voucher number
Give total number for this period
8. Pijrmtnt Vrachon credited to
your eccount
9. Trwtury check* received ( whether
or not depo«ited)
10. PERIOD COVERED BY THIS REPORT
FROM (month, day, year) TO (month, day year)
a. Cash on hand beginning of reporting period
b. Letter of credit withdrawals
c.' Treasury check payments
d. Total receipts (Sum of lines b and c)
e. Total cash available (Sum of lines a and d)
f. Gross disbursements
g. Federal snare of program income
h. Net disbursements (Line f minus line g)
i. Adjustments of prior periods
j. Cash on hand end of period
$
$
13. OTHER INFORMATION
a. Interest income
b. Advances to subgrantees or subcontractors
$
$
14. REMARKS (A ttach additional sheets of plain paper, if more space is required)
15.
CERTIFICATION
1 certify to the best of my
knowledge and belief that
this report is true in all re-
spects and that all disburse-
ments have been made for
the purpose and conditions
of the grant or agreement
AUTHORIZED
CERTIFYING
OFFICIAL
SIGNATURE
DATE REPORT SUBMITTED
TYPED OR PRINTED NAME AND TITLE
(Aria Code) (Number) (£zf«iuion)
TELEPHONE |
THIS SPACE FOR AGENCY USE
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Appendix E
Page E-6
FEDERAL CASH TRANSACTIONS REPORT
CONTINUATION
(This form is completed and attached to Standard Form 271 only when,
reporting more than one grant or assistance agreement.)
Approved by Office of Management and Budget No. 80-RO182
1. FEDERAL SPONSORING AGENCY AND ORGANIZATIONAL
ELEMENT TO WHICH THIS REPORT IS SUBMITTED
2. RECIPIENT ORGANIZATION (Give name onlv iHou-n on SF nt\
FROM (montk. dan. I/ear)
TO I Month, dan, war)
4. List information below for each grant or other agreement covered by this report. Use additional forms if more space is required.
FEDERAL GRANT OR OTHER
IDENTIFICATION NUMBER
(Show a subdivision by other identi-
fying numbers if required by the
Federal Sponsoring Agency)
RECIPIENT ACCOUNT NUMBER
OR OTHER
IDENTIFYING NUMBER
FEDERAL SHARE OF NET DISBURSEMENTS
NET DISBURSEMENTS K.Von.
rfiM/iur«rifirnM ln» program in-
mar rrnived) FOR REPORTING
EftlOO
-i£L
CUMULATIVE
NET DISBURSEMENTS
5. TOTALS (Should correspond with amounts shown on SF 272 as
follows: column (c) the same as line llh ; column (d) the Hum of lines
Jlh and Hi of this SF S7t and cumulative dixburKtmentit xliown on
last report. Attach explanation of any differences.)
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Appendix E
Page E-7
INSTRUCTIONS
Please type or print legibly. Items 1, 2, 8, 9, 10, lid, lie, llh, and 15 are self explanatory, specific
instructions for other items are as follows:
Item
Entry
Entry
Item
3 Enter employer identification number assigned by the
U.S. Internal Revenue Service or the FICE (institution)
code.
If this report covers more than one grant or other
agreement, leave items 4 and 5 blank and provide the
information on Standard Form 272-A, Report of Fed-
eral Cash TransactionsContinued; otherwise;
4 Enter Federal grant number, agreement number, or
other identifying numbers if requested by sponsoring
agency.
5 This space reserved for an account number or other
identifying number that may be assigned by the re-
cipient.
6 Enter the letter of credit number that applies to this
report. If all advances were made by Treasury check,
enter "NA" for not applicable and leave items 7 and 8
blank.
7 Enter the voucher number of the last letter-of-credit
payment voucher (Form TUS 5401) that was credited
to your account.
lla Enter the total amount of Federal cash on hand at the
beginning of the reporting period including all of the
Federal funds on deposit, imprest funds, and unde-
posited Treasury checks.
lib Enter total amount of Federal funds received through
payment vouchers (Form TUS 5401) that were cred-
ited to your account during the reporting period.
lie Enter the total amount of all Federal funds received
during the reporting period through Treasury checks,
whether or not deposited.
llf Enter the total Federal cash disbursements, made
during the reporting period, including cash received
as program income. Disbursements as used here also
include the amount of advances and payments less
refunds to subgrantees or contractors, the gross
amount of direct salaries and wages, including the
emplopee's share of benefits if treated as a direct cost,
interdepartmental charges for supplies and services,
and the amount to which the recipient is entitled for
indirect costs.
llg Enter the Federal share of program income that was
required to be used on the project or program by the
terms of the grant or agreement.
Hi Enter the amount of all adjustments pertaining to prior
periods affecting the ending balance that have not
been included in any lines above. Identify each grant or
agreement for which adjustment was made, and enter
an explanation for each adjustment under "Remarks."
Use plain sheets of paper if additional space is required.
1 Ij Enter the total amount of Federal cash on hand at the
end of the reporting period. This amount should include
all funds on deposit, imprest funds, and undeposited
funds (line e, Hess line h, plus or minus line i).
12 Enter the estimated number of days until the cash on
hand, shown on line llj, will be expended. If more than
three days cash reqirements are on hand, provide an
explanation under "Remarks" as to why the drawdown
was made prematurely, or other reasons for the excess
cash. The requirement for the explanation does not
apply to prescheduled or automatic advances.
13a Enter the amount of interest earned on advances of
Federal funds but not remitted to the Federal agency.
If this includes any amount earned and not remitted to
the Federal sponsoring agency for over 60 days, explain
under "Remarks." Do not report interest earned on
advances to States.
13b Enter amount of advance to secondary recipients in-
cluded in item llh.
14 In addition to providing explanations as required above,
give additional explanation deemed necessary by the
recipient and for information required by the Federal
sponsoring agency in compliance with governing legis-
lation. Use plain sheets of paper if additional space is
required.
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Appendix E
Page E-8
EXCEPTION SITE REPORT
POLICY
Site reporting will be triggered when State
program managers plan expenditures exceeding
$100,000 at a particular site. Reporting will
continue as States encumber or obligate Trust
Fund monies in accordance with these plans.
The State will continue to update information
on a site until it becomes "inactive." For the
purposes of this report, "inactive" will be
defined as sites on which no obligation or out-
lay has occurred for two successive quarters.
For each site reported, States should
include the site name, the total planned expen-
ditures, cumulative obligations, cumulative out-
lays, and any settlements and cost recoveries of
LUST Trust Fund money. Some of these data
elements require further explanation as follows:
Amount Planned: These are the State pro-
gram manager's estimates of total site pro-
ject costs which required use of the LUST
Trust Fund. These estimates are the pro-
gram manager's best projections based on
discussions with contractors, site assess-
ments and other relevant information.
These estimates may be higher than what
has been encumbered or obligated at the
time of reporting; however, these numbers
should reflect concrete plans to spend in
the future.
Amount Obligated: There is often confu-
sion regarding terms such as encumbrances
and obligations. For the purposes of this
report, that which the States generally refer
to as encumbrances are essentially the
same as what the Federal government calls
obligations. Obligations are funds that are
dedicated to a specific site but have not
been spent.
Amount Outlayed: This column should
exhibit actual expenditures related to a site
as the State draws down money from its
Federal account to pay for Trust Fund-
eligible activities.
Judgments/Settlements and Cost Recov-
ered: When the State receives a binding
settlement document, (i.e., court order,
consent decree, etc.) it should be reported
in the Settlement column. The Cost
Recovery column should be used to report
actual payments received. For example, a
State may report a $50,000 settlement and,
if the RP has not paid in full or is on a pay-
ment schedule, the cost recovery column
would reflect only the amount received.
A demand letter or bill alone is not consid-
ered a settlement because these mechanisms are
not "binding." However, if a State issues a bill
or demand letter and full payment is received,
thereby closing the case, then the amount
received should be entered in both columns.
If a State should receive a partial payment
before a full settlement is reached, the State
should enter the amount received in both
columns and update them when the final settle-
ment is reached.
Total Judgments and Settlements/Total
Costs Recovered: Enter the dollar value of
all binding settlements to date which
involve LUST Trust Fund money. This
value should include both the sites where
Trust Fund expenditures were less than
$100,000 as well as those listed in the
report. In the second blank, enter the
cumulative amount of money to date that
has been received by the State as a result of
its cost recovery efforts.
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Appendix E
Page E-9
Action Codes:
N - Current Quarter Activity
D - Delete entry, previously recorded data
was incorrect
A- Added corrections to previously
reported data.
Exception Codes: Report any site which
involves the actions listed below, whether
expenditures exceed $100,000 or not.
Reporting such sites enables headquarters
to inquire, observe, and learn about innova-
tive methods to alleviate the burden of
spills from USTs.
1 - State plans to use innovative or experi-
mental technology at the site
2 - State plans to provide permanent alter-
native water supply
3 - State plans to permanently relocate
residents.
Reporting Frequency, Recipients and
Regional Responsibilities
States should address quarterly reports to
the Regional UST Program Manager. Reports
are due in the Regional Office eight days after
the end of each Federal fiscal quarter.
The UST Program Manager has the respon-
sibility to send this report to the Regional
Financial Management Officer (FMO). These
two people will cooperate to address any ques-
tions concerning late or missing reports, or
potentially inaccurate data, and to prepare the
reports for headquarters use.
Inquiries
If you have any questions regarding this
report, please contact your Regional FMO or
UST Regional Program Manager. At headquar-
ters you may contact the Budget Division at
(202) 382-4198 or the Office of Underground
Storage Tanks at (202) 475-7265.
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Appendix E
i
-------
PageF-1
APPENDIX F
COST DOCUMENTATION CHECKLIST
I. GENERAL INFORMATION
SITE NAME
SITEID#
LOCATION
(City, State)
NATURE OF CLEANUP ACTION
STATE PROJECT OFFICER:
LEGAL CONTACT:
OWNER/OPERATOR:
II. COST DOCUMENTATION
PREPARATION
1) Have you verified the accuracy and com-
pleteness of the following costs through
reconciling the cost documentation and
accounting system information:
_ Payroll
_ Travel
Contractor Services
Supplies and Equipment
General Support & Management
(GS &M) Costs
Indirect Costs (as applicable)
_ Other
2) Have you ensured that:
Costs are properly charged to the site
Account number agrees with site name
Timesheets indicate appropriate Social
Security numbers, hours and account
numbers
Costs are accurately reflected in State
accounting system
Contractor invoices reference the
specific site
3) Are all relevant documents attached?
_Yes _No If not, why?
4) Has the owner/operator requested the
expense records?
_Yes _No
If yes, has someone performed the process
of redacting?
_Yes _No
_Yes _No
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Appendix F
PageF-2
5) Have you notified the owner/operator of
payment terms and procedures? Do you
have a copy of a letter stating the payment
terms?
_Yes _No
6) Have you received a signed agreement
from the owner/operator?
3) Date of checklist preparation.
Yes
No
7) Was the case closed prior to settlement?
_Yes _No
HI. COST SUMMARY
1) Total costs documented
2) Time period of costs incurred
through
4) Preparer_
IV. STATUS OF ACTION
.Demand letter to be sent
Trial date
In discovery
_Filed
Statute of limitations
In negotiations
Other
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PageG-1
APPENDIX G
REFERENCES
This appendix provides State managers
with information on available reference materi-
als. The appendix lists and gives a brief synop-
sis of the EPA and other Federal reference
materials that could be useful to State man-
agers.
A. LUST Trust Fund Cooperative
Agreement Guidelines; OSWER
Directive 9650.10
The purpose of this directive is to assist
States in administering Cooperative
Agreements containing FY 89 Trust Fund
monies. The directive includes a discussion of
financial policies in the following areas:
State cost share requirements
Allowable costs
Program appraisal reporting requirements
Also included is a list of previously issued
EPA guidance which this directive supersedes.
The directive is available from the EPA Office
of Underground Storage Tanks (OUST).
B. Cost Recovery Policy for the Leaking
Underground Storage Tank Trust Fund;
OSWER Directive 9610.10, October 7,
1988
This OSWER directive contains a complete
statement of EPA's policies on cost recovery
under the LUST Trust Fund as well as a list of
the special conditions for inclusion in LUST
Cooperative Agreements. The directive discuss-
es the following topics:
State and Federal roles in cost recovery
Recoverable costs
Interest charge
Priorities for cost recovery
Documentation of costs
This directive is available from the EPA
Office of Underground Storage Tanks (OUST).
C. State LUST Trust Fund Fiscal Review
Guide
This document outlines EPA's financial
management objectives for recipients of LUST
Cooperative Agreements. It also delineates the
criteria which EPA will employ when assessing
States' performance. This is available from the
EPA Financial Management Division.
D. State Superfund Financial Management
and Recordkeeping Guidance
This EPA manual provides agency-wide
policies and procedures for the Superfund pro-
gram. States may find that some of this infor-
mation may be applicable to the implementa-
tion of the LUST Trust Fund program. This
guidance is available from the EPA Financial
Management Division.
E. Office of Management and Budget
Circular A-87
This circular discusses procedures for indi-
rect cost allocation and submission of State
indirect cost allocation plans for Federal
approval. It provides methods of calculating
indirect cost rates and obtaining EPA approval
for those rates. Circular A-87 is available from
the OMB Financial Management Branch.
F. Office of Management and Budget
Circular A-102
This circular establishes uniform adminis-
trative requirements for States. Requirements
for submitting financial reports and spending
program income are included. Circular A-102
is available from the OMB Financial
Management Branch.
-------
Page G-2
G. 40 Code of Federal Regulations (C.F.R.)
Part 30 and Part 31
This part of 40 CFR 30 and 31 contains the
EPA general requirements for Cooperative
Agreements to States. This is available from
the EPA Grants Administration Division
(GAD).
H. Letter of Credit - Treasury Financial
Communication System (LOC - TFCS)
Recipient's Manual
This EPA manual discusses the require-
ments for establishing a Letter of Credit, and
for amending it if necessary. Also, procedures
for drawing down the necessary funds are
explained. A section on Financial Status
Reporting is also included. This manual is
available from the EPA Financial Management
Division.
I. Assistance Administration Manual
This EPA manual describes specific
requirements for all EPA assistance recipients.
Key chapters are as follows:
Chapter 19 - Recipient Record Require-
ments
Chapter 20 - Accounting and Internal
Management
Chapter 21 - Procurement under Assistance
Agreements
Chapter 22 - Cost and Price Analysis
Chapter 26 - Property Management
Chapter 27 - Real Property Acquisition
The manual is available from the EPA
Grants Administration Division.
J. Hardcopy Standards Set
The American National Standards Institute
sets technical standards for microfilming of
records that should be followed by States wish-
ing to microfilm LUST Trust Fund expense
documents. The complete set of microfilm
standards, called the Hardcopy Standards Set, is
available from:
Association for Information and
Image Management
Suite 1100
1100 Wayne Avenue
Silver Spring, MD 20910
(301) 587-8202
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