&EPA
United States
Environmental Protection
Agency
Administration And
Resources Management
(3304)
EPA 205-R-96-006
December 1996
1996 Integrity Act Report To
The President And Congress
Federal Managers'
Financial Integrity Act (RL. 97-255)
October 1, 1995-September 30, 1996
EPA REGION VII IRC
091432
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Cover artwork from EPA's 1996 management integrity
guidance booklet, A Managers "How To " Guide for
Program Reviews: Seeing the Forest and the Trees, March 1996.
Original drawing by John Ozimina.
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$
- -^—'- a UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
5 V9V9V o umicu OIMIEO cnvinwnmcniMi. rnwiE
* -VHy-_T WASHINGTON, D.C. 20460
\~ jV
DEC | 6 1996
THE ADMINISTRATOR
The President
The White House
Washington, DC 20500
Dear Mr. President:
I am pleased to report that the Environmental Protection Agency's (EPA) management
and financial control systems, with exceptions noted, provide reasonable assurance that the
Agency's programs and resources are protected from fraud, waste, and abuse. In my judgment,
EPA has achieved the intent of the Federal Managers' Financial Integrity Act of 1982, (P.L. 97-
255), to prevent problems through systematic review and evaluation of the Agency's management
and financial controls.
My assurance to you is based on EPA's annual self-evaluation, conducted in accordance
with the Office of Management and Budget's (OMB) national management integrity guidance
under Circular A- 1 23 , Management Accountability and Control. Over the last year, EPA' s
Assistant and Regional Administrators carried out this policy by exercising personal judgment in
reviewing their operations and in identifying, correcting, and reporting significant issues that
affect the management of the Agency's environmental programs.
In September 1996, my Senior Leadership Council (SLC) met with senior managers from
OMB, the General Accounting Office (GAO) and EPA's Inspector General, to hear their views of
the Agency's most significant management problems. This annual discussion is of great assistance
to our Assistant and Regional Administrators in making their independent assessments of their
environmental programs and operations. Our senior managers held follow-up meetings with our
oversight agencies to clarify positions and to provide updates on EPA's progress in addressing the
issues raised in September. I am pleased to report that these sessions were very helpful to all
parties in gaining a better understanding and appreciation of each other's perspectives.
The SLC met again on November 26, 1996, to review the results of the Agency's self-
evaluations, including the Assistant and Regional Administrators' formal responses to the views of
our oversight colleagues at OMB and GAO. The SLC then developed independent
recommendations on EPA's material management control weaknesses and financial non-
conformances for my final decision, which I am conveying to you in this report.
Printed on Recycled Paper
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As a result of this systematic Agency-wide evaluation, I am very pleased to report that
EPA has corrected three of its six current material management control weaknesses in FY 1996:
1) Research and Development Operating Expenses; 2) Drinking Water Primacy, and 3)
Research and Development Extramural Resources. These weaknesses were identified an average
of more than five years ago, and their final correction reflects the results of sustained management
attention, especially in last year's very challenging fiscal climate.
The Agency is carrying over three material weaknesses into fiscal year 1997: 1)
Accounting System-Related Financial Management Problems; 2) Information Resources
Management Planning and Investment; and 3) Environmental Data Quality. EPA is also
carrying over its three material financial non-conformances with government-wide accounting
standards. This latter action is a result of the government shutdowns and many FY 1996
Continuing Resolutions, which affected the Agency's ability to obligate funds for these areas,
delaying their correction as scheduled.
Finally, I am identifying two new material weaknesses in FY 1996: 1) Grants Close Outs
and Oversight of Assistance Agreements; and 2) Construction Grants Close Out. These areas,
while significant, had previously been identified by EPA managers, and targeted for ongoing
corrective action as Agency weaknesses. I believe that declaring these areas as material
weaknesses is most appropriate and will focus the necessary senior management attention to
resolving these problems as quickly as possible.
The Environmental Protection Agency will continue its mission to protect public health
and the environment. With your leadership and support, I will work closely with the new
Congress, our State and tribal partners, and the American people in developing and carrying out
common sense, cost effective, and flexible strategies to protect our health and conserve our
natural resources while growing the economy.
Sincerely,
Carol M. Browner
Enclosures
Identical letters sent to The Honorable Newt Gingrich, Speaker of the House of Representatives, and
The Honorable Albert Gore, Vice President of the United States, as President of the Senate.
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UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
FISCAL YEAR 1996
INTEGMW ACf B1PORT
TO THE
PRESIDENT AM) CONGRESS
Federal Managers' Financial Integrity Act
(PX, 97-255)
October 1, 1995 - September 30, 1996
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TABLE OF CONTENTS
Page
Administrator's Letter to the President 1
ENCLOSURE A
Statistical Summary of Performance Al
ENCLOSURE B
Material Weaknesses Summary and Schedule of
Corrective Actions Bl
New Material Weaknesses
Grants Close Outs and Oversight of Assistance Agreements B2
Construction Grants Close Out B4
Carry Over Material Weaknesses
Environmental Data Quality B6
Accounting System-Related Financial Management Problems B8
Information Resources Planning and Investment BIO
Corrected Material Weaknesses
Research and Development Extramural Resources B12
Drinking Water Primacy B14
Research and Development Operating Expenses B16
ENCLOSURE C
Material Financial Non-Conformances Summary and
Schedule of Corrective Actions C1
Carry Over Financial Nnn-rnnfnrmanr.es
Regional/General Ledger Superfund Accounts Receivables C2
Property Accounting Process C4
Accounting System Interfaces C6
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ENCLOSURE A
STATISTICAL SUMMARY OF PERFORMANCE
1996 INTEGRITY ACT REPORT
U.S ENVIRONMENTAL PROTECTION AGENCY
IMHA&Ctt&B^
Prior Years
1994 Report
1995 Report
1996 Report
Total
NUMBER OF MATERIAL WEAKNESSES
Number reported
for the first
time in:
42
0
0
2
44
For that year,
number that have
been corrected:
39
0
0
0
39
For that year,
number still
pending:
3
0
0
2
5
Of the total number corrected, how many were corrected in 1996? _J3
i FiVlFIA Section 4
Prior Years
1994 Report
1995 Report
1996 Report
Total
NUMBER OF MATERIAL NON-CONFORMANCES
Number reported
for the first
time in:
18
0
0
0
18
For that year,
number that have
been corrected:
15
0
0
0
15
For that year,
number still
pending:
3
0
0
0
3
Of the total number corrected, how many were corrected in 1996? Q .....
Enclosure A - Page 1
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ENCLOSURE B
SUMMARY
MATERIAL WEAKNESSES AND
SCHEDULE OF CORRECTIVE ACTIONS
1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
MWM£Tll8AlLWl^yCl«SIS i
1 . Grants Close Outs and Oversight of
Assistance Agreements
2. Construction Grants Close Out
€ AERY O VEE MATEBI AL WEAKNESSES
3. Environmental Data Quality
4. Accounting System-Related Financial
Management Problems
5. Information Resources Planning &
Investment
COKRSCTED MAt ERIAL W£AK1«$JE$ '
1 . Research & Development Extramural
Resources
2. Drinking Water Primacy
3. Research & Development Operating Expenses
fiscal tfowr
ilnst I
Reported
1996
1996
Fiscal Year I
First \
Reported
1992
1992
1992
FisealYear i
First •
Reported :
1990
1992
1990
T««r**
C
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[X] Material Management Control Weakness
[X] New
[ ] Material Financial Non-conformance
[ ] Corrected
[ ] Carryover
TITLE: Grant Close Outs and Oversight of Assistance Agreements
DESCRIPTION:
The OIG found that neither Project Officers (POs) nor the Grants Administration Division (GAD) adequately
managed assistance agreements. Agency project files lack documentation to show that EPA monitored progress
on the projects or required recipients to complete projects and submit the required close out documentation. This
lack of oversight has created a significant backlog of assistance agreements to be closed out.
RESPONSIBLE MANAGER:
Harvey Pippen, Director, Office of Grants and Debarment
Office of Administration and Resources Management (OARM)
APPROPRTATTONS/ACCOTTNTS;
[X] EPM
[X] S&T
[X]SF
[X] LUST
[X] B&F
[X]IG
[X] Oil Spills
[X] STAG
[X] FIFRA
[ ] Other _
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
1996
N/A
N/A
1998
Explanation for Change in Date: N/A
Enclosure B - Page 2
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACTTON STRATEGY!
EPA's strategy to improve assistance agreement management is to: 1) establish a team of grants and program staff
to develop and implement creative ways to realign grants administration responsibilities to devote more time to
post award grants management; 2) develop a policy on Grants Management Officer (GMO) oversight
responsibilities; 3) emphasize post award management in PO training; 4) develop a policy on PO roles and
responsibilities to address issues such as site visits, monitoring expenditures and improving record retention
methods; and 5) develop and implement a validation strategy to evaluate the effectiveness of the PO training.
EPA will take aggressive action to close assistance agreements that have become inactive.
RESULTS INDICATORS:
EPA will measure progress in correcting the material weaknesses by monitoring the close out of over 8,000
grants at a rate of 2,500 grants close outs per year. Regions will provide their action plans for closing out grants,
along with completing a vulnerability assessment and plans to correct any other weaknesses found. GAD will
perform follow-ups with Regional offices and the Headquarters GMOs to ensure that corrective actions are being
completed. The follow-ups will be conducted through monthly Regional conference calls, Regional Management
Council meetings and oversight visits at Regional offices.
MAJOR CORRECTIVE ACTION
MILESTONES
1 . Develop strategy to closeout older grants and to
resolve generic closeout issues.
2. Develop policy on GMO oversight
responsibilities.
3. Closeout 50% of grants physically completed
before 1996.
4. Realign the Grants Operations Branch to allow
more time for post award administration.
5. Develop and implement PO training validations
strategy.
6. Issue policy on PO roles and responsibilities
with emphasis on post award administration.
7 Train EPA staff
ORIGINAL
TARGET
DATE
12/96
4/97
7/97
7/97
10/97
12/97
Onpoinp
CURRENT
TARGET
DATE
N/A
N/A
N/A
N/A
N/A
N/A
N/A
ACTUAL
COMPLETION
DATE
Enclosure B - Page 3
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\
1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[X] Material Management Control Weakness
[XI New
] Material Financial Non-conformance
1 Corrected f 1 Carryover
TITLE: Construction Grants Close Out
DESCRIPTION:
Of the more than $50 billion in construction grants awarded in the last 20 years, grants totaling $12 billion had
not been closed out at the end of FY 1996. In 1990, the Construction Grants Completion/Closeout Strategy was
developed to expedite completion and close out of this program and to reallocate resources to other activities.
In 1993 EPA designated this area as an Agency weakness since the program still involved many billions of
dollars, and EPA was concerned that lack of Agency-wide recognition might result in the loss of resources to
properly complete the program. Without sufficient oversight resources, the close out process could slow down
to an unacceptable pace, and risk development of problems resulting from loss of institutional knowledge, loss
of records, and loss of ability to manage over an extended period of time. Millions of dollars in potentially
ineligible program costs are not being reimbursed for reuse on other high priority state clean water projects.
RESPONSIBLE MANAGER:
Michael B. Cook, Director, Office of Wastewater Management
Office of Water (OW)
APPROPRTATTONS/ACCOTTNTS:
[ ] EPM
[ ] S&T
[ ]SF
[ ] LUST
[ ]B&F
[ ] Oil Spills
[ ]STAG
[ ] FIFRA
[X] Other: CG
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
1996*
N/A
N/A
2002
ExplanationJiir ChangeJn Jlale: *Identified as an Agency weakness in
1992. The original target date was to complete all but 100-200 of the
5860 projects that were active at the end of FY 1990 by the end of FY
1997.
Enclosure B - Page 4
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CQHRKCTTW JETTON-STRATEGY:
The Agency has developed and implemented a strategy to expedite project audits that are on the critical path to
project close out. This new process allows program officials to close out a greater number of projects without
requesting an audit, and expedites scheduling and completion of necessary audits. The Agency will continue to
work with Regions and states to develop revised projections consistent with the new audit strategy. Regions are
making excellent progress in meeting goals, but the rate of progress in Regions I, U, ffl, IV, V and IX is a
concern. Problems identified include resolution of adverse audit findings, and resolution of disputes at the
Regional office and Headquarters level. The Agency will: 1) increase the priority of, and attention to,
administrative completions, audits and dispute resolution, and close outs; 2) assure that close out resources are
directed to organizational units where resource inadequacy impedes more rapid completion and close out of
projects; and 3) develop a strategy to define, Region by Region and state by state, specific actions to successfully
close out the program in each location, and define criteria to measure success.
RESTIT/TS INDICATORS;
At the end of FY 1990 there were 5,860 projects with a grant amount of $34 billion remaining to be closed out.
At the end of FY 1996 there were 1,085 projects totaling $12.1 billion remaining to be closed out. By April
1997, EPA will develop a strategy that contains actions to be taken in each location to successfully accomplish
closeout of the program. The Agency will develop other options to more effectively close out the program as
action plans are implemented. By the end of FY 1999, only three Regions will have 10 or more projects
remaining to be closed out.
MAJOR CORRECTIVE ACTION
MILESTONES
1 . Update state strategies
2. Monitor achievement of commitments for
administrative completion/closeout
3. Issue progress report
4. Assistant Administrator level memo to Regions
that need to take corrective actions.
5 . Complete strategy for addressing remaining
projects awaiting closeouts.
6. Administrative completion of all construction
grants projects.
7. Closeout of all construction prants projects
ORIGINAL
TARGET
DATE
First Quarter
Annually
3/31 and 9/30
Annually
4/93
N/A
N/A
9/95
9/97
CURRENT
TARGET
DATE
First Quarter
Annually
3/31 and 9/30
Annually
Periodically as
required
11/96
4/97
9/99
9/02
ACTUAL
COMPLETION
DATE
First Quarter
Annually
3/31 and 9/30
Annually
Periodically as
required
Enclosure B - Page 5
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[X] Material Management Control Weakness
[ ] New
[ ] Material Financial Non-conformance
[ ] Corrected
[X] Carryover
TITLE: Environmental Data Quality
DESCRIPTION:
EPA organizations that make or use environmental measurements are required to maintain a Quality Assurance
(QA) program to assure that environmental data of the appropriate type and quality are collected to support Agency
decisions. GAO and OIG have criticized the Agency for failing to systematically assess the integrity of the
Agency's environmental data measurement program.
RESPONSIBLE MANAGER:
Henry L. Longest II, Deputy Assistant Administrator for Management
Office of Research and Development (ORD)
APPROPRIATIONS/ACCOUNTS:
[X] EPM
[X] S&T
[X] SF
[X] LUST
]B&F
[X] Oil Spills
[ ]STAG
[X] FIFRA
[ ] Other _
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
1992
1994
1996
1997
Explanation for Change in Date: ORD's assessment of QA program
implementation indicates that additional senior management attention is
needed to ensure effective implementation of approved quality
management documentation. EPA programs with outstanding corrective
actions from QA management reviews will report an Agency weakness
for their own organization.
Enclosure B - Page 6
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACTION STRATEGY:
ORD focused top management attention on the importance of quality assurance to increase environmental data
quality supporting Agency decisions. ORD provided QA compliance status reports and distributed policies and
regulations to all senior managers. During FY 1996, ORD continued its management assessments and provided
training on QA policies and practices. Performance standard language on quality management was developed and
distributed to managers. Since FY 1992, ORD has reviewed quality assurance programs in 34 Agency
organizations. In FY 1997 and beyond, ORD will continue its oversight, but per EPA Order, responsibility for
current, documented, and implemented Quality Management Plans (QMPs) is the responsibility of EPA program
and Regional offices.
RESULTS INDICATORS:
ORD is aggressively working with Agency offices to achieve full compliance in developing required QMPs. Site
review results will provide indicators of accuracy in environmental measurements.
MAJOR CORRECTIVE ACTION
MILESTONES
1 . Include QA performance standard in all senior
manager's performance agreements.
2. Distribute schedule for planned FY 1996
Management Systems Reviews.
3. Develop Agency-wide generic training on
definitions, principles, and practices.
4. Distribute for green border review, new Quality
Manual, including Order on revised QA
requirements.
5 . Develop procedures for resolving disputes on
QA-related documentation and implementation
issues
6. Complete action plans responding to unresolved
QM corrective actions and report in QM Annual
Report and Work Plan.
7. Make QA documentation and implementation
status a standing agenda item for management
meetings, e.g., Deputy Administrator, AA/RA,
media Division Directors, etc.
ORIGINAL
TARGET
DATE
12/95
12/95
3/96
4/94
4/96
11/96
12/96
CURRENT
TARGET
DATE
12/95
12/95
3/96
3/97
4/96
11/96
3/97
ACTUAL
COMPLETION
DATE
3/96
1/96
9/96
10/96
Enclosure B - Page 7
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SB,
1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[X] Material Management Control Weakness
[ ] New
[ ] Material Financial Non-conformance
[ ] Corrected _ [X] Carryover
TITLE: Accounting System-Related Financial Management Problems
DESCRIPTION:
While EPA's Integrated Financial Management System (IFMS) meets the Joint Financial Management
Improvement Program core accounting system requirements, specific systems-related problems impair EPA's
ability to provide complete, and timely data for Agency decision-making and control of assets. These problems
include: 1) incomplete user manuals and system documentation; 2) inadequate automated project cost accounting
capability; 3) incomplete interfaces with programmatic and administrative systems; and 4) inadequate financial
management reports. EPA has corrected all deficiencies except for implementing the Fixed Asset System, which
is scheduled for implementation in FY 1997.
RESPONSIBLE MANAGER:
Kathryn S. Schmoll, Comptroller, Office of the Comptroller
Office of Administration and Resources Management (OARM)
APPROPRIATIONS/ ACCOUNTS:
[X] EPM
[X] S&T
[X] SF
[X] LUST
[X] B&F
[X]IG
[X] Oil Spills
[X] STAG
[ ] FIFRA
[ ] Other _
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
1989
1990
1996
1997
Explanation for Change in Date: Government shutdowns and limited
funding provided by each Continuing Resolution delayed installation.
Enclosure B - Page 8
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACTION STRATEGY;
EPA will implement the Fked Asset System (FAS) module and issue new policies and procedures to address the
new function in IFMS.
RESULTS INDICATORS:
EPA's key success measure is complete, reliable, and timely financial data to support effective Agency decision-
making. Final result indicator is to implement the FAS and issue new policies and procedures.
MAJOR CORRECTIVE ACTION
MILESTONES
1. Complete final on- site verification reviews.
2. Conduct Strategic and Master Plan Study.
3. Complete Property System Requirement Study.
4. Implement Version 5. le of IFMS - User Manuals
and System Documentation
5. Develop Funds Management Requirements.
6. Complete enhancements to produce accurate
reports.
7. Develop Project Cost Accounting Requirements.
8. Implement interface between IFMS and GICS.
9. Eliminate Automated Document Control Register.
10. Replace FMS function in CPARS.
11. Install Project Cost Accounting System.
12. Implement Fixed Asset System.
ORIGINAL
TARGET
DATE
6/93
3/93
1/94
2/94
9/93
6/94
9/93
9/93
6/94
2/95
9/95
7/96
CURRENT
TARGET
DATE
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2/97
ACTUAL
COMPLETION
DATE
6/93
7/93
6/94
5/94
9/94
9/94
9/94
7/95
9/94
4/95
9/95
Enclosure B - Page 9
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[X] Material Management Control Weakness
[ INew
[ ] Material Financial Non-conformance
[ ] Corrected
[X] Carryover
TITLE: Information Resources Planning and Investment
DESCRIPTION:
OIG and GAO believe that material management control weaknesses have resulted in duplication, inefficiency, cost
overruns, and delays in developing and implementing EPA information systems, and have caused ineffective Agency
management of ADP contracts, data quality deficiencies, exposure of sensitive data to unnecessary risk, and inability
to support EPA's cross-media mission. The lack of a cohesive information management planning and investment
review process, top management commitment, and sufficient resources to support Information Resources Management
(IRM) impede a comprehensive Agency-wide assessment of environmental risks and solutions.
RESPONSIBLE MANAGER;
Paul Wohlleben, Acting Director, Office of Information Resources Management
Office of Administration and Resources Management (OARM)
APPROPRIATIONS/ACCOTINTS:
[X] EPM
[X] S&T
[X] SF
[X] LUST
[X] B&F
[X]IG
[X] Oil Spills
[X] STAG
[ JFIFRA
[ ] Other _
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
1992
1995
1997
1997
Explanation for Change in Dafc: Three milestones have been revised to
reflect new Information Technology Management Reform Act of 1996
(ITMRA) investment requirements.
Enclosure B - Page 10
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACIIQM STRATEGY: The elements of EPA's three-phased corrective action strategy remain as
originally proposed; however, ITMRA raises new challenges for EPA's IRM planning and investment processes. The goal
of the strategy is to implement an effective IRM planning and investment process that ensures the Agency's Information
Technology (IT) investments effectively support both its mission and management goals: 1) develop a research and
comprehensive action plan; 2) establish policies and procedures to formalize Agency IT planning; and 3) implement pilot
projects to build the knowledge necessary to refine Agency IRM planning processes and adopt IT capital planning best
practices. Key accomplishments to date include: a) appointment of an Agency Chief Information Officer to strengthen
EPA's central IRM authority; b) designation of the Agency's IRM Executive Steering Committee as the IRM Investment
Review Board; and c) issuance of the Agency first 5-Year IRM Plan and Strategic Plan.
RESTII/TS INDICATORS: Key success measures for IRM planning and investment include: 1) more effective mission
support as proposed investments are evaluated based on a cohesive, Agency-wide IRM Strategic and Implementation Plan;
2) increased data quality for better decision-making; and 3) reduced costs from integrated planning and budgeting and
coordinated systems development. The integrity of the process will be indicated by a reduction in the number of instances
of systems duplication, identification of additional opportunities for integration, better control of costs, and earlier detection
and resolution of delays in system implementation.
MAJOR CORRECTIVE ACTION
MILESTONES
1. Establish program offices planning process.
2. Establish central review capability.
3. Initiate pilot integrated planning cycle.
4. Publish formal Integrated IRM Plan
5. Finalize planning procedures and guidance.1
6. Initiate Agency-wide IRM 5-Year Plan process.
7. Issue Agency-wide IRM 5-Year Plan.
8. Establish Pilot Investment Review Board Process2
9. Initiate pilot investment reviews.
10. Complete Pilot Investment Review process,
revise and issue Agency-wide capital planning
guidance.
ORIGINAL
TARGET
DATE
9/93
12/93
5/94
12/94
2/95
5/95
3/96
5/96
7/96
4/96
CURRENT
TARGET
DATE
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
11/96
9/97
ACTUAL
COMPLETION
DATE
9/93
12/93
5/94
4/95
11/95
11/95
3/96
7/96
The guidance issued for this milestone reflects the strategy of issuing guidance in a focused, informal and iterative manner. The guidance
will be modified as necessary based on ITMRA.
" EPA is analyzing the IT capital planning provisions of ITMRA to determine the potential impact on the Agency's IRM planning.
Additionally, OMB is revising affected policy Circulars, e.g., A-130 and A-ll to reflect the new requirements established by law; however, this work
has not been completed. Based on this fluid situation, EPA is establishing and initiating an Investment Review Process based on its interpretation of
the law and available OMB guidance.
Enclosure B - Page 11
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D SB,.
1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[X] Material Management Control Weakness
[ ] New
[ ] Material Financial Non-conformance
[X] Corrected
[ ] Carryover
TITLE: Research & Development Extramural Resources
DESCRIPTION:
Internal ORD assessments and OIG audits and related reviews identified a number of vulnerabilities in ORD's
management of extramural resources, which account for nearly seventy percent of total ORD funds. The
vulnerabilities included a wide range of programmatic, administrative, and financial issues. These deficiencies
in ORD laboratories significantly impaired the ORD mission.
RESPONSIBLE MANAGER:
Deborah Y. Dietrich, Director, Office of Resources Management and Administration
Office of Research and Development (ORD)
APPROPRIATIONS/ACCOUNTS:
[X] EPM
[X] S&T
[X]SF
[ ] LUST
]B&F
[ ] Oil Spills
[ ]STAG
[ ]FIFRA
[ ] Other _
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
1990
1992
1996
1996
Explanation for Change in Date: Not Applicable
Enclosure B - Page 12
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACTION STRATEGY;
ORD' s comprehensive strategy to strengthen extramural resource management and ensure compliance with all
ORD, EPA, and Federal policies and requirements was to: 1) assign executive-level oversight; 2) conduct
comprehensive staff training; 3) develop and implement new policies and procedures and evaluate their
effectiveness; 4) conduct in depth management reviews and analyses; and 5) establish Extramural Management
Specialist (EMS) positions in all ORD offices and laboratories.
RESULTS INDICATORS;
ORD is striving to achieve effective, efficient extramural resource management in full compliance with EPA and
Federal policies and requirements. ORD: 1) appointed an SES-level Acquisition Executive to oversee overall
corrective actions for this weakness; 2) developed and conducted training for 400 assistance project officers, and
approximately 750 contract Project Officers (POs), Work Assignment Managers (WAMs) and Delivery Order
Project Officers (DOPOs); 3) established official Agency positions and hired fourteen EMSs in ORD Centers and
Labs; 4) converted over 200 vulnerable contractor positions to permanent government employees; 5) revised the
ORD Policy and Procedures Manual to address a multitude of extramural management issues; and 6) conducted
management reviews in ten ORD Labs and Centers. In addition the Office of Acquisition Management conducted
special reviews in Las Vegas and Corvallis; the Office of Administration and Resources Management conducted
a Management Assistance Review in FY 1995, and the OIG is finalizing an audit of the EMS position. Each ORD
Lab and Center convened a focus group to analyze the impact and validity of corrective actions and concluded that
actions taken were sufficient to ensure that the management of ORD's extramural resources was no longer a
material weakness.
MAJOR CORRECTIVE ACTION
MILESTONES
1. Complete training sessions for POs, DOPOs,
and WAMs with contract management
responsibilities.
2. Develop policy guidance on generic issues and
problems.
3 . Implement management oversight throughout
ORD and provide proactive approaches in
identifying and correcting problems.
4. Complete training sessions for Project Officers
with assistance administration and contract
management responsibilities.
ORIGINAL
TARGET
DATE
9/91
12/91
12/91
9/96
CURRENT
TARGET
DATE
N/A
N/A
N/A
9/96
ACTUAL
COMPLETION
DATE
9/95
10/94
9/94
9/96
Enclosure B - Page 13
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\
1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[X] Material Management Control Weakness
[ 1 New
[ ] Material Financial Non-conformance
[XI Corrected f 1 Carryover
TITLE: Drinking Water Primacy
DESCRIPTION:
In 1992, most states were having difficulties adopting and implementing all EPA drinking water regulations and
no state had full primacy for the Public Water System Supervision (PWSS) program. The states' ability to retain
primacy was in jeopardy. Three areas of attention to address primacy were highlighted: 1) increase the states'
technical capacity and expertise to meet the requirements of Federal drinking water regulations; 2) increase the
states' financial resources (including federal grants); and 3) increase EPA's capacity to directly implement drinking
water regulations in the event that primacy is returned by or withdrawn from the states. In 1995-96, EPA
reassessed its program activities and redirected its resources to focus on high priority, health risk-based concerns.
The reassessment was based on building partnerships with the states and providing flexibility so that states could
implement drinking water regulations in a manner that maximized the return on resources invested. The Agency's
commitment to state capacity building and the retention of primacy by the states has been strengthened in the
recently enacted 1996 Amendments to the Safe Drinking Water Act (SDWA) that provides resources to the States
for capacity development through the Drinking Water State Revolving Fund (DWSRF).
RESPONSIBLE MANAGER;
Cynthia Dougherty, Director, Office of Ground Water and Drinking Water
Office of Water (OW)
APPROPRIATIONS/ ACCOUNTS:
[X] EPM
[ ] S&T
[ ]SF
[ ] LUST
]B&F
[ ] Oil Spills
[X] STAG
[ ] FIFRA
[ ] Other _
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
Explanation for Change in Date: EPA's re
program and the enactment of the 1996 Ame
addressed major PWSS primacy problems.
1992
1997
1997
1996
idirection of drinking water
ndment of the SDWA have
Enclosure B - Page 14
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACTION STKATF.GV-
EPA has: 1) increased, through the budget process, PWSS grants to states from $39M in FY 1990 to $90M in FY
1997; 2) developed a priority-setting plan to focus resources to the greatest public health threats, allowing more
time for states to build capacity to carry out the complete program; 3) provided training and technical assistance
to increase state technical and financial capacity; 4) developed an active program of outreach, on-site assistance,
mobilization of outside resources and promoting alternative financial mechanisms, and 5) developed innovative
approaches, added flexibility to program implementation, and improved communications with the states on these
new approaches.
RESULTS INDICATORS:
In 1992, no state had full primacy and most states did not have state regulations comparable to Federal regulations.
Currently, forty states have full primacy and nine have adopted necessary regulations and are awaiting EPA
approval. States' capacity building efforts have been quite successful to date. Between FY 1990-1994, forty states
have actively increased their own capacity through either increased general appropriations or adoption of
user/operator/laboratory fee systems in the amount of an additional $60M per year. All but one of the major
corrective action milestones have been completed, or are ongoing activities. Milestone #6 is now considered
unnecessary because the 1996 SDWA Amendments require states to develop capacity development strategies,
diminishing potential primacy withdrawal/return problems for EPA. Milestone #8 is an activity that Regions
conduct annually; the actual completion date has been entered accordingly for FY 1996.
MAJOR CORRECTIVE ACTION
MILESTONES
1 . Revise state resource needs assessment to estimate
shortfall by year and by regulation.
2. Implement the priorities guidance with each state
through the annual work planning process.
3. Assess state abilities to meet priority one activities.
4. Identify and work to resolve state capacity needs.
5 . Develop contingency plan for directly
implementing state primacy programs.
6. Identify EPA resource needs to directly implement
state programs.
7. Elevate state capacity efforts in FY 94 and future
contract plans.
8. Validate that states have implemented new rules
included in the priority strategy.
ORIGINAL
TARGET
DATE
3/93
annually
9/93
ongoing
3/93
6/93
8/93
9/97
CURRENT
TARGET
DATE
ongoing
10/96
ACTUAL
COMPLETION
DATE
12/95
annually
9/93
ongoing
1/93
No longer
appropriate
11/93
9/96
Enclosure B - Page 15
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[X] Material Management Control Weakness
[ ] New
[ ] Material Financial Non-conformance
[X] Corrected
[ ] Carryover
TITLE: Research & Development Operating Expenses
DESCRIPTION:
Internal EPA reviews identified that the lack of sufficient resources for research and development laboratory
operating expenses prevented the Agency from maintaining adequate and up-to-date research materials and
services for vital scientific studies and analytical activities. This significantly impaired fulfillment of the
Agency's research mission.
RESPONSIBLE MANAGER:
Deborah Dietrich, Director, Office of Resources Management and Administration
Office of Research and Development (ORD)
APPROPRTATIONS/ACCOTINTS:
[ ] EPM
[X] S&T
[X] SF
[ ] LUST
]B&F
[ ] Oil Spills
[ ]STAG
[ ] FIFRA
[ ] Other _
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
1990
1992
1996
1996
Explanation for Change in Date: Not Applicable
Enclosure B - Page 16
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACTTON STRATEGY: The Agency's strategy was to: 1) obtain Congressional approval for
increased flexibility in use of the R&D appropriation; 2) consolidate ORD's budget structure to allow more
efficient allocation of resources; 3) include ORD laboratory funding requirements in Agency budget and planning
processes; and 4) issue new policy initiatives, specialized financial management reviews and evaluations, and
improve monitoring and reporting techniques.
EPA: 1) obtained Congressional authority to fund operating expenses from the R&D (now S&T) appropriation;
2) consolidated the funding structure of ORD's operating expenses from six Allowance Holders to one, enabling
resources to be more efficiently adjusted among offices; 3) removed ceiling on operating expenses, providing
greater flexibility to address operating expense concerns by making it possible to reprogram resources into other
program elements; 4) incorporated new definitions for global expense object classes to provide administrative
and programmatic definitions; 5) conducted several individual ORD laboratory financial management reviews
addressing funds control, use of appropriations, imprest funds and other financial issues; 6) established an ORD
Management Information System (OMIS) to provide a firm performance criteria and statistical data base for
tracking expense requirements. OMIS will provide the basis for increased policy initiatives, specialized financial
management reviews and evaluations, and implementation improved monitoring techniques; and 7) reorganized
to create a new staff structure responsible for operating expense concerns within ORD, particularly in the areas
of capital equipment and buildings and facilities.
REST IT /TS TNDTC ATORS: Corrective actions resulted in increases in ORD laboratory operating expense funds
from $22 million in FY 1990 to over $58.5 million in FY 1996. A key measure of success was obtaining an
overall reduction of risk to the Agency's scientific and research mission through improved funding of EPA's
R&D laboratories.
MAJOR CORRECTIVE ACTION
MILESTONES
1 . Reassess overall weakness to determine the
propriety of Integrity Act reporting. [Lab Study]
2. Submit a proposal to the Agency based on " 1 . "
above, [reorganized ORD and increased Op Exp]
3. Develop policy directives for financial
management operations. [LIPS/OMIS]
4. Conduct financial management reviews.
5 . Validate effectiveness of corrective action in
reducing the risk to the Agency.
ORIGINAL
TARGET
DATE
3/94
4/94
6/94
7/94
8/94
CURRENT
TARGET
DATE
N/A
4/96
6/96
7/96
8/96
ACTUAL
COMPLETION
DATE
11/94
6/95 & 1/96
9/95
ongoing
10/96
Enclosure B - Page 17
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ENCLOSURE C
SUMMARY
MATERIAL FINANCIAL NON-CONFORMANCES AND
SCHEDULE OF CORRECTIVE ACTIONS
1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
! CAI^YOW»MAWMM.!^ON*CONiO«MANCiS
1 . Regional/General Ledger Superfund Accounts
Receivables
2. Property Accounting Process
3. Accounting System Interfaces
: Fiscal
i YsarFfest j
Reported i
1989
1983
1985
LaslYear's;
QarectKHi
!&&$<¥}
1996
1996
1996
i Current \
\ Otr-^lian i
B0|e.ra..j
1997
1997
1997
Page
C-2
C-4
C-6
Enclosure C - Page 1
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\
1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[ ] Material Management Control Weakness
[ ] New
[X] Material Financial Non-conformance
[ ] Corrected [X] Carryover
TITLE: Regional/General Ledger Super/and Accounts Receivables
Core Financial System
Internal reviews found several potential unrecorded accounts receivable in the Regions resulting from program
officials not promptly notifying the servicing finance office of the creation and disposition of receivables. The
IFMS accounts receivable module lacks the capabilities to automatically process the unique Superfund
requirements of compound interest and flexible installment receivables. EPA's implementation of the Superfund
Accounts Receivable Collection Tracking System (CTS) will provide the necessary functionality.
RESPONSIBLE MANAGER:
Kathryn S. Schmoll, Comptroller, Office of the Comptroller
Office of Administration and Resources Management (OARM)
APPROPRTATTONS/ACCOTINTS;
[X] EPM
[X] S&T
[X] SF
[X] LUST
[X] B&F
[X]IG
[X] Oil Spills
[X] STAG
[X] FIFRA
Other
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
Explanation for Change in Date: Governm
funding provided by each FY 1996 Continui
installation.
1989
1990
1996
1997
ent shutdowns and limited
ng Resolution delayed
Enclosure C - Page 2
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACTION STRATEGY:
The Agency now requires each Servicing Finance Office to reconcile the recorded accounts receivable with the
program office and the Office of Regional Counsel to assure that all receivables are recorded in IFMS. The
Agency will install the CTS system to automatically account for installment receivables and compound interest.
RESULTS INDICATORS:
Key results indicators include updated and accurate IFMS user documentation, enhanced accounts receivable
installment functions within IFMS, and financial information in reporting formats that meet user requirements.
MAJOR CORRECTIVE ACTION
MILESTONES
1 . Install enhancements to Accounts
Receivable module to handle debt servicing.
2. Conduct third round of on-site verification
reviews.
3. Implement Version 5.1e of IFMS:
- User Manuals; and
- System Documentation
4. Complete enhancements to produce needed
reports:
- Standard Form 220.9; and
- Supplemental Accounts Receivable
Reports.
5 . Provide training on accounting and
managing receivables
6. Install Superfund Accounts Receivable
Collection Tracking System and interface with
IFMS to automate accounting for installments
and compound interest.
ORIGINAL
TARGET
DATE
12/92
6/93
2/94
2/94
6/94
6/94
8/94
2/94
CURRENT
TARGET
DATE
N/A
N/A
N/A
N/A
N/A
N/A
N/A
3/97
ACTUAL
COMPLETION
DATE
5/93
6/93
5/94
5/94
11/95
11/95
5/94
Enclosure C - Page 3
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\
1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
- PROlfc
[ ] Material Management Control Weakness
[ ] New
[X] Material Financial Non-conformance
[ ] Corrected _ [X] Carryover
TITLE: Property Accounting Process
NON-CONEORMANCE TYPE AND DESCRIPTION: Core Financial Subsidiary System
Property values are recorded in the Agency's General Ledger accounts and reconciled with data contained in the
Personal Property Accountability System (PPAS). Internal reviews identified continuing problems in reconciling
financial data recorded in the General Ledger to individual items in PPAS. The Agency formed a Quality Action
Team (QAT) which recommended procuring a property module compatible with IFMS, and developed an
implementation strategy that would integrate financial accounting (IFMS General Ledger) with property
accountability.
RESPONSIBLE MANACERr
Kathryn S. Schmoll, Comptroller, Office of the Comptroller
Office of Administration and Resources Management (OARM)
APPROPRIATIONS/ACCOUNTS:
[X] EPM
[X] S&T
[X] SF
[X] LUST
[X] B&F
[X]IG
[X] Oil Spills
[X] STAG
[X] FIFRA
Other
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
Explanation for Change in Date: Government
funding provided by multiple FY 1996 Continu
installation.
1983
1989
1996
1997
shutdowns and reduced
ing Resolutions delayed
Enclosure C - Page 4
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACTTON STRATEGY:
EPA's corrective action strategy is to: 1) examine policies, procedures and EPA requirements; 2) reconcile data;
and 3) develop user manuals and provide training prior to installing the system. The Agency will install the
Fixed Asset System (FAS) Module and issue new policies and procedures.
RESULTS INDICATORS:
EPA's key success measures are full accounting for capitalized property and increased accuracy of property
accounting records.
MAJOR CORRECTIVE ACTION
MILESTONES
1 . Revise policy and procedures for identifying
and capitalizing property and recommending
opportunities for automated interface between
IFMSandPPAS.
2. Present QAT recommendations to process
owners.
3. Develop implementation strategy for
recommendations accepted by process owners.
4. Install Property Accounting System Module.
ORIGINAL
TARGET
DATE
9/93
7/93
1/94
7/96
CURRENT
TARGET
DATE
N/A
N/A
N/A
2/97
ACTUAL
COMPLETION
DATE
3/93
7/93
6/94
Enclosure C - Page 5
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
[ ] Material Management Control Weakness
[ ] New
[X] Material Financial Non-conformance
[ ] Corrected
[X] Carryover
TITLE: Accounting System Interfaces
NON-CONFORMANCE TYPE AND DESCRIPTION: Core Financial System
Internal reviews identified problems with capability of key Agency administrative systems to electronically
interface with the Integrated Financial Management System (IFMS), as required by OMB Circular A-127:
Financial Management Systems, to avoid duplication of data entry. Currently, EPA has identified two systems,
the Fixed Asset System (FAS) module and the Superfund Accounts Receivable Collection Tracking System (CTS)
that require interface with EPA's Integrated Financial Management System (IFMS).
RESPONSIBLE MANAGER:
Kathryn S. Schmoll, Comptroller, Office of the Comptroller
Office of Administration and Resources Management (OARM)
APPROPRIATIONS/ACCOUNTS:
[X] EPM
[X] S&T
[X]SF
[X] LUST
[X] B&F
[X]IG
[X] Oil Spills
[X] STAG
[X] FIFRA
[ ] Other _
PACE OF CORRECTIVE ACTION:
Fiscal Year First Identified:
Original Targeted Correction Date:
Correction Date In Last Year's Report:
Current Correction Date (FY):
Explanation for Change in Date: Govemm
funding provided by each FY 1996 Continuii
installation.
1985
1990
1996
1997
ent shutdowns and limited
ig Resolution delayed
Enclosure C - Page 6
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1996 INTEGRITY ACT REPORT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CORRECTIVE ACTTON STRATEGY!
EPA's corrective action strategy is to install the Fixed Asset System (FAS) followed by implementation of the
CTS.
RESULTS INDICATORS!
Install, test, and put into full operation the FAS and CTS.
MAJOR CORRECTIVE ACTION
MILESTONES
1 . Analyze disposition of historical FMS data.
2. Eliminate ADCR.
3. Finalize project cost accounting requirements.
4. Install project cost accounting requirements.
5 . Implement interface between IFMS and
regional GICS.
6. Implement replacement for FMS historical
data.
7. Replace FMS function in CPARS.
8. Implement MARS view of historical data.
9. Implement account number changes.
10. Implement Fixed Asset System.
1 1 . Install CTS and interface it with IFMS to
automate accounting for Superfund installment
receivables and compounding interest calculations
ORIGINAL
TARGET
DATE
9/93
6/94
9/93
9/95
9/93
3/95
2/95
7/95
10/95
10/92
1/96
CURRENT
TARGET
DATE
N/A
N/A
N/A
N/A
N/A.
N/A
2/95
N/A
N/A
2/97
3/97
ACTUAL
COMPLETION
DATE
10/93
9/94
9/94
9/95
7/95
9/95
4/95
9/95
10/95
Enclosure C - Page 7
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For additional copies of this Report, please contact:
Environmental Protection Agency
Office of the Comptroller
Resource Management Division 3304
Management Integrity Branch
401 M Street, S.W.
Washington, DC 20460
Phone: (202) 260-9650
Fax: (202) 260-0400
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vvEPA
United States
Environmental Protection Agency
(3304)
Washington, DC 20460
Official Business
Penalty for Private Use
$300
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