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Enviranimnal Pr
Report of Audit
REGION 6 MANAGEMENT OF
SIGNIFICANT SUPERFUND REMOVALS
AUDIT REPORT NO. E1SHD9-06-0017-9100513
SEPTEMBER 29, 1989
CM
oc
WASHINGTON. O.C. 20460
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TABLE OF CONTENTS
Paqe
SCOPE AND OBJECTIVES 1
SUMMARY OF FINDINGS 2
ACTION REQUIRED 4
BACKGROUND 4
FINDINGS AND RECOMMENDATIONS:
1. IMPROVED COORDINATION AND OVERSIGHT NEEDED 7
2. CONTRACTOR ASSIGNMENTS SHOULD BE SEGREGATED .... 11
3. COMPLETE ENFORCEMENT SHOULD BE TAKEN 15
4. BETTER DOCUMENTATION NEEDED 17
5. EARLIER EXEMPTION REQUESTS NEEDED 21
APPENDIX A - REGION RESPONSE TO DRAFT AUDIT REPORT .... 25
APPENDIX B - DISTRIBUTION 29
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
SOUTHERN DIVISION, SUITE 276
1375 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
(404) 347-3623 AUDIT
(404) 347-2398 INVESTIGATIONS
REGIONAL OFFICE:
144S ROSS AVENUE, SUITE 1200
DALLAS, TEXAS 75202-2733
(214) 655-6621 AUDIT
(214) 655-6610 INVESTIGATIONS
September 29, 1989
MEMORANDUM
SUBJECT:
FROM:
TO:
Audit Report No. E1SHD9-06-0017-9100513
Region 6 Management of Significant Superfimd Removals
Mary M.
Divisional Ins
Southern Audit
General/for Audits
ion
Robert E. Layton, Jr.
Regional Administrator
Region 6
SCOPE AND OBJECTIVES
We have completed a review of the Region's management of significant Superfund
removals. Our objective was to evaluate the Region's effectiveness and
efficiency in managing significant removals performed at Superfund sites.
Specifically, we determined whether:
a. Sites were properly classified as removals under Agency guidance;
b. Exemptions to exceed the statutory limits for removals were properly
obtained;
c. Actions taken properly addressed site hazards;
d. Pertinent environmental standards were adhered to during the
removal;
e. Responsible parties were appropriately pursued to share in the cost
of the removal; and
f. Site records adequately documented the removal.
To accomplish our objective, we reviewed the significant removals ongoing as
of October 1988 with cost ceilings exceeding $2 million, the statutory ceiling
on removals. The 1986 Superfund Amendments and Reauthorization Act (SARA)
limited removals to $2 million unless an exemption was obtained. Region 6 was
conducting the two removals at the Vertac Superfund site in Jacksonville,
Arkansas and the Gramlich Superfund site in Fort Smith, Arkansas. These two
removals were the only significant removals the Region had ever conducted at
the time our review began. In our review, we observed site activities,
reviewed site documentation, and conducted interviews of involved personnel.
We conducted review work at the two sites, the Regional offices, *^e Arkansas
Department of Pollution Control and Ecology office, a cleanup con. actor's
office, and Environmental Protection Agency (EPA) Headquarters offices. The
review was limited to significant removals and was not intended to evaluate
the Region's entire removal program.
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We performed our review in accordance with the Government Auditing Standards
issued by the Comptroller General of the United States. We reviewed removal
activities conducted at the sites to determine if the actions met Agency
guidance. We reviewed site activities conducted between June 1982 and July
1989. We performed our review from October 1988 to July 1989.
The review included tests of management controls and regional procedures
related to the audit objectives. We did not specifically review all of the
Region's internal controls in effect for conducting removals. The findings
and recommendations in this report include any internal control problems we
identified and our recommendations to strengthen the internal controls. No
other issues came to our attention which we believed were significant enough
to warrant expanding the scope of this review.
SUMMARY OF FINDINGS
The Region needed to improve the efficiency and effectiveness of significant
removals. Our review found that improvements could be made in the:
coordination of joint cleanups; contractor assignments; use of enforcement;
documentation of activities; and timeliness of exemption requests. We
recommend improvements in these areas to strengthen the Region's internal
controls over significant removals and to provide for more efficient and
effective significant removals. Our findings and recommendations, summarized
below, are presented in detail in the FINDINGS AND RECOMMENDATIONS section of
this report.
1. Improved Coordination and Oversight Needed.
The Region needed to improve the coordination and oversight of joint
cleanup efforts with the State of Arkansas, We found that a series of
misunderstandings and the State's limitations delayed cleanup of both
the Vertac and Gramlich sites. At Vertac, the Region and the State did
not coordinate timely incineration of the drums. At Gramlich, the
Region presumed the State had cleaned up the site, only to find six
years later, that the site was still contaminated. Delayed cleanup of
the two sites left people living on or near the sites in danger for an
additional two to six years while removal costs increased a total of $6
million.
We recommend the Regional Administrator: adopt procedures for
coordination and oversight of joint cleanup efforts with states; and
sign a memorandum of understanding with the State of Arkansas for joint
cleanup of the Vertac site.
2. Contractor Assignments Should Be Segregated.
The Region needed to improve the segregation of contractor assignments.
We found that the Region did not adequately segregate contractor
assignments at the Gramlich site. The on-scene coordinator assigned
three contractors to perform more than one of the fundamental removal
activities of sampling, analysis, and excavation. The performance of
these activities without adequate segregation presented the appearance
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of a conflict of interest and possibly allowed the contractors to
perform unnecessary work.
We recommend the Regional Administrator require the segregation of
contractor assignments to avoid conflicts of interest or ensure the
integrity of work by performing additional oversight and monitoring.
Complete Enforcement Should Be Taken.
The Region needed to improve enforcement against responsible parties.
We found that the Region did not take complete enforcement actions
against a responsible party for the Gramlich site. The Region: did not
ask the responsible party to perform the cleanup prior to beginning the
removal; did not notify the responsible party in writing of their
potential liability for the cost of the removal; did not issue an
administrative order once the responsible party refused to perform the
removal; and had not pursued cost recovery against the responsible
party. Regional personnel said the urgency to address site threats
preempted taking complete enforcement. They added that the deadline for
cost recovery did not expire until 1991. If the responsible party had
cleaned up the site, the Region could have saved the $1.6 million spent
to cleanup the site. The Region also lost the opportunity to recover
treble damages from the responsible party because an administrative
order was not issued.
We recommend the Regional Administrator adopt use of all of the Agency's
enforcement tools and pursue cost recovery for the Gramlich removal.
Better Documentation Needed.
The Region needed to improve the documentation maintained for
significant removals. We found that the Region did not maintain
adequate documentation for removal costs and site access. Cost
documentation did not adequately support contractor charges for
disposal, labor, equipment, and security. Also, some contractor costs
were not documented as removal costs. Site access documentation was
incomplete because oral access agreements were not confirmed with
letters to the site residents. We recognized that the urgency of the
removals might have reduced the on-scene coordinators' abilities to
prepare documentation. However, adequate documentation was necessary to
show that removal decisions were in accordance with Agency guidelines
and to provide evidence for cost recovery actions. By not keeping
adequate documentation, the Region's ability to recover removal costs
from responsible parties could have been harmed. Also, adequate cost
documentation was necessary to support the on-scene coordinators'
approvals of payments to removal contractors.
We recommend the Regional Administrator: adopt documentation
requirements for removal costs and site access; train on-scene
coordinators in documentation; and document all removal-related costs.
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5. Earlier Exemption Requests Needed.
The Region needed to submit earlier exemption requests so Headquarters
could control the course of significant removals. We found that the
Region did not submit timely requests for the removals at the Vertac and
Gramlich sites. Agency procedures required the Region to submit the
requests to Headquarters at the start of the removals. However, the
Region delayed the requests from two to five months. By the time the
requests were made, the Region had already selected and implemented a
response. Consequently, the Region bypassed Headquarters' control over
high cost removal decisions.
We recommend the Regional Administrator: submit exemption memorandums
for significant removals to Headquarters prior to selecting and
implementing a response; and document in the action memorandums all
significant information given to or relied on by the approval official.
To provide a balanced report, we discussed our findings with Regional
personnel during the fieldwork. We also asked the Region to provide written
comments on position papers dated July 21, 1988 and a draft report dated
September 11, 1989. The Region's Environmental Services Division responded to
the position papers on August 14, 1989 while the Region's Emergency Response
Branch (ERB) responded to the draft report on September 26, 1989. We include^
the comments in our findings as appropriate. We also included the verbatim -
response to the draft report as Appendix A. The Emergency Response Branch
concurred with finding 2 but disagreed with findings 1, 4, and 5.
Nonetheless, the Region concurred with recommendations 2.a. and 2.b. and
agreed to review the procedures and documentation changes recommended in
findings 1,4, and 5. The Emergency Response Branch indicated that the
Region's Hazardous Waste Management Division would respond to finding 3, but
no response was received. In order to complete our evaluation we request that
the Region provide the results of the reviews for findings 1, 4, and 5 and any
corrective action taken or planned.
The courtesies and cooperation extended by your staff during this audit were
appreciated.
ACTION REQUIRED
In accordance with EPA Directive 2750, the action official is required to
provide this office a written response to the audit report within 90 days of
the audit report date.
BACKGROUND
Suoerfund
In 1980, Congress passed the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), which established the original
"Superfund". The Superfunid program was created to protect public health and
the environment from the release, or threat of release, of hazardous
substances from abandoned hazardous waste sites. A Trust Fund was established
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to fund cleanups ranging from control of emergency situations to permanent
remedies. CERCLA required that payment for cleanups be sought from those
parties responsible for the problem, including property owners, waste
generators, and waste transporters. Congress revised CERCLA with the 1986
enactment of SARA. SARA included funding for an $8.5 billion program through
1991. The regulatory blueprint for the Superfund Program was the National Oil
and Hazardous Substances Contingency Plan (NCR).
Gramlich Site
The Gramlich Superfund site was a city block in a populated residential area
of Fort Smith, Arkansas. From 1958 to 1970, the late Mr. Gramlich sprayed
contaminated oil as a dust and pest control on his yard, the adjoining unpaved
alley and streets, and under several homes. In 1982, the Region first became
aware of the site and attempted to take cleanup action. However, EPA
Headquarters denied approval of a removal. The State of Arkansas subsequently
removed 200 cubic yards of contaminated soil from the site. Headquarters
decision not to act was the subject of a 1982 congressional review.
In 1988, the Region's remedial program reentered the site to conduct sampling.
Upon finding further contamination, a removal was begun. Cleanup conducted
between June and November 1988 involved locating, excavating, and landfilling
2,618 cubic yards of soil. The removal cost ceiling was $3.3 million of which
$2.9 million was obligated and $1.6 million spent. The Region's on-scene :
coordinator directed the removal and used the services of a Emergency Response
Cleanup Services (ERCS) contractor, a Field Investigation Team (FIT)
contractor, and a Technical Assistance Team (TAT) contractor.
Vertac Site
The Vertac Superfund site in Jacksonville, Arkansas was the site of a former
World War II ordnance plant. Since 1948, herbicides including "Agent Orange"
were produced at the site. Dioxin was a by-product of production. Under
EPA's dioxin listing rule (the "Vertac Rule") and a 1982 Consent Order, the
dioxin wastes were managed and stored on site. The site was listed on EPA's
National Priorities List in October 1981. EPA's Dioxin Disposal Advisory
Group recognized the site as the "worst dioxin site in the U.S." In 1986, a
responsible party agreed to create a trust fund to pay for cleanup of the
site. That responsible party maintained the drums until abandoning the site
in January 1987. The site was adjacent to a residential area of Jacksonville.
The Region and the responsible parties conducted several cleanups at the site.
Our review covered the Region's significant removal to address 28,500 drums
stored at the site. The removal started January 1987 and was still in
progress at the time our review ended in July 1989. As of June 1989, the
removal cost ceiling was $10.9 million of which $9.0 million was obligated and
$8.1 million spent. The Region's on-scene coordinator directed the removal
and used the services of ERCS and TAT contractors.
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FINDINGS AND RECOMMENDATIONS
FINDING 1 - IMPROVED COORDINATION AND OVERSIGHT NEEDED
The Region needed to improve the coordination and oversight of joint cleanup
efforts with the State of Arkansas. We found that a series of
misunderstandings and the State's limitations delayed cleanup of both the
Vertac and Gramlich sites. At Vertac, the Region and the State did not
coordinate timely incineration of the drums. At Gramlich, the Region presumed
the State had cleaned up the site, only to find six years later, that the site
was still contaminated. Delayed cleanup of the two sites left people living
on or near the sites in danger for an additional two to six years while
removal costs increased a total of $6 million.
Vertac Removal
The Region recognized as early as 1985 that preliminary drum overpacking to
contain the leaking dioxin followed by incineration was the only feasible
permanent remedy to clean up the drums. Such a removal would have been
consistent with SARA which required that removals contribute to and be
consistent with permanent remedies. However, the Region opted to start a
removal in January 1987 that only included overpacking and storing the drums.
Regional personnel advised us that they did not include incineration in their •
removal because they had given the State the lead on incineration.
State personnel contended that the Region avoided the incineration issue
because of reactions to a previous incineration attempt at the site. That
unsuccessful attempt was met with strong public opposition, political concern,
and a "no burn" ordinance by the local government. State personnel stated
they took the lead on incineration because the Region had not acted and
because they controlled the responsible party trust fund.
We could not verify that the Region gave the lead for incineration to the
State. The Region did not mention the State's intent to incinerate the drums
in the initial action memorandum or the long-term workplan. Also, the Region
and the State did not prepare and sign a memorandum of understanding
confirming plans and responsibilities for cleanup actions of the drums. Nor
were there any pre-removal planning documents evidencing verbal discussions on
the incineration lead.
Misunderstandings also surrounded the use of the responsible party trust fund.
State personnel said the money was theirs because the trust agreement
indicated they controlled fund expenditures. However, Regional personnel
thought they also had access to the funds because the trust was the result of
a joint action by EPA and the State. Regardless, the trust fund was not
available to pay for incineration. Responsible party litigation tied the
trust fund up for the first year and a half of the removal.
If the Region actually gave the lead for incineration to the State, we think
that closer coordination and oversight would have shown that the Region,
rather than the State, was better equipped to arrange for incineration.
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The State's procurement abilities were limited. The State had never procured
a dioxin incinerator while EPA had procured incinerators for other Superfund
sites. The State conducted three procurement efforts before a contract was
signed. In the first procurement attempt, the State simply conducted an open
house in an attempt to identify what technologies were available to dispose of
the dioxin. The second attempt fell through during negotiations when the
contractor concluded the work could not be performed for the available
funding. The State was finally able to award a contract in their third
attempt in July 1989, two years after the award was planned. State personnel
said they did not attempt to follow Federal a-J State procurement regulations
because they did not consider the trust funds monies to be Federal or State
funds.
The State was also limited to paying for incineration with the trust fund
amount. Because of the limited funding, the State had trouble awarding the
contract. The State had to reduce the scope of the work after the second
procurement effort. Still, only one vendor bid below the trust fund amount.
The State awarded that vendor the contract even though the vendor plans to use
a to-be-built incinerator. The Region committed $2 million to supplement the
incineration effort.
Finally, the State had limited abilities for technology development. As of
January 1987, we determined that there were no commercially permitted
incinerators available to burn dioxin although some research and development '.
permits had been issued. Further, dioxin incineration had only been performed
at a few sites and the strictest EPA incineration standards applied.
Therefore, we think it was reasonable to assume that the incinerator placed at
the site would require some development. EPA had a program for developing
such new and difficult technologies at Superfund sites. The State, on the
other hand, did not have a technology development program and no prior
experience with dioxin incineration.
In our opinion, all of these factors delayed incineration, extended the
Region's removal, and increased cleanup costs. We determined that
incineration should have begun in January 1988, one year after the removal
began. However, incineration was delayed to January 1990 because of these
factors. As a result, the residents living next to the site were exposed to
the threats posed by the drums for an additional two years. Further, removal
costs increased $4.7 million as an additional 14,200 drums were overpacked.
By June 1989, the Region had spent $8.1 million stabilizing and maintaining
the drums. If incineration had been timely, only one year of maintenance
would have been necessary. Therefore, the $4.7 million spent after the first
year could have been saved. The Region could have saved future costs as well.
Regional personnel estimated that future drum maintenance of $600,000 to $1.0
million annually would be required until incineration begins. Finally,
incineration of the remaining site waste was delayed. After the drums are
incinerated, the Region planned to spend an estimated $300 million to
incinerate those wastes once the drums were finished.
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We think that better coordination and oversight, earlier in the removal, would
have made it apparent that the Region was better equipped to take the lead on
incineration and perform incineration as part of the removal.
Gram!ich Removal
In 1982, the Region requested Headquarters approval and $258,000 to conduct an
immediate removal of 800 cubic yards of contaminated soil. Headquarters
denied the request for an immediate removal and suggested that a planned
removal be pursued. In the meantime, the State took immediate action and
conducted a cleanup in October 1982. Regional personnel presumed the State's
action cleaned up the site. However, the Region did not obtain confirming
data from the State and did not perform post-removal sampling to make final
disposition of the site until 1988. At that time, the Region determined that
the State had only removed one-fourth (200 of 800 cubic yards) of the
contaminated soil in 1982 and that the contamination had spread to an
additional 2,000 cubic yards. The Region then spent $1.6 million to remove
2,600 cubic yards of contaminated soil.
Regional personnel stated they had not performed any follow-up actions to
confirm the State's cleanup because the Headquarters 1982 denial had become a
politically sensitive issue during congressional hearings on the Agency's
management. However, we think the political sensitivity of the site should
not have precluded the Region from conducting proper follow-up work to
determine whether the site was clean. Had the Region followed up on the
State's cleanup in 1982, the Region would have been aware of the remaining
contaminated soil. Further, the Region could have pursued the recommended
planned removal in 1982 or initiated an immediate removal when the NCR
criteria were amended in 1985.
Delayed clean up of the site left the residents in the twenty-five homes at
the site in danger for an additional three to six years. Further, removal
costs increased $1.3 million (from $258,000 in 1982 to $1.6 million in 1988).
RECOMMENDATION 1
We recommend the Regional Administrator:
a. Adopt procedures for coordination and oversight of joint cleanup efforts
with states. The procedures should provide for documentation of coordinated
efforts in memorandums of understanding and action memorandums.
b. Sign a memorandum of understanding with the State of Arkansas concerning
coordination and oversight of the joint cleanup effort for the Vertac site.
REGION RESPONSE
Both Gramlich and Vertac Removal cleanups were complex actions
which required extensive coordination between the Region 6
Emergency Response Branch (ERB), and the State of Arkansas. We do
not concur that coordination shortfalls significantly affected the
cost or length of either the Gramlich or Vertac project.
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Nonetheless, the Region 6 ERB will review procedures which could
be utilized for more effective coordination of removal cleanup
actions with the State of Arkansas in order to avoid delays which
might increase project costs or leave citizens living or near
sites which pose an imminent health threat.
A State Memorandum of Agreement (SMOA) already exists for
coordinating Superfund actions within a particular state. ERB
will review each SMOA to ensure that adequate procedures are
included for State/EPA coordination for all removal actions.
AUDITOR EVALUATION
We still maintain that the conflicting statements concerning the Vertac
removal and misinformation concerning the Gramlich removal demonstrated the
need for better coordination between the Region and the State of Arkansas.
Many of these issues could have been cleared up if the Region and the State
documented specific planned actions and responsibilities for each site in
memorandums of understanding. The Region was partially responsive to the
recommendations since the Region agreed to review coordination procedures and
state memorandums of agreement. However, to make a final determination we
need to evaluate the results of the Region's review and any corrective action .
taken or planned. Accordingly, we request the Region provide this information
in a response to the final report.
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FINDING 2 - CONTRACTOR ASSIGNMENTS SHOULD BE SEGREGATED
The Region needed to improve the segregation of contractor assignments. We
found that the Region did not adequately segregate contractor assignments at
the Gramlich site. The on-scene coordinator assigned three contractors to
perform more than one of the fundamental removal activities of sampling,
analysis, and excavation. The performance of these activities without
adequate segregation presented the appearance of a conflict of interest and
possibly allowed the contractors to perform unnecessary work.
The Region's on-scene coordinator controlled contractor assignments. The
coordinator was responsible for verifying completed work and approving
contractor costs. At Gramlich, the coordinator used the ERCS, TAT, and FIT
contractors. These contractors provided cleanup services, technical support
services, and site investigation services, respectively.
A potential conflict of interest arose when the on-scene coordinator assigned
the ERCS contractor to do post-removal sampling. Post-removal sampling
determined whether or not further excavation was necessary. The coordinator
used the ERCS contractor for post-removal sampling because of the magnitude
and urgency of the removal and because of shortages in the TAT and FIT
programs. Since the ERCS contractor was also performing its normal excavation
duties, the sampling potentially allowed the ERCS contractor to influence the
number of excavations. The Region noted that post-removal sampling by the
ERCS contractor is frequently done under the supervision of the coordinator
and that the EPA/ERCS contract allowed the ERCS contractor to perform
sampling. However, we noted that Agency removal procedures state that ERCS
services are intended for cleanup and should not be used for extent of
contamination surveys because of the potential conflict of interest.
The Region was confident that the oversight and monitoring by the coordinator
prevented unnecessary work from being performed. However, site documentation
did not allow us to determine whether any unnecessary work was performed. We
were able to determine that 56 of the 398 excavations performed followed post-
removal sampling by the ERCS contractor. In dollars, the 56 additional
excavations represented $130,000 (56/398 times the $929,000 paid the ERCS
contractor).
Another potential conflict of interest arose when the on-scene coordinator
assigned the FIT and TAT contractors to staff an on-site laboratory. The
coordinator used an on-site laboratory staffed by FIT and TAT personnel
because of the magnitude and urgency of the removal. Since the FIT and TAT
contractors were also collecting samples, the contractors could have
potentially influenced the results of the samples and the number of samples
collected and analyzed. The conflict occurred for the first seven weeks of
the project. Once the conflict was recognized, the coordinator reassigned the
contractors to provide for segregation of the sampling and analysis functions.
The coordinator's use of an on-site laboratory appeared justified because of
the need to provide quick and cost-effective analysis for a large volume of
samples. About 3,000 samples were collected and analyzed in support of the
Gramlich removal. However, the segregation of the sampling and analysis
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functions provided by an off-site laboratory should have been maintained when
the on-site laboratory was used.
We think that segregation of key removal duties should be required. Also, on-
scene coordinators should perform additional oversight and monitoring when
conditions preclude normal segregation of duties.
RECOMMENDATION 2
We recommend the Regional Administrator:
a. Require the assignment of contractors in such a manner that there are no
potential or perceived conflicts of interest. Where situations preclude
segregation, the on-scene coordinator should ensure the integrity of work by
performing additional oversight and monitoring.
b. Adopt written procedures for determining what additional oversight and
monitoring is necessary to ensure the integrity of the work when normal
segregation is precluded.
REGION RESPONSE
The Region 6 ERB concurs with the recommendation that contractor
assignments should be made in a manner which minimizes potential
or perceived conflicts of interest. However, as indicated in our
previous comments on August 14, 1989, because of the magnitude and
urgency of the on-site cleanup and investigative efforts at the
Gramlich site, adjustments to normal contractor assignments were
necessary to accommodate severe manpower shortages. The Region 6
ERB will organize future removal work so that work assignments are
segregated to preclude potential conflicts of interest. If
conditions on future removals, such as personnel shortage,
preclude proper segregation, written procedures will be developed
for monitoring and oversight of contractor work. The written
procedure will employ all available Quality Assurance/Quality
Control (QA/QC) mechanisms to ensure conflicts of interest are
avoided and the appearance of conflict of interest is minimized.
The procedures used for oversight and monitoring of contractor
work at the Gramlich project to prevent conflicts of interest were
not documented in writing. The procedures consisted primarily of
more frequent daily observation of contractor activities by the
OSC [on-scene coordinator] and more TAT oversight
(photodocumentation). The additional oversight by the OSC is
documented in site logs. Written oversight procedures seemed
unnecessary and were never prepared.
As indicated in our mid-August comments, we do not believe that
the described activities by EPA contractors constituted any
conflict of interest. However, we concur that the appearance of
conflict of interest is conceivable. The measures described above
should preclude this appearance in the future.
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AUDITOR EVALUATION
The Region agreed with the finding.
recommendation.
They were also responsive to the
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FINDING 3 - COMPLETE ENFORCEMENT SHOULD BE TAKEN
The Region needed to improve enforcement against responsible parties. We
found that the Region did not take complete enforcement actions against a
responsible party for the Gramlich site. The Region: did not ask the
responsible party to perform the cleanup prior to beginning the removal; did
not notify the responsible party in writing of their potential liability for
the cost of the removal; did not issue an administrative order once the
responsible party refused to perform the removal; and had not pursued cost
recovery against the responsible party. Regional personnel said the urgency
to address site threats preempted taking complete enforcement. They added
that the deadline for cost recovery did not expire until 1991. If the
responsible party had cleaned up the site, the Region could have saved the
$1.6 million spent to cleanup the site. The Region also lost the opportunity
to recover treble damages from the responsible party because an administrative
order was not issued.
The Superfund program strives to place the responsibility for cleanup of
hazardous waste on those who generated the waste and those who owned or
operated hazardous waste sites. Superfund enforcement efforts are designed to
get those who are responsible to bear the cleanup costs. This is accomplished
by use of Agency enforcement tools and post-removal cost recovery.
We found that the Region did not use all of the Agency's enforcement tools
against the responsible party for the Gramlich site. The Region did not ask
the responsible party to perform the cleanup prior to beginning the removal.
Rather, the Region gave verbal notice one day after the removal was approved.
Regional personnel explained that prior written notice was not given because
the removal was on a "fast track". This meant the removal was started despite
the lack of complete enforcement.
The Region then sent a letter to the responsible party confirming the verbal
request. However, the format of the letter did not conform to the Agency's
model notice letter. The letter did not inform the responsible party of their
potential liability for the cost of the removal. Regional personnel said the
letter was a confirmation of the verbal notice and was not intended to be a
formal notice letter.
Once the responsible party verbally refused to conduct the cleanup, the Region
did not issue an administrative order. Agency procedures stated an order
could be used to force a cleanup when the responsible party refuses to act or
acts inappropriately. The order, a legal document which provided for
penalties and treble damages, would have enhanced administrative settlement
and strengthened future litigation for cost recovery. Regional personnel said
they did not think that issuing an order was appropriate, given the
circumstances, and that cost recovery could later be pursued.
The removal was completed in November 1988. However as of July 1989, the
Region had not attempted to recover the cost of the removal from the
responsible party. Regional personnel stated that they had until November
1991 to pursue cost recovery since that was when the Statute of Limitations
for the removal expired.
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RECOMMENDATION 3
We recommend the Regional Administrator:
a. Adopt procedures for use of all of the Agency's enforcement tools. Models
for notice letters and administrative orders should be used, prior notice
should be given, and administrative orders should be issued. The procedures
should also address the coordination of the Region's removal, enforcement, and
legal staffs.
b. Pursue cost recovery for the Graralich removal. A plan of action with
milestone dates should be developed and implemented.
REGION RESPONSE
The Region's Emergency Response Branch indicated a response would be provided
by the Region's Hazardous Waste Management Division.
AUDITOR EVALUATION
The Region did not submit a response from the Hazardous Waste Management
Division. Therefore, the Region should include a response to the finding and
recommendations in their response to the final report.
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FINDING 4 - BETTER DOCUMENTATION NEEDED
The Region needed to improve the documentation maintained for significant
removals. We found that the Region did not maintain adequate documentation
for removal costs and site access. Cost documentation did not adequately
support contractor charges for disposal, labor, equipment, and security.
Also, some contractor costs were not documented as removal costs. Site access
documentation was incomplete because oral access agreements were not confirmed
with letters to the site residents. We recognized that the urgency of the
removals reduced the level of documentation kept. However, adequate
documentation was necessary to show that removal decisions were in accordance
with Agency guidelines and to provide evidence for cost recovery actions. By
not keeping adequate documentation, the Region's ability to recover removal
costs from responsible parties could have been harmed. Also, adequate cost
documentation was necessary to support the on-scene coordinators' approvals of
payments to removal contractors.
Cost Documentation
We found that the Region did not maintain logbooks which adequately supported
costs charged by the ERCS contractor. We reviewed the site entry/exit
logbooks and the on-scene coordinators' logbooks to see if charges for labor,
equipment and security were supported. Our judgmental sample showed that a
substantial amount of the charges could not be verified. About a third of the
labor charges sampled was not supported, while almost all of the equipment and
security charges sampled were not supported. The results of our review were:
Charges Reviewed Charges Unsupported By The Logs
Gramlich Removal:
Labor $ 23,650 $ 12,297
Equipment 206 206
Security 14,987 14, 867
Vertac Removal:
Labor 76,448 29,003
Equipment 2.215 2.136
Total $ 117,506 $ 58,509
We also found that the Region did not maintain adequate cost documentation to
support $500,000 of disposal costs charged to the Gramlich removal. A
disposal contractor trucked soil from the site to its hazardous waste landfill
in the State of Alabama. The contractor weighted the trucks as they entered
and exited the landfill and then billed the Region according to the weight.
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Regional personnel stated that the trucks were weighed prior to leaving the
site to check for compliance with Department of Transportation standards.
However, they did not record those weights or the weights of the empty trucks.
Without the weights, the Region had no way of verifying the amounts billed by
the contractor. Regional personnel agreed that the exact weights could not be
verified. However, they said the approximate weights could be verified by
using basic knowledge of truck and fuel weights, Department of Transportation
weight limits, and the known capacity of the soil containers.
We further found that the Region did not document costs charged by the FIT
contractor as removal costs. Specifically, the FIT costs were not approved in
the action memorandums and were not charged to the removal ceiling. The
Region tasked the FIT contractor to perform several activities at the Gramlich
site. We determined that one of the tasks, staffing an on-site laboratory,
was directly related to performance of the removal. The FIT was paid about
$270,000 to perform this task (5,403 hours times the Region's estimate of $50
an hour). The Region agreed that the costs were not charged to the removal.
They explained that half of the cost was considered investigative work while
the other half was considered a special project. We cannot disagree that the
costs qualified as investigative work or a special project. However, we do
think it was more appropriate to treat the costs as removal costs since the
activities performed directly functioned as part of the removal. The Region's
treatment of the costs resulted in removal costs being understated by
$270,000.
Site Access Documentation
We found that the Region did not maintain adequate documentation for
oral access agreements obtained during the Gramlich removal. The Agency's
access policy required confirmation of oral access with a letter to the
property owner. Seven of the twenty-five residents living at the site granted
oral access instead of signing written access agreements. However, the Region
did not confirm the oral access agreeme *s with a letter to the seven property
owners. Without the >tters, the Regk had no permanent record of a
transactions which cc. d be raised as a Defense or in a claim for damages.
RECOMMENDATION 4
We recommend the Regional Administrator:
a. Adopt specific documentation requirements for each category of removal
costs (e.g. labor, equipment, security, disposal etc.). The requirements
should be based on the options suggested in Agency guidance.
b. Adopt specific documentation requirements for site access. The
requirements should be based on Agency guidance for obtaining site access.
c. Provide documentation training for the on-scene coordinators.
d. Document contractor costs which are directly related to a removal as
removal costs. The costs should be approved in action memorandums and charged
against the removal cost ceiling.
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REGION RESPONSE
The Region 6 ERB agrees that good documentation is required on
Superfund Removal projects to support cost recovery actions and to
document conformance with the National Contingency Plan and HQ
guidance. However, as indicated on our comments provided on
August 14, 1989, the documentation procedures utilized at both the
Vertac and Gramlich projects conformed to guidelines outlined in
the Removal Costs Management Manual {RCMM), OSWER Directive
9360.0-02B. In view of your finding on this matter, Region 6 ERB
will initiate a review of the documentation requirements outlined
in the RCMM and other Agency Directives to ensure conformance and
may develop more specific procedures to be used in the
documentation of Region 6 removal costs.
Region 6 ERB plans to approach Headquarters staff to obtain
clarification on the matter of documentation of costs. It remains
important that national guidance remain highly flexible to
accommodate Regional and project differences.
All OSC's receive training on general cost documentation
requirements as part of the required OSC/RPM Project Management
Course, Contract Officer and Warrant Officer Certification
Courses. If Regional specific or added HQ procedures for cost
documentation are produced per our discussion on this matter,
additional training will be provided to all OSC's.
Region 6 ERB does not object to producing any additional
documentation which will substantially improve the Agency position
in cost recovery, cost documentation, or any other matter.
However, Region 6 ERB currently has serious concerns about
increasing the administrative burden on the OSC. We are striving
to reach a proper balance between administrative and technical
duties.
AUDITOR EVALUATION
The Region disagreed with the finding. They felt that adequate documentation
was kept for the removals. However, we believe the Region was partially
responsive to the recommendations since the Region agreed to initiate a review
of documentation requirements. In order to complete our evaluation of the
Region's response, we request that the Region provide us with the results of
their review and specific documentation changes made or planned in response to
the specific recommendations made.
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FINDING 5 - EARLIER EXEMPTION REQUESTS NEEDED
The Region needed to submit earlier exemption requests so Headquarters could
control the course of significant removals. We found that the Region did not
submit timely requests for the removals at the Vertac and Gramlich sites.
Agency procedures required the Region to submit the requests to Headquarters
at the start of the removals. However, the Region delayed the requests from
two to five months. By the time the requests were made, the Region had
already selected and implemented a response. Consequently, the Region
bypassed Headquarters' control over high cost removal decisions.
The NCP required the Region to determine, as early as possible, the need for
an exemption to the $2 million statutory ceiling on removals. Agency removal
procedures required the Region to submit an exemption request to Headquarters
at the start of a removal when costs were expected to exceed $2 million. The
request ensured Headquarters approval of the selected response and its cost.
Thus, Headquarters could control high cost removal decisions.
We determined that the cost of the Vertac removal was expected to exceed $2
million at the start of the removal. We based our determination on the facts
that the Region estimated the removal could last for three to five years while
a responsible party, who had performed maintenance of the drums prior to the
removal, told the Region that maintenance could cost $2 million a year. Thus,
the removal cost was potentially six to ten million dollars. We also noted a"
State of Arkansas official estimated the removal could cost $2 million every
six months. Nonetheless, the Region started the removal with $1 million and
stated "Additional funds will be requested on a regular basis until these
actions are no longer necessary".
Regional personnel stated that minimal information on the Vertac site was
available at the start of the removal. They also stated that, based on
historical information provided by a responsible party, they did not know that
the project would exceed $2 million. However, we noted that initial
information on the site indicated the Region thought the site was large and
complex and that the condition of the drums posed significant and complex
problems. We think the evidence available at the time clearly indicated that
the removal would cost more than $2 million.
The Region worked at the Vertac site for five months before submitting an
exemption request to Headquarters. By then, the Region had already selected a
response and committed to long-term maintenance of the drums. As a result,
the Region bypassed Headquarters control over the course of the removal.
We also determined that the cost of the Gramlich removal was expected to
exceed $2 million at the start of the removal. We based our determination on
the fact that the first action memorandum "This action...is anticipated to
require less than 12 months and more than $2 million for completion."
Nonetheless, the Region started the removal with $1,999,900. The memorandum
indicated the exemption request would be prepared and submitted at a later
date.
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Regional personnel stated that they did not expect the cost of the Gramlich
removal to exceed $2 million at the start of the removal. They also said they
told the Regional Administrator this before the first action memorandum was
signed. However, we noted the initial action memorandum did not reflect these
comments.
The fact that the Gramlich removal was completed for $1.6 million was not
known at the start of the removal. Therefore, that fact did not influence the
need for Headquarters approval.
The Region worked at the Gramlich site for two months before submitting an
exemption request to Headquarters. By then, the Region had selected a
response and completed forty percent of the removal. As a result, the Region
bypassed Headquarters control over the course of the removal.
We concluded that the Region should have requested Headquarters approval to
exceed $2 million at the start of the Vertac and Gramlich removals. This
would have allowed Headquarters to control the course of the significant
removals. The Region's delayed requests precluded Headquarters control over
the responses.
RECOMMENDATION 5
We recommend the Regional Administrator: •
a. Submit exemption memorandums for significant removals to Headquarters
prior to selecting and implementing a response.
b. Document in the action memorandums all significant information given to or
relied on by the approval official.
REGION RESPONSE
The Region 6 ERB recognizes the requirement to submit action
memorandums for statutory exemptions to EPA Headquarters for
approval as soon as the need to the exemptions is established.
Whenever possible Headquarters concurrence will be sought prior to
the initiation of a removal. We therefore concur with the
recommendation for prompt submittal of exemption requests to EPA
Headquarters prior to selecting or implementing a resource when
statutory limitations may be exceeded. However as indicated in
our August 14, 1989 comments, circumstances were such on both
Gramlich and Vertac that the Region was not certain that
exemptions would be needed when both removals began. The
exemption requests were prepared and submitted to EPA Headquarters
for concurrence as soon as it became evident that statutory cost
limits might be exceeded. We plan to provide additional detail on
this matter in our final response.
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AUDITOR EVALUATION
We still maintain the Region had sufficient information to identify the
exemption requirement when the removals were initiated. However, the Region's
nonconcurrence demonstrated the need to document the basis for that
determination in the initial action memorandum. Since the Region did not
respond to that issue in recommendation 5.b., we request that the Region do so
in a response to the final report.
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APPENDIX A
5 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
144$ t«.X>
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APPENDIX A
FINDING NO. 1. IMPROVED COORDINATION AND OVERSIGHT NEEDED
Both Gramlich and Vertac Removal cleanups were complex actions which re-
quired extensive coordination between the Region 6 Emergency Response Branch
dtl ris .d.tt u cdriiii. ny ou hO COr'iCur tn
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APPENDIX A
FINDING NO. 4. BETTER DOCUMENTATION NEEDED
The Region 6 ER8 agrees that good documentation is required on Superfund
Removal projects to support cost recovery actions and to document conforra-
ance with the National Contingency Plan and HQ guidance. However, as
indicated on our comments provided on August 14, 1989, the documentation
procedures utilized at both the Vertac and Gramlich projects conformed to
guidelines outlined in the Removal Costs Management Guidelines (RCHM),
OSWER Directive 9360.0-02B. In view of your finding on this matter, Region
6 ERB will initiate a review of the documentation requirements outlined in
the RCHM and other Agency Directives Lo ensure CujiConiwrtCB and may develop
more specific procedures to be used in the documentation of Region 6 removal
costs.
Region 6 ERB plans to approach Headquarters staff to obtain clarification
on the matter of docuiaentation of costs. It remains important that
national guidance remain highly flexible to accomodate Regional and project
differences. <
All OSC's recieve training on general cost documentation requirements as
part of the required OSC/RPM Project Management Course, Contract Officer and
Warrant Officer Certification Courses. If Regional specific or added HQ
procedures for cost documentation are produced per our discussion on this
matter, additional training will be provided to all OSC's.
Region 6 ERB does not object to producing any additional documentation
which will substantially improve the Agency position in cost recovery, cost
documentation, or any other matter. However, Region 6 ERB currently has
serious concerns about increasing the administrative burden on The OSC. We
duties
n t> i-aaK
nr-nnar
Sistwi&on arlifli ITT it rat 1 VP anrl
FINDING NO. 5. EARLIER EXEMPTION REQUESTS NEEDED
The Region 6 ERB recognizes the requirement to submit action memorandums
for statutory exemptions to EPA Headquarters for approval as soon as the
need for the exemptions is established. Whenever possible Headquarters
concurrence will be sought prior to the initiation of a removal. We there-
fore concur with the recommendation for prompt submittal of exemption
requests to EPA Headquarters prior to selecting or implementing a response
when statutory limitations may be exceeded. However as indicated in our
August 14, 1989 comments, circumstances were such on both Gramlich and
Vertac that the Region was not certain that exemptions would be needed
when both removals began. The exemption requests were prepared and sub-
mitted to EPA Headquarters for concurrence as soon as it became evident
that statutory cost limits might be exceeded. We plan to provide additional
detail on this matter in our final response.
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28
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APPENDIX B
DISTRIBUTION
Office of Inspector General
Inspector General (A-109)
Regional Office
Regional Administrator, Region 6 (6A)
Audit Followup Coordinator (6M)
Headquarters Office
Comptroller (PM-225)
Agency Followup Official {PM-225)
Agency Followup Official (PM-208)
Associate Administrator for Regional Operations (A-101)
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