&EPA
Unh«d Stum
Environment*! Protection
Report of Audit
REPORT OF AUDIT ON THE ASBESTOS
SCHOOL HAZARD ABATEMENT ACT fASHAA)
AUDIT REPORT NUMBER E1E18-03-0161-9100486
SEPTEMBER 20, 1989
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TABLE OF CONTENTS
Page
OBJECTIVES, SCOPE AND METHODOLOGY 1
SUMMARY" OF FINDINGS 4
ACTION REQUIRED 9
BACKGROUND 9
FINDINGS AND RECOMMENDATIONS
1. EPA NEEDS TO AWARD ASHAA FUNDS MORE EFFECTIVELY 12
2. EPA NEEDS TO REVISE REPAYMENT TERMS FOR ASHAA LOANS.. 17
3. EPA NEEDS TO IMPLEMENT CONTROLS OVER ASHAA FUNDS
AWARDED TO THE BUREAU OF INDIAN AFFAIRS (BIA) 22
4. ASBESTOS CONTRACTORS ARE NOT OBTAINING ADEQUATE
INSURANCE 25
5. ASBESTOS TRUST FUND NOT AVAILABLE TO LEAs 28
6 . PENNSYLVANIA IS NOT COMPLYING WITH AHERA 30
APPENDIX A - INCREASE IN ASBESTOS TRUST FUND AS OF DECEMBER
1989 AND ESTIMATED ANNUAL INCREASE TO THE
ASBESTOS TRUST FUND : 38
APPENDIX B - FLASH AUDIT REPORT 39
APPENDIX C - LETTER FROM REGION III ADMINISTRATOR TO THE
GOVERNOR OF PENNSYLVANIA 42
APPENDIX D - LETTER FROM REGION III DIRECTOR OF HAZARDOUS
WASTE MANAGEMENT TO THE ACTING ASSISTANT
ADMINISTRATOR FOR PESTICIDES AND TOXIC
SUBSTANCES 45
APPENDIX E - AGENCY'S RESPONSE TO THE DRAFT REPORT 47
APPENDIX F - REPORT DISTRIBUTION 70
HEADQUARTERS LIBRARY
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
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*•<«> «••»)!)
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20490
20
OP
THE INSPECTOR GENERAL
MEMORANDUM
SUBJECT:
FROM:
TO:
Audit Report Number E1E18-03-0161-9100486
Report of Audit on the Asbestos School
Hazard Abatement Act (ASHAAJ
Ernest E. Bradley III
Assistant Inspector
eral for Audit
Linda Fisher
Assistant Administrator For
Pesticides And Toxic Substances
Charles L. Grizzle
Assistant Administrator For Administration
And Resources Management
OBJECTIVES. SCOPE AND METHODOLOGY
We performed an audit of the Asbestos Loans and Grants Program
administered by the Office of Pesticides and Toxic Substances
(OPTS). This audit is the second audit our office has conducted on
the ASHAA program. In September 1987, we issued a report
addressing the EPA and states' role in managing the ASHAA program
during fiscal years 1985 and 1986. In this audit report we
informed OPTS that this audit was the first of a series we planned
to conduct of ASHAA.
In this second audit of ASHAA, we originally planned to limit
our review to the Local Educational Agency's (LEA) role in managing
the abatement projects. However, during our survey work, we found
several deficiencies concerning EPA's administration of ASHAA
during fiscal years 1987 and 1988. Accordingly, we expanded the
scope of our work during the audit to include EPA's administration
of ASHAA during fiscal years 1987 and 1988.
The objectives of this audit were to: (1) evaluate the LEA's
role in managing the abatement projects in accordance with Federal
procurement and grant regulations; and (2) examine EPA's
administration of ASHAA. Our review period for both objectives was
from fiscal years 1985 through 1988.
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Audit field work began on May 2, 1988 and was completed on
January 31, 1989. We performed our review at EPA Headquarters,
Region III, Region VIII, Las Vegas Accounting Operations Office,
Departments of Environmental Resources and Education in
Pennsylvania, and LEAs in Pennsylvania, Maryland, Virginia, Ohio
and South Dakota. In addition, we used telephone interviews with
state officials from Maryland and Virginia to determine the status
of the review of management plans submitted by LEAs within their
States.
To evaluate the LEA's role in managing the abatement projects,
we visited a total of 10 of 642 LEAs receiving ASHAA funds. The 10
LEAs were located in Pennsylvania, Maryland, Virginia, Ohio and
South Dakota. We originally intended to sample all LEAs in Region
III receiving ASHAA funds during fiscal years 1987 and 1988 with
asbestos abatement work initiated after the award date. However,
we found a minimal number of LEAs within Region III meeting the
above criteria; consequently, we expanded our sample to include
Ohio, the state with the largest number of ASHAA awardees. When we
visited the 10 LEAs, we examined records for the ASHAA loans and
grants awarded during fiscal years 1987 and 1988, as well as
previous awards during fiscal years 1985 and 1986. At the request
of the Assistant Administrator of the Office of Pesticides and
Toxic Substances we reviewed the ASHAA records and procedures of
the Bureau of Indian Affairs (BIA) in South Dakota. During the
review of the BIA, we visited Region VIII to examine inspection
reports prepared by EPA contractor personnel on BIA projects.
Our review included examining the procurement, award,
monitoring and completion procedures used by the LEAs.
Additionally, we reviewed the costs claimed by the LEA as well as
the LEA's compliance with loan repayment provisions. We examined
award agreements, requests for proposals, bid tabulations,
contractual documents, inspection reports, air testing
requirements, EPA payment requests and supporting invoices.
To examine EPA's administration of ASHAA during fiscal years
1987 and 1988, we conducted interviews with officials and staff
from OPTS, Grants Administration Division (GAD) and EPA's Las Vegas
Accounting Operations Office. Discussions with OPTS personnel
involved their reviewing, ranking and inspecting of ASHAA
applications. We also reviewed computer listings provided to us by
OPTS containing the ranking of ASHAA projects for fiscal years 1987
and 1988. Interviews with GAD and the Las Vegas Accounting
Operations Office concerned the awards, payment and collection
procedures utilized in the administration of the ASHAA program. We
examined GAD files containing payment requests, supporting invoices
and close-out letters. We also obtained a computer listing from
GAD as of August 3, 1988 containing the type of funded projects for
all awardees from the inception of the ASHAA Program. We reviewed
all "Reimbursement" projects from this listing and all "Work-in-
Progress" projects with a loan amount greater than $100,000. In
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Las Vegas, we judgmentally selected a sample of 70 of 599 loan
files to determine whether LEAs were complying with their loan
agreements.
During fiscal years 1987 and 1988, EPA awarded $20 million of
ASHAA funds to states for the Asbestos Inspection and Management
Plan Assistance Program (AIMPAP). Under this program, states were
to award these AIMPAP funds to financially needy LEAs. The funds
were to provide assistance in conducting inspections and developing
management plans as required by the Asbestos Hazard Emergency
Response Act (AHERA). In order to accomplish our second objective,
we conducted telephone interviews with state officials from
Maryland, Virginia and Pennsylvania. Because of serious
deficiencies in the Pennsylvania Program disclosed in our telephone
interview, we visited the Departments of Environmental Resources
and Education in Pennsylvania to review the extent of their
compliance with the requirements of AHERA.
During this portion of the audit we also:
1. Examined both the ASHAA legislation and the Asbestos
Hazard Emergency Response Act (AHERA) along with the
applicable regulations, policies and procedures.
2. Conducted interviews with asbestos abatement contractors,
consultants, industrial hygienists as well as personnel
from insurance companies, universities, engineering firms
and national organizations.
3. Discussed the preliminary results of our review with
senior staff of the Asbestos Action Program.
He performed the audit in accordance with the Standards foy
Audit of Governmental Organizations. Programs. Activities and.
Functions issued by the Comptroller General of the United States as
they apply to economy and efficiency and program results audits.
This review included tests of the records and other auditing
procedures we considered necessary at EPA Headquarters, Regions III
and VIII, the Las Vegas Accounting Operations Office, the state
designees for the Asbestos Program in Pennsylvania and selected
LEAs.
Our review evaluated the economy, efficiency and program
results expected only in relation to the procedures used by the LEA
in complying with ASHAA requirements. We also evaluated EPA's and
the states' oversight of both ASHAA and AHERA requirements. This
review disclosed several areas needing improvement which are
discussed in this report. Because of the limited scope of our
audit, we did not perform a study and evaluation of internal
accounting controls and accordingly did not include a report on
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them. During this review we used information maintained by EPA on
its computer. We did not review the general and application
controls of the data processing system because the main purpose of
our review was to evaluate the overall management of the ASHAA
program, and not to express an opinion on the accuracy of the data
processing system. No other issues came to our attention which we
believed were significant enough to warrant expanding the scope of
this audit.
SUMMARY OF FINDINGS
Our review of the LEA's role in managing the abatement
projects disclosed no significant problems with the award,
monitoring and completion procedures used by the LEAs. We did find
that LEAs were not complying with Federal procurement regulations
concerning bonding requirements. For details, see Finding entitled
"ASBESTOS CONTRACTORS ARE NOT OBTAINING ADEQUATE INSURANCE."
Additionally, we found no significant problems concerning the LEA's
claiming of eligible costs or complying with ASHAA loan repayment
provisions. We did discover, however, several problems with EPA's
administration of ASHAA. Specifically, we found that EPA did not:
o award ASHAA funds in the most effective manner;
o ensure LEAs promptly initiated repayment of ASHAA loans so
that the repaid funds could be used timely by other LEAs;
o implement adequate controls over ASHAA funds awarded to the
Bureau of Indian Affairs (BIA);
o ensure LEAs complied with Federal procurement regulations
concerning bonding requirements; and
o provide for effective use of the Asbestos Trust Fund.
Also, we discovered a significant problem in the State of
Pennsylvania regarding their compliance with the Asbestos Hazard
Emergency Response Act (AHERA). We found the State's inaction on
the timely review of LEAs1 management plans for asbestos removal
may result in a significant number of school districts proceeding
with deficient plans and inadequately resolving or exacerbating
current asbestos problems. We issued a flash report on January 10,
1989 to the Regional Administrator (See APPENDIX B), who promptly
took corrective action. As a result, the State obtained additional
resources for hiring personnel to review the LEAs1 management
plans. However, our concerns are that this problem may be
indicative of other states across the country. Consequently, we
have recommended that EPA examine review procedures in other states
to ensure these states are complying with AHERA.
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1.
EPA NEEDS TO AWARD ASHAA FUNDS MORE EFFECTIVELY
EPA's implementation of the application process in the ASHAA
program has decreased the effective utilization of over $34 million
in ASHAA funds. During fiscal years 1987 and 1988, EPA did not
allow sufficient time to solicit new applications prior to awarding
ASHAA funds. Instead, EPA utilized applications on hand for
projects which were not significant enough to receive funding in
the prior year. Many of these projects were boiler rooms with
minor damage instead of classrooms with major damage and sig-
nificantly more exposure hours. EPA could have used the funds more
effectively if awards were made using data in the new applications.
By funding new applications, we estimate that an additional two
million exposure hours would have been abated on projects with
major damage.
The change in the application process was made necessary by
EPA not allowing sufficient time to solicit new applications within
the Congressional deadlines for awarding the funds. The intent of
the congressional deadlines was to ensure funds are awarded timely
so that LEAs can begin work in the summer months. Congress has
allowed ample time for new applications in the deadlines provided
EPA initiates the award cycle in a timely manner. However, EPA has
routinely resisted the ASHAA program by not seeking funding for
this program in its budget request to Congress. The Agency's
policy not to participate in the ASHAA program has in the past
resulted in Congress approving a joint resolution forcing the
Agency to spend the ASHAA funds. This discord between the Agency
and Congress concerning the continuance of this program has delayed
the release of ASHAA funds until well into the fiscal year. To
compensate for the funding delays, EPA staff had to expedite the
application process by using previous year applications to award
ASHAA funds. These old applications contained many low priority
projects, and in part, because of the low priority, were not funded
in the previous year. The funding of old applications by EPA was
not the most effective use of ASHAA funds.
The delay in receiving ASHAA funding, combined with the
Congressional deadlines, makes it extremely difficult for the
Hazard Abatement Assistance Branch (HAAB) to properly administer
the ASHAA program. HAAB personnel cannot ensure the funds are used
most effectively when the funds do not become available to the
Agency until one month before the Congressional deadline to award
these funds elapses. EPA has the fiscal responsibility to ensure
ASHAA funds are used effectively. We recommend that the Agency
solicit and utilize applications on an annual basis and in a timely
manner prior to awarding ASHAA funds for the fiscal year. If HAAB
cannot obtain new applications within the Congressional deadlines,
the Agency should request a time extension from Congress.
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2.
EPA NEEDS TO REVISE REPAYMENT TERMS FOR ASHAA LOANS
EPA allows an inordinate amount of time to begin repayment of
some ASHAA loans. We estimate that by establishing a more reason-
able repayment schedule, EPA could have returned an additional $1.5
million to the Asbestos Trust Fund by December 1989 plus an
additional $700,000 each year thereafter (See Appendix A). The
additional resources could have provided more loans and grants to
other financially needy LEAs for their asbestos abatement. EPA
allows all loan recipients a two year grace period after the award
date before requesting repayment of the loan to begin. However,
the work on many of the funded projects had already been completed
prior to the award date or was finished within a year of the award
date. Zn these instances, EPA paid 100 percent of the loan within
a few months of the award date. This allows the LEA use of inter-
est-free money for as long as two years before beginning a loan
repayment program. We recommend that EPA require LEAs to commence
repayment within six months after completion of the abatement work.
This modification to the loan agreement will enable EPA to fund
additional health hazards at other financially needy LEAs.
3. EPA NEEDS TO TT1PTiTifTTENT CONTRPtf? OVER ASHAA FUNDS
Our review of ASHAA grants awarded to the BIA revealed that
EPA overpaid the BIA in excess of $125,000. We attribute the
overpayment to a lack of controls in transferring funds between
government agencies. EPA provides ASHAA funds to the BIA through
an interagency agreement with the Department of Interior (DOI).
The agreement provides up-front funding for all BIA pro->ects
awarded during the fiscal year. The funding is based on cost
estimates of asbestos abatement projects prepared by the various
BIA offices. When the actual cost is less than the estimate, the
award amount should be adjusted downward to reflect actual costs.
However, there is no condition in the interagency agreement ad-
dressing the above situation. Consequently, neither EPA nor the
BIA made this adjustment on the BIA projects. We found several
projects for which the estimate exceeded the actual costs. For
instance, one school had two abatement projects with estimated
total costs of $225,000. EPA awarded a 50% grant in the amount of
$112,500. However, the actual total costs were only $80,000, with
EPA's grant being limited to $40,000. Consequently, EPA overpaid
the BIA $72,500 ($112,500 - $40,000). We recommend that EPA revise
their agreement with the BIA to implement better controls and to
recover any overpayment which currently exists.
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4.
ASBESTOS CONTRACTORS ARE NOT OBTAINING ADEQUATE INSURANCE
Contractors performing asbestos work on ASHAA projects are not
using acceptable sureties for their bonding as required by Federal
Procurement regulations. As a result, the Federal interest in the
ASHAA projects is not adequately protected in the event the con-
tractor defaults in performing or paying personnel under the
contract. Furthermore, by not enforcing the bonding requirement,
LEAs may be awarding contracts to unqualified contractors. Accord-
ingly, these LEAs are not providing adequate assurance that the
asbestos abatement is performed properly and expeditiously, thereby
protecting the health and safety of children and school employees.
In one ASHAA funded project with over $2 million in Federal assis-
tance, we noted the contractor was unable to meet deadlines and was
also unable to pay subcontractors and workers. As a result, the
school district fired the contractor and tried to collect on it's
bond. The bond was written by two businessmen, who were not
licensed in the state and were under investigation by the State
Insurance Department. To date the school district has been unable
to collect on the bond. He recommend that EPA comply with Federal
procurement regulations by ensuring that LEAs are hiring
contractors with the necessary bonding requirements.
5.
The Asbestos Trust Fund, with approximately $5.5 million for
schools with asbestos threats, has not been made available to needy
LEAs. The Asbestos Hazard Emergency Response Act (AHERA), which
created the Trust Fund, stipulates that the accumulated funds will
provide financial assistance to needy LEAs for their asbestos
abatement programs. The primary source of funding for the Trust
Fund will be the repayment of loans previously awarded by EPA.
However, AHERA further provides that EPA cannot have access to the
Fund until Congress makes the funds available through an act of
appropriation. To date, Congress has not appropriated the funds.
Similarly, EPA has never attempted to request the funds, partly
because EPA does not believe the cost of asbestos abatement is a
Federal responsibility. Over $5 million has accumulated in the
Trust Fund during a two year period, yet none of this money has
been advanced to the schools. EPA estimates that this fund will
increase to over $29 million by December 1992. We recommend EPA
request that either Congress appropriate the funds to enable EPA
and LEAs to effectively combat the asbestos hazard, or terminate
the Trust Fund with the money returned to the General Fund.
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6.
PENNSYLVANIA IS NOT COMPLYING WITH AHERA
As part of our ASHAA audit, we became aware of a significant
problem in the State of Pennsylvania. We found that the State was
not reviewing management plans submitted by 487 LEAs to ensure the
plans were adequate. Furthermore, the State was allowing their 90
day maximum review period (stipulated by AHERA) to expire without
taking any action. We reviewed 28 of the 487 plans and discovered
all 28 plans had deficiencies. Some of these deficiencies were ex-
tremely significant such as incomplete or inadequate response
actions. As a result of Pennsylvania's lack of timely review, LEAs
may be acting on deficient plans under the assumption that they
adequately protect school children. Accordingly, we issued a flash
report to the Regional Administrator of Region III on January 10,
1989 (See APPENDIX B). The purpose of this report was to bring to
his attention a significant issue which required immediate top
management attention. As a result of our flash report, the State
of Pennsylvania has dedicated additional resources to review the
LEAs' management plans.
We believe that the review problem in Pennsylvania may be
indicative of other states across the country. Consequently, we
recommended that EPA examine review procedures by other states to
ensure these states are complying with AHERA.
Prior to issuing the draft report, we provided advance copies
of our findings to the Office of Toxic Substances (OTS). OTS
officials provided written comments to four of our six preliminary
findings. Our evaluation of their comments did not significantly
alter the content of our findings. We issued the draft report to
both the Assistant Administrator for Pesticides and Toxic
Substances and the Assistant Administrator for Administration and
Resources Management on June 30, 1989. The response to the draft
report was due on August 7, 1989. Program Officials requested a
time extension until August 14, 1989. We received the response on
August 28, 1989.
The response indicates that the report has identified some
areas for program improvement. In fact, the Assistant
Administrator for OPTS claims that they have already begun efforts
to implement some changes recommended by the OIG. However, the
response also indicates that several areas of the report do not
reflect the requirements, practices or practical constraints of the
program. We paraphrased their response and provided our comments
at the end of each finding in the Findings and Recommendations
section of this report. The entire response is attached in
Appendix E of this report.
8
I
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On September 7, 1989 we held an exit conference with officials
from OPTS. We also held an exit conference with Region III
officials on September 13, 1989. Based on these discussions and
written comments submitted by the Agency, EPA has begun to take
some corrective actions. We believe that EPA needs to take
additional actions to adequately address the problem areas cited in
this report.
ACTION REQUIRED
In accordance with EPA Order 2750, the action official is
required to provide this office with a written response to the
audit report within 90 days of the report date. Since this report
deals primarily with the management of the ASHAA program, the
Assistant Administrator For Pesticides And Toxic Substances was
designated the primary action official. As such, she should take
the lead in coordinating the Agency's response.
BACKGROUND
Asbestos refers to a group of hydrated mineral silicates which
readily separate into fibers. Asbestos-containing materials were
used widely for fireproofing thermal and acoustical insulation, and
decoration in building construction. These materials usually were
applied by spraying, but also were trowelled into overhead
surfaces, steel beams, ceilings, walls, and furnaces, as well as
wrapped on pipes.
Asbestos is a known human carcinogen. Extensive epidemiologic
evidence demonstrates that inhalation of asbestos fibers can lead
to the specific cancer mesothelioma, lung cancer, asbestosis, and
other diseases which are serious, irreversible, and may be fatal.
The existence of asbestos in a building does not necessarily mean
that a hazard exists. Hazards exist when people are exposed to
asbestos fibers that are released into a building environment. The
potential for such release of asbestos fibers depends upon the
characteristics of the asbestos-containing material. In general,
soft, crumbly materials tend to release fibers more easily than
hard cementitious materials. However, both types of materials may
become "friable." "Friable materials" are defined as any materials
that may be crumbled, pulverized, or reduced to powder by hand
pressure.
since children breathe five times faster than adults, they are
much more susceptible to the effects of asbestos inhalation. For
this reason, asbestos-containing material in school buildings can
pose serious hazards for human health and the environment.
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EPA estimates that 15 million school children - almost one-
third of the nation's school population - and 1.4 million school
employees attend school and work in buildings which have asbestos
materials. The best available figures indicate that about 33,000
LEAs nationwide have at least one school built before January 1979,
the date asbestos was no longer allowed in the construction of
buildings. There are 96,000 schools in these 33,000 LEAs of which
about 31,000 schools contain at least some asbestos material.
In August of 1984, President Reagan signed into law the
Asbestos School Hazard Abatement Act (ASHAA, Public Law 98-377).
The statute creates an EPA loan and grant program to financially
assist LEAs with asbestos abatement projects in public and private
schools. The Act envisions a three step process. First, EPA mails
applications to private and public schools. Second, Governors (or
designees) are responsible for collecting and submitting
applications to EPA. Third, EPA will receive and review all
applications, inspect all potential award sites, and make offers of
financial assistance available on the basis of both the applicant's
asbestos hazard and demonstrated financial need.
The Office of Pesticides and Toxic Substances has designated
the Hazard Abatement Assistance Branch (HAAB) as the cognizant
office for receiving, ranking and inspecting ASHAA projects. This
Branch is assisted by the Grants Administration Division (GAD)
which is responsible for awarding the loans and grants. All
payments of ASHAA funds as well as repayments of ASHAA loans are
administered by EPA's Las Vegas Accounting Operations Office.
In making award decisions, the HAAB formulates a national
priority list from all the applications received. Applicants are
ranked on the degree of the hazard. This is demonstrated by the
conditions of the materials and the likelihood that asbestos fibers
will be released into the school environment. Only projects with
friable asbestos-containing material receive a ranking. HAAB used
four hazard categories to rank projects. The projects depicted in
these categories ranged from those with major damage and direct
exposure to projects without any damage or exposure.
GAD must make offers of financial assistance only to those
LEAs who do not have adequate resources to support an appropriate
asbestos abatement project. Assistance may take the form of either
a grant or an interest-free loan, or some combination of both.
Loans may include up to 100 percent of abatement project costs and
grants may cover up to 50 percent of costs. The loans are interest
free and must be repaid within 20 years or less. ASHAA stipulates
that grants may only be awarded to those applicants who would not
be able to undertake a program without Federal grant assistance.
The following chart shows the number of applications received
and funded from inception through FY 88.
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Applications Received
1985
1986
1987
1988
Total
LEAS
1,108
371
340
-0-
1.819
Projects
8,548
2,389
1,769
-0-
706
Total Abatement Costs
_ millions!
$539
212
178
$222
Applications Funded
1985
1986
1987*
1988*
198
173
168
Ifll
Projects
417
421
729
226
Total Abatement Costs
(Millions)
$ 45
47
42
Total 642 1.793
* Funded applications from previous year.
As shown above, EPA has awarded $157 million or 17% of total costs
requested ($929 million) to assist schools in cleaning up friable
asbestos-containing material.
In October 1986 Congress enacted the Asbestos Hazard Emergency
Response Act (AHERA). The Act required EPA to promulgate
regulations addressing such areas as inspections, response actions,
surveillance, transportation and disposal. EPA also had to develop
model accreditation programs for people who inspect for asbestos,
develop management plans, and conduct abatement work. Further,
every school district in the country had to inspect for asbestos-
containing material and develop management plans which describe
abatement actions to be undertaken. School districts had to
complete the plans by October 12, 1988 and begin implementation by
July 9, 1989.
In June 1988, AHERA was amended to provide LEAs an opportunity
to request a deferral to May 9, 1989 for submission of their
management plan. To obtain the deferral the LEA had to submit the
request to the State Governor by October 12, 1988. Along with the
request, the LEA had to provide various assurances to the State
Office before a deferral was granted. Even with a deferral from
the state, the LEA is still required to meet the July 9, 1989
deadline to begin implementation of its management plan.
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FINDINGS AND RECOMMENDATIONS
1. EPA NEEDS TO AWARD ASHAA FUNDS MORE EFFECTIVELY
EPA's implementation of the application process in the ASHAA
program has decreased the effective utilization of over $34 million
in ASHAA funds. During fiscal years 1987 and 1988, EPA did not
allow sufficient time to solicit new applications prior to awarding
ASHAA funds. Instead, EPA utilized applications on hand for
projects which were not significant enough to receive funding in
the prior year. Many of these projects were boiler rooms with
minor damage instead of classrooms with major damage and sig-
nificantly more exposure hours. EPA could have used the funds more
effectively if awards were made using data in the new applications.
By funding new applications, we estimate that an additional two
million exposure hours would have been abated on projects with
major damage.
The change in the application process was made necessary by
EPA not allowing sufficient time to solicit new applications within
the Congressional deadlines for awarding the funds. The intent of
the Congressional deadlines was to ensure funds are awarded timely
so that LEAs can begin work in the summer months. Congress has
allowed ample time for new applications in the deadlines provided
EPA initiates the award cycle in a timely manner. However, EPA has
routinely resisted the ASHAA program by not seeking funding for
this program in its budget request to Congress. The Agency's
policy not to participate in the ASHAA program has in the past
resulted in Congress approving a joint resolution forcing the
Agency to spend the ASHAA funds. This discord between the Agency
and Congress concerning the continuance of this program has delayed
the release of ASHAA funds until well into the fiscal year. To
compensate for the funding delays, EPA staff had to expedite the
application process by using previous year applications to award
ASHAA funds. These old applications contained many low priority
projects, and in part, because of the low priority, were not funded
in the previous year. The funding of old applications by EPA was
not the most effective use of ASHAA funds.
The delay in receiving ASHAA funding, combined with the
Congressional deadlines, makes it extremely difficult for the
Hazard Abatement Assistance Branch (HAAB) to properly administer
the ASHAA program. HAAB personnel cannot ensure the funds are used
most effectively when the funds do not become available to the
Agency until one month before the Congressional deadline to award
these funds elapses. EPA has the fiscal responsibility to ensure
ASHAA funds are used effectively. We recommend that the Agency
solicit and utilize applications on an annual basis and in a timely
manner prior to awarding ASHAA funds for the fiscal year. If HAAB
cannot obtain new applications within the Congressional deadlines,
the Agency should request a time extension from Congress.
12
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Prior to awarding loans and grants, each LEA's application is
ranked by EPA in accordance with the guidance in the Act. The
applications are evaluated based on the physical characteristics of
the asbestos hazard in the school. Several key indicators are
included in this hazard categorization and ranking; such as, degree
of damage (major or minor), exposure (direct or through an air
plenum) and exposure hours (weekly exposure hours). Those schools
with severely damaged asbestos are ranked in Category I and schools
with minor damage are ranked in Category II. The exposure hour
total is derived for a project area by multiplying the number of
people (students or employees) exposed with the amount of hours
exposed each week (persons X hours/day X days/week). For example,
a classroom used for five one-hour classes of 30 students five days
a week has an average weekly exposure hour total of 750
(30 students X 5 classes X 5 days). The combination of damage and
the exposure hours results in a unique ordering or listing of all
projects, known as the National Hazard Ranking (NHR).
Of the two project characteristics (damage and exposure
hours), damage is more important because EPA ranks projects with
major damage and one exposure hour higher than a project with minor
damage and 100,000 exposure hours. Projects with major damage
include asbestos containing material that is dislodged, hanging or
missing, while projects with minor damage only require evidence of
some physical contact not severe enough to dislodge portions of the
asbestos containing material. The effect of the classification of
either major (Category I) or minor (Category II) damage can be
substantial because EPA does not consider the square footage of the
damaged area. To illustrate the difference, one project with major
damage could include dislodged asbestos in several classrooms
exposing thousands of school children while another project with
minor damage may include a boiler room with only some evidence of
abrasions on the asbestos material. Accordingly, there is a
significant difference in the health hazard associated with poten-
tial release of asbestos fibers between the two projects. To
ensure ASHAA funds are used effectively, the Agency has to fund the
projects of needy LEAs with the most serious health hazards.
The ASHAA law required that states submit new applications on
an annual basis. This is important because applications need to
reflect current and accurate information on such items as the
degree of hazard, costs of abatement and the financial condition of
the LEA. All of these items can change dramatically within a year.
Accordingly, EPA should rank applicants annually to ensure ASHAA
funds are targeted to the needy LEAs with the most hazardous
projects.
Several factors contributed to not soliciting new ASHAA
applications. In FY 1987, Congress directed EPA to accelerate the
award process by ensuring awards are made by April 1, 1987. This
would enable school districts to complete necessary asbestos
abatement work prior to the end of the 1987 summer school recess.
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While Congress wanted EPA to expedite the award process, EPA
requested that Congress rescind the ASHAA funds in FY 87 as part of
the budget-cutting effort. The Assistant Administrator of OPTS has
stated in written testimony to a Congressional Subcommittee that:
"... direct Federal funding of abatement projects in
schools does not represent the most effective use
of Federal resources."
However, Congress approved a joint resolution forcing the Agency to
spend the ASHAA funds appropriated for FY 87. This resolution was
not approved until March 1987, five months into the fiscal year.
Nevertheless, EPA still attempted to meet the award deadline of
April 1, 1987.
To accommodate the April 1 deadline, EPA decided to have two
award cycles instead of one. The first award cycle was for $34.2
million awarded to projects left over from qualified applications
submitted in 1986. This was necessary because new applications
could not have been obtained by the April 1 deadline. However,
most of the projects with major damage and high exposure hours were
already funded in 1986. Many of the remaining projects from 1986
consisted of less significant projects such as boiler rooms with
minimal exposure hours or minor damage. As a result, EPA funded a
total of 663 projects, of which only 171 or 26 percent had major
damage with over 50 exposure hours per week. We found that 25
percent of the funded projects were for small areas such as boiler
rooms, storage rooms and tunnels with exposure hours ranging from
only 2 to 20 hours per week.
Subsequent to the first award cycle on April 1, 1987, EPA
obtained new applications for approximately $8 million to be
awarded on May 29,1987. This amount was set aside to ensure that
each state received $250,000 provided the state had enough quali-
fied projects. In this second round of new applications, projects
totalling $94 million qualified for funding based upon EPA's hazard
and financial need criteria. Many of these projects were far more
hazardous than the left over projects from 1986. However, EPA only
had $8 million remaining in FY 87 funds. Approximately $5 million
of the $8 million was needed to ensure that each state received the
minimum of $250,000. Consequently, EPA was only able to fund 66 of
1,769 potential projects. Furthermore, 65 of the 66 projects were
funded out of hazard sequence with over one million dollars awarded
to projects with minor damage.
The next chart illustrates the positive effects that could
have been obtained by awarding the $34 million towards new appli-
cations ranked as Category I.
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OLD APPLICATIONS VS. NEW APPLICATIONS
ACTUAL AWARD 1987 ROUND 1 - OLD APPLICATIONS
Category 1
Category 2
Total Funded
Category 1
Exposure Hours
EXPOSURE HOURS
682,843
1.781.769
682.843
AMOUNT
(MILLIONS!
$ 12
22
S 34 Million
POTENTIAL AWARD 1987 ROUKD 1 - MEW APPLICATIONS
454,308 $ 7
Category 1
(Funded 1987 Round 2)
Category 1
(Funded 1988)
Category 1
(Unfunded 1988)
Total Category 1
Exposure Hours
2,164,545
227.614*
2.846.467
23
S 34 Million
* Estimated - assuming $12 million could abate 682,843
exposure hours in 1987, $4 million could abate
227,614 exposure hours (4/12 X 682,843)
If EPA utilized the $34 million Round One award amount toward
the new applications, the above chart illustrates that EPA could
have abated an additional 2.2 million exposure hours for projects
with major damage (2,846,467 - 682,843). The health hazard as-
sociated with exposure hours from major damage (Category I) is far
more severe than exposure hours from minor damage (Category II).
Major damage represents asbestos containing material that is
dislodged, hanging or missing while minor damage only requires
evidence of some physical contact not severe enough to dislodge the
asbestos material.
A similar situation occurred in FY 88, when the President did
not sign the Congressional Appropriation language until December
22, 1987. In this appropriation, Congress required a March 1, 1988
award date for $23 million in ASKAA loans and grants. Accordingly,
EPA used the FY 87 priority list, which was now almost a year old,
to satisfy the impending Congressional deadlines. The effect of
using the old listing in FY 88 was not as significant as in FY 87,
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because in FY 87 only $8 million was awarded to the new applicants.
Consequently, a significant number of major projects remained on
the list for funding in FY 88. However, we believe that a new
round of applications would, as in the previous rounds, have funded
more high priority projects than the left over projects from FY 87.
Agency Reply to PIG Draft Report
OPTS agrees with the DIG that annual solicitation of new
school applications is preferable. However, this has not always
been possible, given late appropriations, the congressional dead-
lines mandated by the ASHAA appropriation language and the federal
requirements for application review and approval.
The Agency has made every effort to solicit new applications
each year, so far as funds were provided and sufficient time was
available to accomplish the lengthy application approval, distribu-
tion, completion, and review process. In fact, EPA has used
applications which were previously on hand only twice, in 1987 and
1988. In 1987, EPA had about a month and, in 1988, the Agency had
approximately two months to make awards, once funds were available.
Auditor's Comments
The Agency has responsibility to ensure ASHAA funding is used
most effectively. We recognize that the Agency is faced with a
number of constraints in adequately administering this Program.
However, when these constraints such as late appropriations and
Congressional deadlines make it impossible to properly administer
the program, the Agency must not sacrifice the effectiveness of the
ASHAA program. The Agency must allow the Hazard Abatement
Assistance Branch adequate time to properly administer the ASHAA
program. Adequate time would enable EPA to solicit new
applications from LEAs with the most serious and current health
hazards. If adequate time is not available, the Agency should
request a time extension from Congress.
RECOMMENDATION
We recommend that the Assistant Administrator For Pesticides
And Toxic Substances solicit and utilize applications on an annual
basis and in a timely manner prior to awarding ASHAA funds for the
Fiscal Year. Whenever possible, EPA should send out applications
early, rather than wait until funding is approved. This would give
EPA additional time if funding was delayed, and would allow the
Agency to comply with Congressional deadlines in awarding the
funds.
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2.
EPA NEEDS TO REVISE REPAYMENT TERMS FOR ASHAA LOANS
EPA allows an inordinate amount of time to begin repayment of
some ASHAA loans. We estimate that by establishing a more reason-
able repayment schedule, EPA could have returned an additional $1.5
million to the Asbestos Trust Fund by December 1989 plus an addi-
tional $700,000 each year thereafter (See Appendix A). The addi-
tional resources could have provided more loans and grants to other
financially needy LEAs for their asbestos abatement. EPA allows
all loan recipients a two year grace period after the award date
before requesting repayment of the loan to begin. However, the
work on many of the funded projects had already been completed
prior to the award date or was finished within a year of the award
date. In these instances, EPA paid 100 percent of the loan within
a few months of the award date. This allows the LEA use of inter-
est-free money for as long as two years before beginning a loan
repayment program. We believe EPA should require LEAs to commence
repayment within six months after completion of the abatement work.
This modification to the loan agreement will enable EPA to fund
additional health hazards at other financially needy LEAs.
According to the Asbestos School Hazard Abatement Act (ASHAA),
all loans awarded under ASHAA will be interest free and will have a
maturity period of twenty years or less. The law also provides
that EPA determine the time and amount of repayments within the 20
year time frame. EPA decided that repayments will be made in
equal, semi-annual, installments (of not less than $2,500 each)
beginning two years after the loan offer is made. Repayments will
continue in installments for 18 years or until the balance is paid
in full. As stipulated in the Asbestos Hazard Emergency Response
Act of 1986, all loan repayments under ASHAA will go to an Asbestos
Trust Fund. This fund will be used by EPA to award additional
loans and grants to financially needy schools.
EPA funds two types of projects. The first type of project is
called a "Work-in-Progress" (WIP) project. The WIP project con-
sists of abatement work typically started after the award date. On
WIP projects the LEA requests funds to pay for costs incurred
during work in progress. The second type of project is a "Reim-
bursement" project, whereby all the abatement work was complete
prior to the award, but after January 1, 1984. The Act provides
that EPA cannot award financial assistance for abatement actions
completed prior to January 1, 1984. Accordingly, EPA stated that
any project completed after that date is eligible for reimburse-
ment. On "Reimbursement" projects, EPA policy states that LEAs may
receive the entire loan within 90 days of the award date.
Regardless of the type of project, EPA allows a two year grace
period before requesting the first repayment. This grace period
coincides with the two year project period which EPA allows for
completion of the abatement work. Since many of the LEAs receive
funds as the work transpires, the full amount of the loan is
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generally not received until the project is completed. Conse-
quently, EPA decided to postpone the first loan repayment for two
years after the award date, the maximum time for which the LEA has
to complete work on the project.
We obtained a computer listing from the Grants Administration
Division containing the type of funded project (reimbursement or
WIP) for all awardees from fiscal years 1985 through 1988. We
reviewed all reimbursement projects from this listing and any WIP
projects with a loan amount greater than $100,000. Between 1985
and 1988, EPA had awarded 599 loans totalling $112 million to
various LEAs. Discussion with OPTS personnel revealed that $17
million of the $112 million awarded as loans was for reimbursement
projects and $95 million was for WIP projects.
LEAs received $17 million for reimbursement projects and had
use of interest-free money for two years before any repayment was
required. For example, one LEA was awarded a loan of $349,000 on
July 28, 1986 for work completed prior to that date. The LEA
received the $349,000 by November 1986. However, this LEA was not
required to make the first of 36 repayments until December 1988,
over two years later. The amount of the repayments is $9,700
semiannually over 18 years. Since this LEA already funded the work
without an ASHAA award, we do not believe the LEA should be given a
two year grace period before initiating repayment. This same LEA
was awarded another loan for $240,000 in March 1987, and received
the full amount by June 1987. Again, the LEA was reimbursed for
abatement work which was already completed and paid for by the LEA,
however, the repayments on the ASHAA loan would not begin until
June 1989. In both instances, we estimate that, had the repayments
been initiated within six months of the award date, the Trust Fund
would have an additional $43,200 for future ASHAA awards.
We believe EPA should revise the repayment terms for appli-
cants with reimbursement projects. Repayment should begin on the
first semi-annual repayment date following the final payment by EPA
on the project, or two years, whichever is earlier. EPA's current
repayment schedule requires LEAs to make repayments every six
months, the end of June and December each year. We believe EPA
could initiate repayment sooner under the same semi-annual repay-
ment schedule thereby maintaining the same uniformity and cost
effectiveness under the existing payback process.
In addition to the reimbursement projects, many of the WIP
projects were completed within six to 12 months of the award date.
This occurred because the award was made in early Spring with the
work scheduled for that summer. When this happens, the LEA
receives all funding within six to 12 months of the award and is
not required to begin repayment until 12 to 18 months later.
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For example, one LEA was awarded a loan of $652,823 on March
25, 1987 for work to be completed after the award date. The LEA
completed the work and received the $652,823 by March 1988.
However, this LEA was not required to make the first of 36 repay-
ments until June 1989, over one year later. The amount of the
repayments is $18,134 semiannually over 18 years. Since the LEA
completed the work and received all of the award within one year,
we do not believe the LEA should have use of the interest free
money for an additional year before initiating repayment. We
estimate that, had the repayment been initiated within one year of
the award date, the trust fund would have an additional $36,268 for
future ASHAA awards.
We were unable to compute the total number of WIP projects
completed within the first year of the award. However, from our
sample of 90 projects, 44 of the projects (49%) were completed
early in the two year period. These LEAs completed the work from
seven months to twenty months before the first repayment was due.
EPA should initiate the repayment process promptly after the
project is completed.
Furthermore, EPA should not wait two years until the awardees
receive 100% of the award to require repayment. LEAs receive 90
percent of the award as costs are incurred, however, EPA retains 10
percent of the award until all of the final documentation is
submitted. We found numerous applicants were not receiving the full
amount of the award for several reasons, many of which were the
fault of the LEA. One such reason was that the applicants were not
submitting all the necessary documentation. We believe these
applicants should be required to initiate repayment when the work
is completed and 90 percent of the award is paid. This would allow
EPA to accumulate more funds in the Asbestos Trust Fund for future
awards.
Agency Reply to QIG Draft Report
OPTS, acting on the OI6 finding, is working with GAD and the
Agency's Las Vegas Financial Management Center (LVFMC) to determine
if a revised repayment system would be feasible and advisable for
the 1990 or any future ASHAA award cycles. We expect a
determination on this issue before the 1990 awards.
While we understand and appreciate the OIG's objectives in
this matter, two factors in particular may mitigate against
adopting the OIG recommendation. First, the period between an
ASHAA award to a local education agency (LEA, which is a public
school district or a private school) and the date of the first
repayment installment, approximately two years later, was
established to provide sufficient time for LEAs to conduct
abatement actions or to complete specific financial procedures
related to receiving the award.
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Second, a uniform repayment schedule was selected to improve
the efficiency of EPA's financial monitoring activities. While
LVFMC and GAD are unable to presently quantify the additional costs
and resource requirements which might be incurred by the OIG's
recommended repayment system, which would track each individual
ASHAA award on a separate payment initiation schedule, they would
likely be significant. Further, this extra cost to EPA would not
produce any immediate benefits to LEAs since funds repaid to the
Asbestos Trust Fund are not presently available for redistribution
to other financially needy schools.
Nevertheless, we agree that a speedy return of the money to
the Asbestos Trust Fund would be beneficial in the event Congress
allows EPA access to these funds. Thus, OPTS will continue to work
with GAD and LVFMC to evaluate alternate repayment schedules and
make any appropriate program changes in time for a 1990 award
cycle,
Auditor' s Comments
It is important to ensure the timely and effective use of
ASHAA funds. Many ASHAA awardees have either already completed the
asbestos abatement prior to receiving the EPA award or will
complete the abatement within the first summer after the award. We
recognize that the awardees must still complete certain
administrative and financial procedures even after the abatement
work is complete. However, we believe that EPA and the LEAs should
be able to complete the necessary procedures within 90 days after
completion of abatement. Accordingly, this would allow LEAs to
initiate repayment as much as 18 months earlier.
Further, we are not suggesting that the Agency track
individual awards on a separate time schedule. We are recommending
that the Agency continue to use the present semi-annual repayment
periods (June and December); however, the Agency should revise the
loan repayment schedules to initiate repayments earlier. Since the
repayment periods would remain the same, the additional costs and
resources to revise the system would not be excessive. We believe
the benefits from accumulating additional funds for needy schools
would exceed the costs of revising the repayment schedules.
Finally, we are issuing a finding on the Asbestos Trust Fund
which will hopefully resolve the Agency's inability to use the
Fund. See finding entitled "ASBESTOS TRUST FUND NOT AVAILABLE TO
LEAs."
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RECOMMENDATION
We recommend that the Assistant Administrator For Administra-
tion And Resources Management modify the future loan agreement to
revise repayment terms for applicants receiving loans. Repayment
for reimbursement projects should commence six months after the
award date. Repayment for WIP projects should commence on the next
semi-annual repayment date after the work is completed or two years
after the award date, whichever is earlier.
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3. EPA NEEDS TO IMPLEMENT CONTROLS OVER ASHAA FUNDS
AWARDED TO THE BUREAU OF INDIAN AFFAIRS (BIA)
Our review of ASHAA grants awarded to the BIA revealed that
EPA overpaid the BIA in excess of $160,000. We attribute the
overpayment to a lack of controls in transferring funds between
government agencies. EPA provides ASHAA funds to the BIA through
an interagency agreement with the Department of Interior (DOI).
The agreement provides up-front funding for all BIA projects
awarded during the fiscal year. The funding is based on cost
estimates of asbestos abatement projects prepared by the various
BIA offices. When the actual cost is less than the estimate, the
award amount should be adjusted downward to reflect actual costs.
However, there is no condition in the interagency agreement ad-
dressing the above situation. Consequently, neither EPA nor the
BIA made this adjustment on the BIA projects. He found several
projects for which the estimate exceeded the actual costs. For
instance, one school had two abatement projects with estimated
total costs of $225,000. EPA awarded a 50% grant in the amount of
$112,500. However, the actual total costs were only $80,000, with
EPA's grant being limited to $40,000. Consequently, EPA overpaid
the BIA $72,500 ($112,500 - $40,000).
We visited one area office of the BIA which received
approximately $493,000 of $827,000 awarded to the BIA since the
inception of the ASHAA Program in 1985. This particular area
office received EPA funding for 23 schools containing 59 differ*
ent projects for asbestos removal. We reviewed projects on four of
23 schools funded and found that actual costs for all four schools
were less than the estimate. Since the award amount was based on
the estimate, we computed an overpayment of $164,468. When asked
about the overpayment, BIA officials responded "that very few firms
perform asbestos work in the area. Consequently, we figured the
limited competition would keep the price high and we adjusted our
estimate accordingly." Subsequent to our visit, personnel from
the area office performed their own analyses of project costs.
Their computations indicated a total overpayment of $153,000 for
their particular area office. This area office then offered to
forward to us a check for $153,000, but we refused, advising them
to contact EPA officials responsible for approving the award.
EPA needs to review the above analyses performed by the BIA
and determine the extent of the overpayment. EPA also needs to
determine whether any other BIA area office has received an over-
payment of ASHAA funds. Furthermore, EPA should modify the inter-
agency agreement to include controls which would ensure that the
ASHAA award is the correct amount and that any overpayment is
promptly repaid to the Agency. Such controls should include a
periodic review of actual costs by EPA for all BIA projects.
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Agency Replyto PIG Draft Report
EPA has already undertaken actions to recover excess funds
from BIA, and OPTS will work with GAD and BIA to implement a more
rigorous oversight function for BIA award projects. In fact,
actions have already been taken to recover the $153,076.34
resulting from lower than expected abatement costs in BIA projects.
EPA and BIA have signed an interagency agreement (IAG) which
governs the ASHAA award and administrative process for Indian
schools. Since BIA is another government agency rather than an
LEA, it assumes many of the same responsibilities and prerogatives
of financial management control as EPA.
The IAG which currently governs the transfer of these funds
has provisions for BIA to report and return excess funds. Under
the current IAG, BIA must submit quarterly cost reports to the
EPA's Cincinnati Financial Management Center (CFMC). As the IAG
requires BIA to return all unexpended funds, GAO will work closely
with the BIA to make sure that this reporting requirement is met.
Auditor * s Comments
The response implies that EPA officials were aware of the
overpayments and that the current system would eventually detect
these oversights. We disagree. Many of these projects were
awarded in fiscal years 1985 and 1986 and some were completed as
long as three years ago. Accordingly, any system which did not
disclose overpayments in existence for over three years needs to be
revised.
The BIA personnel claimed they were unaware that EPA overpaid
them by $164,468; consequently, they never notified EPA. The BIA
agreed that an overpayment exists, and as a result of our review,
recomputed the award amounts for all the awards to this particular
area office. Their review indicated a total overpayment of
$153,076. Further, the BIA was willing to review our computation
of $164,468 to determine if the additional $11,392 ($164,468 -
$153,076) was valid. Accordingly, the BIA contacted EPA officials
to repay the overpayment. However, they claimed that EPA officials
told them to wait until the Inspector General's report is released.
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RECOMMENDATION
We recommend that the Assistant Administrator For Administra-
tion And Resources Management:
1) Amend the interagency agreement with the DOI to
ensure that the BIA final award is based on actual costs.
Further, the amendment should require the BIA to furnish
EPA with information on the estimated versus actual costs
for each BIA abatement project funded by EPA.
2) Recover any overpayment to the BIA which currently
exists.
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4.
ASBESTOS CONTRACTORS ARE NOT OBTAINING ADEQUATE INSURANCE
Contractors performing asbestos work on ASHAA projects are not
using acceptable sureties for their bonding as required by Federal
Procurement regulations. As a result, the Federal interest in the
ASHAA projects is not adequately protected in the event the con-
tractor defaults in performing or paying personnel under the
contract. Furthermore, by not enforcing the bonding requirement,
LEAs may be awarding contracts to unqualified contractors. Accord-
ingly, these LEAs are not providing adequate assurance that the
asbestos abatement is performed properly and expeditiously, thereby
protecting the health and safety of children and school employees.
In one ASHAA funded project with over $2 million in Federal assis-
tance, we noted the contractor was unable to meet deadlines and was
also unable to pay subcontractors and workers. As a result, the
school district fired the contractor and tried to collect on it's
bond. The bond was written by two businessmen, who were not
licensed in the State and were under investigation by the State
Insurance Department. To date the school district has been unable
to collect on the bond.
As a condition to receiving ASHAA funds, the LEA is required
to certify in the application that its procurement system meets the
requirements in 40 CFR Part 33. According to 40 CFR 33.265, when
an ASHAA recipient has entered into a subagreement over
$100,000 for construction, EPA must determine that the Federal
Government's interest is adequately protected. If EPA does not
make the above determination, the contractors shall obtain bonds
from companies holding certificates of authority as acceptable
sureties. The Department of the Treasury (DOT) issues certificates
of authority to various bonding companies. These certificates
allow the bonding companies to act as sureties on government funded
projects. Before issuing the certificate, DOT performs an examina-
tion of the company records to ensure the company can legally and
financially underwrite the bond.
In the asbestos field, most of the major bonding companies
will not insure asbestos abatement projects. These major companies
fear liability lawsuits will occur years later from workers and
owners claiming health damages from asbestos contamination. As a
result, those few who do write policies have raised prices far
above reasonable rates.
Our review disclosed that three of the largest ASHAA awards
went to LEAs who did not comply with the bonding and insurance
requirement of the Federal Procurement regulations. The Federal
assistance for these three schools ranged from $2 to $5 million.
In the previously cited example, the contractor defaulted, and the
school district is suing the bonding company as well as the con-
tractor and other parties. At the time of default, only about half
the asbestos was removed and the start of the school year was
imminent. Consequently, many students were forced to take classes
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in two other buildings. This resulted in half day classes for more
than 3,000 students. The school board hired a second contractor
and demanded a performance bond issued by a company licensed in the
State. The asbestos was finally removed the following summer.
However, the school district is still proceeding with legal action
against the original bonding company.
In another instance, the school district awarded the contract
to a low bidder who did not have bonds from a Treasury rated
surety. The second low bidder was aware that the low bidder did not
have the necessary insurance and protested the award. However, the
school district still awarded the contract to the low bidder. The
school board claimed that they received a letter from EPA officials
which stated that it was the LEA's determination to choose one of
the three bonding instruments listed in 40 CFR, Part 33.265.
However, according to the Federal Regulations, if EPA does not
ensure that the Federal Government's interest is adequately pro-
tected, the award recipient is required to use Treasury rated
sureties. Therefore, EPA's guidance to the LEA was not consistent
with the Federal regulations. Furthermore, this guidance was
provided by an EPA contractor, who should not be making EPA
decisions concerning interpretation of Federal regulations.
We found that EPA is not determining that the Federal Govern-
ment's interest is adequately protected. Also, discussions with
EPA officials reveal a degree of uncertainty on their part as to
whether or not the insurance requirement applies to ASHAA funded
projects. However, according to Federal regulations, the insurance
requirement applies to ASHAA projects funded by EPA. Compliance
with the insurance requirement is necessary, not only because it
protects the interest of the Federal Government, but it also helps
to ensure the integrity and capability of both the surety and
abatement contractor. The insurance requirement acts as a
deterrent against unqualified contractors in that these contractors
would be unable to obtain acceptable sureties. This is especially
necessary since LEAs are required by Federal regulations to award
the contracts to the lowest bidder. EPA's emphasis on insurance
requirements is especially critical because most LEAs are
unfamiliar with insurance procedures.
Agency Reply to QIC Draft Report
OPTS is also concerned about the availability and quality of
performance bonds for contractors. However, GAD believes that the
protection in place for the ASHAA process is equivalent to that
afforded in much larger Agency grant programs. In addition, GAD
believes that the new EPA regulations, which no longer require
Treasury-approved bonding companies for public LEAs, appear to
affect the relevance of this finding. Nevertheless, EPA will
review possible approaches for better addressing this issue.
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Auditor's Comments
The Federal procurement regulations are clear that the bonding
requirements stipulated in 40 CFR 33.265 apply to ASHAA awardees.
Furthermore, all Agency grant recipients with subagrcements for
construction over $100,000 should have complied with the above
procurement regulation. We have some concerns regarding the new
procurement regulations which the Director contends no longer
requires Treasury-bonding companies for public LEAs. These
procurement regulations (40 CFR Part 31) do not apply to loan
assistance. Approximately 75% of the ASHAA funds are awarded as
loans. Accordingly, we believe EPA still has to address the
bonding requirements for loan recipients in the new EPA procurement
regulations (40 CFR Part 31).
RECOMMENDATION
We recommend that the Assistant Administrator For Administra-
tion And Resources Management comply with 40 CFR, Part 33.265 by
determining that the Federal Government's interest is adequately
protected on any abatement project awarded ASHAA funds in excess of
$100,000. This determination should include a review of the
recipient's bonding and insurance requirements for hiring contrac-
tors. If this determination is not made or the recipient's re-
quirements are inadequate, the Assistant Administrator should
ensure that the award recipient obtains Treasury rated sureties
as stipulated by 40 CFR, Part 33.265.
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5.
ASBESTOS TRUST FUND NOT AVAILABLE TO LEAS
The Asbestos Trust Fund, with approximately $5.5 million for
schools with asbestos threats, has not been made available to needy
LEAs. The Asbestos Hazard Emergency Response Act (AHERA), which
created the Trust Fund, stipulates that the accumulated funds will
provide financial assistance to needy LEAs for their asbestos
abatement programs. The primary source of funding for the Trust
Fund will be the repayment of loans previously awarded by EPA.
Over $5 million has accumulated in the Trust Fund during a two year
period, yet none of this money has been advanced to the schools.
EPA estimates that this fund will increase to over $29 million by
December 1992. We believe EPA should request that either Congress
appropriate the funds to enable EPA and LEAs to effectively combat
the asbestos hazard, or terminate the Trust Fund with the money
returned to the General Fund.
In 1986 AHERA amended the Asbestos School Hazard Abatement Act
(ASHAA) of 1984, creating an Asbestos Trust Fund. The purpose of
the Fund is to provide awards to financially needy schools. The
Fund was designed to be of no cost to the Federal Government.
Initially, Congress would authorize $25 million a year in fiscal
years 87 through 90, amounting to a total of $100 million over four
years. AHERA also provided that LEAs awarded loans under ASHAA
would repay the loans to the Trust Fund. The loan repayments would
be used to repay the Treasury for the initial $100 million plus
interest.
Almost three years have elapsed since enactment of AHERA, but
the Trust Fund never received the $25 million per year as envision-
ed by Congress. Nevertheless, loan repayments have been going into
the fund since June 1987. Current estimates indicate that the fund
will have a balance of $8 million in June 1989.
The need for this money is extremely evident in the massive
number of applications received by the Agency for FY 89 funds.
Over 1200 LEAs applied for ASHAA funds in FY 89. This number of
LEAs is almost four times greater than the applicants that applied
in the previous round of awards. The large increase can be attrib-
uted to the recent submittal of management plans by LEAs as re-
quired by AHERA. The plans provide the LEAs with a current assess-
ment of their asbestos problems, needed resources and proposed
actions. With LEAs required to begin implementing this plan by
July 1989, their need for ASHAA funds has never been greater.
The intent of this Trust Fund was to serve as a revolving
account - collecting loan repayments and ensuring that the repaid
money is promptly reprogrammed for future awards. If this intent
is no longer viable, the funds should be returned to the General
Fund. Trust Fund monies could be used to either: (1) provide more
funds to needy schools; (2) lower the level of appropriations,
while maintaining the same level of assistance to needy schools; or
28
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(3) reduce the public debt if Congress did not want to use it for
its originally intended purpose.
Agency Reply to PIG Draft Report
EPA, in fact, has not requested Congress to make available the
money being returned to the Asbestos Trust Fund. The previous
Administration's policy was that asbestos abatement was more
appropriately addressed at the State and local level. However, as
part of the normal process of transition between Administrations,
this policy is being reviewed. Of course, it is a congressional
prerogative to appropriate these funds whenever the Congress deems
necessary.
Auditor's
We believe EPA should make every effort to ensure ASHAA funds
accumulating in the Trust Fund are promptly utilized either as
future awards or returned to the General Fund.
RECOMMENDATION
We recommend that the Assistant Administrator For Pesticides
And Toxic Substances should work with the Office of Management and
Budget and Congress to ensure that the Trust Fund is utilized.
29
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6.
PENNSYLVANIA IS NOT COMPLYING WITH AHERA
As part of our ASHAA audit, we became aware of a significant
problem in the State of Pennsylvania. We found that the state was
not reviewing management plans submitted by 487 LEAs to ensure the
plans were adequate. Furthermore, the State was allowing their 90
day maximum review period (stipulated by AHERA) to expire without
taking any action. We reviewed 28 of the 487 plans and discovered
all 28 plans had deficiencies. Some of these deficiencies were ex-
tremely significant, such as incomplete or inadequate response
actions. As a result of Pennsylvania's lack of timely review, LEAs
may be acting on deficient plans under the assumption that they
adequately protect school children. Accordingly, we issued a flash
report to the Regional Administrator of Region III on January 10,
1989 (See APPENDIX B). The purpose of this report was to bring to
his attention a significant issue which required immediate top
management attention. In the report, we recommended that the
Regional Administrator perform the following:
o Instruct the State of Pennsylvania to inform the LEAs of the
status of its review process, so that LEAs do not assume the
State has sanctioned their plans; and
o Request the Assistant Administrator of Pesticides and Toxic
Substances withhold EPA grants and loans to all Pennsylvania
LEAs awarded under the Asbestos School Hazard Abatement Act
until the State complies with AHERA.
The Regional Administrator sent a letter to the Governor of
Pennsylvania recommending notifying LEAs that their plans had not
yet been reviewed or approved, and could be deficient (See
APPENDIX C). The Regional Director for Hazardous waste Management
also sent a letter to the Acting Assistant Administrator,
Pesticides and Toxic Substances, recommending that he withhold EPA
asbestos grants and loans for Pennsylvania until the state complies
with the law (See APPENDIX D). As a result of our early
recommendations, the State of Pennsylvania has dedicated additional
resources to review the LEAs1 management plans. Additionally, on
April 10, 1989 the State in accordance with our recommendation
issued a letter to all LEAs advising them of their review process.
We believe that the review problem in Pennsylvania may be
indicative of other states across the country. The diagram below
illustrates the status of LEAs' compliance with AHERA nationwide.
Statistics in the diagram are from an EPA report dated March 15,
1989, which compiled lists submitted by the states to EPA regional
offices between December 1988 and February 1989.
30
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Based on the data received from the fifty states,
the District of Columbia, Puerto Rico and the Virgin
Islands, covering over 42,000 LEAs nationwide:
79% are in compliance, consisting of:
40% with plans submitted by 10/12/88
39% with approved deferrals
21% are in noncompliance, consisting of:
14% submitting neither plan nor a deferral
request
7% with unapproved deferrals or late
submissions
As shown above approximately 39% or 16,380 LEAs received deferrals,
allowing them until May 9, 1989 to submit their plans. The number
of LEAs (39%) with deferrals represents basically the same number
of LEAs (40%) that submitted their plans by October 12, 1988. How-
ever, the May 9 deadline is more crucial because LEAs are required
by AHERA to begin implementation by July 9, only 61 days later.
Consequently, states may not be able to review all their management
plans before the scheduled implementation date of July 9. Detailed
below is our finding on the State of Pennsylvania.
PENNSYLVANIA IS NOT COMPLYING WITH THE ASBESTOS LAW
The State of Pennsylvania has not ensured that LEAs properly
manage asbestos programs in their schools as required by AHERA.
Current requirements of AHERA have not been fulfilled and it
appears that the State may also be unable to achieve future re-
quirements as well. Specifically, the State has not:
l) reviewed management plans submitted by LEAs
2) awarded funds available to financially needy schools for
preparation of their management plans
3) adopted legislation for a state contractor certification
program
As a result, LEAs may be subjecting their students to unnecessary
health risks through the implementation of inadequate management
plans. Furthermore, the State is not ensuring that EPA funds,
available to the LEAs, are promptly awarded to the appropriate
schools.
31
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MANAGEMENT PLANS
Our review disclosed that the State of Pennsylvania is not
complying with the requirements of the Asbestos Hazard Emergency
Response Act (AHERA). The State had not reviewed, nor will it be
able to timely review, "Management Plans" for asbestos removal
submitted to the state by some 487 Local Educational Agencies
(LEAs). The State, in accordance with AHERA, has 90 days after
receipt to act on the plans, otherwise the State will have granted
tacit approval. Our initial review has revealed that many of these
plans are deficient. Our concern is that a significant number of
school districts will proceed with deficient plans and inadequately
resolve or may even exacerbate current asbestos problems.
AHERA requires that all LEAs inspect school buildings under
their authority for the presence of asbestos containing material.
Based on this inspection, a management plan should have been
developed for all buildings and submitted to the state no later
than October 12, 1988. The purpose of the plan is to ensure the
LEA takes appropriate and timely steps to manage asbestos in school
buildings. Some of the key elements of the plan include:
1) identifying all asbestos in the schools; 2) hiring accredited
personnel for preparing the plan, inspecting the buildings and
abating the asbestos; 3) notifying parents and employees of the
availability of the plan. AHERA provides that the Governors of
each state may establish administrative procedures for reviewing
management plans. After the state establishes these procedures,
the state has only 90 days to approve/disapprove the management
plans.
In Pennsylvania, the Department of Environmental Resources,
Bureau of Air Quality Control was assigned the responsibility of
reviewing the asbestos management plans for approximately 1400
LEAs. State personnel informed us that 487 LEAs submitted plans by
the October 12, 1988 deadline. Another 588 LEAs requested a
deferral until May 9, 1989, while the status of the plans for the
remaining 325 LEAs were unknown. Discussions with State personnel
revealed that the State has not provided sufficient resources to
review these plans. As of December 19, 1988, only three of 487
plans submitted were reviewed by the State. All three plans were
rejected for various deficiencies. Furthermore, the 90 day review
period for these 487 plans elapsed on January 10, 1989.
One State official performed a cursory review of the submitted
plans. In his estimation, as many as 20% to 50% of the plans may
be deficient. We reviewed 28 plans prepared by 17 different
contractors. We found that all 28 plans had deficiencies ranging
from not identifying an asbestos coordinator to inadequate response
actions. Listed below is a chart describing the various flaws in
the reviewed plans.
32
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MBA OF DEFICIENCY
NUMBER OF PLANS
WITH DEFICIENCIES
Asbestos Coordinator
Resource Evaluation
Operation and Maintenance Plans
Response Actions
Follow-up to Response Actions
Bulk Sampling
Inspections/Reinspections
Worker/Occupant/Parent Notification
Total Number of Deficiencies
22
10
10
7
1
3
3
22
S3,
As shown above, we found a total of S3 deficiencies in 28
different plans. Many of these deficiencies are very significant
and warrant immediate review by the State. Without this review,
the LEAs may be inclined to believe the State has concurred with
their management plans and employ improper procedures.
The deficiencies cited in our review are significant because
asbestos was present in all the buildings covered by the 28 manage-
ment plans we reviewed. Examples of significant deficiencies
included incomplete and inadequate response actions. We found
seven of 28 (25%) management plans without specific response
actions or schedules for beginning and completing response actions.
Consequently, the plans are inadequate because they do not address
how or when the LEAs will abate their asbestos problems. Another
deficiency was that 10 of 28 plans did not contain a resource
evaluation. This is important because without sufficient resour-
ces, the LEA may not be financially able to abate their asbestos
problems, other significant examples included three management
plans without an Operations and Maintenance (O & M) plan, and seven
management plans with inadequate O & M plans which only reiterated
general conditions needed for a good 0 & M plan. Instead, the plan
should contain specific steps to remove any existing asbestos
fibers and to ensure non-friable asbestos material does not become
friable, thus exacerbating the existing hazards. We also found
that 27 of the 28 plans did not notify parents, workers, or stu-
dents as required by AHERA. Notification is needed so that all
subjected parties are adequately informed of the asbestos hazards
and the LEAs1 plans for dealing with the hazards.
Discussions with other states revealed that their cognizant
agencies were reviewing their management plans. Officials from
Maryland and Virginia disclosed that 92% of the plans submitted
were reviewed and over 90% were disapproved. These figures are
alarming considering that both of these States have provided more
assistance to their LEAs than Pennsylvania. Some of the assistance
Maryland provided to their LEAs included listings of certified
33
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contractors, training seminars, awareness seminars, as well as
offering use of their facilities. Moreover, Virginia requested and
evaluated proposals from various contractors to prepare the plans.
Based on the evaluations, the State assigned specific contractors
to designated areas of the state. Despite the active roles played
by both states, over 90% of the plans were rejected. The high
percentage of disapprovals in both states only accentuates the need
for Pennsylvania to review their management plans.
AIMPAP FUNDS
The Pennsylvania Department of Education did not award $1
million to financially needy LEAs under the Asbestos Inspection and
Management Plan Assistance Program (AIMPAP). EPA granted $1
million to the State in order to help needy LEAs conduct inspec-
tions and develop management plans as required by AHERA. The State
received the funds from EPA in April 1988. As of February 1989 (10
months later), the State still had not awarded the funds. The
management plans were required by Law to be submitted to the State
by October 12, 1988. The intent of AIMPAP was to provide up-front
funding to assist needy LEAs. The inability of the State to award
these funds may in part explain the large number of LEAs (65%)
which were unable to comply with the October 12 deadline.
The AHERA legislation authorized EPA to provide financial
assistance under the Asbestos School Hazard Abatement Act (ASHAA)
in the form of grants to LEAs. The grants were for carrying out
inspections for asbestos-containing material and for preparing
management plans in school buildings. In determining which LEAs
receive grants, EPA should consider the financial need of the LEA.
EPA requested states to submit applications for these funds and to
include a plan by which the state would determine financially needy
LEAs.
In Pennsylvania's application to EPA, the State agreed to
award grants no later than April 21, 1988. The State also proposed
to augment the Federal share ($1 million) with $2 million of state
funds. The State estimated in the application that approximately
500 of 2,000 LEAs would be eligible to receive funds. Financial
need indicators such as per capita income, personal income and
market value will be used to make such selection.
Discussion with State personnel revealed that numerous prob-
lems were encountered in designing the application for the LEAs.
Legal experts for the State requested several modifications,
causing lengthy delays in completing the application form. The
revised application was eventually mailed to all the LEAs in
February 1989.
34
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We contend that the State should have expedited the award
process. Requiring more than ten months to formulate the applica-
tion form does not appear reasonable, especially considering the
short time frames the LEAs had to prepare and submit their manage-
ment plans to the State.
NO ACCREDITATION PROGRAM FOR ASBESTOS WORKERS
Pennsylvania does not have any form of licensing or certifica-
tion program for asbestos occupations. These occupations include
asbestos inspectors, management planners, and project designers, as
well as contractors, supervisors, and workers. Pennsylvania is
required by AHERA to have a program by July 1989. So far no
legislation on asbestos certification has been introduced in the
State Legislature. Some 40 states have established accreditation
programs of some type for asbestos contractors and workers. The
main purpose of state licensing and certification programs is to
protect the health and safety of the public. Improper handling of
asbestos materials in buildings can cause greater hazards than
leaving the material undisturbed. Training asbestos professionals
for their accreditation also promotes worker safety.
According to AHERA, states shall adopt a contractor accredita-
tion plan at least as stringent as the model plan developed by EPA.
The plan must be adopted within 180 days after the commencement of
the first regular session of the state legislature. In Pennsylva-
nia, the legislature sessions run for two years. The legislative
year ended in December 1988 and accordingly the state will have to
enact legislation by July 1989.
To conduct asbestos-related work in schools, persons must
receive accreditation in order to inspect school buildings for
asbestos, develop management plans, and design or conduct response
actions. Such persons can be accredited by states, which are
required to adopt contractor accreditation plans at least as
stringent as the EPA Model Plan, or by completing an EPA-approved
training course and passing an examination for such course.
An accreditation program is essential for protecting public
health and safety. The purpose of any accreditation program is to
ensure workers possess adequate proficiency and conduct their work
in a professional manner. Basic elements of an accreditation
program include requirements for qualifications, performance,
enforcement, as well as reciprocity. For accreditation to be
effective, the legislature must assure administrative coordination
of accreditation with other asbestos regulatory programs, provide
an adequate funding mechanism, and establish credible enforcement
and penalty provisions. Furthermore, the State has to provide
adequate oversight to ensure asbestos professionals comply with the
requirements.
35
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As a possible sanction to compel states into complying with
AHERA and ASHAA requirements, we suggest that EPA consider with-
holding funds awarded to states under the Clean Air Act. In
accordance with guidance established by the EPA Headquarters Office
of Air and Radiation, EPA regional offices award Section 105 grants
annually to the states for developing and carrying out air related
programs and activities. One of the programs performed by the
states is the National Emission Standards for Hazardous Air Pol-
lutants (NESHAP) Program. Under this program, States enforce
NESHAP regulations which require owners or operators of a building
structure, facility, or installation with asbestos to take certain
actions when performing construction, renovation or other modifica-
tion projects. EPA grants provide assistance to states for enforc-
ing the NESHAP requirements concerning asbestos. We believe that
if states such as Pennsylvania are not complying with the asbestos
laws (ASHAA and AHERA), EPA should consider withholding Section 105
grant funds applicable to the NESHAP Program until the State
complies with the requirements of the asbestos laws.
Agency Reply to PIG Draft Report
We commend the OIG's efforts to improve and expand the
Commonwealth of Pennsylvania's program response to AHERA. However,
OPTS feels that the OIG has overstated the problem with the state's
compliance. First, under the AHERA statute, a State is not
required to review AHERA school management plans, as the OIG
appears to suggest. Pennsylvania, however, does intend to review
plans, in part with federal funds it has received, although the OIG
is correct in noting that a more rapid response by the State may
have been beneficial.
Second, the State's inability to adopt a contractor
accreditation plan in accordance with the AHERA schedule is not
unique. Presently, only six States have established full AHERA
accreditation programs approved by EPA, although most of the
others, like Pennsylvania, appear to be moving more rapidly now to
establish them.
The development of State AHERA accreditation programs is a
major OPTS objective. In fact, OPTS launched a major new State
program enhancement initiative this spring to help states establish
asbestos accreditation, management, and assistance programs. To
date, EPA has developed model State legislation for asbestos
accreditation, as well as models for fee-based accreditation
programs, in the States. At least $1 million in federal grants and
special technical counselling will be provided to States by OPTS
and EPA's Regional offices for this purpose in 1990, primarily for
accreditation programs.
36
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Finally, OPTS feels that it is more appropriate to work with
the States to facilitate their compliance rather than to withhold
funds, which may be badly needed in their jurisdictions.
Auditor's Comments
We agree that the AHERA statute does not require states to
review AHERA school management plans. However, the statute does
provide that the state has a maximum of 90 days from date of
receipt for reviewing the plans once the review procedures are
established. Accordingly, Pennsylvania established procedures and
must comply with the above deadlines.
We recognize that not many states (six) have established full
AHERA accreditation programs approved by EPA. Some 40 states,
however, have established approved training courses for their
asbestos workers. Many of these programs have been in existence
for some time now. Pennsylvania has been reluctant to even
initiate any type of training program for their asbestos workers.
Accordingly, EPA needs to take stronger measures to encourage all
states to comply with the AHERA requirements. Pennsylvania's
reluctance to adopt any type of training program should establish
it as a prime candidate for additional encouragement by EPA.
We believe that EPA should at least consider the alternative
of withholding funds for states not complying with AHERA
requirements. We agree that it is better to work with the states
to achieve compliance, however this approach has not always worked
in the past with every state. Our experience has been that some
states require more encouragement than others.
RECOMMENDATION
We recommend that the Assistant Administrator For Pesticides
And Toxic Substances:
1. work with Pennsylvania to develop an accreditation program
in accordance with AHERA and award AIMPAP funds provided
under ASHAA to their LEAs.
2. if Pennsylvania does not develop an accreditation program
and award AIMPAP funds to their LEAs, request that the
Assistant Administrator for Air and Radiation consider
withholding portions of asbestos NESHAP money that
Pennsylvania is receiving under the Clean Air Act.
37
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APPENDIX A
18BE8T08 TRP8T FUND AS
REIMBURSEMENT PROJECTS FUNDED:
YEAR
1985
1986
1987
1988
1989
LOAN
AMOUNTS
$ 5,646,300
4,362,347
4,016,705
3,470,127
S17.495.479
LESS THAN
TWO YEAR
GRACE PERIOD
$ 141,157
282,315
600,849
788,020
874.773
$2.687.114
$
TWO YEAR
GRACE
PERIOD
-o-
-o-
313,683
556,036
779.185
INCREASE IK
TRUST FUND
fAS OF 12/89)
$ 141,157
282,315
287,166
231,984
95.588
Si.648.904
SI.038.210
WORK-IN-PROGRESS PROJECTS COMPLETED IN 18 MONTHS OR LESS:
1985 $ 6,683,229
1986 6,110,639
1987 2,055,767
1988
1989
S14.849.635
$ -0-
277,700
421,636
742,434
742.434
$2.184.204
$ -0-
-0-
371,290
541,029
824.978
Si.737.297
$ -0-
277,700
50,346
201,405
(82.544)
$ 446.907
TOTAL INCREASE AS OF DECEMBER 1989: $1.485.117
(flTTM&'PKD mMMnmr. TUCRX&flB TO TffB XflfiKfiTOa TWJflT Vtnm
TOTAL ASHAA LOAN AMOUNT AWARDED (FY 85-88)
AVERAGE ANNUAL ASHAA LOAN AMOUNT AWARDED
($112 MILLION / 4 YEARS)
ASSUMPTION: 50% OF PROJECTS COMPLETED WITHIN
FIRST YEAR (.5 X $28 MILLION)
ANNUAL LOAN REPAYMENT AMORTIZED OVER 19 YEARS
($14 MILLION / 19)
CONCLUSION: $736,842 WOULD BE REPAID TO THE
ASBESTOS TRUST FUND ONE YEAR
EARLIER, EVERY AWARD YEAR.
$112 MILLION
$ 28 MILLION
$ 14 MILLION
$ 736.842
38
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APPENDIX B
Page 1 of 3
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OfHCl Of THE INSPCCTOfl GENERAL
MID-ATLANTIC DIVISION
Ml CHESTNUT •UILDINC
PHILADELPHIA. PENNSYLVANIA 11107
January 10, 1989
MEMORANDUM
SUBJECT:
FROM:
TO:
FLASH AUDIT REPORT—
Management Plans, For Asbestos Removal
Not Reviewed Bv/^the State o£ Pennsylvania
r i
P. Ronald
Divisional Inspector General for Audit
Mid-Atlantic Division//
James M. Seif
Regional Administrator
The purpose of this flash report is to bring to your atten-
tion a significant issue which requires immediate top management
attention. We will continue to address this issue and others
that arise in completing our audit entitled "Review of Asbestos
School Hazard Abatement Act." Our detailed audit report will be
completed in June 1989.
As part of this audit, we found that the State of Pennsyl-
vania is not complying with the requirements of the Asbestos
Hazard Emergency Response Act (AHERA). Specifically, the State
had not reviewed, nor will it be able to timely review, "Manage-
ment Plans" for asbestos removal submitted to the State by some
487 Local Educational Agencies (LEAs). The State, in accordance
with AHERA, has 90 days after receipt to act on the plans, other-
wise the State will have granted tacit approval. Our initial
review has revealed that many of these plans are deficient. Our
concern is that a significant number of school districts will
proceed with deficient plans and inadequately resolve or may even
exacerbate current asbestos problems.
AHERA requires that all LEAs inspect school buildings under
their authority for the presence of asbestos containing material.
Based on this inspection, a management plan should have been
developed for all buildings and submitted to the state no later
than October 12, 1988. The purpose of the plan is to ensure the
LEA takes appropriate and timely steps to manage asbestos in school
39
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APPENDIX B
Page 2 of 3'
buildings. Some of the key elements of the plan include:
1) identifying all asbestos in the schools; 2) hiring accredited
personnel for preparing the plan, inspecting the buildings and
abating the asbestos; 3) notifying parents and employees of the
availability of the plan. AHERA provides that the Governors of
each state may establish administrative procedures for reviewing
management plans. After the state establishes these procedures,
the state has only 90 days to disapprove the management plans.
In Pennsylvania, the Department of Environmental Resources,
Bureau of Air Quality Control was assigned the responsibility of
reviewing the asbestos management plans for approximately 1400
LEAs. State personnel informed us that 487 LEAs submitted plans by
the October 12, 1988 deadline. Another 588 LEAs requested a
deferral until May 9, 1989 while the status of the plans for the
remaining 325 LEAs were unknown. Discussions with State personnel
revealed that the State has not provided sufficient resources to
review these plans. As of December 19, 1988 only three of 487
plans submitted were reviewed by the State. All three plans were
rejected for various deficiencies. Furthermore, the 90 day review
period for these 487 plans will elapse on January 10, 1989.
One State official performed a cursory review of the sub-
mitted plans. In his estimation, as many as 20% to 50% of the
plans may be deficient. We reviewed 28 plans prepared by 17
different contractors. We found that all 28 plans had deficien-
cies ranging from not identifying an asbestos coordinator to
inadequate response actions. Listed below is a chart describing
the various flaws in the reviewed plans.
AREA OF DEFICIENCY
Asbestos Coordinator
Resource Evaluation
Operation and Maintenance Plans
Response Actions
Follow-up to Response Actions
Bulk Sampling
Inspections/Reinapections
Worker/Occupant/Parent Notification
Total Number of Deficiencies
As shown above, we found a total of 83 deficiencies in 28
different plans. Many of these deficiencies are very significant
and warrant immediate review by the State. Without this review,
the LEAs may be inclined to believe the State has concurred with
their management plans and employ improper procedures.
NUMBER OF PLANS
WITH DEFICIENCIES
22
10
10
7
1
3
3
21
40
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APPENDIX B
Page 3 of 3
Discussions with other states revealed that their cognizant
agencies are reviewing their management plans. Officials from
Maryland and Virginia disclosed that 92% of the plans submitted
were reviewed and over 90% were disapproved. These figures are
alarming considering that both of these States have provided more
assistance to their LEAs than Pennsylvania. Some of the assistance
Maryland provided to their LEAs included listings of certified
contractors, training seminars, awareness seminars, as well as
offering use of their facilities. Moreover, Virginia requested and
evaluated proposals from various contractors to prepare the plans.
Based on the evaluations, the State assigned specific contractors
to designated areas of the state. Despite the active roles played
by both states, over 90% of the plans were rejected. The high
percentage of disapprovals in both states only accentuates the need
for Pennsylvania to review their management plans.
We recommend that the Region instruct the State of Pennsyl-
vania to inform the LEAs of the status of its review procedures, so
that the absence of disapproval does not imply State sanction of
the plan. We also recommend that the Regional Administrator
request that the Assistant Administrator of Pesticides and Toxic
Substances withhold EPA grants and loans to all LEAs within the
State awarded under the ASHAA law. Pressure exerted by the LEAs
deprived of these EPA funds may provide the impetus for the State
to comply with the AHERA law.
While procedures do not require a formal response, we would
appreciate receiving notification of the action you propose to
alleviate this situation. We will determine what actions you have
taken to correct the deficiencies noted above during the remainder
of our field audit work. Should you or your staff have any ques-
tions on this report, please feel free to contact me.
41
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APPENDIX C
Page 1 of
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION III
841 Chestnut Building
Philadelphia. Pennsylvania 1910?
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
JAN 2 0 .389
Honorable Robert P. Casey
Governor of Pennsylvania
Harrisburg. Pennsylvania 17120
Dear Governor Casey:
As you are aware, the Asbestos Hazard Emergency Response Act
(AHERA) was passed by Congress in 1986. The Environmental
Protection Agency (EPA) and the states have responsibilities in
the implementation of that law.
There are several areas of concern that I would like to bring
to your attention. First, Pennsylvania staff has not yet been
assigned to review management plans, to approve deferral requests
of Local Education Agencies (LEAs), or to report this information
to the EPA. Second, grant funds have not been distributed to
LEAs for inspection and management plan writing. Third, legislation
has not been passed for the implementation of AHERA accreditation
requirements.
My letter to you of December 27, 1988 highlighted the need
for the Commonwealth to review the management plans and to respond
to deferral requests.
In accordance with the AHERA provisions, the Pennsylvania
Department of Environmental Resources (PA DER), in its letter of
June 10, 1988, informed LEAs that it would be reviewing the manage-
ment plans. Also, the Pennsylvania Department of Education informed
LEAs that management plans would be approved or disapproved within
90 days, with additional time provided to correct any deficiencies.
It im EPA's understanding that Pennsylvania has not yet
started the review of the management plans, nor has staff been
assigned because of lack of approved budget. We are concerned
that those LEAs that submitted their management plans prior to
October 12, 1988 have not received a notice from the Commonwealth
informing them of disapproval. They may be under the erroneous
impression that their management plans have been approved, when they
have, in fact, not yet been reviewed, and may even need revision to
be considered adequate. I recommend that the Commonwealth notify
LEAs in writing as soon as possible of its review
that the absence of disapproval of a management plj
42
I jVi—......
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APPENDIX C
Page 2 of 3
Commonwealth sanction of the plan. If PA DER has not approved
deferral requests, I ask that this be done immediately.
In addition. State Compliance Reports were to be submitted
to EPA by December 31, 1988. To date, EPA has not received, as
required, that Report listing the names and addresses of the pub-
lic and private LEAs which submitted their management plans by
October 12, 1988; those LEAs which requested deferrals; or those
LEAs which did not respond at all. I would appreciate receiving
the State Compliance Reports as soon as possible — certainly not
later than early February.
Also, I am recommending that EPA Headquarters investigate
the possibility of withholding funds from Pennsylvania Asbestos
School Hazard Abatement Act (ASHAA) loan and grant LEA awardees
until their management plans are approved.
The second area of concern is that the Commonwealth of
Pennsylvania was awarded $1 million under the Asbestos Inspection
and Management Plan Assistance Program (AIMPAP) to assist schools
with the greatest need of inspection for asbestos-containing
materials in school buildings and the preparation of management
plans for FYs 1988 and 1989. I understand that the Commonwealth
is still in the process of developing an AIMPAP application form
to be sent to LEAs.
The third issue is that no Pennsylvania legislation is pending
for the implementation of AHERA. AHERA requires that each state
adopt a contractor accreditation plan at least as stringent as the
model plan developed by the EPA, within 180 days after the comcence-
ment of the first regular session of the legislature of the state
which is convened following the date on which EPA completes
development of the model plan. The model plan was published in
the Federal Register of April 30, 1987.
I know that the Commonwealth shares EPA'a concern about
children being exposed to even low levels of asbestos. Therefore,
I would ask that you direct your immediate attention to these
important compliance issues.
If you need assistance in taking action on these issues,
please feel free to contact me.
1 James H. S(
Regional Ac
xinistrator
cc:
Honorable Arthur A. Davis, Secretary
PA Department of Environmental Resources
Brad Furey
PA Department of Education
43
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APPENDIX C
Page 3 of 3-
bcc: P. Ronald GandolCo
Divisional Inspector General for Audit
Mid-Atlantic Division
Hank Sokolowski, Chief
Program Management and Audit Branch (3PM60)
David Kling, Acting Chief
Hazard Abatement Assistance Branch
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APPENDIX D
Page 1 of 2
UNTOD STATES ENVIRONMENTAL PROTECTION AGENCY
REGION IK
$41 Chestnut Building
Pennsylvania 19107
2 0 1989
MEMORANDUM
TO: Victor R. Kimm, Acting Assistant Admini
Pesticides and Toxic Substances (TS-78
FROM: Stephen R. Wassersug, Director
Hazardous Waste Management Divisi
f
SUBJECT: Lack of Review of Management Plans Submitted by
Local Education Agencies {LEAs) in the state of PA -
Asbestos-Containing Materials in Schools Rule of
10/30/88 under the Asbestos Hazard Emergency Response
Act (AHERA)
As you are aware, the State role under the Asbestos-
Containing Materials in Schools Rule of October 30, 1987 in the
review of the management plans, as well as responding to requests
for deferrals, is a key element in aiding Local Education Agencies
(LEAs) to meet their obligations under the law.
Our concern is that we have been advised that the State of
Pennsylvania has not yet started the review of the management
plans, nor responded to deferral requests submitted by LEAs to
meet the state obligations under the law.
Pennsylvania Department of Environmental Resources (PA DER)
letter of June 10, 1988 informed LEAs that PA DER would be
reviewing the management plans.
AHERA required the State to disapprove a management plan
within ninety {90} days after the date of receipt of the plan,
if the plan did not contain all of the necessary requirements
to be considered complete.
We ar« aware that the State of Pennsylvania has not yet
begun the review of the management plans, nor responded to
deferral request! submitted by LEAs. They also did not respond
to the requirement to submit to EPA by December 31, 1988 the
names and addresses of the public and private LEAs who submitted
their management plan, those LEAs who requested deferrals, or
those LEAs who did not respond at all.
Our concern is that those LEAs who submitted their
management plans prior to or on October 12, 1988 and did not
receive notice of disapproval from the State may be under the
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APPENDIX D
2 Page 2 of 2
impression their management plan is approved, when in fact it
has not yet been reviewed and requires revision. The deadline
for the 90 days review, if the plan were submitted on October
12, 1988 was January 10, 1988. If the plan were submitted prior
to October 12, 1988, an LEA should have received a response
prior to January 10, 1988.
Also, the State of Pennsylvania was awarded $1 Million
Dollars under the Asbestos Inspection and Management Plan
Assistance Program (AIMPAP) to assist schools with the greatest
need in the inspection of school buildings for ACM and the
preparation of management plans. We understand the State is
still in the process of developing an AIMPAP application form
to be sent to LEAs.
Another issue is that no legislation is pending for the
implementation of AHERA. The provisions of the law require
that each State shall adopt a contractor accreditation plan at
least as stringent as the model plan developed by the Adminis-
trator within 180 days after the commencement of the first
regular session of the legislature of the State which is convened
following the date on which the Administrator completes develop-
ment of the model plan. The model plan was published in the
Federal Register of April 30, 1987.
We have recommended the State of Pennsylvania notify LEAs
in writing of its review procedures, so that the absence of
disapproval of a management plan does not imply approval of the
plan, and requested the State comply with the requirements of
AHERA. Also, we have requested that the State compliance report
be forwarded by January 23, 1989.
I hereby request that EPA Headquarters investigate the
possibility of withholding funds from PA Asbestos School Hazard
Abatement Act (ASHAA) loan and grant awardees until the management
plans are reviewed.
I am attaching a copy of the letter we are forwarding to
Governor Casey for your information.
Your expeditious response to this request would be greatly
appreciated* Thanking you in advance for your cooperation.
Attachment.
cc: p. Ronald Gandolfo
Divisional Inspector
General for Audit
Mid-Atlantic Region
46
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APPENDIX E
Page 1 of 23
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, DC 2CM€0
A::- 2 5 IKS
TOXIC SUBSTANCES
MEMORANDUM
SUBJECT:
FROM:
Comments on Draft Report on Audit of the Management of
the Asbestos School Hazard Abatement Act (ASHAA) Loan
and Grant Program
TO:
Victor J. Kimm
Acting Assistant
for Pesticides
and Toxic Substances
Ernest E. Bradley III
Assistant Inspector General for Audits
Office of the Inspector General
I am providing our comments to the draft audit report issued
June 30, 1989, by the Office of the Inspector General (OIG) in
its second audit report on the Asbestos School Hazard Abatement
Act (ASHAA) loan and grant program. This response of the Office
of Pesticides and Toxic Substances (OPTS) vas developed in
conjunction with the Agency's Grants Administration Division
(GAD) in the Office of Administration and Resources Management
(OARM), which shares responsibility for ASHAA loan and grant
administration.
We appreciate the time and effort that your Mid-Atlantic
Field Division staff has invested in this audit. They have, over
the past year, been working closely with OPTS asbestos staff,
both at headquarters and in the Regions, as well as with GAD and
Agency financial management personnel. The report, in many ways,
also reflects a considerable investment of OPTS and OARM time and
effort.
The ASHAA loan and grant program, in Meeting every
congressional award deadline since its founding in 1985, has
provided more than $201 million in assistance to schools with
financial need and serious asbestos hazards. As it is one of our
largest and most prominent programs, we are constantly seeking
ways to improve its administration. We conducted, in
consultation with school and other affected groups, a major
47
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APPENDIX E
Page 2 of 2-3
evaluation of ASHAA in 1986, which resulted in several important
program changes. In preparation for the 1989 award cycle, we
made several improvements to conform ASHAA activities with the
Asbestos Hazard Emergency Response Act (AHERA) and, this summer,
OPTS is conducting another evaluation of the 1989 program to
identify further refinements for any potential future awards.
You may also recall that important program modifications
followed the OIG's earlier ASHAA audit, issued September 15,
1987, on ASHAA implementation and its award process for school
loans and grants. Likewise, we believe this report has
identified some additional areas for program improvement, as
acknowledged below and in the attached comments. In fact, OPTS
staff has already begun efforts to implement some changes
recommended by the OI6 during its investigation over the past 14
months. In other instances, however, we believe several areas of
the report do not accurately reflect the requirements, practices
or practical constraints of the program. These areas, too, are
clearly indicated.
Summary comments are provided below for each of the OIG's
six findings, followed by a more detailed response in the
attachment.
SUMMARY COMMENTS ON QIC FINDINGS
Finding One — EPA needs to award ASHAA funds more effectively.
OPTS agrees with the OIG that annual solicitation of new
school applications is preferable. However, this has not always
been possible, given late appropriations, the congressional
deadlines mandated by the ASHAA appropriation language and the
federal requirements for application review and approval.
The Agency has made every effort to solicit new applications
each year, so far as funds were provided and sufficient time was
available to accomplish the lengthy application approval,
distribution, completion, and review process. In fact, EPA has
only twice used applications which were previously on hand, in
1987 and 1988. In both years, EPA was faced with congressional
deadline* which mad* the solicitation of new applications
impossible. In 1987, EPA had about a month and, in 1988, the
Agency had approximately two months to make awards, once funds
were available, in 1987, EPA tried to overcome the problem of
soliciting new applications by conducting two separate award
cycles, with the first of these meeting the congressional
deadline with applications on hand and the second utilizing new
applications which wei*e collected while the first: cycle was in
progress.
48
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APPENDIX E
Page 3 of 23
OPTS, in its current evaluation of the ASKAA award process,
is examining the effectiveness of the 1989 application form,
approved last year by the Office of Management and Budget (OMB)
for three years. If the evaluation shows that no major changes
are needed to the 1989 form and that it can be used again in
1990, prospects are improved for a quick solicitation of new
applications from schools if additional ASHAA appropriations are
provided.
OPTS will nalce every effort to solicit new applications if
funds are appropriated for a 1990 award cycle. If no revisions
to the current application are necessary, OPTS will be able to
solicit new applications for 1990 as long as the period between
the availability of funds and the congressionally mandated award
date is at least five months. For example, if funds are
available by October 1, 1989, new applications can be solicited
and awards could be made by March 1990. If OPTS concludes that
the application needs modifications, an additional two months
will be required to complete the award process. In the event
that OMB will need to approve a new application, OPTS will work
closely with OMB to expedite the process.
Finding Two — EPA needs to revise repayment terms for ASHAA
loans.
OPTS, acting on the OIG finding, is working with GAD and the
Agency's Las Vegas Financial Management Center (LVFMC) to
determine if a revised repayment system would be feasible and
advisable for the 1990 or any future ASHAA award cycles. We
expect a determination on this issue before the 1990 awards.
While we understand and appreciate the OIG's objectives in
this matter, two factors in particular may mitigate against
adopting the OIG recommendation. First, the period between an
ASHAA award to a local education agency (LEA, which is a public
school district or a private school) and the date of the first
repayment installment, approximately two years later, was
established to provide sufficient tine for LEAs to conduct
abatement actions or to complete specific financial procedures
related to receiving the award.
Second, a uniform initial repayment schedule was selected to
improve the efficiency of EPA's financial monitoring activities.
While LVFMC and GAD are unable to presently quantify the
additional costs and resource requirements which might be
incurred by the OIG's recommended repayment system, which would
track each individual ASHAA award on a separate payment
initiation schedule, they would likely be significant. Further,
this extra cost to EPA would not produce any immediate benefits
to LEAs since funds repaid to the Asbestos Trust Fund are not
presently available for redistribution to other financially needy
schools.
49
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APPENDIX E.
Page 4 of '23
Nevertheless, we agree that a speedy return of the money to
the Asbestos Trust Fund would be beneficial in the event
Congress allows EPA access to these funds. Thus, OPTS will
continue to work with GAD and LVFMC to evaluate alternate
repayment schedules and make any appropriate program changes in
time for a 1990 award cycle.
Finding Three — EPA needs to implement controls over ASHAA funds
awarded to the Bureau of Indian Affairs (BIA).
EPA has already undertaken actions to recover excess funds
from BIA, and OPTS will work with GAD and BIA to implement a more
rigorous oversight function for BIA award projects. In fact,
actions have already been taken to recover the $153,076.34
resulting from lower than expected abatement costs in BIA
projects. EPA and BIA have signed an interagency agreement (IAG)
which governs the ASHAA award and administrative process for
Indian schools. Since BIA is another government agency rather
than an LEA, it assumes many of the same responsibilities and
prerogatives of financial management control as EPA.
The IAG which currently governs the transfer of these funds
has provisions for BIA to report and return excess funds. Under
the current IAG, BIA must submit quarterly cost reports to the
EPA's Cincinnati Financial Management Center (CFMC). As the IAG
requires BIA to return all unexpended funds, GAD will work
closely with the BIA to make sure that this reporting requirement
is met.
Finding Four — Asbestos contractors are not obtaining adequate
insurance.
OPTS is also concerned about the availability and quality of
performance bonds for contractors. However, GAD believes that
the protection in place for the ASHAA process is equivalent to
that afforded in much larger Agency grant programs. In addition,
GAD believes that the new EPA regulations, which no longer
require Treasury-approved bonding companies for public LEAs,
appear to affect the relevance of this finding. Nevertheless,
EPA will review possible approaches for better addressing this
issue.
Finding Five — Asbestos Trust Fund not available to LEAs.
EPA, in fact, has not requested Congress to make available
the money being returned to the Asbestos Trust Fund. The
previous Administration's policy was that asbestos abatement was
more appropriately addressed at the State and local level.
However, as part of the normal process of transition between
Administrations, this policy is being reviewed. Of course, it is
a congressional prerogative to appropriate these funds whenever
the Congress deems necessary.
50
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APPENDIX E
Page 5 of 23
Finding Six — Pennsylvania is not complying with AHERA.
We commend the OIG's efforts to improve and expand the
Commonwealth of Pennsylvania's program response to AHERA.
However, OPTS feels that the OIG has overstated the problem with
the State's compliance. First, under the AHERA statute, a State
is not required to review AHERA school management plans, as the
016 appears to suggest. Pennsylvania, however, does intend to
review plans, in part with federal funds it has received,
although the OIG is correct in noting that a more rapid response
by the State may have been beneficial.
Second, the State's inability to adopt a contractor
accreditation plan in accordance with the AHERA schedule is not
unique. Presently, only six States have established full AHERA
accreditation programs approved by EPA, although most of the
others, like Pennsylvania, appear to be moving more rapidly now
to establish them.
The development of State AHERA accreditation programs is a
major OPTS objective. In fact, OPTS launched a major new State
program enhancement initiative this spring to help States
establish asbestos accreditation, management, and assistance
programs. To date, EPA has developed model State legislation for
asbestos accreditation, as well as models for fee-based
accreditation programs, in the States. At least $1 million in
federal grants and special technical counselling will be provided
to States by OPTS and EPA's Regional offices for this purpose in
1990, primarily for accreditation programs.
Finally, OPTS feels that it is more appropriate to work with
the States to facilitate their compliance rather than to withhold
funds, which may be badly needed in their jurisdictions.
Conclusion
We trust you will review and weigh our comments thoroughly
as you prepare your final report. We will continue to assess
your findings and, of course, make program modifications, as
appropriate. Correspondingly, we trust you will take into
consideration the effort required by OPTS program and OARM grants
and administrative staff to support your investigations over the
past three years, as well as the expected relevance of additional
findings, as you initiate further audit activities on the ASHAA
and AHERA programs.
If you have any questions regarding the comments provided or
wish to discuss any of these topics in greater detail, please
51
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APPENDIX E
Page 6 of 23
contact Michael M. Stahl, Director of the Environmental
Assistance Division in the Office of Toxic Substances, at FTS
382-3949.
Attachments
cc: John C. Martin
Charles L. Grizzle
Charles L. Elkins
Paul R. Gandolfo
Edwin B. Erickson
52
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APPENDIX E
Page 7 of 23
bcc: Dennis Deely
Harvey Pippen
w. Scott McMoran
Michael Stahl
David Kling
Steven Young
Gina Bushong
Michelle Price
53
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APPENDIX E
Page 8 of 23
COMMENTS ON THE DRAFT AUDIT REPORT
ON THE MANAGEMENT OF THE
ASBESTOS SCHOOL HAZARD ABATEMENT ACT
The Office of Pesticides and Toxic Substances (OPTS) and the
Grants Administration Division (GAD) of the Office of
Administration and Resources Management (OARM) are providing
comments on the audit of the management of the Asbestos School
Hazard Abatement Act (ASHAA) loan and grant program, conducted by
the Office of the Inspector General (OIG), in two parts. Part
One will provide general observations on the draft report, while
Part Two offers comments on the six specific findings of the
draft report.
I. PART ONE: GENERAL OBSERVATIONS
clarification of Finding Summaries
o In certain instances, the summaries of the findings
provided in the draft report do not accurately
represent the detailed discussion of the particular
issues presented later in the paper.
Two of the summaries provided in the OIG report are not
entirely consistent with the detailed discussions of the findings
presented in the report. In the summary of the first finding,
EPA needs to award ASHAA funds more effectively, the OIG states
that "Congress has allowed ample time for new applications in the
deadlines provided." The detailed discussion of this issue
acknowledges that in one of only two instances where EPA utilized
applications on hand, the funds were not available to the Agency
until December 22, 1987 and EPA was required to make the awards
by March 1, 1988. Given the considerable requirements for
application approval, distribution, completion, and review, nine
to ten weeks does not represent "ample time for new
applications.n
In the summary of the second finding, EPA needs to revise
repayment terms for ASHAA loans, the statement is made that a
modification in the repayment period "will enable EPA to fund
additional health hazards at other financially needy LEAs [local
education agencies]." At present, EPA would be unable to utilize
any funds collected by an earlier repayment plan since the Agency
currently has no control over this money being placed in the
Asbestos Trust Fund. The fact that these funds are not now
available to EPA is acknowledged in the detailed discussion of
the finding.
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APPENDIX E
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Acknowledgement of OPTS' s Previous Continents
o The draft report might better reflect significant
information which OPTS provided in its earlier response
to certain issues.
In our February 15, 1989, response to the OIG's draft
findings report, several key issues were presented which are not
reflected in the OIG's current draft report. In particular, we
believe three of the six findings in this report do not fully
account for information provided in previous responses.
For example, our previous response addressed the issue of
annually soliciting ASHAA applications. The procedures for a new
ASHAA application process include approval by the Office of
Management and Budget (OMB), distribution to schools, completion
by school officials, and technical review of the returned
applications. In the information previously submitted, we
indicated that a minimum of six to seven months is necessary to
conduct an ASHAA award cycle which includes soliciting new
applications. Process compression could jeopardize the quality
of the awards made under the ASHAA program. Thus, as pointed out
in our previous response, the critical issue here lies not in
EPA's administration of the ASHAA program but in the initial date
on which the funds become available to the Agency. EPA must work
within the congressionally mandated deadlines established in the
appropriation.
In our previous response to the third finding, EPA needs to
implement controls over ASHAA funds awarded to the Bureau of
Indian Affairs (BIA), OPTS stated that EPA was already in the
process of recovering $153,076.34 in excess funds resulting from
lower than estimated abatement costs in certain BIA projects.
The OIG suggests in the present report that EPA is not actively
pursuing the return of these funds. In fact, EPA has already
amended the interagency agreement to recover the overpayment.
In the OIG's fourth finding. Asbestos contractors are not
obtaining adequate insurance. the significance of the 1989
revised procurement regulations should be considered. While the
new procurement regulations do not void this finding, they
significantly affect the number of LEAs subject to this
requirement. Since only private LEAs are currently covered by
bonding requirements (only 12% of the total awardee population),
the relative importance of this issue is diminished.
55
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APPENDIX E
Page 10 of -231
Recognition o£ Practical Considerations
o The findings presented in the draft report might
recognize the practical considerations which are
involved in program administration.
In formulating recommendations for changes in the ASHAA
program, the 016 might give greater consideration to the
practical considerations which must be faced by the various
offices involved with ASHAA administration. In particular, the
OIG's recommendation that EPA solicit new applications annually
ignores the necessary and time consuming steps, which OPTS has
previously outlined, that are required to accomplish this task.
Thus, the OIG's recommendation that EPA solicit new applications
each year would be ideal but may not always be possible, given
the constraints on the program.
on the issues of revised repayment terms and increased
oversight of bonding requirements, we would be negligent in our
use of Federal money if we did not account for the financial
impact to the Agency of any recommended administrative changes in
our process. For instance, the OIG's recommendation on repayment
should be assessed in part by evaluating the increased costs
incurred by the Agency's Las Vegas Financial Management Center
(LVFMC) against the benefits of a small number of LEAs beginning
repayment of their loans at an earlier date. EPA must also
consider the advisability of diverting more of its limited
resources to monitoring LEA compliance with bonding requirements,
particularly if only a small percentage of schools are affected
by this issue.
Recognition of 1989 ASHAA Program Modifications
o OPTS and OARM made modifications to the ASHAA program
for the 1989 award cycle which may impact the
significance of certain findings in the draft report.
EPA has made several changes in the 1989 ASHAA award cycle
which may be relevant to the OIG's findings. For example, new
1989 ASHAA procedures require the development of ASHAA project
cost estimates by LEAs, including the BIA, by asbestos abatement
professionals, accredited under the Asbestos Hazard Emergency
Response Act (ARERA). This new requirement should improve
estimation and help assure that ASHAA funds, including those for
BIA, are awarded in a more efficient manner.
As part of our redesign of the 1989 award process, the
ASHAA application form was also redesigned. Part of this
application redesign process included obtaining OMB approval of
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APPENDIX E
Page 11 of 23
the revised ASHAA application form. As a result of negotiations
betveen EPA and OMB, the Agency was successful in obtaining OMB's
approval of the application for a three-year period. This was
the first time our program was successful in obtaining a multi-
year approval of an ASHAA application form.
OPTS is currently conducting an internal evaluation of the
1989 ASHAA award process. As part of this review, the redesigned
1989 application form will be evaluated. If the evaluation
indicates that no major changes are needed to the form, it can be
used in 1990 without further OMB consideration. Utilization of
the 1989 form would improve prospects for soliciting new
applications quickly in the future.
Finally, as we have mentioned previously in this section,
revisions in the Agency's procurement regulations became
effective in 1989. The changes in the procurement regulations
have a direct impact on the number of ASHAA awards which are
subject to the bonding requirements. As of October 1988, EPA no
longer has a role in determining whether a public LEA has
obtained any particular type of bond. Thus, the Agency's
oversight responsibility has decreased.
Based on the above discussion, OPTS feels that the changes
in the program in 1989 are particularly relevant to several of
the concerns expressed by the DIG in the draft report and should
be reflected in the final audit report.
II.
1.
PART TWO; COMMENTS ON THE SIX SPECIFIC FINDINGS
Finding One — EPA NEEDS TO AWARD ASHAA FUNDS MORE
EFFECTIVELY
Comment by the QIC
OPTS* past practice of using applications from previous
award cycles rather than soliciting new applications has
decreased effectiveness of ASHAA funds awarded.
OPTS Response
OPTS agrees with the OIG that annual solicitation of new
LEA applications is generally preferable. However, the
key issue, as discussed above, lies not in EPA's administration
of the ASHAA program, but in the initial date on which the funds
become available to the Agency. Although OPTS concurs that
annual application solicitation would help maintain a more
current pool of priority projects, there are several reasons
which have prevented EPA from following this practice every year.
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Page 12 of 231
The ASHAA loan and grant program was established by Congress
and the funds are made available annually as a result of direct
congressional appropriations. The funding for ASHAA has never
been requested in the President's budget and, from one year to
the next, EPA has no assurance as to whether funds vill be
available. Therefore, OPTS has not been permitted to solicit
applications from LEAs before funds are actually available since
this practice could be wasteful, considering the expense to the
Federal government of preparing and distributing the
applications, as veil as the tine and money invested by LEAs in
application completion. It is estimated, for example, that the
average LEA will take 31 hours and spend approximately $200 to
complete the 1989 ASHAA application. There are also expenses
associated with the States' responsibilities for collecting and
submitting applications to EPA.
Congressional appropriations for the ASHAA program have
always included deadlines in the appropriation language. Since
an appropriation of this type is a direct congressional order
the Agency makes every effort to meet these deadlines. EPA has
had little choice but to design an award cycle which
incorporates the dates set by Congress. The following table
illustrates the amount of time OPTS actually had between the date
funds were available and the congressionally mandated award date.
AVAILABILITY OF FUNDS
FY
1985
1986
1987
1987
1988
1989
(1)
(2)
DATE
August, 1984
November, 1985
March, 1987
March, 1987
December, 1987
September, 1988
CONGRESSIONAL
DEADLINE
June 6, 1985
July 31, 1986
April 1, 1987
May 29, 1987
March 1, 1988
May 15, 1989
With the considerations of late appropriations on the one
hand and early award dates on the other, it is important to
understand the administrative procedures which must take place
before applications are made available to LEAs. As a result of
the Paperwork Reduction Act, OMB must approve any Federal
agency's request for information from the public. OMB will
typically not review an information collection request unless an
agency can show that there is a need to collect the information;
that is, in the case of ASHAA, OMB will not review or approve the
loan and grant application until an appropriation is signed by
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APPENDIX E
Page 13 of 23
the President. In the past, OMB has required several months to
review a proposed application. Award time schedules must be
adjusted to include this consideration.
.Further, once an application form has been approved by OMB,
it must be printed and distributed to LEAs. Under the best
circumstances, this activity takes approximately one month.
Sufficient time must then be allotted for the LEA to complete the
application materials and submit them to the State for initial
review. More time is required for the State oversight process,
which takes place prior to State submission of the applications
to EPA. Consequently, a minimum of two months is necessary from
the time the LEA receives the application material until it is
received by EPA for assessment. After EPA receives the ASHAA
applications, it takes another eight weeks to adequately review
the applications, solicit additional State comments, and prepare
award documents. Thus, awards cannot be made for about two
months after the applications are received by EPA.
In summary, five months are necessary from the time OMB
approves an application until awards are made. Taking into
consideration the additional one to two months for OMB approval
of the application, it takes at least six to seven months from
the time Congress passes an appropriation and the President signs
the bill until awards can be made, if new applications are to be
solicited.
Again, OPTS does not disagree with the 016 that it would be
preferable for an ASHAA cycle to begin with a solicitation of new
loan and grant applications, whenever possible. This was done
for the 1989 award round, consistent with congressional direction
associated with the appropriation and is a general objective of
the program office. Further, OPTS was able to achieve this
objective in 1989 because it had almost eight months, from
September, 1988 until May, 1989, in which to accomplish all the
required tasks involved in soliciting new applications.
Unfortunately, due to the circumstances described above,
this has not always been possible. Since 1985 (the first award
cycle), EPA has conducted two award cycles where previous
applications were used. In both cases, EPA was faced with
congressional deadlines which made the solicitation of new
applications impossible. In 1987, EPA had one month and in 1988
the Agency had about two months to make awards, given the time
between fund availability and the congressionally mandated award
date.
In 1987, OPTS attempted to both meet the congressional
deadline and solicit new applications by conducting two award
rounds, despite a late appropriation (January) and a subsequent
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Page 14 of
rescission request which was not resolved until March. ASHAA
applications on file from 1986 were technically reviewed in early
1987 so that once the rescission was decided EPA could still meet
the April 1, 1987 deadline. The Agency funded $32.4 million on
schedule in round one.
In addition, at the time of ASHAA appropriation, EPA
requested OMB review of the application so that EPA could
immediately mail applications to schools for round two if funds
were approved despite the rescission. Due to early application
approval and printing, as well as reduced time allotted for
school completion of the application and shorter EPA technical
review (since only $8 million was left to award), the Agency was
able to make its additional award announcements approximately
three months after rescission resolution, on May 29, 1987.
In 1988, the abridged application process, used for the
second round in 1987, could not be used to accommodate the late
ASHAA appropriation. This approach could not be used because a
longer technical review was required to approve applications for
the larger amount of funds, $22.6 million, and the earlier award
deadline (March 1, 1988).
2. Finding Two — EPA NEEDS TO REVISE REPAYMENT TERMS FOR ASHAA
LOANS
Comment bv the QIC
EPA allows too much time for repayment of some ASHAA loans,
particularly those for reimbursement projects. By allowing a
two-year grace period on all loans, money that could be used for
other awards is not returned to the Asbestos Trust Fund.
OPTS Response
OPTS, acting on the OIC finding, is working with GAD and
LVFMC to determine if a revised repayment system, such as that
suggested, would be feasible and advisable for subsequent ASHAA
award cycles. However, it should be noted that the majority of
ASHAA projects are not completed significantly before the two
year deadline.
Our further response is divided into two discussion topics:
first, accounting aspects of the ASHAA loan and grant program,
and second, the issue of repayments to the Asbestos Trust Fund.
Both of these topics played a significant role in EPA's initial
decision that repayments should begin two years after the award
date.
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APPENDIX E
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8
Under ASHAA, EPA was authorized to make awards to LEAs
which had completed necessary abatement projects as early as
1984. In the four award cycles which EPA conducted between 1986
and 1988, approximately 27 percent of the awards were made to
LEAs for the reimbursement of completed projects. This
represents approximately $16.8 million of the $111.8 million
awarded during this period. Reimbursement funding was continued,
on a limited basis, to encourage schools to act quickly and
responsibly in addressing any asbestos hazards in their buildings
even if immediate Federal funding was not forthcoming.
The report implies that LEAs which receive funds for
reimbursement projects receive their funds very shortly after the
award date. This is not always true. Several contractual and
accounting activities must occur before the LEA receives funds.
First, the LEA must provide information regarding its ability to
repay the loan. In the case of a private school, the LEA must
provide collateral for the loan. In addition, there are a
variety of legal documents which the LEA must provide to GAD
prior to the official completion of the award process.
Additionally, the LEA must resolve any technical questions which
were not resolved in the review of application materials. For
example, an LEA might be required to provide documentation of the
accreditation of contractors who conducted the abatement work.
Such items must be resolved before the release of funds.
Finally, all records of expenditures related to the project must
be submitted to EPA and reviewed for appropriateness before
monies are paid to the recipient.
Thus, a number of activities related to reimbursement
projects must occur before funds are released to the LEA. While
an exact estimate of the average time required to accomplish
these preliminary activities is not readily available, many
months often elapse before the LEAs actually receive payment.
Many of the points discussed above are also relevant to the
issue of the repayment schedule for "work-in-progress" projects.
In addition, EPA is responsible for monitoring these awards
while the funded activities are carried out. EPA also conducts a
thorough inspection of the project after the work is finished.
The EPA Regional inspector must document the quality of the
project and examine evidence that all ASHAA requirements have
been fulfilled. This documentation is then submitted to EPA
Headquarters for final approval. In all, this process is very
time consuming. Additionally, because of the small number of
Regional inspectors (in relation to the number of projects that
require monitoring), final close-out inspections may not be
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APPENDIX E -
Page 16 of'231
conducted immediately following the completion of an abatement
project. Thus, the majority of work-in-progress projects are not
completed significantly earlier than the allotted two-year
period.
In selecting the two-year grace period, EPA was also
concerned about maintaining efficient monitoring of the loan
repayment process. In the past, the LVFMC, the division unit
within EPA which is responsible for ASHAA loan repayments,
conducted its operations using manual accounting systems, it
would have been very costly for EPA to track individual LEA
awards, each with a different repayment initiation schedule, on
such a system. Since most reimbursement projects have a several-
month lag time before receipt of awards, LEAs typically have the
use of the funds for only a few months before repayments begin.
Therefore, we contend that uniformity in the payback schedule is
more efficient and cost effective for EPA.
The OIG report additionally states that "EPA should not wait
until the awardees receive 100% of the award to require
repayment." Under LVFMC's current practices LEAs are required to
initiate repayment of their loans at the end of the two year
grace period regardless of the percentage of funds they have
received by that date. Thus, the OIG's statement that repayment
is delayed is inaccurate.
The OIG states that if EPA were to require earlier repayment
of loans and grants, additional funds would be available through
the Asbestos Trust Fund to aid other needy LEAs in their efforts
to abate asbestos hazards. Unfortunately, this is not the case.
While the loan repayments are made to the Trust Fund for this
purpose, EPA has no authority to access these funds without
direct authorization from Congress. To date there has been no
action on the part of Congress to authorize such a use.
Nevertheless, OPTS concurs that a speedy return of the money
to the Trust Fund would be beneficial in the event that Congress
allows EPA access to these funds. EPA will investigate revising
the terms of repayment as follows:
o For reimbursement projects repayment would begin
approximately six months after the award.
o For work-in-progress projects, repayment would begin
approximately six months after project completion or
two years after the award date, whichever is earlier.
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APPENDIX E
Page 17 of 23
10
The financial impact to LVFMC will need to be thoroughly
evaluated prior to any decision. If funds are appropriated for
a 1990 ASHAA award cycle, EPA will decide on any alterations to
the repayment terms before those awards are made.
3. Finding Three — EPA NEEDS TO IMPLEMENT CONTROLS OVER ASHAA
FUNDS AWARDED TO THE BUREAU OF INDIAN AFFAIRS (BIA)
Comment bv the OIG
Reviews of a number of BIA grants show overpayments which
are attributable to a lack of controls in transferring funds
between government agencies.
OPTS Response
EPA and BIA have an interagency agreement (IAG) which
governs the award process. Under this agreement (IAG
fDW14931393-01-0), BIA accepts the same financial management
control responsibilities for ASHAA funds awarded to Indian school
projects that EPA bears for all other LEA projects. Under this
agreement, BIA has primary responsibility to monitor the
financial activities of the ASHAA funds transferred to BIA
relative to other LEAs. OPTS would like to point out that
although there may be drawbacks to transferring funds between
agencies through lAGs, this is the only method available to
achieve this transfer of funds. OPTS would also like to
emphasize, as stated in our previous response, that actions have
been taken to recover the $153,076.34 in excess funds resulting
from lower than expected abatement costs.
EPA and BIA have made several adjustments to the ASHAA funds
transferred to BIA. Consequently, OPTS believes that the OIG's
recommendations that we amend the IAG to ensure that the BIA
final award is based on actual costs and to require the BIA to
furnish EPA with information on the estimated versus actual costs
for each BIA abatement project funded by EPA are unnecessary.
The IAG currently in effect (see attached), already requires that
quarterly cost reports for the ASHAA program be forwarded to the
Financial Management Center in Cincinnati, Ohio and that
unexpended funds be returned to the EPA at the completion of
work. Thus, there are currently mechanisms in place to assist
EPA in detecting overpayments and obtaining reimbursement when
necessary.
From the beginning of the program in 1985, ASHAA funds
totalling $827,712.37 have been transferred from EPA to BIA.
During that time period, BIA has reported decreases totalling
$199,976.34 in Indian project areas. This represents an overall
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APPENDIX E
Page 18 of 23
11
continues to notify EPA when project estimates exceed actual
costs and EPA will amend lAGs to accurately reflect such
decreases in funds transferred to BIA. GAD will work closely
with the BIA to make sure that this reporting requirement is met.
4. Finding Four — ASBESTOS CONTRACTORS ARE NOT OBTAINING
ADEQUATE INSURANCE
Comment by the 01G
OPTS is not fully protecting the Federal interest in ASHAA
projects because it is not assuring that contractors selected for
ASHAA work are using acceptable sureties, as required by
regulation.
OPTS Response
There are several clarifications which should be made in
this section of the report. First, the procurement regulations
which have been in effect for previous award cycles require that
the award official determine that the government's interest is
adequately protected when the recipient proposes to use a bonding
company not certified by the Treasury Department. In these cases
the recipient is responsible for assuring that it is using
acceptable agents. Recipients must notify the award official if
a bonding company other than an approved one is used.
The question of revising EPA's enforcement of the bonding
requirements oecame less important as a result of the October 1,
1988 changes in the procurement regulations. At that-time EPA'S
new general regulation for assistance programs (40 CFR Part 31)
took effect. This nev regulation which applies to all public
institutions which receive awards does not include the
requirement that contractors use only bonds provided by Treasury-
approved bonding companies. From October 1988 onward, EPA will
have no role in determining whether any particular bonding
company is acceptable. Such matters will be left for the public
LEA recipient and contractor to negotiate.
EPA acknowledges that this bonding requirement still applies
to award* made to private institutions which receive grant funds.
However, it should be noted that private LEA awards constitute
only an average of 12% of all ASHAA awards. Additionally, an OMB
workgroup is currently revising the procurement regulations to
include private institutions. Thus, we expect that in the near
future the bonding requirements will no longer apply to private
LEAs.
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APPENDIX E
Page 19 of 23
12
Finally, we have not had frequent instances of contractors
defaulting on ASHAA projects. In light of the few problems
encountered in the program and revised procurement regulations,
EPA presently questions the diversion of resources from
fundamental aspects of program management in order to enforce
compliance with bonding requirements. Nevertheless, EPA will
review possible approaches for better addressing this issue.
5. Finding Five — ASBESTOS TRUST FUND NOT AVAILABLE TO LEAS
Comment bv the PIG
The Asbestos Trust Fund with approximately $5.5 million for
schools with asbestos hazards has not been made available to
needy LEAs. To date, Congress has not appropriated funds from
the Trust Fund nor has EPA attempted to request the funds.
OPTS Response
OPTS does not dispute the finding that Trust Fund monies
have not been requested by EPA for the purpose of funding
financially needy LEAs in their efforts to abate serious asbestos
problems. Under the Reagan Administration, the EPA's position
was that asbestos abatement was an issue best handled at the
State and local level. The Administration felt that Federal
funds could be more effectively used in other program areas.
As part of the normal process of transition between
Administrations, this policy is being reviewed.
6. Finding Six — PENNSYLVANIA IS NOT COMPLYING WITH AHERA
Comment by the PIG
Pennsylvania is not complying with AHERA because the State
has not reviewed management plans, not awarded funds available to
financially needy schools for preparation of management plans,
nor adopted legislation for a State contractor certification
program.
OPTS Response
Management Plans
OPTS commends the OIG's efforts to improve and expand the
Commonwealth of Pennsylvania's program in response to AHERA.
However, we would like to provide some clarification. First, the
State's tardiness in reviewing school asbestos management plans
does not mean they are not complying with AHERA. Under the AHERA
statute (Sec. 205 (b)), States "may [emphasis added] establish
65
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APPENDIX E
Page 20 of 23
13
administrative procedures for reviewing management plans
submitted1* by schools; they are not required to do so. While we
have repeatedly encouraged States to conduct management plan
reviews and provided training to State officials, no funds were
appropriated by the Congress to assist the States in carrying out
this activity nor are they required to do so by lav.
An additional concern of OPTS is that we have no information
about what criteria the OIG used to judge the quality of the
management plans. In order to comment on the deficiencies that
the OZG has found in management plans, OPTS needs to know more
about the criteria and methods which the OIG has used to evaluate
the management plans.
In an effort to encourage states to develop management plan
review programs, EPA presented a series of training courses to
assist States in their effort to undertake this process. As part
of EPA's management plan review training for state officials, EPA
developed a checklist which State officials could use as a tool
to conduct their review of LEA management plans. In the summer
of 1988 we conducted state management plan review training in the
following cities: Atlanta, Boston, Chicago, Denver, and San
Francisco. Approximately 30 State officials attended each
session. Another effort aimed at improving the quality of the
management plans is the release of OPTS's brochure titled "The
ABCs of Asbestos in Schools." This brochure can help improve the
management plans by educating parents and teachers and
stimulating their constructive involvement in the development and
implementation of the management plans.
Although Pennsylvania has been slow to review management
plans, we would like to point out that the State has taken
actions to facilitate their review. In the FY 88/89 budget, the
Governor approved funds and new administrative positions to aid
in the review of management plans. In light of the fact that
Pennsylvania has been moving in a positive direction to alleviate
this problem, we do not agree with the OIG recommendation that
the Assistant Administrator of Pesticides and Toxic Substances
withhold EPA grants and loans to all Pennsylvania LEAs awarded
under th« Asbestos School Hazard Abatement Act. w« feel that
this is inappropriate because it does not seem equitable to
punish needy schools with genuine asbestos hazards for inaction
by the State government, especially when that state action is not
required by federal law.
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APPENDIX E
Page 21 of 231
14
AIMPAP Funds
We share your concern over the fact that Pennsylvania has
failed to award the $1 million in funds awarded under the
Asbestos Inspection and Management Plan Assistance Program
(AIMPAP). The State has requested and received an extension of
the deadline for the completion of this program until September,
1989. This extension was requested by the State so they would
have sufficient tine to administer the grant program. OPTS is
not troubled by States that withhold these funds until after the
LEAs have developed their management plans so that the awards
can be made as reimbursements. We believe awards made as
reimbursements have the advantage of allowing the State to have
some control over the quality of the plans.
Ho Accreditation Program for Asbestos Workers
OPTS concurs in OIG's finding that Pennsylvania must, under
law, establish an accreditation program for asbestos occupations.
The establishment of such programs are critical to the success of
AHERA. However, Pennsylvania's noncompliance with AHERA in this
regard is not unique.
AHERA stipulates that States must have accreditation
programs in place for inspectors, supervisors, management
planners, project designers, contractors, and workers. According
to AHERA, states shall adopt a contractor accreditation plan at
least as stringent as the model plan developed by EPA in April
1987. It is not the case that 40 States have established
accreditation programs at least as stringent as the model plan
developed by EPA. Some 40 States do have EPA approved training
courses. but only six States have EPA approved State
accreditation programs for all disciplines. Fourteen states have
either interim or fully approved State accreditation programs in
one or more disciplines.
The Pennsylvania Department of Environmental Resources has
drafted proposed asbestos accreditation legislation. This draft
proposed legislation would provide the basis for accreditation of
asbestos professionals including asbestos inspectors, workers,
supervisors, management planners, and project designers. We
believe that Pennsylvania is now making a concerted effort to
comply with AHERA.
In addition to the fact that we disagree with the
recommendation in principle, we believe it is inappropriate to
recommend that the Assistant Administrator for the Office of
Pesticides and Toxic Substances withhold State grant funds under
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APPENDIX EL
Page 22 of 2J
15
the Clean Air Act. Since the Clean Air Act is administered by
the Assistant Administrator for Air and Radiation, the
recommendation for withholding these funds should be directed to
him.
OPTS believes that Pennsylvania has begun steps to resolve
the problems in the review of management plans, the distribution
of AIMPAP funds, and the development of asbestos accreditation
programs. Although we recognize that prompt compliance with
AHERA is a problem, we do not feel that withholding funds is an
appropriate way to respond to it. states face many practical
problems in attempting to comply with AHERA and we feel that they
are better served by OPTS when we provide assistance and guidance
than when we threaten to withhold funds.
Clearly, State development of AHERA accreditation programs
is a major OPTS objective. While approximately 40 States have
established asbestos contractor certification or training
programs to some degree over the past several years, many need
assistance in upgrading these programs to the AHERA accreditation
standard.
To facilitate State compliance with AHERA, OPTS launched a
new State program enhancement initiative in April 1989 to help
States establish accreditation programs, as well as develop
programs for asbestos management and assistance. In conjunction
with the National Conference of State Legislatures (NCSL), EPA is
closely tracking State program development. NCSL and EPA have
also sponsored a national meeting on AHERA accreditation
requirements and have developed model accreditation legislation
and a fee-based accreditation program for State administration.
In 1990, at least $l million in State grants and special
technical counselling will be available to States, particularly
for accreditation programs, through EPA's Regional offices.
Attachment
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APPENDIX E
Page 23 of 23
Part II - Approved Budget
EPA i»o laentii.cation s.-.i*
22 Budget Categories
ot
Th.s Acti
;,or C' "iia- P-o,»c
Estimate C^t: to C»s«
iai Personnel
(0) fringe Bener.ts
(c! Travel
(Oi ESij.pmer.i
i*i Supples
(1) Procurement/Assistance
(-153.076.34)
674.636.Q3
(fl) Construction
(hi Other
j$ -153,076.34 js 674,636.03
Toui Direct Charges
6) Indirect Costs Rate
Base
Qc) Total
(EPA Shaft 100 \) (Other Agency Share
23 is equipment autnoriiea to be lumisnea By EPA or ieast; purcnsst: cr ieniec v.iih EPAfunas?
(Identity all equipment costing $1.000 or mote)
24 Ar* any or m«s* tunas Ming us«a on *xtrarr>urai agraements'' iS*« i;cm22l|
YtS
No
Type of £»iramur*J Agrtemam
Grant
Coopt rativ* Agretrn a nt
P;ocur«mtnt (Includes Small Purchase Orderi
Contractor/Recipient Name (ii known)
various
Total Extramural Amcjnt Under Trns Project Percent funded by EPA »,
674,636.03
100
Pan HI - Funding Methods and Billing instructions
25.
Funds-Out Agreement
(Note: EPA Agency Location Code (ALC) - 68010727)
{ y | Disbursement Agreement
D
Repayment
Advance
Request tor repayment of actual costs must be itemized on
Financial Management Center, EPA. Cincinnati. OH 45268.
1C31 or SF 1C&C and suom.nt; to the
Monthly
Quarterly
Upon Completion ol W;.-k
Only available for use Dy Federal agencies on working capital fund or with appreciate justificatsn oi
need for this Type ot paymem metnod. Unexpended funds at completion ot *c-« *iH be returnee to
EPA, Quarterly cost repons will be forwarded to the Financial Management C«.--ter, £PA, C.nc.-natt
OH 45266.
T i.
Transfer-Oil
U»eo! to transfer obiigationai authority or transfer o« function between federal agencies Must recede
pflOf 'Pprevai by the Office ot tne Comptroller. Budget Division. Budget Formulation and Control
. .
Branch. EPA Headquarters Forward appropriate repons to the Financial Report! ar-a Analysis
Brandt, Financial Management Diwston, PW-226F. EPA, Washington. DC 20460.
26.
Funds-ln Agreement
Reimbursement Agreement
Repayment
Advance
Allocation Transfer-In
Other Agency's IAG identification Number
EPA Program Office Allowance Hoider/ResponsiD..,ty Center
Otner Agency s Billing Address (Include Agency Location Coat
or Station Symooi Nutno»n
Otner Agency's Billing Instructions and Frequency
tPA Fwm 1*10.* (Raw. 1&4S)
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APPENDIX F
REPORT DISTRIBUTION
Headquarters
Assistant Administrator for Administration
and Resources Management (PM-208)
Director, Office of Toxic Substances (TS-792)
Director, Financial Mangement Division (PM-226F)
Office of the Comptroller (PM-225)
Agency Follow-up Official (PM-225); Attention: Director, Resource
Management Division
Agency Follow-up Official (PM-208)
Agency Follow-up Coordinator (PM-208); Attention: Program
Operations Support Staff
Director, Grants Administration Division (PM-216)
Associate Administrator for Regional Operations (A-101)
Office of Congressional Liaison (A-103)
Office of Public Affairs (A-107)
Inspector General (A-109)
Region III
Regional Administrator, Region III (3RAOO)
Assistant Regional Administrator, for Policy and Management (3PMOO)
Director, Hazardous Waste Management Division (3HWOO)
Regional Audit Follow-up Coordinator (3PM72)
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