&EPA
United States
Environmental Protection
Agency
Report of Audit
REPORT OF AUDIT ON THE LEAKING
UNDERGROUND STORAGE TANK (LUST) PROGRAM
AUDIT REPORT NUMBER EW8B-03-0160-9100487
SEPTEMBER 21, 1989
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0
TABLE OF CONTENTS
Page
SCOPE AND OBJECTIVES 1
SUMMARY OF FINDINGS 3
ACTION REQUIRED 7
BACKGROUND 7
FINDINGS AND RECOMMENDATIONS
1. DISTRIBUTION OF LUST TRUST FUNDS NEEDS IMPROVEMENT... 11
2. STATE CONTROL OVER CLEANUPS BY RESPONSIBLE PARTIES IS
INADEQUATE 19
3. ABSENCE OF UNDERGROUND STORAGE TANK (UST) LEGISLATION
IN PENNSYLVANIA 29
4. IMPROVEMENTS ARE NEEDED IN STATE PROCEDURES FOR
ADDRESSING THREATS TO HUMAN HEALTH 34
APPENDIX A AGENCY'S RESPONSE TO THE DRAFT REPORT 38
APPENDIX B DISTRIBUTION 53
HEADQUARTERS LIBRARY
ENVIRONMENTAL PROTECTION AGENCY
-vASHINGTON, D.C. 20460
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20440
OFFICE OF
THE INSPECTOR GENERAL
MEMORANDUM
SUBJECT:
FROM:
TO:
Audit Report Number E1D88-03-0160- 9100487
Report of Audit on the Leaking
Underground Storage Tank (LUST) Program
Ernest E. Bradley III
Assistant Inspector General for Audit
Jonathan Z. Cannon
Acting Assistant Administrator for
Solid Waste and Emergency Response
Edwin B. Erickson
Regional Administrator, EPA Region III
SCOPE AND OBJECTIVES
We performed an audit of the Leaking Underground Storage Tank
(LUST) program administered by the Office of Underground Storage
Tanks (OUST) in EPA Headquarters and the Waste Management Branch in
Region III. This audit is the first in a series we plan to perform
on the LUST program. In a memorandum dated May 10, 1988, the
Assistant Administrator, Office of Solid Waste and Emergency
Response (OSWER) submitted suggestions to the Office of the
Inspector General's (OIG) for the annual audit plan. One of these
suggestions was to perform a review of the "Method of allocation of
Leaking Underground Storage Tank Trust Fund appropriations to the
Regions and the States." Prior to receiving this memorandum, our
office began an OIG initiated survey of the LUST program and the
suggestion by OSWER was included in the objectives of our audit.
The objectives of the audit were to evaluate: 1) EPA's management
of the LUST Trust Fund, specifically the targeting, awarding and
utilization of Trust Fund monies; and 2) whether EPA and states had
established adequate procedures and controls to ensure that site
cleanups were performed properly and promptly as required by
Subtitle I of the Resource Conservation and Recovery Act (RCRA).
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Audit field work began May 6, 1988 and was completed on
March 31, 1989. Our review period encompassed from October 1987 to
December 1988. We performed our review in OUST, Region III and in
the States of Delaware, Maryland, Pennsylvania and Virginia. In
addition we primarily used telephone interviews with states and EPA
Regions outside of Region III to gather information on states'
needs and abilities.
In reviewing EPA's management of the LUST Trust Fund our major
areas of concern were the targeting, awarding and utilization of
Trust Fund monies. During the audit we;
1. Reviewed requirements contained in both the
Resource Conservation and Recovery Act (RCRA)
and the Superfund Amendments and
Reauthorization Act (SARA) including applicable
regulations, policies and procedures.
2. Conducted interviews in person with officials
and staff from OUST, Region III, and states in
Region III.
3. Interviewed, primarily by tel€>phone, state and
regional officials outside Region III to
determine the financial need and performance of
other state LUST programs.
To review EPA's and the states' compliance with RCRA, our
primary areas of concern were whether EPA and the states had
established procedures and controls to ensure that site cleanups
were performed properly and promptly. As of December 1988, there
were over 8,200 sites nationwide which were being addressed by
states under the LUST program. Our review concentrated on state
tracking systems for 936 sites located in Delaware, Maryland and
Virginia. Pennsylvania has not implemented a LUST program and this
problem is addressed in finding number three of this report.
Our sampling of the 936 sites was judgmental because we wanted
to review LUST sites in all the various phases of the cleanup
process. We were unable to perform a statistical sample because
the states' tracking systems did not contain the level of detail
needed. We examined site files containing tank tightness tests,
monthly inventory records, site assessments, gasoline recovery
reports and corrective action plans. Additionally, we analyzed
cooperative agreements, state work plans and EPA quarterly
evaluation reports of state accomplishments. During this part of
our audit we also:
1. Interviewed EPA toxicologists and researched
various studies on the effects of human
exposure to gasoline contaminated water.
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2. Visited LUST sites in Maryland with ongoing
recovery systems.
3. Conducted interviews with owners/operators,
contractors and various environmental groups.
4. Discussed the preliminary results of our review
with senior staff of OUST and Region III.
We performed the audit in accordance with the Standards for
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, Region III
and the State offices for the LUST programs in Delaware, Maryland,
Pennsylvania and Virginia.
Our review evaluated the economy, efficiency and program
results expected only in relation to the procedures used by the
states in complying with RCRA requirements for the LUST program.
This review disclosed several areas needing improvement which are
discussed in this report.
Because of the newness of the LUST program and the limited
expenditures by the states, we limited the scope of our audit and
did not perform a study and evaluation of internal accounting
controls and accordingly did not include a report on them. During
this review we used information maintained by EPA and the states on
their computers. We did not review the general and application
controls of the data processing systems because the main purpose of
our review was to evaluate the overall management of the LUST
program, and not to express an opinion on the accuracy of the data
processing systems. No other issues came to our attention which we
believed were significant enough to warrant expanding the scope of
this audit.
SUMMARY OF FINDINGS
The detailed findings, along with related recommendations for
corrective action, are provided in the "Findings and
Recommendations" section of this report. During our review we
found that:
o EPA's method of distributing $90 million to the states did
not provide for optimum use of the LUST Trust Fund.
o States in Region III have not adequately ensured that
responsible parties were properly and promptly cleaning up
sites which had leaking underground storage tanks.
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o Pennsylvania failed to enact UST legislation causing the
State to lose $1.4 million in Federal funds.
o The states of Virginia and Delaware are subjecting LUST
site victims to unnecessary health risks by allowing them
to continue to breathe hazardous vapors released from
gasoline contaminated water.
The findings included in this report are summarized below.
1. DISTRIBUTION OF LUST TRUST FUNDS NEEDS IMPROVEMENT
EPA's method for distributing $90 million to the states, for
fiscal years 1987 through 1989, did not provide for optimum use of
the LUST Trust Fund. Further, EPA needs to revise the proposed
distribution procedures in order to obtain the maximum benefits for
an additional $90 million to be awarded in fiscal year 1990. The
distribution method was flawed for two reasons. First, EPA did not
use the proper base amount for determining the states' allowance of
LUST Trust funds. EPA requested $180 million of $461 million
accumulated in the Fund through fiscal year 1990, because some
states were not ready to effectively use their LUST Trust Fund
money. However, EPA used this lesser amount {$180 million) as the
base amount for distribution, resulting in a reduction of LUST
Trust funds to all states. Consequently, needy states with
effective LUST programs received less LUST Trust funds because
other states were unable to use their funds in a timely manner.
Second, the distribution method did not adequately address the
individual need and performance of the various states. This method
was based on statistics (number of tanks, population dependent on
groundwater, and gasoline consumption) which are not indicative of
the need and performance of the various states. As a result,
states with well established programs received insufficient funds
and were unable to address critical situations. In some instances,
these situations continue to expose the public to serious health
hazards and are significantly deteriorating the quality of our
groundwater.
We found that at least seven states were deprived of $54.1
million in LUST Trust funds, with reductions ranging from $2.6
million to $13.2 million. Conversely, 20 other states received
$18.4 million in funds that they were not able to use effectively.
If EPA considered need and performance of the states as the primary
basis for distributing LUST Trust funds, we believe that more
contaminated sites could have been cleaned up in a timely manner.
We recommend that EPA revise the distribution method to ensure the
amount is commensurate with the need and performance of the
individual state.
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2. STATE CONTROL OVER CLEANUPS BY RESPONSIBLE PARTIES IS
INADEQUATE
States in Region III have not adequately ensured that
responsible parties were properly and promptly cleaning up sites
which had leaking underground storage tanks. With over 900
responsible party cleanups initiated, and possibly three times as
many in the next few years, Region III needs to ensure that its
states manage their resources effectively so that sites are
appropriately cleaned up. Subtitle I of RCRA requires the states
to ensure that sites are cleaned up properly and promptly.
Generally, Delaware, Maryland and Virginia did a good job in
identifying responsible parties and initially instructing them to
clean up contaminated sites. However, we found that these states
were not properly monitoring ongoing site activities after
identifying and instructing the responsible party. In addition,
our review of these three states revealed that only 66 of 936
responsible party sites have been cleaned up. Specifically, we
found that the states did not: 1) prioritize responsible party
sites; 2} schedule and track corrective actions; 3) perform timely
followup actions; and 4) assess corrective actions. As a result,
there were no assurances that responsible parties were effectively
and efficiently performing corrective actions necessary to protect
human health and the environment. Since the states have identified
responsible parties for 95 percent of the contaminated sites, we
believe the major thrust of state LUST programs should be the
monitoring of these cleanups. We recommend that EPA require states
to establish better controls over responsible parties. Such
controls should include prioritizing, tracking, assessing and
following up on responsible party cleanups.
3. ABSENCE OF UNDERGROUND STORAGE TANK fUST) LEGISLATION IN
PENNSYLVANIA
Pennsylvania's failure to enact UST legislation caused the
State to forfeit $1.4 million in Federal LUST Trust funds. State
officials in the Department of Environmental Resources (DER) have
unsuccessfully attempted to have UST legislation enacted by the
Pennsylvania State Legislature over the past two years. This lack
of action by the State has impacted DER's ability to obtain needed
staff and other resources to implement the LUST program. This
failure caused the State to lose $1.4 million in Federal LUST Trust
funds. An additional $775,000 will also be lost if the State does
not enact legislation by September 30, 1989. More importantly, the
State still has not adequately addressed the problem of leaking
underground storage tanks which pose a major threat to groundwater
and are potential fire and explosion hazards. Based on EPA's
estimates, Pennsylvania could have as many as 18,000 leaking tanks.
The potential for environmental damage from these leaking tanks is
substantial and costly to clean up. The longer these sites
continue to be ignored the more likely the contamination will
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spread, resulting in further deterioration of groundwater and
increases in the cost of cleanups. Without enacting UST
legislation, the State does not have the capability to prevent and
detect contamination from leaking underground tanks. We recommend
that Region III should continue to withhold funds from Pennsylvania
until the State implements an effective LUST program. Also EPA
should establish a Federal LUST program in Pennsylvania if the
State does not implement their own program in a timely manner.
4. IMPROVEMENTS ARE NEEDED IN STATE PROCEDURES FOR ADDRESSING
THREATS TO HUMAN HEALTH
Of the three state programs we reviewed in Region III, the
states of Virginia and Delaware were subjecting LUST site victims
to unnecessary health risks by allowing them to continue to breathe
hazardous vapors released from gasoline contaminated water. Our
review disclosed that in Virginia and Delaware people were
unnecessarily exposed to gasoline contaminants in household water
supplies. Through discussions with LUST personnel from states
outside of Region III and other EPA Regions, we determined that
people in other areas of the country were also being exposed to
contaminants in household water supplies. Studies indicated that
breathing vapors from gasoline contaminated water may be more
hazardous than drinking this water. Maryland has recognized the
hazards from these vapors and was providing filters as a temporary
alternative until a permanent water supply could be obtained.
However, Virginia and Delaware did not provide alternative
treatment systems for residences with contaminated private wells
even though Subtitle I of RCRA allows states to use Federal LUST
Trust Fund monies to provide alternative water supplies. We
recommend that the Agency formulate a policy addressing states'
responsibilities concerning all pathways of human exposure to
gasoline contaminated water, specifically from inhalation and
dermal absorption.
Prior to issuing the draft report, we provided advance copies
of our findings to OUST and Region III personnel. These officials
provided written comments to our preliminary findings. Our
evaluation of their comments did not significantly alter the
content of our findings. We issued the draft report to the Acting
Assistant Administrator for Solid Waste and Emergency Response.
The response to the draft report was due on August 7, 1989. We
received the response to our draft report on August 3, 1989, and
the response was essentially the same comments as the Agency
provided to our preliminary findings. The response generally
agreed with our findings. 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 A of this report.
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On August 23, 1989 and September 5, 1989 we held exit
conferences with Headquarters and Region III officials. Based on
these discussions and written comments submitted by the Agency, EPA
has begun to take corrective actions. We believe that the swift
action taken by EPA will provide beneficial results to the overall
LUST program. These corrective actions included:
1. Revisions to the allocation formula;
2. Several efforts which are underway to improve performance
in state tracking and oversight of responsible party
cleanups;
3. Continuing assistance to Pennsylvania in developing and
implementing a State LUST program; and
4. Initiation of an analysis of the health effects caused by
inhalation and dermal exposure to gasoline contaminants.
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 LUST program, the
Assistant Administrator for Solid Waste and Emergency Response was
designated the primary action official. As such, he should take
the lead in coordinating the Agency's response.
BACKGROUND
Underground storage tanks leaking gasoline are a threat to
human health and the environment by causing groundwater
contamination. Many components of gasoline can have serious health
effects, such as, benzene and ethyl dibromide which are suspected
to cause cancer. The primary reason for regulating underground
storage tanks is to protect water, especially groundwater. Half of
the nation's population depends on groundwater as a source of
drinking water. Leaks from underground storage tanks are a result
of simple, everyday use and are commonplace and widespread. Rural
areas would be seriously affected if their groundwater became
contaminated, since it provides 95 percent of their total water
supply. Leaking underground storage tanks present a threat to more
than just groundwater. Gasoline releases can contaminate surface
water and may cause fires and explosions. Also, releases can cause
toxic vapors to enter homes, posing significant indoor air
pollution problems. Tank leaks can result in personal injury, loss
of property and danger to the environment. Many underground tanks
are old, made of bare steel, unprotected against corrosion and are
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therefore very susceptible to leaking. These dangers persuaded
Congress to enact statutory requirements concerning underground
storage tanks.
EPA estimates that there are approximately two million
underground storage tanks subject to the new Federal UST
regulations. According to recent (1988) EPA estimates, 84 percent
of underground storage tanks at gasoline service stations are made
of bare (unprotected) steel and are highly susceptible to corrosion
and leaks. Of the remaining tanks, 5 percent are steel tanks that
are cathodically protected from corrosion, and the remaining 11
percent are constructed of fiberglass plastic.
In addition, EPA estimated that as many as 15 to 20 percent of
petroleum tanks may be leaking. Two 1985 studies indicated that
approximately 33 percent of the existing motor fuel storage tanks
are over 20 years old or are of unknown age. Many of these old
tanks systems have already had a leak, or will soon leak unless
measures are taken to improve or remove them. If these percentages
hold true for all regulated underground storage tanks, hundreds of
thousands of tanks nationwide may be leaking.
In 1984, Congress amended the Resource Conservation and
Recovery Act (RCRA) with the Hazardous and Solid Waste Amendments.
The revised law required EPA to develop and implement a
comprehensive regulatory program for underground storage tanks.
Specifically, the law required EPA to develop regulations for
underground storage tanks in the areas of technical standards,
financial responsibility and state program approval.
In 1986, Congress responded to public concerns about the
dangers from leaking underground storage tanks by passing into law
the Superfund Amendments and Reauthorization Act (SARA). Section
205 of SARA amended Subtitle I of the Resource Conservation and
Recovery Act (RCRA) to provide Federal funds for corrective actions
on petroleum leaks and spills from underground storage tanks. This
amendment to RCRA established a $500 million "Leaking Underground
Storage Tank Trust Fund," paid for by a tax of 0.1 cent on each
gallon of gasoline. According to these amendments, priority for
corrective actions is to be given to those underground storage
tanks that present the greatest threat to human health and the
environment.
Congress authorized EPA to use the LUST Trust Fund for
corrective actions on petroleum leaks and spills and to make these
funds available to the states as soon as possible. Corrective
actions refer to a range of activities that typically begin at the
report or suspicion of a leak, through final cleanup. Such
corrective actions can include:
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o Emergency response and hazard mitigation,
o Investigation of suspected leaks and identification of the
source,
o Comprehensive site investigations,
o Exposure assessments to determine potential health effects,
o Provision of alternative water supplies,
o Temporary or permanent relocation of residents, and
o Site cleanup, including removal, treatment and disposal of
surface and subsurface contamination.
Corrective actions are often carried out by contractors at the
direction of the states or responsible parties.
The EPA issued underground storage tank regulations in
September 1988. The regulations addressed leak detection,
corrective action requirements, standards for new tanks and other
proper tank management practices. The new regulations also
included requirements for tank owners to have insurance or other
financial resources to pay for damage done by leaking underground
tanks.
The Office of Underground Storage Tanks (OUST) in EPA, has
overall responsibility for developing and implementing the LUST
program. It defines, plans, develops and implements the
legislative requirements established under Subtitle I of RCRA
mandating that EPA regulate leaking underground storage tanks that
contain petroleum and other hazardous substances. The Office
defines the extent of the existing problem, formulates strategies,
and implements activities to reduce future contamination of the
nation's groundwater. In addition, OUST serves as the point of
contact within the Office of Solid Waste and Emergency Response
(OSWER) to ensure effective and timely response to groundwater
contamination incidents.
EPA's Regional offices maintain a balance with each state
regarding "service" to the states and "oversight" of the states.
Regions have the lead role in the state program appraisal process.
Regional Coordinators assist states in developing their programs
and in obtaining state program approval. The coordinators target
Regional resources to identify state needs and facilitate state
program improvement. This "oversight" entails communicating
national priorities and goals to the states by defining the
appraisal criteria and clearly defining expectations in state
cooperative agreements and grant workplans. They also review the
timeliness, content and accuracy of reporting requirements, oversee
state progress towards meeting commitments in their workplans and
lead program reviews of the states. The Regions are responsible
for assembling teams of Regional staff from other Regional offices
to support the assessment of state performance in all important
programmatic areas. The Regional Coordinators identify state needs
and are advocates with OUST Headquarters for those needs.
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States are expected to play a key role in Trust Fund
corrective actions because state officials are generally closer to
the scene and know more about local site conditions than Federal
officials. Consequently, using the Trust Fund quickly and
effectively is one of OUST's top priorities. This was to be
accomplished through cooperative agreements with the states.
Cooperative agreements are signed contracts between states and EPA.
These cooperative agreements allow states to apply for LUST Trust
funds, awarded under Federal assistance agreements.
In order to receive LUST Trust funds, states are required to
develop state LUST programs capable of prioritizing cleanup sites,
monitoring cleanups, and managing cost recovery and enforcement
programs. The LUST Trust Fund provides funds for supplemental
cleanup capabilities and may also be used by states to enforce
necessary corrective action and to recover costs expended from the
Fund for cleanup activities. U.S. House of Representatives' Report
(100-189) accompanying EPA's appropriation bill for fiscal year
1988 stated that, "In distributing these (LUST Trust) funds, EPA
should give priority to those states with well developed programs,
identified needs, and ready-to-go projects".
The new EPA UST regulations issued September 1988, provide
state agencies authority to approve a cleanup action if they are
assured that it will provide adequate protection of human health,
safety, and the environment. Once approved, owners and operators
implement the plan and monitor, evaluate and report the results of
the implementation. Crucial to the successful implementation of
cleanup programs is adequate monitoring and enforcement of
established cleanup standards.
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FINDINGS AND RECOMMENDATIONS
1.
DISTRIBUTION OF LUST TRUST FUNDS NEEDS IMPROVEMENT
EPA's method for distributing $90 million to the states, for
fiscal years 1987 through 1989, did not provide for optimum use of
the LUST Trust Fund. Further, EPA needs to revise the proposed
distribution procedures in order to obtain the maximum benefits for
an additional $90 million to be awarded in fiscal year 1990. The
distribution method was flawed for two reasons. First, EPA did not
use the proper base amount for determining the states' allowance of
LUST Trust funds. EPA requested $180 million of $461 million
accumulated in the Fund through fiscal year 1990, because some
states were not ready to effectively use their LUST Trust Fund
money. However, EPA used this lesser amount ($180 million) as the
base amount for distribution, resulting in a reduction of LUST
Trust funds to all states. Consequently, needy states with
effective LUST programs received less LUST Trust funds because
other states were unable to use their funds in a timely manner.
Second, the distribution method did not adequately address the
individual need and performance of the various states. This method
was based on statistics (number of tanks, population dependent on
groundwater, and gasoline consumption) which are not indicative of
the need and performance of the various.states. As a result,
states with well established programs received insufficient funds
and were unable to address critical situations. In some instances,
these situations continue to expose the public to serious health
hazards and are significantly deteriorating the quality of our
groundwater.
We found that at least seven states were deprived of $54.1
million in LUST Trust funds, with reductions ranging from $2.6
million to $13.2 million. Conversely, 20 other states received
$18,4 million in funds that they were not able to use effectively.
If SPA considered need and performance of the states as the primary
basis for distributing LUST Trust funds, we believe that more
contaminated sites could have been cleaned up in a timely manner.
A.
EPA Is Penalizing States With Effective LUST Programs
States with effective LUST programs and immediate need were
deprived of LUST Trust funds by as much as 60 percent of their
potential grant amounts. We found that EPA personnel applied a
distribution formula to only $180 million of an estimated $461
million available for fiscal year 1990. By doing so, EPA
significantly decreased the availability of LUST Trust funds to the
states. Instead EPA should have applied the formula to the entire
amount of funds which would be available for the grant period.
This would provide a maximum amount for an individual state. Once
the state ceiling is established, EPA should make a state by state
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decision on whether some or all the eligible amount should be
awarded. This approach would allow the award of LUST Trust funds
to be more commensurate with the need and performance of the
individual states. More importantly, it would enable the states
with good performance records to promptly address the environmental
hazards in their states.
Our review of state programs disclosed that at least seven
states have a bona fide need for additional funds. Also, EPA has
determined in quarterly state program reviews, that certain states
have very effective programs. Further, ssome of these states are
presently unable to address health hazards and environmental
contamination caused by leaking underground storage tanks because
they did not receive all their eligible funds. For example,
Illinois and Wisconsin in EPA Region 5 were fully staffed and had
contractors in place to address the problems with leaking
underground storage tanks. However, these states did not have the
funds to address significant threats to human health and the
environment. Significant health problems due to leaking
underground storage tanks in Illinois and Wisconsin were disclosed
on a national news broadcast. We confirmed these problems with EPA
regional and state program officials.
One neighborhood in Chicago, Illinois had abandoned gasoline
tanks which were causing people, to become sick. Gasoline was
leaking into a store and the owner said he was afraid of losing his
life because of the vapors and threat of explosion. In Decatur,
Illinois an entire block was contaminated by gasoline under the
ground. A pregnant woman was told by her doctor to move out of her
house because her baby could be deformed by the contamination. A
state official from Illinois said that he felt "the state was
duped" and he was "totally frustrated over the holdup of these
funds that were supposed to be out there".
In Tomah, Wisconsin the city's well has been contaminated by
benzene (a cancer-causing component of gasoline). State officials
issued a notice stating that the town should not drink this water.
The town tried to obtain Trust Fund assistance, but was told that
there were no funds available and that it would have to do more on
its own. The city had a study performed that identified a service
station as a potential source of the contamination. This station
had all of its tanks excavated and replacement tanks installed at a
cost of $70,000 to the owner. However, no leaks were discovered in
the excavated tanks. Without the identified source of the
contamination, cleanup actions could not be initiated and the
threat to human health could not be abated.
The Regional UST Coordinator from EPA Region 6 stated Texas
has an excellent enforcement program and was one of the best in the
country at utilizing their funds to achieve desired results.
However, Texas could only award contracts for 11 of their 33 Trust
Fund sites because of the limited funds available. In New
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Hampshire, contamination directly impacted on residents health. In
three communities, households with the highest contamination could
not shower at all, or had to open windows and doors and limit
exposure to less than 5-10 minutes. Alternate water was provided
to an elementary school, two churches, 50 households, a 51 unit
trailer park and six businesses. The alternate drinking water
supplies being provided cost the state $120,000 per year and were
only a temporary measure. New Hampshire estimated that they need
$3 million to correct these situations.
Listed below are examples of states which appeared to have
both the need and the ability to utilize more LUST Trust funds.
Included in the chart is the proposed amount allocated through
fiscal year 1990, as well as the amounts which EPA could have
allocated using the total amount of LUST Trust funds projected
through fiscal year 1990.
STATES
TEXAS
ILLINOIS
WISCONSIN
NEW HAMPSHIRE
AMOUNT
ALLOCATED
$17,397,000
7,031,000
5,445,000
1.739,000
S31.612.QQQ
POTENTIAL
ALLOCATION
$30,567,000
17,060,000
12,912,000
4.296.000
564,835.000
SHORTAGE
$13,170,000
10,029,000
7,467,000
2.557,000
S33.223.QQQ
We believe that the shortage totaling $33.2 million, ranging
from $2.6 million to $13.2 million per state, could have been
effectively used to correct some of the health hazards cited in our
previous examples. We also believe that other states could have
addressed significant problems with additional funding. For
example, Minnesota, Virginia and Michigan established effective
programs and did not have the needed resources. These states had
shortages ranging from $6 million to $8,5 million.
EPA awarded limited funds to states ready to proceed with
effective LUST programs. The former Assistant Administrator of
Solid Waste and Emergency Response stated during an interview on
NBC Nightly News; "We asked for a smaller amount of money, no
question about it, because we just didn't think the states were
ready for it." Consequently, EPA did not request the full amount
of the LUST Trust Fund. By the end of fiscal year 1990, EPA will
have awarded only $180 million to the states, of the estimated $461
million in the fund. In its most recent allocation plan for fiscal
year 1990, EPA will distribute only those funds available as of •
September 30, 1988. Accordingly, there may be as much as a two
year lag between when the funds are received in the Trust Account
and subsequently awarded to the states. During this same two year
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time period the LUST Trust fund will grow from $194 million to $461
million. The chart below illustrates the amounts accumulated and
awarded over the last three fiscal years as well as projections
through fiscal year 1990.
AWARDS TO STATES VS. TRUS"7" FUND BALANCE
LEGEND
^B AWARDS TO STATES
i&isa FUND BALANCE
1087 1983 1969 1900
FED. FISCAL YEARS
(EPA estimates $30 million of the Trust
Fund will be used by the Agency from fiscal
year 1987 through 1990 for administrative
and operational activities.)
As shown in the chart above/ EPA will award only 39 percent of
the Trust Fund balance by September 1990. With such a small
percentage of the total funds being awarded to the states, EPA
needs to ensure that its basis for withholding funds is
appropriate. EPA should not penalize all states because some
states lack effective programs. Instead, EPA should ensure needy
states with effective LUST programs receive their full allowance of
LUST Trust funds.
B. SPA Needs To Distribute LUST Trust Funds Based On The States
Need and Performance
In fiscal years 1987 and 1988, EPA awarded $18.4 million in
LUST Trust funds to 20 states which did not have effective state
LUST programs. Eight of these states received LUST Trust funds and
still have not expended the money as of the beginning of fiscal
year 1989. These funds could have been used by states in a better
position to proceed with cleanups of LUST sites. EPA's
distribution method did not adequately address the individual need
and performance of the various states. The distribution method was
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based on arbitrary statistics which were not indicative of the need
and performance of various states. These statistics included
number of tanks, population dependent on groundwater, and gasoline
consumption. Under this distribution method, all states both with
effective and non-effective programs received LUST Trust funds.
None of the statistics used addressed need and performance of the
individual states. If EPA considered need and performance of the
states as the primary basis for distributing LUST Trust funds, we
believe that more contaminated sites could have been cleaned up in
a timely manner.
In accordance with Section 9003(h) of Subtitle I of RCRA, the
Administrator should enter into cooperative agreements with states
that have the capabilities to carry out effective corrective
actions and enforcement activities. However, EPA took a more
flexible approach in their cooperative agreements, which required
that the states must have or obtain such capabilities. Therefore,
whether or not a state had such capabilities, had no bearing on the
amount of funds allocated. We realize all states need a minimum
base level of funding to begin the initial implementation of a
state program. However, as discussed below, some states received
funds that they were unable to use effectively. The current
distribution method should be revised to better equate funding
levels with the states' need and performance.
We reviewed awards and expenditures in seven states which did
not have state legislation established as of the end of fiscal year
1988. Our review disclosed that these states were awarded $4.9
million, but generally have not been able to utilize .these funds.
Expenditures for these seven states totaled $319,500. Below we
have summarized the awards and expenditures for each state.
STATES
PENNSYLVANIA
MISSOURI
COLORADO
WYOMING
NEVADA
ALASKA
WASHINGTON
Totals
AMOUNT
AWARDED
$1,050,000
1,150,600
650,000
300,000
300,000
1,158,400
339,700
S4.948.70Q
AMOUNT
EXPENDED
$ 0
104,800
85,800
34,300
36,100
58,500
0
S319.500
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In addition, six other states had no expenditures and seven
states expended less than three percent of their total funds
awarded. These 13 states were awarded $13.5 million in fiscal
years 1987 and 1988 and had total expenditures of only $140,000.
For example, California is attempting to initiate the LUST program
at the local level which could involve 100 separate jurisdictions
(58 counties and 42 cities). As of February 1989, California
completed contracts with only 12 jurisdictions (12 percent of the
total jurisdictions). In reviewing state expenditures in the OUST
December 1988 report, California expended less than $21,000 which
represents only 0.5 percent of the $4.61 million awarded by EPA.
To enable states to perform more cleanups in a prompt and proper
manner, EPA needs to limit funding to states which are not ready to
proceed. These states should not receive more than base level (or
core program) funding until they are ready to proceed with a LUST
program including enforcement of responsible party cleanups.
Conclusion
EPA's method for allocating LUST Trust funds to states had two
problems: Base amount and distribution formula. First, the base
amount should have been adjusted to the actual amount of the Trust
Fund. However, EPA submitted a budget request for an amount
significantly less than the amount available in the Trust Fund and
justified this position by insisting some states were not ready for
the funds. EPA then used the lesser amount as a base amount for
determining a state's allowance. By using the lesser amount as the
base, EPA reduced LUST Trust funds to all the states. This
unjustly penalized needy states with effective programs. We found
at least seven needy states with effective programs incurred
reductions in their LUST Trust Fund amounts ranging from $2.6
million to $13.2 million.
Second, EPA's distribution method was based on statistics and
did not adequately address the need and performance of individual
states. More than $18 million was awarded to states that did not
have effective LUST programs and were not in a position to utilize
Federal funds. These funds could have been used by other states in
a better position to proceed with cleanups at LUST sites. EPA was
aware of which states had efficient LUST programs and a need for
more funding. EPA should consider need and performance of the
states as the primary basis for distributing LUST Trust funds. We
believe this would better enable states to perform necessary
cleanups in a prompt and proper manner as required by Subtitle I of
RCRA.
Agency Response and Action Taken
The Director of the Office of Underground Storage Tanks
contended that EPA does not have independent access to the Trust
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Fund monies. Accordingly, EPA can only award the amount made
available by Congress and the Office of Management and Budget
(OMB).
Our allocation procedure distributes money to regions, not to
states directly. Regional offices make independent decisions on
how to distribute that money to the states. Regional Offices are
free to fund states based on their additional detailed information
and on their judgements of need and readiness to proceed. Thus,
regional awards to states provide a greater level of responsiveness
to state need and ability to perform than the; national allocation
procedure would if used directly.
The Agency has taken efforts to improve its Trust Fund
allocation formula by incorporating criteria such as core staffing
requirements, environmental need, and performance. These efforts
had been well underway prior to receipt of the audit report.
However, no mention was made of these efforts in the most recent
version of the report. Addressing these comments directly in the
final audit report will help to ensure that OUST's positions and
rationale have been fully understood by your staff and that we have
the benefit of your response to our comments.
Currently, about 25 states have passed or are developing
statutes that create a State fund to help pay for cleanup costs.
Consequently, many states do not rely on the Federal funds alone to
help pay for the cleanup of UST releases.
Auditor's Comments
We are not necessarily suggesting that EPA request more funds
because the current funding level may be appropriate. We found
needy states received an insufficient amount of LUST Trust funds
while other states were unable to effectively use their LUST Trust
funds in a timely manner. The thrust of our finding is that EPA
should ensure LUST Trust funds are commensurate with the need and
performance of the individual state. If EPA is requesting less
funds because some states are not ready to proceed with their LUST
programs, EPA should ensure that only these states receive less
LUST Trust funds. Needy states with effective programs should
receive their full allowance of LUST Trust Fund monies.
We recognize that Headquarters distributes the money to the
Regions and the Regional Offices make decisions on how to
distribute that money to the states. However, this regional
distribution can further divert funds from needy states. Under
this regional concept, some states may receive additional funds
because other states within their region may be less ready to
proceed. However, these states may not be as needy as other states
located outside the region. For example, Headquarters allocated
funds to Region IV for all six states located in this Region.
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However, Georgia and Florida chose not to participate in the
Federal LUST Program. Region IV distributed the allocated funds
for these two states to the four remaining states in their region.
Consequently the four states benefitted because two states in their
region chose not to participate in the Program not because they
were the most needy states.
Concerning the new allocation formula, we did not evaluate the
revised formula for fiscal year 1990 because the allocation method
was in the proposal stage at the time of our field work.
Accordingly, we did not mention your proposed revision to the
formula in the report. We agree thai: the criteria you plan to
incorporate in the formula such as need and performance should
mitigate some of the inadequacies of the current allocation method.
However, we still contend that EPA should not reduce the total base
amount for all states because some states are not ready to proceed
with their LUST program.
The development of state Trust Funds will provide additional
resources for state LUST programs. Further, the need for these
state Trust Funds provides evidence that the Federal LUST Fund does
not have sufficient resources for states to adequately administer
their state LUST programs. Therefore, it is even more important
for EPA to ensure the limited Federal funds are directed to the
states with the greatest need and performance.
Recommendation
We recommend that the Assistant Administrator for Solid Waste
and Emergency Response revise the distribution method to ensure
that:
1) the base amount in the distribution formula is equivalent
to the total amount projected in the Trust Fund by the end
of that fiscal year. This would provide a maximum
allowance for each state; and
2} the amount of LUST Trust funds awarded to each state is
commensurate with their individual need and performance.
States with effective LUST programs would receive their
maximum allowance while other states less ready to proceed
with their LUST programs would receive a lesser amount.
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2. STATS CONTROL OVER CLEANUPS BY RESPONSIBLE PARTIES IS INADEQUATE
States in Region III have not adequately ensured that
responsible parties were properly and promptly cleaning up sites
which had leaking underground storage tanks. With over 900
responsible party cleanups initiated/ and possibly three times as
many in the next few years, Region III needs to ensure that its
states manage their resources effectively so that sites are
appropriately cleaned up. Subtitle I of RCRA requires the states
to ensure that tsites are cleaned up properly and promptly.
Generally, Delaware, Maryland and Virginia did a good job in
identifying responsible parties and initially instructing them to
clean up contaminated sites. However, we found that these states
were not properly monitoring ongoing site activities after
identifying and instructing the responsible party. In addition,
our review of these three states revealed that only 66 of 936
responsible party sites have been completed. Specifically, we
found that the states did not: 1) prioritize responsible party
sites; 2) schedule and track corrective actions; 3) perform timely
follow-up actions; and 4) assess corrective actions. As a result,
there were no assurances that responsible parties were effectively
and efficiently performing corrective actions necessary to protect
human health and the environment. Since the states have identified
responsible parties for 95 percent of the contaminated sites, we
believe the major thrust of state LUST programs should be the
monitoring of these cleanups.
Although EPA did not issue underground storage tank
regulations until September 1988, states with cooperative
agreements were required under Section 9003(h) of RCRA to ensure
that corrective actions were performed properly and promptly. By
August 1987, Region III states (Delaware, Maryland and Virginia)
signed cooperative agreements which required them to have or obtain
the capabilities to carry out effective programs. The cooperative
agreements also required the states to submit a comprehensive
workplan before receiving Federal grant funding. Delaware,
Maryland and Virginia submitted workplans to EPA and were awarded
LUST Trust funds in September 1987. Activities in these workplans
included certain basic program elements and site-specific work.
These activities included:
o Developing a system for assigning priorities to sites;
o Establishing a site by site tracking system for activities,
decisions, and costs; and
o Overseeing cleanups, including those performed by
responsible parties.
In addition to these three activities, we believe states also
need to assess when responsible parties should proceed to the next
stage of the cleanup process. The first stage of the cleanup
process is the emergency stage consisting of immediate corrective
action. On larger spills, this stage usually involves a full-time
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recovery system. Further stages may involve long term corrective
actions, periodic recovery, and a post monitoring period. States
and responsible parties should establish goals and time frames for
the various stages of activity. For example, based on site
conditions, it may be reasonable to assume that only 80 percent of
the spilled substance will be recovered during the emergency
corrective actions. Therefore, it may b€> more effective to proceed
into the periodic recovery phase rather than continue to recover on
a full-time basis. States need to make this determination on a
site by site basis to ensure the cleanups are performed effectively
and efficiently. Additionally, states need to determine the amount
of time responsible parties should perform periodic recovery and
post monitoring of the site.
In the 18 months (June 1987 - December 1988) since signing
their cooperative agreements, we found that Region III states have
not adequately addressed cleanups by responsible parties. The
results of our review in Delaware, Maryland and Virginia are
discussed below.
A. Prioritizing Responsible Party Sites
Our review disclosed that states in Region III have not
established priority systems for responsible party cleanups. As a
result, states did not direct their oversight resources to those
sites with the greatest threat to human health and the environment.
The states have performed well during emergency situations;
however, they have not adequately monitored the remedial phase of
cleanups. Our review of site files in Delaware, Maryland, and
Virginia revealed that some responsible parties need more oversight
than others in order to ensure that sites are cleaned up properly
and promptly. Successful cleanup efforts* depend largely on such
factors as the responsible party's: cooperation, integrity,
financial capability and technical expertise. States need to
consider these factors, along with the risks to human health and
the environment, in establishing priority systems to better
allocate resources for oversight of responsible party cleanups.
Section 9003(h) of RCRA directed the states to give priority
in requiring owners and operators to undertake corrective actions
when releases from underground storage tanks pose a significant
threat to human health and the environment. Therefore states
should have ensured that higher priority was given to releases
which posed the greatest threat to human health and the
environment. However, EPA did not stress the importance of
prioritizing all LUST sites in the cooperative agreements.
Instead, EPA requested states to prioritize only potential Trust
Fund sites. Generally, these are sites where an owner or operator
had not been identified. Specifically, the ApplicationGuidelines
for LUST Cooperative Agreements (OSWER Directive 9650.6> stated:
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This requirement (priority system) does not
necessarily presume the need to rank all UST
releases in the state. Rather, it is a priority
system or scheme that should be used as a screen-
ing device to assure that sites considered to be
addressed with Trust Fund monies (Trust Fund
sites) are within the higher priority classes
established by the state.
In their cooperative agreements, states agreed to establish a
priority system only for Trust Fund sites. Since only five percent
of the LUST sites will be cleaned up with Trust Fund monies, states
only prioritized these five percent. Consequently, 95 percent of
the on-going cleanups have not been prioritized. Prioritizing
responsible party, as well as Trust Fund sites, would enable states
to allocate their resources in a manner which will achieve the
greatest amount of compliance from responsible parties.
Some responsible party sites need more state oversight than
others. For example, at one site in Virginia, the owner reported
to the State on March 11, 1986 that he had lost 50 to 60 gallons of
gasoline from an underground storage tank. The gasoline traveled
underground and bubbled up from the bottom of a nearby creek which
empties into State navigable waters. The State inspector's
original report dated March 31, 1986 recommended that the States
"Monitor the site until the gasoline is not a threat to State
waters." However, State files indicated no additional monitoring
or follow-up until July 1988, over two years later. A status
report, dated July 1988, mentioned that the responsible party
recovered 21,000 gallons of gasoline and that the recovery should
continue. The report further mentioned three of 21 monitoring
wells still contained measurable amounts of gasoline. The State's
site file did not indicate how the spill escalated from 60 to
21,000 gallons. As of our review in November 1988, there was no
additional follow-up or correspondence with the responsible party.
We believe that this site is an example of a high priority site and
accordingly, more State oversight should have been performed. Our
conclusion is based on several factors: 1) a responsible owner or
operator of an underground storage tank should be able to give a
better estimate of the amount of gasoline lost; 2) the responsible
party in this example used his own employees, which may not have
been qualified, to perform the cleanup; and 3) the large amount of
gasoline released posed a significant threat to human health and
the environment.
Conversely, at another site in Virginia, a responsible party
suspected soil contamination adjacent to three underground tanks.
This responsible party immediately contacted a consultant to
perform a preliminary study, which would determine the extent of
contamination. The consultant began his review on April 11, 1988
and completed his study within two months. State officials were
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notified and received a copy of the consultant's study. Included
with the study were the responsible party's plans to test his tanks
immediately and install a well to monitor groundwater. By November
1988, this responsible party had submitted the results of the tank
tests and was in the process of developing a corrective action plan
to address the remedial phase of the cleanup.
We believe that both sites should have received more attention
than they did from State personnel. However, the first site should
probably have been given higher priority because of the extent of
contamination and lack of experienced cleanup personnel. We
believe the states need to include factors such as the responsible
party's: cooperation, integrity, financial capability and technical
expertise in assigning priorities to sites. Adequate priority
systems would allow the states to allocate their resources more
efficiently, to ensure responsible parties are cleaning up sites in
a timely manner.
B.
Scheduling And Tracking Corrective Actions
Our review disclosed that states in Region III were not
adequately tracking corrective actions performed by responsible
parties. We found that states sent letters to responsible parties
instructing them to perform certain actions and to submit results
of these actions. The states further provided deadlines for
submitting this information. Our review of the states' site files
revealed that the required information was not always submitted or
was not available in the files. For example, there were lengthy
gaps in correspondence, missing status reports and incomplete
assessments. State personnel informed us that they often had
informal discussions with responsible parties which may have
satisfied some of these requirements. However, these discussions
were not always documented in the site files. We attributed the
incompleteness of the files, in part, to the states' inadequate
tracking of responsible party actions. Under the new UST
regulations, the responsible parties will have additional milestone
dates which will only intensify the states' need for an adequate
tracking system. This tracking effort is essential for
establishing a timely and effective enforcement program.
In reviewing Maryland site files we found the State requested
that nine responsible parties submit status reports on a routine
basis (generally bi-weekly or monthly). Of these nine responsible
parties, six (67 percent) did not submit the required reports in a
timely manner. More significantly however, our review disclosed
that the State did not contact these delinquent responsible parties
for periods ranging from seven to 33 months after the required
reports were due. At some of these sites, responsible parties did
not submit progress reports because cleanup actions were not
promptly initiated. In addition, at one site the State performed
follow-up only twice in six years; consequently, the required
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cleanup actions were not performed by the responsible party for
almost six years. We believe that since the State's tracking
system did not contain milestone (progress report due) dates, State
inspectors may not have known that some responsible parties were
not submitting the required status reports.
Our review of Virginia's site tracking system disclosed that
only eight of 83 responsible parties submitted the required site
assessment or remedial action plans. Some of these responsible
party sites were discovered as long as three years ago. Although
the State's "LUST Data Management" system included information
fields such as "Plan Submitted" and "Plan Approved" it did not
track the due dates for submitting these plans. In order for a
state to track responsible party compliance, the mt>st significant
milestones to monitor are due dates for requirements such as site
studies, contamination assessments, corrective action plans and
progress reports. Without monitoring the due dates, states cannot
ensure that cleanup actions are performed properly and in a timely
manner.
Under the new UST regulations, an owner or operator of an
underground storage tank system must comply with specific
requirements in response to a confirmed release. Unless a state
decides otherwise, the regulations provide specific time frames for
various actions by a responsible party. Specifically, a
responsible party must within 24 hours: 1) report the release to
the state agency; 2) take immediate action to prevent further
release; and 3) identify and mitigate fire, explosion and vapor
hazards. Within 20 days after a release, a responsible party must
submit a report to the state agency summarizing their abatement
steps taken. Within 45 days site information and a free product
removal report must be sent to the state agency. Based on this
information, the state agency may request the owner/operator to
develop and submit a corrective action plan. Because of all these
various milestones, states need to expand their present tracking
systems to adequately monitor responsible parties' compliance with
the regulations.
Without an adequate tracking system, states had no assurance
that responsible parties were complying with corrective actions
required by the states. With over 8,200 leaking tanks nationwide,
and possibly three times as many in the next few years, it is
essential for states to establish and implement a system capable of
tracking responsible parties' actions to ensure sites are cleaned
up properly and promptly. The new UST regulations containing
additional milestone dates only intensifies the need for an
adequate tracking system.
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C. Performing Timely Follow-UpActions
States in Region III did not perform timely follow-up when
responsible parties were found to be delinquent in performing
corrective actions. States required responsible parties to perform
various activities such as determining the extent of contamination,
and submitting plans for remedial cleanup actions. States set
deadlines for these activities in order to ensure that cleanups
were initiated and completed timely. However, states did not
follow up when responsible parties failed to perform these cleanup
activities. Part of this problem was due to the states' inability
to adequately track the individual actions of the responsible
parties as discussed in the previous section (Scheduling and
Tracking Corrective Actions). However, the primary reason states
have not performed timely follow-up was because they have not
implemented effective enforcement programs. Without timely follow-
up and adequate enforcement of responsible party activities,
contaminated sites will continue to threaten human health and the
environment.
On December 26, 1984 Delaware's Water Supply Branch received
evidence of a major gasoline leak at a service station. In January
1985, the State required that the owner of this station perform a
complete soil and groundwater investigation to determine the extent
of contamination. In a letter to the owner, in May 1985, Delaware
stated, "...that gasoline has posed threats to life and health
through the contamination of water supplies and accumulation of
vapors in dwellings creating explosive atmospheres." The owner
finally agreed in July 1985 to perform the required investigation.
During our review of Delaware's LUST program in December 1988, we
found that the State had not obtained the results of the required
investigation nor any progress reports of cleanup actions taken for
the last four years.
In Maryland, an underground storage tank leaked fuel oil which
was not abated for almost six years. The leak was discovered in
September 1981 and although a system was installed to recover the
lost oil, the recovery system did not work. Over the past eight
years, only two follow-up inspections were performed by the State.
The first follow-up inspection was not performed until October
1984, three years after the leak occurred. This inspection
revealed that the recovery system was not operating and the
contamination was still present. The owner claimed that the system
did not work but assured the inspector that the contamination would
be addressed. However, there was no follow-up done by the State
for an additional three years. Another inspection was then
performed in June 1987 and the report stated: "Inspector could not
identify any recovery system" . For six years this leak was left
unaddressed by the responsible party and State actions were
ineffective. After the second inspection in June 1987, the owner
hired a consultant who reported to the State that an 18 inch
monitoring well contained mostly oil. In July 1987, the owner
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agreed to hand bail the well once a week to recover the spilled
oil. Maryland was required under their Federal LUST grant (awarded
in September 1987) to ensure cleanups were performed properly and
promptly. However, our review in January 1989, revealed no
indication in Maryland's files that the responsible party removed
the oil and there was no additional correspondence, inspections, or
other follow-up performed by the State. Consequently, no follow-up
had been performed for a year and a half from July 1987 to
January 1989.
The success of the LUST program will only be attained through
effective state enforcement programs. Federal and state resources
are not adequate to fund the massive expense of cleaning up the
damage caused by thousands of leaking tanks. Consequently, states
must develop successful relationships with responsible parties to
effectively accomplish the needed cleanups. Successful
relationships with responsible parties will only be accomplished
through effective enforcement programs, pursued both formally and
informally by the states.
D.
States Need To Assess Corrective Actions
We found that states in Region III did not assess the
timeliness or the effectiveness of corrective actions during the
various stages of the cleanup process. The cleanup process for
responsible parties generally involved various stages of activity
such as: immediate corrective action; long term corrective action;
and a post-monitoring period. Our review disclosed that
responsible parties have initiated 936 cleanups in three states;
however, only 66 or seven percent have been completed.
Approximately 30 percent or 279 of the 936 sites have been in the
active cleanup status for approximately three years. Further,
states were not effectively assessing the progress of their
responsible parties through these various stages. Consequently, we
were unable to ascertain that responsible parties performed timely
cleanups. State personnel informed us that they were reluctant to
place sites into a completed cleanup status for fear the
contamination would return. States need to segregate the various
stages of the cleanup process. This is necessary to ensure: proper
cleanup actions are taken promptly; limited enforcement resources
are targeted correctly; and cost recovery is initiated timely
against responsible parties.
The duration of the cleanup process varies significantly
depending on site characteristics and corrective actions selected.
Site characteristics (such as proximity, quality, and current and
future uses of nearby surface and ground water; as well as
groundwater depth, direction of flow, rate of flow and soil
conditions) impact the time period for the cleanup process. The
duration for the actual removal of the leaking substance can range
from as little as six hours to as long as three years. Because of
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the different site characteristics and corrective actions, there
were no uniform standards established for cleanup actions. The
cleanup standards are developed by the state agency on a site by
site basis. Consequently, it is important for the state to assess
the progress of the responsible parties on an individual basis.
Below we have summarized responsible party cleanups initiated
and completed in Delaware, Maryland and Virginia.
Responsible Party Cleanups
Delaware Maryland Virginia Total
1. Number of Cleanups
Initiated:
1985(and
prior years)
1986
1987
1988
Totals
72
66
79
63
6
98
35
170
109
262
391
2. Cleanups Completed:
3. Percentage of
Cleanups Completed:
1.4%
17.5%
1%
Nationwide Average*
36%
* According to OUST Monthly Progress Report, December 1988 {35.7
percent of the 8,270 cleanups initiated nationwide have been
completed).
As shown in the above chart only 66 or seven percent of 936
cleanups have been completed. Accordingly, many of these sites
have remained in the cleanup status for significant periods, some
over four years.
Subtitle I of RCRA requires states with cooperative agreements
to ensure cleanups are completed properly and promptly.
Responsible parties may not complete cleanups timely, if the states
do not promptly assess that required activities are being
performed. For example, Delaware's tracking system did not have an
updated status, within the last 12 months, for over 60 percent of
their active sites. Further, over half of these sites did not have
any state review in the last 24 months.
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Our review of Maryland's site files disclosed that., although
certain cleanups appeared to have been completed, none were
officially closed out by the State. Maryland officials stated
there were several reasons for sites not being closed out.
Specifically, the State did not: 1) have cleanup standards for
determining exactly when a cleanup was completed; 2) have the
resources to assess all of the cleanup actions performed in the
State; and 3) want to remove these sites from their tracking system
in case contamination was later discovered in the same area.
In summary, it is important to assess the progress of
responsible parties through the cleanup cycle. It appeared that
many states were identifying responsible parties but were not
obtaining timely corrective actions from responsible parties,
Since the type, time and degree of corrective actions vary on a
site by site basis, it is necessary to assess the individual
progress of the responsible parties on a site by site basis.
Conclusion
Our review of cooperative agreements within Region III
disclosed that virtually no requirements for responsible party
sites were contained in those agreements. However, 95 percent of
the leaking sites had responsible parties. Consequently, we
believe EPA Region III should have provided more requirements
addressing responsible party cleanups in the cooperative
agreements. These requirements should include priority systems,
effective tracking systems, timely follow-up and timely assessment
of corrective actions. Currently, the emphasis in the cooperative
agreements is on the clean up of sites without responsible parties,
which only represents five percent of the leaking sites nationwide.
However, EPA and state officials in Region III believe that in the
future, the major thrust of the LUST program will be corrective
actions by responsible parties. We believe more sites could be
cleaned up in a timely manner if EPA modified cooperative
agreements with the states to ensure better management of their
inventory of responsible party cleanups.
Agency Response and Actions Taken
The Agency agreed that EPA and the states must devote
resources to making continuing improvements in tracking and
oversight of responsible party cleanup activities. Both the
Director of the Office of Underground Storage Tanks (OUST) and
Regional personnel indicated that our analysis appears to be
lumping together all releases regardless of when reported to the
state. Obviously, releases reported before state cleanup programs
were established would not have close oversight, and releases
reported prior to the effective date of EPA's regulations would not
be subject to the procedures specified there. You unfairly judge
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historical state program activities by standards that should apply
to only the most recent sites reported.
The Director, Hazardous Waste Management Division, Region III
pointed out that a great deal of information regarding the
oversight of LUST sites is kept at the regional and field offices
of the states. This information was not reviewed during the audit.
Auditor's Comments
The Agency has agreed that corrective actions are required in
this area. As to the Agency's additional comments, we did not
unfairly judge historical data because our review disclosed that
states did not perform adequate oversight at the recently
discovered sites as well as the older sites. All the sites
selected in our review were active, ongoing cleanups even after the
states signed their cooperative agreements. These examples were
obtained from the states' current data base for responsible party
sites. Also, all of the sites used as examples in this report had
cleanup activities ongoing after the inception of the LUST program.
We do not understand why the Director of the Hazardous Waste
Management Division in Region III believes that information in
state regional and field offices was not reviewed. We discussed
the scope of our audit and the results of the reviews performed at
the states with Region III program officials. Our field work was
performed at the states' central offices where the details of this
finding were obtained and reviewed. There were no regional/field
offices in Delaware or Maryland, only Virginia had field offices.
Virginia State program officials assured us that it was their
policy that all official documents compiled in the field offices
must be submitted to the State's central office. We reviewed the
data submitted by the field office in the Virginia central office.
Recommendation
We recommend that the Assistant Administrator for Solid Waste
and Emergency Response revise OSWER Directive 9650.6 to comply with
Subtitle I of RCRA. Specifically, revisions should require states
to perform the following for responsible party cleanups:
o prioritize sites;
o schedule and track progress of corrective actions;
o ensure enforcement actions are taken against delinquent
responsible parties;
o assess the effectiveness of corrective actions in a timely
manner; and
o close out sites with completed cleanups.
We recommend that the Regional Administrator of Region III
modify cooperative agreements with the states to comply with the
revised OSWER Directive.
28
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3. ABSENCE OF UNDERGROUND STORAGE TANK fUSTM LEGISLATION IN
PENNSYLVANIA
Pennsylvania's failure to enact UST legislation caused the
State to forfeit $1.4 million in Federal LUST Trust funds. State
officials in the Department of Environmental Resources (DER) have
unsuccessfully attempted to have UST legislation enacted by the
Pennsylvania State Legislature over the past two years. This lack
of action by the State has impacted DER's ability to obtain needed
staff and other resources to implement the LUST program. This
failure caused the State to lose $1.4 million in Federal LUST Trust
funds. An additional $800,000 will also be lost if the State does
not enact legislation by September 30, 1989. More importantly, the
State still has not adequately addressed the problem of leaking
underground storage tanks which pose a major threat to groundwater
and are potential fire and explosion hazards. Based on EPA's
estimates, Pennsylvania could have as many as 18,000 leaking tanks.
The potential for environmental damage from these leaking tanks is
substantial and costly to clean up. The longer these sites
continue to be ignored the more likely the contamination will
spread, resulting in further deterioration of groundwater and
increases in the cost of cleanups. Without enacting UST
legislation, the State does not have the capability to prevent and
detect contamination from leaking underground tanks.
Section 9003(h) of RCRA allows a state to use LUST Trust Fund
monies if: 1) EPA determines that the state has the capability to
carry out effective corrective actions and enforcement activities;
and 2) the state enters into a cooperative agreement with EPA. In
order to enter into a cooperative agreement, states are required to
have or obtain both the authority as well as the resources to carry
out corrective actions, enforcement activities, and cost recovery
actions.
EPA awarded Pennsylvania $525,000 in LUST Trust funds in
September 1987 under the assumption that the State would complete
the tasks outlined in their cooperative agreement. EPA's
guidelines for cooperative agreements provided for the development
of both core program activities and site-specific activities. One
core program activity in Pennsylvania's cooperative agreement was
the development of a comprehensive legislative package which
included enforcement, corrective action and cost recovery as
required by RCRA Subtitle I. The enactment of this legislation and
the provision of sufficient resources would have enabled the State
to effectively carry out a LUST program. In September 1988, EPA
awarded the State an additional $525,000 even though the State had
not enacted legislation. As of December 31, 1988 the State only
spent $12,000 of the total $1,050,000 awarded. The balance of
$1,038,000 ($1,050,000 -$12,000) remains with the U.S. Treasury
until the State is able to use these funds.
29
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The balance of Pennsylvania's LUST Trust funds was not
expended because the State did not enact legislation providing the
authority or the resources to administer the program. Accordingly,
EPA denied the State approximately $1.4 million in additional Trust
Fund monies. The chart below shows, for each fiscal year: 1) the
amount of Trust Fund money Pennsylvania could have received; 2) the
amount that Pennsylvania lost for not having a LUST program; and 3)
the actual amount awarded or to be awarded to Pennsylvania.
FISCAL YEAR
1987
1988
1989
POTENTIAL
AWARDS
$ 609,000
1,085,000
1.575.000
53.269.000
LOST
FUNDS
$ 84,000
560,000
775.000
31.419.000
AWARD
AMOUNT
$ 525,000
525,000
800,000*
SI.850.OOP
*Not released by Region III as of March 30, 1989.
As shown above, the State has already forfeited $1.4 million and
another $800,000 will also be withheld if the State does not enact
legislation. Pennsylvania's failure to establish State UST
legislation has benefited other states with tank programs already
in place. EPA personnel allocated the funds ($1.4 million)
withheld from Pennsylvania to other states in Region III. These
states received the $1.4 million because they could use the funds
more effectively.
The forfeited funds seem trivial in comparison to the
potential environmental damage caused by the estimated 18,000
leaking tanks in the State. State personnel have estimated that
each year as much as eight million gallons of various hazardous
substances may be leaking into the State's groundwater. With one
gallon of petroleum able to contaminate as much as a million
gallons of groundwater, State personnel estimated that Pennsylvania
could have enough contaminated groundwater to cover the entire land
surface of the State to a depth of ten inches. The above estimate
was probably overstated since it was based on worst case
conditions. However, the estimate did show the potential for
significant environmental damage to groundwater caused by not
adequately addressing contamination from leaking tanks.
Pennsylvania had two different agencies overseeing underground
storage tanks: Pennsylvania State Police and the Department of
Environmental Resources (DER). However, neither agency provided
adequate regulations governing the protection against leaking
tanks. Regulations existed to control design, construction, and
installation of underground tanks. These regulations were enforced
by the Office of the Fire Marshall, a division of the Pennsylvania
30
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State Police and were primarily intended to prevent fires and
explosions; not to prevent contamination of groundwater, surface
water and soil. The second agency responsible for underground
storage tanks was DER, which generally did not get involved until a
leak was reported. Under Pennsylvania's Clean Streams Act, DER
could require a responsible party to abate a leak. However, DER
lacked the authority and resources to undertake State lead
cleanups. In addition, without adequate resources the State could
not oversee responsible party cleanups.
The major flaw with the responsibilities shared by DER and the
State Police was that neither agency provided adequate regulations
to prevent leaks. These regulations did not satisfy the" Federal
UST regulations in the areas of leak detection, leak prevention,
monitoring and corrective actions. Under existing regulations, the
Fire Marshall performed an initial inspection of each tank after it
was placed into use. However, most leaks occur subsequent to the
Fire Marshall's inspection and possibly go undetected for several
years before the leaking substance is discovered and reported to
DER. Consequently, significant environmental damage may occur
during this period.
Since signing the cooperative agreement with Pennsylvania, EPA
has worked with the State to get UST legislation enacted. DER
personnel believed that EPA Region III had done everything they
could to help get the legislation passed. EPA personnel wrote
letters to the Secretary of DER and have even met with State
legislators. In these discussions, EPA stressed the importance of
a State LUST program, urging the passage of the legislation and
outlining the consequences should the State fail to implement an
effective LUST program.
State UST legislation is needed not only to address the gaps
in the current regulations, but more importantly to enable DER to
direct staff resources to the LUST program which would lead to EPA
releasing withheld funds for cleanups of hazardous sites. Examples
of how the legislative delays impacted municipalities are discussed
below. One Pennsylvania township abandoned a 500,000 gallon-per-
day municipal well in 1986 because of a leaking tank at a gas
station 500 feet away. DER ordered the station's owner to remove
the tank, and clean up the site. The owner removed the tank, but
claimed that he could not afford to clean up the site. The State
estimated cleanup costs to be more than $100,000. The drinking
water well was shut down because of the fear that the pumps would
draw gasoline from the contaminated soil into the well.
Unfortunately, since the contamination remained unabated for over
two years, the situation worsened. In January 1989, the municipal
well was found to be contaminated. Township officials have made
several attempts to obtain funding from the State, however, no
funds have been made available.
31
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Two other Pennsylvania sites, included on the State's list for
Federal funding are discussed below. Contamination at these sites
has not been abated because of the State's inability to use LUST
Trust funds.
At one site, a service station owner was ordered to test his
tanks after gasoline contamination was discovered in private wells
of nearby residents. The tank test results indicated a leak in the
piping. Originally, six residences reported gasoline in their
wells, however, over the last couple of years 16 additional
residences have reported contaminated wells. All 22 residences
were using alternative water supplied by the owner of the* service
station. However, the owner did not have the financial resources
needed to initiate the required cleanup. Meanwhile, contamination
is spreading and the cleanup costs are escalating.
At a second location in the same county, there were seven
confirmed cases of gasoline contaminated drinking water. Six of
these cases involved homes, and the seventh was a school. Further,
a stream which was ranked by the State as "high quality" is located
less than a 1,000 feet away from the reported contamination.
Currently, DER is uncertain of the source of the contamination, and
stated that Federal funds are needed to do a site investigation.
In summary, the State can no longer afford to sit back and
ignore the threat that leaking underground storage tanks pose to
the State's residents and water resources. Discussions with a
State official revealed that the number of reported leaking
underground storage tanks is expected to rise because of the
additional testing requirements in the new Federal UST regulations.
EPA Region III has recognized the lack of commitment by the State
in implementing a LUST program and has accordingly withheld LUST
Trust funds from the State. Unless the State takes immediate
action, we believe EPA should initiate procedures to terminate the
assistance agreement with the State in accordance with 40 CFR
30.903. This section provides that:
The award official may unilaterally terminate the
agreement in whole or in part at any time before the
date of completion, whenever he determines that the
state failed to comply with the conditions of the
agreement.
We believe the lack of implementing a State LUST program for
over two years represents a failure to comply with the terms and
conditions of the assistance agreement. Accordingly, this will
result in EPA assuming responsibility for administering the LUST
program in Pennsylvania. With EPA's limited resources,
consideration should be given to hiring a contractor who could
manage the State LUST program. Funding could come from the State's
share of the Trust Fund.
32
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Agency Response and Actions Taken
On July 6, 1989, the Governor of Pennsylvania signed into law
a bill establishing a regulatory program for underground and above-
ground storage tanks. This action reflects the Region's success in
handling the situation in Pennsylvania and eliminates the need to
consider Regional implementation of the LUST program in that State.
Auditor's Comments
We recognize that the State passed legislation on storage
tanks six days after we issued our draft report. However, as
stated by Region III officials in a memorandum dated May 30, 1989,
(incorporated as Appendix A to this report) implementation of a
State LUST program in Pennsylvania is more dependent upon obtaining
adequate staffing levels, than enacting legislation. The passage
of the State's LUST bill was a step in the right direction but
Pennsylvania must provide adequate resources needed to implement
their State's LUST program. In addition, EPA must ensure that the
program is implemented quickly and that the State complies with the
terms of their cooperative agreement.
Recommendati on
*
We recommend that the Regional Administrator of Region III:
1} continue to assist Pennsylvania in establishing State UST
and LUST programs in accordance with the new EPA
regulations;
2) establish a Federal program to administer the LUST
program in Pennsylvania if the State does not implement
their own program in a timely manner; and
3) terminate the assistance agreement with the State of
Pennsylvania in accordance with 40 CFR 30.903, if the
State does not take immediate action to comply with the
terms of their cooperative agreement.
33
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4. IMPROVEMENTS ARE NEEDED IN STATE PROCEDURES FOR ADDRESSING
THREATS TO HUMAN HEALTH
Of the three state programs we reviewed in Region III, the
states of Virginia and Delaware were subjecting LUST site victims
to unnecessary health risks by allowing them to continue to breathe
hazardous vapors released from gasoline contaminated water. Our
review disclosed that in Virginia and Delaware people were
unnecessarily exposed to gasoline contaminants in household water
supplies. Through discussions with LUST personnel from states
outside of Region III and other EPA Regions, we determined that
people in other areas of the country were also being exposed to
contaminants in household water supplies. Studies indicated that
breathing vapors from gasoline contaminated water may be more
hazardous than drinking this water. Maryland has recognized the
hazards from these vapors and was providing filters as a temporary
alternative until a permanent water supply could be obtained.
However, Virginia and Delaware did not provide alternative
treatment systems for residences with contaminated private wells
even though Subtitle I of RCRA allows states to use Federal LUST
Trust Fund monies to provide alternative water supplies.
The National Institute for Occupational Safety and Health
(NIQSH) has identified benzene as a cancer causing compound. Also,
NIOSH believes that exposure to toluene and naphthalene can cause
damage to the kidneys, liver and central nervous system. NIOSH
requires the use of only the most reliable and protective
respirators to ensure maximum protection when coming in contact
with any detectable concentration of benzene. According to the
NIOSH Pocket Guide to Chemical Hazards, benzene is an "Occupational
Carcinogen." Occupational carcinogens are defined as any substance
or mixture of substances which causes an increased incidence of
benign or malignant tumors in humans as the result of oral,
respiratory or dermal exposure.
In addition, benzene and toluene are extremely flammable
having very low flash points (the lowest temperature at which
vapors ignite when exposed to a flame) of 12 degrees and 40 degrees
Fahrenheit, respectively. Since household water supplies are
typically used at temperatures above these flash points on a daily
basis, extremely hazardous situations exist when gasoline
contaminated water is used. This was evident at one site, where
the owner tried to clean up his water supply by pumping the
gasoline out of the well. Contaminated water was channeled into a
drainage ditch that ran along a highway. During the pumping
operation there was an explosion and the contaminated water in the
drainage ditch caught fire. The fire burned for about three hours
before burning itself out.
In Maryland, the State LUST program has provided granular
activated carbon filters to over 25 private residences. Our review
disclosed that these filters cost approximately $900 and reduce the
34
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contaminants in household water supplies to undetectable limits.
The filters were provided as a temporary measure until a permanent
water supply could be obtained. These actions were in compliance
with the requirements of RCRA by reducing the threats to human
health posed by gasoline contaminants in household water supplies.
We believe that the states of Delaware and Virginia were not
complying with RCRA because these states did not alleviate such
threats to human health in a timely manner.
In Virginia, State officials did not believe their LUST
program should provide private residents with alternative water
supplies since they did not provide this service under other State
water programs, Virginia's Department of Health has the
responsibility to determine whether alternative drinking water
supplies are needed for residences with contaminated private wells.
However, no expenditures of LUST funds have been made by the State
for alternative drinking water supplies. In addition, we believe
that Virginia should have considered contamination from other uses
of household water supplies, such as showering and bathing. At one
site in Virginia, State records disclosed that five families had
wells contaminated by gasoline and other wells in the area were
potentially affected by the contamination. Groundwater problems in
this town had been documented by the State for over seven years.
In late 1981, a new born baby developed chronic vomiting and
diarrhea, and blisters throughout his mouth. These health problems
did not go away until after the family discontinued using tap water
in the baby's formula. A later analysis of the family's well
disclosed that their water supply was contaminated with gasoline
constituents, such as, benzene, toluene and naphthalene.
Delaware's LUST program provided for alternative water but
generally only for drinking water purposes. Since March 1987, the
State had been attempting to obtain State funds to replace private
wells. However, in the interim the contamination continued to
threaten impacted parties. Delaware provided interim treatment for
a drinking water supply at one site and delivery of bottled water
at another site. However, at both of these sites, people continued
to use water contaminated with a volatile organic compound
(benzene) for showering, bathing and other household uses. These
uses allowed benzene to be released into the air and according to a
State official, exposed residents to much more benzene than if they
drank the contaminated water. Benzene enters the blood, bone
marrow and central nervous system after being ingested or inhaled.
According to an EPA toxicologist, benzene was identified as causing
leukemia. In March 1987, State LUST personnel recommended
replacing wells at 12 different locations using State funds.
However, at the time of our review of the State's program in
December 1988, these water supplies had not been replaced.
Federal and state regulations regarding contamination of water
supplies have traditionally focused on drinking water. However,
human exposure to contaminants in water can occur from pathways
35
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other than drinking contaminated water. These pathways include:
inhalation of contaminants transferred to the air from showers,
baths, toilets/ dishwashers, washing machines, and cooking;
ingestion of contaminants in food; and dermal absorption of
contaminants while washing, bathing, and showering. In addition,
discussions with an EPA toxicologist revealed that chronic exposure
(exposure to small amounts of contaminants in indoor air, over long
periods of time) is a significant threat to human health.
Contaminants released into the air from household water supplies,
especially during showering and bathing, can be a greater threat to
human health than drinking contaminated water.
The results of an EPA sponsored study, published in 1985,
stated that calculations indicate that the expected air inhalation
exposures can be substantially higher than those (exposures) from
ingestion of chemicals in drinking water. Experiments were
undertaken to simulate air exposures that can be encountered in
showers using water contaminated with volatile chemicals, such as
those found in gasoline. These experiments concluded that high
levels of indoor air contamination can come from normal household
uses of contaminated water.
The U.S. Department of Energy (DOE) had a study performed on
Human Exposure to Volatile Organic Compounds in Household Tap
Water; The Indoor Inhalation Pathway. DOE reviewed and accepted
the study in 1987. This study analyzed human exposure to
contamination as a result of transfers from tap water to indoor
air. Results of the study indicated that inhalation exposures to
contaminants released from household water supplies could be even
greater than exposures from ingestion. Specifically, exposure to
contaminants in the air released from contaminated tap water,
ranged from 1.5 to 6.0 times greater than the exposure attributable
to drinking the contaminated water. In addition, more than half of
the daily inhalation exposure was projected to occur during the
shower or bath with an additional one-third to occur in the
bathroom after bathing.
Conclusion
The purpose of EPA's LUST Trust Fund is to alleviate
environmental damage and the threats to human health posed by
leaking underground storage tanks. Although Virginia and Delaware
were using LUST Trust funds for other major program tasks the
threats to human health were not being adequately addressed at
residences with wells contaminated by gasoline, impacted parties,
with contaminated wells, which neither caused these problems nor
can afford to remedy these situations were suffering the
consequences. Since EPA estimates that as many as 400,000 tanks
may be leaking nationwide and many groundwater supplies are or will
be contaminated, exposure to gasoline contamination through
inhalation and absorption should be considered in assessing threats
to human health. The development of specific regulations and
36
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procedures to eliminate inhalation and dermal exposures to gasoline
contaminants in household water supplies, are needed. When a
household water supply becomes contaminated it is necessary for the
states to provide relief to these residents expeditiously. One
interim measure the states could take is to provide filtering
systems (costing $900) to protect those people exposed to gasoline
contaminants. In our examples we have shown that the people in
Virginia have been exposed to gasoline contaminants in their water
supplies for as long as seven years. Also Delaware estimated that
it would need $44,000 to replace the 12 contaminated wells
identified thus far. The consequences to human health from
exposures over long periods cannot be measured against the
relatively small cost of providing alternative water supplies. By
instructing people not to drink contaminated water, but allowing
them to be exposed to greater contamination from other household
water uses, the Agency and the states are failing in their
responsibility under Subtitle I of RCRA to protect human health.
Agency Response and Actions Taken
The Agency agreed that health risks from dermal and inhalation
exposures need additional attention and have begun work in this
area. With the assistance of a contract work assignment OUST is
re-examining these risks. Based on this analysis, the Agency will
provide information and a policy, if necessary, to the states.
Auditor's Comments
The Agency needs to promptly address this area. EPA estimated
that as many as 400,000 tanks may be leaking and therefore many
household water supplies could be contaminated. Accordingly, EPA
needs to expedite their analysis to ensure that states rapidly
respond to these health risks. One interim measure available to
alleviate these health risks is requiring the states to provide
alternative water supplies such as the granular activated carbon
filters.
Recommendation
We recommend that the Assistant Administrator for Solid Waste
and Emergency Response instruct the Director of the Office of
Underground Storage Tanks to formulate a specific policy addressing
the states' responsibilities concerning all pathways of human
exposure to gasoline contaminated water. In the interim, all
states should be instructed to closely monitor these exposure
routes and provide additional protection to affected parties.
We recommend the Regional Administrator of Region III
implement the above policy to alleviate the continuing problems
noted in Delaware and Virginia.
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APPENDIX A
page 1 of 15
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
1989
O' ( ICS O'
SOLID V^ AST L AlvCEVEBCtNCv PcScC,-.S =
MEMORANDUM
SUBJECT: Comments or; Audit Findings on the Leaking Underground
Storage Tank (LUST) Trust Fufld Program
FROM: /.Jonathan Z. Canno
r^*7\cting Assistant A
TO: ^ F. Ronald Gandolfo\_
Divisional Inspector General for Audit
Thank you for the opportunity to review and comment on the
draft audit report on LUST Trust Funds. Attached are two memos
each from OUST Headquarters and Region 3 that provide detailed
comments on the audit findings and recommendations.
There have beer: some changes since the release of this
report. Or. July 6, 1989, the Governor of Pennsylvania signed
into lav, a bill establishing a regulatory progran. for underground
and ateve-grcunc storage tanks. This action reflects the
Region's success in handling the situation in Pennsylvania and
eliminates the need to consider Regional implementation of the
LUST program in that State.
We noticed that some of our comments on the draft audit
report had not been addressed in the most recent version. For
example, in the attached 5/9/89 nemo frorr, Ron Brand to you, a
detailed description was presented on OUST's efforts to improve
its Trust Fund allocation formula by incorporating criteria such
as 'cere staffing requirements, environmental need, and
performance." These efforts had been well underway prior to
receipt of the audit report. However, nc mention was made of
these efforts in the most recent version of the report.
Addressing these comments directlj ir. the final audit report
will help to ensure that OUST's positions and rationale have been
fully understood b> you: staff and that we have the benefit of
your respcr.se to our comments.
If you would like to discuss these concerns further, please
cor.tart Fon Brand, Director of the Office of Underground Storage
Tanks Jit 381-4756.
38
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APPENDIX A
page 2 of 15
/
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. DC. 20460
MEMORANDUM
SUBJECT
FROM:
TO:
Comments on Draft Audit Finding on the Leaking
Underground Storage Tank (LUST) Trust Fund Program
Ronald Brand, Director
Office of Underground Storage Tanks
P. Ronald Gandolfo
Divisional Inspector General for Audit
Thank you for the opportunity to review and comment on the
initial preliminary finding of your audit of the LUST program. As
my detailed comments indicate, I agree with your second
recommendation, and have already revised our allocation approach
for 1990 to give much greater weight to need and performance. I
suggest that you re-examine the first recommendation, however,
since it would require a major restructuring of the current law in
a direction explicitly rejected by Congress when authorizing the
Trust Fund.
Recommendation 1: Revise the distribution method to ensure that
the distribution formula is applied to the total amount accumulated
in the Trust Fund, providing a maximum entitlement for each state.
Corrents
1) This recommendation is jvot feasible under current lav.
We are able to make funds available to States from the Trust
Fund and only as appropriated bv Congress. EPA does not have
independent access to Trust Fund monies: Congress appropriates
funds to EPA frost the Trust Fund on an annual basis.
Through 1989, Congress has appropriated $114.4 million from
the fund, and we have made $93.1 million of this available to
States. The remaining $21.3 million is EPA's actual and
budgeted expenses over the 3 year period.
2) The law does not provide States an "entitlement" of Trust Fund
monies.
The Superfund Amendment and Reauthorization Act (SARA)
provides that Trust Fund monies may be used only for costs of
carrying out the activities in section 9003 (h). This is
reinforced by 26 USC 9508 (c) of the Internal Revenue Service
M-
39
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APPENDIX A
page 3 of 15
Code governing use of the fund. In addition, the SARA
conference report specifically prohibits such an approach.
EPA is told not to treat the fund as formula grants, but to
provide States disbursements from the fund "as necessary to
respond to releases." Congress designed a fund to be" used as
necessary, not as "entitled."
3) Our allocation procedure distributees money to Regions, not to
States directly.
We distribute Trust Fund cooperative agreement money to our
ten Regional offices, and the Regional offices make
independent decisions on how to distribute that money to
States. While the national distribution formula relies on
State-specific information to calculate Regional percentages,
Regional offices are free to fund States based on additional
detailed information and on their judgments of need and
readiness to proceed. Thus, regional awards to states provide
a greater level of responsiveness to state need and ability
to perform than the national allocation procedure would if
used directly. Also, this means it is not appropriate to
project "entitlements" or "shortages" for any State using the
State's percentages which contribute to the Regional
allocations.
4) We have increased our appropriation requests to address State
needsand readiness toproceed.
We recognized that most States needed to do substantial
preparatory work before they could effectively use large
amounts of Trust Fund money. This work included getting
legislative authorities, developing regulations and policies,
getting approval to hire staff, hiring and training staff, and
securing contractor assistance.
For this reason, we provided relatively small awards during
the first year and a half of the program. As States have
identified specific needs and have increased their
capabilities, Congress has made more funding available. We
are requesting a large increase for 1990.
5) The Trust Fund balance chart does not account for EPA funds
used or budgeted.
EPA used $11.8 million for its own operations in 1987 and
1988. Approximately $9 million per year is also budgeted for
use in 1989 and 1990. These funds are not accounted for in
your "remaining balance" chart.
6) Many States have created their own cleanup funds.
You may want to indicate in your report that many States do
not rely on the Federal funds alone to help pay for cleanup
of UST releases. About 25 States have passed or are
40
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APPHOIX A
page 4 of 15
developing statutes that create a State fund to help pay for
clean-up costs.
Recommendation 2: Revise the distribution method to ensure that
the amount of LUST funds awarded to each State is commensurate
with their individual needs and performance. This would allow
needy States with good performance to receive their maximum
entitlement in a timely manner.
Comments
1) We agree with this recommendation and have revised our
allocatidn approach to direct funds based on need and
performance.
As noted above, we allocate Trust Fund monies to our
Regional offices who then award the funds to individual
States according to their needs and readiness to proceed.
We have gradually improved our allocation methodology over
the years, advancing from a simple model based on petroleur.
usage (FY 1987) to an approach based on core staffing
requirements, environmental need, and performance.
Performance is indicated by the demonstrated ability to use
funds received in previous years.
2) Initially, we provided some money to nearly all States to
build LUST programs. Our goal was to build widespread
capability quickly.
During the first eighteen months of Trust Fund activities in
FY 1987 and FY 1988, we focused on allocating Trust Fund
monies to States to help them build infrastructures and
establish basic LUST programs. Our policy has been to get
money to as many States as possible, and work with them to
accomplish certain key activities such as getting the
necessary legislative, regulatory, and procurement
mechanisms in place. The program mandate is to get prograr.s
developed and operating in all States, not just those ready
to proceed at the start. This year, and hereafter, we will
increase funding support to the best performing States, and
work intensively with the other States to remove obstacles
and improve their programs.
This strategy has resulted in an uneven fund utilization
rate among States measured by drawdown rates. This is not
surprising given the nature of the strategy, but several
mitigating factors should also be taken into account. First,
since this was a new program, there was no track record of
performance on which to evaluate States. Second, the
amounts of money allocated in the first two years are very
small compared to later years, and the lag in utilization is
comparatively small. Since these are "no-year" funds, they
will be used for LUST work. Third, the strategy was suc-
cessful in bringing nearly all States into the program, and
41
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APPENDIX A
page 5 of 15
providing them crucial early support necessary to make
strong performers of many States, not just the few ready to
go in 1987 and 1988.
If you have any questions, please contact nie at FTS 382-4756
or Joe Retzer at FTS 382-7601.
42
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APPENDIX A
page 6 of 15
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 2046D
*AS'E
JUN 8 1989
MEMORANDUM
SUBJECT:
Comments on Draft Audit Findings *2, «3 and *4 on the
Leaking Underground Storage Tank (LUST) Program
FROM: Ronald Brand, Director
Office of Underground Storage Tanks
TO: P. Ronald Gandolfo
Divisional Inspector General for Audit
SUMMARY COMMENTS
Thank you for the opportunity to review and comment
additional findings of your audit of the LUST program. You
chosen well to focus on tracking and oversight of responsible
party (RP) cleanup activities, since this
will continue to grow as more tank owners
compliance with the new regulatory requirements
now working closely with EPA
processes and techniques for
will continue to be top priority
on the
have
of
workload for States
discover leaks through
My office is
Regions and States to improve State
addressing RP cleanups, and this
work in the future.
I also support your concern about the lack of UST
legislation in Pennsylvania. I have followed closely Region
Ill's efforts to work with the State, and at the Regions'
request, "personally testified at a State legislative committee
hearing in support of UST legislation. The Region's strategy of
withholding additional Trust Fund monies as an incentive for
State action is sound and appears to be having an impact. It
would be premature at this time to terminate the cooperative
agreement with Pennsylvania and establish a Federal program in
State.
Your final recommendation concerning dermal and inhalation
exposures and health effects from benzene is another area of
interest to me. I have initiated an analysis of these health
effects and will provide States with this information as soon as
it is available.
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APPENDIX A
page 7 of 15
DF7AILFP DISCUSSION
Finding 2 Recommendation: The Regional Administrator of Region
III should modify cooperative agreements with the States to
quire better priority setting and oversight for responsible
party cleanups.
Comments
1 )
We agree that EPA and States must devote resources to making
continuing improvements
cleanup activities.
in tracking and oversight of RP
Because of the dramatic increase in the number of releases
reported, strong oversight of RP corrective actions is a
difficult task to accomplish in a new program. Although
States are now developing better tracking systems, there
remains more to be done, and we will continue working with
Regions and States to bring about improvements. Simply
requiring States to develop improved systems is no
guarantee of results; they need to build staff resources and
expertise over time, and we will assist them with problem
diagnosis and system development.
I understand that Region III is providing you-some specifics
on how they are working with the individual States. In
OUST, we have several efforts underway to improve
performance in this area:
o The corrective action plan review project is designed
to improve State performance in tracking and reviewing
RP corrective action plans. The goal is to get
corrective action based on approved plans to start more
quickly.
o The field measurements project is intended to speed up
corrective actions by fostering wide use of field
techniques for measuring site contamination, thus
avoiding lengthy waiting for State lab analyses.
o "The Trust Fund compliance project focuses on developing
improvements in State enforcement procedures to
identify HP's earlier and in even more cases.
o "Petroleum Tank Releases Under Control," a soon-to-be
published training tool for State personnel, provides
assistance in evaluating RP options for controlling
releases from petroleum USTs.
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APPEOK A
page 8 of 15
2 )
TKf- analysis unfairly fni Js t o__rt i c t. i ncu . sh sitrs di sc r
- __ .
before and after S late programs were es labl i shed and
regulations published.
Your analysis appears to be lumping together all releases
regardless of when reported to the State. Obviously,
releases reported before State cleanup programs were
established would not have close oversight, and releases
reported prior to the effective date of EPA's regulations
would not be subject to the procedures specified there. You
ur. fairly judge historical State program activities by
standards that should apply to only the most recent sites
reported .
«
Our experience is that most States have established
oversight and tracking procedures only within the past one
to two years, and they are improving over time. Did you
find that States addressed more recent releases more
effectively than the old ones?
3 ) Priority setting should focus on potential health and
environmental impacts rather than RP characteristics.
The Trust Fund legislation requires States to prioritize
Trust Fund sites according to their impact on human health
and the environment. The same principle should apply when
addressing RP sites. Factors such as RP cooperation,
integrity, and financial strength are difficult to measure
objectively and may not come into play until far along in
the oversight process.
Finding 3 Recommendation: Terminate the assistance agreement
with the State of Pennsylvania and establish a Federal program to
administer the UST regulations if the State does not implement
their own program immediately.
Comments
1)
It is inappropriate to terminate the cooperative agreement
now because legislative action appears likely soon.
Region Ill's denial of additional Trust Fund monies to
Pennsylvania has increased the visibility of the UST program
in the State and may provide the additional incentive needed
for adoption of UST legislation. Newspaper coverage of the
UST issue has been extensive and one State senator has
announced that adoption of UST legislation is his pncary
goal for the year. An additional promising sign is that
three additional position vacancies for the State's UST
program, which had been "frozen" for an indefinite period of
time, have now been released and are in the process of being
filled.
45
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APPBODC A
page 9 of 15
2) Direct management of the program by EFA would disccjrage
action by Pennsylvania and be less effective than a Slate-
run r r p g r a rr,.
The VST program, both prevention and Trust Fund cleanup
activities, is designed to be a delegated program. This
means that EPA's Regional offices have small staffs of
persons trained to provide support services (funding,
training, assistance, and expertise) and oversight to
States. Each Regional office has enough staff for one
person per State plus one manager, a secretary, and a
technical specialist. Region III does not have sufficient
staff to manage a State program in Pennsylvania. Our
program is successful only when EPA's staff and funding
leverage the development of a State program.
An attempt to manage the program by EPA's limited staff
might also have a detrimental result by discouraging current
efforts to get legislation passed and a program started.
The strategy of withholding funds while working with the
State to get action keeps the responsibility on the State to
implement this environmental program.
Finding 4 Recommendation: Formulate a specific policy addressin'g
the States responsibilities concerning all pathways of human
exposure to gasoline contaminated water, especially from
inhalation and dermal absorption.
1) We agree that health risksfromdermal and inhalation
exposuresneed additional attention.and we have recently
begun work in this area.
With the assistance of a contract work assignment, we have
initiated a re-examination of the risks and potential health
effects of UST releases, including the dermal, inhalation,
and ingestion exposure risks over realistic time periods for
different populations. Based on this analysis, we will
provide information and a policy, if necessary, to States.
46
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APPHOIX A
page 10 of 15
UNITEDSTATES ENVIRONMENTAL PROTECTION A3ENCY
in
Chestnut
Philadelphia Pennsylvania 1EH07
SUBJECT:
FROM:
TO:
Comment on Draft LUST Audit
Stephen R Wassersug. Director/^ £^/-£~-^- Y^
Hazardous Waste Management Division (3HWOO)
P. Ronald Gandolfo
Divisional Inspector Genera) for Audit (3AJOO)
DATE: MiY 30 B89
Thank you for the opportunity to comment on the LUST findings prior to
the issuance of the draft report. Our comments are as follows:
SECTION 2
State Control Over Cleanups by Responsible Parties is Inadequate
1. In Paragraph 2, it is stated that states with cooperative agreements were
required under 9003(h) of RCRA to ensure that corrective actions were
performed properly and promptly. We believe that states need to
continue to build their responsible parry enforcement and oversight
programs. However, the cooperative agreement workplans were
developed in accordance with OSWER Directive 9650.6 which emphasizes
the development of the core program as well as site-specific activities. AJJ
Region III states had core program activities, such as developing priority
systems, enforcement policies and procedures, Quality Assurance/Quality
Control, pubb'c participation plans, etc. that needed to be developed. In
addition, the states had to hire and train staff to perform these activities.
Although the Inspector General's draft report does an excellent job in
pointing out the longer range goals of the LUST program, it does not
acknowledge the activities that needed to be conducted prior to the
implementation of an effective responsible parry oversight program.
2. We agree that the cooperative agreement guidance from EPA
Headquarters stressed the development of a priority system to rank sites
which would be addressed directly with Trust Fund monies. Region III
developed cooperative agreements in accordance with that guidance.
47
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APPSJDIX A
page 11 of 15
2
The recommendation to modify the Region III cooperative
agreement* to include the setting of priorities for all sites uould be
a deviation from Headquarters guidance, iherefore, this
recommendation should also be made 10 the Assistant
Administrator for Solid Waste and Emergency Response to ensure
national consistency.
3, In several areas of the report, oversight activities of LUST cases are
discussed which occurred many years prior to the implementation of the
cooperative agreements. Although this helps to make the point thai the
LUST Trust Fund monies were needed at that point in time, it misleads
the reader to believe that the frequency of state inspection, oversight and
enforcement activities remains the same, which is not an accurate %-iew of
the developing state programs. For example, in the discussion of the two
sites in Virginia under Section A. the incident of inadequate oversight
took place prior to the cooperative agreement, whereas the example of
the improved responsible party actions occurred after the cooperative
agreement was in place.
4. It should be pointed out that a great deal of information regarding the
oversight of LUST sites is kept at the regional and field offices of the
states. This information was not reviewed during the audit.
5. We believe that the national statistics shown in Section D are not
accurate. We have been working with Headquarters to establish the
proper definition of "sites cleaned up." The current defin;:ion counts onh
shes cleaned up after the effective date of the cooperative agreement.
However, it appears most regions are using historic data uhen reponinc
this information; whereas, we have asked the Region II] states to repon
the sites cleaned up in accordance with the definition.
SECTION 3
Absence of UST Legislation in Pennsylvania
1. ID Paragraph 1, it is slated that Pennsylvania's failure to enact UST
legislation was the cause for the forfeiture of $1.4 million in LUST funds.
This is not exactly correct, since the Department of Environmental
Resources (DER) does have statutory authority under the Clean Streams
Act to address the problems of releases into the waters of the State. In
so far as the failure to pass UST legislation may have impacted the abi!i:\
of DER to obtain the needed staff resources to implemer.: the LUST
program, it could be s'.ated that their inability to effective;, utilize the
48
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APPENDIX A
page 12 of 15
2.
available funding resulted in the Joss of additional monies.
The dollar figures used in Paragraph ] and in the chan on Page 2 of this
section are not in agreement with OUT date,. The following chan is
provided for your information.
FY 87
FY SS
FY 89
Potential
Award
$ 775,000
1,152,396
1,295,610
Actual
Award
$ 525,003
525.000
0
Lost Funds
$ 250,000
627,396
1.295,610
$ 3,223,006
$ 1,050,000
2,173,006
lii the first sentence in Paragraph 3, the implication is that the initial
award of Trust Fund monies was made on condition that the State enact
legislation. That was not the case. Furthermore, there is no discussion of
the delay in the actual award of FY 87 monies. Although EPA offered
DER the $525,000 in FY 87 money in September 1987, the award was r.-it
accepted by DER because of concerns regarding the grant conditions or,
cost recovery and administrative settlements. After HO revised this
policy, DER was offered an amended award which was accepted ir
August 1988.
In Paragraph 4, the first sentence states that the Trust Fund monies have
not been expended because for over two years the State has not enacted
kgislation establishing the authority or the resources to administer the
program. This statement is not correct. See comments 1 and 2 above as
well as our revised figures for the chan.
In the Last Paragraph on Page 2. the texi reads, "The second agenr>
responsible for USTs is DER." This statement is not quite correct
Although DER does get involved with resultant environmental problems
from leaking USTs, the Agency has no specific statutory authorin for
regulating USTs. Their involvement in the program is through the::
authority under the Clean Streams Act whereby they address any releases
to the waters of the State, which is broadly interpreted to include soils as
well.
In the Second Paragraph on Page 3. it is stated that legislation is needed
to enable the Trust Fund to provide money for cleanups of hazarcr-js
49
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APPENDIX A
page 13 of 15
sites. This is not accurate since DER would be capable of using the funds
even without specific UST lepslation if adequate staffing were provided to
implement the program.
On the final page of the report, the recommendation is made to terminate
ihe assistance agreement for failure to comply with the conditions of the
agreement. Although we agree that there may be cause to terminate the
agreement for failure to perform the activities agreed to in the grant
workplan, the responsibility of the State to enact legislation and develop
an UST program are not activities funded by the LUST Trust Fund. We
would only cause further delay and disruption in the development of then
program if we were to terminate the agreement now. that they have made
a commitment of three workyears of effort to the LUST program.
Furthermore, EPA policy' would limit the Regional OfOce use of the Trust
Fund only to those cases where there is a major public health emergency.
Rather than increasing the number of sites that could be addressed, there
would be fewer sites where action could be taken under a Federal lead.
The report also discusses the possibility of EPA assuming responsibility for
administering the UST program in Pennsylvania using the State's share
of the Trust Fund. FY 89 UST funding to DER was $200,000 and
for FY 90 $162,500 has been offered to the State. Such limited
funding would not be able to provide adequate contractor support
to implement the Pennsylvania program. The more extensive
funding available from the LUST Trust Fund could not be used by
EPA to implement the UST program.
Piease contact me or Mr. Wayne Naylor of my staff at (215) 597-7354 if
you have any questions or concerns.
50
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION ID
841 Chestnut Building
Philadelphia. Pennsylvania 19107
APPENDIX A
page 14 of 15
SUBJECT:
FROM:
TO:
Comments on the Draft LUST Audit Report
3 1
Stephen R. Wassersug, Director /Lf— /;-v<.-v / ^'
Hazardous Waste Management Division (3HWOO)
P. Ronald Gandolfo
Divisional Inspector General for Audit (3AIOO)
'^s.
We have completed our review of Section 4 of your draft
audit report entitled "Improvements are Needed in State
Procedures for Addressing Threats to Human Health," and we
have the following comments.
1. In Paragraph 1, it is stated that, in Virginia,
State officials do not believe their LUST program should
provide private residents with alternate water supplies,
because they do not provide this service under other state
water programs. This is not quite accurate. The Department
of Health, not the Virginia Water Control Board (VWCB), has
the responsibility to determine whether alternate drinking
water supplies are needed for private residents with
contaminated private wells. VWCB can spend the Trust Fund
monies for alternate water supplies only after coordinating
with the Department of Health. So far, no drawdown has
occurred in this category. We would recommend that VWCB
should set up a special agreement with the Department of
Health for using Federal Trust Fund monies to provide
alternate water supplies.
2. We fully agree with the recommendations that State
procedures for addressing threats to human health from
gasoline exposure be evaluated, and that specific policies
be adopted with respect to (1) drinking water containing
gasoline (2) use of water containing gasoline for non-
drinXing water purposes, and (3) possible explosion risks of
using gasoline containing water.
3. Of the chemical constituent found in gasoline,
benzene is the chemical of greatest health concern. EPA
regulates benzene as a human carcinogen under the air
NESHAPs program and both the RCRA and Superfund programs
manage benzene cleanup activities based on cancer risks.
51
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APPENDIX A
page 15 of 15
4. The Region III UST program is fully aware of the
health risks associated with benzene exposure. (See the
attached Allentown, Pennsylvania Risk Assessment for
gasoline vapors.) Therefore we expect that the task of
developing a specific recommendation about inhalation
exposure to volatile gasoline constituents found in drinking
water should occur smoothly.
5. In Paragraph l, it nay be an overstatement to say
"the States of Virginia and Delaware are subjecting LUST
site victims to unnecessary health risks...." This sentence
should be modified to provide the detail as to how icany
cases and what degree of risk is ongoing; otherwise, it may
be taken out of context.
Please contact me or Mr. Wayne Naylor of my staff at
597-7354 if you have any questions.
Attachment
52
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APPENDIX B
REPORT DISTRIBUTION
Headquarters
Assistant Administrator for Administration
and Resources Management {PM-208)
Director, Office of Underground Storage Tanks (WH-562A)
Director, Financial Mangement Division (PM-226F)
Office of the Comptroller (PM-225)
Agency Followup Official (PM-225); Attention: Director, Resource
Management Division
Agency Followup Official (PM-208)
Agency Followup 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 Followup Coordinator (3PM72)
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