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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF THE INSPECTOR GENERAL FOR AUDITS
WESTERN DIVISION
211 Main Street, Suite 220
San Francisco, CA 94105
415 744-2445
March 30, 1990
SUBJECT: Review of EPA Region B's Corrective
Actions Taken in Response to
Audit Report No. E5eH7-08-0005-71992
Review of EPA Region B's Administration of
Superfund Cooperative Agreements
Special Report No. E1SGG9-08-5000-0400013
From: Truman R.
Divisional Inspector General for Audit
Western Division
To: James J. Scherer
Regional Administrator
EPA Region 8
SCOPE AND OBJECTIVES
We have completed a special review of the corrective actions
taken by Region 8 in response to the audit findings and
recommendations contained in our prior audit of Region 8's
Administration of Superfund Cooperative Agreements (Audit Report
No. E5eH7-08-0005-71992), dated September 30, 1987. This
followup review was conducted in response to the Inspector
General Act Amendments of 1988 which focused increased attention
on Agency responses to the findings and recommendations published
by the Inspectors General. These amendments require that Agency
management report semi-annually, in a separate report to
Congress, the corrective actions taken in response to audit
findings and recommendations. The Office of the Inspector
General (OIG) is also charged with periodically reviewing Agency
corrective actions to determine their timeliness and
effectiveness in correcting reported conditions.
The purpose of this followup review was to determine the
effectiveness of Region 8's actions in correcting the reported
conditions. The specific objectives of our review were to
determine whether:
1. Region 8 management took the corrective actions
indicated in its response to the audit recommendations;
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2. The corrective actions were implemented in accordance
with the Region's action plan and milestone dates; and
3. The actions were effective in correcting the
conditions addressed in the audit report.
To accomplish our objectives we: (i) reviewed applicable
regulations, policies and procedures; (ii) interviewed
responsible Region 8 personnel; (iii) reviewed applicable records
relative to the Region's administration of Superfund cooperative
agreements; and (iv) selectively tested the status of Superfund
site activities. We did not evaluate the internal controls
associated with the input and processing of information into
automated records systems. Due to its limited scope, the review
did not represent an audit in accordance with the Government
Auditing Standards (1988 Revision) issued by the Comptroller
General of the United States. Our review was performed during
the period August 14, 1989 to November 20, 1989.
PRIOR AUDIT FINDINGS AND RECOMMENDATIONS
Audit Report No. E5eH7-08-0005-7l992 (the audit) was issued
on September 30, 1987. The audit was performed for the purpose
of evaluating Region 8's management and supervision of Superfund
cooperative agreements awarded under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980
(CERCLA). The period covered by the audit was August 1982
through February 1987. The primary objectives of the audit were
to:
Determine the adequacy of Regional policies, procedures,
and practices for administration and management of
cooperative agreements under CERCLA;
- Review compliance of Regional policies, procedures,
and practices with National Superfund guidance; and
Ascertain that the objectives of the cooperative
agreements were being achieved.
The audit concluded that the Region needed to more
effectively manage the $6.4 million of cooperative agreements in
effect at that time. In general, the audit disclosed that pre-
remedial and remedial work were not performed timely and
effectively. The audit also noted a need for increased Regional
involvement with the states and improved Regional procedures.
Finally, the review disclosed a need for improved monitoring of
the financial management of cooperative agreement recipients.
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The audit report's ten recommendations addressed the conditions
reported in three findings. The three findings are
summarized as follows:
1. Monitoring of Pre-remedial and remedial functions
required Regional attention. State produced work products were
sometimes late and incomplete because of inadequate Regional
procedures to monitor state activities under cooperative
agreements.
2. Regional Administration of Cooperative Agreements should
be strengthened. Administrative aspects of the cooperative
agreements were deficient due to inadequate Regional procedures
for overseeing state activities.
3. Regional oversight of recipient financial management
systems need improvement. Financial reporting by the states was
deficient due to inadequate regional oversight of recipient
financial management systems and inadequate Regional tracking of
recipient financial submissions.
On December 18, 1987, Region 8 provided a response to the
audit report as required by EPA Directive 2750. This response
was supplemented with additional clarifying correspondence on
February 19, 1988 and April 7, 1988. The responses indicated •
general agreement with the audit findings, and detailed the I
specific corrective actions to be taken in response to the
recommendations. For most corrective actions, target dates for
implementation were included in the response.
RESULTS OF REVIEW
Region 8 initiated actions to correct the audit findings
discussed in the audit and to implement the 10 recommendations.
The Region's implementation of its action plan, however, was not
timely in all instances nor fully effective in correcting the
previously reported conditions. Our followup review disclosed
that corrective action to implement two of the audit report's
recommendations remained incomplete. Also, the corrective
actions on two other audit recommendations were not fully
effective in correcting the deficiencies discussed in the audir.
Our followup review also disclosed that the Region does not
have an effective system for tracking the implementation of
corrective actions. Consequently, Regional management has no
assurance or knowledge that its commitments to correct audit
identified deficiencies have been met.
The results of the special followup review are presented in
the same order as the findings contained in the audit.
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Special Report No. E1SGG9-08-5000-0400013
1. Pre-Remedial Program Continues to Require Corrective Actions
Finding No. 1 of the audit included recommendations that the
Region improve the: (i) timeliness and effectiveness of pre-
remedial functions performed under cooperative agreements; and
(ii) management of National Priority List NPL sites included in
cooperative agreements to assure that timely actions were being
performed. The Region agreed with the recommendations.
Our followup review disclosed that/ while the Region had
initiated timely action to correct the conditions leading to
recommendation no. 1, its actions were not fully effective. The
reported conditions included inadequate Regional oversight of
state pre-remedial work and a lack of progress toward completion
of preliminary assessments (PAs) and site investigations (Sis).
Regarding the first condition, the Region prepared written
procedures to improve Regional oversight of state pre-remedial
work. The procedures, dated June 10, 1988 and entitled
"Procedures for Managing Superfund Cooperative Agreements",
generally addressed the major events in the application, award
and performance monitoring on Superfund cooperative agreements.
The procedures were supplemented by a delineation of the roles
and responsibilities of the Project Officer, the Remedial Program
Manager (RPM) and Grants Administration Section of the Region,
and by a policy on project file documentation requirements dated
April 7, 1988. These procedures represented a significant
improvement. However, we concluded that the procedures have not
been fully effective because the Region failed to disseminate
them to all applicable Regional staff and provide appropriate
training on their application. This conclusion was based on our
discussions with three RPMs, two of which disclosed that they
were neither aware of nor in full compliance with the issued
procedures. As a result, these two RPMs were not adequately
documenting their evaluations of state pre-remedial work
products. Since the Region is responsible for monitoring the
progress of state Superfund activities, and is ultimately
responsible for assuring compliance with program objectives, it
is our opinion that additional Regional effort is required to
correct the previously reported condition. In this regard, the
Region should consider holding periodic meetings and training
sessions for Regional staff involved in the Superfund cooperative
agreement program to discuss the roles and responsibilities of
each participant in the process.
With respect to the need for progress toward completion of
PAs and Sis, the Region had agreed to meet the goals and
timetables stated in the Superfund Amendments and Reauthorization
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Act of 1986 (SARA) for performance of the pre-remedial program
requirements. SARA required that all sites identified by EPA as
of December 1986 have a PA completed by January 1, 1988 and an SI
(if necessary) completed by January 1, 1989.
While we did not perform a followup review on the Region's
PA activities, we selectively reviewed 84 sites in Region 8
subject to the SARA timetables for completion of the Sis by
January 31, 1989. Twenty-five (or 30 percent) of the sites had
not met the SARA goal for completion of an SI. In fact, none of
the 25 sites had a completed SI as of October 16, 1989.
According to Regional staff, the Sis had been started on all 84
sites but had not been completed due to uncertainties over the
requirements of the proposed new Hazard Ranking System (HRS).
Regional personnel stated that the revised HRS procedures may
require additional data gathering during the SI phase of work.
We did not review the timeliness or adequacy of the Region's
performance of required PAs under SARA.
In its response to recommendation no. 2, the Region also
committed to perform several site specific activities by certain
dates. Our followup review disclosed that some of these
committed actions were also missed. The following schedule
provides examples of the types of actions missed by the Region.
Regional Commitments to CorrectiveAction
Superfund Site
Sharon Steel
Silver Bow Creek
Arsenic Trioxide Site
(Operable Unit 1)
Arsenic Trioxide Site
(Operable Unit 2)
Action Required
Record of Decision
Record of Decision
Construction Start
Construction Start
Completion
Target
3rd Qtr.
FY 1989
3rd Qtr.
FY 1989
4th Qtr.
FY 1988
4th Qtr.
FY 1988
Status
10/31/89
Incomplete
Incomplete
Not
Started
Started
9/89
In our opinion, the Superfund site status information
disclosed during our followup review demonstrates the need for
increased Region.8 attention to assure full implementation of our
prior audit recommendations.
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Special Report No. E1SGG9-08-5000-0400013
2. Regional Administration of Cooperative Agreements Needs
Strengthening
Finding No. 2 of the audit included recommendations that the
Region: (i) establish a more active role in the
monitoring of the recipients' cooperative agreement activities;
(ii) develop written procedures to assist the RPM's in the
performance of their administrative responsibilities; (iii)
assure that the recipients have the necessary qualifications to
meet the requirements of 40 CFR 30.301 prior to the award of a
cooperative agreement; (iv) require that recipients' prepare site
specific schedules for all National Priority List sites; (v)
place additional emphasis on updating and maintaining the CERCLIS
data base; and (vi) continue to coordinate with the State of Utah
in an effort to develop an effective working relationship. The
Region agreed with these recommendations.
Our followup review disclosed that the corrective actions on
five of the six recommendations were implemented and were
effective in addressing the conditions identified in the audit
report. However, actions relative to first recommendation (i.e.
active monitoring of recipient activities) have not been fully
successful.
In its response to the audit recommendation, the Region
emphasized the value of executing Superfund Memorandum of
Agreements (SMOAs) with the states. The SMOAs were to shift many
of the administrative activities to the states, thereby assuring
correction of the cited conditions. The Region agreed to have
three SMOAs in place and three others in negotiations by the end
of FY 1988. As of the date of our current review, only the State
of Utah had an operational SMOA.
We discussed the current status of the SMOAs with Regional
staff and were informed that (i) the States of Colorado and
Montana are currently negotiating SMOAs with the Region, (ii)
Wyoming is withdrawing from any responsibility for the Superfund
program, and (iii) North Dakota and South Dakota have minimal
Superfund activity, therefore the value of a SMOA would be
questionable. Wyoming, North Dakota, and South Dakota have
historically had difficulty in hiring and retaining sufficiently
qualified staff to participate in the Superfund program in a
meaningful way.
The Region also noted that under the proposed revised
National Contingency Plan (NCP), SMOAs are encouraged but are not
mandatory unless the state: (i) wants to recommend remedies for
EPA concurrence; or (ii) wants to be recognized as the lead
agency for a non-fund-financed action at an NPL site. The
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proposed NCP also would require that the Region enter into a SMOA
if a state requests and the state has demonstrated the capability
to take the lead for response.
Considering the significance of the Superfund program, it
remains our opinion that the Region should establish a more
active role in monitoring activities to assure timely and
adequate performance. Regardless of whether states are
performing under SMOAs or not, the Region needs to establish
adequate controls to monitor performance.
3. Oversight of Recipient Financial Management Needs Improvement
Finding No. 3 of the audit included recommendations that the
Region: (i) prepare written procedures for use in administering
the Letter of Credit (LOG) method of reimbursement; and (ii)
improve review of recipient accounting systems. The Region
concurred with the recommendations.
Our followup review disclosed that the corrective actions
proposed by the Region were implemented timely. However, their
actions were not fully successful in correcting the deficiencies
which led to the first recommendation.
We found that the Quarterly Cash Transaction Reports
(SF-272) continue to be submitted late by the states. Our prior
review noted that some SF-272s were submitted up to 75 days late.
Our followup review found that this condition continued to exist.
The LOC User's Manual requires that an SF-272 be submitted within
15 days following the end of the calendar quarter. We reviewed
29 SF-272s due between April 1987 and July 1989 and found that 11
(or 38 percent) were submitted between 2 and 65 days late. The
Region needs timely submission of these reports to effectively
monitor the financial aspects of the cooperative agreements.
Therefore, it remains our opinion that the Region needs to
continually monitor LOC recipient performance.
4. other Matters - Lack of Corrective Action Tracking System
In addition to the status of corrective actions taken by
Region 8 on the audit recommendations, our followup review
disclosed that the Region did not have an effective system for
tracking the implementation of corrective actions agreed to in
response to audit report recommendations. As a result, Regional
management had no assurance that the agreed to corrective actions
are implemented timely, completely and effectively, as required
by EPA Directive 2750.
Until early 1988, Region 8 used the Agency's automated audit
follow up system to track implementation of corrective actions.
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Special Report No. E1SGG9-08-5000-0400013
EPA, however, terminated use of the system in early 1988 because
it was considered inadequate. Since that time, no Agency-wide
automated system has been available for use while the replacement
system was being developed and implemented. The issue of
maintaining an Agency-wide system was recently addressed in the
EPA Inspector General's Special Review of the Effectiveness of
Agency Audit Followup, dated September 5, 1989. That review
recommended that the data base of a new system being developed by
EPA include all outstanding incomplete actions from prior OIG
audit reports.
The Region advised that some of its staff attended
training on EPA's new audit tracking system, the Management
Audits Tracking System (MATS), during October 1989. Regional
management also stated that the new system would be fully
implemented by November 15, 1989 and that all outstanding actions
from prior OIG audit reports would be included for
tracking purposes. Successful implementation of the new tracking
system should correct the identified weakness.
RECOMMENDATIONS
We recommend that the Region 8 Regional Administrator:
1. Prepare and implement an updated action plan which
addresses each of the incomplete corrective actions in audit
report no. E5eH7-08-0005-711992. Specifically, the following
corrective actions should be included.
a. Assure that Regional Superfund staff are aware of and
fully instructed in Regional policies and procedures implemented
to enhance oversite of state performance in the Superfund
cooperative agreement program. Specifically, the importance of
the policy entitled "Region VIII Policy on Documentation in
Project File of Region's Acceptance/Rejection of Completed
PA's/SI's", dated April 7, 1 988, should be re-emphasized.
b. Assure that all remaining Si's covered by SARA'S original
completion goal of January 1, 1989 are adequately tracked and
completed to the extent possible, pending implementation of the
revised HRS.
c. Give special attention to expediting action at the
following three NPL sites identified in both the audit and our
followup review as experiencing inordinate delays:
- Sharon Steel Site
- Silver Bow Creek Site
- Arsenic Trioxide Site
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d. Continue to take an active role in monitoring the
timeliness and adequacy of state Superfund cooperative agreement
performance; including having in place for each state: (i) a
signed final SMOA; or (ii) alternative oversight methods tailored
to state.
2. Enter the corrective action plan from our followup review into
MATS and monitor progress until all corrective action items are
complete.
MANAGEMENT COMMENTS
A draft report was transmitted to Region 8 for comment on
December 28, 1989. The Region responded with comments on January
31, 1990. An exit conference was held with Region 8 officials on
March 21, 1990, and a supplemental response to the report was
provided to the auditors on March 26, 1990. While the responses
to the draft report did not indicate complete concurrence with
the results of the review, they were generally constructive and
offered some explanantions of extenuating circumstances that
impacted the Region's ability to meet all of their prior
commitments.
The Region's comments are summarized below, followed by
auditor comments, as necessary. With respect to the supplemental
comments, we concluded that they did not materially change the
Region's initial positions, other than specifically noted below.
The complete text of the Region's responses have been included as
Attachment 1 and 2 to this report.
Region 8 Comments and Our Evaluation:
Finding 1. The Region responded that, since the audit, every EPA
review of State prepared pre-remedial deliverables has been
accompanied by a transmittal letter indicating the Region's
comments and findings. The RPM's lack of awareness of the
procedures did not diminish that fact. In regard to it's failure
to meet the SARA schedule for performance of PAs and Sis, the
Region emphasized that the schedules included in SARA were goals
and not requirements. The Region emphasized that the whole
Agency failed to achieve the goal for Sis but that the Region
will continue to "whittle away" at the so-called backlog. The
Region indicated that all required Sis are either scheduled for
FY90, underway, or completed. Another constraint on the
completion of Sis is the absence of an operational HRS. As a
result, many of the Sis which CERCLIS indicates as incomplete
actually have been completed to the point that all that remains
is the final step of scoring the site once there is an
operational HRS in place.
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Special Report No. E1SGG9-08-5000-0400013
In its supplemental response, the Region commented that
construction at both of the Arsenic Trioxide Sites was initiated
during calendar year 1989 and that that information was available
in the CERCLIS system.
Auditor Evaluation. Contrary to the Region's assertion, our
followup review disclosed that two of the three RPMs responsible
for review of state prepared pre-remedial work products indicated
they did not document the files in accordance with the Regions
policy. One RPM indicated that he was not aware of the
requirement.
Issuance of policies and procedures is not always sufficient
to correct operating deficiencies. Constant staff turnover and
assignment rotation within any organization, necessitate a
continuing program of information reinforcement and education.
This is necessary to have an effective system of management
controls.
Regarding its comments on the failure to meet the
legislative goals for completion of PAs and SIsf we acknowledge
that constraints outside the Region's control may have impacted
its ability to meet the SARA timetable for completing Si's.
However, in the absence of an operational HRS, we believe that
the Region should continue to complete the Sis in an expeditious
manner.
With regard to the status of construction activity at the
Arsenic Trioxide Sites, we are unsure of the exact definition of
construction start as applied to the CERCLIS system. Even if
both sites are now under construction, the action dates still
indicate that a considerable delay was experienced in
accomplishing these prior commitments.
Finding 2. The Region responded that they had made a
conscientious effort to negotiate SMOAs with each of the states
in the Region. While the Region noted that the SMOAs have been
or soon will be put into effect in Utah and Colorado, and some
progress has been made with Montana, the SMOA does not appear to
be the method to pursue with Wyoming, North Dakota, and South
Dakota. Instead, the Region has established State Coordinators
to act as liaison between the States and the Region. Also,
monthly meetings are held with Utah and Colorado for oversight
and coordination purposes. While this program has been
successful, the Region concedes that they have encountered many
difficulties in monitoring activities in South Dakota and
Wyoming. These states continue to experience difficulty in
keeping experienced staff. Due to high turnover, or the
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Special Report No. E1SGG9-08-5000-0400013
inability to hire staff, many quarterly reports have been missed
and little work has been accomplished over the last two years in
the pre-remedial program.
Auditor Evaluation. We acknowledge the Region progress's toward
establishing a more active role in monitoring state performance
under the cooperative agreements. However, the Region has not
yet fully implemented its action plan. The Region committed to
having three SMOA's in place and three others in negotiations by
the end of FY 1988. While it appears that that particular goal
is on longer achievable for practical reasons, the intent of the
audit recommendation remains unachieved. As of March 12, 1990,
only one SMOA was in effect. Consequently, we believe that this
corrective action remains incomplete and the item should remain
open in MATS until: (a) all states have a SMOA in place; or (b)
alternative oversight methods are in place.
Finding 3. The Region responded that most of the late SF-272's
included in the followup report were identified and followed up
on during the process of implementing the audit recommendations.
Procedures followed in those cases was to call the state to
notify them that their SF-272s were late. If the recipient is
unresponsive, written notification is given. Continued
unresponsiveness or late submission could result in notification
to the state that LOG privileges would be suspended until receipt
of the SF-272. This procedure was followed in Montana where the
Region's action has resulted in timely submission of the state's
SF-272's.
Auditor Evaluation. A review of performance for the most recent
information available, quarter ending December 31, 1989, showed
that all quarterly reports were received on a timely basis. It
appears that the Region's practice of monitoring and followup for
tardy performance, has corrected the problem. We encourage the
Region to maintain their pratices in the future.
Finding 4. The Region responded that until the Agency-wide
tracking system is in place, the Region would implement an
interim audit tracking system. In their supplemental response
the Region agreed to implement the MATS.
Auditor Evaluation. If implemented and used by the Region, the
MATS should correct the previously reported condition.
ACTION REQUIRED
In accordance with EPA Directive 2750, the Action Official
is required to provide this office with a written response to the
audit recommendations included in this report within 90 days of
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Special Report No. E1SGG9-08-5000-0400013
the date of this report. For corrective actions that are ongoing
or planned, the Directive requires that the response include an
action plan with specific milestone dates.
You were designated the Action Official for this report
because of your responsibilities in conjuction with the original
report of audit. Directive 2750, Chapter 3, states that the
Action Official is responsible for "Ensuring that timely,
adequate responses and determinations are transmitted on findings
and recommendations contained in audit reports and that monetary
and non-monetary corrective actions are implemented." With the
enactment of the Inspector General Act Amendments of 1988
(Amendments) there is heightened emphasis on timely corrective
action. The Amendments require that the Agency report to
Congress semi-annually on audit resolution, including reasons for
any corrective actions that remain incomplete one year after the
management decision on the report. Therefore, it is in the best
interest of your office and the Agency, to implement corrective
actions in a timely manner. A copy of this report was provided
to EPA's Office of Administration, Resources Management Division
(RMD). RMD was delegated responsibility for monitoring,
tracking, and reporting on audit resolution and implementation of
corrective actions, using the MATS.
Please refer to the special report number on all related
correspondence. If you have any questions regarding this special
review, please call Mr. Truman R. Heeler at FTS 484-2445.
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ATTACHMEOT 1
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION VIII
999 18th STREET - SUITE 500
DENVER, COLORADO 80202-2405
iJAN 3 1 !?"
Ref: 8PM-GM
MEMORANDUM
TO: /^ruman R. Beeler
Divifeipnal9Insper:tor General For Audit
,
FROM: //ames J. Stherer >'
legional Administrator
EPA, Region 8
SUBJECT: Response to draft audit report No. E5eH7-08-0005-71 992
Review of EPA Region 8's Administration of Superfund
Cooperative Agreements
The Region provides the following comments in response to
the subject draft audit report. We appreciate the opportunity
given us to respond and hope that our comments will provide you
with the necessary clarification.
FINDING - 1 (Page 4 & 5)
Pre-Remedial Program Continues toRequire Corrective Actions.
According to your report, the auditors found 1) inadequate
Regional oversight of state pre-remedial work, and, 2) a lack of
progress toward completing preliminary assessments (PA) and site
investigations (SI).
With respect to 1 ) above, since the original audit, every
EPA review of State prepared pre-remedial deliverables has been
accompanied by a transmittal letter indicating our comments and
findings (either by approval or request for re-submittal). This
has been the case notwithstanding your draft report's discussion
of RPM awareness of written procedures, which cannot diminish the
success of our written dialogue with the States on their
deliverables.
With respect to 2) above, SARA established goals, not
requirements, for completing PA's and Si's. Region 8, along with
all EPA Regions, has met the PA goal of SARA.
The draft report notes that 30% of site files reviewed had
not received Si's per the SARA goal. While the auditor's method
for determining whether Si's were needed at all sites was not
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Special Report No. p;iSGG9-08-5000-0400013
ATTACHMENT 1
provided, it should be pointed out that the SI completion
timetable in the act was a goal that EPA was asked to achieve to
the "maximum extent practicable."
Over a year ago, Headquarters announced that the Agency
would not meet this goal due to resource and other constraints.
In Region 8, we have proceeded to whittle away at the so-called
SI backlog to the maximum extent practicable. All sites needing
Si's are either scheduled in FY90, underway, or completed.
To obtain credit for SI completions, we must indicate the
future disposition of the sites. Without an operational Hazard
Ranking System in place, we cannot determine whether sites should
be dropped from our process or scored for NPL listing. Hence,
the CERCLIS data base shows that Si's have not been "completed"
when in fact all we have not been able to do is determine the
nature of future response actions.
All of the above needs to be reflected in any summary of
Regional performance in "completing" Si's or else the draft
report would be suggesting that we take actions that are
indefensible from either an environmental or guidance
perspective. Given the discretion awarded the Agency with the
statutory language to the "maximum extent practicable," we do not
recommend "completing" Si's before we can justify our future
decisions to the public and to Congress.
FINDING - 2 (Page 5 & 6)
Regional Administration of Cooperative Agreements Need
Strengthening
The auditors' finding indicates that Superfund Memorandum of
Agreement's (SMOA) have not been implemented as agreed to in the
previous audit report. In addition, the auditors stated that the
Region should establish a more active role in monitoring state
activities to assure timely and adequate performance.
Each Regional state was requested to initiate a SMOA with
EPA to define roles and responsibilities. The Region offered
each state funding under a CORE grant to develop and negotiate
these agreements. A SMOA has been executed in Utah and is near
signature in Colorado. A draft SMOA was completed in Montana but
the state has not made completion of this document a priority
item.
As noted in your draft audit report, North and South Dakota
and Wyoming have very small superfund programs and very little
superfund activity of any kind. In addition, Wyoming is in the
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ATTACHMENT 1
process of closing out its participation in the superfund program
and North and South Dakota have indicated they will do the same
as soon as pre-remedial work is completed. We believe it is
clear that the Region did indeed make every effort to negotiate
these agreements.
Regarding the Agency's attempt to closely monitor
performance under cooperative agreements, we believe that this
has been accomplished. We have been successful in maintaining a
close working relationship with all Regional states, particularly
Utah and Colorado. Due to the size of these programs and the
amounts of money awarded, key personnel meet with these two
states on a monthly basis. A program person with a technical
background has been designated as State Coordinator to act as
liaison between EPA and the States on all issues. This
individual works closely with Grants Management to assure close
coordination on cooperative agreements.
In addition, this individual and the Grant's representative
monitor oversight of all cooperative agreements by assuring that
quarterly reports are submitted by the states and reviewed by
designated project officers for those agreements. Responses are
also prepared and submitted to the states.
While this system is in place and quite effective for Utah,
Colorado and Montana, many difficulties have been experienced in
monitoring cooperative agreement activities in the states of
South Dakota, and Wyoming. These states have experienced a great
deal of difficulty in keeping experienced staff. Due to high
staff turnover and/or inability to rehire, many quarterly reports
were missed and little work was accomplished over the last two
years under pre-remedial.
FINDING - 3 Page 7
Oversight of Recipient Financial Management Need Improvement
The audit report indicated that Regional state's continue to
submit their Quarterly Cash Transaction Reports (SF-272) late and
that effective procedures be implemented to assure compliance
with Letter of Credit (LOC) reporting requirements.
Most of the late SF-272's included in the auditors current
report, were identified and followed up on during the process of
resolving the previous audit. Our procedure, which was followed
in those cases, is to call the state to notify them that their
SF-272's are late. If the state is unresponsive, written
notification is given. Continual unresponsiveness or lateness
could result in notification to the state that LOC privileges
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Special Report No. E1SGG9-08-5000-040001 3
ATTACHMENT 1
will be suspended until receipt of the SF-272. This procedure
was followed in Montana where the Region's action has resulted in
timely submission of the state's quarterly cash transaction
reports.
FINDING - 4 Page 7 & 8
Lack of Corrective Action Tracking System
The auditors indicated that the Region does not have an
effective system for tracking the implementation of corrective
actions as agreed to in the previous audit report.
Although Regional staff were provided necessary training on
the Agency's new audit tracking system, it has yet to be provided
for our use. Therefore, until the new audit tracking system is
available, an interim system will be implemented within the
Region.
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Special Report No. E1SGG9-Q8-5000-0400013
ATTACHMENT 2
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION VIII
999 18th STREET - SUITE 500
DENVER, COLORADO 80202-2405
MAR 2 '
Ref: 8PM-GM
MEMORANDUM
TO:
FROM:
SUBJECT:
Truman R. Beeler
Divisional Inspector General For Audit
Martha Nicodemus, Chief
Grants Management Branch
Addendum to draft audit report
No. E5eH7-08-0005-71992, EPA Region 8's
Administration of Superfund Cooperative Agreements
FINDING 1 (Page 4 & 5) and FINDING 2 (Page 5 & 6)
Please consider the attached comments from the Superfund
Remedial Branch and the Superfund Management Branch as addendums
to the Regions response dated January 31, 1990. These addendums
are the result of the exit conference with the Inspector General
staff on March 21, 1990.
FINDING - 4 Page 7 & 8
The Grants Management Branch now has in place the Agency's
new Management Audit Tracking System (MATS).
If you have any further questions regarding this response,
please contact me.
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Special Report No. E1SGG9-Q9-5000-0400013
ATTACHMENT 2
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION VIII
999 18th STREET - SUITE 500
2! ;==•-• DENVER, COLORADO 80202-2405
REF: 8HWM-SR
MEMORANDUM
TO: Patrick Godsil, Deputy Director
Hazardous Waste Management Division
FROM: Diana Shannon, Chief
Superfund Remedial Branch
SUBJECT: Supplemental Information - Inspector General Audit No.
E5eH7-08-0005-71992
This is a followup to the March 21, 1990 meeting with the
Inspector General staff. Please find the applicable additional
information provided below:
Regional Commitments to Corrective Action
Sharon Steel - Record of Decision: ROD has not yet been
issued due to intensive public and political opposition to the
proposed remedy. The ROD is now planned for 4th Quarter of 1990.
EPA agreed to do additional studies at the site before
reproposing the remedy for the site. Further, public and State
opposition may occur, therefore, we cannot to commit to when the
ROD will be issued.
Arsenic Trioxide Site (Operable Unit 1) - Construction
Start: This commitment has been met - construction of the rural
water system started on 8/11/89.
Arsenic Trioxide Site (Operable Unit 2) - Construction
Start: This commitment has been met - construction of the Lidger
Wood and Wyndmere projects started on 3/31/89 and 3/9/89,
respectively.
We do not understand why the Inspector General auditors did
not get the information on the Arsenic Trioxide construction
dates. That information was in the CERCLIS reports provided.
These.activities, like many others, are tracked nationally
through the Superfund Comprehensive Accomplishments Plan (SCAP)
and the Strategic Targeted Activities for Results System (STAR)
and through monthly briefings with the Regional Administrator,
weekly briefings within the Branch, and daily tracking by
supervisors and RPMs. Because of the extensive tracking already
underway, and the peripheral relation of this activity to the
1
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Special Report >to. E1SGG9-08-5000-0400013
ATTACHMENT 2
Inspector General's audit report, we recommend that this activity
no longer be tracked as a part of this audit.
Charles Mooar offered to gather the information on the
Silver Bow Creek site. We would like a copy of that information
so we can stay apprised of activities in Montana.
If you have any questions, please let me know.
cc:
SRB SCs
Mooar
Coursen
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Special Report Mo. E1SGG9-08-5000-0400013
ATTACHMENT 2
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION VIII
999 18th STREET - SUITE 50Q-- .,
DENVER, COLORADO 80202-2405" "--C^
23 J9SO '.-—-F'"''^Pl
Ref: 8HWM-SM - ' ' :
TO: Patrick Godsil, Deputy Director
Hazardous Waste Management Division
FROM: Charles Mooar, Chief
Superfund Management Bra
SUBJECT: Amendment to EPA Response to the Inspector General
Audit No. E56H7-08-0005-71992
Please consider this response an amendment to the original
EPA response and a followup to the March 21, 1990 meeting with
the Inspector General.
Finding 1, Pre-Remedial.
Regarding the auditor's finding on lack of progress toward
completing preliminary assessments and site investigations, I
would like to add that follow-through on commitments is
necessarily contingent upon adequate funding. The Region always
asks Headquarters (HQ) for the funding needed to complete the
commitments it makes, however, the Region does not always receive
the funds to do so. In the case of PAs and Sis, the Region has
not received the funding adequate to complete the Sis to which it
committed. We believe that in the future, the audit should
concentrate on EPA's administrative monitoring and management of
cooperative agreements in achieving progress toward our
commitments rather than the meeting of the commitment itself.
The achievement of commitments is closely monitored within the
Region and at HQ. In addition, Congress holds EPA accountable
for missed commitments and targets.
Finding 1, Regional Commitments to Corrective Action
Silver Bow Creek - Record of Decision (ROD). As noted in
previous Regional comments, the Silver Bow Creek NPL site is an
extremely complex site, covering a large area from the town of
Butte to Milltown Dam, and requiring investigations and studies
of hazardous substances generated during over 100 years of mining
and ore processing operations, as well as other industrial
activities. Since the original audit and audit report, EPA and
the State of Montana have worked towards defining priorities
within this complex site. The jointly-issued master plan
(published October 1988) describes an overall approach for
addressing the site on an operable unit (OU) basis.
The commitment reflected in the OIG's list of corrective
actions is based on the schedule for the Warm Springs Pond
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Special Report No. E1SGG9-08-5000-0400013
ATTACHMENT 2
Operable Unit which had a ROD planned for the FY 1989, third
quarter. Region VIII also committed to this date in SPMS/SCAP
negotiation with HQ for FY 1989. Although the SPMS/SCAP target
was not met, the State did complete a draft feasibility study
(FS), which was distributed for public comment on October 25,
1989. Since then, EPA and the State of Montana have agreed that
EPA will take the lead on response to public comment and other
actions needed to issue the ROD, due to lack of adequate staff at
the State. The Region expects that it will address this slipped
SPMS/SCAP target during FY 1990.
Despite delays in the issuance of the ROD, expedited
response actions are proceeding. As a result of public comment
on the draft FS, EPA and the State decided to implement a non-
time-critical removal action to address concerns at the Mill-
Willow bypass of the Warm Springs Pond OU. The PRP at the site,
ARCO, will complete the work under an administrative order on
consent, beginning May 1990. The non-time-critical removal
action will involve excavation of approximately 200,000 cubic
yards of tailings and contaminated soil, and the strengthening of
the pond berm that parallels the bypass to provide additional
protection from floods/earthquakes. The estimated cost for this
action is between $10 million and
$15 million.
Finding 2, Regional Administration of CooperativeAgreements.
I would like to add to our response to the auditor's finding
that the Region should establish a more active role in monitoring
state activities to assure timely and adequate performance. The
implication of the auditor's response was that SMOAs would allow
the Region to achieve this type of oversight. I would like to
point out that the purpose of a SMOA is to define roles and
responsibilities of the state and EPA for the Superfund program.
It does not facilitate the achievement of better oversight. EPA
has reevaluated its thinking on the value of this agreement which
is reflected in the final NCP (see Attachment 1).
The Region believes that a SMOA is a useful working document
for states that have significant Superfund programs involving
state-lead projects or the recommendation of remedies to EPA. In
other states, where States do not have a SMOA or an intent to
negotiate one, e.g., North Dakota, South Dakota and Wyoming, EPA
nonetheless does have mechanisms in place to assure that adequate
program and cooperative agreement oversight is achieved. First,
the Scope of Work for each pre-remedial cooperative agreement
with such states covers these responsibilities. I have attached
a sample of such cooperative agreement language for your
information (Attachments 2). In addition, regular telephone
conversations are used to establish a vital link between the
agencies to assure effective planning and coordination.
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Special Report Vo. 31SGG9-08-5000-0400013
ATTACHMENT 2
We pointed out in our earlier response that quarterly
reporting, which is the mechanism for oversight, has been a
problem in Wyoming and South Dakota. Wyoming has pulled out of
the program altogether and South Dakota has since hired staff and
begun submitting reports in a timely fashion.
We disagree with the OIG evaluation that the Region must
more actively monitor the states. We believe the states are
closely monitored through reporting on cooperative agreements.
When the state is slow or deficient in reporting, EPA works with
the appropriate staff to remedy the problem. Staff resources
have been dedicated to this task within the program and Grants
Management Branch. These resources were doubled in FY 1990.
Attachments
cc: Tim Alleman
John Wardell
Diana Shannon
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Special Report No. E1SGG9-08-5000-0400013
APPENDIX A
DISTRIBUTION
A. Office of the Inspector General
Headquarters Office
Inspector General
Deputy Inspector General
AIGA
DAIGA
Director, Audit Operations Staff
DlGAs
B. Regional Office
Regional Administrator, Region 8
Director, Waste Management Division
Audit Followup Coordinator
C. Headquarters Office
Assistant Administrator for Administration
and Resources Management -
Agency Followup Official (PM-208)
Director, Resource Management Division
Agency Followup Coordinator (PM-225)
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