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OFFICE OF INSPECTOR GENERAL
EPA-350-R-05-001
Catalyst for Improving the Environment
August 2005
Annual Superfund
Report to Congress
for Fiscal 2004
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O/G Scorecard Summary of Superfund
Results by OIG Goal - Fiscal 2004
OIG GOAL 1
Contributing to Improved Human Health and Environmental Quality
(Below are Superfund Results of OIG Work in Terms of Products, Actions by EPA, and Impacts)
36 Environmental Recommendations
15 Environmental Risks Identified
14 Examples of Environmental Policy, Regulatory, Practice, Process Actions, or Changes Made
1 Environmental Risk Reduced
5 Certifications/Validations/Verifications (of Environmental Information or Activity Reviewed)
1 Best Environmental Practice Implemented
8 Environmental Critical Public or Congressional Concerns Addressed
OIG GOAL 2
Improving EPA's Management, Accountability, and Program Operations
(Below are Superfund Results of OIG Work in Terms of Products, Actions by EPA, and Impacts)
22 Recommendations for Management Improvements/Additional Review
19 Certifications/Validations/Verifications/Allegations Disproved
1 Example of Management Policy, Practice, Process Actions, or Changes
5 Management Critical Public or Congressional Concerns Addressed
11 Criminal, Civil, and Administrative Actions
$2,401,864 Total Questioned Costs ($1,300,021 Federal Share) *
$ 260,605 Savings (from investigative actions)
$ 220,573 Fines, Settlements, and Restitutions
* exclusive of contracts and Single Audits from audits by Defense Contract Audit Agency, other Federal Auditors,
and Certified Public Accountants
75% OIG Customer Satisfaction Rating on Superfund Assignments
To find out more about the U.S. Environmental Protection Agency's
Office of Inspector General, visit our web site at:
http://www.epa.gov/oig
Cover Photos: Photographs of the Gilt Edge hardrock mining site, courtesy of Tina Lovingood.
Hardrock mining sites may have a significant impact on the Superfund Trust Fund.
Printed with vegatable oil based inks on 100% recycled paper (minimum 50% postconsumer)
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This report covers fiscal 2004 Superfund activity of the Environmental
Protection Agency (EPA) Office of Inspector General (OIG). The
Superfund Amendments and Reauthorization Act of 1986 requires the
OIG to annually audit the Superfund program and report the results to
Congress.
A growing shortfall in the Hazardous Substance Superfund Trust Fund is
of increasing concern to some in Congress. Our audit of EPA's fiscal
2004 financial statements disclosed that the Trust Fund's assets were not
sufficient to cover appropriations to EPA. The U.S. Treasury had to
transfer $7.6 million to EPA in fiscal 2004 in excess of Trust Fund
amounts available for transfer. Increasingly, Trust Fund deficits will
need to be covered from the Treasury's general fund in order for the
Trust Fund to continue operations. Due in part to our concerns regarding
the Superfund shortfall, in April 2004, we added a new challenge,
"Superfund Evaluation and Policy Identification," to our annual list of
management challenges submitted to the EPA Administrator. We have
performed various studies on Superfund management to provide
Congress and EPA with suggestions to maximize available resources.
In response to a Congressional request, we determined that there was a
$174.9 million shortfall in fiscal 2003 for non-Federal Superfund sites.
This shortfall prevented EPA from beginning construction in some
instances or providing the full amount of funding needed, resulting in
projects being segmented into phases or being scaled back. The shortfall
only considers EPA's use of extramural funds (funds for contractors and
others outside EPA), and does not address EPA's intramural
expenditures.
In a separate review, we found that Superfund administrative costs have
been growing while other expenditures have been decreasing. From
1999 to 2003, EPA's inflation-adjusted Superfund administrative
expenditures increased $36.8 million while programmatic expenses
decreased about $174 million during the same period. We found there
was no central, integrated source of information on Superfund
administrative costs, which hampered the Agency's ability to effectively
manage them. EPA needs to more consistently define, track, and account
for its administrative expenditures, so it can better understand these
expenditures and make more effective management decisions. Although
many recommendations have been made in the past to address Superfund
issues, because EPA's processes to track the effectiveness of
recommended actions are limited, continuing and repeated
recommendations on how to improve the program's efficiency and
effectiveness may not achieve desired results.
Hardrock mining sites identified nationwide may have significant
financial impacts on the Superfund Trust Fund, and we looked at ways
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EPA can improve its efforts in this area. Hardrock mining involves
extraction of certain metals and minerals from the earth, including
copper, gold, and silver (but not coal), and many sites will require
decades to clean up. We identified 156 hardrock mining sites that may
cost at least $7 billion to clean up. We noted uncertainty in ranking the
sites in regard to human health and environmental risks, as well as
determining how many of the identified responsible parties will have the
ability to pay for lengthy cleanup actions, and EPA needs to pay greater
attention to these issues.
More than half of EPA's fiscal 2004 budget was awarded to organizations
outside the Agency through assistance agreements, including a
significant amount related to Superfund sites. As a result of two of our
assistance agreement reviews, EPA terminated one inappropriate grant
and we discovered unallowable outlays in another.
Addressing Superfund shortfalls is a critical issue, and we will continue
to assist Congress and EPA in their efforts to ensure there is adequate
funding to protect against potential adverse health and environmental
impacts resulting from Superfund sites. Early identification,
communication, and evaluation of issues needed to reform Superfund
can better prepare the Agency to manage the Superfund program in an
efficient and effective manner.
]lAull- [ J^J-^ ,
Nikki L.^Tinsley (j
Inspector General
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Table of Contents
Hazardous Substance Superfund Trust Fund 1
EPA Earns Unqualified Opinion on Financial Statements 1
Details on Superfund Shortfall Provided to Congress 2
Limitations Found in Management of Superfund Administrative Costs 2
Hardrock Mining Sites May Have Significant Impact on Trust Fund 3
Assistance Agreements 4
Coeur d'Alene Coalition Grant Inappropriate 4
Idaho Outlays of $649,362 for Bunker Hill Cleanup Questioned 4
New Mexico Funds of $11,558 Questioned 5
Remedial Action Decision Making 6
New Management Challenge on Superfund Added 6
Some States Unable to Address Superfund Assessment Needs 6
Marjol Battery Site Needs Additional Measures 7
Stauffer Site Remedies Adequate 7
Escambia Site Actions Generally Appropriate 8
IEL Landfill Site Contamination Discounted 8
Bunker Hill Site Actions Generally Appropriate 8
Response Claims 10
Review of Picillo Superfund Site Claim 10
Performance Reviews 11
Tribal Superfund Program Needs Direction 11
Weaknesses Found in Indian Country Site Inventory 11
Brownfields Program Needs Further Actions 12
Investigative Activity 13
Laboratory President Convicted at Trial 13
Subcontractor Agrees to $260,605 Settlement 14
Impersonator Sentenced for Copying Official Seals 14
Listing of Fiscal 2004 Superfund Reports 15
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
Hazardous Substance Superfund Trust Fund
The Government Management and Reform Act of
1994 requires Federal agencies to prepare annual
audited financial statements. The requirement for
audited financial statements was enacted to help
bring about improvement in agencies' financial
management practices, systems, and controls so
that timely, reliable information is available for
managing Federal programs.
One of the major entities covered by the
Environmental Protection Agency's (EPA)
financial statements is the Hazardous Substance
Superfund Trust Fund (Trust Fund). The EPA
Office of Inspector General (OIG) audit of the
Agency's financial statements satisifies our
Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) audit
requirement to annually audit the Trust Fund.
During fiscal 2004, the Trust Fund assets were not
sufficient to cover appropriations to EPA.
Consequently, the U.S. Treasury Bureau of Public
Debt, which manages the Trust Fund, transferred
funds to EPA in excess of the assets available to be
transferred by $7.6 million in fiscal 2004. EPA's view
is that the shortfall will be covered by the collection of
cost recoveries and receipt of interest income over
time. In our opinion, because cost recoveries have
declined and the investment principal upon which
the interest is earned has steadily decreased, any
deficit and future financing will have to be
covered almost entirely by appropriations from the
Treasury's general fund in order for the Superfund
Trust Fund to continue operations. The following
summary of our fiscal 2004 financial statement
audit relates to all findings resulting from our audit
of EPA's financial statements, including those of the
Trust Fund.
EPA Earns Unqualified Opinion on
Financial Statements
EPA earned an unqualified opinion on its fiscal
2004 financial statements, which includes the
Trust Fund. In evaluating EPA's internal controls,
we identified 10 reportable conditions in the
following areas. Although we do not believe they
represent material weaknesses that would prevent
the fair presentation of reliable financial statement
amounts, they are internal weaknesses that still
should be corrected.
• EPA's Quality Assurance Guide, which is the
framework for implementing the Agency's
financial management program, is out of date.
• Despite improvements, regional calculations
related to unearned revenue did not include the
proper amounts of cumulative disbursements,
resulting in a $14 million understatement of
unearned revenue.
• Finance offices were unable to record accounts
receivable transactions promptly in the
Integrated Financial Management System due
to untimely submission of documentation.
Further, we identified $1,963,980 in unrecorded
fines and penalties.
• EPA did not promptly record marketable
securities received from companies in
settlement of debts. Specifically, of the four
accounting offices receiving such settlements
of debts, only one recorded receipt of non-cash
assets.
• Contractor-held property acquisition values
were understated by about $6.9 million due to
the omission of a contract from the EPA
Reports of Government-Owned/Contractor-
Held Property documents.
• Obligations were not recorded in the proper
accounting period. In one region and a finance
center, 10 out of 16 obligations tested were
recorded in fiscal 2005 but were actually fiscal
2004 obligations.
• The Operations Systems Staff of the Office of
the Chief Financial Officer developed and
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
implemented accounting systems without
assessing the risks these systems pose to
Agency assets, personnel, and operations.
• The Operations Systems Staff also did not
ensure management controls were operating
effectively by assessing and testing security
controls for the Grant Payment Allocation
System and Inter-Governmental Document
Online Tracking System.
• There was a general breakdown of security
controls related to software changes that could
undermine the integrity of Integrated Financial
Management System software libraries and
financial system data.
• We continued to be unable to assess the
adequacy of the automated application control
structure as it relates to automated input,
processing, and output controls for the
Integrated Financial Management System.
Our tests of compliance with laws and
regulations did not identify any instances of
noncompliance with laws and regulations that
would materially misstate the financial
statements. However, we identified three
noncompliances under the Federal Financial
Management Improvement Act. Specifically,
EPA: did not comply with standards requiring it
to provide full costs per output to management in
a timely fashion; continued to experience
difficulties in reconciling some
intragovernmental transactions due to some
Federal entities not providing needed
information; and still needed to establish a
background check program for non-Federal
personnel. We also found an instance of
noncompliance related to reconciling Trust Fund
balances with Treasury.
In its response to our draft report, the Agency
generally concurred with our recommendations
and noted the completion or planning of a number
of corrective actions.
We issued our report (2005-1-00021) on
November 15, 2004.
Details on Superfund Shortfall Provided
to Congress
In response to a congressional request, we
reviewed the fiscal 2003 funding needs for non-
Federal Superfund sites and estimated a
$174.9 million shortfall.
This limited funding prevented EPA from
beginning construction at all sites ($118.5 million
of the shortfall) or providing the full amount of
funds needed ($56.4 million of the shortfall),
resulting in projects being segmented in phases
and/or scaled back.
EPA emphasized the funding of ongoing
construction over new construction starts. For
fiscal 2003, the National Risk Based Priority Panel
considered 35 new start projects and determined
that 9 should receive remedial funds. Of the
remainder, 15 did not receive remedial funds, and
11 were determined not ready for various reasons,
including enforcement issues, changed site
conditions, and design complications.
Our shortfall estimate only considers the regions'
use of extramural resources (funds for contractors
and others outside EPA), and does not address
intramural resources (obligations involving the
labor and travel of EPA personnel that are
obligated to specific Superfund sites).
We issued our report (2004-P-00001) on
January 7, 2004.
Limitations Found in Management of
Superfund Administrative Costs
Several factors inhibit EPA's ability to effectively
determine, allocate, manage, and optimize rising
Superfund administrative costs, according to
information we gathered as part of a congressional
request.
From 1999 to 2003, EPA's inflation-adjusted
Superfund expenditures declined about 11 percent,
from $1.71 billion in 1999 to $1.52 billion in 2003.
However, administrative expenditures, which
accounted for about 25 percent of those expenditures,
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
increased $36.8 million during that 5-year period.
Meanwhile, programmatic expenses, which accounted
for the other 75 percent of expenditures, decreased
about $174 million during the same period.
Personnel-related expenditures accounted for
nearly 80 percent of the total known
administrative expenditures, and to a large extent
involve payroll-related costs.
We found there is no central, integrated source of
information on Superfund administrative costs,
which hampers the Agency's ability to effectively
manage them. EPA's Environmental and
Management Appropriation absorbed an additional
$370 million in Superfund support costs over the
5 years, but these additional Superfund costs are
not identified as such in EPA's accounting system.
We also found that Superfund administrative
requirements are largely based on prior years'
allocations and a 1987 Agency workload model.
Despite efforts to make improvements, inefficiencies
remain regarding contracting and special accounts, as
well as recovering unspent obligations. Further, EPA
does not follow up to see if corrective actions solved
problems. Consequently, repeated recommendations
on how to improve the program's efficiency and
effectiveness may not achieve desired results.
We issued our report (2004-S-00004) on
September 15, 2004.
Hardrock Mining Sites May Have
Significant Impact on Trust Fund
Hardrock mining sites identified nationwide may
have significant financial impacts on the Trust
Fund and on States. Most of the sites will require
decades to clean up, and the ability of the
Superfund program, States, or responsible parties
to pay for generations of sustained cleanup
activities needed for many mining sites is
questionable.
Hardrock mining, which is not coal mining,
involves the extraction of certain metals and
minerals from the earth, including copper, gold,
iron ore, lead, and silver, and can cause significant
impacts on the environment. EPA has reported
that the metal mining industry was the largest
toxic polluter in 2000, releasing 3.4 billion pounds
of toxics, or 47 percent of the total released by
U.S. industry.
Our review identified 156 hardrock mining sites
nationwide that have the potential to cost between
$7 billion and $24 billion to clean up (at a
maximum total EPA cost of $15 billion). These
costs are over 12 times EPA's total annual
Superfund budget of about $1.2 billion for the last
5 years.
There is some uncertainty regarding the
ranking of sites in regard to human health and
environmental risks. Also, there is uncertainty
regarding how many of the potential
responsible parties identified for sites will have
the ability to pay for lengthy cleanup actions.
Further, after EPA turns over responsibility for
long-term remedial actions to States after
10 years, there is concern regarding the States'
ability to pay.
We issued our report (2004-P-00005) on
March 31,2004.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
Assistance Agreements
More than half of EPA's fiscal 2004 budget was
awarded to organizations outside the Agency
through assistance agreements, including a
significant amount of funds related to Superfund
sites. Therefore, the effective management of
assistance agreements is essential for EPA to
ensure it efficiently manages Superfund efforts.
On July 20, 2004, the Inspector General testified
on the need for EPA to improve how it measures
environmental results generated by grants.
Although EPA has made progress in this area,
more needs to be done, the Inspector General told
the U.S. House of Representatives' Subcommittee
on Water Resources and the Environment,
Committee on Transportation and Infrastructure.
Further, on March 3, 2004, the Assistant Inspector
General for Audit had testified before the Senate's
Committee on Environment and Public Works on
how EPA needs to continue to improve the way it
manages assistance agreements. The Assistant
Inspector General noted that project officers did
not perform all the necessary steps when
conducting pre-award reviews, and oversight once
grants are awarded also needs improvement.
CERCLA requires audits "of a sample of
agreements with States," and we perform financial
and compliance audits of assistance agreements
with States and political subdivisions. During
2004, the OIG issued three reports on specific
assistance agreements related to Superfund,
including two reports on agreements awarded to
States. Details on each follow.
Coeur d'Alene Coalition Grant
Inappropriate
As the result of a hotline complaint, we found that
EPA inappropriately awarded a technical
assistance grant to the Basin Cleanup Coalition in
Coeur d'Alene, Idaho. As a result of our review,
EPA terminated the grant, which would have
totaled $50,000 in Federal funds.
The purpose of the grant (No. 1-97025201) was to
fund the hiring of a technical advisor to assist
communities affected by the Superfund cleanup in
the Coeur d'Alene River Basin in understanding
and participating more fully in the cleanup
process. The Basin covers four counties in Idaho
and Washington State.
We found that the Coalition was not a qualified
grant recipient because of potential conflicts of
interest and because it did not meet administrative
and management capability requirements. The
Coalition did not have a sufficient membership to
have a Board of Directors, and thus was unable to
enter into contracts to hire a technical advisor.
Also, the Coalition did not obtain the tax exempt
status required by the grant.
On December 5, 2003, following our meeting with
EPA Region 10 officials, the Region notified the
Coalition that the grant was terminated, resulting
in $50,000 being put to better use.
We issued our report (2004-P-00010) on
March 25, 2004.
Idaho Outlays of $649,362 for
Bunker Hill Cleanup Questioned
We questioned unallowable outlays that Idaho
made to meet cost sharing requirements for
Federally funded remedial actions at the Bunker
Hill Superfund site in the Coeur d'Alene Basin.
Of the $7.9 million in outlays made by Idaho
under Cooperative Agreement No. V990431-01,
we questioned $649,362 related to unallowable
costs incurred before award of the agreement,
unsupported payroll costs, unallowable pre-
remedial action costs, duplicate costs, and excess
costs reported for the institutional controls
program.
In our opinion, because of the questioned costs,
the outlays reported on the State's Financial Status
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
Report do not present fairly, in all material
respects, the allowable outlays incurred in
accordance with the criteria set forth in the
agreement, and we recommended that EPA
disallow the questioned costs.
We issued our report (2004-4-00016) on
June 2, 2004.
New Mexico Funds of $11,558
Questioned
We found total outlays reported in financial
statements by the New Mexico Environmental
Department under EPA Cooperative Agreement
No. V986338-01, related to Superfund efforts, to
generally be accurate, although we noted $11,558
in questioned costs.
Of $2.9 million in cumulative total outlays
claimed, the State did not fully match its
10-percent cost sharing requirements for its core
program activities under the agreement, resulting
in a $11,558 overdraw of Federal funds. The State
agreed with our recommendation to recover that
amount.
The agreement was authorized under CERCLA to
provide financial support for various Superfund
efforts, including pre-remedial activities, EPA-led
management assistance activities, State-led
activities for Fruit Avenue and North Railroad
Avenue plume sites, voluntary remediation
activities, and various administrative costs.
We issued our report (2004-4-00012) on
March 31,2004.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
Remedial Action Decision Making
We performed in-depth reviews of the reliability
of site-specific analytical data as a basis for sound
site remediation decisions. In addition, the OIG
has worked closely with the Agency to
characterize Superfund sites. Through these and
other actions, the OIG is working to ensure that
Agency decisions on site remediation are based on
data of known quality.
Due to obstacles noted to hazardous waste
cleanup, in our 2004 memorandum to the
Administrator on key management challenges, we
added a new challenge this year, "Superfund
Evaluation and Policy Identification." Further, we
found that some States were unable to address
assessment needs and face future Superfund
challenges. Also during 2004, we reviewed a
petition regarding Idaho's Hazardous Waste
Program, and issued reports on activities at
various sites that involved remedial action
decision making. Details follow.
New Management Challenge on
Superfund Added
Over the last few years, a number of reviews of
the Superfund program have identified troubling
obstacles to the Agency's ability to effectively
meet the Nation's current and future needs for
hazardous waste cleanup. In particular, the
Superfund program cannot meet all of its current
reported needs for cleanup, including remedial
action. Also, due to falling Trust Fund balances,
the percent of Superfund appropriations coming
from general revenues has increased dramatically.
Thus, we added this challenge, "Superfund
Evaluation and Policy Identification," to our list of
management challenges submitted to the
Administrator in April 2004.
EPA has processes for evaluating and reforming
Superfund, but has failed to identify or
communicate the current fiscal and other program
management challenges that are causing great
pressure on the program. Early identification,
communication, and evaluation of these types of
issues can better prepare the Agency to manage the
Superfund program and keep it directed on
efficient and effective achievement of cleanups.
Some States Unable to Address
Superfund Assessment Needs
Some States need to address backlogs in site
assessments in order to improve their hazardous
waste site cleanup programs, and need to increase
their capacity to take cleanup actions at additional
sites in the future.
The five States reviewed (Kansas, Michigan, New
Jersey, Pennsylvania, and Washington) have all
implemented processes for identifying, assessing,
investigating, and prioritizing hazardous waste
sites similar to EPA's remedial process for the
Superfund program. However, three of the States
(Kansas, New Jersey, and Washington) had a total
backlog of 423 sites awaiting site assessment, and
another (Pennsylvania) also appeared to have a
backlog.
Until these backlogs are eliminated, States cannot
assure that sites posing the greatest threat to
human health and the environment are being
addressed promptly, and the States' capacity to
address future hazardous waste sites may be
limited.
The five States reviewed have developed cleanup
standards based on risk and sound science that
should be sufficiently protective of the
environment, but their processes are more
streamlined than the baseline approach established
by EPA. Therefore, if EPA wants the States to
assume a larger role in addressing National
Priorities List sites, it should consider giving the
States greater flexibility regarding the approaches
to use.
Over the next 10 years, States will be assuming
additional operation and maintenance
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
responsibilities for long-term response actions at
many sites, but many States may not have the
resources needed to undertake these future
obligations because of declining budgets.
We made various recommendations to help EPA
enhance the role of States as co-implementers of
the Superfund program, and EPA and States
generally agreed with our recommendations.
We issued our report (2004-P-00027) on
September 1, 2004.
Marjol Battery Site Needs Additional
Measures
Our review of citizens' concerns regarding the
Marjol Battery Site in northeastern Pennsylvania
found that sufficient actions were taken at the site,
although additional precautionary measures can be
taken.
Approximately 5,500 people live within a one-
mile radius of the site, located in the Borough of
Throop. Polyaromatic hydrocarbons (PAHs),
polychlorinated biphenyls (PCBs), and lead were
identified in the surface soil in the site's former
operational areas. Prior to being a battery processing
facility, coal mining had been done at the site.
A technical expert - a mining engineer - with
whom we contracted concluded that excavating all
material in the northern portion of the site and
placing the remaining soil under permanent
solidified caps will be sufficiently protective.
Also, although residents were concerned about the
potential for mine fires in two underground coal
seams, the expert indicated that the chance of
these two seams having been mined extensively is
low and, thus, the risk of mine fires is low.
Nonetheless, the expert said potential surface
strains should be calculated at the site and
compared to allowable strains for the permanent
solidified cap. Also, a consultant for the Borough
said the objection to the proposed final remedy
will be removed if 8 to 12 additional boreholes are
drilled through the 2 seams of concern, to ensure
the seams have not been mined extensively and
thus are not susceptible to mine fires.
Consequently, to allay residents' concerns, we
recommended that the drilling be done, although
no specific evidence indicates it is necessary.
EPA agreed with our recommendation to calculate
the surface strains and agreed to work with the
Borough to evaluate the potential for mine fires at
the site.
We issued our report (2004-P-00017) on
May 18,2004.
Stauffer Site Remedies Adequate
We found that EPA followed required procedures
for remedy selection, oversight, and community
involvement at the Stauffer Chemical Company
Superfund Site in Tarpon Springs, Florida.
However, additional actions can be taken.
Phosphorus sludge has been removed from
above-ground storage tanks at the site, and EPA
has signed a record of decision addressing heavy
metals and radiation in soil and waste. However,
citizens are concerned, among other things, that
old and forming sinkholes could cause structures
at the site to subside and thus create pollutant
pathways.
An independent expert - a hydrogeologist -
retained by the OIG concluded that EPA's selected
remedy is feasible. However, the remedy is only
feasible if the design incorporates cautionary
recommendations included in the June 2003 draft
report on the geophysical study, and if additional
groundwater characteristics information and
analysis are addressed.
We concluded that EPA Region 4 appropriately
monitored site activity, early geophysical and
groundwater studies, and site contaminant
identification. However, EPA should have ensured
that the subsequent 2001-2003 studies were
completed earlier to better address the potential
for sinkholes.
EPA agreed with our recommendations to implement
cautionary recommendations from previous
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
geological studies, study groundwater further, and
revise the site's community relations plan.
We issued our report (2004-P-00018) on
June 3, 2004.
Escambia Site Actions Generally
Appropriate
EPA cleanup planning, relocation of residents, and
community relations were appropriately conducted
at the Escambia Wood Treating Superfund site,
Pensacola, Florida, although we noted several
potential areas for improvement.
The Escambia site in EPA Region 4 is an
abandoned wood preserving facility where various
health risks were identified and 358 households
were permanently relocated.
Overall, EPA took appropriate cleanup planning
actions at the site. EPA plans to conduct a
remedial action to address the contaminated soil
mound and contaminated ground water. We noted
that it could be beneficial for the Region to
include State, local government, and community
concerns in future sampling and analysis plans.
The U.S. Army Corps of Engineers effectively
implemented a very large and complex residential
relocation project at the site. To enhance future
relocations, Region 4 should continue to require
the Corps to provide appraisal details to property
owners, more closely monitor housing inspections,
and allow residents a period of time to report
replacement housing problems and obtain
reimbursement for legitimate repairs.
EPA made efforts to inform the community and
keep it up to date on activities at the site. To
bolster future community relations, EPA should
consider reviewing and updating the site
Community Involvement Plan, conducting more
public meetings, and providing compact discs and
courtesy copies of future administrative record
documents.
We issued our report (2004-P-00032) on
September 30, 2004.
IEL Landfill Site Contamination
Discounted
EPA Region 5 had properly discounted radioactive
contamination at the Industrial Excess Landfill
(IEL) Superfund site, Uniontown, Ohio. We also
concluded that the remedy selected was in
accordance with EPA policy.
Citizens brought these issues to our attention because
of concerns that the landfill was contaminated with
radioactive waste, and that the method used to clean
up the ground water was inappropriate. That method,
monitored natural attenuation, involves a variety
of processes that act without human intervention
to reduce the contaminants in soil or ground water.
In the early 1990s, the landfill was tested for
radioactivity; in 1995, EPA's Science Advisory
Board concluded it was unlikely radioactive
contamination was present at the site. A radiation
expert, retained by the OIG, determined that 2000
and 2001 ground water tests met drinking water
requirements with respect to radioactivity and did
not pose a danger to public health.
We also found that EPA policy was followed in
selecting monitored natural attenuation, that the
landfill site was appropriately sampled and
analyzed, and that contaminants from the site that
could pose a danger to public health were being
appropriately monitored.
We issued our report (2004-P-00031) on
September 29, 2004.
Bunker Hill Site Actions Generally
Appropriate
An EPA OIG review of complaints regarding the
Bunker Hill Superfund site, in Idaho, and the
surrounding Coeur d'Alene Basin area found that
EPA followed laws and regulations in listing the
site and met community involvement standards.
However, we found that the site's Lake
Management Plan could better address cleanup.
We found that EPA followed laws and regulations
in listing the site, and concluded that EPA made a
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
logical decision to first do cleanup work in the
Bunker Hill "Box" (where the mines and smelter
were located) and then later pursue further cleanup
as needed in the overall Basin. EPA is permitted
to address the most critical areas first, and we
consider that a logical decision.
Another concern raised was whether CERCLA
authorizes the Basin Environmental Improvement
Commission to plan, prioritize, and perform
response/remedial actions, as specified in the
September 2002 Record of Decision. The Act
does not address the creation of such an
independent body. However, the National
Contingency Plan encourages and allows the
involvement of such a commission.
We found that the Coeur d'Alene Lake
Management Plan could better address cleanup
under the Clean Water Act. The management
actions recommended in the Plan lack detail, and
do not fully support an EPA decision to conduct a
partial deletion of the Lake from the National
Priorities List. We recommended better
implementation of the plan. Further, due to the
lack of dedicated funding for Plan implementation,
we recommended that EPA, the State of Idaho, and
the Coeur d'Alene Tribe form a consensus about
dedicating the funds.
Although concerns were raised about EPA
properly following laws and regulations in
handling community involvement during the
Superfund process, we concluded that community
involvement met standards. We found many
instances where EPA took positive steps to involve
the community, and noted considerable input by
the community for the remedial design work for
the overall Coeur d'Alene Basin. Also, we found
evidence that EPA took steps to help alleviate the
economic downturn in Shoshone County, which
includes the Bunker Hill Box and much of the
Coeur d'Alene Basin.
We issued our report (2004-P-00009) on
March 24, 2004.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
Response Claims
CERCLA, as amended by the Superfund
Amendments and Reauthorization Act of 1986,
authorizes EPA to pay any claim for response costs
by "any other person" as a result of carrying out the
National Contingency Plan. Potentially Responsible
Parties, who often make these claims, are required to
enter into a Preauthorized Decision Document with
EPA to cover work for which some costs will be
reimbursed. The Preauthorized Decision Document
specifies the work to be performed, the portion of
the cost that EPA will reimburse, and the procedures
through which the Potentially Responsible Parties
can make claims for reimbursement.
We do not audit response claims, but instead
review claims by following the instructions in the
Agency's claims guidance for the claims adjuster.
During 2004, we performed one such review, as
discussed below.
Review of Picillo Superfund Site Claim
We reviewed the first claim submitted by the five
Potentially Responsible Parties for the CERCLA
response action at the Picillo Pig Farm Superfund
Site in Coventry, Rhode Island. The Preauthorized
Decision Document authorizes the Potentially
Responsible Parties to submit claims against the
Superfund Trust for an amount not to exceed the
lesser of $1,400,000 or 40 percent of eligible,
reasonable, and necessary costs incurred for the
waste removal action. The Claim Administrator
submitted documentation detailing incurred costs
from November 2002 through December 2003 of
$1,549,628, and requested reimbursement of
$619,851. During our review nothing came to our
attention that caused us to believe that the claimed
costs were ineligible, unreasonable, or
unnecessary.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
Performance Reviews
In addition to the reviews required by CERCLA
and the Superfund Amendments and
Reauthorization Act, we conduct other reviews
that address or are related to Superfund issues.
Following are summaries on several completed
during fiscal 2004.
Tribal Superfund Program Needs
Direction
EPA has been a Federal leader in efforts to
develop tribal relationships, and was the first
Federal agency to adopt a formal Indian policy.
EPA has undertaken various efforts since 1998 to
enhance the tribal role in the Superfund program.
However, EPA has still not fully developed its
tribal strategy in relation to Superfund, even
though the strategy was initiated in 2002, and the
Agency needs to do so.
EPA's tribal strategy lacks a detailed
implementation plan, including milestones,
priorities, targets, and measures. Also, strategy
completion has been hindered because of little
emphasis from top leadership, a lack of clear goals,
missing critical information, and EPA regions not
being included in its development. In the absence
of clear direction, EPA regions have developed
divergent regional tribal programs. This makes it
difficult for EPA to consult with and protect tribal
interests when making Superfund decisions.
During case studies of six tribes, we noted that the
stronger and more effective relationships
demonstrate four important characteristics:
frequent and timely communication, appropriate
information sharing, addressing issues raised by
tribes, and operating in a government-to-
government relationship. Ultimately, successful
partnerships create more effective decisions.
The Agency concurred with our recommendations
and agreed to take actions to finalize its tribal
strategy, with tribal and regional input, during
fiscal 2005.
We issued our report (2004-P-00035) on
September 30, 2004.
Weaknesses Found in Indian Country
Site Inventory
In connection with our ongoing evaluation of EPA
activities to enhance the role of Indian tribes in the
Superfund program, we noted immediate actions
were needed to address weaknesses in the
Agency's development of an inventory of
hazardous waste sites in Indian Country.
In 1999, the Agency started its development of an
inventory of hazardous waste sites on Indian land,
and provided funding to the Tribal Association on
Solid Waste and Emergency Response (TASWER)
to provide EPA with necessary tribal input. Our
review of EPA's efforts to develop an inventory
disclosed some serious shortcomings:
• Project mismanagement issues associated with
TASWER caused substantial delays.
• EPA had not fully defined the inventory-related
information needed.
• TASWER's methodology for obtaining tribal
input had serious limitations.
• EPA had not developed a detailed plan for
validating, managing, storing, or updating the
baseline inventory.
We believe that these shortcomings, if not
substantially addressed, will prevent a credible
and reliable inventory from being produced.
Moreover, without significant modifications, EPA
will be required to make an additional investment
in this effort.
We recommended that EPA provide more
oversight to TASWER; define specific program
information needs; review the inventory
methodology and address key limitations; and
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
develop a detailed plan for validating, managing,
storing, and updating the baseline inventory. EPA
generally indicated our recommendations were
appropriate.
We issued our report (2004-P-00003) on
January 30, 2004.
Brownfields Program Needs Further
Actions
Although stakeholders were generally pleased
with the brownfields program, designed to restore
and revitalize contaminated properties (including
some former Superfund sites), EPA experienced a
number of problems. Estimates on the number of
brownfields sites range from 450,000 up to one
million.
During fiscal 2003, EPA announced over $73
million in competitive assessment, revolving loan
fund, and brownfields cleanup grants. We noted
concerns regarding untimely and unclear guidance,
the need for additional guidance, a time-
consuming grant application review process, and
limitations in providing applicant feedback.
EPA's Office of Brownfields Cleanup and
Redevelopment responded to and addressed these
concerns and made progress. However, we noted
that the applicant and site eligibility determination
process lacked documentation. We also noted
required property ownership deadlines being
questionably extended, problems regarding travel
funds, and EPA not implementing environmental
performance measures for brownfields.
Recommendations to EPA included developing a
process for sampling applications to conduct more
detailed eligibility evaluations, implementing
environmental performance measures, and
evaluating the current workload model to ensure
new responsibilities of the expanded brownfields
program are reflected in the model. EPA agreed
with most of our recommendations.
We issued our report (2004-P-00020) on
June 21,2004.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
Investigative Activity
The OIG Office of Investigations continued to
focus its investigative resources on allegations
of fraud, waste, and abuse in high risk and high
dollar EPA programs and administrative areas,
including the Superfund program. High
priority was also given to environmental
programs and employees when the action under
investigation had the potential to seriously
undermine the integrity of the Agency and/or
the public trust in the Agency's ability to carry
out its mission to protect public health and
safeguard the environment.
Proactive and reactive investigative efforts by
the Office of Investigations covered all stages
of the Superfund program:
• The Laboratory Fraud Directorate continued
its initiative to detect and investigate
laboratory fraud within the environmental
community, involving commercial,
contractual, and Agency laboratories. Many
of these laboratories conduct analyses and
produce data used to make decisions
concerning Superfund sites.
• The Financial Fraud Directorate continued
major efforts in uncovering fraudulent
activities in the award and performance of
contract and assistance agreements. EPA
programs, including Superfund, are
dependent on contractors and assistance
agreement recipients to perform a
significant portion of the work related to
EPA's mission.
• The Computer Crimes Directorate continued
to monitor previously identified computer
security weaknesses, identify new and
emerging vulnerabilities, and advise the
Agency on any additional computer security
enhancements that are needed. We
continued to perform criminal investigations
of intrusive activities affecting EPA systems
and data.
During fiscal 2004, our Superfund investigative
efforts resulted in:
• Two Convictions
• One Civil Complaint
• One Sentencing
• Seven Administrative Actions, including one
10-year debarment
Monetary fines and restitution totaled more than
$220,573. In addition, $260,605 in cost savings
were realized. During the past three fiscal years,
cumulative monetary fines, restitution, and
recoveries resulting from Superfund investigations
totaled more than $18.5 million. We expect to see
a continued increase in significant actions as OIG's
investigative emphasis on major Agency
contracting and laboratory fraud continues.
Following are three instances of Superfund
investigative activities with results in fiscal 2004.
Laboratory President Convicted at Trial
On August 17, 2004, following a jury trial,
Edward V. Kellogg, President, owner, and Quality
Control Officer of Johnson Laboratories, Inc.,
New Cumberland, Pennsylvania, was found guilty
of 34 counts of mail fraud. The charges were filed
in May 2003 in U.S. District Court, Eastern
District of Pennsylvania. In addition, on
November 18, 2003, EPA's Debarring Official
issued a Notice of Suspension to Kellogg as a
result of the May 2003 indictment.
Johnson Laboratories provided analytical testing
of environmental samples, including water and
wastewater, to the EPA at the Bruin Lagoon
Superfund Site in Bruin, Pennsylvania, as well as
to municipalities and commercial clients required
to comply with environmental laws and
regulations administered by the EPA. Among the
tests prepared by Johnson Laboratories were tests
for volatile organic compounds (VOCs), a
contaminant whose presence in water is regulated
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
by the EPA. VOCs can contaminate drinking
water, and VOCs in wastewater may be discharged
into rivers and streams, affecting fish, wildlife,
and potential drinking water sources.
As the head of the business, Kellogg allowed
environmental test results to be fraudulently
prepared and billed to customers from May 1998
through July 2000. These test reports were false
in that they purported to contain the results of
VOC testing performed in accordance with EPA
method 601/602, when in fact Kellogg knew this
testing method had not been used. Instead, VOC
testing had been performed under the lesser
inclusive EPA method 624. Johnson Laboratories
did not have the necessary laboratory instruments
to perform the tests in accordance with EPA
method 601/602 as Kellogg reported to his
customers.
This investigation was conducted jointly with the
EPA Criminal Investigation Division, the
Pennsylvania Attorney General's Office, and the
Pennsylvania Department of Environmental
Protection.
Subcontractor Agrees to $260,605
Settlement
The Government, through its prime contractor,
entered into a contractual settlement with
Environmental Chemical Corporation (ECC),
Cincinnati, Ohio, resulting in a savings to the
Government of $260,605. ECC was a
subcontractor that provided laboratory testing
services for an EPA-funded, U.S. Army Corps of
Engineers contract to perform cleanup work at the
Drake Chemical Superfund Site in Lock Haven,
Pennsylvania.
During the course of the contract, it was
determined that ECC was involved in laboratory
testing improprieties, such as not following its
own established policies and procedures for
testing and false calibrations, which resulted in
ECC losing its Lab Validation and in harm to the
Government. The Government and ECC, through
the prime contractor, agreed that if ECC would
close out its subcontract and not seek payment of
$260,605 of previously billed but unpaid costs, the
Government would consider that just
compensation for the potential ECC fraud.
This case was conducted jointly with the U.S.
Army Criminal Investigation Division Command
and the Defense Criminal Investigative Service.
Impersonator Sentenced for Copying
Official Seals
On February 6, 2004, Steven L. Nagy was
sentenced in U.S. District Court, Northern District
of Texas, to 46 months in prison, followed by
3 years of supervised release. Nagy was also
ordered to pay $218,656 in restitution and a $200
special assessment. This sentencing follows
Nagy's October 27, 2003, conviction in connection
with charges related to impersonation, including
false statements and mail fraud. In addition, on
August 12, 2004, Nagy was debarred from
Government contracting for 10 years.
Nagy, the owner and operator of Earth Source
Environmental Management, Sallisaw, Oklahoma,
created copies of professional engineering seals
bearing the names and license numbers of at least
four professional engineers. Nagy used the forged
credentials to write, sell, and distribute fraudulent
Spill Prevention Control and Countermeasure
Plans.
Under Federal regulation, Spill Prevention Control
and Countermeasure Plans are required to be
signed and certified by a licensed professional
engineer and maintained on file at certain facilities.
If a facility does not have a signed and certified
plan, it is fined $5,000 regardless of the quality of
the plan. Nagy admitted to producing Spill
Prevention Control and Countermeasure Plans for
more than 100 customers since 1991 using the
forged credentials. Spill Prevention Control and
Countermeasure Plans are instituted to assist
facilities from needing emergency response
cleanup actions under the Superfund program.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2004
Report No.
Description
Date
2004-2-00009 CH2M Hill, Inc. - FYs 2000-2001 RAC 68-W9-8225 05-NOV-03
2004-M-00003 Ombudsman Review of CART Complaints at Coeur d'Alene Site 24-NOV-03
2004-2-00015 Foster Wheeler Environmental Corp. - FY2001 RAC 68-W9-8214 26-NOV-03
2004-M-00002 Ombudsman Review of Complaints on World Trade Center Followup 01 -DEC-03
2004-2-00017 Tetra Tech NUS, Inc. - FYs 1996-1998 RAC Close-out 68-S6-3003 18-DEC-03
2004-1 -00030 Black & Veatch Special Proj. Corp. - FY2000 RAC 68-W9-9043 31 -DEC-03
2004-2-00018 Tetra Tech NUS, Inc. - FYs 1999-2000 RAC 68-S6-3003 05-JAN-04
2004-P-00001 Boxer/Dingell Congressional Request - 2003 07-JAN-04
2004-P-00003 Superfund Issues in Indian Country 20-JAN-04
2004-P-00005 Mega Financial Responsibilities at Superfund Mine Sites 04-FEB-04
2004-1-00042 Weston Solutions, Inc. - Preaward PR-CI-03-10595 02-MAR-04
2004-1-00043 Lockheed Martin Serv. - Preaward REAC PR-CI-03-10595 03-MAR-04
2004-2-00019 Weston Solutions, Inc. - DACA45-98-D-0004 Delivery Order #1 03-MAR-04
2004-2-00020 Tetra Tech EM, Inc. (EMI) - Preaward PR-CI-03-10595 03-MAR-04
2004-2-00021 URS Operating Svcs & URS Group, Inc. - Preaward PR-CI-03-10595 03-MAR-04
2004-2-00023 Versar, Inc. - CACS 68-01-7053 & Follow-up Audit complete 2/2004 08-MAR-04
2004-M-00007 Ombudsman Review of Alberton, MT, Train Derailment Cleanup 12-MAR-04
2004-2-00024 Tetra Tech Inc./B&V SPC Joint Venture - FY2000 RAC 68-S7-3002 16-MAR-04
2004-1-00048 MetcalfS Eddy Inc. - FYE 2001 RAC 68-W6-0042 18-MAR-04
2004-P-00009 Coeur d'Alene/Bunker Hill Ombudsman Audit 24-MAR-04
2004-P-00010 Hotline Complaint - Basin Cleanup Coalition 25-MAR-04
2004-P-00011 EPA Equipment Purchases for Counter Terrorism Preparedness 29-MAR-04
2004-4-00015 New Mexico Environment Department SF Cooperative Agreement 31-MAR-04
2004-2-00029 Stone & Webster, Inc. - DACA45-96-D-0007 #8 CACS 19-APR-04
2004-1 -00060 EG&G Tech Svs. Inc. - CACS 68-W8-0126 Rev Final Voucher 119 17-MAY-04
2004-M-00009 Ombudsman Review of Picillo CERCLA Claim 26-MAY-04
2004-M-00010 Ombudsman Review on Complaints on Farms Near Delta, CO 01-JUN-04
2004-4-00016 Idaho SF Credit Claim - Cooperative Agreement V990431-01 02-JUN-04
2004-P-00018 Ombudsman Review, Stauffer Chemical Co. Site, Tarpon Springs, FL 03-JUN-04
2004-1-00077 CH2M Hill, Inc. - FY2001 CAS Accounting Change Cost Impact 08-JUN-04
2004-M-00012 Ombudsman Review, Cascade Pole Co. Site, Olympia, WA 08-JUN-04
2004-P-00020 Brownfields Management Review: Program Implementation 21-JUN-04
2004-1-00084 E&E FY2003 Personal Computer System 22-JUN-04
2004-1-00089 Toeroek Associates, Inc. - Preaward RFP #PR-R4-04-10086 24-JUN-04
2004-4-00017 CH2M Hill, Inc. - FY2001 CAS Disclosure Statement Revisions 28-JUN-04
2004-4-00018 CH2M Hill, Inc. - FY2001 CAS Disclosure Statement Revisions 28-JUN-04
2004-4-00019 CH2M Hill, Inc. - FY2001 CAS Disclosure Statement Revisions 28-JUN-04
2004-M-00013 Ombudsman Review, Bridgeport (NJ) Rental and Oil Services Site 29-JUN-04
2004-2-00039 Indtai, Inc. - Preaward PR-R4-04-10086 & Acctg Sys Survey 06-JUL-04
2004-M-00014 Ombudsman Review, Rocky Mt. Arsenal Cleanup, Denver, CO 29-JUL-04
2004-2-00040 Weston Solutions, Inc (Roy F. Weston) - FY1999 ARCS 68-W9-0057 02-AUG-04
2004-2-00042 Aarcher, Inc. - Preaward PR-R4-04-10086/Pre-Award Acctg Sys 05-AUG-04
2004-1-00094 Bechtel Group Inc. - FY 1997 Incurred Cost 06-AUG-04
2004-1-00096 Tetra Tech EMI - FY 9/30/2001 Annual Close-out RAC 68-W6-0037 10-AUG-04
2004-2-00043 Weston Solutions, Inc. - FYE 12/31 /1998 ARCS 68-W9-0057 12-AUG-04
2004-2-00044 Weston Solutions, Inc. - FY 12/31/99 RAC Close-Out 68-W7-0026 13-AUG-04
2004-2-00046 Tetra Tech Inc/B&V SPC Joint Venture - FY1999 RAC 68-S7-3002 16-AUG-04
2004-2-00047 Tetra Tech Inc/B&V SPC Joint Venture - FY1999 RAC 68-S7-3002 17-AUG-04
2004-S-00003 E&E State Income Tax Allocation FYs 90 thru 01 23-AUG-04
2004-1 -00101 Shaw E&l Findlay Joint Venture - FY2002 Preaward PR-CI-02-10152 24-AUG-04
2004-P-00026 EPA Needs to Improve Change Controls for Integrated Financial Management System 24-AUG-04
2004-4-00035 E&E - Non Compliance With Cost Accounting Standard 402 25-AUG-04
2004-1-00103 Roy F. Weston, Inc. - CFY 12/31/1996 (& 1995) ARCS 68-W9-0015 31-AUG-04
2004-4-00036 E&E - Non Compliance With Cost Accounting Standard 402 31-AUG-04
2004-P-00027 Role of Superfund NPL State Cleanup Program Evaluation 01-SEP-04
2004-1-00108 Griffin Services, Inc. - FYE 1/31/2000 Incurred Cost 13-SEP-04
2004-S-00004 Superfund Mandate: Administrative Support Issues 15-SEP-04
2004-S-00005 E&E Revised Disclosure Statement Review 22-SEP-04
2004-1-00112 Metcalf&Eddy Inc.-CFY 2002 RAC 68-W6-0042 24-SEP-04
2004-2-00050 CH2M Hill, Inc. - FY 2001 RAC Annual Close-out 68-W6-0025 24-SEP-04
2004-2-00051 CH2M Hill, Inc. - FY 2002 RAC Annual Close-out 68-W6-0025 24-SEP-04
2004-P-00031 Ombudsman Review, Industrial Excess Landfill Site, Uniontown, OH 29-SEP-04
2004-P-00032 Ombudsman Review, Escambia Site, Pensacola, FL 30-SEP-04
2004-P-00035 Tribal Superfund Program Needs Clear Direction 30-SEP-04
2004-S-00008 E&E Floorcheck FY03 30-SEP-04
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