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<«,, ,«*-,
•
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
. WASHINGTON, D.C. 20460 ,
SEP 3 0
' OFFICE OF
THE INSPECTOR GENERAL
I
<\
MEMORANDUM
SUBJECT: Final Audit Report on the Handling of. ,
Superfund Bankruptcy Settlements ' '. >
Audit Report Number E1SFF3-20-8004-4100579 . ,
FROM: • kMichael Simmons VAvcVoM 3wws>rfv^>9-
• Associate Assistant Inspector General for Internal . ,
- and Performance Audits (2421)
TO.: • 'Jonathan Z.. Cannon • ., ' • ( '.'.''
, Chief Financial Officer (3101) '
• Steven,'A. Herman' • ' ._ ' ' " ' ( .-.
Assistant Administrator for Enforcement and ' .
Compliance Assurance (2211) . • \ • ' •
•. • i '•„.'. , '
Attached is our final'audit report entitled "EPA's Handling of
Superfund Bankruptcy Settlements." - The overall objectives of
.this audit were to evaluate whether: '(1) adequate controls are
in place to ensure that marketable securities received in
bankruptcy cases are accurately recorded and,, properly .
safeguarded, (2) program accomplishments :for bankruptcy,
settlements are being accurately reported,> and (3) changes in
legislation are needed to .increase EPA's- recoveries from bankrupt
.parties. ' , , -> • ' •. i .
This, audit report contains findings that describe problems the
"Office"of Inspector General (OIG) identified.and corrective
actions the OIG recommends. This aud'it report represents the
opinion'of the OIG. Final determination.on matters in this audit
report will be made by EPA managers in accordance with
established'EPA .audit Resolution procedures. Accordingly, the
findings contained in this audit report do"not necessarily
represent the final EPA position. During.this audit, the OIG did
not measure the audited offices against the standards established
by the National Contingency Plan (NCP).. The issues of concern
contained in this report are not binding in any enforcement
Lf/,
CVi
CVJ
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Recycled/Recyclable
Printed with Soy/Canola Ink on paper that
contain* 81 least 50% recydM fit>»r
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proceeding brought by EPA or Department of Justice under Section
107 of the- Comprehensive Environmental Response Compensation, and
Liability Act to recover cots incurred not inconsistent with the
NCP. We have no objection to the further release of this report
"to the public. " / "
Although we did not receive y9ur formal -written response to our
draft audit report in time to include it in'this report, we did
meet with members of your staff to discuss our' findings and
recommendations. They indicated general agreement with the
report's findings and recommendations. We considered their
comments in finalizing the attached report, and we have .
summarized their comments in the appropriate sections of the
report.' '*.,"" .
ACTION REQUIRED
[
In accordance with EPA Order 2750, you are required to provide
this office a written.response to the audit report within 90 days
of the.final audit report date. 'Since the recommendations are
addressed to two offices we are designating the Chief Financial
Officer as the primary action official. As such, the primary
action official should take the lead in coordinating the Agency's
official response so the 90 day timeframe is-met. The^Assistant
Administrator for Enforcement and Compliance Assurance,.as.the
secondary action official, should coordinate with the primary
action official. For corrective actions planned but not
completed by your response date, reference to specific.milestone
dates will assist us in closing the report.,
i ,
If your staff has any questions or needs additional information
regarding this report, please contact Melissa Heist at ..
(202) 260-1479 or .Drusilla Yorke at (202) , 260-9628.
Attachment •
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BPA'S Handling Of Superfund Bankruptcy Settlements
EXECUTIVE SUMMARY
PURPOSE
The .purpose of this audit, was to determine whether the
Environmental Protection Agency (EPA) is properly handling .
Superfund. bankruptcy settlements. Specifically, the objectives
of the audit were to determine if: - •
\ • '
"^ • EPA has' adequate controls in place to ensure that stock
and other assets received in bankruptcy settlements are
'accurately recorded and properly safeguarded;
. • the Agency is accurately reporting its program
accomplishments for bankruptcy settlements; and
'• changes, in-legislation vare. needed in order, to increase
EPA's recoveries fr;.'." bankrupt responsible parties.
BACKGROUND
The Superfund program is.administered under thei Comprehensive .
Environmental 'Response, Compensation and Liability Act of 1980
{CERCLA), as amended by the Superfund Amendments and
Reauthorization .Act of 1986 and the Omnibus Budget Reconciliation
Act of 1991. Congress established a trust fund, the Hazardous
Substance Superfund,,to respond to and cleanup hazardous
substance emergencies, and abandoned "uncontrolled hazardous.waste
sites. The trust fund is commonly referred to as .the Superfund
Trust, Fund. ...-,,•-, ^
The law directs EPA to cleanup.hazardous waste sites by either
compelling the potentially responsible' parties to .cleanup" the , ,
site or by using monies from the Superfund Trust Fund to pay for
the cleanup. If. trust fund.monies are used, EPA attempts to
recover .the costs of the cleanup from the parties responsible for
the contamination. x Some responsible parties file for bankruptcy
protection. EPA has been involved in responsible party
bankruptcies, since at least 1980. EPA's participation in-
bankruptcy settlements has increased-from 2'in fiscal 1980 to a
cumulative total of 199.by fiscal 1993. The Bankruptcy Code
(Title 11 of the U.S. Code) is designed to.give individuals or
companies filing for bankruptcy protection a financial fresh
start. In bankruptcy settlements, EPA is an unsecured-creditor.
Report No. E1SFF3-20-80Q4-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
As an unsecured creditor, EPA is entitled to receive a percentage
of the'assets to be distributed after the secured creditors'
claims have been satisfied., Some bankrupt responsible parties
satisfy their debts by issuing marketable securities in. their
reorganized companies. During fiscals 1992 .and 1993, EPA
' received 2.4 million "shares of marketable securities (common
.„ stock, warrants, and contingent value rights) from bankrupt
responsible parties.' EPA transfers marketable, securities it
receives to the Department of Treasury (Treasury) which is
responsible for their'sale. Proceeds-from the sale of the
. securities are returned, to the Superfund Trust. Fund.
RESULTS-IN-BRIEF
During fiscals 1992 and.1993, the Agency received 2.4'million
shares of marketable securities with a market value of $22.4
million as of March 1994. Our audit work showed- that the Agency
has limited controls in place' to safeguard securities it
receives., For example, the Agency has not established central
receiving 'points for receipt of securities, restricted access to
securities, nor assigned custodial responsibility for the ...
securities. In addition, the Agency does not record the receipt'
of marketable securities in its.accounting system.
We also found that more complete recording and reporting of
information on bankruptcies would result in better information
for Agency managers to use in'making decisions about the Agency's
Superfund cost recovery program. Further, current bankruptcy
laws can hinder EPA's ability to recover cleanup costs from
bankrupt responsible parties.
These issues,identified during our audit are discussed in the
following paragraphs and'described in more detail in Chapters II
through V.of this report. , ' .
PRINCIPAL FEND!
EPA'S Controls For Handling Marketable Securities Need To Be
Strengthened ,
v
The Agency has limited' controls over marketable.securities.it
receives. We found: (a) central receiving points had not been
established, (b) access to securities was not restricted,
. Report No. E1SFF3-20-8004-41O0579
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EPA'S Handling Of Superfund Bankruptcy Settlements
'(c) custodial responsibility was hot- assigned, '(d) records were
not maintained, to show the amount of securities received and
transferred to Treasury, and (e) written procedures for
processing the securities had not been established. As a, result,.
the Agency cannot be assured securities it receives are
adequately safeguarded against theft and timely forwarded to
Treasury so that they can be sold., We also found that EPA does
not have procedures in place to follow up with bankrupt
.responsible parties or their assigned trustees to ensure the
Agency has received-all securities it is entitled to receive.
To improve controls in this area, we are recommending the Chief
Financial Officer establish' central receiving points for
marketable securities, designate employees with custodial . . J
responsibility for securities, and develop procedures that
address'the proper handling of marketable"securities. We are
•also recommending the Assistant Administrator•for Enforcement and
Compliance Assurance assign responsibility for following up with
reorganized companies to help ensure that EPA receives all 'of .the
.securities it is entitled to receive. ' . . ,'
Improvements Needed In Accounting for Marketable Security . .
Transactions ., . ... !
When EPA receives marketable securities from bankrupt Superfund
.responsible parties, receipt of the securities is not recorded in
the Agency's accounting system. .Also, as we have found in the
past for other types of accounts receivable, accounts receivable
for Superfund bankruptcy settlements are not .recorded timely. >In
the two regions we visited, regions 2 and 5, accounts receivable
for the five fiscal 1992 and 1993 bankruptcy, settlements'
.affecting these regions were not recorded for an average of seven
months after agreements were reached with the responsible
parties.. Improvements in the accounting for marketable security
transactions would help ensure that marketable securities
•received by/the Agency are adequately safeguarded. Also, it
would result in more current and complete information about
Superfund assets for managing the, Superfund program and ensuring
that Superfund receivables are promptly collected. . . .
In response:to a recommendation contained in the audit report on
the fiscal.1993 financial statements for the Superfund Trust
Fund, the Chief Financial Officer agreed to develop procedures to
account for,and record 'the receipt and sale of .securities. We,
are also recommending that- the Assistant Administrator for
Enforcement and Compliance Assurance include provisions in the
Report No. EUSFF3-20-8004-4100579 %
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EPA'S Handling Of Superfund Bankruptcy Settlements'
Agency's bankruptcy guidance-to: (a) follow up'with DOJ when
final bankruptcy orders are not forwarded timely to the Agency,
and (b) timely forward bankruptcy orders to the appropriate
financial management office so accounts receivable can be
established.
More Complete Recording and Reporting of Bankruptcy Information
Would Result In Better Information For Making Decisions About The
Superfund Program . ; •
Bankruptcy cases handled by Headquarters Office of Enforcement
and Compliance Assurance attorneys are not always entered into
the Comprehensive Environmental Response, Compen'sation and
Liability Information System (CERCLIS)/ the 'Agency's main
Superfund tracking system., Using information provided by
Treasury, we identified six bankruptcy cases valued at over $96.6
million that were settled during fiscals 1992 and 1993, but which
were not recorded in CERCLIS. In addition, when we requested a
listing of: (a) bankruptcy cases resulting in the transfer of
marketable securities.to the Agency, (b} the amount of securities
received, and (c) the total proceeds from sale of the securities,
Headquarters and regional officials told us that they could not .
be sure the listings they provided were complete because this
information is not tracked in CERCLIS. More complete information
on bankruptcies could be useful to Agency managers in making
decisions about" the Agency's Superfund cost recovery program. It
would also allow the Agency to better present the results of its •
cost recovery efforts by showing the' impact bankruptcies have on •
the Agency's efforts to recover costs, from responsible parties.
We are recommending the Assistant Administrator for Enforcement
and Compliance Assurance instruct Headquarters attorneys to alert
attorneys-and program office staff in the regions of the status
of Headquarters managed cases so that.regional staff can ensure
that settlement information is input into CERCLIS. .We are also
recommending that the office develop procedures to track total
collections,- including form of payment for bankruptcy
settlements; and revise the Superfund enforcement performance
.measurement reporting to reflect the impact bankruptcies are
having on the .Superfund cost recovery program.
Report No. E1SFF3-20-8004-4100579
iv
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EPA'S Handling Of Superfund Bankruptcy Settlements
Current Bankruptcy Laws Limit The Effectiveness Of The Agency's .'..
Superfund Cost Recovery Program '
Current bankruptcy laws .can hinder EPA1s ability to recover'
cleanup costs-from bankrupt responsible parties. , This reduces
the -amount of money that can be returned to the Superfund Trust .
Fund and used for cleanup of additional hazardous waste sites.
Two ke.y issues in the area of bankruptcy law heed to be resolved.
in order to improve the Agency.'s abil_ity to recover Superfund
cleanup costs. The first issue deals with what EPA's claim is.
Some reorganizing companies have argued that EPA's claim should
include all environmental •• liability, even future cleanup costs
'EPA might -incur. These companies contend that all of-their >'
environmental liability should be discharged, and they should get
a fresh start. The second issue deals with: ' (a') how. much
information responsible parties should include in their
'bankruptcy notices to creditors, and (b) where the,notices should
be filed. If the notice 'is mailed to a region where the
responsible party has no liability,, or if it contains
insufficient information, the Agency can miss out.on its.
\opportunity to participate in ,the bankruptcy proceedings.
Pending amendments' to the Bankruptcy Code could improve EPA's .
ability to>recover cleanup costs from bankrupt'responsible
parties, but some problems'will still remain even if the proposed
amendments become law. DOJ is attempting to address, .these and
other problems by drafting additional amendments to the
Bankruptcy Code. .The Agency needs to continue to work closely
, with-DOJ to ensure .its concerns in this'.area are addressed. We
are-also recommending that the Agency.-develop policies and ~' .
procedures requiring offices receiving 'bankruptcy notices to
search existing Agency databases to determine if bankrupt parties
have any known environmental liabilities, and if they do," to'
notify the appropriate Agency' attorney^ , • " ,
AGENCY COM3MENTS AND PIG EVALUATION ,
'
On August 19, 1994, we issued a draft audit report to the Chief'
Financial Officer and the Assistant Administrator for.Enforcement
and Compliance Assurance. We'met with representatives of,bo'th
offices on September 27., 1994,- to discuss their comments on the
draft audit.report. ' ,
The Agency agreed-with our recommendations for strengthening
controls over the receipt.and handling of marketable securities.
Appropriate Headquarters and regional employees are being
Report No. E1SFF3-20-8004-4100579 ' • .'
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-' • • ... V • ' •' , • ,•• . >
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.EPA'S Handling Of Superfund Bankruptcy Settlements
assigned custodial responsibility for 'securities, and
instructions for handling securities will be formalized in the
near future-. "* The Agency also agreed to implement the corrective
actions we recommended with regard to accounting for marketable
securities. Staff from the Financial Management Division,
however, told us that they do not plan to formalize the
procedures for accounting for marketable securities until June
30, 1996. Given-the material dollar value of securities that are
being, received by the Agency we believe a high priority should be
placed on .formalizing these procedures before June 30, 1996.
The Agency also agreed to facilitate the recording of bankruptcy
cases in CERCLIS by modifying its Superfund Comprehensive
Accomplishments Plan. Manual and CERCLIS enforcement coding
guidance to standardize bankruptcy entries. The Agency initially
disagreed with our recommendation- on tracking and reporting
additional information on bankruptcy cases because collection arid
settlement information for bankruptcy cases is-included in the
overall settlement and collection information that is tracked and
reported by the Agency. In subsequent meetings with Office of
Enforcement and Compliance Assurance staff,, they indicated that -
they planned to initiate a needs analysis of CERCLIS in the near
future, and as a part of that analysis they will look into ^ ,
tracking additional information on bankruptcy cases. We believe.,
this is a positive first step that will lead to more information
that Agency managers can use in managing and reporting on the .
results of the Agency's cost recovery efforts.
Finally, the Agency agreed in principle with our recommendation, •
to search existing data bases when bankruptcy notices are
received to determine if "bankrupt parties have any known
environmental liability. Managers in the Office of Enforcement;
arid Compliance Assurance told us that development of standardized
procedures for handling bankruptcy notices is a top priority of
the,Agency's Bankruptcy Workgroup. However, before the office
commits to performing such, searches-, it wants to determine
whether.the necessary'time and resources are available.- We
believe the development of standardized 'procedures for handling
bankruptcy notices will help .ensure the Agency can effectively
participate in bankruptcy cases. We also continue to believe
that a search of existing data bases would be an effective means
of identifying environmental/liabilities of bankrupt parties.
Report No. E1SFF3-20-8004-4100579 ,
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EPA'S Handling Of Superfund -Bankruptcy Settlements
TABLE OF CONTENTS
EXECUTIVE SUMMARY ............ i
• ' . K
CHAPTER I - -, ' '; -"'•.'
• INTRODUCTION ...................... , I
Purpose ................ 1
Background ''.-.. .• . . . < . . . 1
Scope and Methodology . ... 2
Prior Audit Coverage .."....,.....'.... 4.
y .
CHAPTER II • .:•••'.' . ' ' • .-.-•.'
EPA'S CONTROLS FOR,HANDLING MARKETABLE SECURITIES •
NEED TO BE STRENGTHENED 7
Additional Controls Are Needed To Ensure That
Marketable Securities Are.Adequately Safeguarded 8
Procedures Need To.Be 'Established To Ensure EPA
Receives All Payments It Is .Entitled To. Receive '. ;. 10
RECOMMENDATIONS''..'- ... . . . . . . . . '.•*>. '., . . . . .-' 11
AGENCY. COMMENTS '..'-...-..... 11
OIG EVALUATION ,OF AGENCY COMMENTS .......... i ... 12-
\ '
CHAPTER III . v
IMPROVEMENTS NEEDED IN ACCOUNTING FOR MARKETABLE
SECURITY TRANSACTIONS ;..'...".... 13
Procedures To Record Marketable Securities.
' ,- , Need To-Be" Established '...'. 13:
Accounts Receivable For Bankruptcy ' .
Settlements -Should Be Recorded More Timely ... 14
Posting Proceeds From The Sale Of Securities- .;
To The Correct. Superfund Site •> 16
. ' RECOMMENDATIONS .'...'...'. '.,."-."•.'.' 17
.AGENCY 'COMMENTS ............ S ......... 17
• OIG EVALUATION OF AGENCY COMMENTS .•;....•...'.. 18
Report No. -E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
TABLE OF CONTENTS
CHAPTER IV - ' • •*....
MORE COMPLETE RECORDING AND REPORTING OF"BANKRUPTCY
INFORMATION WOULD RESULT IN BETTER INFORMATION FOR'
MAKING DECISIONS ABOUT THE SUPERFUND PROGRAM ..... 19
Some Bankruptcy Settlements Were Not Input.
. Into CERCLIS ... . , ........... 20
The Agency Should Track And. Report
•Information Showing The Effect Bankruptcies
Have On Superfund Cost Recovery ......... 20
Value Of Ongoing Cost Recovery 'Actions
Should Be Updated In CERCLIS .......... 24
RECOMMENDATIONS . . ......... 24
AGENCY COMMENTS '. 25
'OIG EVALUATION OF AGENCY COMMENTS . . . . .26
.CHAPTER V • . , .
CURRENT BANKRUPTCY LAWS LIMIT THE EFFECTIVENESS OF
. •• - ' THE AGENCY'S SUPERFUND COST'RECOVERY PROGRAM ..... 27
The Courts' Definition Of EPA's Claim _ '
\ Affects Cost Recovery .' 1 . . 28
Improvements Needed In The Bankruptcy
Notification Process > 28
• / Pending Legislation Could Affect EPA's
Superfund Cost Recovery' Program . . .. ..- . .' . . . , 29
Department Of Justice^s Proposed Draft
Amendments . 29
RECOMMENDATIONS 30.
AGENCY COMMENTS . ... . . . . . . . . 30
' . OIG EVALUATION OF AGENCY COMMENTS ...>.' '31
APPENDIX A . . , '
REPORT DISTRIBUTION LIST . 33'
Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
CHAPTER I
INTRODUCTION
PURPOSE
-' /
The purpose of this audit was to determine whether EPA is
properly.handling Superfund bankruptcy settlements.
Specifically, the objectives of the audit were to .determine if:
1 • - ' ' • • ' " /'•'.'.
• EPA has adequate controls in place to ensure that stock
and other assets received'in bankruptcy settlements.are
accurately recorded and properly safeguarded;."- • ,
• the Agency is .accurately reporting its program
accomplishments for bankruptcy settlements; and .
>• changes ,in legislation are needed .in. order to increase .
' EPA's recoveries from bankrupt responsible parties.
BACKGROUND
The Superfund program is"administered under the Comprehensive
Environmental .Response', Compensation and Liability Act-of 1980,
as amended by the Superfund Amendments and Reauthorization Act .of
1986 and the Omnibus Budget Reconciliation Act of 1991. Congress
established a trust fund,.the Hazardous Substance Superfund, to
respond to and cleanup hazardous substance emergencies and
abandoned uncontrolled hazardous waste sites. The trust fund !is
commonly referred to as the Superfund Trust Fund. The Superfund
program is,primarily managed by EPA's Office of Solid Waste and
Emergency Response with much of the day to ^ay; operation of the"
Superfund program being carried out -in EPA's ten" regional .
offices. The' Office of Enforcement and Compliance Assurance is'
involved in recovering- cleanup costs from responsible parties. .
i ' '. • ' ' • • •
The law directs' EPA to cleanup hazardous.waste sites by either
compelling potentially responsible parties to cleanup the site or
by using monies from the Superfund Trust'. Fund to pay (for the
cleanup. If trust fund monies are used, EPA attempts to recpver
the costs of the. cleanup 'from the parties responsible for the
contamination. Some responsible parties file for bankruptcy
Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund'Bankruptcy Settlements /,
protection under Title-.11 of the U.S. Code. EPA has been
involved in responsible party bankruptcies since'at least 1980.
EPA's participation in bankruptcy settlements has increased from
2 in fiscal 1980 to a' cumulative total of_199 by fiscal 1993.
The Bankruptcy Code (Title 11 of the U.S. Code) is designed to
give individuals-or companies filing.for bankruptcy protection a
financial fresh start. Bankrupt parties must notify their
creditors 'of their bankruptcy filing. • In bankruptcy settlements,
EPA is an unsecured creditor. As. an unsecured creditor, EPA is
entitled to receive a percentage of the assets to be distributed
after the secured creditors' claims have been satisfied.
Some bankrupt responsible parties satisfy their debts by issuing
marketable securities in their reorganized companies'. During .'
fiscals 1992 and 1993, EPA received 2.4 million shares of -
marketable securities (-common stock, warrants, and contingent
value rights) from bankrupt responsible .parties. EPA'transfers
marketable securities it receives to Treasury which is .
responsible for their saie. Proceeds from the sale of the
securities are returned to the Superfund Trust Fund.'
SCOPE AND METHODOLOGY
Our audit covered Superfund- bankruptcy settlements finalized in
fiscals 1992 and 1993 which resulted or .will result in EPA
receiving marketable securities. To accomplish our objectives,
we.performed audit work at the EPA Headquarters Office of
Enforcement and Compliance Assurance, Office of General Counsel,
and the Financial Management Division. We also performed audit
work at the Financial'Management Offices and the Offices of
Regional Counsel in regions 2 and 5. In addition, during our
audit we met with attorneys from DOJ who are involved in -
Superfund bankruptcy settlements. Finally, we met with Treasury
officials responsible for the sale of EPA's marketable
securities. - . •
We performed the audit in accordance with Government Auditing
Standards (1988 Revision) issued by 'the Comptroller General of
the United States." Our audit included tests of financial and
program records and other auditing procedures we considered
necessary, as further described below. As a part of our audit,
we assessed the internal control structure related to the
handling, safeguarding and processing of, marketable securities."
We conducted our audit work -from August 1993 to April 1994. The
material internal control weaknesses and other issues we
Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy settlements
identified during our audit are included in Chapters II through V
of this report. .No other.issues came to our attention which were
significant enough to warrant expanding the scope of the audit.,
. Our audit included a review of EPA's policies and procedures
related to handling and processing marketable securities. We
..obtained information from interviews with personnel- in the
offices' where we performed -audit work. Further, we reviewed the
Statements of Federal Financial Accounting Standards issued by
the Federal 'Accounting Standards Advisory Board that were
'applicable to our audit objectives. ' ; -
In performing the audit,1 we reviewed the marketable securities
files-maintained by the Headquarters Financial Management .
Division. We also obtained records from Treasury to help
identify a, universe of marketable securities that EPA transferred
for sale during fiscals 1992 and 1993. The'Office of Solid Waste
and Emergency Response maintains a computerized tracking system,
the Comprehensive Environmental Response, Compensation and
Liability Information System (CERCLIS), to support day-to-day .
management and .operations of the:Superfund program. We obtained.
copies of various' CERCLIS print-outs on the status of Superfund
bankruptcy cases; however, we were unable to obtain information
from the system to identify a universe of Superfund bankruptcy
cases that resulted in the Agency receiving marketable securities
because this information is noV currently tracked. ,We also,
obtained print-outs,'from the Office of Enforcement and Compliance
Assurance Docket System; however, we found this system also does
-not track marketable securities received as payment of debts owed
to EPA. We did not audit the general and application controls of
these data processing systems. The purpose of our audit was'not
to .express an opinion on the accuracy'of these, data processing.
systems, but rather to evaluate the Agency,'s'handling of
bankruptcy settlements.
\ .
We reviewed., the final bankruptcy agreements for all-cases we were
able to identify' which resulted in -the Agency receiving
marketable'securities during fiscals 1992 and 1993. We-reviewed
these bankruptcy agreements which we obtained from the Office of
Enforcement and Compliance Assurance to de'termine the amount of
EPA's ^allowed' claim. Based on our analysis; of the bankruptcy1 .
agreements, we'determined that regions 2 and 5 had the highest
dollar value of bankruptcy receivables. Therefore, we visited
these two regions during the audit'. We reviewed the accounts
receivable files maintained in the.regional offices to determine
whether the receivables were properly and timely established, .and
if the files contained adequate documentation to'support the
Report' No. E1SFF3-20-8004-4100579 ' •
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EPA'S Handling Of Superfund Bankruptcy Settlements
receivables. We also verified that collections related to the
receivables were correctly posted in the accounting system.
As part'of the audit, we also met with attorneys from.EPA's
Office of.Enforcement and Compliance Assurance, as well as DOJ
attorneys who litigate Superfund bankruptcy cases on EPA's
behalf. We met with them to discuss problems and concerns
•encountered when 'litigating Superfund bankruptcy cases and
actions taken to improve the Federal government's standing in
bankruptcy. Both EPA and DOJ have convened bankruptcy rworkgroups'
to deal with emerging problems in litigating Superfund
bankruptcies. We also reviewed draft and proposed amendments to
Title 11 of the U.S. Code to determine the effect the amendments
will have on EPA's Superfund cost recovery program. We discussed
our concerns with the proposed legislation" .with attorneys from'
EPA's Office of .General Counsel. . .
In accordance with the Federal Managers''Financial Integrity Act
(FMFIA), program offices periodically evaluate their internal
controls by conducting assessments. We obtained a copy of the
fiscal 1993 FMFIA report to the President to determine if the
Agency had identified any applicable weaknesses.in its evaluation
of internal controls. However, we did not perform any tests to
verify the accuracy and integrity of the report data. We found
the Agency had reported that technical shortfalls in.its accounts
receivable module, non-current policies and procedures,
inaccurate and incomplete reports, and insufficiently trained
personnel prevent EPA from effectively managing its accounts
receivable. We also found one internal program report that
identified marketable securities as an area where policies and
procedures are needed.
PRIOR AUDIT COVERAGE
, >•• •••-..
In a report summarizing the results of the audit of the fiscal
1993 financial statements for the Superfund Trust Fund, Leaking
Underground Storage Tank Trust Fund and the Asbestos Loan Program
(Audit Report No. P1SFL3-20-8003-4100231, issued March 30, 1994),
several weaknesses in the accounts^receivable area were reported.
The'independent public accounting firm that conducted the audit
recommended that the Chief Financial Officer establish procedures
to account for and record the receipt and sale of marketable
securities. To improve the timeliness of the .recording of
accounts receivable, the independent public accounting'^irm
recommended improvements in the coordination between Offices of
Regional Counsel and regional .Financial Management Offices. The
, , Report No. E1SFF3-20-8004-4100579 .
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EPA'S. Handling Of'Superfund Bankruptcy Settlements
Chief Financial Officer has already taken'some corrective actions-
in the^ area and has developed milestones for completing other
necessary corrective actions. Additional details on-the status
of the Agency's'ongoing corrective actions are included in
Chapter III of this report.- ' ; • •
Report No. E1SFF3-20-8004-4100579
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Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
CHAPTER
CPA'S CONTROLS FOR HANDL1
SECURITIES NEED TO BE STRENG
Our review of fiscals 1992 and 1993 bankruptcy settlements where
EPA 'received marketable securities (stock, warrants', or ' .
contingent value rights) showed that the-Agency has limited
controls over the securities' it; receives'; We found: (a) central.
receiving points had not been established,' (b) access to • -
securities was ,not restricted, '(c) custodial responsibility was
not assigned, (d) records were not maintained to show the amount
of securities received'and transferred to Treasury, and .'
(e) written procedures.for processing the securities had not been
established. As a result, the Agency cannot be assured
securities it.receives are adequately safeguarded against theft,
and timely forwarded to Treasury so that.they can be>sold. We
also found that EPA does not have procedures in place to follow
up with bankrupt responsible parties or their assigned trustees
to ensure the Agency has received all securities it is entitled
to receive. .--•... ; .. \ •
In some- instances, parti.es responsible for contaminating .'
Superfund sites file for bankruptcy protection under Title 11 of '
the U.S. Code, the Bankruptcy Code. EPA is th'en entitled to
receive a portion of the bankrupt responsible parties' remaining .
assets to satisfy their debts to,'the Agency. "Some bankrupt
responsible, parties satisfy these.debts by issuing EPA marketable
securities in their reorganized companies. EPA then forwards'the
securities to Treasury, so they can be sold as quickly as is
practicable. According to Treasury's records, the Agency has
been receiving marketable securities from bankrupt responsible
parties since.at least fiscal 1988.' .During fiscal 1993, EPA
received approximately 1.7 million shares of common stock,. 17,000
warrants 'and 628,000 contingent value rights as payment .of debts
from bankrupt responsible parties. . The Agency has collected'.
approximately $16.9 million for those securities that have been
sold. • As more and more parties responsible for contaminating
Superfund sites file for bankruptcy protection,' it. is likely that
•EPA will continue to receive marketable securities in reorganized
companies as payment of debts owed to the Agency. . ,
\
' ' •
Report No.. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
Additional Controls Are Needed To Ensure That Marketable Securities
Are Adequately Safeguarded
EPA has not established central receiving points where marketable
securities are to be sent. As a result, securities are being
sent to various offices both inside and outside EPA. One ;
regional-Financial Management Office, as well as the Superfund
Accounting'Branch in Headquarters, have received marketable
securities. Marketable securities "have also been sent to the
Superfund lockbox maintained at a Pittsburgh bank and to the.
Assistant U.S. Attorney General.
Marketable securities sent to the lockbox are forwarded to one of
EPA's regional Financial Management Offices who then forwards
them .on to the-Superfund Accounting Branch in Headquarters.
Offices within EPA that receive securities also forward them to
the Superfund Accounting Branch. The Superfund Accounting Branch
then forwards the securities to the Headquarters Accounting
Operations Branch where £he securities are held in a safe until
they are transferred to Treasury, so they can be sold. We
believe central receiving points for marketable securities should
be established and^-this should be reflected in ongoing revisions
to" the Agency's Resources Management Directive 2550D, "Financial
,Management of the•Superfund Program". Establishing.central
.receiving points would', help ensure that securities the Agency is
entitled to receive are not lost or.stolen.
In addition, proper safeguarding.of assets requires that access
be. limited to authorized personnel who have been -assigned
custodial officer responsibilities.. Since the Agency has not .
established central receiving points access to securities is not .
limited. Further, personnel- in the Financial Management Division
who are responsible for handling the Agency's securities told us
that processing marketable securities is/an unofficial
responsibility, and they 'are not evaluated on their performance
of these duties^,. " : •
* * •
At the time- we initiated our audit fiel'dwork, we also found that
no one within EPA was maintaining a log of the securities
received^ and. the securities transferred to Treasury so they could
be sold. Staff in the Headquarters Accounting Operations Branch
told us that their involvement with securities was limited to
safeguarding the securities while in EPA's possession, and they
were hot required to maintain.a record of the securities '
received. However, by not maintaining a record of the amount and
type of securities received and the amount transferred to
/
Report No.'E1SFF3-20-8004-4100579 '
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. • " I
EPA'S Handling Of Superfund Bankruptcy Settlements
Treasury, the Agency could not be sure that its assets were
adequately safeguarded against theft, and that the securities were
promptly transferred to Treasury ,so that they could be sold.
During our audit, personnel in the Headquarters Accounting
Operations Branch initiated several corrective actions. The
office drafted procedures on how it should handle securities. It „
also established a log to track the.type,and amount''..of securities
received, the date the securities were received by EPA, the date '
they were transferred to Treasury, and information on sale of the
securities. Headquarters Accounting Operations Branch should .
also incorporate into its-procedures a requirement that the log
be completed by individuals with custodial responsibility for
.marketable securities. We believe'the procedures should further
require the;office notify the Superfund Accounting Branch of the
receipt of marketable securities so that the Superfund Accounting
Branch can ensure that the necessary accounting transactions are
recorded/ These actions'will provide ,for better control over . .
marketable securities while they are in the Agency's custody.
They will also provide the Agency a record of the securities that
have been transferred to Treasury;" so the Agency can be sure that •
the securities are sold and the proceeds are deposited into the
Superfund Trust Fund. .. ' /•• • . • ' •
We also'found that procedures'need to be established outlining
that marketable securities should be registered to the Superfund
Trust Fund, and they should be sent to a designated central ' .'
receiving point within EPA. .This" information should be included
in settlement agreements. ;Such controls would help ensure that
EPA receives all of the marketable securities it is entitled to
receive and that once the securities are .received they are
adequately safeguarded. We found one ca'se'.where a bankrupt
responsible party issued over 150 -thousand shares of marketable
1 securities valued at $6'. 2, million in an EPA employee's name.
These securities were subsequently returned to the company and
were reissued to the Superfund Trust Fund, but without adequate
•controls' and procedures in place the Agency is at risk.
The Office'of .Enforcement and Compliance Assurance has convened a
Bankruptcy Workgroup^toireview current bankruptcy activities*and
to revise and update the Agency's guidance in-this area. In •
February 1994, the workgroup issued "A Bankruptcy Primer' for the
Regional Attorney." The purpose of the document is to provide
regional "attorneys 'with' an overview of the Bankruptcy Code as it
relates to enforcement, cost, recovery and other proceedings under
various environmental statutes. The workgroup.is, in the process
of drafting proposed guidance addressing the participation,of EPA
.. Report No. E1SFF3-20-8004-4100579 / •- -, -
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EPA'S Handling Of Superfund Bankruptcy Settlements,
in bankruptcy cases. The guidance should include standard
language to be included in settlement agreements that would
require marketable securities be registered to the Superfund
Trust Fund and be submitted to 'a designated EPA central receiving
point. . ' .
Procedures Need To Be Established To Ensure EPA Receives All
Payments It Is Entitled To Receive
During our audit, we found 'one instance where- 4, 491 shares of,
marketable securities valued at $54,700 received as payment of a
fiscal 1989 debt -remained at DOJ for well over a year. This .
occurred because the Agency does not have procedures . in place
requiring, someone within EPA to. follow up with the bankrupt
responsible party or the assigned trustee to ensure the Agency
has received all of the securities it is e'ntitled to receive. In
this case, if someone within EPA had followed up. they would have
found the marketable securities had been transferred to DOJ.
Action could have then been taken .to have securities transferred
more timely to EPA, so they could be sold. In other cases,
follow up might show marketable securities have not been
. distributed, and the Agency could then take' action to obtain the
securities it is entitled to receive. ' • .
Although bankruptcy agreements stipulate the amount of EPA's
allowed unsecured claim, there is nothing in the bankruptcy
agreement to indicate the total funds or securities the 'Agency is-
entitled' to receive. We spoke with an Office of Enforcement and
Compliance .Assurance attorney and 'a DOJ attorney who litigate
Superfund bankruptcies to. determine if there is any document . '
which would ' identify the payments EPA should expect to receive in
' chapter 11 bankruptcy proceedings. We were informed by both
officials that no such document exists. Both agreed that this is
a problem and that, some type of follow-up action' needs to be .
implemented. . • - . • (
We obtained and reviewed the Agency's existing guidance "Revised
Hazardous Waste Bankruptcy Guidance" (OSWER Directive 9832.8, '
dated May 23, -1986) and "Procedures for Documenting Costs for
CERCLA §107 Actions" (-OSWER Directive 9832. 0-1A, dated January'
30, 1985). We found that available guidance does not include
procedures to follow up to make sure EPA has received all the
securities it- is entitled to receive. Therefore, we believe
guidance is needed in the area." . - .
-
Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
RECOMM
We recommend that the; - .
l. Chief Financial Officer: (a) establish central receiving
'points for the receipt of.marketable securities, (b) designate
employees with custodial responsibility for marketable
securities, and (c) incorporate into revisions to Resources
Management Directive 2550D procedures for the proper handling of
marketable securities. .. " - -
2 .; Assistant Administrator for Enforcement and:Compliance , .
Assurance assign responsibility for following up with reorganized
'companies or their trustees, to determine if they have made final'
distribution of securities in payment of EPA's unsecured claim.-
3. Assistant Administrator for'Enforcement.and Compliance
Assurance include in ongoing revisions to policies and procedures
being developed by the o-'f ice's Bankruptcy Workgroup, standard,
language to- include in :Gnapter 11 bankruptcy agreements-that will
ensure marketable securities are properly registered to the
Superfund Trust Fund and are.sent to a designated central
receiving point.. ' . ' ...
i . ' . " •-
AGENCY -COMMENTS ' . "' •.'',•/'''' -....'•
The Agency agreed with our recommendations for strengthening
controls over the .handling of 'marketable securities. .
Specifically, representatives of the. Financial Management •
Division told us that the Headquarters Accounting Operations. s
Branch will be responsible for handling.marketable securities for.
' settlements involving multiple regions. Regional financial
management offices will be responsible for securities received in
settlements that involve only one region. They also told us.that
appropriate Headquarters.and regional employees are being , ' ,
assigned custodial responsibility for the -handling and
safeguarding of -securities. Further, Headquarters, and regional
financial management staff have been provided draft instructions
on the handling of securities, and the 'Financial Management
Division plans to finalize these instructions in the near future..
1 '<. " - , *'
The Agency also plans to include in revisions.to Resources
Management Directive 2550D a separate accounts receivable chapter
that will include a section on bankruptcy. In-addition,'
procedures will be developed to follow up,with reorganized
Report No. E1SFF3-20-8004-4100579
: .. '11 •. - •
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.
EPA'S Handling Of Super fund Bankruptcy Settlements
companies or their trustees to help ensure EPA receives all of
the .securities, it is entitled to receive. Finally, the Office of
Enforcement and Compliance Assurance will include in bankruptcy
policies. and procedures that are being developed appropriate
language to include in Chapter 11 bankruptcy agreements -that will
help ensure that marketable securities are properly registered to
the Superf und - Trust Fund and are sent to a designated receiving
point. , . • •
PIG EVALUATION OF AGENCY COA^IENTS
.The' actions planned by the Agency are responsive to our
recommendations. They. should- help ensure that the Agency
receives all of the securities it is entitled to receive and once
the securities are received they are properly safeguarded.'
Regarding Recommendation 1, Financial Management Division staff
indicated that the Headquarters Accounting Operations Branch, as-
well as . regional., financial management officers', will be -
designated as receiving points for marketable securities. Since
the Agency plans to. have multiple receiving points for securities
it is even more important for the Agency to record the receipt of
securities in the Agency's accounting system. Chapter III, of
this report discusses the Agency's procedures for accounting for
the receipt and sale ~of securities. •
Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superiund Bankruptcy Settlements
CHAPTER HI
IMPROVEMENTS NEEDED IN ACCOUNTING
FOR MARKETABLE SECURITY TRANSACTIONS
When EPA receives,marketable securities from bankrupt Superfund
• responsible parties, receipt of the securities is not recorded in
'the Agency's accounting system. Also, as we have found in the
past for other types of accounts receivable, accounts receivable
' for Superfund'bankruptcy'settlements are not recorded timely. In
the two regions we visited,' regions 2 and 5, accounts receivable
. for the five fiscal 1992 and 1993 bankruptcy settlements
affecting these regions were not recorded for an average of seven
, months after agreements were reached with the responsible
parties. Improvements in the accounting -for marketable .security
transactions would help ensure that marketable securities
received by the Agency'are adequately safeguarded.• Also, it
would .result in more current and complete information about -
Superfurid assets for managing the Superfund program and ensuring
.that Superfund receivables are promptly collected.'
• '•'•-. • } . • ' • "
Procedures To Record Marketable Securities Need To Be Established
During fiscals 1992 and 1993, the Agency received 2.4 million
shares of marketable securities, with a. market value of. $22'.4
million as of March 1994. We found, however, that no.record of
receipt of the stock was made in the Agency's accounting system
-.until the securities were sold by Treasury. 'Also, the
receivables established to show the companies; owed'the Agency-
money .were not adjusted1 to reflect receipt of the ^marketable
securities. For .example, at the end of fiscal 1993, a $19
million accounts receivable remained outstanding in the Agency's
accounting system-even though marketable securities valued at
$4,698,756 had been received in payment of the debt "in April
1993. . ' . . ,' - -
According to Statement of'Federal Financial Accounting Standards
(SFFAS) No. 3,' Accounting For Inventory And Related Property.
monetary instruments should be.recognized as assets when legal
and/or physical custody is obtained. The standard'further
requires monetary instruments to be valued at market value. We
found that marketable securities.received in payment of Superfund
debts are. issued in'EPA's name. Therefore, we'believe that they
are an EPA asset and when received should be recorded as assets
; Report No. E1SFF3-20-8004-4100579
•.'"•.', '• •'- 13 •
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V
EPA'S Handling Of Superfund Bankruptcy Settlements
at their fair market value and the related accounts receivable
reduced. • ' •.
Accounting for.marketable securities was also addressed in, the ^
audit report on the Agency's fiscal 1993 financial statements for
the Superfund Trust Fund, Leaking Underground Storage Tank Trust
Fund and the Asbestos Loan Program (Audit Report No.,PlSFL3-20r
8003-4100231, issued March 30, 1994). .The independent public
accounting firm that conducted the audit recommended that.the
Chief Financial Officer establish procedures to account for and
record receipt and sale of marketable securities. The Chief
Financial Officer*, agreed such procedures should be developed and
established .a target date of September 30, 1994 for their
issuance. In meetings- with Financial Management Division
personnel, they expressed concerns about the effort that would be
needed to modify the Agency's accounting, system to record the
receipt and sale of marketable securities. We believe that the
securities could be recorded in the accounting system using
existing accounts and costly.changes to the accounting system
would not be needed. ••
Accounts Receivable For Bankruptcy Settlements Should Be Recorded
More Timely ,
/" ' t _ '
According _to SFFAS No. 1, Accountingfor Selected Assets and
Liabilities, receivables should be recorded when a federal entity
establishes a claim to cash or other -assets against an entity
based on legal provisions. In regions ;2 and 5", we found that •
for the five fiscal 1992 and.1993 bankruptcy cases affecting ,the
regions, accounts receivable were not established for an average
of seven months after agreements were reached with the
responsible parties (see .EXHIBIT' 3'. i"below) . The value of these
cases was $75.5 million. Timely recording of receivables
provides the Agency with more accurate external reports, such as
financial statements. it also results in more accurate reports
for EPA personnel to use in managing the .Agency's accounts
receivable and monitoring the effectiveness of the Agency's
Superfund cost recovery, program. .
Report No. ElSFF3-20r8004-4100579
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EPA"' S Handling Of Superfund Bankruptcy Settlements
EXHIBIT 3.1
SCHEDULE OF BANKRUPTCY ACCOUNTS RECEIVABLE (A/R)
SETTLEMENT
• COMPANY A
COMPANY ,B ,
\ COMPANY C r .
COMPANY D '
COMPANY E
COMPANY B
COMPANY C "
REGION.
' 2 • ' .
2
' 2
.5
5."
. ; 5'
5 -
. DATE OF
- . AGREEMENT
12/01/92
ll/09/92_ '
09/28/92
01/15/93
04/15/93
02/11/9,3
09/28/92
DATE'
• OF A/R
08/19/93
01/12/93
08/26/93
06/21/93
08/10/93
08/30/93
08/30/93
•ELAPSED
TIME
8 MONTHS
2 MONTHS
,11 MONTHS
•5 MONTHS
4 MONTHS
6 MONTHS
11 MONTHS
Bankruptcy settlements sometimes result in the Agency receiving..
cash payments from bankrupt parties.'.-We found three instances .
where accounts receivable were not established until the cash .was
actually received'. For example, in one settlement dated April
1993, a company was ordered to pay EPA $1,061,600. The •
settlement agreement stated-that '$1-.million was to-be'paid . in ••
cash, and $61,600 as an .allowed unsecured claim. The accounts
receivable for the cash payment was not .established until July
14, 1993, one day after receipt of. the payment.. We also found in
both regions 2 and 5 that, when the accounts receivable were
established for the cash payment, the receivable did ,not include
,EPA's allowed unsecured claim amount. Failure to accurately and
timely record receivables creates a climate for, fraud. An EPA
•employee could divert payments made'to'the Agency without anyone
being..aware because an accounts receivable had not been
established to show that the Agency was expecting payment from a' .
company. > . • ' . , -. - •-..
Regional Financial Management Office personnel told us that
accounts receivable were not recorded timely because Offices of
.Regional Counsel we're not providing them with, copies of
bankruptcy agreements. Also, personnel in .the regional.Financial
. Management Offices.and the Offices of Regional Counsel told us
.that DOJ. was not always timely, in. forwarding final bankruptcy
.agreements. Better follow-up with .DOJ by. the Offices of Regional..
. "Counsel and the Headquarters Office of Enforcement and Compliance
Report No. E1SFF3-20-8004-4100579 --'
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EPA'S Handling Of Superfund Bankruptcy Settlements
Assurance would help ensure more timely forwarding of bankruptcy
agreements to regional Financial Management Offices. . . *>
The Agency recognizes that weaknesses exist in the accounts
receivable area. In fact,. EPA reported accounts receivable as a ' ,.
material weakness in its fiscal, 1993 Federal Managers' Financial
Integrity Act report to the President. The independent public
accounting firm that conducted the audit of the fiscal ,1993
financial statements for the Superfund Trust Fund, Leaking
Underground Storage Tank Trust Fund and .the Asbestos Loan Program
(Audit Report'No. P1SFL3-20-8003-4100231., issued March 30, 1994), ,
recommended that additional .policies and procedures be developed
to improve coordination between the Offices of Regional Counsel
and the regional Financial Management Offices. In response to
this recommendation, the Chief Financial Officer agreed to
develop, by July 31, 1994, a new strategy with the Office of
Enforcement and Compliance Assurance, Office of Solid Waste and
Emergency Response and the DOJ that would address the timely
recording of receivables. Wer believe that better coordination
between these offices will improve the timeliness of the transfer
of. final bankruptcy agreements to the appropriate offices for
recording as receivables. .'"'... :
Posting Proceeds From The Sale Of Securities To The Correct Superfund
Site . . • .-•-.'• .•'-..
•
When EPA' recovers Boosts from Superfund responsible parties these
collections must be posted in the accounting system against the
Superfund .site for which .the funds were expended. Under Section
107 of CERCLA, EPA can seek recovery- of uncollected costs from
any remaining responsible party,identified. Therefore, it is
important that recoveries are properly posted against the
appropriate Superfund sites. - •
During our audit, we found that for one of the six Superfund .
bankruptcy-settlements we reviewed the proceeds from the sale of
securities were inaccurately posted. In this settlement, EPA
received approximately one million share's of marketable
securities and over $1 million in cash as payment of a $29.2 N
million allowed claim. The settlement involved six companies and
sixteen Superfund ^sites. When the marketable'securities from \
five of these companies 'were sold, sites for.a sixth company in
the settlement who had not remitted any payments were credited .
with proceeds from the sale of the securities. • We' discussed . , *
these errors with Office of Enforcement and Compliance Assurance
personnel, and they .immediately requested the respective regional
' ' • . ' , *
' . Report No. E1SFF3-20-8004-4100579.
• ' • - 16 • - '
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EPA'S Handling Of Superfund Bankruptcy settlements
Financial Management Offices make the necessary adjustments to
the accounting system. • ~
We found an attorney .in the Office of Enforcement and Compliance
Assurance had developed a program to calculate the proportionate
rates'.to be, used when allocating proceeds from the sale of
marketable securities to.'the appropriate Superfund sites.' The (
program allows.the user to-easily determine the amount to be-
posted to each Superfund site by. merely Centering the judgement
amounts for each'Superfund site and the total shares of • , J'
marketable,securities•or cash proceeds from the sale of the
securities. The use of this program could help eliminate the
errors we identified and also provide consistent allocation of
proceeds from the sale of marketable securities to the • .
appropriate Superfund sites. : . '
RECOMMENDATIONS
* ' * .
We recommend that the:. ","'••' ' . '
"r.' • • \ - ' . ,. •
••!.' Chief Financial Officer establish procedures to record
marketable securities in.the Agency's accounting system when they
•are received and adjust the appropriate accounts receivable to
reflect receipt .of .the securities. - ' .. . •
2. Assistant Administrator for Enforcement and Compliance,-
Assurance' include in revisions to the bankruptcy guidance - •.
procedures to: (a) follow up with'.DOJ if the'final bankruptcy
order (settlement agreement) is "riot-forwarded, to the Agency
timely, and.(b) timely forward bankruptcy orders received-to the
appropriate finance office >so accounts receivable can be
established. • • •-
3. Chief Financial" Officer, in conjunction with the Assistant.
Administrator for Enforcement- and Compliance Assurance,.
standardize the procedures'for allocating proceeds from the sale
of marketable securities to. Superfund sites. ,
. ft ' . ' , . • *
AGENCY COMMENTS '
i i , ' ' , * ' - *
The Agency plans-to implement each of our recommendations for
improving the accounting for marketable securities. The Chief
Financial Officer, plans to develop 'procedures for properly
recording securities in the Agency's accounting system when ithe
Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
securities are received. During December 1994, a working group
will be established to develop these procedures. However> the
office does not plan to. formalize these procedures until June -30,
i.996. In the meantime, the Financial Management Division will
ensure that the .securities are recorded in the financial <
statements. , ,
To help ensure the timely recording of receivables in the
Agency's accounting system, the Assistant Administrator for ;
Enforcement and Compliance Assurance agreed to include in •-
revisions to the bankruptcy guidance^procedures to follow up with
DOJ to obtain final bankruptcyBorders and to timely forward the
orders to the appropriate finance office so that accounts-
receivable can be established. The Chief Financial Officer also
'agreed to work with the Office of Enforcement and Compliance
Assurance to develop standardized-procedures for allocating
proceeds from the sale of marketable securities to the
appropriate Superfund sites. '~ ,,
OIG EVALUATION OF AGENCY COMMENTS \
The actions, planned by Agency officials when implemented should
help ensure that marketable securities received by EPA.are
adequately safeguarded. In addition, implementing these
corrective•actions will result, in more complete and accurate
financial' information.for use in managing the Superfund program
and collecting debts owed the Agency. We are concerned,1 however,
that the-Agency does not plan to formalize procedures to record
securities in EPA's accounting system until June 30, .1996. 'As
previously mentioned, since the Agency'plans to have multiple
receiving points for securities a "record of their receipt should
be maintained in the Agency's accounting system so that the
securities are properly contrplled.
Report-No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
• CHAPTER IV • • • - ' /" '
MORE COMPLETE RECORDING AND REPORTING OF
BANKRUPTCY INFORMATION WOULD RESULT IN
BETTER INFORMATION FOR MAKING DECISIONS
ABOUT THE SUPERFUND PROGRAM
Bankruptcy cases handled by Headquarters Office of Enforcement
and.Compliance Assurance attorneys are not always entered into
the Comprehensive Environmental Response, Compensation and/
Liability Information System (CERCLIS), the Agency's main
Superfund tracking system. Using information provided by
Treasury, we identified six bankruptcy cases valued .at over $96.6
million that were settled;during fiseals- 1992 and 19.93,, but which
were not recorded in CERCLIS. In addition, when we .requested a
listing of: -'(a) bankruptcy cases resulting in the transfer' of
marketable securities to the Agency, (b) the amount of securities
received, and (c) the total proceeds, .from sale of the securities,
Headquarters and regional offacials.told us that, they could.not
be.sure listings they provided were complete because this
^information is not tracked in CERCLIS.' More complete information
on bankruptcies could be useful to Agency managers in-making
decisions about the Agency's Superfund cost recovery program.- It
would also allow 'the Agency to better present the results, of its
cost recovery efforts by showing the impact bankruptcies have on
the 'Agency's efforts to recover,, costs from responsible parties.
, - ' , ' ' ( "
CERCLIS is a computerized tracking system, supporting day-to-day.
management and operation of the Superfund program. Top
management in the Agency,depend on the accuracy, completeness'and
timeliness of:information ,in this system to make various
decisions regarding the Superfund program and to prepare external
reports,on the Superfund program, including reports on the
effectiveness of the Agency's cost recovery program. Data from' -
CERCLIS is included in the-Agency/sjSuperfund Annual'Report to
Congress 'and in the annual Superfund Trust Fund financial 't
•statements. Because CERCLIS is .so critical to,the operations of
the Superfund program, it is important that the system contain
complete, current and accurate information. Accurate .and
complete recording and reporting of bankruptcy settlements, in
'particular, is,becoming increasingly important as1 the Agency's
participation in'bankruptcy settlements has increased-from 2 in
fiscal 1980 to a cumulative total-of 199 by fiscal- 1993.-
Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
Some Bankruptcy Settlements Were Not Input Into CERCLIS
'','*'
The six bankruptcy settlements we found that were not entered in
CERCLIS-(see EXHIBIT 4.1) involved multiple debtors, multiple
sites, and"multiple regions. The cases were handled by .
Headquarters Office of Enforcement and Compliance Assurance
attorneys. .These attorneys had not recorded.these settlements in
CERCLIS,or forwarded the documentation to the'appropriate Office
of Regional Counsel for input into CERCLIS because the Superfund
Program Management Manual guidance on entering accomplishment
data -into CERCLIS does riot address cases handled by Headquarters"
attorneys. One Headquarters attorney told us that because there
was no guidance .requiring him to enter settlements in CERCLIS, he
was unaware.that bankruptcy settlements handled^by Headquarters
were not being entered. . • ".''-•
EXHIBIT 4.1
SCHEDULE OF FISCALS 1992 AND 1993 BANKRUPTCY SETTLEMENTS
NOT-RECORDED IN CERCLIS
CASE NAME.
A -
B
C
D . ' .
E
. F - ' ' .
TOTAL
SETTLEMENT DATE
DECEMBER 01, 1991.
FEBRUARY 11 / 1993
SEPTEMBER 28, 1992
JANUARY 15, 1993
APRIL" 15, 1993
JANUARY 07, 1993
SETTLEMENT AMOUNT
$ 27,098,870
12) 909, 148 . .
s 19,084,009
615,560
31, -535, 850 -
5,400,000
$ 96,643,437
JuTE: I his. information was obtained by reviewing the settlement documents for these cases.
The Agency Should Track And Report Additional Information Showing
The Effect Bankruptcies Have On Superfund Cost Recovery
The 'Agency's current processes-fcfr tracking and reporting its
accomplishments in recovering costs'do not completely reflect
what is actually occurring during the recovery of fund monies,
including the effect bankruptcies have on the Superfund cost
recovery program. 'For example, during our audit we requested a
listing of: (a) all bankruptcy cases resulting in the transfer
Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
of marketable securities to the Agency, '(b) the' amount of
securities received, and (c)•the total'proceeds from the.sale of
the securities. Headquarters officials told us that they did not
have a complete listing of Superfund -bankruptcy cases which
resulted 'in the Agency' receiving marketable securities. Prior to
our visits to regions 2 and 5, we requested the Offices of
Regional Counsel within these two regions identify all bankruptcy
• cases within their .regions that resulted.in the Agency receiving
•marketable securities. To provide us the listings, both regional
offices had to query their attorneys. They told us-that not all
regional attorneys responded to the request, and those who did
had to .prepare their responses from memory, because this
information is not tracked in CERCLIS. •• • -
' • • • " ! ' • 1 ' . ' • ''
Our analysis of the information.we. gathered on the bankruptcy '
cases resulting in the Agency receiving.marketable, securities
showed that.the Agency is'only collecting a portion of the
settled'claim amount when the marketable securities are sold'(see
EXHIBITS.4.2 and 4.3). For. example, for' an allowed claim 'of $19
million, EPA received 1,044,168 shares of common stock with a
fair market value of $5.5 million as of March 1994. In addition,
(EPA received marketable securities from four other bankruptcy
•cases for allowed claims of $50.4 million.' The securities for -
these four cases were sold'and the Agency .recovered a.total of .
$23 million, including all cash payments. .Overall; for these .
five Superfund bankruptcy cases, EPA recovered and returned to-'
the Superfund"Trust Fund about 41 percent of EPA's allowed claim
(see. EXHIBIT-4.3). However;,as Exhibit 4.2 shows, the percentage
EPA.ultimately collected varied widely from case to case 'with EPA
collecting as little as , 19 percent and .as much as 94 percent in'
bankruptcy cases resulting in the "Agency receiving marketable•
securities. The bankrupt parties financial position, the number
of creditors,-., the total amount of the allowed claim against the
party, and the: amount of EPA's claim in relation to the total •
claim of the other 'creditors in the bankruptcy proceeding, can
all impact 'the amount EPA collects from bankrupt responsible.
parties. ' - . . • > '
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EPA'S Handling Of Superfund Bankruptcy Settlements
EXHIBIT 4.2
COMPANY B OOMMNY C COMPANY 0 COMPANY E COMPANY f
SETTLEMENTS
Company A Hasnt Made Distributions To Date.
$5.5 M = Ttie Value Oi Co, C$ Securities Awaiting Sale.
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EPA'S Handling Of Superfund Bankruptcy Settlements
EXHIBIT 4.3
$6,119.51
$5,481.88
$41,020.53
16,922.65
iCASH PAYMENTS .
BRNOFSTOCKONHAND
iUNCOUECIElE
Dollars In Thousands
We.believe information similar; to that shown in EXHIBITS 4.2 and
4.3 would be useful to management in making decisions about the
Agency's Superfund cost recovery program. In-addition, it.would
help the Agency to more completely show the results of its cost-
recovery efforts and the Impact bankruptcies have on the Agency's
cost recovery program..' • ,
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EPA'S Handling Of Superfund Bankruptcy Settlements
Value Of Ongoing Cost Recovery Actions Should Be Updated In
CERCLIS
i s- .
We also found that the dollars sought during cost recovery that ,
are tracked in CERCLIS. are not adjusted to reflect the total
dollars DOJ- is seeking to recover for the Superfund Trust Fund.
According to .Office of Site' Remediation Enforcement (OSRE)
personnel, the average case takes approximately thirty-nine
months to complete, and any .costs incurred during 'this litigation
period are recoverable and are sought by DOJ. OSRE officials
stated that cases pending at DOJ are updated biannually in
CERCLIS, however, the data field for the dollars sought is not
updated to reflect additional costs that were incurred or
identified after the case- was sent to the DOJ.
The Agency reported in the fiscal 1993 Overview to the Financial
Statements that Superfund is seeking $944 million in ongoing cost
recovery actions. However, this accomplishment was understated
by the costs that EPA incurred during litigation, for any cases
pending 'at DOJ at fiscal year end.; We asked OSRE officials to
quantify the effect, of not- updating, the dollars sought while the
case is pending at DOJ. They told us that while this figure -
could have a material impact on the value of ongoing cost
recovery actions', the information was not readily available.
" - ( • *
RECOMMENDATIONS
We recommend that the Assistant Administrator, for Enforcement and
Compliance Assurance:"
1. Instruct Headquarters attorneys to alert attorneys and
program office staff in the regions of the status of Headquarters
cost recovery cases so that regional staff can ensure that
settlement, information is input into CERCLIS.
2. Modify policies, and procedures to update the "dollars sought"
data field in CERCLIS as , a part of the biannual update of DOJ
cases. •'.,';
3. Modify policies and procedures to track total collections,
including form of payment for bankruptcy settlements; and revise
the Superfund [enforcement performance measurement reporting to
reflect the impact bankruptcies are having on the Superfund cost
recovery program. • • -
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EPA'S Handling Of Superfund Bankruptcy Settlements
AGENCY COMMENTS • ' ' • -
When we met with representatives of the Office of Enforcement and
Compliance Assurance they told us that procedures are in place to
ensure all bankruptcies are coded into CERCLIS. They agreed
problems have been experienced-, in-recording Headquarters managed
. bankruptcy cases in CERCLIS.v However, they stated that the audit
report should recognize that over the past several years, a
process'has been put in place for identifying all cost recovery
settlements through.the use. of.DOJ reports. The settlement'
status of cases shown on the'.DOJ .reports are'compared with '
CERCLIS, .and corrections or additions are forwarded to the .
appropriate regional offices for input Into CERCLIS.' To further ,
facilitate the recording of bankruptcy information in .CERCLIS,
the office plans to "modify its Superfund Comprehensive
Accomplishments Plan manual and "CERCLIS.enforcement coding '
guidance to standardize bankruptcy entries in CERCLIS. "
Representatives from the office also indicated that better
communication between Headquarters- and regional attorneys and
program office personnel would help ensure that Headquarters -.
'managed, cases are input into CERCLIS. •. ' '. . •
The Office of Enforcement and Compliance Assurance agreed to- ',
. biannually update the dollars sought field in CERCLIS to reflect
costs incurred, during litigation. The of f ice plans-to update not.
only bankruptcy cases,, but also other cost recovery cases where
additional costs have been identified for recovery.
; Finally, .the Office of Enforcement >and; Compliance Assurance '
initially disagreed with .our recommendation on tracking and
reporting.additional information on bankruptcy cases. The office
stated that current reporting of cost recovery settlements and
collections includes bankruptcy settlements. .In subsequent
discussions with staff from the office,, they, agreed that the
Agency should consider tracking additional information on
'.bankruptcies. Theytold us that because CERCLIS is a site.
specific database it is not ideally suited for recording
bankruptcy cases which usually .cover multiple sites for which'the
bankrupt party is responsible. They plan to initiate a needs
analysis of CERCLIS in the near future, and as a part of that
analysis they will look into tracking cases, by potentially
responsible party which would allow the Agency to more easily '
collect information, on bankruptcyrcases.
Report No. E1SFF3-20-8004-4100579.
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EPA'S Handling Of Superfund Bankruptcy Settlements
PIG EVALUATION7 OF AGENCY COMISIENTS
The Agency's planned actions meet the intent'of our
recommendations. They should result in more complete information
for Agency managers to use in managing and reporting on the :
results of the Agency's cost recovery efforts.
Report No.. E1SFF3-20-8004-4100579
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EPA'S Handling Of Superfund Bankruptcy Settlements
CHAPTER V
CURRENT BANKRUPTCY LAWS LIMIT THE EFFECTIVENESS
OF THE AGENCY'S SUPERFUND COST RECOVERY PROGRAM
,A basic objective of the Superfund enforcement program is to
' place responsibility for cleanup of hazardous waste sites on-
those who generated the hazardous waste, who owned or operated
the waste sites/ and-who transported and arranged for the
transportation or-disposal of" the hazardous waste (responsible , •
parties).. If the Government conducts the cleanup using Superfund
Trust"Fund monies, the EPA attempts to recover the costs of the
cleanup from the resppnsible parties. Current bankruptcy.'laws
can hinder EPA's ability to recover cleanup costs from bankrupt-
responsible parties. This reduces the amount of" money that.can
be."returned to the Superfund Trust Fund and used for cleanup of. .'
additional hazardous wa'ste sites.. \
We met with attorneys from EPA's Office of Enforcement and
Compliance Assurance and Office of General Counsel, as well as
attorneys from DOJ to.discuss problems they were.aware of in
litigating bankruptcy cases to recover Superfund cleanup costs.
From these meetings we learned that two -key issues in the area of
'bankruptcy law need to be resolved in order to .improve the
Agency's ability to recover Superfund cleanup costs. The first
issue deals with what EPA's claim,is. Some reorganizing
companies have argued that EPA's claim should include all
environmental liability, -even future -cleanup costs EPA might
incur'. These companies contend that all. of their environmental •
liability should be discharged., and they should-get, a fresh
start. The second, issue deals with: (a) how much, information-
responsible parties should include in their bankruptcy notices to
"creditors, and (b) where the notices should be filed.- If the
notice is mailed to a region where the responsible party has no '
liability, or if>it contains insufficient information, the, Agency
can miss -out on its opportunity to participate in the. bankruptcy
proceedings". • .• . • '•-•-.
Pending amendments to the Bankruptcy Code (Title 11 of the U.S. -
Code).could improve EPA's ability to recover cleanup costs from
bankrupt responsible parties, but some problems will still remain'
even if the proposed amendments become law. DOJ is attempting to
address'these'and other problems by .drafting additional
amendments to the Bankruptcy Code. DOJ's" pending amendments
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• EPA'S Handling Of Superfund Bankruptcy Settlements
would help fill the gaps left by pending legislation. The Agency1
should continue to work closely with DOJ to ensure its concerns,
in this area are addressed. / •,. ' " . v . . .
.(
The Courts' Definition of EPA's Claim Affects Cost Recovery
Some bankrupt responsible parties seeking to reorganize their
companies have argued that a "claim," under Title 11 of the U.S.
.Code (11 U.S.C. § 101(5)), can be broadly defined to include all
of their environmental liability existing at the time they filed
for bankruptcy. Under Title 11 U.S.C. § 502(c), a court may
estimate -"any. contingent or unliquidated claim" if determining
.the exact amount of the claim extensively delays the: court .-.
proceedings. This, coupled with the policy underlying the
bankruptcy laws to give the "debtor a fresh start, has allowed
debtors to argue that estimated future cleanup costs at'a,site
should be dischargeable. EPA's position, however, is that if it
has not incurred cleanup-costs, /its claim has not arisen and
should not be dischargee in bankruptcy. The Government or the
courts may not be aware of ,all the Superfund sites involved, the
responsible party's connection to the site, or may lack
sufficient information about the site's'contamination. "Under •
these circumstances, it would be extremely difficult if not
impossible for EPA or the courts to' estimate future Superfund
cleanup costs. This could prevent the Government from being able
'to participate meaningfully in the bankruptcy proceedings. While
.recent court decisions seem to support .EPA's view on this issue,
one court has held that a Superfund cleanup claim arises when
there is a release or threatened release of,a hazardous
.substance, not when the Government has incurred cleanup costs.
Improvements Needed In The Bankruptcy Notification Process
i i ] ' ' . • .
Although Title 11 U.S.C. § 342 requires/debtors to notify all
creditors when they file a bankruptcy.petition, it gives no
guidance as to what'information the notice must contain or where
the notice must be filed. If the notice is mailed to a region
where the responsible party has no liability, EPA can miss the
opportunity to participate in the. bankruptcy proceedings. In
addition, if the responsible- party's bankruptcy notice provides
insufficient information, EPA may .not b'e able to identify the
1 claims it has against the responsible party. In order, to .-._ •
participate as a creditor in the bankruptcy proceeding, a proof
of claim must be filed within the time period set by the court.
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EPA'S Handling of Superfund Bankruptcy Settlements
Pending Legislation Could Affect EPA's Cost Recovery Program
One proposed bill in the House of-. Representatives/ H.R. 1270,
[103d Cong., 1st Sess.^ (1993)], would make all Superfund claims
nondischargeable. It specifically amends Title 11 U.S. Code to
make nondischargeable claims of, governmental units for costs that
are incurred to abate hazardous substances and for'which the
debtor is 'liable under the Comprehensive .Environmental Response,
Compensation-, and Liability Act of 1980 (as amended 'by the
Superfund Amendments.and Reauthorization Act of 1986), 'certain
claims under the Solid Waste Disposal Act, and claims under
similar State .laws. The.bill would enable EPA to enforce its
claims on the reorganized company. 'However, according to-DOJ,
this bill is considered to be highly controversial, because it
defeats the underlying policy of bankruptcy"law.which is to give
debtors a financial'"fresh start". '
A proposed Senate bill [S.540, 103d Cong., 2d Sess. (1994)],
could•negatively impact the Superfund. cost recovery program.
Section 221 of S.540 (Supplemental Injunctions) authorizes the
bankruptcy court to issue an injunction. The injunction, among
other things, prohibits EPA from taking legal actions to recover ,
damages allegedly caused by the presence of, or exposure .to,
a'sbestos or asbestos containing products. Howeyer, responsible
parties may argue that Section 221 of S.540 could apply .to
'Superfund cleanup'claims related to asbestos contaminated sites.
If a'responsible party was successful in obtaining, an 'injunction'
based on this interpretation, the amount of money collected in
Superfund bankruptcy cases could be further reduced. . Section 117,'
of S.640 (Settlement of Claims and Demands for Payment) could •
also adversely affect the"recovery of Superfund cleanup costs
from bankrupt responsible parties. Section 117 authorizes the,
bankruptcy court to issue ,an injunction which could prohibit' EPA
from seeking recovery of its response claim'outside of the trust
established to settle the claim. The .injunction may put the
Government at ah economic disadvantage if the trust is
insufficient to cover the Government's cleanup costs.
Department Of Justice's Proposed Draft Amendments
DOJ has drafted proposed amendments to Title 11 of. the U.S. Code.
DOJ's proposed amendments include provisions that are designed to
ensure that bankruptcy is riot used to impede enforcement of
government regulations, such as environmental protection
mandates, and ensure that.the Government has adequate notice of'
bankruptcy claims and can respond to those, claims effectively...
Report No. E1SFF3-20-8004-4100579
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EPA'S Handling Of' Superfund Bankruptcy Settlements
.EPA should continue working with DOJ to ensure that its concerns
with the current bankruptcy law are addressed. To further ensure
that EPA is able to participate meaningfully in bankruptcy
proceedings, policies and procedur.es should be established .
requiring that offices receiving bankruptcy notices ;search the
Agency's Site Enforcement Tracking System and CERCLIS to
determine if the bankrupt party has any known environmental
liability. If so, the appropriate Office of Regional Counsel 'or
Headquarters attorney should be notified.
RECOMMENDATIONS
We'recommend that the Assistant Administrator for Enforcement' and
Compliance Assurance: \
1. Work with the Associate Administrator for Congressional and
Legislative Affairs to .prepare comments outlining EPA's concerns
with Senate bill S.540. '' " '
2. Develop policies 'and procedures requiring that offices
receiving bankruptcy notices search the Site Enforcement Tracking
System and CERCLIS to determine if the bankrupt party has any
known environmental liability, and if'the bankrupt party does, to
notify the appropriate Office of 'Regional Counsel or Headquarters
attorney. - •
AGENCY COMMENTS ... - • .
Representatives of the,Office of Enforcement and Compliance
Assurance" told us that they have discussed their concerns
regarding S.540 with the Office for Congressional and Legislative
Affairs. The offices plan to prepare comments on the proposed .
amendment by "November 30, 1994.
• •, - - i
Concerning our recommendation to search the Site Enforcement
Tracking System and CERCLIS when bankruptcy notices are received,
the Office of Enforcement and Compliance 'Assurance agreed in
principle with the recommendation. - Staff from the office told us
that the development of standardized procedures for handling.
bankruptcy notices is a top priority of the Agency's Bankruptcy
Workgroup, and it plans to develop such procedures by March 31,
1995. However, before the office commits to searching the Site
Enforcement Tracking System and CERCLIS, it wants to determine
whether the necessary time and resources are available.
Report No. E1SFF3-20-8004T4100579
. 30 • '
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EPA'S Handling Of Superfund Bankruptcy Settlements
QIG EVALUATION OF AGENCY COMM
The Agency's planned corrective actions meet the intent of our
recommendations. The development of standardized procedures•for
handling bankruptcy notices will help ensure that the Agency 'can
effectively participate in bankruptcy claims. We continue to
believe that searching existing data bases, such as the Site ;
Enforcement Tracking System and CERCLIS, when bankruptcy notices
are received would be an effective way ,of identifying
environmental liabilities of bankrupt parties so the Agency can
participate in bankruptcy proceedings. , . ,
Report No. E1SFF3-20-8004-4100579
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Report No. EisFF3-20-8004-4100579
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APPENDIX A
REPORT DISTRIBUTION LIST
EPA Headquarters Offices ' • , . ;
4 Assistant Administrator for Solid Waste ari . ' , '
• .Comptroller (3301)
Director,, Office of Site .Remediation Enforcement (2244)
Director, Regional Support Division (2244)
'Director, Financial Management Division (3303F)
Director, Office of Program. Management (5201'G) •. I
_ Director, Policy and Program Evaluation'Division. (5502G)N
Chief, Fiscal Policies and . Procedures • Branch (3303F)
Chief, Financial Reports and .Analysis Branch'(3303F)
Chief, Financial Compliance and*Quality Assurance
Staff.(3303F) ' . , ' '
Chief, Headquarters Accounting Operations Branch (3303)
Chief, Superfund Accounting Branch (3303F)'
Director, Information Management Staff (5103)
Agency. Followup Official, (3304) - •
Carolyn Levine, Audit-Liaison for the .Office of'
' Administration"and Resources Management, (3102)
^Charlene Dunn, Audit Liaison for the Office of Solid Waste
and Emergency.Response (5101).
' Robert Banks, Audit Liaison for the.Office of Enforcement
- and Compliance Assurance (2221) .. - '
EPA Regional Offices . . . ' '
'
Financial Management Officers, Regions 2 and 5
'Offices of Regional Counsel, Regions 2 and 5
Office of Inspector General - '"'.'=.<• ' • -
Divisional Inspector General, Eastern Audit Division
•Divisional Inspector General, Northern Audit Division
Chief, Resources Management Unit
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