&EPA
United States Office of the Inspector General April 2002
Environmental Protection 1200 Pennsylvania Ave., N.W. (2460)
Agency Washington, D.C. 20460
EPA's Office of the
Inspector General
Annual
Superfund Report
to the Congress
for Fiscal 2001
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ABBREVIATIONS
CERCLA Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as
amended
EPA Environmental Protection Agency
1C Institutional Control
ITS Intertek Testing Services
NCP National Oil and Hazardous Substances Contingency Plan, 40 CFR Part 300
NPL National Priorities List
OI Office of Investigations (EPA OIG)
OIG Office of the Inspector General
FDD Preauthorized Decision Document
PR? Potentially Responsible Party
RAC Remedial Action Contract
RP.M Remedial Project Manager
SARA Superfund Amendments and Reauthorization Act of 1986
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ANNUAL
SUPERFUND REPORT
TO THE CONGRESS
FOR FISCAL 2001
April 2002
Required by
Section lll(k) of the
Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (CERCLA),
as amended by the Superfund Amendments and
Reauthorization Act of 1986 (SARA)
OFFICE OF THE INSPECTOR GENERAL
U.S. ENVIRONMENTAL PROTECTION AGENCY
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
FOREWORD
This report covers fiscal 2001 activities of the
Environmental Protection Agency (EPA) Office
of the Inspector General (OIG), and is our 15th
Annual Superfund .Report to the Congress. The
Superfund Amendments and Reauthorization Act
of 1986 (SARA) requires the OIG to audit the
Superfund program annually and to report to
Congress annually on these audits.
In addition to our traditional mandated and self-
initiated work, we also take a proactive role to
help EPA prevent future problems and perform
work requested by Agency management. During
fiscal 2001, we assisted EPA management in a
number of ways. At the request of two Assistant
Administrators and one Regional Administrator,
we reviewed actions EPA took to address asbestos
exposure to citizens in Libby, Montana, and
barriers EPA faced and continues to face in
addressing this issue. Although EPA attempted in
the 1970s and 1980s to address contaminant
asbestos exposure like that in Libby, Montana,
those attempts did not result in regulations or
other controls that might have protected the
citizens of Libby. Once the Libby problem was
publicized in the media, EPA aggressively
addressed the problem through the Superfund
program. Fragmented authority and jurisdiction,
technological barriers, funding constraints, and
funding priorities all contributed to the failure, to
sufficiently address asbestos-contaminated
vermiculite when the problem first came to EPA's
attention hi the 1970s.
We completed a joint review with two other
Agency offices on the management of Superfund
collections and receivables. This review
identified good practices, as well as areas for
improvement, for both EPA regions and
Headquarters. The joint team also worked with
the Department of Justice, which has collection
responsibilities, to reconcile EPA and Justice
records and improve coordination between the
two agencies.
We assisted the Agency by advising Agency
workgroups and bringing to management attention
areas for improvement arising out of our other
work. Through participation in Superfund
Design/Construction Workgroups, we have
helped the Agency improve its use of several
mechanisms to accomplish the design and
construction phases of cleanups. Through
workgroup participation and other efforts, we
have helped the Agency detect and deter improper
practices in analytical laboratories, and improve
the quality of analytical data used to characterize
Superfund sites. By alerting EPA to ways the
wording of the Superfund Information Request
Pertaining to Financial Disclosure Package
required under Section 104(e) of CERCLA made
it difficult to prosecute false statements' cases, we
sparked improvements in the Package addressing
its deficiencies.
We again were able to issue an unqualified
opinion on EPA's financial statements, including
those of the Hazardous Substance Superfund, for
fiscal 2001. The Agency continues to correct
longstanding problems, but we found some
internal controls still needed to be strengthened.
We are working to resolve with the Agency its
disagreement with our opinion that it is not
complying with the managerial cost accounting
standard.
We reviewed an allegation that an interim remedy
selected for the Petoskey Municipal Well Field
site in Michigan was not needed and wasted
Superfund resources. We concluded that the
remedy was unnecessary. We also found that
Region 5 and the State incorrectly computed then-
respective cost shares, and the Region is seeking
recovery of its overpayment of $123,800 to the
State.
We also reviewed an allegation that Region 3
mismanaged the cleanup of the Tranguch
Gasoline site hi Hazleton, Pennsylvania. We
found that EPA took timely and effective action
to address hazards in residents' homes. However,
we noted problems in EPA's,communications
with residents and the State, which may have
resulted in EPA overcompensating by taking extra
actions and incurring unnecessary costs. The
Region is taking steps to prevent similar problems
in the future, which will improve their response to
both Superfund and Oil Pollution Act sites.
Our review of the use of institutional controls at
sites in Region 2 found they were effective in all
cases where they were implemented. However,
there was still room for improvements. In
response to our review, the Region will be
reviewing sites hi the interim between the
statutorily required five-year reviews and will
provide additional training to staff.
We received a Congressional request to determine
if frequent turnovers in remedial project
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
ii
managers responsible for the Abex site in
Virginia had negatively impacted cleanup efforts.
We concluded that it had not. However, we did
recommend that Region 3 improve its handling of
site transfers and revise its form used to request
site files. The Region agreed to make these
improvements.
We reviewed EPA's pilot projects to enhance
State and tribal roles in Superfund. Although
EPA considered these pilots successful, we found
they lacked measurable goals for the projects and
did not fully track costs. In response to our
findings, EPA agreed to take corrective actions.
Our Superfund investigative efforts continued to
produce convictions for fraud and other improper
actions of EPA contractors. In one case, former
employees of a major environmental laboratory
pled guilty in a false claims case stemming from
submission of a data package reflecting the false
analysis of an environmental sample. The
laboratory later pled guilty to conspiracy to
commit mail fraud and agreed to pay a $9 million
fine.
The Administration proposed in its fiscal 1998
budget to eliminate the requirement to issue this
report, along with the specific annual audits the
report is required to summarize. This report is
largely duplicative of our semiannual reports.
Elimination of the specific audit requirements,
outlined in the Purpose section of this report
(page 1), would allow us to focus our audit efforts
each year on those areas where they can be most
productive. We encourage the Congress to take
this action.
We will continue to help the Agency implement
Superfund more effectively and efficiently
through program evaluations, audits,
investigations, fraud prevention, and cooperative
efforts with EPA management.
Nikki L. Tinsley
Inspector General
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001 ii[
TABLE OF CONTENTS
PURPOSE 1
BACKGROUND 2
ASSISTANCE TO EPA MANAGEMENT 3
HAZARDOUS SUBSTANCE SUPERFUND 5
EPA Earns Unqualified Opinion on Financial Statements 5
REMEDIAL ACTION DECISION MAKING '. 6
RESPONSE CLAIMS 7
PERFORMANCE REVIEWS , 8
Superfund Monies Used Inappropriately at Petoskey Site '. 8
Although EPA Actions at Tranguch Gasoline Site Were Sufficient, Communication Needs
Improvement 8
Region 2's Institutional Controls Were Effective 9
Staff Turnover Did Not Impede Cleanups, but Processes Could Be Improved 9
Plan to Enhance State and Tribal Superfund Roles Needed Measurable Goals 10
INVESTIGATIVE ACTIVITY 11
FISCAL 2001 SUPERFUND REPORTS 13
The complete text of selected reviews is available through the EPA OIG
internet home page, http: // www.epa.gov/oigearth
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
PURPOSE
We provide this report pursuant to section
11 l(k) of the Comprehensive Environmental
Response, Compensation, and Liability Act of
1980 (CERCLA), Public Law 96-510, as
amended. The Superfund Amendments and
Reauthorization Act of 1986 (SARA), Public
Law 99-499, amended that section of CERCLA
to add several annual requirements for the
Inspector General of each Federal agency
carrying out CERCLA authorities. These
requirements include four audit areas and an
annual report to Congress about the required
audit work. This report covers fiscal 2001 OIG
Superfund activities. We discuss the required
four audit areas below.
This report summarizes our work in the
mandated audit areas. We also provide a
broader picture of our Superfund efforts by
summarizing other significant Superfund audit
work, assistance to EPA management, and
Superfund investigative work.
Trust Fund
CERCLA requires "... an annual audit of all
payments, obligations, reimbursements, or other
uses of the Fund in the prior fiscal year. ..."
We now meet this requirement through the
financial statement audit required by the
Government Management Reform Act.
Claims
CERCLA requires an annual audit to assure
"... that claims are being appropriately and
expeditiously considered .. .." Since SARA
did not include natural resource damage claims
as allowable Fund expenditures, the only claims
provided in CERCLA, as amended, are response
claims.
Cooperative Agreements
CERCLA requires audits "... of a sample of
agreements with States (in accordance with the
provisions of the Single Audit Act) carrying out
response actions under this title . . .. " We
perform financial and compliance audits of
cooperative agreements with States and political
subdivisions. Some of our audits also review
program performance. While we did audit work
under this requirement in fiscal 2001, we did not
issue any final reports on it during the fiscal
year.
Remedial Investigations/Feasibility
Studies
CERCLA requires our "... examination of
remedial investigations and feasibility studies
prepared for remedial actions .. . ." We discuss
our approach to this requirement in a chapter of
this report.
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EPA Office of the Inspector General Annual Super-fund Report to the Congress for Fiscal 2001
BACKGROUND
CERCLA, enacted on December 11, 1980,
established the "Superfund" program. The
purpose of the Superfund program is to protect
public health and the environment from the
release, or threat of release, of hazardous
substances from abandoned hazardous waste sites
and other sources where other Federal laws do not
require response. CERCLA established a
Hazardous Substance Response Trust Fund to
provide funding for responses ranging from
control of emergencies to permanent remedies at
uncontrolled sites. CERCLA authorized a $1.6
billion program financed by a five-year
environmental tax on industry and some general
revenues. CERCLA requires EPA to seek
response, or payment for response, from those
responsible for the problem, including property
owners, generators, and transporters.
SARA, enacted October 17, 1986, revised and
expanded CERCLA. SARA reinstituted the
environmental tax and expanded the taxing
mechanism available for a five-year period. It
authorized an $8.5 billion program for the
1987-1991 period. It renamed the Trust Fund the
Hazardous Substance Superfund. The Budget
Reconciliation Act of 1990 reauthorized the
program for three additional years and extended
the taxing mechanism for four additional years.
Congress has continued to fund Superfund after
expiration of the authorization and the taxing
mechanism.
The basic regulatory blueprint for the Superfund
program is the National Oil and Hazardous
Substances Contingency Plan (NCP), 40 CFR Part
300. The NCP was first published in 1968 as part
of the Federal Water Pollution Control Plan, and
EPA has substantially revised it three times to
meet CERCLA requirements. The NCP lays out
two broad categories of response: removals and
remedial response. Removals are relatively short-
term responses and modify an earlier program
under the Clean Water Act. Remedial response is
long-term planning and action to provide
permanent remedies for serious abandoned or
uncontrolled hazardous waste sites.
CERCLA recognized that the Federal
Government can only assume responsibility for
remedial response at a limited number of sites
representing the greatest public threat. Therefore,
EPA must maintain a National Priorities List
(NPL), updated at least annually. The NPL
consists primarily of sites ranked based on a
standard scoring system, which evaluates their
threat to public health and the environment. In
addition, CERCLA allows each State to designate
its highest priority site, without regard to the
ranking system.
CERCLA section 104(c)(3) does not allow EPA
to fund remedial actions unless the State in which
the release occurs enters into a contract or
cooperative agreement with EPA to provide
certain assurances, including cost sharing. At
most sites, the State must pay 10 percent of the
costs of remedial action. EPA may fund 100.
percent of site assessment activities (preliminary
assessments, site inspections), remedial planning
(remedial investigations, feasibility studies,
remedial designs), and removals. For facilities
operated by a State or political subdivision at the
time of disposal of hazardous substances, the
State must pay 50 percent of all response costs,
including removals and remedial planning
previously conducted.
CERCLA sections 104(c)(3) and 104(d) authorize
EPA to enter into cooperative agreements with
States or political subdivisions to take, or to
participate in, any necessary actions provided
under CERCLA. A cooperative agreement serves
to delineate EPA and State responsibilities for
actions to be taken at the site, obtains required
assurances, and commits Federal funds. EPA
uses cooperative agreements to encourage State
participation in the full range of Superfund
activities - site assessment, remedial, removal,
and enforcement.
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EPA Office of the Inspector General Annual Super-fund Report to the Congress for Fiscal 2001
ASSISTANCE TO EPA MANAGEMENT
In addition to our traditional mandated and self-
initiated work, the OIG responds to EPA
management requests for review of vulnerable
program areas and OIG input in the development
of regulations, manuals, directives, guidance, and
procurements. These are efforts to prevent
problems that might later result in negative
findings or investigative results, or to respond to
prior audit findings. The OIG reviews and
comments on draft documents prepared by
Agency offices. OIG staff also participates in
conferences and EPA work groups to provide
input.
The OIG continued such efforts in fiscal 2001 in
assistance to EPA management both in work
specifically focused on Superfund and in
crosscutting work affecting Superfund. We
issued a report on a review of asbestos
contamination in Libby, Montana, performed at
the request of two EPA Assistant Administrators
and one Regional Administrator. Jointly with
other EPA offices, we issued four reports on
reviews of the Superfund accounts receivable
process. We summarize below these reports and
some of our other Superfund-related activities
assisting management.
EPA Must Address Barriers to Prevent
Future Human Health Tragedies
Although EPA attempted in the 1970s and 1980s
to address contaminant asbestos exposure like that
in Libby, Montana, those attempts did not result
in regulations or other controls that might have
protected the citizens of Libby.
In November 1999, the media ran a series of
newspaper articles reporting that miners and their
families in the Libby area died or became ill from
exposure to asbestos-contaminated vermiculite
ore mined there since the 1920s. Subsequently,
the media reported that EPA officials knew about
the problem but did not take action.
We identified various barriers that prevented EPA
from sufficiently addressing asbestos-
contaminated vermiculite when the problem first
came to its attention in the 1970s. For example,
authority for taking action was shared among
EPA offices and other Federal agencies. This
fragmented authority and jurisdiction, when
combined with ineffective communication, made
taking actions difficult. Limitations in science,
technology, and health effects data also impeded
EPA's efforts to determine the degree of health
risk at Libby. Furthermore, due to funding
constraints and competing priorities, EPA
emphasized other areas, such as asbestos in
schools, rather than asbestos-contaminated
vermiculite.
After the November 1999 newspaper articles,
EPA began an aggressive Superfund cleanup at
the Libby site. In addition, EPA traced,
evaluated, and planned to take action on at least
16 sites throughout the country that received
asbestos-contaminated vermiculite from Libby.
However, at the time of our review, EPA had not
taken new steps to address prevention of
exposures at asbestos or asbestos-contaminated
processing sources and facilities unrelated to
Libby.
We recommended that EPA, in partnership with
other Federal organizations and States, also assess
asbestos or asbestos-contaminated ore, rock, and
mineral processing sources and facilities that
were similar although unrelated to Libby. We
also recommended that, if EPA finds concerns
with the Libby-related work and/or the
assessments regarding human health and the
environment, it should determine short- and
long-term actions necessary to resolve the
problems. Some of these actions included
Superfund removals, changes in the Toxic
Substances Control Act or the Clean Air Act
regulations, or statutory changes.
We issued our. final report (2001-S-00007) on
March 31, 2001. EPA's response to our report
adequately addressed our recommendations. On
February 26, 2002, EPA published a Proposed
Rule to list the Libby Asbestos site on the
National Priorities List for Uncontrolled
Hazardous Waste Sites.
OIG/Agency Team Assesses
Superfund Collections and
Receivables
EPA OIG joined EPA's Office of Site
Remediation Enforcement and Office of Chief
Financial Officer on an Agency Joint
Management Review team that assessed the
management of Superfund collections and
receivables in EPA and the Department of Justice.
EPA designated the management of Trust Fund
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
collections and accounts receivables as a top
Superfund priority. As of April 2000, EPA's
records indicated about $527 million in
outstanding accounts receivable had been
delinquent for more than 120 days.
The team identified: (1) practices that would
facilitate collection of accounts receivables;
(2) areas where the collection and receivable
management process could be improved; and
(3) areas in which EPA Headquarters could
provide better guidance and support. The team
also worked with Justice to reconcile differences
between EPA and Justice, including making
recommendations to improve the collection
process and efforts of both agencies.
The team issued four reports: a national report
(2001-S-00002) and three regional reports
(Region 1: 2001-S-00003, Region 5:
2001-S-00004, and Region 6: 2001-S-00005).
The offices involved are taking corrective actions.
Superfund Design/Construction
Workgroup
We served as advisors on the Agency's Phase I
Superfund Design/Construction Workgroup. The
Phase I workgroup's charter was to develop
options, with pros and cons, for splitting the
design and construction work into separate
remedial design and construction contracts,
retaining the current Response Action Contracts
(RACs) type contracts, or some other
combination. The Phase I Design/Construction
workgroup developed and analyzed various
procurement options to arrive at their
recommended option of a menu approach to allow
regions to select from among several contracts.
This menu includes:
• Remedial Design Contracts,
• Remedial Action Contracts,
• Full-Service Contracts (same in scope, but
smaller in size, than the current RACs),
• Site-Specific Contracts,
• Interagency Agreements, and
• Cooperative Agreements.
We continued to assist the Agency by
participating in the Phase n workgroup, tasked
with developing the implementation details for
the Phase I workgroup's recommendation. This
includes:
• Promoting distribution of work across
contract vehicles.
• Increasing participation by small and small
disadvantaged businesses.
• Increasing the use of performance-based
contracts and work assignments.
• Exploring the use of separate construction
contracts.
Updating OSWER Directive #924.3-08 on
the assignment of work among EPA
contracts, the Army Corps of Engineers, and
the Bureau of Reclamation.
Improving Data Quality
The OIG has worked closely with the Agency's
Office of Environmental Information to improve
the quality of the data used to characterize
Superfund sites. We have participated in
meetings of the Agency's Workgroup to Develop
Approaches for Detecting and Deterring
Improper Practices in Analytical Laboratories.
Also, the Inspector General has addressed the
American Council of Independent Laboratories on
laboratory fraud detection and deterrence.
Investigative Efforts Spur Superfund
Financial Disclosure Package
Improvements
As a result of an investigation into alleged false
statements, EPA changed the wording of the
Superfund Information Request Pertaining to
Financial Disclosure Package required under
Section 104(e) of CERCLA to make time frames
outlined in various parts of the package
consistent. Before the change, the 104(e) letter
requested financial information for the past five
years, while the Financial Statement of
Individuals form that accompanied the letter
requested information for only the past
three years. Both the letter and form now request
information for the past five years. EPA made
this change in part because the conflicting time
periods requested caused difficulty in prosecuting
cases for false statements.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
HAZARDOUS SUBSTANCE SUPERFUND
The Government Management Reform Act
requires Federal agencies to prepare annual
audited financial statements. The requirement for
audited financial statements was enacted to help
bring about improvements 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 these financial statements is
the Hazardous Substance Superfund Trust Fund.
The EPA OIG's requirement to audit EPA's
financial statements also meets our CERCLA
audit requirement to annually audit the Superfund
Trust Fund, which we previously referred to as
our Trust Fund audit. The following summary of
our fiscal 2001 financial statement audit relates to
all findings resulting from our audit of EPA's
financial statements, including those of the
Hazardous Substance Superfund.
EPA Earns Unqualified Opinion
on Financial Statements
EPA earned an unqualified opinion on its fiscal
2001 financial statements. In evaluating EPA's
internal controls, we noted certain matters that we
consider to be reportable conditions, but none we
believe to be material weaknesses which would
prevent the presentation of reliable financial
statement amounts. In evaluating the Agency's
internal control structure, we identified three
reportable conditions in the following areas:
• Implementing Accounting for Internal
Use Software Timely
• EPA's Interagency Agreement Invoice
Approval Process
• Automated Application Processing
Controls for the Integrated Financial
Management System.
We did not identify any instances of
noncompliance with laws and regulations that
would result in material misstatements to the
audited financial statements. However we again
noted, as we did in our fiscal 1999 and 2000
audits, that EPA did not comply with the
managerial cost accounting standard. EPA also
continues to experience difficulties in reconciling
some of its intra governmental assets and
liabilities due to some Federal entities not
performing reconciliations. Without the proper
confirmations from its trading partners, EPA has
limited assurance that intra governmental balances
are accurate.
During the audit of the fiscal 2001 financial
statements, we noted substantial progress in
completing corrective actions in fiscal 2002. The
Agency revised its financial system security
remediation plan and submitted it to OMB as part
of EPA's fiscal 2003 budget submission. The
agency also plans to implement an automated
process for the interagency agreement invoice
approval process during fiscal 2002.
In its response to our draft report, the Agency
generally concurred with our recommendations
and noted completion or planning of a number of
corrective actions. However, the agency did not
agree with the issue on substantial noncompliance
with the managerial cost accounting standard. In
our opinion, EPA's cost accounting system does
not completely satisfy the objectives of the
standard. The Deputy Chief Financial Officer,
while acknowledging the desirability of
continuing improvements as envisioned by the
standard, continued to disagree with our
conclusion that EPA did not comply with the
standard. On December 12, 2001, we elevated
this issue to the Administrator for resolution, as is
required by Federal Financial Management
Improvement Act. As of March 31, 2002, we
have not received a response from the
Administrator.
We issued our final report (2002-1-00082) on
February 26, 2002. A final response to our report
is due by May 30,2002.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
REMEDIAL ACTION DECISION MAKING
In each Report for the past two years, we
explained that we have focused our attention on
Superfund site characterization and remedy
selection, in lieu of narrowly addressing the
performance of remedial investigations and
feasibility studies at Superfund sites. We have
continued in-depth reviews of the reliability of
site-specific analytical data as a basis for sound
site remediation decisions. The remedial
investigation/feasibility study activity at
Superfund sites is highly data dependent. If
analytical data quality is inadequate, even strict
adherence to Agency rules and guidance in
carrying out the remedial investigation/feasibility
study process will not assure sound decision
making.
Assessments of instances of possible
misrepresentation of analytical data produced in
both Agency and contractor laboratories during
fiscal years 1999 and 2000 have caused us to
devote even more resources to such assessments
in fiscal 2001. A fully functioning automated
analytical data processing system enables us to
review analytical data sets for indications of
improper manual manipulation of noncompliant
analytical results to achieve method-specified or
contract-specified quality. We use this tool to
support ongoing investigations of suspected
laboratory fraud and it is available for assessing
analytical data quality on an ongoing basis.
We continue to believe that our resources are
better used in seeking to assure data of known
quality to support Superfund remedial decision
making than devoting those resources to
site-specific retrospective reviews of the remedial
planning process. In addition to the investigative
efforts discussed elsewhere in this report, the OIG
has worked closely with the Agency's Office of
Environmental Information to improve the quality
of the data used to characterize Superfund sites.
The OIG has participated in meetings of the
Agency's Workgroup to Develop Approaches for
Detecting and Deterring Improper Practices in
Analytical Laboratories. Also, the Inspector
General has addressed the American Council of
Independent Laboratories on laboratory fraud
detection and deterrence. Through these actions,
the OIG is working to assure that Agency
decisions on site remediation are based on data of
known quality.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
RESPONSE CLAIMS
Section 11 l(a)(2) of CERCLA, as amended by
SARA, authorizes EPA to pay any claim for
response costs incurred by "any other person" as a
result of carrying out the NCP. Additionally,
section 122(b)(l) of CERCLA, as amended by
SARA, authorizes the President to reimburse
Potentially Responsible Parties (PRPs) for
"certain costs of actions under the agreement that
the parties have agreed to perform but which the
President has agreed to finance." The President
delegated this authority to the EPA Administrator
under Executive Order 12580, January 26, 1987,
who further delegated it to EPA's Office of Solid
Waste and Emergency Response. Authority for
decisions regarding claims against the Fund is
currently delegated to the Director, Office of
Emergency and Remedial Response.
PRPs are required to enter into a Preauthorized
Decision Document (PDD) with EPA to cover
work for which some costs will be reimbursed.
The PDD specifies the work to be performed, the
portion of the cost that EPA will reimburse, and
the procedures through which the PRPs can make
claims for reimbursement.
- o
During fiscal 2001, we issued three memorandum
reports concerning our reviews of response
claims. Our response claim reviews are not
audits, but rather follow instructions in the
Agency's claims guidance for the claims adjuster.
Old Southington Landfill Site
We reviewed claimed costs of $6,680,153.51 for
work performed to clean up the Old Southington
Landfill site in Southington, Connecticut. Under
the PDD for the site, the claimant cleaning up the
site is entitled to submit claims covering 63.09
percent of eligible costs, not to exceed a total of
$8,800,165. This was the first claim submitted,
and was for costs incurred from March 5, 1998,
through September 30, 2000.
In our memorandum of May 9, 2001 (2001-S-
00008), we recommended that the claim be paid
except for $71,045.45 ($44,822.57 EPA share) in
ineligible and unsupported costs. We questioned
$63,554.68 as ineligible because the costs were
incurred prior to the PDD date. We also
questioned $4,440.77 as ineligible because it was
for operation and maintenance costs rather than
remedial action. In addition, we questioned
$3,050 as unsupported because it was in excess of
the amount paid the vendor. We also expressed
concern that the legal fees may be excessive and
unnecessary, although we did not question them.
York Oil Site
We reviewed claimed costs of $1,992,468 for
work performed to clean up the York Oil site in
Moira, New York. Under the PDD for the site,
the claimant cleaning up the site is entitled to
submit claims covering 16.11 percent of eligible
costs, not to exceed a total of $2,738,700. This
was the first claim submitted, and was for costs
incurred from March 1995 through November
1999.
In our memorandum of September 12, 2001
(2001-M-00020), we recommended payment of
the requested amount of $320,986, representing
16.11 percent of the costs claimed. We made
suggestions for improvements in time and travel
expense documentation for one of the claimant's
contractors. In addition, we made
recommendations for improvement in the
documentation submitted with future claims.
Hunterstown Road Site
We reviewed claimed costs of $259,311 for work
performed to clean up the Hunterstown Road site
in Adams County, Pennsylvania. Under the PDD
for the site, the claimant cleaning up the site is
entitled to submit claims cohering 39 percent of
eligible costs, not to exceed a total of $2,670,320.
This was the first claim submitted, and was for
costs incurred from April 1999 through July 2000.
In our memorandum of June 12, 2001 (2001-M-
00014), we recommended payment of the
requested amount of $101,131, representing 39
percent of the costs claimed.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
PERFORMANCE REVIEWS
In addition to reviews required by CERCLA, as
amended, we conduct other reviews related to
EPA's management of the Superfund program.
We summarize below some particularly
significant reviews of EPA management
completed in fiscal 2001 not summarized
elsewhere in this Report.
Superfund Monies Used
Inappropriately at Petoskey Site
EPA Region 5 did not select the appropriate
remedy in its Interim Record of Decision to
provide $1.238 million to Michigan from the
Superfund Trust Fund for the cost of installing an
air stripper at the Petoskey Municipal Well Field
Superfund Site. The money was used instead to
help defray the cost of a new drinking water
source, which could set an inappropriate
precedent for other parties to seek Superfund
monies to address non-Superfund issues, such as
local drinking water problems.
OIG had received an allegation claiming that
Region 5's selected remedy was potentially a
waste of Superfund monies because an EPA
response was not warranted and the process for
determining the cost of the air stripper was
improper. We concluded that although the
remedy was unnecessary from a Superfund
perspective. Region 5 approved and contributed
$1.238 million from the Superfund Trust Fund
(the capital cost of the air stripper) to partially
defray the City's cost of replacing the Well.
Specifically:
• The air stripper remedy was unnecessary
because the Administrative Record and other
documents showed that drinking water
contamination was within the standard and
future risk of contamination above the
standard was unlikely. Thus, the scientific
evidence did not support Region 5's decision
to fund the remedy.
• The air stripper, for which the money was
sought, could not even be built because of
well construction deficiencies and because
the well was under the direct influence of
surface water. Installing an air stripper
would have violated both Federal and
Michigan Safe Drinking Water Acts.
• Region 5 and Michigan used an incorrect
total cost to determine their respective cost
matches for an air stripper, resulting in
Region 5 overpaying the State by $123,800.
We issued our final report (2001-P-00011) on
September 14, 200!. Recognizing that six years
have passed since Region 5 made an affirmative
decision to award $1.238 million, we did not
recommend recovery of the total award. In our
view, the true benefit of this report is to serve as a
"lessons learned" document for future Superfund
decisions. The Region did agree with our
recommendation to recover the costs associated
with the $123,800 overpayment, and has
requested this sum from the State.
Although EPA Actions at
Tranguch Gasoline Site Were
Sufficient, Communication
Needs Improvement
We determined that the remediation efforts taken
by EPA at the Tranguch Gasoline Site, in
Hazleton, Pennsylvania, appeared sufficient to
ensure the safety of area residents, although EPA
could have communicated better with those
residents.
We conducted this review as a result of a hotline
complaint alleging that Region 3 mismanaged the
Tranguch site, where vapors from a gasoline spill
stemming from corroded underground storage
tanks caused a major concern for area residents.
We found that EPA took timely and effective
actions to address hazards in residents" homes. In
particular, we noted that: •
• Homes sampled were representative of
the spill area.
• EPA's decisions on taking remediation
were sufficient.
• A buyout of residents" homes was not
warranted.
However, we found that EPA should have
communicated better with residents and the
Pennsylvania Department of Health. EPA's poor
communication resulted in many residents not
trusting EPA, and EPA may have
overcompensated by taking extra actions that may
not have been needed. These actions mav result
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
in as much as $2.8 million in unnecessary costs.
We issued the final report (2001-P-00015) on
August 29, 2001. We recommended that the
Region 3 Administrator, to ensure better
communication with the public at future sites,
provide additional training to appropriate EPA
personnel on risk communication, and develop a
risk communication reference guide. In response
to our report, the Region provided a plan for the
additional training and for preparation of the risk
communication reference guide.
Although the Tranguch site was an Oil Pollution
Act site, not a Superfund site, the Region's
actions will have a positive impact on its
Superfund operations. Responses under both
laws are handled by the same staff and are
implemented in largely the same manner.
Region 2's Institutional Controls
Were Effective
Region 2 adequately made use of institutional
controls (ICs) at Superfund sites to make sure
public health and the environment were protected.
ICs are non-engineering measures (usually legal
controls) intended to affect human activities to
prevent or reduce exposure to hazardous
substances. EPA has recently emphasized these
controls as an important aspect of the Superfund
program.
We reviewed 14 sites and found that 8 had ICs in
place, while the remaining 6 had decided on ICs
but had not yet implemented them. ICs were
effective in all cases where they were
implemented. For example, at one site, where ICs
covered land and water use restrictions, the
county health department received a call that led
to it preventing the use of well water for five new
houses because ground water was still
contaminated. At another site, an EPA Remedial
Project Manager found large holes around a site
cap that appeared to have been dug by dogs, and
then arranged to have the holes filled and
preventive measures implemented.
Despite the effectiveness of ICs, we noted some
areas where improvements could be made. State
and regional staff indicated that the interval
between the 5-year reviews was too long. New
York and New Jersey monitor their sites on
annual and 2-year cycles, respectively, and we
consider those time frames better. In addition, we
identified the need for additional training of
regional staff on the awareness and use of ICs.
We recommended that the Region 2
Administrator have staff conduct interim reviews
at least every 18 months and that additional
training courses be developed. Region 2
generally concurred with our recommendations.
We issued our final report (2001 -M-00021) on
August 29, 2001. In its response to our report, the
Region indicated it would conduct interim
reviews and was developing training courses. On
March 21. 2002. the Region reported to us that it
had selected 1 7 sites for the first round of interim
reviews. The reviews will address ICs and will
follow up on recommendations made in 5-year
reviews and Preliminary Closeout Reports.
Staff Turnover Did Not Impede
Cleanups, but Processes Could
Be Improved
In response to a request from Senator Charles
Robb of Virginia, we reviewed the frequency of
Remedial Project Manager (RPM) turnover in
Region 3 and its impact on the Region's cleanup
efforts. The Senator was concerned that the EPA
had misplaced sampling results at the Abex site
for more than six years and asked us to determine
whether it was caused by excessive RPM turnover
and/or an inadequate filing system.
We concluded that RPM turnover did not
adversely affect site cleanups. However, we
found a significant variance in the amount of time
spent briefing incoming RPMs. We
recommended that the Region formalize site
transfers by having the RPMs complete a Site
Information/Checklist form, and instruct the new
RPM to use the former RPM's ''draft" salient
issues as a source of information. The Region
agreed that both of these actions will better
facilitate site transfers between RPMs.
We found that Abex sampling information had
been misplaced for more than six years because
the RPM requesting the files inadvertently did not
check the box at the bottom of the request form
for oversized documents. An oversized map was
stored separate from the site file. Region 3 has
revised its Superfund file room request form by
adding a checkbox at the top of the form for
oversized documents. We believe this was an
isolated incident and the revisions to the form will
prevent future occurrences.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
10
We issued our final memorandum report (2001-
M-00015) on June 15, 2001. Region 3 issued a
memorandum to the RPMs on September 18,
2001, with instructions to implement our
recommendations.
Plan to Enhance State and Tribal
Superfund Roles Needed
Measurable Goals
To encourage greater state and tribal
participation, EPA developed a Plan to Enhance
the Role of States and Tribes in the Superfund
Program in March 1998. EPA funded pilot
projects with eight states and nine tribes, and
concluded that the pilots successfully overcame
barriers and helped states and tribes agree upon
mutual expectations, enabling quicker cleanups of
more sites.
Although EPA concluded that its pilot projects to
enhance the roles of states and tribes in the
Superfund program were successful, we found
that EPA's plan to implement these projects did
not have measurable goals and EPA did not fully
track costs. EPA's lack of performance goals and
measures for the pilot program limited its ability
to document its success. Also, while EPA had a
record of how much it provided the states and
tribes for the pilot projects, it did not track other
implementation and oversight costs.
We issued our final report (2001-M-00002) on
November 17, 2000. In response to our report,
EPA agreed to work with regions to develop a
strategy to communicate needed information,
develop customized plans, collect baseline
information, establish appropriate measures, and
track total costs.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
11
INVESTIGATIVE ACTIVITY
The OIG Office of Investigations (OI) continues
to focus its investigative resources on high cost
program and administrative areas. Priority is also
given to environmental programs and employees
when the action under investigation has the
potential to seriously undermine the integrity of
the Agency and/or the public trust in its ability to
carry out its mission to protect public health and
safeguard the environment. Many of our
investigations resulted in successful prosecutions
of companies and individuals who jeopardized
public health and the environment by falsifying
environmental test data and reports that the
Agency, local governments, and individual
customers rely on to assess threats and control
hazardous wastes, toxins, and other contaminants
that pollute our ground water, rivers, and streams.
Major proactive investigative efforts have
covered all stages of the Superfund program, with
a special emphasis on contracting for removals
and remediation. As a result of OI proactive
efforts in prior years, we continue to initiate
criminal investigations across the nation. The OI
is continuing its initiative to detect and investigate
laboratory fraud within the environmental
community, involving commercial, contractual, as
well as Agency, laboratories. As a result of
increased referrals and investigative results in this
area, the Inspector General submitted an open
letter to the environmental analytical laboratory
community to draw their attention to issues of
misconduct or unethical practices in analytical
laboratories related to inappropriate or fraudulent
manipulation of laboratory data.
During fiscal year 2001, our Superfund
investigative efforts resulted in five convictions,
two civil filings, and six administrative actions.
Over the past six fiscal years, monetary fines,
restitution, and recoveries resulting from
Superfund investigations totaled more than
$75 million. We expect to see an increased
number of significant actions as our investigative
emphasis on major Agency contracting and
laboratory fraud continues.
The following synopsis is an example of
Superfund investigative activity with results in
fiscal 2001.
Lab Fined $9 Million for False Claims
Five former employees of Intertek Testing
Services Environmental Laboratories, Inc. (ITS)
pled guilty on September 26, 2001, to making
false demands against the United States. The
defendants, admitted in their guilty plea
agreements that they knowingly caused a false
claim to be submitted against the United States by
submitting a data package reflecting the false
analysis of an environmental sample.
The laboratory later pled guilty to conspiracy to
commit mail fraud and agreed to pay a $9 million
fine. Between January 1994 and December 1997,
ITS, a full service environmental testing
laboratory, generated $35.7 million in gross
billings. It performed environmental sample
analysis on more than 59,000 separate
environmental projects involving more than
250,000 samples of air, soil, liquids, pesticides,
explosives, and nerve/chemical agents. These
analyses were conducted for determining, among
other things, the presence of known or suspected
human cancer-causing contaminants. ITS was
formerly known as NDRC Laboratories, Inc., and
Inchcape Testing Services Environmental
Laboratories, Inc.
This investigation was conducted jointly by the
EPA OIG, the EPA Criminal Investigations
Division, the Defense Criminal Investigative
Service, the United States Army Criminal
Investigation Command, and the Air Force Office
of Special Investigations.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001 12
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
13
FISCAL 2001 SUPERFUND REPORTS
Exhibit
Page 1 of3
Program Evaluation, Performance Audit, and Special Review Reports |
Report No. Descri ptlon
2001 -S-00002 Accounts Receivable Collections - National Report
2001-S-00003 Accounts Receivable Collections - Region 1
2001-S-00004 Accounts Receivable Collections - Region 5
2001-S-00005Accounts Receivable Collections - Region 6
2001-M-00002 Enhanced State and Tribal Roles
2001-M-00021 Institutional Controls - Region 2
2001-P-00011 Interagency Agreements
2001-S-00007 Libby, Montana, Asbestos Contamination
2001-P-00017 Petoskey, Michigan, Manufacturing Co. Remedial Dec
2001-S-00010 Dotential ly Responsible Party Search Program
2001 -M-0001 5 Site Personnel Turnover - Region 3
2001-P-00015 Tranguch Gasoline Site, Pennsylvania
Date
Response Claims Reports
J
2001-M-00014 Hunterstown Road, Adams County, Pennsy
2001-S-00008 Old Southington Landfill, Southington,
2001-M-00020 York Oil, Moira, New York
Contract Reports
Initial Pricing Reviews (Preaward Audits)
2001-2-00016 Computer Sciences Corp., MD - PR-HQ-00-10323
2001-1-00013 DLZ National Inc. of Ohio - PR-HQ-00-10536
2001-1-00014 DLZ National Inc. of Ohio - PR-HQ-00-10536 - Accounting System
2001-1-00138 FEV Engine Technology, MI - PR-CI-01 -11610
2001-2-00023 International Technology (IT) Corp., IL - DACW45-94-D-0005
2001-2-00009 Mantech Environmental Tecnnology, VA - PR-HQ-00-10661
2001-2-00025 Mi lestone Associates, Inc., MD - PR-HQ-01-12880
2001-2-00020 Ricardo, Inc., MI - PR-CI-01 -11610
Incurred Costs
2001-1-00112 ABB Environmental Services, MA - Fiscal 1997 & 1998
2001-1-00036 Arthur D. Little, Inc., MA - Fiscal 1997
2001 1-00188 Bechtel Group, Inc., CA - Fiscal 1999
2001-1-00041 Camp, Dresser & McKee, MA - Fiscal 1998
2001-1-00187 CET Environmental Services, Inc., CO - Fiscal 1998
2001-1-00045 CH2M Hill, Inc., CO - Fiscal 1996
2001-1-00067 CH2M Hill, Inc., CO - Fiscal 1997
2001-1-00046 Dyncorp, Inc., VA - Fiscal 1998
2001-1-00091 Earth Technology Remediation Service, MI -
2001 - 1-00190 Earth Technology Remediation Service, MI -
2001-1-00192 Earth Technology Remediation Service, MI -
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2001
14
Exhibit
Page 2 of 3
FISCAL 2001 SUPERFUND REPORTS
Contract Reports (continued) |
Report No. Audi tee/Descri ption
Incurred Costs (continued)
2001-1-00074 Ecology & Environment, Inc., NY - Fiscal 1994
2001-1-00177 Ecology & Environment, Inc., NY - Fiscal 1995
2001-1-00195 Ecology & Environment, Inc., NY - Fiscal 1996
2001-1-00201 Ecology & Environment, Inc., NY - Fiscal 1997
2001-1-00205 Ecology & Environment, Inc., NY - Fiscal 1998
2001-1-00064 Enviro-Management & Research, Inc., MD - Fiscal 1999
2001-1-00156 Environmental Quality Management, Inc., OH - 1999
2001-1-00062 Fluor Daniel, Inc., TX - Fiscal 1994 ARCS Closeout
2001-1-00141 Foster Wheeler Environmental Corp., NJ - Fiscal 1998
2001-1-00133 Foster Wheeler Environmental Corp., NJ - Fiscal 1999
2001-1-00181 Gannett Fleming Environmental Engineers, Inc., PA - Fiscal 1999
2001-1-00113 Griffin Services, Inc., GA - Fiscal 1998
2001-1-00031 Guardian Environmental Services Inc., DE - Fiscal 1992-93
2001-1-00004 Jacobs Engineering Group, CA - Fiscal 1994
2001-1-00071 Jacobs Engineering Group, CA - Fiscal 1995
2001-1-00072 Jacobs Engineering Group, CA - Fiscal 1995
2001-1-00199 Malcolm Pirnie, Inc., NY - Fiscal 1994
2001-1-00200 Malcolm Pirnie, Inc., NY - Fiscal 1995
2001-1-00140 Metcal f & Eddy, Inc., MA - Fiscal 1998
2001-1-00042 Sverdrup Corp., MO - Fiscal 1999
2001-1-00102 TN & Associates, WI - Fiscal 1999
2001-1-00125 Transcontinental Enterprises, Inc., NC - Fiscal 1998
2001-1-00124 Westinghouse Remediation Service, Inc., FL - Fiscal 1997
Date
1/16/01
7/20/01
9/18/01
9/26/01
8/28/01
12/18/00
6/25/01
12/11/00
5/23/01
4/19/01
8/15/01
3/16/01
11/30/00
10/ 6/00
1/10/01
1/10/01
9/25/01
9/25/01
5/22/01
11/16/00
2/15/01
4/ 4/01
7/16/01
Closeout (Final) Audits
2001-1-00089 Black & Veatch Special Projects Corp., KS - Fiscal 1996 ARCS
2001-1-00105 Black & Veatch Special Projects Corp., PA - Fiscal 1996 ARCS
2001-1-00011 COM Federal Programs Corp., VA - Fiscal 1996 ARCS
2001-1-00044 Hall iburton NUS Corp., MD - 68-01-6699
2001-2-00019 Malcolm Pirnie, Inc., NY
2001-1-00056 OHM Remediation Services, OH
2001-1-00008 Tetra Tech Environmental Management, Inc., IL - 68-WO-0034
Internal Controls
2001-M-00027 Malcolm
2001-1-00135 Midwest
2001-1-00137 Midwest
Pirnie, Inc., NY - 2001 Floorcheck
Research Institute, DC - MAAR 6
Research Institute, DC - MAAR 13
Cost Accounting Standards
2001-1-00106 Tetra Tech, Inc.,
9/28/01
5/16/01
5/16/01
CA
Cost Accounting Standard 403
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EPA Office of the Inspector General Annual Super-fund Report to the Congress for Fiscal 2001
15
FISCAL 2001 SUPERFUND REPORTS
Exhibit
Page 3 of 3
Contract Reports (continued)
J
Report No. Auditee/Description
Other Contract Audits
2001-1-00019 ABB Environmental Service:
2001-4-00004 ABT Associates, Inc., DC -
e Memorial Institute, OH
& Veatch Special Projects
& Veatch Special Projects
& Veatch Special Projects
Federal Programs Corp.
Federal Programs Corp.
Federal Programs Corp.
Environmental Services
Envi ronmental
Envi ronmental
Envi ronmental
Envi ronmental
Envi ronmental
Envi ronmental
Envi ronmental
Envi ronmental
Envi ronmental
Envi ronmental
Envi ronmental
2001-1-00010 COM
2001-1-00051 COM
2001-1-00034 COM
2001-4-00020 CET
2001-2-00026 CET
2001-2-00001 CET
2001-2-00002 CET
2001-2-00003 CET
2001-2-00004 CET
2001-1-00012 CET
2001-2-00005 CET
2001-2-00006 CET
2001-2-00008 CET
2001-2-00012 CET
2001-1-00189 CET
2001-1-00006 CH2M
2001-1-00090 CH2M
2001-1-00066 CH2M
2001-1-00083 CH2M
2001-1-00159 Computer
Services
Servi ces
Services
Services
Services
Services
Servi ces
Services
Servi ces
Servi ces
Servi ces
Ltd. ,
ed
MO - Fiscal
GA - Fisca
KS - Fisca
1998 ARCS
1998 RAC
- Financial
- Review of
- Review of
- Review of
- Review of
- Review of
- Review of
- Review of
- Review of
- Review of
- Review of
- Review of
Companies, Ltd., CO - Cost Accounting Standard
, Inc., CO - Accounting System Follow-up
, Inc., CO - Fiscal 1997 Home Office Allocation
, Inc., CO - Fiscal 2000 Forward Pricing Rates
Sciences Corp. , VA - 68-01-7365
Rev iew/Revi si on
Equipment Rates
Invoices
Invoices
Invoi ces
Invoi ces
I n v o i ces
Invoi ces
Invoi ces
Invoices
Invoices
Invoices
416
2001-1-00048 Development Planning & Research Assoc., Inc., KS
2001-1-00193 Eastern Research Group, MA - EDP General Internal
2001-1-00134 Environmental Management Support, MD - 68-W6-0014
2001-1-00003 Environmental Technology, Inc. (Earth Tech), VA
2001 -1-00060 Environmental Technology, Inc. (Earth Tech), VA -
2001-4-00019 FEV Engine Technology, MI - Local Travel Cost
2001-1-00154 Foster Wheeler Environmental Corp., NJ - Fiscal 1999
2001 -1-00179 Gannett Fleming, Inc., MD - Accounting System
IT Group, Inc., PA - Fiscal 2001 QATS Provisional Rates
IT Group, Inc., PA - Indirect Bidding & Billing Fiscal 200
RAC
2001-4-00009
2001-4-00011
2001-2-00011
2001-1-00157
2001-1-00033 OHM
2001-1-00043 Roy
2001-1-00057 Roy
Jacobs Engineering Group;
OHM Remediation Services,
Remediation Services,
F. Weston , Inc. , NJ -
F. Weston, Inc. , PA -
KS - Fiscal 1998 RAC 68-W5-0014
KS - Delivery Order Review
PA - Interagency Agreements
Fiscal 1996 ARCS 68-W9-0022
Fiscal 1996 ARCS 68-W8-0089
Date
2001-1-00150 SciComm, Inc., MD - 68-W3-0009
2001-1-00167 Tetra Tech/Black & Veatch Joint Venture, CA - Fiscal 1997-98 RAC
2001-1-00058 Tetra Tech/NUS Joint Venture, MD - Fiscal 1996-98 RAC
127 5/00
117 8/00
5/18/01
9/17/01
10/12/00
10/12/00
10/12/00
10/12/00
10/25/00
10/25/00
10/25/00
10/25/00
27 :/01
8/27/01
10/11/00
27 2/01
I/ 4/01
1/25/01
1/26/01
11/23/00
9/ 7/01
4/19/01
10/ 5/00
12/ 8/00
5/17/01
6/13/01
8/14/01
3/30/01
4/11/01
12/21/00
6/25/01
117 7/00
11/16/00
12/ 8/00
6/11/01
7/10/01
127 8/00
------- |