OFFICE OF INSPECTOR GENERAL
EPA-350-R-07-001
May 2007
Annual Superf und
Report to Congress for
Fiscal Year 2006
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O/G Scorecard Summary of Superfund
Results by OIG Goal - Fiscal Year 2006
OIG GOAL: Contribute to Human Health and Environmental Quality Through Improved
Business Practices, Accountability, and Integrity of Program Operations.
Below are Superfund Results of OIG Work in Terms of Outputs, Actions by EPA, and Impacts
Dollars in Millions
19 Policy, Practice, Process Actions, or Changes Made
4 Critical Public or Congressional Concerns Addressed
37 Recommendations for Agency/Stakeholder Action
44 Certifications/Validations/Verifications/Allegations Disproved
$3.2 Questioned Costs (Federal)
$683.5 Cost Efficiencies (Federal)
$ 1.2 Fines, Settlements, Restitutions
3 Sentencings
1 Civil Judgment/Settlement
4 Administrative Actions
$ 26.2 Questioned Cost Sustained (EPA)
$ 83.8 Cost Efficiencies Sustained (EPA)
To find out more about the U.S. Environmental Protection Agency's
Office of Inspector General, visit our Website at:
http://www.epa.gov/oig
Cover Photo: The Army Creek Landfill site before (left) and after (right) cleanup. The abandoned sand and
gravel quarry in New Castle, Delaware, which was subsequently used as a municipal
landfill, was turned into a wildlife preserve.
Printed with vegatable oil based inks on 100% recycled paper (minimum 50% postconsumer)
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This report covers Fiscal Year 2006 Superfund-related activity of the
U.S. Environmental Protection Agency (EPA) Office of Inspector
General (OIG). The Superfund Amendments and Reauthorization Act of
1986 requires the OIG to annually audit the Superfund program and
report the results to Congress.
Due to some significant Agency activities in April 2006 we were able to
remove "Superfund Evaluation and Policy Identification" as one of EPA's
key management challenges. EPA had developed an action plan to
respond to the majority of the 108 recommendations in its 120-Day
Study of the Superfund program. Also, the Agency agreed to implement
OIG recommendations related to Superfund. We will continue to monitor
EPA's progress related to improving the Superfund program.
In response to a congressional request, we looked at EPA's Superfund
resources and found that EPA needs to better account for those
resources, particularly in light of decreased funding. We found several
obstacles that prevented EPA from efficiently and effectively managing
Superfund program performance and adequately accounting for
resources. These obstacles included the way EPA accounts for program
resources, manages by function, and relies on an outdated workload
model. Total cost efficiencies resulting from this report to date are
$639 million.
In a separate review, we noted that EPA did not timely redistribute
Superfund cooperative agreement, interagency agreement, and small
purchase payments from a general site identifier to specific Superfund
sites. As of January 2006, the finance offices recorded $39 million in a
general account, and those payments remained undistributed for as much
as 10 years. Subsequent to our bringing this issue to EPA's attention,
EPA provided unaudited data reports that indicated the undistributed
costs were reduced to $13 million as of May 12, 2006.
EPA needs to better manage cleaning up contaminated sediments to cut
down on the adverse effects on human health and the environment.
Contaminated sediments are the soils and other material that accumulate
at the bottom of water bodies, and contain toxic or hazardous materials
that often originate from Superfund sites. EPA has made progress with
its Contaminated Sediment Management Strategy, but needs to make
better use of that strategy.
We found that EPA appropriately handled hazardous material releases
and debris that resulted after Hurricane Katrina struck in August 2005.
EPA established quality and timely approaches for rapidly identifying,
prioritizing, and assessing the impact of hazardous material releases
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following the hurricane. Further, EPA assessed results of damage or
releases at all 18 Superfund National Priorities List sites over which the
hurricane passed. EPA concluded that the hurricane did not impact 15 of
the 18 sites, and the Agency was monitoring the remaining 3 sites.
Addressing Superfund funding and program management remains an
important issue. We will continue to assist Congress and EPA in their
efforts to protect against potential adverse health and environmental
impacts resulting from Superfund sites. Early identification,
communication, and evaluation of issues needed to reform the Superfund
program can better prepare the Agency to address Superfund issues.
Bill A. Roderick
Acting Inspector General
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
Table of Contents
Hazardous Substance Superfund Trust Fund 1
EPA Earns Unqualified Opinion on Financial Statements 1
EPA Can Better Manage Superfund Resources 2
EPA Can Improve Redistributing Superfund Payments from General Site Indentifiers 2
Assistance Agreements 3
Oregon Outlays of $782,693 Questioned 3
Remedial Action Decision Making 4
EPA Can Better Manage Efforts to Clean Up Contaminated Sediments 4
Contamination Problems Reviewed in California Agricultural Community 4
More Information Needed on Toxaphene Degradation Products 5
Response Claims 6
Reviews of Whitehouse Oil Pits Superfund Site Claims 6
Review of Bofors-Nobel Superfund Site Claim 6
Review of Armour Road Superfund Site Claim 6
Review of Army Creek Landfill Superfund Site Claim 7
Review of Illinois Credit Claim for Ottawa Radiation Site 7
Performance Review 8
EPA Appropriately Handled Hazardous Waste Releases and Debris after Hurricane Katrina 8
Investigative Activity 9
Three Sentenced in Kickback Scheme 9
Contractor Enters into $1 Million SettlementAgreement 9
Listing of Fiscal Year 2006 Superfund Reports 11
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
Hazardous Substance Superfund Trust Fund
The Government Management and Reform Act
requires Federal agencies to prepare annual
audited financial statements. The act was passed
to help improve agencies' financial management
practices, systems, and controls so that timely,
reliable information is available to manage Federal
programs.
One of the major entities covered by EPA's
financial statements is the Hazardous Substance
Superfund Trust Fund. OIG's audit of EPA
financial statements also meets our
Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA)
requirement to annually audit the Superfund Trust
Fund. EPA presented the financial statements for
Fiscal Year 2006 in a consolidated format and did
not include a separate presentation on the
Superfund Trust Fund.
The following summary of our Fiscal Year 2006
financial statement audit relates to all findings
resulting from our audit of EPA's financial
statements, including those of the Hazardous
Substance Superfund Trust Fund. After the details
on the financial statement audit are summaries on
several other reviews we conducted that note
ways EPA can improve its management of
Superfund resources.
EPA Earns Unqualified Opinion on
Financial Statements
EPA earned an unqualified opinion on its Fiscal
Year 2006 financial statements. That means we
found the statements to be fairly presented and
free of material misstatements. However, in
evaluating internal controls, we noted two
reportable conditions. Reportable conditions do
not represent weaknesses that would cause a
material misstatement of financial amounts.
Rather, they represent significant deficiencies in
the design or operation of internal controls.
One of the reportable conditions involved EPA
implementing two accounting processes in Fiscal
Year 2006 that led to misstatements. These
misstatements involved the Agency's bad debt
expense, revenue, contra revenue, advance
accounts, and unearned revenue accounts. The
processes included reclassifying receivables older
than 2 years as currently not collectible. They also
involved transferring the receivables and related
allowance accounts from regional financial
management offices to financial management
centers. Among other things, the advance account
for Superfund future cost special account
receivables had a debit balance of $2,749,860.
Advances received from others should normally
have a credit balance.
The other reportable condition involved EPA not
properly accounting for advance funding
agreements with other Federal Government
agencies. EPA recorded nearly $56 million in
advances disbursed under Interagency
Agreements as expenses rather than assets.
We also found that EPA did not comply with
regulations related to reconciling intragovernmental
transactions. The Agency did not reconcile
material activity and balances with the Department
of Health and Human Services, and had out-of-
balance situations with many other agencies. This
instance of noncompliance did not result in
material misstatements to the audited financial
statements.
The Agency agreed with the issues raised and
indicated it has begun taking corrective actions.
We issued our report (2007-1-00019) on
November 15, 2006.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
EPA Can Better Manage Superfund
Resources
In response to a congressional request, we
examined EPA's Superfund resources and found
that EPA needs to overcome challenges in
accounting for and managing those resources.
Created in 1980, the Superfund program has
cleaned up over 1,500 of the Nation's highest
priority hazardous waste sites. However, funding
for the program has decreased over the years. In
Fiscal Years 2004 and 2005, all Superfund
appropriations came from general tax revenue
rather than the Superfund Trust Fund. Two recent
OIG studies have reported shortages in funding.
We found several obstacles that prevented EPA
from efficiently and effectively managing
Superfund program performance and adequately
accounting for Superfund resources. This is
because of the way it:
• accounts for program resources,
• manages by functions,
• supplements the program with other funds,
• relies on an outdated workload model, and
• maintains unliquidated Superfund
obligations and funds in special accounts.
We recommended changes to help EPA overcome
these obstacles, better manage its Superfund
resources, and direct additional funds to Superfund
cleanup. We also noted that Congress could direct
EPA to monitor all Superfund carryover before
each fiscal year expires, and demonstrate how
reprogrammed or non-reprogrammed Superfund
carryover directly benefits Superfund response
and cleanup activities.
In response to our recommendations, the Agency
has deobligated $38.6 million in Superfund dollars
and returned $352,000 in Superfund Special
Account funds to the trust fund. Total cost
efficiencies to date from this report are
$639 million.
We issued our report (2006-P-00013) on
February 28,2006.
EPA Can Improve Redistributing
Superfund Payments from General Site
Identifiers
EPA did not timely redistribute Superfund
cooperative agreement, interagency agreement,
and small purchase payments from a general site
identifierto specific Superfund sites.
When EPA cannot readily identify costs incurred
for certain response activities to a specific site,
EPA assigns a general site identifier, and
subsequently will redistribute the costs to a more
appropriate general or site-specific identifier when
such costs are paid.
However, the finance offices reviewed did not
timely record costs to specific site identifiers, as
required. As of January 2006, the finance offices
recorded $39 million in a general account. Those
payments remained undistributed for periods
ranging from 2 months to 10 years. As a result,
the $39 million may not be considered in settlement
negotiations and oversight billings, and thus may
not be recovered from responsible parties. The
bulk of the $39 million ($31 million) involved
cooperative agreements.
Subsequent to our bringing this issue to EPA's
attention, EPA provided unaudited data reports that
indicated the undistributed costs were reduced to
$13 million as of May 12, 2006. Besides
recommending that EPA redistribute the remaining
amount, we recommended that it develop written
procedures, provide training, and change
cooperative agreement conditions to require
recipients to provide detail for distributing costs
within 24 hours. EPA has begun corrective
actions.
We issued our report (2006-P-00027) on July 31,
2006.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
Assistance Agreements
About half of EPA's Fiscal Year 2006 budget was
awarded to organizations outside the Agency
through assistance agreements, including a
significant amount of funds related to Superfund
sites. CERCLA requires audits "of a sample of
agreements with States." During 2006, we issued
one report on a specific assistance agreement
related to Superfund awarded to a State.
Oregon Outlays of $782,693 Questioned
We questioned $782,693 in unallowable and
unsupported outlays for a cooperative agreement
awarded to Oregon for work at the McCormick
and Baxter Superfund site in Portland, Oregon.
EPA awarded the agreement to the Oregon
Department of Environmental Quality on July 22,
1997. The award, as amended, provides
$9,372,588 to the State for remedial design and
actions at the McCormick and Baxter site.
We questioned $505,122 in contract outlays due to
not complying with Federal procurement
requirements, and $33,553 in prepaid expenses
reported under a contract with a Federal agency.
We also questioned $244,018 for other contract
outlays regarding issues previously raised by the
contractor's cognizant auditor, work performed
outside the scope of the contract, and costs not
supported by invoice details.
We recommended that EPA disallow the $782,693
in unallowable and unsupported contract outlays.
We issued our report (2006-4-00147) on
September 21,2006.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
Remedial Action Decision Making
We performed in-depth reviews of the reliability of
site-specific analytical data for sound site
remediation decisions. Also, we have worked
closely with the Agency to characterize Superfund
sites. Through these and other actions, we are
working to ensure that the Agency decisions on
site remediation are based on data of known
quality.
During 2006, we determined that the
improvements EPA had made were sufficient for
us to remove "Superfund Evaluation and Policy
Identification" as a key management challenge.
Nonetheless, during 2006 we continued to find
ways in which EPA could improve its remedial
action decision making. Details follow.
EPA Can Better Manage Efforts to
Clean Up Contaminated Sediments
EPA needs to better manage cleaning up
contaminated sediments to cut down on the
adverse effects on human health and the
environment.
Contaminated sediments are the soils and other
materials that accumulate at the bottom of water
bodies and contain toxic or hazardous materials
that often originate from Superfund sites. As of
2004, over 3,200 fish consumption advisories were
in place in the United States covering 24 percent
of the Nation's river miles and 35 percent of its
lake acres. CERCLA provides EPA authority to
conduct or compel remedial actions for
contaminated sediments.
EPA has made progress with its Contaminated
Sediment Management Strategy, but more
improvement is needed. Program offices
generally did not use National Sediment Inventory
data for decisionmaking, even though the inventory
is the most comprehensive data source available.
Also, EPA's various program offices did not fully
coordinate their activities within EPA, or
effectively coordinate and communicate with other
Federal agencies. Further, EPA did not develop
adequate sediment quality criteria to ensure
comparability, or develop sufficient performance
measures.
We recommended that EPA assign responsibility
for overseeing and evaluating its Contaminated
Sediment Management Strategy to a committee or
office. We also recommended developing better
performance measures, evaluating the need to
develop sediment criteria, and continuing to
improve research coordination. Further, we
recommended that EPA develop and implement a
plan to provide a comprehensive national
assessment of contaminated sediments. The
Agency generally agreed with our
recommendations.
We issued our report (2007-P-00016) on
March 15, 2006.
Contamination Problems Reviewed in
California Agricultural Community
In response to a request, we reviewed
contamination concerns regarding the agricultural
community of McFarland, California, and noted
areas where EPA can improve.
During the 1980s, residents of McFarland noticed
health problems that they attributed to water, air,
and soil contamination. A study by State and
county officials noted unusually high rates of
cancer, but it could make no causal association
between health data and the contaminants. We
looked at EPA efforts in the area as a result of
issues raised by concerned citizens and an
environmental group.
EPA developed preliminary remediation goals for
McFarland using a lifetime residential exposure of
30 years based on Agency Superfund guidance.
However, we believe a 70-year lifetime exposure
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
assumption better reflects the intent of the
National Contingency Plan and would better
protect the public. EPA appears to have
conducted air and soil sampling activities
appropriately, although it should consider analyzing
the synergistic effects of multiple contaminants.
We recommended that EPA identify available
sources of information on the toxicology of
contaminant mixtures that may be found in
drinking water, and continue to support research
characterizing the joint toxic action of
contaminants in drinking water. We also made
several suggestions, such as providing an
explanation for not using the 70-year lifetime
exposure assumption. EPA disagreed with some
of our conclusions, such as using the 70-year
lifetime exposure assumption.
We issued our report (2006-P-00041) on
September 28,2006.
More Information Needed on Toxaphene
Degradation Products
During review of concerns raised regarding a
Superfund site, we determined that the current
methods EPA uses to identify and measure
toxaphene are not designed to identify toxaphene
degradation products. However, other methods
are available.
The Glynn Environmental Coalition, a nonprofit
community organization, brought to the prior
Ombudsman's attention concerns about toxaphene
at a Superfund site in Georgia. Toxaphene, an
agricultural pesticide heavily used in the United
States in the 1960s and 1970s, was totally banned
by 1990 because of its effect on humans and the
environment.
Toxaphene in the environment changes, or
degrades, into products different from the original
material in chemical composition and how they
appear to testing instruments. EPA's current
methods to test for toxaphene do not test for the
degradation products. However, a new testing
method used by others specifically tests for
toxaphene degradation products.
The OIG recommended that EPA validate,
approve, and use the new method, as well as
arrange for specific research needed to determine
the risk that toxaphene degradation products may
pose to people. In general, EPA officials
concurred with the recommendations.
We issued our report (2006-P-00007) on
December 16, 2005.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
Response Claims
CERCLA, as amended by the Superfund
Amendments and Reauthorization Act of 1986,
authorizes EPA to pay any claim for response
costs as a result of carrying out the National
Contingency Plan. Potentially responsible parties,
who often make these claims, are required to enter
into a preauthorized decision document with EPA
to cover work for which some costs will be
reimbursed. The document specifies the work to
be performed, the portion of the cost EPA will
reimburse, and the procedures through which the
potentially responsible parties can make claims for
reimbursement. While we do not audit response
claims, we review claims by following the
instructions in EPA's claims guidance for the
claims adjuster. During 2006, we performed
several such reviews, as discussed below.
Reviews of Whitehouse Oil Pits
Superfund Site Claims
We reviewed the first mixed funding claim
submitted by the Whitehouse Remedial Action
Group, for CERCLA response action at the
Whitehouse Oil Pits Superfund Site in Duval
County, Florida. The preauthorized decision
document authorizes the claimant to submit claims
against the Superfund Trust for an amount not to
exceed $6,206,600 or 81.6 percent of eligible,
reasonable, and necessary costs incurred for
designing the remedial action pursuant to the
Record of Decision and Consent Decree. The
claimant submitted documentation detailing
incurred costs of $3,722,239 and requesting
reimbursement of $394,748. We recommended
that EPA reimburse the claimant $366,340 of the
total allowable eligible costs. We reduced eligible
costs claimed by $34,815, which represents
unsupported labor costs incurred by the City of
Jacksonville (a member of the Whitehouse
Remedial Action Group). EPA sustained the
questioned amount. We issued our report
(2006-4-00027) on October 31, 2005.
We also reviewed the second claim submitted by
the Whitehouse Remedial Action Group for the
CERCLA response action at the Whitehouse site.
The preauthorized decision document had the
same limitations as the first claim. The claimant
submitted documentation detailing incurred costs
of $4,445,960 and requesting reimbursement of
$3,627,621. We recommended that EPA accept
the claim as perfected, and reimburse the claimant
$3,627,621. We issued our report (2006-4-00139)
on September 7, 2006.
Review of Bofors-Nobel Superfund Site
Claim
We reviewed the mixed funding claim submitted
by De Maximis, Incorporated, on behalf of the
settling defendants for the Bofors-Nobel
Superfund Site in Muskegon, Michigan. The
preauthorized decision document authorizes the
claimant to submit claims for an amount which
was the lesser of $7,200,000 or 47 percent of
eligible, reasonable, and necessary costs incurred
for design of the remedial action pursuant to the
Record of Decision and Consent Decree. We
recommended that EPA accept the claim as
perfected, and accept for reimbursement
$923,527.86 of the total allowable eligible costs of
$1,964,952.89. We issued our report
(2006-4-00093) on April 4,2006.
Review of Armour Road Superfund Site
Claim
We reviewed the mixed funding claim submitted
by Morrison and Foerster LLP on behalf of
U.S. Borax, Inc., for the Armour Road Superfund
Site, in North Kansas City, Missouri. The June
1999 amended Administrative Order on Consent
authorized the claimant to submit a claim for
50 percent of the actual eligible costs of the work
performed pursuant to the Electrokinetic
Technology Study Work Plan. The claimant
identified $489,611 as total eligible costs in its initial
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
claim, representing costs for an Electrokinetic
Technology Study and Building Demolition and
Disposal services. The costs claimed for the
Building Demolition and Disposal services were
subsequently eliminated from the claim plus an
additional $251 for unallowable costs.
We recommended that EPA accept the claim as
perfected, and reimburse the claimant $104,767 of
the total allowable eligible costs of $209,535.
Further, we identified four invoices, totaling
approximately $40,000, for costs incurred after
EPA approved the request to participate in the
Electrokinetic Technology Study but before it
amended the Administrative Order on Consent.
Nothing came to our attention that led us to believe
that these costs were not required, reasonable, or
allocable to the Electrokinetic Technology studies,
but only invoices representing post-Administrative
Order on Consent costs can be considered
allowable. We recommended that EPA ratify
these costs into the Order. EPA sustained the
questioned amounts and agreed to revise the
Administrative Order. We issued our report
(2006-4-00102) on May 9,2006.
Review of Army Creek Landfill Superfund
Site Claim
We reviewed the second claim submitted by Clean
Tech, Incorporated, on behalf of New Castle
County for the Army Creek Landfill Superfund
Site, in New Castle, Delaware. The preauthorized
decision document authorized New Castle County
to submit claims for 40 percent of its eligible costs
for designing and constructing a pump and treat
groundwater system pursuant to the Record of
Decision and the Consent Decree. We found that
the County's total claims for reimbursement
(Claim Nos. 1 and 2) exceeded the maximum
ceiling of $2,000,000 by $123,552, and thus were
ineligible for reimbursement. EPA sustained the
ineligible amounts. We issued our report (2006-4-
00097) on April 27,2006.
Review of Illinois Credit Claim for Ottawa
Radiation Site
We reviewed the State of Illinois Emergency
Management Agency's credit claim for costs
associated with its remediation of the Luminous
Processing facility and grounds prior to its listing
on the National Priorities List. The Illinois
agency's credit claim identified $4,729,677 of costs
incurred between State Fiscal Years 1984 and
1987. The Illinois agency escalated these
expenditures by $3,213,181 to reflect current
dollars by using a consumer price index, bringing
its total credit claim to $7,942,858. Our review
noted no exceptions to the $4,729,677 in costs
incurred and recommended Region 5 seek a legal
opinion on the validity of the claimed consumer
price adjustments. Based on our recommendation,
Region 5 acquired a legal opinion, and rejected the
Illinois Emergency Management Agency's
$3,213,181 price adjustment in its entirety. We
issued our report (2006-4-00026) on October 31,
2005.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
Performance Review
In addition to the reviews required by CERCLA
and the Superfund Amendments and
Reauthorization Act, we conduct other reviews
related to Superfund issues. Following is a
summary on one completed during Fiscal Year
2006.
EPA Appropriately Handled
Hazardous Waste Releases and
Debris after Hurricane Katrina
EPA established quality and timely approaches for
rapidly identifying, prioritizing, and assessing the
impact of hazardous material releases following
Hurricane Katrina, including at Superfund sites.
EPA also adequately reviewed the handling of
hurricane-generated debris and waste.
Hurricane Katrina created an estimated 86 million
cubic yards of debris, caused more than 7 million
gallons of oil to spill, and produced floodwaters
that deposited hazardous substances in sediments.
EPA was the Federal agency with the lead for
addressing hurricane-generated hazardous debris
and waste.
EPA assessed results of damage or releases at all
18 Superfund National Priorities List sites (15 in
Louisiana and 3 in Mississippi) over which the
hurricane passed, as well as more than 400
industrial facilities in the affected area.
EPA concluded that the hurricane did not impact
15 of the 18 Superfund sites. The remaining three
sites are all in Louisiana. Two of these sites -
Delatte Metals and PAB Oil - showed higher
concentrations of metal in groundwater samples
than from pre-hurricane samples. EPA said it will
continue to monitor groundwater at these sites as
part of routine operations and maintenance. Initial
results from a third site - Agriculture Street
Landfill - confirmed that the remedy implemented
at the site was not impacted by the hurricane, but
completion of the final evaluation was pending
further sampling.
In its overall efforts to assess the impact of
Hurricane Katrina, EPA coordinated with State,
local, and other Federal Government agencies to
assess potential impacts, and provided quality and
timely information for determining risks and
impacts. EPA provided information on chemicals
present in sediment samples. EPA distinguished
between hazardous and nonhazardous debris,
provided the public with information on how to
properly dispose of household waste, and collected
over 2.5 million hazardous waste containers.
We did not make any recommendations.
We issued our report (2006-P-00023) on May 2,
2006.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
Investigative Activity
The OIG Office of Investigations continued to
focus its investigative resources on allegations of
fraud, waste, and abuse in high risk and high dollar
areas, including the Superfund program. During
Fiscal Year 2006, our Superfund investigative
efforts resulted in:
• $1.2 million in monetary fines and
restitution
• Three sentencings
• One civil settlement
• Four administrative actions
Following are two instances of Superfund
investigative activities with results in Fiscal Year
2006.
Three Sentenced in Kickback Scheme
Three men were sentenced on conspiracy charges
related to a kickback scheme involving a contract
awarded by EPA for the cleanup of the Berkley
Products Superfund site in Denver, Pennsylvania.
On July 19, 2006, in the U.S. District Court for the
Eastern District of Pennsylvania:
• Ronald Check, Jr., president of Grace
Industries, Inc., was sentenced to
60 months probation, the first 6 months to
be served under house arrest, and was
ordered to pay a $5,000 fine and a special
assessment of $200.
• James Vagra, a former project manager
for Grace, was sentenced to 6 months in
prison followed by 3 years supervised
release, and was ordered to pay a $32,382
fine and a $200 special assessment.
• Gary Sanders, a former site foreman for
Grace, was sentenced to 60 months of
probation and was ordered to pay a $32,382
fine and a $200 special assessment.
In 1996, EPA awarded a contract to Tetra Tech
Nus, Inc., to serve as the prime contractor for the
Berkley Products site cleanup. In 2000, Tetra
Tech awarded a subcontract to Grace to construct
a landfill cap at the site. James Risner, the project
manager for Tetra Tech, solicited approximately
$129,531 in kickbacks from Check, Jr. in exchange
for certifying that the work performed by Grace
was completed in a satisfactory manner. Risner
then kicked back approximately half of all the
money he received to Vagra, who in turn provided
half of that to Sanders. Vagra and Sanders each
received $32,382 in kickbacks. Risner provided
Grace with phony invoices in the amount of the
kickbacks to disguise the illegal payments.
In addition to the sentencings, on February 16,
2006, Risner, Check, Jr., and Sanders each pled
guilty to one count of conspiracy to violate the
anti-kickback statute and one count of conspiracy
to defraud the Internal Revenue Service (IRS).
Vagra pled guilty to the same charges on March 1,
2006. Grace paid $113,711 to the IRS for
deducting the kickback payments as business
expenses. Vagra paid $12,177 to the IRS and
Sanders paid $21,527 for underreporting income.
Risner's sentencing is pending.
Contractor Enters into $1 Million
Settlement Agreement
A contractor entered into a $ 1 million settlement
agreement related to performing cleanup activities
at the Tar Creek Superfund Site, Northern Ottowa
County, Oklahoma.
On December 23, 2005, while making no
admission of wrongdoing or liability, Washington
Group International, Inc. (WGI), formerly known
as Morrison Knudson Corporation, entered into a
$1 million settlement agreement with the U.S.
Department of Justice, Civil Division, and the U.S.
Attorney's Office for the Northern District of
Oklahoma.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
In its case, the Government alleged that between
1996 and 2003, WGI submitted false
representations and certifications in progress
reports provided to the Government. WGI also
improperly billed costs during its performance of a
U.S. Army Corps of Engineers contract funded by
EPA to perform cleanup activities at the Tar Creek
site. These false representations and claims
resulted in the Government paying more for the
cleanup contract than was necessary.
Specifically, it was alleged that WGI:
• required truck drivers and others to falsely
record, on truck tickets and other reports,
more cubic yardage, truck loads, and/or
full loads than were actually hauled;
• directed or caused truck drivers to give
the false appearance that the trucks were
being fully and efficiently utilized for their
intended purpose;
• paid full salary to workers who had been
injured on the job and therefore should
have been paid worker's compensation
benefits rather than wages; and
• billed the Government for time and
expenses associated with transporting
injured workers to medical care.
WGI also entered into a compliance agreement
with the EPA Suspension and Debarment Division.
According to the agreement, WGI must continue
to maintain its internal audit program, program
efficiency and cost accountability system, code of
business conduct, and ethics and compliance
training program.
This investigation was conducted jointly with
the Defense Criminal Investigative Service and
the U.S. Army Criminal Investigation
Command.
10
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2006
Listing of Fiscal Year 2006 Superfund Reports
Report No.
Description
Date
2006-2-00001 CH2M Hill Inc - FY 2002 RAC Annual Close-Out 68-W6-0036 07-OCT-05
2006-2-00002 CH2M Hill Inc - FY 2001 RAC Annual Close-Out 11-OCT-05
2006-2-00005 Tetra Tech FW, Inc. - FY 2002 RAC 68-W9-8214 28-OCT-05
2006-2-00004 Tetra Tech FW, Inc. - FY 2003 RAC 68-W9-8214 28-OCT-05
2006-4-00026 Illinois Credit Claim for Ottawa Radiation Site 31 -OCT-05
2006-4-00027 Whitehouse Oil Pits Superfund Site, First Response Claim 31-OCT-05
2006-2-00008 E&E Agreed Upon Procedures RFP-PR-R7-05-10029 29-NOV-05
2006-P-00007 More Information Is Needed on Toxaphene Degradation Products 16-DEC-05
2006-2-00010 CH2M Hill, Inc. - FY 2003 RAC - 68-W6-0036 18-JAN-06
2006-P-00013 EPA Can Better Manage Superfund Resources 28-FEB-06
2006-2-00013 Weston Solution, Inc. - FY 2003 RAC 68-W7-0026 03-MAR-06
2006-P-00016 EPA's Management Strategy for Contaminated Sediments 15-MAR-06
2006-1-00036 Washington Group Int'l-formerly Morrison Knudsen FY 2003 RAC 28-MAR-06
2006-4-00093 Bofors-Nobel Superfund Site Response Claim 04-APR-06
2006-2-00017 E&E Data Input CAS 402 Noncomp - Cost Impact 26-APR-06
2006-4-00097 Army Creek Landfill Superfund Site Response Claim 27-APR-06
2006-P-00023 Hurricane Katrina Hazardous Material Releases/Debris Management 02-MAY-06
2006-4-00102 Armour Road Superfund Response Claim 09-MAY-06
2006-M-00010 Followup on State Cleanup Programs 02-JUN-06
2006-2-00021 Tetra Tech NUS, Inc. - FY 2002 RAC 68-W6-0045 14-JUN-06
2006-2-00023 Tetra Tech NUS, Inc. - FY 2002 RAC 68-S6-3003 15-JUN-06
2006-2-00024 Tetra Tech EM, Inc. - FY 2002 RAC Close-Out 68-W6-0037 27-JUN-06
2006-2-00025 Tetra Tech EMI, Inc. - FYE 9/30/03 RAC Annual Close-Out 68-W6-0037 11-JUL-06
2006-2-00026 Weston Solution, Inc. - FY 2002 RAC 68-W7-0026 13-JUL-06
2006-2-00027 Tetra Tech NUS, Inc. - FY 2001 RAC 68-S6-3003 20-JUL-06
2006-P-00027 Redistribution of Superfund Payments to Specific Sites 31-JUL-06
2006-2-00029 COM Federal Program Corp. - FY 2002 Annual RAC 68-W9-8210 16-AUG-06
2006-4-00130 Nobis Engineering, Inc. - Financial Cap Risk Assessment 17-AUG-06
2006-2-00030 Tetra Tech NUS, Inc. - FYE 9/30/2003 RAC Annual Close-Out 68-W6-0045 17-AUG-06
2006-4-00131 E&E Accounting System 21-AUG-06
2006-2-00031 Nobis Engineering, Inc. - Preaward - PR-HQ-05-10957 22-AUG-06
2006-M-00013 Assistance to Department of Justice on Wellfield Superfund Site 05-SEP-06
2006-4-00139 Whitehouse Oil Pits Superfund Site, Second Response Claim 07-SEP-06
2006-4-00147 Oregon DEQ Reported Outlays Under Agreement V99060102 21-SEP-06
2006-P-00041 Review of Environmental Concerns at McFarland, California 28-SEP-06
2006-2-00034 Tetra Tech NUS, Inc. - FY 2003 RAC 68-S6-3003 28-SEP-06
2007-1 -00019 * EPA's Fiscal Year 2006 Financial Statements 15-NOV-06
Report issued in Fiscal Year 2007
11
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