oEPA United States Environmental Protection Agency Office of Solid Waste and Emergency Response DIRECTIVE NUMBER: 9650.6-1 TITLE'Supplemental Requirements for LUST Trust "•Cooperative Agreements APPROVAL DATE: EFFECTIVE DATE: 07/27/87 07/27/87 ORIGINATING OFFICE: Office of Underground Storage Tanks (OUST) 0 FINAL D DRAFT STATUS: REFERENCE (other documents): OSWER Directive 9560.6 - Guidelines for UST Trust Fund Cooperative Agreements OSWER OSWER OSWER VE DIRECTIVE DIRECTIVE Dl ------- United States Environmental Protection Agency Washington, DC 20460 OSWER Directive Initiation Request 1. Directive Number 9650.6-1 2. Originator Information Name of Contact Person J. Heffelfineer/C. Mooar Mail Code WH-562A Office OUST Telephone Code 382-2199/382-7970 3. Title Supplemental Requirements for Initial LUST Trust Fund Cooperative Agreements 4. Summary of Directive (include brief statement of purpose) This directive provides supplemental information necessary for State/EPA negotiation of initial cooperative agreements under the LUST Trust Fund. 5. Keywords Cooperative Agreements, States, Regional Offices 6a. Does This Directive Supersede Previous Directive(s)? \~%~\ b. Does It Supplement Previous Directive(s)? No No What directive (number, title) Yes What directive (number, tiM, 2650.1 , Guidelines for UST Trust Fund Cooperative Agreements 7. Draft Level A - Signed by AA/DAA B - Signed by Office Director C - For Review & Comment D - In Development 8. Document to be distributed to States by Headquarters? Yes X No This Request Meets OSWER Directives System Format Standards. 9. Signature of Lead Office Directives Coordinator Betty^R. Arnold, Program Analyst, OUST s~-Zj'fl£~ <^& tfA^^Jw * ^ 1 *7 ^ ^i-t^txvt^" ^ fff f O'L' fc^t**?^A_-*\ 10. Name and\fitle of AJbproviMj Official J. Win sl&^klrt^rH!'1'' Assistant Administrator, y OSWER Date / / /*/£"// 8"? Date / / EPA Form 1315-| *) (Rev. 5-87) Previous editions are obsolete. OSWER OSWER OSWER O DIRECTIVE DIRECTIVE DIRECTIVE ------- UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON. D.C. 20460 JUL 27 iS37 OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE MEMORANDUM SUBJECT: Supplemental Requirements for LUST Trust Fund Cooperative Agreements FROM: Ronald Brand, Director Office of Underground Storage Tanks TO: Waste Management Division Directors Regions I - III, V - X Water Management Division Director, Region IV Attached Is a supplemental OSWER Directive for negotiating LUST Trust Fund Cooperative Agreements. The directive establishes specific requirements for State accounting systems, financial reporting, and cost recovery that reflect the requirements set forth in the July 2, 1987 memorandum, "Reporting and Recordkeeping for LUST Cooperative Agreements," issued by the Office of the Comptroller and the Grants Administration Division. Please make sure that your staff in the UST program has communicated these requirements to each State seeking coopera- tive agreements under the LUST Trust Fund. Regional UST staff should also coordinate with their financial management and grants administration counterparts to ensure that these require- ments are addressed in each State cooperative agreement. If you'have any questions concerning the directive, please contact Charles Mooar at (FTS) 382-7970. Attachment cc: Assistant Administrator for Administration and Resource Managment Assistant Regional Administrators for Planning and Management UST Coordinators ------- OSWER DIRECTIVE 9650.6-1 PURPOSE This memorandum provides additional direction for Regional use in negotiating the initial Leaking Underground Storage Tank (LUST) Trust Fund Cooperative Agreements with States, and supplements the "Guidelines for UST Trust Fund Cooperative Agreements," OSWER Directive 9650.6, effective April 2, 1987. This directive clarifies and specifies State recordkeeping, accounting requirements, cost documentation and reporting requirements that will be needed to ensure sound administration and use of the LUST Trust Fund, and to provide for effective communication, oversight and program support between the Regions and the States. STATE ACCOUNTING SYSTEMS Requi rements OSWER Directive 9650.6 required that States adhere to general recordkeeping requirements of 40 CFR Part 30, and specifically that States must develop a plan for site-specific accounting of Trust Fund expenditures. Directive 9650.6 further stated that the States implement that plan as expeditiously as possible. This directive clarifies those requirements to specify that States must maintain a financial management system (as required by 40 CFR 30.510) capable of organizing and recording expenditures for corrective actions and enforcement activities on a site-specific basis. Prior to making expenditures of Trust Fund monies for site-specific activities, a financial management system must be in place to record such costs on a site-specific basis. All costs that can be allocated to a particular site, including contractor costs, should be charged accordingly. In developing and operating State accounting systems, the State shall maintain cost documentation and other appropriate records to support any future cost recovery efforts. The State shall adhere> to the principles of documentation and record retention described in the manual State Participation in the Superfund Program, OSWER Directive 9375.1 -4u, "Cost Documentation Requirements for Superfund Cooperative Agreements." As specified in OSWER Directive 9650.6 for Trust Fund Cooperative Agreements, State accounting data and records shall be available to the Federal government, as needed, on a case-by-case basis to support program and fiscal reviews. For any award made after August 15, 1987, the requirements specified above shall be addressed in cooperative agreements through the use of the specific language contained in paragraphs 1, 2, and 4 of the attachment to this directive. Awards made before August 15, 1987 need not contain the verbatim language, but must assure the substance of the requirements specified above. ------- OSWER DIRECTIVE 9650.6-1 FINANCIAL REPORTING REQUIREMENTS Requi rements The Office of the Comptroller is responsible for issuing Agency financial policies and procedures for tracking the LUST Trust Fund in the Agency's Financial Management System (FMS). Comptroller Policy Announcement 87-13 contains policies and procedures for establishing appropriate LUST Trust Fund accounts in FMS. With respect to State Cooperative Agreements, the announcement specifies account structures and activity codes to be used by Regions and States, and describes the manner in which State expenditures, by activity, will be reported through Letter of Credit drawdown procedures. OSWER Directive 9650.6 calls for separate quarterly progress reports, including Trust Fund expenditures by type of State activity. Under the financial reporting requirements specified in the Comptroller Policy Announcement 87-13, a State will report on its use of Trust Fund monies under three major activity codes when it makes a request for funds (Letter of Credit drawdown). Under the Comptroller's policy, all financial transactions and financial reporting between EPA and the States with LUST Trust Fund Cooperative Agreements will be carried in FMS through the use of appropriate account codes. To support adequate tracking of financial transactions by the Office of the Comptroller, States shall submit annual Financial Status Reports (SF-269) and quarterly Federal Cash Transaction Reports (SF-272), in accordance with 40 CFR Part 30 and OMB Circular A-102. Regional UST Coordinators shall work with each State to ensure the proper allocation of LUST Trust Fund expenditures to the three activity codes identified in the Comptroller announcement: "7" - General Support and Management, "E" - Site Cleanup Actions, and "4" - Enforcement. In addition to the exception reporting required by OSWER Directive 9650.6 for named sites with planned expenditures greater than $100,000, States shall also identify through quarterly reports the sites where LUST Trust Fund expenditures have actually exceeded $100,000, and shall report the amounts of such expenditures For any award made after August 15, 1987, the requirements specified above shall be addressed in cooperative agreements through the use of the specific language contained in paragraphs 5 and 6 of the attachment to this directive. Awards made before August 15, 1987 need not contain the verbatim language, but must assure the substance of the requirements specified above. ------- OSWER DIRECTIVE 9650.6-1 COST RECOVERY Requi rements As specified in OSWER Directive 9650.6, States must have or obtain the authority and capability to recover costs from liable owners and operators. It is the responsibility of the State under each cooperative agreement to pursue recovery of LUST Trust Fund costs from liable owner/operators on behalf of the LUST Trust Fund. Where States have appropriate authorities and capabilities to collect response expenditures on behalf of the LUST Trust Fund , the State shal1: (1) make a reasonable effort to recover costs from liable owners and operators; (2) report within 30 days on any amounts received from an owner/operator, or agreed or adjudged to be owed by the owner/operator, as a recovered cost of site cleanup; (3) promptly return recovered funds (or an equivalent amount) to EPA for deposit to the LUST Trust Fund, to the extent that the State is successful in recovering costs. If a State lacks authorities and capabilities to collect response expenditures on behalf of the LUST Trust Fund (i.e., the authority to recover such costs from liable owners/operators and return such monies to EPA for deposit to the LUST Trust Fund), the State shall agree to obtain such authorities and capabilities by the end of the next legislative session after the execution of the initial Cooperative Agreement. (The States understands that EPA may decline to enter into a subsequent Cooperative Agreement if such capabilities and authorities are not obtained.) The State shall also agree to delay taking cost recovery action under a Cooperative Agreement until such authorities or capabilities have been obtained. After a State obtains authorities and capabilities to collect re- sponse expenditures on behalf of the LUST Trust Fund, the State shall adhere to the three requirements specified above, including notifi- cation of recovery settlements and prompt return of recovered funds. Once a State cost recovery action has been reported, the Regional UST Coordinator and Regional Financial Management Officers shall ensure that appropriate accounts are developed to track adequately the proper payment of such recoveries to the LUST Trust Fund. For any award made after August 15, 1987, the requirements for cost recovery specified above shall be addressed in cooperative agreements through the use of the specific language contained in paragraph 3 of the attachment to this directive. "Insert 1" may be used where States have appropriate authorities and capabilities, while "Insert 2" may be used where such authorities and capabilities still need to be developed. Awards made before August 15, 1987 need not contain the verbatim language, but must assure the substance of the requirements specified above. ------- Attachment REQUIREMENTS FOR INCLUSION IN LUST STATE COOPERATIVE AGREEMENTS 1. State agrees to maintain a financial cost accounting system which meets the requirements of 40 CFR 30.510. 2. State agrees to organize and maintain site-specific infor- mation on activities and costs where Trust Fund monies are used. Prior to making expenditures of Trust Fund monies for corrective and enforcement actions, a system must be in place to record these types of costs on a site-specific basis. All other costs that can be identified to a particular site should be charged accordingly. State contractors must bill costs on a site-specific basis, including corrective action costs, enforcement costs and to the extent possible manage- ment costs. 3. The State acknowledges that expenditures from the LUST Trust Fund covering the cost of corrective or enforcement action constitute a liability of the owner/operator to the United States. (Insert 1 or 2 below) > J (INSERT 1, for States which have authority to collect response expenditures on' behalf of the LUST Trust Fund)~ The State therefore agrees: a) That it will make reasonable efforts to recover these costs from liable owner/operators. In making .such efforts, States may consider equitable factors to the extent pro- vided in section 9003(h)(6)(B) and section 9003(h)(ll) of the Solid Waste Disposal Act, as amended; b) That it will report within 30 days on any amounts received from,the owner/operator, or agreed or adjudged to be owed .by the owner/operator, as a recovered cost of site clean-up; and c) That to the extent the State is successful in recovering these costs, it will promptly return recovered funds (or an equivalent amount) to EPA for deposit in the LUST Trust Fund. (INSERT 2, for States lacking authority to collect response expenditures on behalf of the LUST Trust FundT The State therefore agrees that to the extent the State lacks the authority or procedure to collect response expendi- tures on behalf of the LUST Trust Fund (i.e., the authority to recover such costs from owner/operators and return such monies to EPA for deposit to the Trust Fund), the State . will: ------- -2- a) Obtain such authority or procedure by the end of the next legislative session after the execution of this Agreement. (The State understands that if such authority and/or procedure is not obtained, EPA may decline to enter into subsequent Cooperative Agreements); and b) Delay taking cost recovery action under this Cooperative Agreement against owner/operators until such authority or procedure is obtained. c) Once the State obtains that authority or procedure, State agrees: 1) That it will make reasonable efforts to recover these costs from liable owner/operators. In making such efforts, States may consider equitable factors to the extent provided in section 9003(h)(6)(B) and section 9003(h)(ll) of the Solid Waste Disposal Act, as amended; 2) That it will report within 30 days on any amounts received from the owner/operator, or agreed or adjudged to be owed by the owner/operator, as a recovered cost of site clean-up; and 3) That to the extent the State is successful in recovering these costs, it will promptly return recovered funds (or an equivalent amount) to EPA for deposit in the LUST Trust Fund. 4. State agrees to maintain supporting documentation and appro- priate records in support of any future cost recovery efforts. The State shall adhere to the principles of documentation and records retention described in the manual State Partici- pation in the Superfund Program, OSWER Directive 9375.l-4u, "Costs Documentation Requirements for Superfund Cooperative Agreements," pending development of more specific guidelines on LUST costs documentation. The State agrees to make these records available to the Federal Government, as needed, on a case by case basis. 5. State agrees to provide reports as outlined in the "State Application Guidelines for Initial LUST Trust Fund Cooperative Agreements" dated March 27, 1987. These reports consist of; 9 Quarterly progress reports; 0 Exception reporting as needed; 0 Financial Status Reports (SF-269); and ------- -3- The State further agrees to provide quarterly reports as follows: 0 Federal Cash Transactions Report (SF-272) 9 All individual sites and their amounts where Trust Fund dollars in excess of $100,000 have been expended. State agrees to identify Letter of Credit drawdowns under EPA's three major activity codes. The three codes are "7" General Support and Management, "E" - Site Cleanup Actions, and "4" - Enforcement. Procedures supplementing the EPA Letter of Credit Recipients Manual will be provided to clarify how the State requests funds under the activity codes. ------- ATTACHMENT 9 / fay OSWHS Direct a ve Suooieiftersted Succ< I emerit e-d DV >i ^ CS St! ------- |