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Inspector General Diviision Western Audit Division
Conducting the Audit: San Francisco, California
Region Covered: Region 9
Program Office Involved: Office of Underground Storage Tanks
Hazardous Waste Management Division
Cover Photograph: Removal of an Underground Storage
Tank in Long Beach, California
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
%PB0^X OFFICE OF THE INSPECTOR GENERAL FOR AUDITS
WESTERN DIVISION
75 HAWTHORNE STREET
19TH FLOOR, MAIL CODE M
SAN FRANCISCO, CA 94105-3901
T
September 30, 1992
MEMORANDUM
SUBJECT: Report on Implementation of the
Leaking Underground Storage Tank (LUST) Program
in the State of California
Audit Report No. E1LLB1-09-0200-2100665
FROM: Truman R. B
Divisional Inspector General for Audit
Western Division
TO: Daniel W. McGovern
Regional Administrator
EPA, Region 9
San Francisco, California
Attached are five copies of the subject audit report. The
overall objective of our audit was to evaluate the adequacy of
the implementation of the LUST program in California. The report
contains important findings and recommendations regarding the
sub j ect area .
Since the report and recommendations are directed to your office,
we have not distributed copies of the report to the Secretary of
the California Department of Environmental Protection or other
state officials responsible for administration of the LUST
program in California. However, we have provided sufficient
additional copies to your office for such a distribution, if you
wish to do so.
Action Required
In accordance with EPA Order 2750, you, as the action official
are required to provide this office a written response to the
audit report within 90 days of the final audit report date. For
corrective actions planned, but not completed by your response
date, reference to specific milestone dates will assist this
office in deciding whether to close this report. We have no
objections to the further release of this report to the public.
Printed on Recycled Paper
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This audit report contains findings that describe problems the
Office of the Inspector General has identified and corrective
actions the OIG recommends. This audit report represents the
opinion of the OIG. Final determinations on matters in this
audit report will be made by EPA managers in accordance Wlt£
established EPA audit resolution procedures. Accordingly, the
findings described in this audit report do not necessarily
represent the final EPA position, and are not binding upon EPA in
any enforcement proceeding brought by EPA or the Department or
Justice.
Should you have any questions about this report, please contact
me or Geary Pena of our Sacramento Office at (916) 551-1076.
Attachments
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TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY i
CHAPTERS
1 - INTRODUCTION 1
PURPOSE 1
BACKGROUND 2
SCOPE AND METHODOLOGY 4
2 - PRIORITY SYSTEM USED FOR LUST CLEAN-UPS
IN CALIFORNIA WAS UNACCEPTABLE 9
3 - CALIFORNIA'S LUST ENFORCEMENT PROGRAM
WAS INEFFECTIVE 33
4 - REGION 9 WAS NOT EFFECTIVELY MONITORING
CALIFORNIA'S LUST PERFORMANCE 57
5 - STATE PROGRAM WAS NOT MOVING TOWARD
TIMELY APPROVAL 67
APPENDICES
APPENDIX I - SCHEDULE OF AGENCIES IN THE
LOCAL OVERSIGHT PROGRAM . . 78
APPENDIX II - ABBREVIATIONS 79
DISTRIBUTION 80
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EXECUTIVE SUMMARY
PURPOSE
EPA estimates that as many as 40 percent of the approximately 2
million underground storage tanks in the United States are
leaking. As of December 31, 1991, the State of California (the
state) reported 16,491 confirmed leaking tank sites, almost twice
as many as any other state.
Leaking tanks create human health and environmental risks because
they frequently contaminate groundwater. Groundwater is the
source of drinking water for half the United States. It is also
used for irrigation, livestock watering, and industrial uses.
Leaking tanks usually contain petroleum, which is a known
carcinogen. Other adverse effects of contact with petroleum are
nausea; skin, eye, and throat irritation; loss of reflexes; and
liver and kidney damage.
Facts such as these led Congress, in the 1986 amendments to the
Superfund Amendments and Reauthorization Act (SARA), to set up a
$500 million trust fund to assist in cleaning up leaks from
underground storage tanks. In doing so, Congress handed EPA the
enormous challenge of overseeing the clean-up program.
Congressional intent, however, was that the clean-up program be
implemented at the state level. The Federal role was to establish
criteria and to aid the states in establishing their programs.
Because of the significant environmental risks associated with
leaking tanks, and EPA's relatively new role in this program, we
initiated an audit of the implementation of the Leaking
Underground Storage Tank (LUST) Program in California. The
purpose of the audit was to:
• Determine the adequacy of Region 9's (the Region) and the
state's actions to prioritize the clean-up of LUST sites;
• Evaluate the effectiveness of the Region's and the state's
LUST related enforcement actions; and
• Evaluate the effectiveness of the Region's monitoring of
the state's performance under LUST cooperative agreements.
BACKGROUND
Because of national problems with leaking underground tanks,
Congress amended the Resource Conservation and Recovery Act
(RCRA) in 1984 to regulate underground storage tanks. In 1988,
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the Federal rules for regulating tanks took effect. These rules,
promulgated in the Code of Federal Regulations (40 CFR 280 to
281), required underground storage tank systems to be designed
and upgraded to protect against leaks. They also required tank
owners to insure or have some other way of paying for potential
clean-up costs. Also, the regulations required a leak or spill
over 25 gallons to be reported, and provided that any
contaminated soils and groundwater must be cleaned up.
After Congress amended RCRA, it further addressed the need to
clean-up leaking tank sites by passing SARA in 1986. SARA
established a $500 million LUST Trust Fund, paid for by a tax of
1/10 cent for each gallon of gasoline. The Trust Fund can be
used for clean-ups of contaminated sites, or for the states'
administration of the program. According to SARA, priority for
clean-ups is to be given to those leaking underground tanks that
present the greatest threat to human health and the environment.
However, according to EPA1, the Trust Fund is intended to be a
short-term solution to the problem of leaking tank sites. The
long-term solution is for states to have tank regulatory programs
that prevent leaking tanks from threatening human health and the
environment.
To fulfill its responsibilities under SARA, EPA sets the
nationwide minimum standards and oversees the program for leaking
tank site clean-ups, while allowing the states to operate the
site clean-up programs. In this respect, the states' job is to
oversee clean-ups where the owner or operator is taking action
and to carry out clean-ups where no owner can be found or where
the owner is insolvent. Through
SARA, EPA is able to offer states
LUST Trust Fund monies to operate
the program.
LUST Trust Funds Awarded by Region 9
FY 1987 to FY1991
EPA Regions provide Trust Funds
to the states for the program
through cooperative agreements
(CAs). These CAs include a work
plan setting out requirements for
the state's clean-up program.
From Fiscal Year (FY) 1987 to
1991, EPA awarded about $214
million in Trust Funds to the
states. During that same period,
the Region awarded about $22
million to its four states, of
which about 73 percent went to
California, as shown in the chart
at the right.
California 73%
$15.8 million
Arizona 16%
$3.5 million
^Hawaii 4%
$0.8 million
evada 8%
$1.6 million
'Federal Register, Volume 53, No. 185, September 23, 1988.
ii
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A significant portion of the LUST Trust Fund monies provided to
California were being used ineffectively and contrary to the uses
intended by SARA. The funds were being used for leaking tank
site clean-up activities at lower priority sites, rather than at
sites posing the greatest risk to human health and the
environment. As a result, high risk sites were not being cleaned
up timely, nor were aggressive enforcement actions being taken
against responsible parties.
Although California was awarded about $15.8 million in LUST CA
funds from FY 1987 to FY 1991, we estimated that about $4.5
million had been expended on activities associated with low
priority site clean-ups. We concluded that the use of LUST CA
funds in this manner are contrary to the intent of SARA. This
condition was attributable to several causes, including the fact
that the Region had not required the state to establish or use a
priority system that focused on sites with the greatest risk to
human health and the environment. In addition, the Region had
not required the state to develop and implement a meaningful
enforcement program. This latter cause, contributed to site
clean-ups being stalled and drawn out over many years.
The Region had not previously identified these problems with the
state's LUST program because it was not effectively monitoring
and evaluating the state's performance. The Region's evaluations
did not assess how well the state used the 75 percent of LUST CA
funds which it allocated to its local agencies. We also found
that the Region had not used the LUST CA funds in a manner to
encourage the state to make reasonable progress toward getting
its state program approved by EPA.
PRINCIPAL FINDINGS
Unacceptable
The priorities established by the state to use its LUST CA funds
did not fulfill the intent of SARA that such funds be directed to
sites with the greatest risk to human health and the environment.
As a result, there was no assurance that the $7.3 million of LUST
CA funds expended for overseeing leaking tank site clean-up
activities during FY 1988 to 1990 were directed toward such high
priority sites. Rather, the state used an estimated $4.5 million
of the funds to oversee lower priority clean-ups. In our
opinion, the use of LUST CA funds for lower priority work was
contrary to the intent of SARA. The Region needs to require the
iii
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state to direct its oversight activities to clean-ups at high
priority sites statewide.
This condition was attributable to the following: (i) the Region
was not effectively monitoring the state's performance under the
LUST program; (ii) a workable priority system had not been
established in California; (iii) the state did not implement its
priority system for LUST CA fund clean-ups; (iv) the state did
not require counties to initiate site clean-up efforts on the
most hazardous, environmentally-threatening leaking tank sites,
including those affecting drinking water; (v) the state
distributed LUST CA funds for site clean-up to only 21 of 58
counties in the state, rather than to high priority sites on a
statewide basis. Further, many of the 21 counties did not
oversee site clean-ups in major cities within their boundaries.
California's LUST Enforcement Program Was Ineffective
The Region has allowed an ineffective LUST enforcement program to
exist within the state. During FY 1988 through FY 1991, the
state reported that it expended $1.6 million in LUST CA funds to
enforce clean-ups at leaking tank sites. However, the Region did
not require the state to develop a meaningful enforcement
program. We found that about 99 percent of the 8,344 enforcement
actions reported by the state represented nothing more than
notification letters advising leaking tank site owners and
operators to clean-up their sites. The Region subsequently
reported these notification letter actions as enforcement
statistics to EPA Headquarters. We believe that this seriously
overstates enforcement activity because the letters do not
establish any kind of an action plan for timely clean-up of a
site.
In our opinion, there were several reasons for the ineffective
LUST enforcement program, including: (i) the fact that the CAs
did not require the state to establish an effective enforcement
program, nor hold them accountable for not having one; (ii) a
lack of emphasis on the importance of aggressive enforcement
actions; (iii) inconsistencies between state and EPA enforcement
policies; (iv) a lack of adequate staffing at the state's
regional boards to handle the large number of enforcement actions
assigned to them; (v) a lack of legal expertise at the local
agencies to pursue complex environmental cases; (vi) outside
interests which sometimes adversely affected enforcement actions;
and (vii) the state had not taken advantage of an enforcement
tool called "field citations".
In our review, we judgmentally selected 38 leaking tank sites to
review the status of enforcement actions. We concluded that
enforcement action appeared appropriate at only one site. For
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the other 37 sites, or 97 percent of those sampled, the
enforcement actions were determined to be inadequate as follows:
• Thirteen, or about one-third of the sites had no
enforcement action taken, although the leaks had been
reported for 2 to 11 years.
• For 19 sites, where clean-up-and abatement orders were
issued, the owner or operator had not complied with the
terms of the order and no enforcement actions to assess
penalties for noncompliance were taken. We calculated that
the minimum and maximum penalties which could have been
assessed for just 3 of the 19 sites ranged from $2.2 million
to $22.3 million.
• At five sites, where clean-up-and-abatement orders were
issued and penalties assessed, the $226,540 of penalties
were only a small fraction of the amounts that could have
been assessed. The penalties which could have been assessed
ranged from a minimum of about $1 million to a maximum of
$10.4 million. We do not believe that the penalties
assessed in these cases exceeded the cost of compliance,
thereby negating their effectiveness.
In view of the state's lack of an effective enforcement program,
the Region has the responsibility to either require improvements
or initiate appropriate enforcement actions on its own.
Region 9 Was Not Effectively Monitoring California's LUST Performance
The Region was not effectively monitoring the state's performance
under EPA's LUST program, and had not established an adequate
management system for determining progress being made to clean-up
LUST sites. The Region had not evaluated: (i) the use of about
$7.3 million, or 75 percent of the LUST CA funds used by
California between 1988 and 1990; (ii) the progress the state was
making cleaning up its leaking sites; or (iii) information
included in state generated clean-up status reports before
forwarding this information to EPA Headquarters. We concluded
that these conditions contributed to serious problems with the
state's LUST program. These problems included the need to
implement an effective state priority system for site clean-ups
and enforcement actions, as discussed in Chapters 2 and 3 of this
report. Weaknesses in the Region's monitoring and management
systems were attributed, in part, to the fact that the Region did
not include specific requirements in the state's LUST CAs for
performing critical activities in the areas of prioritizing site
clean-ups and enforcement.
We also determined that the state-generated information
transmitted by the Region to EPA Headquarters overstated the site
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clean-up progress being made in California. Since this
information was being used by EPA to make nationwide funding
decisions and to report the status of the LUST program to
Congress, it was important that the status information be
accurately reported.
State Program Was Not Moving Toward Timely Approval
The Region has not successfully used LUST CA funds as an
incentive to encourage California to obtain timely approval of
its state program. Although EPA has recognized a link between
LUST CA funds and the Underground Storage Tank (UST) regulatory
program, we believe that program approval could be used to
correct weaknesses in both programs. This is particularly true
since the Region has awarded about $15.8 million in LUST CA funds
to the state. However, we do not believe that the state has made
reasonable progress toward getting its state program approved.
Specifically, we found that: (i) although the Region planned to
incrementally approve each of the six required components of the
state's program, none of the components had been approved; (ii)
the state had not yet submitted for approval three of the
required program components, namely: the memorandum of agreement
with EPA; the state's demonstration that its enforcement
procedures were adequate; and a letter from the Governor
requesting program approval; and (iii) the state has requested
and received three time extensions to its deadline for submitting
a draft state program to the Region for approval. These
extensions have delayed submission of the draft program by more
than three years.
We concluded that the state had little financial incentive to
submit its program for approval, since the Region has not made
LUST CA funding contingent upon this approval and there were no
financial penalties for not having its program approved. The
most obvious adverse effect of this situation in the LUST program
is that the state's enforcement program was inadequate. As we
discussed in Chapter 3 of this report, this has led to extended
delays in initiating clean-up actions at leaking tank sites. We
also noted that the other states (Nevada, Arizona, and Hawaii) in
Region 9 do not yet have approved state programs.
RECOMMENDATIONS
Our detailed recommendations follow the findings, discussed in
Chapters 2 through 5. However, in summary, we are recommending
that the Region:
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• Require California to revise its priority system so that
the most environmentally threatening leaking tank sites are
given the highest priority as required by SARA.
• Monitor the quality and quantity of state enforcement
actions to assure that the enforcement program is effective
and being carried out according to EPA policy and guidance.
• Require that CA work plans address all key LUST program
activities, including a statewide priority system and
effective enforcement program. These activities should be
periodically evaluated by the Region.
• Make future LUST CA funding contingent upon the Region's
approval of California's state program.
A draft report was provided to the Region on August 27, 1992.
The Region responded to the draft report on September 25, 1992,
and an exit conference was held on September 29, 1992.
The Region provided the following overall comments:
...Because of the immense size of the LUST program in
California, and the limited resources available to
develop it, our short-term goal has been to assist the
State to continually improve the program, towards the
long-term goal of program approval. Many areas and
recommendations identified as opportunities for
improvement are ones that EPA and the State have
already recognized, and are consistent with directions
we have been embarking upon.
However, there are some recommendations we strongly
disagree with: ...use [of LUST] funding for state
program approval as an incentive - at this time this
would be counterproductive since California is moving
forward with state program approval and continuing to
build strong capability to implement the program;
and...refine the implementation of California's
priority system - we believe the priority system needs
refinement and consistent application, but not at a
statewide level.
The Region's detailed comments follow the recommendations in
Chapters 2 through 5.
VII
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PIG EVALUATION
The Region's comments were positive in recognizing the need for
improvements in the LUST program in California. However, we
continue to maintain that the implementation of the
recommendations in this report are necessary to have an effective
LUST program that meets the intent of SARA. In particular, a
statewide priority system is necessary because:
• Sixty-four (64) percent of the state's LUST sites were not
included in the geographic area covered by LUST CA funding.
In addition, a majority of the leaking tank sites identified
as affecting drinking water or groundwater were not
included.
• The requirements of SARA were not being fulfilled since
the LUST CA funds were not directed to those sites with the
greatest risk to human health and the environment.
We disagree with the Region that linking LUST CA funding to state
program approval would be counterproductive. The state has
extended its deadlines for state program approval three times,
resulting in a delay of the submission of a draft program by more
than three years. According to state personnel, there was little
financial incentive for the state to have its program approved by
the Region. They further added that "If EPA was to tie LUST
Trust Funds to obtaining state program approval, then the state
would seek to have its program approved."
In addition, guidance contained in OSWER Directive 9650.10
recommended linking LUST funding with state program approval, and
further stated "Regions should develop criteria to measure and
evaluate state progress. They should consider the degree of
progress in allocating Trust Fund monies to States."
Our complete evaluations of the Region's response to our
recommendations are included following the Region's comments to
each recommendation in Chapters 2 through 5.
viii
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CHAPTER]
INTRODUCTION
PURPOSE
As the United States boomed in the post-war years, producing
millions of cars and thousands of miles of roads to drive them
on, a nationwide network of service stations requiring
storage systems to fuel them sprang up. Millions of storage
tanks were placed underground.
This practice avoided dangers of
fire and explosion, but it also had
a disadvantage; it was hard to tell
when these underground storage tank
systems were leaking.
A well installed underground
storage tank system generally lasts
20 years or more. Over time,
leakage problems, usually due to
the slow corrosion of buried steel
tanks or piping, often develop.
EPA now estimates that as many as
40 percent of the approximately 2
million underground storage tanks
are leaking; many are leaking into
groundwater and hence, often times
drinking water.
Facts such as these led Congress to
set up a $500 million Trust Fund to
clean-up leaks from underground
storage tanks in 1986. In doing
so, Congress handed EPA the
enormous challenge of overseeing
the cleaning up of tens of
thousands of leaking tank sites.
Congress intended for EPA to play
an important leadership role in tank clean-ups by requiring it to
establish regulatory criteria. The state and local governments
would then carry out the clean-up program wherever possible.
California has reported the largest number of leaking tank sites
of any state. Because of the significant environmental risks
associated with leaking tank sites, and EPA's relatively new role
in this program, we performed an audit of the implementation of
the Leaking Underground Storage Tank (LUST) Program in
California. The purpose of the audit was to:
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in this program, we performed an audit of the implementation of
the Leaking Underground Storage Tank (LUST) Program in
California. The purpose of the audit was to:
• Determine the adequacy of the Region's and state's actions
to prioritize the clean-up of LUST sites;
• Evaluate the effectiveness of the Region's and state's
LUST related enforcement actions; and
• Evaluate the effectiveness of the Region's monitoring of
state's performance under LUST cooperative agreements (CAs).
BACKGROUND
Leaking underground storage tanks create human health and envi-
ronmental risks. According to the Director of Region 9's
Hazardous Waste Management Division:
Much public attention is paid to Superfund's toxic
dumps and hazardous waste sites, yet leaks from
underground storage tanks are more commonplace and can
be just as dangerous and costly.
As of December 31, 1991, California reported 16,491 confirmed
leaking tank sites. This was nearly double the number reported
by the state with the next highest number.
.i
Leaking tank sites frequently contaminate groundwater. In fact,
leaking underground tanks are one of the five leading sources of
groundwater contamination in the United States2. Groundwater is
the source of drinking water for half the United States, and, in
many areas, the only source. It is also used for irrigation,
livestock watering, and industrial uses. Leaking tank sites
usually contain petroleum, which is a known carcinogen. Other
adverse effects of contact with petroleum are nausea; skin, eye,
and throat irrigation; loss of reflexes; and liver and kidney
damage.
Laws And Regulations
Because of national problems with leaking underground tanks.
Congress amended the Resource Conservation and Recovery
Act (RCRA) in 1984 to regulate underground storage tanks. In
National Water Quality Inventory. 1990 Report to Congress, dated
March 1992.
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1988, the Federal rules for regulating tanks took effect. These
rules, promulgated in the Code of Federal Regulations (40 CFR 280
to 281), cover five key areas:
• Design and Construction: Underground storage tank systems
must be protected from corrosion.
• Leak Detection: Tanks must have leak detectors.
• Spill and Overfill: Systems must have devices to prevent
overfilling of the tank and catch basins to hold small
spills.
• Financial Responsibility: Tank owners must have insurance
or some other way of paying for potential clean-up costs.
• Clean-up: A leak or spill over 25 gallons must be
reported. Contaminated soils and groundwater must be
cleaned up.
Congress further addressed the need to clean-up leaking tank
sites when it passed the Superfund Amendments and Reauthorization
Act (SARA) in 1986. This act established a $500 million LUST
Trust Fund, paid for by a tax of 1/10 cent for each gallon of
gasoline.
The Trust Fund can be used for clean-ups of contaminated sites,
or for the states' administration of the program. According to
SARA, priority for clean-ups is to be given to those leaking
underground tanks that present the greatest threat to human
health and the environment. However, according to EPA, the Trust
Fund is intended to be a short term solution to the problem of
leaking tank sites. The long term solution is for states to have
tank regulatory programs that prevent leaking tanks from
threatening human health and the environment.
To fulfill its responsibilities under the 1986 SARA amendments,
EPA sets the nationwide minimum standards and oversees the
program for leaking tank site clean-ups, while allowing the
states to operate the site clean-up programs. To ensure the
necessary protection of the environment, state programs must (i)
be no less stringent than the Federal program; and (ii) provide
for adequate enforcement of tank regulations. If a state program
is not adequate, EPA may operate the program in that state.
Through SARA, EPA is able to offer states LUST Trust Fund monies
to operate the program. States do not actually clean-up a site
unless the owner or operator of a tank site cannot be found. In
most cases, states monitor the clean-up progress being made by
the tank owner or operator by ensuring site assessments, clean-up
plans, and disposal of contaminants is adequate.
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EPA Regions provide LUST Trust Funds to the states for the
program though CAs. These CAs include a work plan setting out
requirements for the state's clean-up program. From Fiscal Year
(FY) 1987 to 1991, EPA awarded about $214 million in Trust Funds
to the states. During that period, the Region awarded about $22
million to its four states, of which about $15.8 million, or 73
percent went to California, as shown below.
California Award
Cooperative Amount As
Agreement No. Of 12/91 Budget Period
L009450-01-0 $ 8,410,000 09/23/87 - 09/30/90
L009566-01-0 7.340.000 10/01/90 - 09/30/93
Total $15.750.000
The CA funds provided to California were budgeted by cost
categories, such as personnel, contractual, and indirect costs.
The largest cost category was the contractual area, since the
state LUST program under the CAs included delegating significant
responsibility to 21 counties under the Local Oversight Program
(LOP). Under the CAs, the state was tasked to:
• Manage contracts with counties in the LOP;
• Develop and manage a cost recovery process for costs
incurred overseeing clean-ups; and
• Provide technical assistance to the local agencies.
The state was not required to perform clean-ups, unless the owner
could not be found or is insolvent. About 75 percent of the
funds spent by the state were provided to counties for overseeing
clean-ups.
Under the terms of the CAs, the state was required to cost share
10 percent of the total allowable program costs. The state
contributed substantially more than 10 percent. From FY 1987 to
FY 1990, the state indicated it spent $14.8 million.
SCOPE AND METHODOLOGY
We performed this audit according to Government Auditing
Standards issued by the Comptroller General. Our field work was
conducted from August 1991 to June 1992. The scope of our work
was limited to EPA, Region 9 and LUST activities under the State
of California's CAs. The audit covered management procedures in
effect through June 1992.
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The state's LUST program is administered by the State Water
Resources Control Board (the state). The state operates with a
network of nine Regional Water Quality Control Boards (regional
boards) that cover different geographical areas of the state. We
selected the following three regional boards for review: the
Central Valley Regional
Leaking Tank Sites
By Regional Board
Board, the San Francisco
Bay Regional Board, and
the Los Angeles Regional
Board. The jurisdiction
of these regional boards
covered 11,734, or 71
percent, of the 16,491
leaking tank sites
reported by the state, as
shown by the chart. The
state also distributed
LUST funds to 21 Of the
58 counties in
California. We made
field visits to three of
the counties receiving.
LUST funds: San Joaquin
County, Los Angeles
County, and Ventura
County.
To accomplish our objectives we:
5,000
4,000
3,000
2,000
1,000
Regional Board
As of December 31,1991
• Reviewed applicable laws, regulations, directives; and
policies;
• Interviewed responsible Region 9, state, and local
government personnel; and
• Examined records maintained by Region 9, the state, and
local governments applicable to the administration of the
LUST program.
The records we examined were located at Region 9; the State Water
Resources Control Board; the State Regional Water Quality Control
Boards for the Central Valley, San Francisco Bay, and Los
Angeles; and selected local agencies (counties and cities) within
the geographic boundaries of the regional boards. Generally, the
scope of our review included reports and records prepared from
the inception of the state's program until December 1991. Some
subsequent records were also examined to follow-up on information
collected during prior periods.
The records we reviewed included:
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• Region 9's CAs with the state and the corresponding work
plans;
• Annual and semi-annual Region 9 performance evaluations of
the state's performance;
• EPA and state quarterly clean-up tank inventory and status
reports;
• State regional boards' clean-up inventory and status
reports; and
• Site-specific clean-up files located at the regional
boards and local governments.
Summary statistics were used to analyze the program whenever
possible. We also requested and received some special reports
from the state. These reports included: an aged listing of
leaking tanks over three years old which had not been closed;
financial information on LUST funds spent by the state, its
regional boards, and local agencies; and the categorization of
leaking tank sites (drinking water, groundwater, soil, and
undetermined) that were included in the state's LUST funded
inventory.
The leaking tank site files that we reviewed were judgmentally
selected. We selected the sites which we considered to have the
most serious types of leaks, that is, those affecting drinking
water and groundwater. However, other leaking tank site files
were also reviewed.
Internal Controls
We reviewed the significant internal controls associated with
Region 9's LUST program in the state including:
• The CAs with the state and associated work plans; and
• Region 9 annual and semi-annual performance evaluations of
the state's CA performance.
Our review of Region 9's LUST program in the state disclosed a
number of instances where internal controls needed improvement.
These are discussed in the Principal Findings section of the
Executive Summary and in Chapters 2 through 5 of this report.
Due to inherent limitations in any system of internal control,
errors or irregularities may occur and not be detected. However,
based on our review, nothing else came to our attention that
caused us to believe that the Region was not in compliance with
any other of the terms and conditions or applicable agreements,
laws, and regulations for those areas of the LUST program tested.
6
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The scope of our audit did not include a review of the costs
claimed by the state under its LUST program CAs. It also did not
include a review of the associated LUST financial controls
maintained by the Region and state. We did obtain unaudited
information from the state which showed that $9.7 million of LUST
funds were used under the CAs during FY 1988 through FY 1990.
Prior Audit Work
No prior audits have been performed on Region 9's LUST program.
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CHAPTER2
PRIORITY SYSTEM USED FOR LUST CLEAN-UPS
IN CALIFORNIA WAS UNACCEPTABLE
The priorities established by the state to use its LUST CA funds
did not fulfill the intent of the SARA that such funds be
directed to sites with the greatest risk to human health and the
environment. As a result, there was no assurance that the $7.3
million of LUST CA funds expended for overseeing leaking tank
site clean-up activities from FY 1988 to 1990 were directed
toward such high priority sites. Rather, the state used an
estimated $4.5 million of the funds to oversee lower priority
site clean-ups. In our opinion, the use of LUST CA funds for
lower priority work was contrary to the intent of SARA, and the
Region needs to require the state to direct its oversight
activities to clean-ups at high priority sites statewide. Also,
when LUST CA funds were used to oversee higher priority leaking
tank site clean-ups, they did not always appear to be used
effectively.
This condition was attributable to the following:
• The Region was not effectively monitoring the state's
performance under the LUST program;
• A workable priority system had not been established in
California;
• The state did not implement its priority system for LUST
CA funded clean-ups;
• The state distributed LUST CA funds for site clean-up to
only 21 of 58 counties in the state, rather than to high
priority sites on a statewide basis. Further, many of the
21 counties did not oversee site clean-ups in major cities
within their boundaries; and
• The state did not require the 21 counties to initiate site
clean-up efforts on the most hazardous, environmentally-
threatening leaking tank sites, including those affecting
drinking water.
BACKGROUND
SARA requires states to give priority attention to LUST site
clean-ups that pose the greatest threat to human health and the
environment. The purpose of a state priority system is to ensure
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that leaking tank sites addressed with LUST funds have the
greatest impact on protection of human health and the
environment. EPA's implementing guidance, the Office of Solid
Waste and Emergency Response (OSWER) Directive 9650.10, requires
states to establish and use a priority system in determining
which leaking tank sites to fund with LUST monies.
Oversight Of Leaking Tank Site Clean-Ups
In 1987, the Region signed its first LUST CA with California.
One of the main purposes of this and subsequent CAs was to
provide Federal funding for oversight of leaking tank site clean-
ups. Owners and operators of tanks are responsible for cleaning
up the pollutants from their leaking tanks. However, state and
EPA oversight is needed to make sure that:
• Environmental damage is minimized;
• The full extent of the pollution is diagnosed;
• The site clean-up work is done properly and timely; and
• The extracted pollutants are disposed of correctly.
About 75 percent of the CA funds the state used were earmarked
for site clean-up oversight. The state has distributed all of
the LUST CA funds for site clean-up oversight to 21 counties
under its Local Oversight Program (LOP). These 21 counties used
about $7.3 million from FY 1988 to FY 1990. No CA funding was
provided for oversight of clean-ups for sites outside the
geographic areas of these 21 counties. The remaining 37 counties
were, therefore, not funded.
Role Of Regional Boards In The LUST Program
The CA recipient in California, the State Water Resources Control
Board, has nine Regional Water Quality Control Boards (regional
boards). The only CA funds received by the regional boards are
earmarked for technical assistance. The regional boards also
oversee leaking tank site clean-ups when local agencies are
unable, or unwilling, to do so. It should be noted that the
regional boards did not receive any CA funds for site oversight.
In September 1991, we requested information from the Region
concerning the top priority LUST leaking tank sites in
California. The Region advised us it did not know which sites
had the highest priority. It indicated that this information was
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maintained by the state. As we discuss in detail in Chapter 4 of
this report, we believe that the Region's lack of such critical
information about the LUST program was a major contributor to the
priority system conditions reported in this chapter.
STATE PRIORITY SYSTEM WAS UNWORKABLE AND WAS NOT
BEING USED
We concluded that the state's established priority system for
cleaning up leaking tank sites was not developed in a manner that
assured attention to those sites most environmentally threatening
to groundwater. Also, as established, the system places a
relatively high priority on cleaning up leaks from non-petroleum
sites. Such sites are outside the scope of the LUST program.
Further, we found that the priority system established by the
state was not actually being used.
OSWER Directive 9650.10 reguires states to establish and use a
priority system in determining which leaking tank site clean-ups
to fund. In order to assure LUST funds are used effectively,
SARA requires Federal funds to be applied to the highest priority
leaking tank sites (those that pose the greatest threat to human
health and the environment).
State Clean-TJp Priority System Was Inadequate
SARA requires leaking tank sites to be cleaned up based on
priorities, as follows:
The (EPA) Administrator (or State)...will give priority
in undertaking corrective actions under this
subsection, and in issuing orders requiring owners or
operators to undertake such actions, to releases of
petroleum from underground storage tanks which pose the
greatest threat to human health and the environment.
While OSWER Directive 9650.10 provides that every leaking tank
site does not have to be ranked, it does require that LUST funds
be used on the highest priority leaking tank sites within a
state.
California's CAs contained the following state priority clean-up
requirements:
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Priority Type of Pollution
1 Groundwater pollution with cancer-causing
chemicals that affects drinking water or
other beneficial uses, such as crop
irrigation. (Underscore added.)
2 Groundwater pollution by non-carcinocrenic
chemicals that affects beneficial uses.
(Underscore added.)
3 Groundwater pollution not affecting
beneficial uses.
4 No groundwater pollution, but groundwater
threatened if not cleaned up.
In our opinion, the Priority 1 area is too large to be
effectively used for directing LUST CA funds. A top priority
based on beneficial uses does not readily distinguish one site
from another due to the large number of sites affected.
EPA guidance provides additional factors to assist in setting
priority rankings. OSWER Directive 9650.10 provides that states
may address SARA'S "threat to human health and the environment"
criteria by considering such factors as: the total population
exposed; proportion of the population affected in a community;
the number of drinking water wells affected; and impact on
sensitive populations or environmental areas. We believe that
the Region should require the state to incorporate the above
OSWER guidance into its priority system.
The Priority 2 area is inappropriate under the LUST program.
LUST CA funds are only to be used for petroleum leaks which, by
definition, are considered carcinogenic. Although we did not
identify any non-carcinogenic site clean-up activities funded
with LUST money, the priority system should be changed to make
sure the LUST funds are not improperly used.
Priority System Not Used
While the state had established a priority system, it was not
being used to direct the use of LUST CA funds because:
• CAS did not require ranking leaking tank sites on a
statewide basis; and
• The state had not actually assigned a priority to all of
its identified leaking tank sites.
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As a result, not all leaking tank sites affecting drinking water
(Priority 1 sites) were being actively cleaned up. We found that
48 of the 69 leaking tank sites identified as affecting drinking
water were not being cleaned up timely. As illustrated in the
following chart, the leaks at these 48 tank sites had been known
for anywhere from 3 to 14 years.
Tank Leaks Into Drinking Water Not Cleaned Up
Over 3 Years Old
Number of Sites
20
15
10
1977 1983 1984 1985 1986 1987 1988
Year Leak Reported
All Leaking Tank Sites Not In Priority System. Only 21 of the 58
counties in California were receiving LUST CA funds. These were
the only local agencies under the CAs required to follow the
state's priority system. However, they had not implemented the
state's priority system. In addition, leaking tank sites in the
other 37 counties were not required to be ranked using the
state's priority system.
Priority Ranking Not Included In State's Site Data Base. While
the state had a data base of leaking tank sites, we determined
that sites in its data base were not assigned a ranking following
the priority system. As summarized below, the state's data base
merely identified whether a leak affected drinking water,
groundwater, soil, or had an "undetermined" effect on the
groundwater.
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NUMBER OF LEAKING TANK SITES BY TYPE OF EFFECT
As of December 31, 1991
Leak Effect Number of Sites Percent
Drinking Water 69 0.4
Groundwater 6,317 38.3
Soil 3,924 23.8
Undetermined 6,181 37.5
Total 16.491 100.0
The site designation used in the state's data base does not
readily equate to a particular priority ranking. For example,
the 6,317 leaking tank sites designated as affecting groundwater
cannot be assumed to be Priority 1 because it is unknown whether
they affect a beneficial use. Further, the data base designation
"Undetermined" did not identify which, if any, of the 6,181 sites
affect groundwater.
CALIFORNIA WAS DIRECTING ITS EFFORTS TO LOWER
PRIORITY SITES
We believe that a significant portion of the LUST CA funds
expended by local agencies for oversight activities were directed
at lower priority sites (those only impacting soil or those with
an undetermined affect). In our opinion, using CA funds for
lower priority sites violates the intent of SARA, which requires
that LUST funds be directed to the sites with the greatest threat
to human health and the environment (i.e. Priority 1 sites).
We estimated that about $4.5 of the $7.3 million in LUST CA funds
expended by California were used to fund lower priority sites;
while higher priority sites statewide remained unfunded. We
based our estimate on the ratio of low to high priority sites
within the 21 counties receiving LUST CA funds. It is recognized
that this is imprecise, but it represented the only information
readily available that we could reasonably rely on.
LUST CA Funds Distributed On A Geographic Basis
One of the principal reasons that the oversight activities were
not being directed to the highest priority sites was because the
state distributed LUST CA funds to only selected geographic areas
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(21 counties), rather than throughout the state based on
environmental priorities.
Under California's LOP, the state allocated CA funds on a
geographic basis, which covered only 21 of the 58 California
counties (36 percent of the sites) as shown on the next page.
These 21 counties had agreements with an additional 16 cities to
oversee leaking tank site clean-ups in their geographic areas.
In making the funding allocations, the state apparently did not
consider the adverse affect this would have on directing CA funds
to higher priority sites on a statewide basis.
Cities Not Included In Geographic Area. Many of the 21 counties
under the LOP did not have oversight responsibility for the
entire geographic area within their county because cities within
their boundaries were excluded. For example, Los Angeles County
received LUST CA funding under the state's LOP. However the City
of Los Angeles was excluded from the county's geographic area,
and there was no funding of oversight for sites within the City.
Similarly, Orange County received CA funds under the LOP, but
sites within the City of Anaheim were excluded. This condition
further restricted the direction of CA funds to the highest
priority sites. A list of the 21 funded counties and the cities
located in their boundaries which were excluded from these
counties' programs is detailed in Appendix I of this report.
Other Local Agencies Excluded From LUST CA Funding. There were
80 additional agencies in California, which were not included in
the state's LOP, and therefore, did not receive any LUST CA
funding for clean-up oversight. This included 34 additional
cities not under the jurisdiction of the 21 funded counties; 37
counties; and 9 state regional boards. These 80 agencies had
10,557 leaking tank sites under their jurisdiction according to
the state's data base, including 4,149 sites affecting
groundwater.
No State Plans For Additional Local Agencies In The LOP.
According to state personnel, the state has no immediate plans to
allocate LUST CA funds to more than the existing 21 counties.
The state informed us there was insufficient funding to franchise
the program to all local agencies. Also, state personnel told us
some local agencies did not want to join the LOP. We believe
these statements, provide further reasons why the priority of a
site, rather than geographic locations within the state, should
be the basis for using the LUST CA funds in California.
LOP County Sites Not Prioritized
The 21 counties receiving LUST CA funds were not directing their
oversight efforts to sites with the greatest risk to human health
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COUNTIBS RECEIVING LUST FUNDS
Oversight Responsibilities
For Cleanups
Shaded counties are in the
Local Oversight Program and
received LUST funds.
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and the environment. As previously noted, the state's data base
classified leaking tank sites into four categories based on the
effect of the leak: drinking water, groundwater, soil, and
undetermined. Although these four categories do not readily
equate to the state's priority system for determining sites most
environmentally threatening, we determined that as of December
31, 1991, the sites under the jurisdiction of these 21 counties
included sites that affected only soil or sites with an
undetermined effect. This was about 62 percent of the counties'
sites. Under the state's priority system, these sites would not
warrant a Priority 1 classification. In our opinion, the use of
LUST CA funds for oversight activities on such sites violates the
intent of SARA. As previously discussed, we estimate that $4.5
million of CA funds were used on oversight activities at these
lower priority sites. ;
LUST-Funded Sites
Compared to Other Sites
Ground/Drinking Water
2,237 Sites
Ground/Drinking Water
4,149 Sites
Undetermin
1,270 Siti
Soil
2,427 Sites
Undetermine
4,911 Sites
Soil
,497 Sites
LUST-Funded Sites Sites Not Receiving LUST Funds
In addition to our estimate that $4.5 million of LUST CA funds
were directed to lower priority sites, we are also concerned that
a portion of the $2.8 million balance of LUST CA funds provided
under the LOP were not spent effectively. For example, San Mateo
County was aware of a leaking tank site that threatened drinking
water as early as February 1985. In 1990, the county began using
LUST CA funds to oversee the clean-up of this site. However, as
of January 1992, seven years after the leak was first reported,
and almost two years after beginning to use LUST CA funds for
oversight, the owner had not provided the county information on
the extent of the pollution problem or submitted a work plan for
cleaning up the site. In January 1992, the county referred the
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site to the regional board for action. While we were unable to
ascertain the total CA funds expended by the County for its
oversight activities at the site, we did determine that the
county had incurred more than $150,000 for all of its oversight
efforts through December 31, 1990. Yet, for at least one site,
the expenditures appear to have accomplished little in getting
the site cleaned up timely.
County Referrals To Regional Boards
We found that the state allowed counties receiving LUST CA funds
to transfer the oversight responsibility of a site, at any time,
to the regional board in their geographic area. This resulted in
a significant number of high priority sites being excluded from
LUST CA funding because the regional boards did not receive such
funds under the CAs. This practice also contributed to the
counties use of LUST CA funding to oversee the lower priority
sites.
We found local agencies tended to refer oversight of leaking tank
sites that posed the most environmental threat to regional boards
because these clean-ups were the most difficult, costly, and time
consuming to manage. Generally, these sites affected drinking
water or groundwater.
To illustrate the transferring of high priority sites to the
regional boards, the following was determined from our review in
Los Angeles County and in seven San Francisco Bay area counties
under the San Francisco Bay Regional Board which received LUST
funds. These counties included Santa Clara, Alameda, Sonoma, San
Francisco, San Mateo, Solano, and Napa.
Los Angeles County. Los Angeles County, one of the largest
agencies in the CA funded LOP, spent $1.7 million of CA funds
received during FY 1988 through FY 1990. The county advised us
that it preferred to perform its oversight activities on lower
priority soil sites, since they could be dealt with more quickly.
The county usually transferred the sites affecting groundwater to
the regional board for clean-up oversight. It should be noted
that 74 percent of the 1,027 sites overseen by the county
pertained to leaking tank sites that affected only the soil. We
believe that this practice violated the intent of SARA, which
requires LUST funds to be directed to sites with the greatest
threat to human health and the environment.
San Francisco Bay Area. The seven Bay area counties used $1.6
million of CA funds, received during FY 1988 through FY 1990.
During this period, these counties referred oversight of 226
sites affecting groundwater (generally higher priority sites) to
the San Francisco Regional Board. In the meantime, 208 leaking
tank sites affecting only the soil were retained.
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Regional Boards Received No LUST CA Funds To Oversee Sites
The state did not provide the regional boards any LUST CA funds
to cover their oversight activities associated with leaking tank
site clean-ups. In our view, this resulted in LUST oversight
funding being directed away from higher priority sites. The
regional boards had oversight responsibility for 43 percent of
all leaking tank site clean-ups, and for about 57 percent of the
sites affecting drinking water and groundwater in the state. The
following chart shows that distribution of Federal LUST oversight
funds from FY 1988 to 1990 compared to the numbers of sites
reported as of December 31, 1991:
LUST FUNDS FOR CLEANUP OVERSIGHT; FY 1988 to FY 1990
No. Of
Leaking Tank Average
Federal Sites as Funds Available
No- °f Funds of 12/31/91 Per Site
Agencies (a) (b) (a) -s- (b)
21 LOP Counties3 $7.3 5^934 $1,230
(Plus 16 Cities)
Other Local 0 3,393 0
Agencies-70
Regional 0 7,164 0
Boards-9
As illustrated above, the regional boards and the local agencies
not in the LOP received no LUST CA funds from FY 1988 to FY 1990.
During the same period, the 21 counties in the LUST funded LOP
used about $7.3 million in Federal funds. Thus, those counties
in the LOP expended an average of about $1,230 per site in LUST
CA funds over the three year period. However, the regional
boards, which had the oversight for the largest number of leaking
tank sites and generally the highest priority sites did not
receive any LUST CA funds during the period.
Reasons Whv Regional Boards Have So Many Sites. As previously
discussed, the counties with LUST CA funding were transferring
leaking tank sites affecting drinking water and groundwater to
Includes an additional 16 cities that have agreements to allow the
counties perform oversight for the leaking tank sites within the city limits.
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the regional boards, while the counties directed much of the
oversight activities to sites affecting only soil. This
condition contributed to a substantial work load at the regional
boards.
The regional boards' work loads were further increased by the
fact that they performed clean-up oversight activities for
leaking tank sites referred to them by the 37 counties that did
not receive LUST CA funds. We estimated that as of December 31,
1991, the regional boards had oversight responsibility for about
1,900 tank sites within these counties. These referrals
represented about 72 percent of the total leaking tank sites
within these counties. The extent of referrals was illustra'ted
by the following examples:
• Marin County transferred 130 of 149, or 87 percent, of its
leaking tank sites to a regional board for oversight.
• El Dorado County transferred all of its 71 leaking tank
sites to a regional board.
Backlog At The Regional Boards. There was a large backlog of
leaking tank sites awaiting clean-up oversight action at the
regional boards. Our review of the San Francisco Bay Regional
Board and the Los Angeles Regional Board records showed that no
oversight action had been initiated in 77 percent of the 2,817
leaking tank sites affecting drinking water or groundwater within
their jurisdiction. These two boards were responsible for 54
percent of the leaking tank sites under the jurisdiction of
regional boards.
Regional Boards Not Using Priorities
We reviewed three of the state's nine regional boards to assess
whether they had assigned priorities to the leaking tank sites
within their geographic areas. The review included the San
Francisco Bay Regional Board, the Los Angeles Regional Board, and
the Central Valley Regional Board. We concluded that the San
Francisco Bay and Central Valley Regional Boards were not
directing adequate oversight to cleaning up the most
environmentally threatening sites. The Los Angeles Regional
Board was doing a better job of directing its oversight
activities to higher priority sites; but we identified
opportunities for improvement.
San Francisco Bay Regional Board. This regional board had
established its own priority system for leaking tank sites. The
board was assigning its highest priority code to sites where a
"bubble" of fuel (free product) was found floating on
groundwater. We concluded the regional board's priority system
was inconsistent with the state's priority system. Under the
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state's priority system, the highest priority was to be given to
groundwater pollution that affected beneficial uses, regardless
of whether there was free product, or the fuel had dissolved into
the groundwater.
Not withstanding the appropriateness of the regional board's
priority system, we also found that the board had not initiated
any oversight action on 311 of the 321 clean-up sites, or 97
percent, to which it had given a high priority designation. For
example, in February 1990, a leak was reported at a site in
Redwood City that affected groundwater. At that time, the owner
reported a preliminary assessment was underway. Although the
regional board had given this site its highest priority code, it
did not take any action on this site. A February 1992 regional
report showed that the site had not been cleaned up, and that a
clean-up was not underway.
The regional board also had jurisdiction for another 728 sites
that affected groundwater, but which had not been given a high
priority code under its system. None of these sites were being
worked on. However, we noted the board was overseeing clean-up
action on five low priority sites that affected only the soil,
and 41 other sites where an effect on groundwater had not been
confirmed.
Central Valley Regional Board. We found that oversight of high
priority leaking tank sites affecting drinking water needed
improvement at the Central Valley Regional Board. Our review
disclosed that the regional board was overseeing the clean-up of
only two of the seven sites affecting drinking water. The case
file for another site was incomplete and we were unable to
determine its status. With respect to the four other high
priority cases, we found that clean-up action had not been
started because, either the owners claimed they did not have
sufficient funds; or the regional board had not taken prompt
action to initiate oversight activities. We consider such delays
involving drinking water sites a significant human health risk,
since the existence of leaking tanks at these sites have been
known for periods of up to seven years. The results of our
review of two of the four sites without any clean-up action are
discussed as follows.
Vacaville. A leaking tank at a gas station was discovered in
March 1988, and was found to be polluting a domestic well used
for drinking water. Our review of the case file showed the owner
had not responded to a nearly 2-year old request for a final
clean-up plan. In this case, the regional board had requested a
final clean-up plan from the owner of the site by May 1990.
However, as of February 1992, nearly two years later, there was
no evidence of further communication to ascertain why the plan
had not been received. Since leaking tank sites which affect
drinking water are the highest priority within the state, it is
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difficult to understand why no action was taken on this site in
the past two years.
Sonora. This case pertained to a gas station which had leaking
tanks that polluted two drinking water wells. The leaking tanks
were discovered in June 1985. Our review of the case file showed
that no action had been taken on this case since it was referred
to the regional board in January 1989, over three years ago.
We brought these sites to the attention of regional board
personnel, who stated that the sites should have been worked on.
However, they informed us that they gave on-going clean-up-and-
abatement orders (enforcement actions) a higher priority for the
use of their limited resources. While the board's comments are
acknowledged, we believe that the state has a responsibility
under the CAs to direct resources to the leaking tank sites
affecting drinking water.
Los Angeles Regional Board. The. Dos Angeles Regional Board was
overseeing clean-ups at 587 high priority groundwater sites and
232 lower priority leaking tank sites (those affecting soil or
where an affect on the groundwater had not been confirmed). It
also had 367 higher priority sites that affected groundwater,
which it classified as "inactive", since there was no oversight
activity or clean-up activity.
We attempted to review two of the oldest "inactive" groundwater
affected sites during our visit to the regional board in March
1992. Both of these leaking tank sites had been identified for
more than eight years. One was reported in 1982 and the other in
1983. Regional board personnel attempted to locate the two case
files, but were unable to find them. They indicated that the
files had been lost during an office move in 1989. Without these
files, the regional board did not know the extent of the
pollution problem or any other information relating to the site.
It, therefore, did not know if these sites were properly
classified under its system, or if the site was posing a danger
to human health and the environment.
SUMMARY
As discussed in this chapter of our report, the state's LUST
program has exhibited a general lack of attention to the
oversight of leaking tank sites with the most potential for
adversely affecting human health and the environment. This has
resulted in an estimated $4.5 million of California's LUST CA
funds being used for the oversight of lower priority clean-ups.
With respect to the LUST program, SARA provides that:
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The Administrator (or a State...) shall give priority
in undertaking corrective actions under this
subsection, and in issuing orders requiring owners or
operators to undertake such actions to releases of
petroleum from underground storage tanks which pose the
greatest threat to human health and the environment."
The Region needs to take several actions discussed in the
recommendations below, to improve the state's program so that it
will comply with the intent of SARA.
RECOMMENDATIONS
We recommend that the Regional Administrator:
1. Require California to revise its priority system to comply
with the intent of the SARA by assuring that:
a. Additional ranking criteria are used to identify the
most environmentally threatening tank sites affecting
groundwater with a beneficial use;
b. Non-LUST sites are excluded from the priority system;
and
c. The priority system is applied uniformly on a statewide
basis.
2. Require California to:
a. Assign its priority code to all leaking tank sites in
the state's data base. This should include those sites
currently classified "undetermined".
b. Direct LUST CA funds to regional boards for oversight
clean-up activities at higher priority sites on a statewide
basis.
3. Limit the use of future LUST CA funds for oversight
activities to the highest priority sites on a statewide basis.
4. Periodically review the state performance under the LUST
program to assure that it has effectively implemented its state
priority system.
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Regional Response. The Region provided the following comments on
the finding:
Overall Comments. The Region responded that:
We agree that the application of the State priority
system should be refined and more vigorously applied.
We are currently discussing with the State how to
better oversee the implementation of the priority
system.
We currently believe that the statewide inconsistency
in applying the priority system is more crucial to the
LUST program, and we will work with the State to ensure
that this is addressed.
Regional Response To Recommendation 1. The Region generally
disagreed with this recommendation, and commented that the state
uses a priority system that meets the needs of the Federal
requirements. Regarding the need to use additional ranking
criteria as recommended in recommendation l.a., the Region said:
The State of California currently has and uses a
priority system to guide local decisions, which meets
the needs of the Federal requirements. OSWER Guidance
Directive 9650.10 states that States must have a
priority system for addressing UST petroleum release
sites which incorporate two priorities: 'releases
which pose the greatest threat to human health and the
environment; and sites where the State cannot identify
a solvent owner or operator of the tank who will
undertake action properly.'
California has developed this priority system to
clearly identify groundwater pollution with cancer-
causing chemicals as the top priority. The top 3
priorities, in fact, discuss groundwater pollution, as
the IG has noted. The top priority is large because
the universe of sites in the State is enormous, and a
number of those sites impact groundwater. We agree
that the priority system should be refined, but at the
local level where it can be applied to hydrogeologic
basins or other geographic areas where it makes the
most environmental sense.
With respect to recommendation l.b. concerning the exclusion of
non-LUST sites from the priority system, the Region noted:
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Federal LUST funds are not applied to non-petroleum
tanks, therefore we feel this recommendation is
inappropriate. We should not dictate the priorities
for the States broader universe. Many of the
facilities captured under the State program also
represent a significant potential or current threat to
public health and the environment.
The Region did not agree with recommendation I.e. concerning the
application of a priority system on a statewide basis, and
responded that:
We agree that the California priority system needs to
be uniformly and more consistently applied, but we
believe that it should be implemented at a local level.
There should be adequate protection of human health and
the environment by each local agency or Regional Water
Quality Control Board ranking their sites and
addressing the highest priorities first. This can more
sensitively take into account vulnerable aquifers,
hydrogeological differences, and other variables.
By funding the local agencies to oversee LUST cleanups
we are not only ensuring the sites are being
prioritized and cleaned up, but we are investing in
capabilities of the local agencies to deal with future
LUST sites. Funding this effort must be balances with
the need to build capability at the local level.
Federal dollars are 23% of the overall amount which
goes to fund the LUST program and oversight by the
State. The remaining 77% of the program is funded by
the State, who must balance local needs with an attempt
to ensure consistent application of the priority
system, and these funds must be applied to other State
priorities as well. We must balance the requirements
of the Federal regulations with the immediate needs of
the State and local agencies responding to leaking
tanks. While will continue to encourage the State to
focus on cleaning up groundwater contained by leaking
underground tank sites, we also appreciate the sound
environmental decision-making that has resulted in
cleanups of soil contaminated sites which pose current
or potential health threats.
Many contaminated soil sites present a high risk in
areas where there is high population density, or where
the proximity of the contaminates site to the public
makes it a health threat. In addition, where the
responsible party of a soil contaminated site is ready
and willing to undertake immediate remediation,
agencies have an obligation, and have generally
25
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committed the resources to oversee this action. In
these cases, it costs less to oversee cleanup while
achieving an immediate environmental benefit.
Furthermore, many soil contaminates sites pose
potential groundwater threats were contamination is
close to the aquifer.
We recommend requiring the State to submit a strategy
to ensure consistent application of the priority
system. We will review it to ensure it is complete and
address our concerns. Finally, we will review the
effectiveness of the effort, and adjust future work
plans accordingly.
OIG Evaluation. We disagree with the Region's comment that the
state's priority system meets the Federal LUST program
requirements. According to OSWER Directive 9650.10:
The purpose of the State priority system requirement is
to ensure that sites addressed with Trust Fund monies
provide the greatest impact on protection of human
health and the environment... States may address the
'threat to human health and environment' criteria by
considering factors such as total population exposed,
proportion of population affected in a community,
number of drinking water wells contaminated, proximity
to a major aquifer, and impact on sensitive populations
or environmental areas.
The state's top priority category, groundwater affecting
beneficial uses, was too large to be effectively used for
directing funds. There were about 6,300 leaking tank sites that
affected groundwater and, potentially, a beneficial use.
Clearly, each of these sites did not have an equal impact on
human health and the environment. Additional criteria, as
recommended by OSWER, are needed to prioritize sites and provide
a basis for identifying a manageable number of top priority
sites. Hydrogeologic basins and other reasonable geographic
criteria can be included in the State's priority system.
A recent study by the state's Office of Program Evaluation, in
July 1992, agreed that the state's priority system was
inadequate. The study concluded that:
The tanks program does not uniformly address the most
important water quality sites first, despite several
stabs at priority policies. In 1987, the State Board
adopted Resolution 87-73...While it provided a good
start, it did not offer a realistic State approach nor
a specific scheme for a site by site evaluation; it
appears largely ignored.
26
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Regarding the Region's comments to recommendation l.a., we do not
agree that the refinement of priorities should be left to local
agencies. The local agencies would hardly be an unbiased source
to establish priorities in view of political pressures, economic
constraints, and other restrictions. Our position was shared by
the state^s Office of Program Evaluation which found that local
agencies in the Local Oversight Program (LOP) thwarted the
state's priority system. According to its July 16, 1992
memorandum:
With informal agreement by the State Board, agencies
entering into the LOP often started with and pursue
'easier' soil cases. No surface or ground water
priority scheme is identified in the past or current
LOP contracts. This has created a situation in which
LOPs currently handle a much greater...percentage of
soil cases than ground water cases...When LOPs request
technical assistance, site review, closure letters or
help with enforcement, the Regional Boards are drawn
away from higher priority water quality sites.
Given limited resources, most Regional Boards and LOPs
have chosen to concentrate on sites such as these where
they will have to spend the smallest dollar for the
greatest site progress...This practice does not
necessarily or systematically address the greatest
water quality need.
In regard to recommendation l.b., the Region's response did not
adequately address our recommended actions. The point raised by
the recommendation was that the state's priority system contained
a priority which was not appropriate for determining which sites
Federal funds could be applied. While the state can use any
priority system it wishes for state funds, the use of Federal
funds must be consistent with Federal priority criteria.
With respect to recommendation I.e., the Region again reiterated
that the priority system should be implemented at the local
level. We do not agree with this approach. In order to meet the
requirements of SARA, the most environmentally threatening sites
must be identified on a statewide basis. Federal funds can only
be applied to the most environmentally threatening sites. There
should be a consistent, verifiable basis for identifying these
high-priority sites on a statewide basis. The local agencies
should not be allowed to choose the lower priority sites for the
use of Federal funds.
Further, by limiting funding for clean-up oversight to only 21
counties, the Region has excluded a majority of the stated high-
priority sites from Federal funding. In our opinion, this
funding practice did not comply with the intent of SARA.
Certainly, the state can use its own monies to fund certain local
27
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agency programs and not others. However, the state should not
have the prerogative to limit Federal funding to selected
geographic areas, without regard to environmental priority.
We also do not agree that the use of Federal funds to clean-up
leaks that affect only soil is justified under the state's
current priority system. Under the state's priority system,
leaking tank sites that affect only soil have the lowest priority
system and risk to the environment. Further, we identified no
additional criteria being applied by local agencies to justify
the use of Federal funds on soil sites. Obviously, when Federal
funds are spent to oversee soil clean-ups, these funds are
unavailable for groundwater and drinking water clean-ups. We
share the Region's concerns that some soil contamination problems
may be significant. However, the Region will have to work with
the state to develop a priority system which addresses these
types of problems.
We also acknowledge the importance of developing state and local
clean-up programs. However, SARA clearly allows states to use
Federal funds on only high priority sites. The Region also
commented that the state funds 77 percent of the LUST program,
while EPA's funding only represented 23 percent. While we agree
that this was an accurate description of funding at the early
stages of the LUST program, by FY 1991 the EPA share of the LUST
funding had exceeded the state contribution.
We concur with the Region's efforts to require the state to
submit a strategy to ensure consistent application of a priority
system. However, it remains our position that this priority
system must: (i) include additional ranking criteria; and (ii)
rank all sites statewide. Further, the Region needs to ensure
that Federal LUST funds are used only on the top priority sites.
Regional Response To Recommendation 2. The Region did not fully
respond to recommendation 2.a. which provided for the assignment
of a priority code for every site. The Region stated:
We will work with the State in developing a plan and
schedule to prioritize and place priority codes on the
undetermined sites, as the information is made
available from responsible parties. It will take
resources to review responsible party actions who will
do site assessments and characterize the extent of the
contamination adequately, and for the State to assign
codes to the sites.
Regarding recommendation 2.b., which provided for the Region to
fund the state regional boards, the Region disagreed and
commented that:
28
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We recognize the need for additional funding to the
Regional Boards, and have been increasing the amount of
Federal funds being directed to them. For FY 93, we
have increased the LUST funding incrementally over FY
92 to the Regional Boards, as has the State. In
addition, for FY 93 the State is committing $2.8
million to the Regional boards from their state general
fund for oversight.
We recommend that we assess the effectiveness of
increasing the funding going to Regional Board at the
FY 93 mid-year, and determine at that time whether
other steps need to be taken to ensure adequate
oversight and response at the Regional Board. For
instance, we will request that the Regional Boards
provide additional information regarding the use of
funds.
OIG Evaluation. Regarding the assignment of priorities, the
Region did not address the need to prioritize sites, other than
those categorized as undetermined. Further, the Region did not
agree to assign priorities on a statewide basis.
As noted in our previous evaluation, the state's top priority
category of groundwater affecting beneficial uses was too large
to effectively direct the use of funds. There were about 6,300
leaking tank sites that affected groundwater, and potentially
beneficial uses. Clearly, each of these sites did not have an
equal impact on human health or the environment. In our opinion,
refined priorities need to be assigned on a statewide basis to
all sites.
With respect to recommendation 2.b., we disagree with the
Region's implication that the oversight funds provided to the
regional boards have increased. To the contrary, the regional
boards have been provided no Federal funds for clean-up
oversight, even though they are responsible for 1,230 more sites,
or 21 percent, than counties receiving Federal funds. Our
concerns were shared by the state Office of Program Evaluation
which commented that: "Program resources do not match the
overall workload at the LOP [Local Oversight Program counties]
vs. the regional board. Less work and more money is at the
LOPs."
The Federal funding currently provided to the regional boards are
only for technical advice to local agencies. Again, it remains
our position that Federal funding for clean-up oversight must be
based on the priority of the cases being worked on, and not
whether or not an agency is in the state's Local Oversight
Program.
29
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Regional Response To Recommendation 3. The Region did not agree
that LUST funding should be limited to the high-priority sites on
a statewide basis and said:
...Limiting the use of LUST funds would effectively
eliminate the Local Oversight Program, which was
instituted because of the size of the California
universe [which] made State site-specific oversight
inappropriate and not practicable. Some local agencies
do not have on-site technical staff to work on
groundwater sites - eliminating funding could in effect
limit further work on contaminated groundwater sites.
As discussed earlier, soil contaminated sites often
have current or potential public health and
environmental impacts, either through soil
contamination itself or through impacts on the
groundwater, and these are important to address.
To follow up on the IG's recommendation regarding
priorities, we will request a strategy to address
consistency in application of the State priority
system, and use or mid- and end-of-the-year reviews to
examine progress.
OIG Evaluation. The intent of our recommendation was not to
eliminate the Local Oversight Program. We do believe that the
agencies in the state's Local Oversight Program should not be
receiving Federal funds for low-priority sites. SARA requires
that LUST funds be spent on the sites that have the greatest
threat on human health and the environment. OSWER Directive
9650.10 also states that the priority system should function on a
statewide basis:
The priority system or scheme should be used as a
screening device to assure that sites considered to be
addressed with Trust Fund monies are within the higher
priority classes established by the State. (Emphasis
added.)
The 21 counties in the Local Oversight Program should only
receive LUST funds commensurate with the workload of high-
priority sites being managed. Since they were responsible for
only 36 percent of all sites, they should not receive 100 percent
of the Federal LUST oversight funds. Other sites in the state
should have equal opportunity for Federal LUST oversight funding,
commensurate with their priority.
We also do not agree that lower priority soil sites should be
Federally funded at the expense of higher priority sites within
the state. The state can use its own funds to develop local
30
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agency technical expertise on lower priority soil sites.
However, in our opinion, this option is not available for Federal
funds.
We recognize that some counties do not have the capability to
oversee complex water contaminated sites. In these instances, it
was appropriate to provide Federal funding to the activity that
was overseeing the clean-up, namely the regional board.
Regional Response To Recommendation 4. The Region agreed to the
recommendation and stated:
We will use mid-year and end-of-the-year reviews, in
addition to overall accounting, to focus on the
implementation of the State's priority system by
qualitatively examining the priorities of the LUST
clean-ups completed and mitigated. We will also use
QA/QC to determine if the priority system is effective.
OIG Evaluation, The Region's response addressed clean-ups that
have been completed and mitigated. It did not consider the vast
majority of the sites that have not been cleaned up. According
to the state's Office of Program Evaluation study:
Increasing caseload paired with resource intensive
oversight has swamped the Regional Boards and LOPs.
83% of the currently known tank leak sites have not
been closed. Some regional boards have boxes of
unreviewed, backlogged sites.
The time to ensure that a priority system is effective is before
funds are provided to the sites, not after. The Region needs to
determine if all sites receiving Federal funding are of the
highest priority, regardless of the status of the site. Further,
the Region should ensure high-priority sites are not being
ignored while lower priority sites are receiving LUST-funded
oversight.
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32
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CHAPTERS
CALIFORNIA'S LUST ENFORCEMENT PROGRAM
WAS INEFFECTIVE
The Region has allowed an ineffective LUST enforcement program to
exist within the state. During FY 1988 through FY 1991, the
state reported that it expended $1.6 million in LUST CA funds to
enforce clean-ups at leaking tank sites. However, the Region did
not require the state to develop a meaningful enforcement
program. We found that about 99 percent of the 8,344 enforcement
actions reported by the state represented nothing more than
notification letters advising leaking tank site owners and
operators to clean-up their sites. The Region subsequently
reported these notification letter actions as enforcement
statistics to EPA Headquarters. We believe that this seriously
overstates enforcement activity because the letters do not
establish any kind of an action plan for timely clean-up of a
site.
In our opinion, there were several reasons for the ineffective
LUST enforcement program, including: (i) the fact that the CAs
did not require the state to establish an effective enforcement
program, nor hold them accountable for not having one; (ii) a
lack of emphasis on the importance of aggressive enforcement
actions; (iii) inconsistencies between state and EPA enforcement
policies; (iv) a lack of adequate staffing at the state's
regional boards to handle the large number of enforcement actions
assigned to them; (v) a lack of legal expertise at the local
agencies to pursue complex environmental cases; (vi) outside
interests which sometimes adversely affected enforcement actions;
and (vii) the state had not taken advantage of an enforcement
tool called "field citations".
In our review, we judgmentally selected 38 leaking tank sites to
review the status of enforcement actions. We concluded that
enforcement action appeared appropriate at only one site. For
the other 37 sites, or 97 percent of those sampled, the
enforcement actions were determined to be inadequate as follows.
• Thirteen, or about one-third of the sites had no
enforcement action taken, although the leaks had been
reported for 2 to 11 years.
• For 19 sites, where clean-up-and abatement orders were
issued, the owner or operator had not complied with the
- terms of the order and no enforcement action to assess
penalties for noncompliance were taken. We calculated that
33
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the minimum and maximum penalties which could have been
assessed for just 3 of the 19 sites ranged from $2.2 million
to $22.3 million.
• At five sites, where clean-
up-and-abatement orders were
issued and penalties assessed,
the $226,540 of penalties were
only a small fraction of the
amounts that could have been
assessed. The penalties which
could have been assessed
ranged from a minimum of about
$1 million to a maximum of
$10.4 million. We do not
believe that the penalties
assessed in these cases
exceeded the cost of
compliance, thereby negating
their effectiveness.
In view of the state's lack of an
effective enforcement program, the
Region has the responsibility to
either require improvements or
initiate appropriate enforcement
actions on its own.
Penalties Under 5 Orders
Millions
''/"„; ••'' ''„'/*'', >,
'.\, -.we'ytf-Ttf:*-
.'/..,«. x *?. i'x t », i i 1 .,
Maximum
',-, ,
s "
x * +
^jt v^ -'„_
Actual
BACKGROUND
Delegating Enforcement
In accordance with the provisions of SARA, the Region, through
the CAs, has delegated the LUST clean-up enforcement program to
the state. Under the CAs, the State Water Resources Control
Board was given authority to enforce LUST clean-ups, using state
regulations.
In accordance with the state's Porter-Cologne Water Quality
Control Act, it further delegated its enforcement respon-
sibilities to: its nine regional boards; and to 108 local
agencies with included counties, cities, and special districts.
The state also provided 21 counties, representing 38 of the 108
local agencies, with LUST funds for enforcement activities
through the Local Oversight Program (LOP). The regional boards
and the remaining 70 local agencies did not receive any LUST
funds for enforcement activities. During FY 1988 through FY
1991, the state reported to the Region that it had expended $1.6
million of LUST CA funds for enforcement activities.
34
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Using Enforcement Techniques
In order for environmental laws and regulations to work, they
must be enforced. Enforcement is especially important for
leaking tank site clean-ups for two primary reasons:
• The owner or operator generally has no motivation to
clean-up a leaking tank site; and
• Delaying clean-up action can extend the contamination,
especially when drinking water or groundwater is affected.
According to EPA's General Enforcement Policy No. 21, one of the
most essential elements of an enforcement program is the
effective use of penalties to deter would-be violators and to
punish violators. The policy also addresses the importance of
assessing penalties that are more than the cost of compliance.
Further, EPA's OSWER Directive 9650.10 requires the states to
have a set of clearly defined enforcement policies and
procedures, that meet Federal requirements. The directive also
requires that EPA Regions evaluate a state's existing or
potential capabilities for enforcement as part of the CA
negotiation and award process. The Regions are expected to
retain responsibility for involvement in state enforcement cases
when it would be beneficial for program compliance or enforcement
strategy.
Laws And Regulations
The Federal enforcement requirements are discussed in the 1984
RCRA and are further defined in the 1986 SARA amendments to the
RCRA. These Acts were implemented by the Federal rules contained
in 40 CFR 280 to 281, which were adopted in September 1988. In
addition, OSWER Directive 9650.10, which defines enforcement
policies and procedures, was implemented in February 1989.
In accordance with the CA, the Region has delegated enforcement
responsibilities to the state. The state enforcement procedures
are contained in its Porter-Cologne Water Quality Control Act and
the California Health and Safety Code.
ENFORCEMENT WAS INAPPROPRIATELY DELEGATED
The Region delegated its LUST clean-up enforcement respon-
sibilities to the state, although the CAs did not hold the state
accountable for establishing and maintaining an effective
enforcement program. In our opinion, this delegation, without
accountability, was a primary cause for the state's ineffective
enforcement program. Further, the delegation did not comply with
35
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OSWER Directive 9650.10, which required that the Region evaluate
the state's existing or potential capabilities for enforcement as
part of the CA negotiation and award process. In this instance,
the CAs did not establish requirements for the state to take
prompt, effective actions that require owners to clean-up leaking
tank sites. It also did not hold the state accountable when
these actions were not taken. Instead, the CAs merely spelled
out the authorities that the state, its regional boards, and
local agencies have in the enforcement area.
The CAs only included one task in the enforcement area. This
task was to "Identify the party responsible for a leak
(and)...notify each responsible party of their obligation to
investigate and remedy UST releases (leaks)..." According to
SARA, states cannot participate in the LUST program unless they
have an effective enforcement program. SARA provides that:
A State may exercise the authorities (for LUST clean-
ups)... if the Administrator (EPA) determines that the
State has the capabilities to carry out effective
corrective actions and enforcement activities.
EPA's OSWER Directive 9650.10 provides that a "state may use its
best professional judgement and enforcement discretion as long as
they result in an effective enforcement program". As discussed
in this chapter, we concluded the state's enforcement program was
not effective.
We concluded that the LUST enforcement program in California was
not an effective tool in deterring would-be violators or in
punishing violators. To illustrate:
• Neither the Region or the state were aware of the total
number of enforcement actions taken at leaking tank sites
nor the amount or adequacy of the penalties assessed. This
condition occurred because the state only tracked the number
and type of enforcement actions taken by the 21 counties
receiving LUST CA funds. It did not track enforcement
actions taken by its regional boards or by other local
agencies. Further, the state acknowledged that the
statistics on the number of reported enforcement actions by
the 21 counties was unreliable. Without accurate statewide
enforcement information, neither the Region or the state can
determine if enforcement policies are being carried out.
• The state's LOP agreement with the 21 counties did not
mention or otherwise require the local agencies to take
enforcement actions.
36
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• There was little documentation available to indicate that
the Region seriously addressed the lack of enforcement
actions with the state. The Region did not mention
California's enforcement results in its annual evaluations
of the state's LUST program. To the contrary, the Region
accepted the state's reported enforcement actions without
validation, and passed these actions to EPA Headquarters.
However, we found that about 99 percent of California's
8,344 reported enforcement actions from FY 1987 to FY 1991
were merely notification letters advising owners and
operators of their responsibilities to clean-up leaking tank
sites.
In a February 5, 1991 annual performance evaluation of the
state's CA activity for FY 1990, the Region noted that the state
spent only 16 percent of its LUST CA funds in the enforcement
area. The evaluation indicated that this was well below the
average nationwide LUST enforcement expenditure, which was 56
percent. However, instead of requiring California to step up its
enforcement actions, the Region stated that "The State Board
needs to take a more active role to ensure that expenditures were
charged to the enforcement category." It is not clear from the
above statement whether the Region wanted the state to verify its
enforcement charging procedures, or to require the state to alter
its bookkeeping method to charge more time to the enforcement
area. Nevertheless, the above statement clearly did not address
the effectiveness of the state's enforcement program.
CLEAN-UP LAWS AND REGULATIONS NOT ENFORCED
The state was not effectively using penalties as an enforcement
tool to aggressively enforce leaking tank site clean-up laws and
regulations. It did not consider enforcement to be a priority,
and spent very little time in the enforcement area. As
previously noted, in FY 1990, the state spent only 16 percent of
its LUST CA funds on enforcement compared to the nationwide
average of 56 percent.
37
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LUST FUNDS SPENT ON ENFORCEMENT
California versus the Nation
Enforcement
16%
Enforcement
56%
Further, we found that funds spent on enforcement were not always
used effectively, and did not lead to the timely clean-up of
leaking tank sites.
Because of the lack of reliability of the state's management
information system relating to enforcement actions, it was
necessary for us to make a judgmental sample of enforcement
actions at selected leaking tank sites. We then reviewed the
individual case files for the selected sites at the respective
regional boards and local agencies. The sites selected were in
the geographic areas of the San Francisco Bay, Los Angeles,
and Central Valley Regional Boards. Our review showed that, with
one exception, virtually all owners or operators were allowed to
delay site clean-ups for years. We attribute this condition
principally to the state's weak enforcement program.
Specifically, for 37 sites, we found that: (i) clean-up-and-
abatement orders had not been issued for 13 sites, although the
leaking tanks had been reported from 2 to 11 years ago and these
orders were a prerequisite to assessing penalties; (ii) for 19
sites where clean-up-and-abatement orders were issued, the owners
or operators had not complied with the orders and were not
penalized; and (iii) for five sites where clean-up-and-abatement
orders were issued and penalties were assessed, the penalties
were inadequate. Details on the results of our review of the 37
38
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leaking tank sites and related enforcement activity is provided
in the following paragraphs.
One-Third Of Recalcitrant Owners Ignored
In California, enforcement action procedures typically follow
three phases:
• A notification letter, which lets an owner or operator
know of its responsibilities in cleaning up a leaking tank
site;
• A clean-up-and-abatement order, which includes deadlines
for key actions, such as preliminary site assessments and
work plans; and
• A notice of violation, which can include a penalty
assessment.
Under these procedures, an owner would generally not be
considered for a penalty assessment unless a clean-up-and-
abatement order was issued, and the owner or operator failed to
comply or comply timely with the deadlines in the order.
Our sample of sites identified 13 instances where a clean-up-and-
abatement order had not been issued even though the leaking tanks
had been reported at these sites for 2 to 11 years. We found
that the local agencies and regional boards were reluctant to
issue clean-up-and-abatement orders. In fact, the three local
agencies we reviewed have never issued a clean-up-and-abatement
order. We consider this to be a serious problem, since it
extends the time of site clean-up and allows the human health and
adverse environmental impacts to continue.
Our review of the leaking tank sites at the Aloha State Flowers
and Appollo Service Station locations illustrate the general
reluctance to initiate enforcement actions and related penalties
in California.
Aloha State Flowers, Redwood City. A leaking tank causing
suspected groundwater contamination was discovered at this site
in 1986. To date, neither the local agency or the San Francisco
Bay Regional Board have issued a clean-up-and-abatement order to
the owner of this site.
Our review of the regional board's case file showed that, during
a March 11, 1986 tank removal, gasoline was found in shallow
groundwater at the site. Under California's Administrative Code,
a tank owner/operator is required to report the following
information, within 5 days of detecting such a leak:
• the results of investigations to determine the extent of
soil and groundwater contamination; and
39
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• how the released hazardous substance and affected soil and
groundwater were disposed of.
The code also requires the owner/operator to report the status of
ongoing investigations and clean-up actions every 3 months.
There was no evidence in the regional board's case files
indicating that the owner reported either the results of any
investigation of the leak, or how the released substance was
disposed of. The case file did contain a notation that
surrounding contaminated soil was probably removed from the site
sometime between 1986 and 1990. However, it did not discuss the
basis for this conclusion, indicate what was done with the
hazardous soil, or further mention groundwater contamination
concerns.
Between 1986 and 1990, neither San Mateo County (the local
agency), or the regional board took any enforcement action at the
site. In October 1990, San Mateo County finally issued a
notification letter to the owner advising of the need to
investigate the impact of the leaking tank on the groundwater.
When the county did not receive a response to the letter, it
referred the case to the regional board. The date of the
referral was not documented in the records.
A year after the county's notification letter, in October 1991,
the regional board advised the owner that it was handling the
case. As of the date of completion of our field work, the owner
had not responded to either the county or the regional board's
efforts to make contact. However, the regional board had not
issued a clean-up-and-abatement order or notice of violation.
Consequently, over six years after discovery of the leaking tank,
the owner has not been required to demonstrate that the site has
been cleaned up, nor have any penalties been assessed to
encourage the owner to be responsive to the regional board.
Appollo Service Station, San Carlos. This leaking tank site was
identified in December 1981 during a utilities excavation. The
utility company noted that "the bell hole began filling with
gasoline when we were approximately 4 feet deep." Although the
extent of the subsequent clean-up activity at the site was not
documented in the site case file, the owner, in December 1984,
reported to the San Francisco Bay Regional Board that the site
was cleaned up.
However, the new owner of the site notified the regional board,
in a November 3, 1987 letter, that the previous leaking tank
problem had not been corrected. It noted that gasoline had been
found in one of the monitoring wells at the site. The letter
further described how, in the current owner's view, the gasoline
was from old tanks. At that time, the regional board did not
take any enforcement action. In September 1990, nearly three
years later, the previous owner was sent a notification letter of
its responsibility to clean-up the site. There was no subsequent
information in the regional board's files indicating it had any
current information on the extent of environmental contamination
40
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at this site. However, as of the date of our audit, the regional
board has not taken further enforcement action such as issuing a
clean-up-and-abatement order or a notice of violation assessing
penalties.
Clean-Up-And-Abatement Orders Not Timely Or Enforced
Of the sites reviewed, we found 19 sites where clean-up-and-
abatement orders were issued, but not complied with by the owner
or operator. Although these orders were generally issued several
years after the owner or operator had failed to clean-up the
site, no enforcement action to assess penalties for noncompliance
were taken. We attempted to calculate what the minimum and
maximum penalty would be for the 19 sites where the orders were
not complied with. For 16 of the sites, the files did not
contain sufficient information to make the calculation. For the
remaining three sites, we determined that minimum and maximum
penalties that could have been assessed ranged from $2.2 million
to $22.3 million as shown in the following chart.
Maximum and Minimum Penalties for 3 Sites
(Actual Penalty = $0)
Millions
Circle Marina
A-1 Gas
Mobil
A discussion of two of these three sites with the highest
potential maximum penalties are discussed below.
Circle Marina Car Wash. Long Beach. A leak in the tank piping at
this site was discovered sometime in 1985. An initial
investigation found high levels of gasoline and solvents
dissolved in the groundwater, floating in a bubble on the
groundwater (called free product), and in the surrounding soil.
In 1986, the owner removed some of the free product from the
groundwater. In 1987, free product was again detected by
monitoring wells. At that time, the free product thickness
varied from 4 to 7 feet.
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On June 3, 1988, over three years after the leak was initially
found, the Los Angeles Regional Board issued a clean-up-and-
abatement order which required the owner to:
• Immediately remove the free product, with a quarterly
report due on June 30, 1988;
• Submit a site assessment plan by June 20, 1988;
• Submit a site assessment report, to include a site
characterization report, 60 days after the approval of the
site assessment proposal; and
• Submit a remedial clean-up plan 30 days after the
acceptance of the site assessment report.
By November 1989, the owner had removed three tanks and 315 tons
of soil from the site. However, satisfactory action to comply
with all requirements of the order had not been taken. In
November 1990, a regional board staff member recommended that the
owner be penalized because:
The site has been idle...The car wash owners have
consistently failed to respond to the staff's request
for free product removal and full plume definition...To
date, no site assessment to help plume definition has
been submitted and the free product recovery was not
continued.
However, no penalty was assessed.
The site assessment plan was not submitted until December 24,
1990, nearly 2% years after the original due date in the order.
At this time, the regional board could have assessed a penalty
ranging from $1.3 million to $13.5 million, calculated as
follows:
Clean-up-and-Abatement No. of Days in No. of
Order Deadline (Site Violation as of Leaking Penalty4
Assessment Plan) 02/28/92 Tanks Minimum Maximum
06/20/88 900 3 $1,350,000 $13,500,000
Apparently, the regional board later authorized the delay;
however, the files did not document the board's reasoning for the
delay, or discuss why penalties were not assessed for the delay.
At the time of our review in February 1992, the site assessment
report also had not been submitted, although it was due by
February 15, 1991. The files did not explain the reason for this
extended delay without further enforcement action, including
4The minimum and maximum penalties per the California Health and Safety
Code, Division 20, Chapter 6.7 are $500 and $5,000, respectively, per day per
tank.
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penalty assessments. We did notice that the owner asked for a
one-month extension until March 15, 1991. The owner explained
that debris in the wells had slowed the free product removal.
The regional board granted the one-month extension. However, the
file shows that the owner requested another extension on March
13, 1991, but the regional board denied this extension.
Considering the penalty authorities available, we estimated the
minimum and maximum penalties that could have been assessed for
the failure to submit the required site assessment report to be
between $525,000 and $5.2 million, calculated as follows:
Clean-up-and-Abatement No. of Days in No. of
Order Deadline (Site Violation as of Leaking Penalty
Assessment Report1 02/28/92 Tanks Minimum Maximum
3/15/91 350 3 $525,000 $5,250,000
In summary, the leak at this site was known for the last seven
years, and an apparent groundwater or soil contamination problem
continued to exist. The regional board did not aggressively
pursue enforcement of its clean-up-and-abatement order for the
site, nor has it assessed penalties for noncompliance against the
owner. In our opinion, the assessment of penalties is necessary
to affect acceptable clean-up action by the owner of this site.
A-l Gas Station, Redwood City. The local fire department first
discovered a leak at this site in early 1984. In December 1984,
San Mateo County required the owner to take samples to determine
the soil and groundwater contamination problem at the site. The
samples, taken in April 1985, showed the soil and groundwater at
the site was highly contaminated as shown below:
(Parts Per Billion)
Substance Actual Level Target Level
Gasoline (in Soil) 250,000 100,000
Benzene (in Water) 39,000 0
In July 1985, a county inspector found 18 inches of floating
gasoline in one of the monitoring wells. The regional board's
case files indicated that, although a clean-up-and-abatement
order was not issued, the county gave the owner until August 1,
1985 to submit a work plan for extracting the floating gasoline.
The owner did not submit the required work plan or remove the
gasoline. However, no additional action was taken by the county
until October 1989, or over four years later. In October 1989,
the county again requested a work plan for removing the floating
product and defining the contaminant.
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A work plan was finally submitted by the owner in March 1990,
almost five years after it was first due. However, during this
period, the county had not issued a clean-up-and-abatement order
or assessed any penalties against the owner was for this delay.
The County, with assistance from the San Francisco Bay Regional
Board, approved the work plan, but the owner did not comply with
the work plan. In July 1990, after a meeting with the owner, the
regional board, although not issuing a clean-up-and-abatement
order, directed the owner to submit a report summarizing all work
conducted to date. The report, due by August 1, 1990, was
submitted six weeks late. However, no action was taken to assess
a penalty for this delay.
In a October 11, 1990 letter, the regional board requested that
the owner provide a time schedule for the following by October
26, 1990:
• the installation of an acceptable gasoline removal
system;
• the submission of a technical report defining the extent
of the contamination; and
• the submission of a final report documenting
implementation of a final site remediation plan.
When the owner did not submit the requested time schedule, the
regional board finally issued a clean-up-and-abatement order.
This order, dated April 15, 1991, set deadlines for the items
included in the October 11, 1990 letter. The first such deadline
was June 1, 1991.
In July 1991, the regional board issued a notice of violation
because the owner failed to meet the deadlines in the clean-up-
and-abatement order. However, the notice of violation did not
include any assessed penalty. In August 1991, the owner claimed
it was financially unable to clean-up the site. Although, the
regional board did not relieve the owner of its site clean-up
responsibility, it did not assess any penalty on the owner for
failure to comply with the clean-up-and-abatement order.
Considering the penalty authorities available, we estimated that
the minimum and maximum penalties which could have been assessed
ranged from $270,000 to $2.7 million, calculated as follows:
Clean-up-and-Abatement No. of Days in No. of
Order Deadline (Site Violation as of Leaking Penalty
Assessment Report) 02/28/92 Tanks Minimum Maximum
06/01/91 180 3 $270,000 $2,700,000
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Penalties Assessed Are Insignificant
For five of the sites we reviewed, penalties were assessed by
regional boards for not meeting deadlines under clean-up-and-
abatement orders. However, the amounts were a small fraction of
what could have been assessed. Only $226,540 in penalties was
assessed relating to the sites, while we calculated that total
minimum and maximum penalties could have ranged between $989,000
and $10.4 million under available penalty authorities.
INSIGNIFICANT PENALTIES ASSESSED
Under Five Clean-up Orders
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
Nyack
Konocti
Consolation
P&M
Conoco
Maximum Penalty
Minimum Penally
Actual Penalty
$1 ,040,000
$52,000
$20,000
$1,125,000
$112,500
$15,000
$1 ,275,000
$127,500
$14,040
$1 ,820,000
$192,000
$40,000
$5,050,000
$505,000
$137,500
[Actual Penalty ffl Minimum Penalty H Maximum Penalty
It should be noted that the regional board's files did not
provide sufficient information for us to evaluate the factors
considered describing the basis for penalty assessment
calculations for these sites. However, we concluded that the
penalty amounts assessed appeared to: (i) be less than the cost
of cleaning up the site; (ii) lack any amount for the economic
benefit of noncompliance; and (iii) be well below the state's
minimum penalty amounts. It was also noted that the regional
boards' enforcement practices were contrary to the goals of EPA's
Enforcement Policy No. GM-21 which requires an enforcement
approach that provides a deterrent effect and a swift resolution
of environmental problems. The policy provides that:
If a penalty is to achieve deterrence, both the
violator and the public must be convinced that the
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penalty places the violator in a worse position than
those who have complied in a timely fashion...Moreover/
allowing a violator to benefit from noncompliance
punishes those who have complied by placing them at a
competitive disadvantage. This creates a disincentive
for compliance. For these reasons, the penalties
generally should, at a minimum, remove any significant
economic benefits resulting from the failure to comply
with the law.
Further discussion of our review of the five sites that had
clean-up-and-abatement orders and penalties assessed by regional
boards follow.
San Francisco Bay Regional Board. For the sites we reviewed,
this regional board had assessed a penalty under only one site
(Consolacion). Although the basis for the board's penalty
calculation was not documented, the penalty amounted to only
$14,040. We calculated that minimum and maximum penalty amounts
ranging from $127,500 to about $1.3 million could have been
assessed. The penalty amounts were calculated using the 51 days
of violation, as determined by the regional board, for five
leaking tanks, at the minimum and maximum penalty amounts of $500
and $5,000, respectively, per tank per day.
Central Valley Regional Board. For the sites we reviewed with a
clean-up-and-abatement order, this regional board had assessed
penalties at four sites. The penalties totaled $212,500 and
ranged from $15,000 to $137,500.
We concluded that these penalty amounts were not determined in
accordance with an aggressive enforcement policy. Our conclusion
is supported by reviewing the conditions relating to the site
involving the largest penalty assessed by this regional board
from the four we reviewed. The regional board assessed a
$137,500 penalty against Conoco. However, we calculated that the
minimum and maximum penalty assessed could have ranged from
$505,500 to $5 million based on the available penalty
authorities. Further, as shown in the details of the case that
follow, the Conoco fine was not assessed by the regional board
until nearly three years after the clean-up-and-abatement order
was issued.
Conoco notified the responsible local agency, Sacramento County,
of a possible soil contamination in Citrus Heights on March 20,
1985. On November 4, 1985, Conoco reported that two out of the
three underground tanks had leaked. Between January and May
1986, the leaking tanks were removed, and Sacramento County
requested that the regional board assume responsibility for
overseeing the site clean-up.
On August 10, 1987, the regional board issued a clean-up-and-
abatement order. As part of this order, the regional board
required a final remediation plan. This plan required Conoco to
set deadlines for installing wells and associated systems and
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required it to report on its progress. The plan was approved on
May 4, 1988, and the first deadline was October 31, 1988.
Almost two years later, Conoco had not met the deadlines included
in the remediation plan, or otherwise attempted to clean-up the
contaminated soils at the site. Consequently, in March 1990, the
regional board staff proposed that a $252,500 penalty be assessed
against Conoco for violating the abatement order for 505 days.
The regional board's executive staff later cut the assessed
penalty in half, to $125,500, and added $12,000 for the board's
staff time spent working on the case, for a total of $137,500.
The case files did not explain the regional board's rationale for
reducing the penalty. The penalty was assessed against Conoco on
June 21, 1990. This was significantly less than the minimum and
maximum penalties of $505,500 to $5 million which could have been
assessed. In making our calculation, we used the 505 day
violation period determined by the regional board for two tanks
at the minimum and maximum penalty amounts of $500 and $5,000 per
day per tank, respectively.
CAUSES OF INEFFECTIVE ENFORCEMENT
We concluded there were several reasons why the state did not
have an effective enforcement program under the LUST program.
These included:
• The CAs issued by the Region did not require the state to
establish an effective enforcement program, nor hold the
state accountable for an effective enforcement program;
• The Region and the state had not emphasized the importance
of aggressive enforcement actions, or established procedures
for monitoring enforcement actions with regional boards and
local agencies;
• State enforcement policies were not always consistent with
EPA policy, nor disseminated to regional boards and local
agencies;
• The regional boards were understaffed and could not handle
the large number of enforcement actions;
• Local agencies lacked legal expertise to pursue complex
environmental cases;
• Outside influences sometimes adversely affected
enforcement actions; and
• The state had not authorized the use of "field citations"
under the program.
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The first two causes were discussed at the beginning of this
chapter. Additional comments on the other causes are provided
below.
State Enforcement Policies Were Not Adequate
Although the Region delegated its enforcement responsibilities to
California, it did not require the state to adopt enforcement
guidance which was consistent with EPA policy. For example, the
Region did not require the state to adopt guidance for computing
penalties which considered the economic benefit of noncompliance.
Also, state policy was inconsistent with EPA policy regarding
maximum daily penalty amounts. The state's maximum daily penalty
amount of $5,000 was less than the maximum Federal penalty of
$10,000 provided for under SARA (see Chapter 5 of this report for
additional discussion of this area). In addition, the state had
not provided guidance to the regional boards and local agencies
on how penalties should be computed or assessed.
Regional Boards Were Understaffed
The state has given regional boards significant responsibility
for initiating LUST enforcement actions in the state. However,
the state has not provided the regional boards with the necessary
resources to carry out their responsibilities. The regional
boards advised us that they had sufficient staff to aggressively
enforce only a handful of LUST sites. In this respect, the state
did not provide regional boards with any LUST CA funds for
enforcement, although they were responsible for over 43 percent
of the clean-up sites. The enforcement problems associated with
understaffing were compounded by the fact the local agencies were
referring most of the difficult LUST enforcement cases to the
regional boards for action. The above conditions have resulted
in an unmanageable workload at the regional boards.
Although the state reported that it expended only 59 percent of
the LUST CA funds received from FY 1987 to FY 1991, it had not
made any additional funds available for enforcement activities at
the regional board level. We attributed this condition to a
general lack of interest in establishing an effective enforcement
program.
Referral Of Cases To Regional Boards. To determine what happens
when clean-ups were referred from a local agency to a regional
board, we reviewed the four cases that San Joaquin County had
referred to the Central Valley Regional Board for enforcement.
We found that the regional board had not taken adequate
enforcement action on three of the four cases. Specifically, the
regional board: (i) had not taken any action on two cases since
they were referred; and (ii) had sent out a letter on one case,
but had not penalized the responsible party for not meeting the
deadlines contained in the letter. The latter case pertained to
a leaking tank site on School Street in Lodi, California.
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San Joaquin County referred the School Street case to the
regional board in December 1990. It was September 1991, or nine
months after the referral, before the regional board contacted
the responsible party. Although the regional board requested
that the responsible party submit a preliminary site assessment
by October 30, 1991, the responsible party did not meet the
deadline. As of the date of our review in February 1992, the
regional board had not initiated further enforcement actions or
assessed penalties for missing the deadline. We attribute these
untimely and limited enforcement actions, in part, to regional
board staffing shortages for enforcement activities.
Lack Of Legal Expertise Defers Enforcement Action
We also found that aggressive enforcement actions were not being
taken by local agencies. For the most part, the local agencies
were referring cases to regional boards, where, typically, no
action was being taken. According- to local agency personnel,
they did not believe they had the legal expertise necessary to
initiate enforcement actions under the LUST program.
In an October 1991 Underground Storage Tank Program Imple-
mentation Survey, the state found that most local agencies did
not receive adequate assistance from their legal counsel. Of 69
respondents, 24, or 35 percent, felt that legal support was
inadequate. Local agency personnel informed us that support was
inadequate because attorneys: (i) did not have experience in
environmental law; and (ii) had too many cases already in
process.
One success story, however, occurred in Alameda County. The
District Attorney in Alameda County has been very successful in
prosecuting leaking tank site cases. It is our understanding
that the Region has plans to conduct enforcement training for
local agencies, drawing on the experience of Alameda County. We
concur with the Region's proposed actions, and suggest that the
Region carry out its proposed training plans as soon as possible.
Outside Interests Can Affect Enforcement Decisions
We noted a leaking tank site case where it appeared a LUST
enforcement action was not taken because of who owned the site.
In this case, the owner was very influential in the community and
a member of the Grand Jury. A discussion of the circumstances
relating to this site were as follows.
In January 1990, a land owner completed soil borings as a
prerequisite to the sale of the property. The borings found a
leaking tank that had contaminated the soil. In April 1990, the
county, which observed the boring, told the owner to complete
further investigation of the site by May 11, 1990. On May 18,
1990, the owner informed the county, that he had not investigated
the site by the deadline, and that site clean-up would not occur
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for a "couple" of years. However, the county did not initiate
any enforcement action against the owner at that time.
In October 1990, a further review by the county showed that the
leaking tank may have contaminated groundwater at the site, and
that further investigation was necessary. However, the county
did not require the owner to perform the investigation. Instead,
the county attempted to refer the case to the regional board. In
its referral, the county commented that "the owner is a very
influential in the community and a member of the Grand Jury".
The regional board advised that it did not have the resources
necessary to enforce the clean-up. Accordingly, the county
retained the case. However, as of the date of our field work,
the county had not initiated any enforcement action at this site.
While this was the only example of outside interests influencing
enforcement actions that we noted, we were advised by regional
board staff that often their boards were reluctant to assess
penalties. They explained that the board members normally had
strong business ties to the community and were reluctant to
recommend penalties. We recognize that conflicts of interest and
outside influences cannot be eliminated. However, the
establishment of a uniform penalty guidance policy by the state
would assist in alleviating some of these types of influences.
Lack Of Field Citation Authority
Through OSWER Directive 9610.14, EPA has developed a "field
citation" concept as part of its underground storage tank
enforcement program. A field citation is similar to issuing a
parking ticket in that it is written on the spot and does not
require extensive documentation. It allows the inspector, during
a site inspection, to immediately assess a fine, usually $100 per
violation.
Field citations were being used in Region 10 for enforcement of
underground storage tanks regulations, such as requiring tank
permits and monitoring equipment. According to Region 10
personnel, field citations were very effective in obtaining swift
compliance with environmental laws and regulations.
In our opinion, the field citation concept could be extended to
the LUST program. This would give regional boards and local
agencies a means to easily and quickly penalize leaking tank site
owners or operators who violate enforcement actions. Such
immediate penalties could help promote compliance, and possibly
reduce the number of referrals from local agencies to the
regional boards.
RECOMMENDATIONS
We recommend that the Regional Administrator:
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1. Revise the California CA to include specific tasks for
establishing and maintaining an effective statewide enforcement
program, which complies with all EPA requirements. The CA should
not only incorporate specific enforcement requirements for the
state, but also for the regional boards and local agencies. In
addition, the CA should hold the state accountable for an
effective statewide enforcement program by making future CA
funding contingent on the establishment of such a program.
2. Monitor the quality and quantity of enforcement actions
initiated within the state to assure that the enforcement program
is effective and being carried out according to EPA policy. To
assist the Region's monitoring process the following procedures,
as a minimum, should be addressed:
a. Including a more in-depth review of the enforcement
actions on a statewide basis. In this respect, special
attention should be devoted to monitoring the state
enforcement actions taken against significant violators to
determine whether the state is complying with EPA
enforcement policy.
b. Requiring the state to establish a tracking system for
all enforcement actions, including those taken by its
regional boards and local agencies.
c. Requiring the state to monitor enforcement actions taken
by its regional boards and local agencies for compliance
with state policy.
3. Require the state to adopt enforcement program guidance which
requires:
• Timely enforcement actions based on established deadlines.
• Clean-up-and-abatement orders that are followed with
assessed penalties.
• Penalty assessments that are calculated in accordance with
EPA policy.
4. Provide training to local agency attorneys to increase the
quantity and quality of LUST enforcement actions.
5. Implement a "field citation" program for the LUST program
that can be used by the state, its regional boards, and local
agencies.
REGIONAL RESPONSE AND PIG EVALUATION
Regional Response. The Region provided the following comments on
the findings and recommendations.
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Overall Comments. The Region stated that:
California's program, and indeed the national LUST
program, was modelled to some extent after Santa Clara
County's LUST program, the first to be established in
the nation in response to leaks from solvent tanks in
the Silicon Valley. Recognizing that a local agency is
most effective in responding to the vast number of
sites in California, the State in 1983 mandated that
the program be implemented by local agencies, not the
Regional Boards or State. While this 'franchise'
concept makes coordination a challenge, EPA
acknowledged the effectiveness of the program and
modelled its program on the same franchise approach.
EPA also developed guidance early on emphasizing
voluntary compliance as a cost-effective way to achieve
environmental benefits.
Regional Response To Recommendation 1. The Region stated that it
generally agreed that:
California's enforcement of the LUST program needs
improvement, particularly in the area of consistency
through California, including cities, counties, and
Regional Water Quality Control Boards." However, the
Region cautioned that:
...it must be noted that EPA OSWER Directive 9610.11
encourages voluntary compliance as the main enforcement
tool, stating that 'to encourage voluntary
compliance...the least resource-intensive action should
be taken first.' California has abided by this
guidance, and pursued a policy of encouraging voluntary
compliance, which has resulted in significant levels of
compliance. We are currently reviewing California's
proposed compliance, monitoring and enforcement policy
and procedures for state program approval, and will
ensure through this mechanism that the enforcement
program remains consistent with Federal requirements.
We agree that the workplan for California should
continue to include milestones and other tools to
monitor the effectiveness of a statewide enforcement
program. Currently, detailed information regarding
site status by Region and county are reported to the
EPA. We are currently sponsoring enforcement training
classes being given throughout the state, and targeted
towards local agency staff, Regional Board staff, and
legal staffs of the LIAs [Local Implementing Agencies].
In addition, we are sponsoring Leak Detection
Inspection Training for local agencies and Regional
Board staff.
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We are initiating oversight in the UST program through
local agency visits by the State, that will result in
incidental benefits to the LUST program. Please note
that a major fact in driving the compliance program is
the State Cleanup Fund, which currently has a balance
of $110,000,000. In order to be reimbursed or
forwarded funds for cleanup, an owner or operator must
demonstrate compliance with all applicable regulations.
If they have applied for Fund reimbursements, but are
not in compliance, the State issues an informal
enforcement letter requiring the applicant to come into
compliance within 60 days or be found not eligible for
up to $990,000 in funds. For owners and operators who
are recalcitrant, the State will follow up with further
enforcement.
We recommend that we continue to guide the State by:
1) reviewing the state program approval documents,
specifically the compliance monitoring and enforcement
polices and procedures; 2) negotiating the FY94 grant
to include a plan for implementing the enforcement
policies and procedures, and; 3) funding or assisting
in setting up further training courses as required.
OIG Evaluation. The Region's response is acknowledged. However,
it did not adequately addressed the latter part of this
recommendation requiring the Region to "hold the state
accountable for an effective statewide enforcement program by
making future CA funding contingent on the establishment of such
a program." The Region instead commented that it would continue
"to guide the state" through (i) state program approval; (ii) an
implementation plan for enforcement procedures; and (iii) funding
and assisting in training courses.
We do not agree that "guiding" the state will hold it accountable
for its ineffective statewide enforcement program. We further
disagree with the Region's conclusion that voluntary compliance
has resulted in significant levels of compliance in California.
The state Office of Program Evaluation wrote, in an August 23,
1992 briefing paper, that "83% of the currently known tank leak
sites have not been closed. Some regional boards have boxes of
unreviewed, backlogged sites." Further, about 97 percent of the
sites reviewed in our audit had inadequate enforcement action
taken. These facts do not demonstrate that there have been
significant levels of voluntary compliance, or that an effective
enforcement program is in existence.
The Region also did not comment on our recommendation that LUST
funding should be tied to an effective enforcement program.
However, we also noted that the state's Office of Program
Evaluation also concluded (in the aforementioned briefing paper)
that, as a potential solution for problems with local agencies in
the enforcement of the UST/LUST program, the state should "tie
funding to performance."
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Regional Response To Recommendation 2. The Region agreed to
monitor the quality and quantity of enforcement actions and
stated that:
Although we agree it is important to monitor the
quantity and quality of enforcement actions, we believe
the more fundamental issue is compliance. When we find
non-compliance, we agree that it should be monitored
and tracked. We believe a better measurement of
enforcement is the number of clean-ups completed or
progressing rather than the amount of funds collected
in penalties. We recommend working with the State to
examine current or planned efforts on those sites where
cleanups have not been initiated or completed. We will
work with the State Board to ensure that there is a
plan of action for those sites not closed or in
progress of being cleaned up. We believe in-depth
review of the enforcement actions of a state as large
as California is the role of the State and Regional
Boards. To that end, we will include in FY94 grant
guidance for the State to conduct audits/reviews of
Regional Boards and local agency enforcement efforts to
provide a better compliance picture for the State.
We agree that the State should track and monitor
enforcement actions. The Regional Boards do, and
should continue to play an oversight role with the
locals, and encourage enforcement where it would ensure
compliance.
We recommend addressing these issues in our FY94
workplan, and pending an enforcement review of selected
local agencies on regarding leak detection, will
address this role in future cooperative agreements and
workplans. ,
OIG Evaluation. The Region's response represents a positive
initial action. However, we do not agree that an in-depth review
of the state's enforcement actions should only be a role for the
state and regional boards. On the basis of the ineffective
enforcement program in the state, the Region needs to play a
major continuing role in reviewing the adequacy and timeliness of
the state's enforcement actions.
Regional Response To Recommendation 3. The Region partially
agreed with this recommendation, by stating that it will ensure
that the enforcement guidance requirements are met. However, it
did not agree with recommendation 3.a. which would require the
state to carry out timely enforcement actions. It also did not
agree with recommendation 3.c. which required the use of the EPA
penalty calculation guidance. Specifically, the Region responded
that:
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The State carries out timely enforcement actions on
high priority sites or where owners and operators have
been recalcitrant. However, given the size of the
universe and the limited funding of the program, there
will always be lower priority sites where no action can
be taken for a longer period of time. Since the
program is being funded at both the State and Federal
levels far below the necessary funding level to run a
State-wide program, there is no way in the foreseeable
future that a uniform compliance, enforcement and
monitoring policy and procedures manual can address all
sites. Instead, we expect it to focus on higher
priority sites.
Through the program approval process, we will be
reviewing California's proposed compliance, monitoring
and enforcement policies and procedures, and ensuring
that the enforcement guidance requirements are met.
Decisions on penalty amounts are influenced by many
legitimate factors beyond the EPA penalty policy.
Settlements for less than calculated amounts
consistently occur in all types of enforcement and
third party cases. Agency resources, RP economics,
deterrence potential and the strength of the case are
all considerations to be taken into account. It is
universal not to assign a maximum penalty to any case
but the most egregious, and penalties are not intended
to be based on the maximum penalty authority.
OIG Evaluation. We disagree with the Region's comment that the
state is carrying out timely enforcement actions on high priority
sites. All of the 38 sites reviewed in our audit were included
on the state's top priority category, a leak affecting
groundwater. However, we found the state did not take adequate
enforcement action for 37 of the 38 sites.
We agree that the priority system should govern which sites
receive oversight funding, including enforcement actions.
However, the state does not have a priority system that is
consistent with Federal requirements. Further, the state's
Office of Program Evaluation briefing paper recognized that the
established priority system was not working and commented that:
Despite the existence of State Board Resolution 87-73
directing the water quality prioritization of tank
sites, property transfers, rather than water quality,
appear to be driving the priority system. Those
wanting to sell or develop property are motivated to
cleanup and pressure the oversight agencies to expedite
their projects. There are not enough resources to
oversee property transfers and push recalcitrant.
Property transfers generally take precedence,
recalcitrant 'benefit' by delay or nonaction.
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Regarding penalty calculations, we disagree that EPA penalty
guidance should not be followed. EPA penalty guidance does, in
fact, address the "legitimate factors beyond EPA penalty policy",
such as "agency resources, RP [responsible party] economics,
deterrence potential and the strength of the case." Further, the
penalty guidance in OSWER Directive 9610.12 mentions that all
these variables (and others) should be used in penalty
calculations. In our opinion, the EPA penalty guidance must be
adapted for the state's program to be at least as stringent as
the Federal requirements.
Regional Response To Recommendation 4. The Region agreed and
noted, "We are currently offering three enforcement training
classes, and will continue to do so as they are needed. In
addition, we [are] sponsoring District Attorney training in
October 1992."
Regional Response To Recommendation 5. The Region agreed to
implement a field citation program and stated that:
We are working with the State Water Resources Control
Board [SWRCB] to identify one local agency that, in
concert with the SWRCB, can implement a pilot field
citation program. Please note, however, that a field
citation program is more appropriate for the
preventative aspects of the program rather than the
LUST program. However, we see the value of the field
citation program and we are pursuing a pilot program
under the UST FY93 Program Grant.
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CHAPTER 4
MONITORING CALIFORNIA'S LUST PERFORMANCE
The Region was not effectively monitoring the state's performance
under EPA's LUST program and had not established an adequate
management system for determining progress being made to clean-up
leaking tank sites. The Region had not evaluated: (i) the use
of about $7.3 million, or 75 percent of the LUST CA funds used by
California between 1988 and 1990; (ii) the progress the state was
making cleaning up its leaking sites; or (iii) information
included in state generated clean-up status reports before
forwarding this information to EPA Headquarters. We concluded
that these conditions contributed to serious problems with the
state's LUST program. These problems included the need to
implement an effective state priority system for site clean-ups
and enforcement actions, as discussed in Chapters 2 and 3 of this
report. Weaknesses in the Region's monitoring and management
systems were attributed, in part, to the fact that the Region did
not include specific requirements in the state's CAs for
performing critical activities in the areas of prioritizing site
clean-ups and enforcement.
We also determined that the state-generated information
transmitted by the Region to EPA Headquarters overstated the site
clean-up progress being made in California. Since this
information was being used by EPA to make nationwide funding
decisions and to report the status of the LUST program to
Congress, it was important that the status information be
accurately reported.
BACKGROUND
The 1987 LUST CA between the state and the Region provided for
the state to establish a Local Oversight Program (LOP) to
distribute Federal funds to ten counties within the state. This
distribution was referred to as franchising. By 1991, the LOP
had been increased to 21 of the 58 counties in the state. The 21
counties were to use CA funds to monitor leaking tank site clean-
ups in their respective geographical areas. Counties that are
not franchised can oversee site clean-ups using their own funds,
or can refer clean-up oversight to one of the nine State Regional
Water Quality Control Boards (regional boards).
The requirements for earning LUST CA funding are generally
described in each year's CA and further detailed in an annual
work plan that is included as an appendix to the CA. The Office
of Solid Waste and Emergency Response's (OSWER) Directive 9650.10
contains EPA's guidance for LUST work plans. EPA requires the
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Regions to oversee state programs in order to ensure
environmental protection through sound use of the LUST Trust
Fund. The Regions are to make yearly evaluations of state
programs, including comparing work plan requirements to
accomplishments reported by states.
STATE PROGRAM DID NOT FOCUS ON CRITICAL LUST
ACTIVITIES
The state's program performance on the most critical aspects of
its LUST program was not being effectively evaluated by the
Region. Although California's CAs gave the appearance of
including the six "core" LUST activities identified as critical
by EPA, a close review of the related work plans disclosed that
the state committed to performing only two of them.
The work plan is to be. used for evaluating a state's performance.
According to OSWER Directive 9650.10, the state work plans are to
include six critical, or "core", LUST program activities. The
purpose of this requirement is to ensure the most critical
aspects of EPA's program are carried out by the states receiving
LUST funding. The six core activities include: (i) a priority
system; (ii) enforcement policies and procedures; (iii) cost
recovery policies and procedures; (iv) a site-by-site tracking
system; (v) public participation procedures; and (vi) quality
assurance practices.
Our review of the California LUST CAs for FYs 1988 to 1992
disclosed that there was a general description of the core
activities. However, the work plan appendix, which identified
the specific tasks the state was committed to perform, did not
incorporate four of the six core LUST activities, including tasks
for the priority system and enforcement. In our opinion, the
lack of work plan tasks relating to the LUST priority system and
enforcement procedures directly contributed to the significant
problems noted in our review of these areas (see Chapters 2 and 3
of this report).
We believe the CAs' lack of focus on four of the six core LUST
activities was attributable to the following:
• The state, rather than the Region, drafted its own CAs.
Thus, the state essentially determined the activities that
would be incorporated into its work plan. It appeared that
the state included activities that could be most easily
performed; and
• The state focused most of its efforts on recovering the
funds that local agencies spent under the LOP overseeing
leaking tank site clean-ups. While cost recovery is a core
LUST activity, and California apparently had one of the best
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cost recovery programs in the nation, emphasis in this area
resulted in other critical core LUST activities not being
addressed.
REGIONAL EVALUATIONS WERE INCOMPLETE
While the Region performed annual evaluations of the state's LUST
program, we found they were incomplete. The Region did not
evaluate the use of about 75 percent of the LUST CA funds
expended by California between 1988 and 1990. As a result, the
Region did not have a good basis for determining if the state
spent the LUST CA funds effectively; or if reasonable progress
was being made cleaning up leaking tank sites.
According to OSWER Directive 9650.10, Regions are supposed to
make a yearly evaluation of state programs to:
• Ensure adequate environmental protection through sound use
of the LUST Trust Fund;
• Describe the progress of programs on a regional scale; and
• Identify the successes and problems encountered in state
programs.
In our view, the Region's evaluations were not accomplishing
these objectives. Our review disclosed that neither the Region,
the state, or the state's regional boards had formally evaluated
the performance of the local agencies. Such an evaluation was
important since the 21 local agencies expended approximately $7.3
million, or 75 percent, of the LUST CA funds provided by EPA
between FY 1988 and 1990, as shown in the following chart.
Total LUST Expenditures
Fiscal Years 1 988, 1989. and 1990
State Board
$0.9 million
Regional Boards
$1.5 million
Local Agencies
$7.3 million
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We also determined that the Region did not make site visits to
evaluate the local agencies, even though the majority of site
clean-up oversight efforts were occurring at this level. In our
opinion, field site visits are essential to identify successes,
problems, and possible solutions. The site visits could also be
used as a means of verifying the program results information
which the state provided to the Region.
MONITORED
The Region was not monitoring the progress of leaking tank site
clean-ups in California. As of the date of our audit, there was
a large backlog of leaking tank sites in California, and the
backlog was continuing to increase.
However, the Region was not adequately using one of the primary
management reports available to assist in evaluating California's
LUST program. The state prepared quarterly State Activity
Reports (STARS) which identified the number of: (i) confirmed
leaking tank sites; (ii) sites where clean-up was in process;
(iii) sites where releases were under control; and (iv) site
clean-ups completed. Preparation of the STARS report is governed
by OSWER Directive 9650.10 and subsequent clarification letters.
We determined that STARS was not reviewed or tested for accuracy
by the Region to measure the effectiveness of the state's
progress. Instead, the Region merely transmitted the unreviewed
STARS report to EPA Headquarters.
According to the OSWER Directive, Regions were to utilize STARS
reports when making annual state evaluations. In addition, the
STARS reports were used by EPA's Office of Underground Storage
Tanks to evaluate national and state programs and to report to
Congress. Further, EPA Headquarters used the STARS reports to
allocate LUST funds nationally. For example, in FY 1993, EPA
Headquarters indicated that it was planning to distribute a $4
million, performance-based "bonus" pool. The pool was to be
allocated on the basis of the number of LUST site clean-ups
initiated as a percent of the total confirmed universe of leaking
tank sites. The allocation was to be based on information
included in the STARS report.
Our review also disclosed that the STARS data reported by the
state were inaccurate and key performance indicators were
overstated, including one applicable to the number of site clean-
ups initiated, by as much as 30 percent. Since the Region had
not validated the accuracy of the STARS data, EPA Headquarters
was receiving inaccurate performance data that may adversely
impact conclusions regarding the status of the LUST program.
This could lead to making status reports to Congress that
overstate the number of site clean-ups initiated, or result in
the incorrect allocation of LUST funds to California.
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STARS Information Not
The Region did not use the STARS reports or supporting data to
evaluate the state's progress or effectiveness in cleaning up
leaking tank sites. The information in California's STARS report
was based upon the state's computerized Leaking Underground
Storage Tank Information System (LUSTIS) data base. LUSTIS was
designed to meet the state's internal reporting needs. The
LUSTIS information was input by the regional boards. Although
the supporting LUSTIS information showed that the state was not
effectively managing some high-priority cases, the Region did not
consider the LUSTIS data when evaluating the state's performance.
For example, the Region was not following up on the lack of
clean-up action at high priority sites. To illustrate, the
September 30, 1991 LUSTIS report showed two cases of leaking tank
sites impacting drinking water, but that no clean-up action had
been initiated. However, since the Region had not reviewed the
LUSTIS information, the Region did not follow-up with the state
to determine why no action had been taken on these cases. It
should be noted that the March 31, 1992 LUSTIS report again
reported that no action had been taken on these same two cases.
STARS Report Significantly Overstates LUST Information
We found that the STARS report significantly overstated
information concerning the number of (i) leaking tank site clean-
ups initiated, and (ii) leaking tank sites. These discrepancies
were allowed to continue because the STARS information was not
reconciled to the LUSTIS data base, and it was based on
inaccurate information. Since the Region had not verified the
accuracy of the STARS reports, the overstated information was
transmitted to EPA Headquarters. It is important that STARS
information be accurate because it is consolidated with STARS
information from other states and used to report the status of
the LUST program to Congress. Additionally, the STARS data are
used to make nationwide LUST funding decisions.
We reviewed California's STARS report dated December 31, 1991 and
found the following problems.
Number Of Clean-Ops initiated inflated. We found that the number
of reported leaking tank site clean-ups initiated in the state
was inflated by about one-third. The STARS reported 5,860 site
clean-ups were initiated. However, the supporting LUSTIS
information showed that only 4,459 clean-ups were initiated. The
difference of 1,401 clean-ups, or 31.4 percent, represented a
significant overstatement of the number of clean-ups initiated.
This condition appeared to have occurred because some sites were
counted more than once due to a change in the transaction code in
the LUSTIS data, which was not corrected in the STARS. As time
passed and more of the LUSTIS transaction codes changed, the
number of clean-ups initiated reported in STARS became
increasingly overstated.
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Unconfirmed Leaking Tank Sites Reported. Leaking tank sites that
had not been confirmed were reported as confirmed leaking sites
in STARS. This was a significant inaccuracy, since the number of
tank sites verified or otherwise confirmed as leaking. We found
the state assumed that all sites coded in the LUSTIS data base as
"No Action" were confirmed leaks. However, according to regional
board personnel, some unconfirmed sites were included in the "No
Action" classification, and therefore, were improperly reported
as confirmed leaks in STARS.
Unregulated Leaking Tank Sites Reported. The number of leaking
tank sites was also overstated because unregulated tank sites
(i.e. above ground tank sites) and some unlocatable sites were
included in STARS. The LUST funding is only to be used for
underground tank sites regulated by Federal laws. Unregulated
heating oil tank sites, farm tank sites, and above ground tank
sites are ineligible and should not have been included in the
STARS report.
Our limited review of 10 selected sites purportedly impacting
groundwater handled by one regional board and reported in STARS
as underground regulated leaking tanks showed two instances of
incorrect reporting:
• One site was an above ground tank site, which was not
part of the LUST program; and
• One site could not be located at the address listed in the
regional board's records.
Because our review was limited, we cannot statistically project
the number of overstated leaking tank sites being reported in
STARS. However, if the overstatement is anywhere near the error
rate found in our limited review, it could represent a
substantial reporting problem.
Use Of Outdated Information
The latest STARS report we reviewed was based on data that was
three months old. The December 31, 1991 STARS report was based
on a September 30, 1991 LUSTIS summary report. However, STARS
reported that the information was current as of December 31,
1991. State personnel stated that they did not have enough time
to compile the STARS report, and were, therefore, forced to use
old data.
STARS Information Not Reconciled
We found that the information included in the STARS report could
not be reconciled with the supporting LUSTIS data base. The
STARS report was produced using a computer program which
rearranged data in the LUSTIS data base. However, state
personnel had not documented how this process worked, or
reconciled the differences between the two systems. As a result,
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significant inaccuracies, such as an overstatement of the number
of site clean-ups initiated, were reported to EPA.
The state initiated some corrective actions after we informed
them of these problems. For example, the state established a
new method of computing STARS performance measures to help
eliminate sites from being counted more than once. In addition,
the state initiated actions to purify the LUSTIS data base
through additional reviews and staff training. However, we
believe it is important for the Region to assure that the state's
actions will result in reliable STARS information. To accomplish
this, the Region should independently verify the accuracy of
STARS information on a periodic basis. These verifications
should include making site visits to responsible local agencies.
RECOMMENDATIONS
We recommend that the Regional Administrator:
1. Include all LUST core program activities identified by OSWER
guidance in California's LUST CA work plans.
2. Establish procedures for evaluating the effectiveness of
California's LUST program. In this regard, the procedures should
include the state's use of all LUST CA funds provided, including
those funds provided to agencies in the state's Local Oversight
Program.
3. Expand the Region's annual year-end evaluation process to
include site visits to local agencies receiving LUST CA funds.
During the site visits, the Region should: (i) verify the
accuracy of status reports; (ii) identify potential programmatic
problems; and (iii) confirm program results reported by the
state.
4. Assure that the STARS report reflects the actual status of
California's LUST program by: (i) requiring periodic
reconciliation with the LUSTIS data base; (ii) including the most
current quarter's information in the STARS report; (iii)
reviewing the accuracy of the STARS report before it is
transmitted to EPA Headquarters; and (iv) holding the state
accountable for any inaccurate data.
REGIONAL RESPONSE AND PIG EVALUATION
Regional Response. The Region provided the following specific
comments to our recommendations.
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Regional Response To Recommendation 1. The Region agreed "that
all LUST core activities [will] be included in cooperative
agreements and workplans."
Regional Response To Recommendation 2. The Region agreed and
said:
We have a procedure for evaluating the State's whole
program, including the LUST program, and not limited to
the Cooperative Agreements. We recommend that in order
to evaluate the use of the State's use of the funds,
future Cooperative Agreements will request the state to
do performance reviews on Local Oversight Programs. In
addition, we will use new tasks previously outlined in
this document to monitor the effectiveness of the
State's program.
Regional Response To Recommendation 3. The Region agreed to
"increase" the number of sites visits to local agencies, in order
to provide assistance. The Region said that, in FY 1993, it
will:
...conduct a few site visits and case reviews in order
to meet this need, as well as continued reviews of
selected site reports from State visits to counties.
The Federal oversight function is to ensure that the
State demonstrates compliance and ensures that cases
get closed.
Regional Response To Recommendation 4. The Region responded
that:
Reconciliation of the LUSTIS database and STARS is in
the current workplan, and we will be assisting the
State this quarter to identify problems. The problems
of definition and interpretation in the STARS database
are nationwide.
OIG Evaluation. The Region's comments to recommendation nos. l
and 2 are considered responsive to our recommended actions. With
respect to recommendation no. 3, the Region's reply was not fully
responsive to our specific recommendations to: (i) verify the
accuracy of status reports; (ii) identify potential programmatic
problems; and (iii) confirm program results during site visits.
These issues must be addressed in the final determination process
to ensure state reported program results are accurate and
reliable.
In regard to recommendation no. 4, the Region's response was
considered incomplete, since it did not address our
recommendations for:
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• Including the most current quarter's data in the STARS
report;
• Reviewing the accuracy of the STARS report before it is
transmitted to EPA Headquarters; and
• Holding the state accountable for any inaccurate data.
Considering the importance of the STARS report in both funding
decisions and reporting program status to Congress, we believe
the recommended management controls are essential.
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CHAPTERS
STATE PROGRAM WAS NOT MOVING TOWARD
TIMELY APPROVAL
Although EPA has recognized a link between LUST Trust Funds and
the Underground Storage Tank (UST) regulatory program, the Region
has not successfully used LUST funds as an incentive to encourage
California to obtain timely approval of its state program. The
Region has awarded about $15.8 million in LUST CA funds to the
state. However, we do not believe that the state has made
reasonable progress toward getting its state program approved.
Specifically, we found that:
• The state has requested and received three time extensions
to its deadline for submitting a draft state program to the
Region for approval. These extensions have delayed
submission of the draft program by more than three years.
• Although the Region planned to incrementally approve each
of the six required components of the state's program, none
of the components had been approved.
• The state had not yet submitted for approval three of the
required program components, namely: the memorandum of
agreement with EPA; the state's demonstration that its
enforcement procedures were adequate; and a letter from the
Governor requesting program approval.
We concluded that the state had little financial incentive to
submit its program for approval, since the Region has not made
LUST CA funding contingent upon this approval, and there were no
financial penalties for not having its program approved. The
most obvious adverse effect of this situation in the LUST program
is that the state's enforcement program was inadequate. As we
discussed in Chapter 3 of this report, this has led to extended
delays in initiating clean-up actions at leaking tank sites. We
also noted that the other states (Nevada, Arizona, and Hawaii) in
Region 9 do not yet have approved state programs.
BACKGROUND
SARA established a Trust Fund for both cleaning up leaking tank
sites and enforcing clean-ups by owners and operators. According
to the preamble to Volume 53, No. 185 of the Federal Register
dated September 23, 1988, the LUST Trust Fund is just a short
term solution to the problem of leaking tank sites. The long
term solution is for states to have their own UST programs that
prevent leaking tanks. The preamble states that:
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EPA, therefore, has made a link between the LUST Trust
Fund and UST regulatory program to ensure that future
contamination is minimized...a state's success in
making reasonable progress toward submitting a
completed application for state program approval may be
grounds for increasing state access to the Trust Fund
in FY 90 and thereafter. EPA realizes that 'reasonable
progress' toward submitting a complete application will
vary depending upon the status of the individual state
program. EPA intends to develop criteria for measuring
state progress, and will evaluate progress for each
individual state...
According to EPA's transition strategy, included in OSWER
Directive 9610.5, the focus of EPA's program is to expedite state
implementation of the national program. In this respect, states
are allowed to administer and enforce state programs for
underground storage tanks in lieu of the Federal program. EPA
can approve a state's program if it:
• Includes requirements that are no less stringent than the
corresponding Federal requirements; and
• Provides for adequate enforcement of program requirements.
Because the long term goal of the program is to prevent leaks,
EPA has recognized that LUST CA funding should be linked to a
state's progress in getting state program approval. The idea is
that an effective state program will prevent leaks, eventually
eliminating the need for LUST CA funding.
CALIFORNIA WAS NOT MAKING REASONABLE PROGRESS IN
OBTAINING PROGRAM APPROVAL
California has not demonstrated reasonable progress in getting
its state program approved. EPA anticipated having state
programs approved shortly after applicable Federal regulations
became effective. According to EPA's transition strategy:
When the Federal UST regulations become effective in
early FY 1989, most states will be in the process of
developing state regulations and beginning to assemble
applications for program approval...Regions and states
need to identify appropriate activities for each to
undertake during the transition period between the
effective date of the Federal regulations to the dates
state programs are authorized by EPA to operate in lieu
of the Federal program...The length of the transition
period will vary by state, ranging from a few months to
two years or more.
In our opinion, the state has not made reasonable progress toward
obtaining state program approval. It did not provide a schedule
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for submitting its state program components, such as laws and
regulations, to the Region for approval until late in 1991, or
about three years after the Federal regulations were effective.
Further, the Region has continually allowed the state to extend
its deadline for submitting a draft application for program
approval, without any financial penalty, such as a reduction in
its available LUST CA funding:
• In FY 1989, the state advised that it anticipated
submitting a draft state program application to EPA by
September 1990;
• In FY 1990, as part of its LUST CA work plan for FY 1991,
the state promised to submit a draft application for state
program approval by July 1991; and
• In 1991, the date for submission of the draft application
was pushed back to October 1992, due to "competing
priorities".
In its FY 1991 mid-year LUST evaluation, the Region expressed
concern over the state's on-going delays and commented that:
EPA is concerned about the tardiness of State Program
Approval application related work plan submittals.
Although most of the late submittals can be attributed
to a shortage of staff available to conduct the work,
EPA suggests that the SWRCB [the state] place more
emphasis on completing the work required to submit an
application for State Program Approval.
In its subsequent FY 1991 year-end evaluation, the Region
commented that it was "pleased with the increased emphasis and
attention the SWRCB [the State] is giving to State Program
Approval and the development of an application package".
However, the state again delayed submission of its draft
application for state program approval until FY 1993.
As of December 31, 1991, three of the six components required of
a state program had not been submitted to the Region for
approval, and none had been approved by the Region. According to
40 CFR 281.20, a state application for program approval must
include the following six components: (i) a program description;
(ii) applicable laws and regulations; (iii) the demonstration of
adequate enforcement; (iv) a memorandum of agreement between the
state and EPA; (v) a statement from the Attorney General
certifying that the state has the authority to carry out the
program; and (vi) a letter from the Governor requesting program
approval. The three components not yet submitted for approval
included: the memorandum of agreement; the demonstration of
adequate enforcement; and the Governor's letter. The other
components were in various stages of regional review, and had not
been approved as of the date of our audit.
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The state cited several reasons for its delayed program
submittals including: competing priorities; limited staff; and
organizational and personnel changes within the state. We
acknowledge the state's position. However, in our opinion, the
state's response suggests a high priority has not been placed on
the timely preparation and submission of the program approval
packages.
LACK OF INCENTIVE FOR PROGRAM APPROVAL
We believe that the primary reason for the state's lack of
progress in getting its program approved was that it had little
financial incentive to do so. In this respect, the state was
aware that the Region has not made LUST funding contingent upon
state program approval. However, OSWER Directive 9650.10
encourages the Region to link state program approval to LUST
funding as shown below:
EPA Regions are encouraged to use the (LUST) Trust Fund
as an incentive for states to develop programs and
apply for program approval. Regions should develop
criteria to measure and evaluate state progress. They
should consider the degree of progress in allocating
Trust Fund monies to States. (Underscore added.)
Our review disclosed that the Region had not applied the concepts
included in the OSWER directive. It has, instead, continued to
provide LUST CA funds to the state despite the state's lack of
progress in preparing its program application. The Region also
had not developed objective criteria for evaluating a state's
progress. As a result, the preparation of California's draft
program application has been delayed for more than three years
from its original target date of September 1990 to October 1992.
In a September 1991 meeting, state personnel confirmed that there
currently was little financial incentive for the state to have
its program approved by the Region. The program personnel stated
that "If EPA was to tie (the availability of) LUST Trust funds to
obtaining state program approval, then the state would seek to
have its program approved."
Shortly after this meeting, the Region reported in its initial FY
1991 evaluation that California had shown a "willingness to
increase its emphasis on proceeding with the development of the
State Program Approval (SPA) application." We are not clear as
to the basis for the above statement in view of the state's
comments in September 1991. It appears that the Region's
optimism was unfounded because the state subsequently requested a
delay in submission of its draft application for state program
approval until FY 1993.
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In its final FY 1991 evaluation in February 1992, the Region
finally threatened to tie LUST CA funding to program progress and
advised the state that:
Staffing shortages and changes within the SWRCB have
caused many delays in work plan output submittals,
particularly those pertaining to quarterly reporting to
EPA and the development of a SPA [State Program
Approval] application...SPA application development may
become tied to LUST Trust Fund allocation.
There was no indication that the Region followed up on the above
letter. We believe that the state should be formally advised
that future LUST funding will be linked to satisfactory progress
on completing an approvable draft program application.
STATE PROGRAM WAS NOT IN COMPLIANCE WITH FEDERAL
REQUIREMENTS
Lack of state program approval has essentially allowed the state
to operate its LUST program without fully complying with Federal
requirements for the past five years. In this regard, we found
that California's LUST program:
• Included requirements that were less stringent than the
corresponding Federal requirements; and
• Did not provide for adequate enforcement of program
requirements.
State Clean-Up Enforcement Rules Not As Stringent As EPA's
We found that the state's laws and regulations were not as
stringent as EPA's in the enforcement area. In this respect,
state law provided for lower maximum penalty amounts, and more
lenient penalty computation procedures.
Maximum Penalty Amounts. State law was not as stringent as RCRA
requirements with respect to maximum penalties. RCRA, Subtitle
It Section 9006 states that: "Owners or operators who fail to
comply with underground tank requirements are subject to a civil
penalty not to exceed $10,000 for each tank for each day of
violation." However, California law limited maximum civil
penalties to $5,000 for each tank per day.
The guidance contained in RCRA, Section 9004, makes it clear that
a state program cannot be approved unless an adequate enforcement
program is in place. This guidance states that:
State programs may be approved by the [EPA]
Administrator only if the state demonstrates that the
state program provides for adequate enforcement of
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compliance with [underground tank] requirements and
standards.
In discussing the maximum penalty differences with regional
staff, they advised that California's $5,000 penalty amount was
considered adequate pursuant to 40 CFR 281.41(a)(3) which states
that:
Civil penalties for failure to comply with any state
requirements or standards for existing or new tank
systems must be capable of being assessed for each
instance of violation, up to $5,000 or more for each
tank for each day of violation. (Emphasis added.)
While the above Federal regulation appears to give the Region the
authority to approve a state program where maximum penalties are
less than $10,000 per tank per day, but at least $5,000, we
believe that the Region should consider requiring California's
program to include the higher maximum before it approves the
state program.
Many of California's recalcitrant tank owners and operators were
large oil companies that face high costs for cleaning up leaking
tank sites. In our opinion, the state needs the ability to
assess a higher penalty level to promote compliance and deter
would-be violators. This is particularly true since it is
unlikely that the Region would initiate any enforcement actions
on its own, given the large size of the regulated community and
the limits on Federal resources. We also noted that Arizona,
another state in Region 9, has adopted a maximum penalty of
$10,000 per day per tank.
State Penalty Computation Procedures. Our review disclosed that
the Region has not required California to develop enforcement
policies that met the requirements of EPA's General Enforcement
Policy No. 21. This policy provides that "...the penalties
generally should, at a minimum, remove any significant economic
benefits resulting from the failure to comply with the law."
During our review of California's LUST enforcement program, we
found that penalties were not being computed to offset economic
benefits (see Chapter 3 of this report). Penalties were
significantly less than what was required to offset the economic
gain that owners and operators realized by not complying with
underground tank requirements* In order for the state program to
be approved, we believe that its enforcement policies must meet
the requirements of EPA's General Enforcement Policy No. 21.
As indicated in Chapter 3 of this report, the Region has allowed
California to operate an inadequate LUST enforcement program.
During our audit, regional program officials assured us that they
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would require the state to implement an effective enforcement
program. While these comments are acknowledged, our audit
disclosed the following serious enforcement weaknesses existed in
the state:
• Enforcement actions were generally not being taken against
owners or operators that were not cleaning up their leaking
tank sites;
• Clean-up-and-abatement orders were not being followed, and
penalties were not being assessed;
• Enforcement actions were issued months or years after a
deadline for a cleanup action had passed; and
• When penalties were assessed, they did not deter
noncompliance because they were less than the cost of a
clean-up or the minimum penalty allowed under state law.
Since an adequate enforcement program is a required component for
approval of a state program, the California program should not be
approved until it can demonstrate it is taking prompt, aggressive
enforcement actions and assessing penalties that at least exceed
the cost of compliance.
PROGRAMS
During the course of our review, we learned that the States of
Arizona, Hawaii, and Nevada were having similar problems
developing their state programs. None of the state programs for
these states had been approved, and there were indications that
their enforcement laws were also insufficient. Therefore,
we believe the recommendations in this finding relating to the
state of California can also be applied to the other states in
Region 9.
Slow Progress In Program Approval
Arizona, Hawaii, and Nevada did not have approved state programs.
At the time of our audit, only Nevada had submitted a draft
application for state program approval.
None of these states appeared to be making rapid progress toward
approval of their state programs, although they had collectively
received about $6 million in LUST funding between FY 1987 and FY
1991. From information obtained during our review, it appears
doubtful that Nevada's program will be approved before 1993.
Similarly, Arizona and Hawaii do not anticipate program approval
until 1994 and 1995, respectively. Until their state programs
are approved, there is little assurance that state programs can
operate effectively in lieu of the Federal program. Our
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discussion of the problems being experienced by these states are
included in the following subparagraphs.
State Of Nevada. The Region had identified a deficiency in
Nevada's enforcement law in December 1990, and recommended that
the state revise the law. However, when Nevada submitted a draft
of its state program for preliminary approval in March 1992, over
one year later, it contained the same deficiency. Because
Nevada's legislature meets only once every two years, this
deficiency cannot be corrected until 1993.
In the meantime, Nevada has been operating with an enforcement
law that is much less stringent than the Federal law. Nevada's
state law, like California's, provided for a maximum penalty of
only $5,000 per day, rather than the $10,000 provided for in the
law. In addition, Nevada's maximum penalty was to be assessed on
a per site basis, instead of on a per tank basis, as authorized
by Federal law.
State Of Arizona. Arizona has not developed its implementing
regulations for the LUST program. It originally planned to
submit its regulations for approval in early 1992. However, it
explained that a change in key state personnel resulted in the
regulations being recalled for additional review and revision by
the state. The Region estimated that it did not anticipate
program approval until 1994. However, as of the date of our
review, a target date had not been established for the submission
of the state regulations for EPA approval.
State Of Hawaii. Hawaii has done little to develop its state
program. The state did not pass its underground storage tank
laws until June 1992, more than three years after the Federal
regulations became effective. At this time, the Region does not
anticipate final program approval until 1995.
In our opinion, the linking of the LUST CA funding with the
program approval process for the above states would help to
expedite the states' actions.
RECOMMENDATIONS
We recommend that the Regional Administrator:
1. Make future LUST CA funding contingent upon the Region's
approval of the state program. In making this approval, the
Region should, as a minimum, make sure that:
a. Objective criteria is developed to measure and evaluate
state progress.
b. LUST CA funding is tied directly to submission of a
draft state program for EPA approval.
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c. The state has provided for the adequate enforcement of
program requirements.
2. Require state leaking tank site clean-up enforcement laws to
be at least as stringent as the Federal law before approving a
state program. In this respect, the Region should make sure the
states adopt enforcement penalty guidance at least as stringent
as EPA's General Enforcement Policy No. 21.
REGIONAL RESPONSE AND PIG EVALUATION
Regional Response. The Region agreed with recommendation I.e.,
and stated that it "will ensure that the state provides for
adequate enforcement through evaluation and negotiation of the
compliance, monitoring and enforcement policy and procedures..."
The Region did not agree with recommendation nos. l.a. and l.b.
and provided the following specific comments. The grantee did
not respond to recommendation 2.
Regional Response To Recommendation 1. The Region commented
that:
We feel strongly that tying future funds to program
approval would be counterproductive, simply diverting
funds needed to continue building local capability so
that the program COULD be delegated. The state has
moved forward on state program approval, and is
developing and improving their program. It should be
recognized at the outset, that limited resources are
available for State program oversight.
The State is moving consistently towards program
approval, and has completed portions of an application.
We anticipate completion of a complete preliminary
application in the near future. The size of the
State's universe, and"the complexity of its
administrative process makes it unique in the nation.
We believe that the State has shown more than adequate
progress towards state program approval. Moreover, we
have a target date for formal approval of late 1993 or
early 1994. Making future LUST funding contingent upon
Regional approval of the program is not appropriate at
this time.
Headquarters has decided to direct LUST carryover funds
to those states with approved programs as a 'bonus' for
those states who have achieved state program approval.
We believe that the carrot, versus the stick approach,
is a more powerful motivator. In addition, to
drastically modify distribution of LUST funds in the
Region further would not provide the desired outcome.
Funding helps to build state and local capacity.
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Reducing current funding levels would be a drastic
measure and would compromise present levels of
capability.
Regional Response To Recommendation l.a. The Region said that
"Objective criteria exist in Headquarters guidance and in the
LUST cooperative agreement. We are currently using this criteria
to evaluate state progress through their state program
application pieces."
Regional Response To Recommendation l.b. The Region commented
that:
California has made tremendous progress towards
submittal of an application, and we anticipate a full
application in 1993. Using distribution of LUST funds
to make application submittals faster would not be
productive. During FY 93, we will be identifying and
evaluating obstacles to program approval for all our
States. Many of these obstacles are being encountered
nationwide, and are often beyond State control.
OIG Evaluation. Our comments, keyed to the Region's response,
are as follows:
Recommendation 1. We disagree that linking LUST funding to
state program approval would be counterproductive. The state has
extended its deadlines for state program approval on three
occasions, delaying submission of a draft program by more than
three years. We were advised by state personnel that there was
little financial incentive for the state to have its program
approved by the Region. They indicated that "If EPA was to tie
LUST Trust Funds to obtaining state program approval, then the
state would seek to have its program approved."
Further, the guidance contained in OSWER Directive 9650.10
recommended the linking of LUST funding with state program
approval. The Directive states that "Regions should develop
criteria to measure and evaluate state progress. They should
consider the degree of progress in allocating Trust Fund monies
to States."
The Region's response discussed the use of objective criteria in
evaluating state progress. We concur with the use of such
criteria. However, if adequate progress was not being made, some
portion of LUST funding would be withheld pending completion of
planned activities. This would provide the state with incentive
to complete its planned program approval activities on a timely
basis.
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In addition, the Region should remember that the long-term goal
of the LUST program is to prevent leaks. It remains our position
that an approved effective state program will facilitate the
accomplishment of this goal.
The Region responded that the target date for the program
approval was in late 1993 or early 1994. We believe that a
specific target date should be established and monitored. During
the audit exit conference, regional representatives commented, if
the target dates were not met, it would consider an adjustment to
the LUST funding.
Recommendation l.a. Our audit showed that the Region was not
using objective criteria to evaluate progress toward state
program approval. Unless objective criteria is identified and
applied, the Region cannot support its determination that a state
is making "more than adequate progress" toward state program
approval.
Recommendation l.b. As previously noted, contrary to the
Region's position, state personnel acknowledged that tying LUST
funding to program approval would be productive. In our opinion,
the state has not given program approval a high priority. Tying
LUST funding to program approval could cause the state to give
program approval a higher priority.
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Local Agency
Alameda County
APPENDIX I
SCHEDULE OF AGENCIES IN THE
LOCAL OVERSIGHT PROGRAM
Agencies Excluded
Alameda Water District, Berkeley,
Fremont, Hayward, Newark, Pleasanton,
Union City
Humboldt County
Kern County
Los Angeles County
Merced County
Napa County
Orange County
Riverside County
Sacramento County
San Bernardino
County
San Diego County
San Francisco City
and County
San Joaquin County
Santa Barbara County
Santa Clara Valley
Water District
Solano County
Sonoma County
Stanislaus County
Tulare County
Ventura County
Burbank, Glendale, Long Beach, Los
Angeles, Pasadena, Santa Monica,
Torrance, Vernon
Anaheim, Fullerton, Orange, Santa Ana
Vallejo
Healdsburg, Santa Rosa
Ventura
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CA
LOP
LUST
LUSTIS
RCRA
SARA
STARS
UST
APPENDIX n
ABBREVIATIONS
Cooperative Agreement
Local Oversight Program
Leaking Underground Storage Tanks
Leaking Underground Storage Tank
Information System
Resource Conservation and Recovery Act
Superfund Amendments and Reauthorization
Act
State Activity Reports
Underground Storage Tank
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DISTRIBUTION
Region 9
Regional Administrator
Director, Hazardous Waste Management Division
Audit Follow Up Coordinator
Headquarters Office
Inspector General (A-109)
Deputy Inspector General
Director, Grants Administration Division (PM-216F)
Agency Follow Up Coordinator (PM-208)
Attn: Assistance Administrator for
Administration and Resources Management
Agency Follow Up Coordinator (H-3304)
Attn: Director, Resource Management Division
Assistant Administrator for Enforcement (LE-133)
Associate Administrator for Regional Operations (H-1501)
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