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Inspector General Divisions
Conducting the Audit:
Western Audit Division,
Lead Division
Northern Audit Division
Southern Audit Division
Regions Covered:
Region 2
Region 4
Region 5
Region 6
Region 7
Region 9
Region 10
Program Office Involved:
Office of Solid Waste and Emergency Response
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
THE INSPECTOR GENERAL
August 6, 1996
MEMORANDUM
SUBJECT: Consolidated Report on EPA's Leaking Underground
Storage Tank Program, Report No. E1LLF5-10-0021-6100264
FROM: Michael Simmons
Deputy Assistant Inspector General for
Internal and Performance Audits
TO: Elliott Laws
Assistant Administrator for
Solid Waste and Emergency Response
Attached is our final report titled Consolidated Report on
EPA ' s Leaking Underground Storage Tank Program . The purpose of
this consolidated report is to identify performance issues that
need attention so that Agency managers can target resources to
improve the overall program.
This report identifies corrective actions the Office of
Inspector General (OIG) recommends involving EPA's Leaking
Underground Storage Tank (LUST) program. As such, it represents
the opinion of the OIG. Final determinations on the matters in
the report will be made by EPA managers in accordance with
established EPA audit resolution procedures. Accordingly, the
findings described in this 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 of
Justice .
In accordance with EPA Order 2750, we have designated the
Assistant Administrator for Solid Waste and Emergency Response as
the Action Official for this report. The Action Official is
required to provide this office with a written response to the
audit report within 90 days of the final report date. The
Printed on Recycled Paper
Recycled/Recyclable
Printed with Soy/Canola Ink on paper that
contain* at laast 50% recyded fiber
-------
response should address all recommendations. For corrective
actions planned but not completed by the response date, reference
to the specific milestone dates will assist us in deciding
whether to close this report. We have no objection to the
release of this report to the public.
Should you or your staff have any questions about this
report, please call Truman R. Beeler, Divisional Inspector
General for Audit, Western Division at (415) 744-2445, or Charles
Reisig, Team Leader at (206) 553-4032.
Attachment
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TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY 1
CHAPTERS
I - INTRODUCTION 1
PURPOSE 1
BACKGROUND 1
SCOPE AND METHODOLOGY 4
EVIDENCE EXAMINED 5
INTERNAL CONTROLS 6
2 - SOME HIGH RISK SITES NOT CLEANED UP 7
3 - COST RECOVERY PROGRAMS NEED IMPROVEMENTS 23
4 - ACTIVITY REPORTS MISLEADING 33
APPENDIX
APPENDIX A - ACRONYMS 45
APPENDIX B - OSWER RESPONSE TO DRAFT REPORT 47
APPENDIX C - REPORT DISTRIBUTION 61
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EXECUTIVE SUMMARY
PURPOSE
BACKGROUND
Congress
Created the
LUST Trust Fund
The purpose of this consolidated report is to
identify issues that need attention so that
Agency managers can target resources to
improve the overall program. This report
summarizes the issues relating to the Leaking
Underground Storage Tank (LUST) Program which
have been identified by Office of Inspector
General (OIG) audits. Several OIG audits
identified issues involving States' oversight
and enforcement of the clean-up of
significantly contaminated sites, cost
recovery of LUST Trust Fund expenditures, and
activity reporting.
The LUST Program's current focus is on
program results and not on adherence to
prescribed procedures. We have identified
three areas where program results should be
improved.
Leaking underground storage tanks pose
significant environmental risks throughout
the country. Because of national problems
with leaking underground tanks, the Congress
amended the Resource Conservation and
Recovery Act (RCRA) in 1984 to regulate
underground storage tanks. In 1988, the
Federal rules for regulating tanks took
effect. The rules, promulgated in the Code
of Federal Regulations (40 CFR 280 to 281),
require underground storage tank systems to
be designed and upgraded to protect against
leaks.
To further address the need to clean-up
contamination from leaking tanks, the
Congress passed the Superfund Amendments and
Reauthorization Act (SARA) in 1986. This Act
created a $500 million LUST Trust Fund,
financed by one-tenth of a cent tax on each
gallon of gasoline, diesel, and aviation
fuels sold. The Fund is to be used to
finance the clean-up of petroleum releases
from underground storage tanks. The Congress
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States operate
the LUST
Program with
EPA Oversight
RESULTS IN
BRIEF
subsequently removed the $500 million ceiling
and by 1995 the Fund had grown to over $1.5
billion.
SARA authorized EPA to provide LUST Trust
Funds to the States to operate the program
and clean-up the contaminated sites. States
are expected to play the primary or lead role
in managing the clean-up process because they
are better able to respond quickly and
effectively to leaks due to their proximity
to, and experience with, local site
conditions.
The EPA's role is to establish the regulatory
criteria, aid the States in establishing and
implementing their programs, and evaluate the
States' implementation of their programs
according to the work plan requirements in
the cooperative agreements.
The results of OIG audits are consolidated in
this report. Those audits reviewed nine
States' LUST programs which received 26
percent of the total LUST Trust Fund
allocation for fiscals 1987 - 1995. We
focused on three areas: (i) oversight and
enforcement of high risk sites; (ii) cost
recovery from responsible owners and
operators; and (iii) States' reporting of
program results.
We found that the States' LUST programs can
be improved. Specifically, we found that
States could improve:
• Oversight and enforcement on some high
risk sites.
• Cost recovery from owners and operators
who are responsible.
• Reporting of program results.
Although States were making notable progress
in cleaning-up many LUST sites, our reviews
of 249 high risk sites disclosed that 126
(one half) had not received appropriate
corrective action. The States did not focus
sufficient resources to remediate potentially
11
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PRINCIPAL
FINDINGS
Oversight and
Enforcement
Needed for Some
High Risk Sites
Some Cost
Recovery
significant threats to human health and the
environment.
There were major differences in results
between the States' cost recovery programs.
Some States had effective programs that
recovered significant amounts from owners and
operators, other States achieved partial
recoveries, and two States did not have cost
recovery programs. One result of ineffective
cost recovery programs is that owners and
operators of leaking tanks were not held
liable for the costs of cleaning-up their own
sites.
We found that the States' activity reports
(reporting of program results) were generally
unreliable and potentially misleading.
Our findings are summarized below and
discussed in detail in CHAPTERS 2 through 4
of this report.
We found that five States could improve
oversight and enforcement to remediate some
high risk sites. We reviewed 249 high risk
sites and found that 126 sites did not get
adequate oversight or enforcement to ensure
protection of human health and the
environment.
Overall, States were making notable progress
in cleaning-up LUST sites, but some high risk
sites needed more oversight and enforcement
actions. Under the LUST Program, States are
responsible for establishing clean-up
programs that protect human health, and the
environment. Some States have more effective
programs than other States. For example,
Ohio did a good job of managing LUST
activities and directing its resources toward
the clean-up of high priority sites.
However, California, Idaho, Kansas, New York,
and Oregon could have directed more attention
toward oversight and enforcement of
responsible party clean-ups for some serious
sites.
For the States in our review, there were
major differences among the cost recovery
111
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Programs Need
Improvement
Activity
Reports Were
Not Accurate
RECOMMENDATIONS
programs and their success in achieving
intended results. We found that: (i) two
States maintained effective cost recovery
programs; (ii) three States needed
improvements in their cost recovery programs;
and (iii) two States did not have cost
recovery programs.
The primary purpose of a cost recovery
program is to provide incentives for owners
and operators to clean-up releases from their
own tanks. When States do not recover clean-
up costs from those owners and operators who
are responsible for paying, the States is:
(i) relieving them of their financial
obligation; (ii) removing the financial
incentive to clean-up contamination; and
(iii) shifting the burden of clean-up costs
to the Federal government. Ineffective cost
recovery programs hinder the efforts of the
LUST Program to protect human health and the
environment.
We found that the quarterly activity reports
submitted by States to EPA did not accurately
report LUST Program results. For the States
reviewed, results were generally overstated.
The activity reports are used as a management
tool to track the most important program
activities. Therefore, it is necessary that
the information be accurate, complete, and
comparable for effective management of the
LUST Program.
Specific recommendations follow the findings
in CHAPTERS 2 through 4. In summary, we are
recommending that the Assistant Administrator
for Solid Waste and Emergency Response
implement management controls to ensure that:
1. States provide adequate oversight and
enforcement on high risk sites.
2. States develop and implement cost
recovery programs.
3. Reliable and timely information is
obtained, maintained, reported and used
for decision making.
IV
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AGENCY COMMENTS
AND OZ6
EVALUATION
OI6 Evaluation
A draft report was provided to the Office of
Solid Waste and Emergency Response (OSWER) on
May 16, 1996. The OSWER responded to the
draft report on June 27, 1996. The response
is summarized below and comments on specific
audit findings are described at the end of
the chapters. The response generally did not
acknowledge the problems identified in our
report, but it either agreed with the
recommendations or presented alternative
actions that meet the intent of our
recommendations.
The response said that the draft report did
not capture the tremendous success of its
State partners in completing over 140,000
LUST clean-ups, nor the magnitude of the
States' workload. As of March 31, 1996,
there were over 314,000 confirmed releases
from underground storage tanks. According to
OSWER these numbers are "astronomical and
unprecedented in other environmental
programs."
OSWER stated that the audit report
conclusions propose a greater level of
oversight and a more intrusive role for EPA
vis-a-vis state programs. It agreed that
management and accountability are important,
but those requirements present a difficult
quandary about asking States to do more with
less. However, OSWER did describe some
actions that have been, or will be, taken to
address the recommendations in our report.
We believe that OSWER's response does not
appropriately address the issues described in
our report.
We believe that OSWER7s emphasis on "the
magnitude of reported releases" circumvents
the issues. We specifically focused our
audits on those sites that posed the greatest
threat to human health and the environment.
OSWER's claim of 314,000 confirmed releases
does not appropriately distinguish between
sites where health and/or environmental risks
are serious (a small portion of confirmed
releases) and those sites where the risk is
relatively insignificant (a majority of the
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sites). As described in CHAPTER 2, our
conclusion is based on the testing we
completed for the high risk sites we sampled.
We found that 125 of 249 high risk sites did
not receive sufficient oversight or
enforcement.
Additionally, the 314,000 confirmed releases
and 140,000 clean-ups cited by OSWER are
suspect. As described in CHAPTER 4, we found
that the numbers were generally overstated.
We believe that we have given the States
credit for making significant progress. When
we found that a State had an effective
program in one or more of the three areas, we
gave recognition to that State in the report.
Finally, we believe that our recommendations
do not require an unreasonable level of
oversight and a more intrusive role for
OSWER. Our recommendations are in accordance
with the Government Performance and Results
Act of 1993 (GPRA) which support managing for
results. Also, the recommendations are not
in conflict with the performance partnership
initiatives which have requirements for
accountability. The recommendations in
CHAPTER 2 relate to the more efficient use of
scarce resources by focusing them on the
higher risk sites. The recommendations in
CHAPTER 3 relate to cost recoveries from
responsible parties which would provide
incentives to clean-up releases from their
own sites. The recommendations in CHAPTER 4
relate to the establishment of program
accountabi1ity.
VI
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CHAPTER 1
INTRODUCTION
PURPOSE
BACKGROUND
Health Risks
The purpose of this consolidated report is to
identify performance issues that need
attention so that Agency managers can target
resources to improve the overall program.
This report summarizes the issues relating to
the LUST Program which have been identified
by OIG audits. Several DIG audits identified
issues involving States' oversight and
enforcement of the clean-up of significantly
contaminated sites, cost recovery of LUST
Trust Fund expenditures, and activity
reporting.
The LUST Program's current focus is on
program results and not on adherence to
prescribed procedures. 'We have identified
three areas where program results should be
improved.
Leaking underground storage tanks pose
significant environmental risks throughout
the country. Because of national problems
with leaking underground tanks, the Congress
amended the RCRA in 1984 to regulate
underground storage tanks. In 1988 the
Federal rules for regulating tanks took
effect. The 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.
Leaking tanks pose a long term health threat
because they usually contain petroleum
products, which contain many harmful
substances. For example, benzene is a known
carcinogen which is often found in fuels and
related fuel vapors. Contact with petroleum
products can cause adverse effects including
nausea; irritation of the skin, eyes, and
throat; liver and kidney damage; and loss of
reflexes.
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Congress
Created The
LUST Trust Fund
States Receive
LUST Funds
Through
Cooperative
Agreements
To further address the need to clean-up
contamination from leaking tanks, the
Congress passed the SARA in 1986. This Act
created a $500 million LUST Trust Fund,
financed by one-tenth of a cent tax on each
gallon of gasoline, diesel, and aviation
fuels sold. The Fund is to be used to
finance the clean-up of petroleum releases
from underground storage tanks. The Congress
subsequently removed the $500 million ceiling
and by 1995 the Fund had grown to over $1.5
billion.
SARA authorized EPA to provide LUST Trust
Funds to the States to operate the program
and clean-up the contaminated sites. States
are expected to play the primary or lead role
in managing the clean-up process because they
are better able to respond quickly and
effectively to leaks due to their proximity
to, and experience with, local site
conditions.
The EPA regional offices provide LUST Trust
Funds to the States for implementing the
program through cooperative agreements (CAs).
States use this money to finance: (i) the
cost of site corrective actions;
(ii) enforcement action undertaken to get
owners and operators (responsible parties) to
take corrective actions; (iii) oversight of
responsible-party lead clean-ups; (iv) cost
recovery efforts of Trust Fund expenditures;
and (v) reasonable and necessary
administrative expenses directly related to
these activities.
Each LUST Trust Fund CA includes a work plan
that establishes requirements for the State's
clean-up program. In general, the States
oversee the clean-ups undertaken by the
responsible parties. This oversight involves
monitoring the clean-up plans, clean-up
progress, and disposal of contaminants. The
States also undertake the clean-up of sites
where a responsible party cannot be
identified or where the responsible party is
insolvent. The EPA's role is to establish
the regulatory criteria, aid the States in
establishing and implementing their programs,
and evaluate the States' implementation of
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their programs according to the work plan
requirements.
Allocation of
Trust Funds to
the States
Leaking underground tank removal and clean-up
A total of 55 States and territories have
CAs. From fiscals 1987 to 1995 over $545
million in Trust Funds were appropriated to
EPA, and EPA awarded almost $473 million to
the States. States reported cumulative Trust
Fund expenditures totaling over $361 million
as of the end of fiscal 1995.
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LUST Trust Funds allocated to the States
through CAs for fiscal 1995 totaled $61.2
million. The following graph illustrates how
the fiscal 1995 LUST Trust Fund allocation
was distributed among the 10 EPA regions.
FISCAL 1995 LUST TRUST FUND ALLOCATION
Dollar Amount by EPA Region
Millions
4567
EPA Region
8 9
10
To supplement LUST Trust Funds, 46 States
have established State financial assurance
funds to help owners and operators satisfy
the Federal statutory requirement for
evidence of ability to pay the costs of
corrective action. While these funds
collected more than $1 billion annually, many
are beginning to face solvency issues as
reimbursement requests increase.
SCOPE AND
METHODOLOGY
We performed our audit in accordance with
Government Auditing Standards -issued by the
Comptroller General. This consolidated
report represents a summation of findings
from nine DIG audits of States' LUST
programs. The audits covered the periods
between August 1987 to October 1995. LUST
Trust Funds allocated to the nine States
totaled $124 million out of $473 million (26
percent) for fiscals 1987 - 1995.
The scope of this consolidated report was
limited to the adequacy of the States'
procedures in three areas: (i) oversight and
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enforcement of corrective actions for high
risk sites (those sites that had contaminated
drinking water or otherwise had been
determined to be a significant threat to
human health and the environment); (ii) cost
recovery of Trust Fund expenditures; and
(iii) activity reporting.
Audit findings in three areas were reported
in seven audit reports and two sets of
position papers to the individual States.
The seven reports were issued to California,
Idaho, New Mexico, Ohio, Oklahoma, Oregon,
and Tennessee. The position papers were
issued to Kansas and New York. All the
audits were performed by the OIG staff except
for Oregon. Oregon's audit was performed by
independent public accountants under contract
with the OIG.
Six audits had been completed for California,
Idaho, New Mexico, Oklahoma, Oregon, and
Tennessee with varying scopes prior to the
decision to summarize common findings in a
capping report. To provide expanded coverage
of the LUST Program, we judgmentally selected
the States of Kansas, New York, and Ohio to
audit for fiscals 1994 and 1995. We also
wanted to determine whether problems
identified in earlier reports continued to
exist in more recent time periods. Our field
work in those States was conducted between
January 1995 and November 1995.
EVIDENCE To accomplish our objectives we:
EXAMINED
• Reviewed applicable laws, regulations,
and directives.
• Interviewed responsible EPA and State
officials.
• Examined records maintained by the
States.
The records reviewed included: CAs, States'
statutes and policies, management site
listings, site files including oversight and
enforcement documents, and States'
priority/assessment systems.
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INTERNAL We reviewed the internal controls associated
CONTROLS with the States7 LUST programs to the extent
we considered necessary to accomplish our
objectives. The controls we evaluated
included priority or assessment systems/
management site listings, document controls,
and information systems.
The internal control weaknesses noted in our
review are discussed in detail in CHAPTERS 2
through 4 of this report. Our
recommendations, if implemented, should
improve the internal controls in those areas.
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
either the program office or the regions were
not in compliance with any other terms and
conditions of applicable agreements, laws,
and regulations for the three areas of the
LUST programs tested and summarized in this
report.
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CHAPTER 2
SOME HIGH RISK SITES NOT CLEANED-UP
OVERSIGHT AND
ENFORCEMENT
NEEDED FOR SOME
HIGH RISK SITES
We found that one State did a good job of
directing its resources toward clean-up of
high priority sites. However, five States
could improve oversight and enforcement to
remediate some high risk sites. We reviewed
249 high risk sites and found that 126 sites
did not get adequate oversight or enforcement
to ensure protection of human health and the
environment.
Overall, States were making notable progress
in cleaning-up LUST sites, but some high risk
sites needed more oversight and enforcement
actions. Under the LUST Program, States are
responsible for establishing clean-up
programs that protect human health and the
environment. Some States have more effective
programs than other States. For example,
Ohio did a good job of managing LUST
activities and directing its resources toward
clean-up of high priority sites. However,
California, Idaho, Kansas, New York, and
Oregon could have directed more attention
toward oversight and enforcement of
responsible party clean-ups for some serious
sites.
We found that these States did not either:
(i) assess some LUST sites to determine the
risk to human -health and the environment; or
(ii) assign the appropriate level of
oversight or enforcement relative to the
potential risk. As a result, States did not
always initiate clean-up efforts on some
sites that were the most hazardous and
threatening to human health and the
environment, including those that posed a
threat to drinking water. In addition, we
found that some States' management reports
were not accurate and as a result did not
identify some serious sites.
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Management
Reports Were
Inaccurate
BACKGROUND
LUST site status reports were not accurate in
Idaho, Kansas, New York, and Oregon. As a
result, these States did not have reliable
information to effectively monitor LUST site
remediation progress. Without a current,
accurate, and complete site status report,
management could not assure that significant
sites were cleaned-up timely.
As discussed previously, SARA established the
LUST Trust Fund to assure rapid and effective
response to releases from leaking underground
storage tanks that pose a threat to human
health and the environment.
Subtitle I of the Resource Conservation and
Recovery Act authorized EPA to provide LUST
Trust Funds to States for the clean-up of
LUSTs through CAs. LUST CAs are agreements
between EPA and States that provide the basis
which EPA oversees and manages the use of
LUST Trust Funds. CAs identify the amount of
funds allocated to each State and establish
LUST Program performance requirements.
OUST gives the States latitude to tailor
their own programs and does not specify
clean-up levels or administrative procedures.
OUST has encouraged States to develop
programs where clean-up efforts are based on
factors that influence human health and the
environment.
OSWER Directive 9650.10, dated
February 8, 1989, provides guidance on LUST
CAs and for prioritizing LUST site corrective
actions. The Directive states:
The State will ensure that a priority system
for addressing underground storage tank
petroleum release sites is established and
maintained. The system will incorporate the
two priorities set in Section 9003(h) of the
Resource Conservation and Recovery Act.
These priorities are:
• Releases which pose the greatest threat
to human health and the environment.
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• Sites where the State cannot identify a
solvent owner or operator of the tank
who will undertake action properly.
In a memorandum, dated March 11, 1993, the
Director of the OUST, wrote:
... even in streamlined programs, all
sites cannot and should not receive the
same degree of oversight. States will
likely need to focus their limited
technical resources on more complex or
hazardous sites. Therefore, we
encourage the use of risk-based priority
systems as a way to determine the
appropriate degree of oversight that
should be given to specific sites.
OSWER Directive 9610.17 dated March 1, 1995,
states that EPA's regulations dealing with
Underground Storage Tank (UST) corrective
actions are aimed at protecting human health
and the environment. Under the regulations,
UST implementing agencies, including EPA, are
expected to establish goals for the clean-up
of UST releases based on consideration of
factors that could influence human and
environmental exposure to contamination.
The Directive recommends that States use a
risk-based decision-making approach as an
integral part of the corrective action
process at sites where leaking underground
storage tank systems have released petroleum
products into the environment and thus
created risks to human health and the
environment.
The EPA's role is to establish the regulatory
criteria, aid the States in establishing and
implementing their programs, and evaluate the
States' implementation of their programs
according to the requirements. OMB Circular
A-123 provides guidance to Federal managers
as they develop and implement strategies for
reengineering agency programs and operations.
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OMB policy for
management
accountability
SOME HIGH RISK
SITES NEEDED
MORE ATTENTION
OMB Circular A-123 defines management
accountability as: "the expectation that
managers are responsible for the quality and
timeliness of program performance, increasing
productivity, controlling costs and
mitigating adverse aspects of agency
operations, and assuring that programs are
managed with integrity and in compliance with
applicable law."
We selected judgmental samples of high risk
sites to determine if the levels of oversight
and enforcement were appropriate in
California, Idaho, Kansas, New York, Ohio,
and Oregon. These six States received $97
million of the $473 million (21 percent) LUST
Trust Funds awarded for fiscals 1987 - 1995.
Of the 249 high risk sites that we reviewed,
we found that 126 (one half) did not get
adequate oversight or enforcement to ensure
protection of human health and the
environment. We limited our scope to
oversight and enforcement of high risk sites
because they should receive priority in times
of scarce resources. We selected sites
designated by the States as either high
priority or as having petroleum contaminated
groundwater.
10
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,- ;
CALIFORNIA
Site where soil and groundwater were contaminated
In our reviews of high risk sites, we did not
take exception to States' priority or
risk-based systems, except in the State of
California where the system was not adequate
to identify the most serious LUST sites. We
issued findings when States failed to
identify or to provide oversight or
enforcement of high risk sites in accordance
with their own policies.
At each State, we reviewed the State's
priority policy/procedures for addressing
LUST site corrective actions. We found that
each State had a policy in place but that the
policy was not always followed. We reviewed
site files and held discussions with program
officials for the 249 high risk sites. Of
the 249 sites reviewed, we determined that
for 126 sites oversight and enforcement could
be improved as described below.
We reported that the priority system for LUST
clean-up was unacceptable and that the
State's LUST enforcement program was
ineffective.
11
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Priority System
For Clean-ups
Was
Unacceptable
California's
Enforcement
Program was
Ineffective
We concluded that the State's priority system
did not identify some sites most
environmentally threatening to groundwater.
Further, we found that the priority system
established by the State was not being
followed.
As a result, some leaking tank sites
affecting drinking water were not being
cleaned-up. We found that 48 of 69 leaking
tank sites, identified as affecting drinking
water, were not being cleaned-up timely. The
leaks at these 48 tank sites had been known
for 3 to 14 years.
For example, a site in Vacaville, California,
where a leaking tank at a gas station was
discovered in March 1988, was found to be
polluting a domestic well used for drinking
water. The owner had not responded to a
two-year-old request for a final clean-up
plan. In this case, the regional board
(State) 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 communication to
explain why the plan had not been received.
Since leaking tank sites which affect
drinking water were the highest priority
within the State, action should have been
taken on this site within two years.
At another site in Sonora, California, a gas
station had leaking tanks that polluted two
drinking water wells. The leaking tanks were
discovered in June 1985. No action had been
taken on this case since it was referred to
the regional board (State) in January 1989.
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, the enforcement
actions were determined to be inadequate as
follows.
• For 13 sites, the State took no
enforcement action although the leaks
had been reported for 2 to 11 years.
12
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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 were taken to assess penalties
for noncompliance.
For 5 sites, where clean-up-and-
abatement orders were issued including
$226,540 in assessed penalties, the
penalties were only a small fraction of
the amounts that could have been
assessed, ranging from a minimum of
$1 million to a maximum of $10.4
million.
IDAHO We reported that greater emphasis on
corrective action was needed for some higher
priority LUST sites and that the State's
management reports were inaccurate.
Oversight Although Idaho had made substantial progress
Needed in addressing the remediation of LUST sites,
Improvement sufficient attention had not been given to
some LUST sites that posed the greatest
threat to human health and the environment.
We found that for 9 sites, out of a sample of
23, oversight of responsible party
remediation efforts had not been conducted on
some significantly contaminated LUST sites.
For example, the Steve's Auto Repair site had
been assigned no priority ranking. The State
became aware of the LUST site during
October 1991. Significant petroleum
contamination of the soil and groundwater had
been identified at the site. A laboratory
report showed that the contaminant benzene
was identified at a concentration of 23,000
parts per billion. The State's clean-up
standards required remediation action when
benzene levels exceed 5 parts per billion.
As of the end of fiscal 1993, the responsible
party had not initiated remediation action at
the site and the State had not conducted any
followup actions.
In another example, the Pioneer Square site
was identified as a LUST site during July
1992 and was assigned a priority ranking of
13
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Management
Reports were
Inaccurate
eight (very high). Significant petroleum
contamination of the soil and groundwater had
been identified at the site. We found that
the State attempted to get the responsible
party to initiate the remediation process,
but were unsuccessful as of the end of fiscal
1993.
Our review of the site status report covering
the fourth quarter fiscal 1993 and site files
for 23 judgmentally sampled sites disclosed
that the status report included incorrect
information on 14 (61 percent) of the sites.
Specifically we found that the report
included: (i) two sites that were not
confirmed LUST sites; (ii) seven sites with
incorrect confirmed release dates; (iii) two
sites with incorrect clean-up initiated
dates; and (iv) three sites with incorrect
confirmed release and clean-up initiated
dates.
KANSAS
Insufficient
Oversight on
Some LUST Sites
We reported that oversight and enforcement
could be improved for some sites which posed
a significant threat to human health or the
environment and that data bases were
inaccurate and not effectively used.
We selected a judgmental sample of 24 sites
which were reported as having contaminated
ground water and found that 6 sites did not
have adequate oversight of responsible party
remediation. Groundwater contamination,
which is an indication of a serious
condition, was discovered several years
earlier at those sites and sufficient
remediation activities had not been
performed.
For example, the Home Oil site was one of the
six sites with significant contamination and
was an example where oversight of responsible
party remediation needs to be improved.
The State was aware of petroleum
contamination at this site for 12 years, yet
the contamination remained uncorrected.
During July 1983, the district office
verified the existence of petroleum
contamination in a garden well at a private
14
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home. The staff suspected that the Home Oil
Service Station's underground storage tanks,
located about a half block away, were the
source of the release. However, the district
office waited until March of 1990 to send a
corrective action letter to the owner and
operator of the service station. The letter
requested a site assessment to identify the
size of the ground water contamination plume
and to develop and implement a remedial plan.
The letter did not establish deadlines for
the requested remedial activities.
The district office did not followup on the
site until February 1995 when it took ground
water samples at the service station. The
samples confirmed that a LUST existed at the
site, showing a level of 13,080 parts per
billion for the primary gasoline constituents
of benzene, toluene, ethyl benzene, and
xylene (BTEX). Staff stated that the site
was considered a "hot" site because of the
very high BTEX level. The site was recently
assigned a priority ranking of 129 (very
high) because it was near a public water
supply and posed a significant threat to the
water.
Enforcement was Kansas did not effectively pursue enforcement
not Effective of responsible party corrective actions for
some LUST sites. As a result, Kansas could
not be sure that the most significantly
contaminated sites were cleaned-up timely.
As of the end of fiscal 1994, Kansas had
issued administrative orders to responsible
parties for 11 sites. We reviewed
administrative orders and site files for 6 of
the 11 sites and interviewed district office
personnel to determine if the State
effectively pursued enforcement of the
responsible parties' corrective actions.
Kansas had effectively pursued enforcement
for two of the six sites but had not pursued
enforcement for the other four sites. At one
site, the State did not pursue enforcement
actions after the responsible party refused
to accept an administrative order. At two
other sites, the administrative order, which
directed remediation activities for both
sites, was dismissed because there may have
15
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Data Bases Were
Inaccurate and
Not Effectively
Used
been additional responsible parties for the
contamination. However, as of March 1995,
additional responsible parties had not been
identified and clean-up activities had not
been initiated.
As an example of some sites where enforcement
was not effectively pursued, the district
office confirmed that a LUST existed at the
St. Mary's Oil site during November 1990. A
soil sample indicated that the release had
caused significant petroleum contamination.
Sample results showed a total hydrocarbons
level of 2,000 parts per million. The State
requires remediation when the total petroleum
hydrocarbons level in the soil exceeds 100
parts per million.
An administrative order was issued to the
responsible party during March 1991 because
the responsible party had refused to conduct
a site investigation to identify the extent
of contamination at the site. The order
directed the responsible party to perform a
site investigation, prepare a remediation
plan, and implement the plan. The order also
established a schedule for the directed
activities.
Four years later (March 1995) the responsible
party had not complied with the order and the
district office had not taken any additional
followup actions. The State recently
assigned a priority ranking of 105 which
means the site posed a significant risk to
human health and the environment.
Kansas maintained LUST site information on
two data bases. We found that these two data
bases contained inaccurate site information
for 8 of 24 sites. In addition, site
information in the data bases had not been
used effectively by the State managers to
monitor the remediation of high risk sites.
16
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NEW YORK We reported that additional oversight of
responsible party corrective actions could
strengthen the program, some errors in
priority classifications were noted, and the
data base contained inaccuracies.
Oversight Could We selected a judgement sample of 58 high
Be Improved priority releases which were located within
the jurisdictions of Regions 1 and 6 of the
State's 9 regional offices. Our review
disclosed that 42 releases had appropriate
oversight, 5 releases were not active LUST
sites, and 11 releases did not have
sufficient oversight.
We found that the regional offices had not
provided sufficient oversight of responsible
party remediation efforts for 11 of the
releases during fiscal 1994. Oversight
weaknesses at each region are discussed
below.
Region 1
We found that sufficient oversight had not
been provided for 8 of 30 releases which were
reported as high priority during fiscal 1994.
For example, we found the following for the
Mobil Service Station site.
In October 1991 petroleum contaminated soil
was found during the removal of an
underground storage tank at the service
station. Regional spills staff reported that
groundwater contamination was possible and
assigned a high priority classification to
the release. They sent a corrective action
letter during November 1991 requesting the
responsible party to install five groundwater
monitoring wells at the site. The purpose of
the wells was to determine if groundwater
contamination existed.
The responsible party failed to conduct any
groundwater investigation during 1992. The
regional office notified the responsible
party during November 1992 that the State
would retain a private contractor to install
the requested monitoring wells and would seek
reimbursement for all costs plus penalties.
17
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During December 1992 the responsible party's
attorney responded by notifying the regional
office that they would decide within two
weeks whether the responsible party would
undertake the requested groundwater
investigation.
As of the end of June 1995 the file contained
no evidence that the responsible party
conducted any groundwater investigation or
that the regional office followed up on the
site after December 1992.
Region 6
We found that sufficient oversight had not
been provided on 3 of 28 releases which were
reported as high priority during fiscal 1994.
For example, we found the following for the
Burkhart Brothers site.
Petroleum was found floating on the
groundwater in two UST excavations during May
1990. A groundwater investigation report,
dated July 1991, showed a level of 27,000
parts per billion in the groundwater for the
petroleum compounds of BTEX. The State's
acceptable clean-up level for BTEX is 30.7
parts per billion.
During August 1991, the regional office
issued a corrective action letter to the
responsible party requesting additional
investigation work, quarterly groundwater
sampling, and a soil venting system proposal.
The file contained no evidence that the
responsible party completed the required
activities.
The regional office last followed up on the
site in March 1992. This followup was a
telephone call to the responsible party
requesting an update on the status of
activities at the site. During the telephone
conversation, the responsible party informed
the regional office staff that he was not
sure he would be financially able to continue
the investigation, and that he would get back
to the Region shortly with the status of the
site. There was no evidence in the file that
the responsible party provided any additional
updates on the status of the site.
18
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Data Base
Contains
Inaccuracies
Region 6 staff said that the large spill
response workload prevented them from
addressing corrective actions on all high
priority LUST releases and that some higher
priority releases were overlooked.
Site priority classifications were not
accurate for 9 of 58 releases. Specifically,
our review showed that some releases assigned
high clean-up priorities should have been
assigned lower priorities, in addition, some
numeric class codes did not identify whether
a responsible party was willing to undertake
corrective actions. Also, the State did not
accurately identify LUST releases or
erroneously classified releases as cleaned-up
for 13 of 68 sites. The State used the data
base to perform various trend analyses and to
obtain status information on specific sites.
OHIO
The State did a good job of managing LUST
activities and directing its resources to
clean-up high priority sites. We reviewed
case files for 20 high priority sites and
found that the State identified and responded
to the most significant sites where there was
an imminent threat to human health and the
environment. We concluded that the State
effectively used a ranking system to direct
its limited resources to the most significant
sites.
OREGON
Enforcement
Actions Were
Not Timely
Contract auditors reported that enforcement
actions were not performed in a timely
manner.
The auditors determined that an excessive
time lag occurred between the time a release
was reported and an enforcement action was
initiated for 11 out of the 11 sites
reviewed.
For example, Leather's Oil had a reported
release on November 3, 1988. On February 9,
1989, the respondent agreed to a unilateral
order. However, on December 24, 1990 a
notice of violation with intent to assess
penalties was issued by the State. This
resulted in a time lag of two years from the
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release to when enforcement action was taken.
Site List Was
Not current/
Accurate/ or
Complete
The State's priority system was not updated
on a regular basis to reflect significant
changes, such as the immediate danger being
eliminated or the corrective action
completed.
MORE EMPHASIS
IS NEEDED FOR
SOME HIGH RISK
SITES
RECOMMENDATIONS
We found that some potentially serious sites
were not assessed as to the risk they posed
or some sites that were assessed, were not
assigned appropriate attention for the level
of risk. In our opinion, these conditions
occurred because the States had not always
followed their own priority or risk-based
decision-making approach. As a result,
States did not oversee or enforce remediation
efforts on some significantly contaminated
LUST sites.
Since the primary purpose of the LUST program
is to focus corrective actions on sites that
pose the most serious threats to human health
and the environment, we believe that EPA
needs to give more emphasis to clean-ups of
high risk sites. It needs to implement
controls to promote effective management and
accountability for the LUST program.
The enactment of the Government Performance
and Results Act of 1993 (GPRA) shifted the
focus of Federal management and
accountability away from inputs, such as
personnel levels and adherence to prescribed
processes, to a greater focus on achieving
desired results. The establishment of new
partnership agreements between EPA and the
States is an opportunity for EPA to reassess
management controls and accountability over
the LUST Program to ensure that all high risk
sites receive appropriate attention.
We recommend that the Assistant Administrator
for Solid Waste and Emergency Response:
1. Implement management controls, as
required by OMB Circular A-123, to
ensure that States provide adequate
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AGENCY COMMENTS
AND OIG
EVALUATION
OIG Evaluation
oversight and enforcement on high risk
sites.
Use the cooperative agreements between
EPA and the States as a tool to achieve
the expected results.
Measure the States performance to
determine if they are meeting the
expected results.
OSWER generally disagreed with our finding
and conclusions, but concurred with the
recommendations. It stated that for the
sites where we took exception to the level of
oversight or enforcement we: (i) provided no
evidence that there were any negative human
health or environmental consequences; (ii)
focused on the very small minority of sites;
and (iii) did not give credit when things
went well. It interpreted the statement in
the report "We believe that EPA needs to give
more emphasis to clean-ups of high risk
sites" to mean that States should numerically
rank LUST sites and spend money (for
corrective action or oversight) only on the
highest ranked sites.
However, OSWER stated that all nine States
audited are now in the process of
implementing risk-based corrective action
(RBCA) thus making substantial improvements.
"RBCA represents a paradigm shift in the way
LUST regulating agencies do business," from
following predetermined and standardized
clean-up levels to setting site-specific
levels based on risk. OSWER believes that
increased implementation of RBCA is the best
approach to address the concerns outlined in
the report.
We believe that our report contains adequate
evidence that there were a significant number
of sites that were not cleaned-up which had
negative human health and environmental
consequences. The sites included in our
report were identified by each State as ones
that pose the most serious health and
environmental risks. The States identified
serious or high risk sites as those which had
21
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high levels of contamination found in
drinking water, domestic water wells,
groundwater, or near a public water supply.
Groundwater is the source of drinking water
for half the United States. It is also used
for irrigation, livestock watering, and
industrial uses. Petroleum is a known
carcinogen and other adverse effects of
contact are nausea; skin, eye, and throat
irritation; loss of reflexes; and liver and
kidney damage.
As previously stated, we limited our audit
scope to high risk sites. While fewer in
number than the low risk sites, the high risk
sites require more immediate clean-up actions
because they pose the most significant threat
to human health and the environment. Our
conclusion is based on the testing we
completed for those high risk sites where we
found that 125 sites out of 249 did not get
adequate oversight or enforcement.
OSWER's interpretation of the report that we
are recommending a specific, inflexible,
numerical ranking system is incorrect. This
issue was previously discussed with OUST's
staff in July 1995. At that time we clearly
explained that we were not recommending a
numerical ranking system that would limit the
expenditure of LUST funds to high risk sites.
We said that our audits had identified a
number of high risk sites that had not
received adequate oversight or enforcement.
We were told about RBCA and that_ OUST
requires States to have a system in place to
focus limited resources on the sites that are
a threat to human health and the environment.
OSWER's proposed actions to implement RBCA
meet the intended purpose of the
recommendations. The effectiveness of RBCA,
however, depends upon whether the States
fully implement an assessment of all sites
and assign oversight on all sites according
to risk. As stated in the report, all nine
states had assessment procedures. However,
some sites were excluded from the assessment
or were never assigned oversight when risk
was assessed as high.
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CHAPTER 3
COST RECOVERY PROGRAMS NEED IMPROVEMENTS
For the States in our review, there were
major differences in results between the
States' cost recovery programs. We found
that: (i) two States maintained effective
cost recovery programs; (ii) three States
needed improvements in their cost recovery
programs; and (iii) two States did not have
cost recovery programs.
In our opinion, two States did not implement
cost recovery programs because they either
did not believe in recovery of clean-up costs
from owners and operators, or never devoted
time to develop a cost recovery policy.
Three States did not maintain adequate site-
specific records to support all recoverable
costs because the States did not follow EPA
requirements for various reasons.
The primary purpose of a cost recovery
program is to provide incentives for owners
and operators to clean-up releases from their
own tanks. Ineffective cost recovery
programs hinder the efforts of the LUST
program to protect human health and the
environment.
When States do not recover clean-up costs
from those owners and operators who are
responsible for paying, the State is:
(i) relieving them of their financial
obligation; (ii) removing the financial
incentive to clean-up contamination; and
(iii) shifting the burden of clean-up costs
to the Federal government.
BACKGROUND Subsection 9003(h)(6), Subtitle I of RCRA
states that whenever costs have been incurred
by a State for undertaking corrective action
or enforcement action, the owner or operator
shall be liable for such costs.
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Office of Solid Waste and Emergency Response
(OSWER) Directive 9610.IDA outlines EPA's
LUST Trust Fund cost recovery policy. The
policy states that each State is to make
reasonable efforts to contact owners and
operators who are liable for LUST sites,
notify them of their liability for
enforcement and corrective action costs, and
demand payment.
Clean-ups are costly, averaging $150,000
The OSWER Directive states that the policy
provides States with the autonomy and the
incentive necessary to pursue recoveries
aggressively and' efficiently. States with
CAs will litigate and settle recovery claims
without the routine involvement or
concurrence of EPA or the Department of
Justice. Also, States may retain any Trust
Fund monies they recover for use on
24
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STATES' COST
RECOVERY
PROGRAMS RANGE
FROM EFFECTIVE
TO NONE
additional Fund-eligible clean-ups and
activities.
The OSWER Directive states responsible
parties are liable for all costs of
corrective action and enforcement, including
interest, indirect and "management and
support" costs associated with these
activities that are paid for by the Trust
Fund. Responsible parties are also liable
for Trust Fund expenditures made by States in
overseeing responsible party clean-ups.
The OSWER Directive requires States to
establish a cost accounting system to support
cost recovery claims in a judicial action and
provide evidence that costs claimed are
reasonable and necessary. States must
document site-specific costs where they have:
(i) performed an emergency response;
(ii) begun a detailed site investigation; or
(iii) determined that an owner or operator is
or is likely to be recalcitrant.
For the States in our review, there were
major differences between the cost recovery
programs. We found that: (i) California and
New York maintained effective cost recovery
programs; (ii) Idaho, Oklahoma, and Tennessee
needed improvements in their cost recovery
programs; and (i.ii) Kansas and Ohio did not
have cost recovery programs.
We reviewed cost recovery programs for seven
States: California, Idaho, Kansas, New York,
Ohio, Oklahoma, and Tennessee. The seven
States received $105 million out of $473
million (22 percent) Trust Funds allocated
for fiscals 1987 through 1995. In addition
to Federal requirements, we reviewed each
State's policy and site files to determine if
the State was following its own policy. For
example, Idaho's policy states that interest
is assessed on Trust Fund expenditures used
for corrective action and enforcement
activities. We reported a finding when we
found that the State did not assess interest
according to its own policy..
25
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EFFECTIVE COST
RECOVERY
PROGRAMS
California
New York
States are required to have a cost recovery
program that is consistent with OSWER
Directive 9610.10A. This directive provides
States with flexibility and discretion in
determining under what circumstances they
will pursue such costs, which costs to
pursue, and how much effort to devote to
pursuit of these costs. States are not
required to recover costs against a
responsible party where the LUST Trust Fund
had been used only for oversight of
responsible party corrective actions.
California and New York had effective cost
recovery programs. California had a recovery
rate of about 90 percent for oversight costs
of responsible party clean-ups. New York had
a recovery rate of 83 percent for direct site
clean-up costs.
We found that California's cost recovery
program effectively recovers the costs of
oversight of responsible party corrective
actions. The state's cost recovery program
for oversight of responsible party corrective
actions was started in July 1989. It had
recovered about $30 million from responsible
parties since the beginning of the program.
The $30 million represents both State and
LUST Trust Funds recovered.
States are not required to recover costs for
oversight of responsible party clean-ups
because the potential benefits might not
exceed the costs to recover. It is at the
discretion of the State to recover oversight
costs. California demonstrated that recovery
of oversight costs can be worthwhile.
The State of New York was effective in
recovering costs from responsible parties
when the State performed the clean-ups with
LUST Trust Funds. Through June 1995, New
York spent about $7.3 million for direct site
clean-ups on 24 sites. We reviewed cost
recovery files for 11 of the 24 sites and
found that the State had efficiently and
aggressively pursued cost recovery. The
State recovered $1.5 million out of $1.8
million spent on direct site clean-ups (an 83
26
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COST RECOVERY
PROGRAMS NEED
IMPROVEMENTS
Idaho
Oklahoma
Tennessee
percent success rate) for six completed cost
recovery cases.
We found three States where cost recovery
programs needed improvements to enhance the
incentives for owners and operators to
clean-up releases from their own tanks. The
absence of strong programs also relieved the
responsible parties from the financial
liability for some clean-up costs.
The State completed four cost recovery
settlements during the period fiscal 1993 and
through the first quarter fiscal 1994. It
recovered 72 percent of identified costs on
the four settlements. Although the State had
incurred Trust Fund expenditures totaling
$198,000 for the sites, only $189,000 was
identified for cost recovery purposes. In
addition, the State did not document why it
accepted reduced cost recovery settlements
totaling $144,000 and did not attempt to
charge interest.
The State maintained incomplete records of
site-specific costs paid with LUST Trust
Funds and therefore, could not recover all
the costs. The State's site-specific records
documented the clean-up contractor's costs
but did not include allocated portions of
indirect costs, management and support costs,
and interest. To ensure that the State could
effectively attempt to recover clean-up costs
from responsible owners and operators, the
LUST CA required the State to establish and
maintain cost records on a site-specific
basis.
The State did not maintain complete records
of site-specific costs paid with LUST Trust
Funds and therefore, could not recover all
the costs. The site-specific records
included clean-up costs but not enforcement
costs, indirect costs, management and support
costs, and interest. To ensure recovery of
appropriate costs from responsible owners and
operators, the State must establish and
maintain cost records on a site-specific
basis.
27
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NO-COST
RECOVERY
PROGRAMS
Kansas
Ohio
Ohio and Kansas had not implemented cost
recovery programs. This resulted in
responsible parties for 138 sites not being
held liable for any clean-up costs. The
States had used LUST Trust Funds for direct
site clean-ups and cost recoveries should
have been pursued.
The State of Kansas did not implement cost
recovery procedures and, therefore, did not
pursue cost recovery from responsible
parties. Since the inception of the program
the State pursued only one cost recovery
settlement and did not demand payment for 17
other sites. As a result, the State had
recovered only $21,748 out of $303,001 Trust
Fund expenditures on direct site clean-ups.
Kansas officials stated that the Federal
mandate for cost recovery runs in opposition
to the State's user friendly approach.
The State of Ohio had not recovered Federal
and State funds spent to clean-up 121 LUST
sites and did not keep complete cost records.
Since 1988, the State had only recovered
$93,000 in costs and penalties from two
responsible parties. We were unable to
estimate the costs associated with 121 sites
because the State did not maintain
site-specific cost documentation as required.
The State did not implement a cost recovery
program because it never devoted time to
develop a cost recovery policy. However, in
late 1995 the State prepared draft cost
recovery procedures and had submitted them to
EPA Region 5 for review and approval.
MORE EMPHASIS
IS NEEDED FOR
SOME COST
RECOVERY
PROGRAMS
We believe that EPA needs to place more
emphasis on the improvement of some States'
cost recovery programs. An important purpose
of cost recovery is to provide incentives for
owners and operators to clean-up releases
from their own tanks. An aggressive cost
recovery policy could be used as an effective
tool to stimulate site clean-ups.
Specifically, responsible parties should be
held liable to clean-up releases from their
28
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RECOMMENDATIONS
AGENCY COMMENTS
AND OIG
EVALUATION
own tanks, or reimburse the State for all
costs to clean-up their site.
The EPA's policy recognizes that there are
situations where cost recovery will not be
possible or feasible. In these situations,
the State is required to fully document its
decisions and to formally close out all
cases. In fulfillment of its
responsibilities under OMB Circular A-123, we
believe that EPA should re-evaluate its
policies and procedures to ensure that States
are accountable for establishing effective
cost recovery programs.
We recommend that the Assistant Administrator
for Solid Waste and Emergency Response:
1. Implement management controls, as
required by OMB Circular A-123, to
ensure that States develop and implement
cost recovery programs in accordance
with the statutory requirements and EPA
policy.
2. Use the cooperative agreement between
EPA and the States as a tool to achieve
the expected results.
3. Monitor and measure the States' cost
recovery programs to determine if they
are meeting the expected results.
OSWER acknowledged that improvements would be
beneficial to some State cost recovery
programs. However, it did not believe that
the problems in a few states were indicative
of systemic, national problems. Its primary
concern is that this chapter generally fails
to recognize the State flexibility and
discretion that intentionally has been built
into the cost recovery policy.
OSWER generally concurred with the
recommendations and said that it will
implement management controls to ensure that
States develop and implement cost recovery
programs in accordance with EPA's policy.
29
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The response states that contrary to several
of the statements made in the report States
are not required to both document and pursue
all costs for which UST owners could be held
liable under Subtitle I. Also, it stated the
cost recovery policy encourages but does not
require States to either document or pursue
these costs.
OSWER stated that the draft report does not
provide any evidence that harm has occurred
to human health or the environment due to
ineffective state cost recovery programs. It
also said that the draft report improperly
equated lack of documentation of cost
recovery decisions with the absence of a cost
recovery program. For example, according to
EPA, Region 7, and the State, Kansas did have
a cost recovery policy but that cost recovery
was not pursued for various reasons.
OIG Evaluation We believe that flexibility and discretion
can be desirable attributes in a national
policy. Some benefits are identified in
OSWER Directive 9610.10A which states that
the two most innovative aspects of EPA's cost
recovery policy for the LUST Trust Fund
should provide States with the autonomy and
the incentive necessary to pursue recoveries
aggressively and efficiently (emphasis
added). Unfortunately, flexibility and
discretion can also be excuses for States'
failure to manage effective cost recovery
programs. Ohio did not implement a cost
recovery program because it never devoted
time to develop a recovery policy. Kansas
did not pursue cost recovery from responsible
parties because cost recovery runs in
opposition to the State's user friendly
approach.
The response states that under Subtitle I of
RCRA, UST owners and operators are liable for
costs incurred by EPA or a State in
performing enforcement or corrective action
at LUST sites. However, if a State fails to
have a cost recovery program under OSWER's
policy, then those owners and operators are
not held liable for the costs incurred.
We believe that our report identifies
sufficient weaknesses in States' cost
30
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recovery programs to demonstrate a need for
corrective action. In addition, we selected
the state of Kansas for review based on a
recommendation from OUST. Its staff believed
that Kansas' LUST program was typical and
representative of the other States. We found
that Kansas did not have a cost recovery
program.
OSWER's response states that our report does
not provide a demonstrated connection between
a State's cost recovery program and
protection of human health and the
environment. We believe this connection is
made in OSWER Directive 9610.10A which states
that EPA expects this policy will help cost
recovery to become a practical and effective
tool that States will use to both stimulate
and fund more clean-ups of releases from
underground storage tanks. The connection is
that by stimulating and funding more clean-
ups of releases, cost recovery helps to
protect human health and the environment.
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CHAPTER 4
ACTIVITY REPORTS MISLEADING
ACTIVITY
REPORTS WERE
HOT ACCURATE
BACKGROUND
Quarterly activity reports submitted by
States to EPA did not accurately report LUST
Program results. For the States where we
reviewed activity reporting, we found that
States generally overstated their results.
The overstatements ranged from 7 to 47
percent. We believe that accurate
performance information is needed to make
sound management or program decisions. Sound
decisions ensure that the program: (i) meets
intended goals, (ii) assesses the efficiency
of processes, and (iii) promotes continuous
improvement.
In our opinion, States did not accurately
report program accomplishments because they:
(i) did not correctly use the OUST
definitions for confirmed releases, clean-ups
initiated, and clean-ups completed;
(ii) improperly reported unregulated tanks;
(iii) had reporting systems that did not
count actual activities; and (iv) placed too
little emphasis on reporting requirements.
The activity reports were used as a
management tool to track the most important
program activities. Therefore, it is
necessary that the information be accurate,
complete, and comparable for EPA to
effectively manage the LUST Program.
States with LUST CAs are required to submit
quarterly activity reports to EPA, disclosing
data on various LUST Program activities.
This reporting mechanism helps EPA program
officials monitor and oversee program
progress by State and EPA region. EPA
Headquarters uses the information to make
nationwide funding decisions, to report
program progress to Congress, and to report
the results of the program in the Agency's
financial statements.
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Activity Data
Reported
Through Fiscal
1995
Through fiscal 1995, more than 303,000
releases had been reported in activity
reports nationwide. In 1995 alone,
new releases were confirmed and reported.
The upcoming 1998 deadline for upgrading,
replacing, or closing underground storage
tank systems will probably increase that
number. Owners and operators often discover
contamination not previously identified as
they evaluate their tank systems to decide
whether to upgrade, replace, or close them
before the deadline.
All States and territories, as well as some
local governments, have corrective action
programs employing a total of about 1,500
technical staff. Most corrective actions are
undertaken by responsible parties with State
and local oversight. Through fiscal 1995,
OUST reported that clean-ups have been
initiated at more than 238,000 sites and
completed at more than 131,000 of them. In
spite of this progress, more than 172,000
sites still need to be cleaned-up. The graph
below illustrates the reported numbers of
confirmed releases, clean-ups initiated, and
clean-ups completed for each of the 10 EPA
regions as of the end of fiscal 1995.
CUMULATIVE LUST SITES THROUGH FISCAL 1995
By EPA Raglan
Thousands
too
123456789 10
EPA -Region
Source: Fiscal 1995 Fourth Quarter Activity Reports (unaudited)
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Management OMB Circular No. A-123, Management
Accountability Accountability and Control, states that
and Control management controls are the organization,
policies, and procedures used to reasonably
ensure that ... reliable and timely information
is obtained, maintained, reported and used
for decision making.
ACTIVITY Quarterly activity reports submitted by
REPORTS ARE NOT States to EPA did not accurately report LUST
RELIABLE Program results. For the States where we
reviewed activity reporting, we found that
States generally overstated their results.
The overstatements ranged from 7 to 47
percent for the various activities and time
periods. We believe that accurate
performance information is needed to make
sound management or program decisions. Sound
decisions ensure that the program meets
intended goals, assesses the efficiency of
processes, and promotes continuous
improvement.
We evaluated the accuracy of the reported
number of confirmed releases, clean-ups
initiated, and clean-ups completed for six
States for various time periods. These six
States (California, Idaho, Kansas, New
Mexico, New York and Ohio) represent 22
percent of the reported confirmed releases,
24 percent of the reported clean-ups
initiated, and 21 percent of the clean-ups
completed.
OUST's The following are OUST's definitions for the
Definitions three major LUST program activities as
described in the Agency's fiscal 1995
Financial Statements and in a Memorandum,
dated December 21, 1990, to the Regional
Program Managers.
• Confirmed releases are the number of
sites where the owner/operator has
identified a release from a petroleum
underground storage tank, reported the
release to the state/local agency, and
the implementing agency has verified the
release.
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• Clean-ups initiated are the total number
of confirmed releases which the State or
responsible party (under State
supervision) has initiated management of
petroleum contaminated soil, removal of
free product, or management or treatment
of dissolved petroleum contamination.
• clean-ups completed are the total number
of confirmed releases where clean-up has
been initiated and where the State has
determined that no further clean-up
actions are necessary to protect human
health and the environment.
We reviewed the controls for data
compilation, supporting documentation, and
the reporting process for the three program
activities listed above. The cumulative
totals for the above listed three activities
were used to determine Regional Trust Fund
allocations and were identified as
performance measures in the Agency's
financial statements.
Each State had its own system for data
compilation and reporting of the three
program activities to EPA regions. Of the
six States, we had reported findings on the
accuracy of the activity data as described
below.
California The activity report dated, December 31, 1991,
significantly overstated the number of
confirmed releases and clean-ups initiated.
These overstatements occurred because some
sites were counted more than once and some
information in the data base was inaccurate.
The number of leaking tank sites was also
overstated because unregulated tank sites
(above ground tank sites) and unlocatable
sites were included in the activity reports.
Unregulated heating oil tank sites, farm tank
sites, and above ground tank sites are
ineligible and should not have been included
in the activity reports.
Clean-ups Initiated. We found that the
number of reported site clean-ups initiated
in the State was inflated by about one-third.
The activity report stated that 5,860 site
clean-ups were initiated. However, the
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Idaho
Kansas
supporting LUST information system showed
that only 4,459 clean-ups were initiated.
The difference of 1,401 (31 percent)
represented a significant overstatement of
the reported number of clean-ups initiated.
Confirmed Releases.. Leaking tank sites that
had not been confirmed were included in the
report as confirmed leaking sites. We found
the State assumed that all sites coded in the
LUST data base as "No Action" were reported
as 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
activity reports.
The quarterly reports did not accurately
report LUST Program activity during fiscal
1993. The number of confirmed releases were
understated by 16 percent, clean-ups
initiated were overstated by 18 percent, and
clean-ups completed were understated by 57
percent. In addition, the quarterly reports
included LUST Program activity that had
occurred prior to the reporting periods.
The inaccuracies occurred because not all
performance data had been correctly compiled
by the computer system used to maintain LUST
site information, information in the
quarterly reports was not reconciled to the
supporting records, and some regions reported
LUST site activity late.
Fiscal 1994 accomplishments were accurately
reported for confirmed releases, but
clean-ups initiated and clean-ups completed
were overstated by 7 percent and 13 percent,
respectively. In addition, the number of
confirmed releases, clean-ups initiated, and
clean-ups completed, reported in the first
quarter fiscal 1995, were overstated by
14 percent, 23 percent, and 47 percent,
respectively.
These inaccuracies occurred for various
reasons, including: (i) multiple leaking
underground storage tanks located at the same
location were incorrectly classified as
separate confirmed releases; (ii) leaking
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underground heating oil tanks were improperly
classified as confirmed releases; and
(iii) source records were not reconciled with
the data base used to prepare activity
reports. We also found staff that compiled
activity report data for the first quarter of
fiscal 1995 had not received adequate
training.
New Mexico The State submitted activity reports that
contained inaccurate data for confirmed
releases. We found that the number of
confirmed releases in the reports did not
match the number in the State's LUST data
base for fiscals 1990 to 1992. For fiscal
1992, the State reported 701 confirmed
releases but the data base supported only
616, a 14 percent difference which represents
a significant overstatement.
The reason this occurred is that reports were
not reconciled to the data base.
New York At the time of our review, the State did not
report actual activities for some program
accomplishments and reported incorrect
information on some high priority sites. For
confirmed releases and clean-ups initiated,
New York reported leaks before they were
confirmed and clean-ups initiated prior to
knowledge that physical clean-up activity had
begun. In addition, we tested a sample of 68
active sites during fiscal 1994. We found
that the State's data base contained
incorrect information for 13 LUST releases, a
19 percent error rate for our sample.
New York counts confirmed releases by
querying the spills data base each quarter
and reporting all LUST notifications of leaks
or suspected leaks. The State adjusts the
total notifications for a small number of
sites where it has been confirmed that no
leak occurred. While the State adjusted for
a few sites where it confirmed no leak
occurred, the majority of the activities
reported were based on a notification and not
on a confirmed release.
New York assumes that clean-ups will be
initiated for 100 percent of the confirmed
releases as computed in the preceding
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Ohio
paragraph, it reports the total confirmed
releases, adjusted for an estimated number of
sites where the responsible party is unknown,
as clean-ups initiated, even though the State
does not know if an actual clean-up has been
initiated.
The State significantly overstated its
accomplishments for the number of confirmed
releases, clean-ups initiated, and clean-ups
completed. These overstatements occurred
because the State included sites with no
contamination.
The State reported all tank removals as
completed clean-ups, even the ones that did
not have a release of petroleum. By
including clean tank removals, the State
overstated the number of clean-ups completed
by 35 percent for the period January through
March 1995.
We found the State's data base supported
significantly fewer accomplishments than it
reported for January through March 1995. The
State's data tracking system did not identify
the specific sites reported for these
accomplishments. The State also could not
provide an explanation of the methodology it
used to compute the reported accomplishments.
MORE EMPHASIS
IS NEEDED ON
REPORTING
REQUIREMENTS
Based on our findings, we believe that the
activity reports were inaccurate. Management
or program decisions based upon those reports
may be at risk because the activity data was
used to make nationwide funding decisions, to
report program results to the Congress, and
to report performance measures in the
Agency's financial statements.
We cannot statistically evaluate the extent
of the error rate in the activity reports
because methodologies and time periods varied
among the audits we are summarizing. For
example, we tested 100 of the three
performance measures for fiscal 1993 in Idaho
but it was not practical to test 100 percent
in Kansas. We had planned to audit 100
percent of fiscal 1994 but chose to randomly
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select a sample because Kansas had integrated
the support into the entire LUST file system.
However, based on the results of our audits
of six States that comprise 21 to 24 percent
of the cumulative totals for the three
reported activities, we believe the problems
and errors are indicative of the extent of
the misstatement of the nationwide reports.
Even if no other State had errors, these six
States comprise a significant amount of the
totals and their combined errors would
significantly affect the nationwide reports.
Therefore, we believe the misstatements
represent a significant reporting problem.
OUST needs to take action to improve the
management controls over activity reporting
for performance measures. OUST should
implement controls to ensure all the States
use the OUST definitions, report only
regulated tanks, improve systems to count
actual activities, and place more emphasis on
reporting requirements.
We recognize that some States calculate the
reported numbers from data base information
and because of large volumes of activities,
as in the State of New York, it is not
feasible to physically count and view
supporting documentation for each activity
reported. However, we believe that those
States should sample test their methodology
or otherwise ensure that reported information
is accurate.
We believe that OUST should implement
controls to ensure that all States report
comparable data. For example, Ohio which
counts every tank pull has significantly
overstated its three activities. Strict
adherence to the definitions would provide
results that can be compared among the
States.
OUST requires the States to report ten LUST
activities, including the three activities
identified as performance measures. Accurate
reporting would provide a sound basis to make
decisions and to focus their efforts and
improve performance.
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Validation and
Verification
RECOMMENDATIONS
AGENCY COMMENTS
AND 016
EVALUATION
The enactment of the GPRA shifted the focus
of Federal management and accountability away
from inputs, such as personnel levels and
adherence to prescribed processes to a
greater focus on achieving desired results.
The GPRA calls for validation and
verification of the results and follow-up for
exceptions.
OUST reported in the Agency's fiscal 1995
financial statements that the data was
validated and verified by EPA regional
offices. However, based upon the
deficiencies that we found, we conclude that
the Regions had not identified the reporting
errors and had not taken steps to ensure that
the States were reporting accurate
information.
We recommend that the Assistant Administrator
for Solid Waste and Emergency Response:
1. Implement management controls, as
required by OMB Circular A-123, to
ensure that reliable and timely
information is obtained, maintained,
reported and used for decision making.
2. Specifically, direct EPA regions to use
the cooperative agreements between EPA
and the States to require them to report
the actual status of their LUST programs
by: (i). using the EPA definitions; (ii)
excluding unregulated tanks; (iii)
improving reporting systems to count
actual activities; and (iv) placing more
emphasis on reporting requirements.
OSWER disagreed that the misstatements in
activity reports represent a significant
reporting problem. It said our conclusion
that activity reports were generally
unreliable was overstated and unsupported
based on the limited size of the databases
examined. For example, New York reported
over 12,000 confirmed releases of which we
investigated 70, a small percentage.
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OSWER generally concurred with the
recommendations and said that it will
implement management controls to ensure that
reliable and timely information is obtained,
maintained, reported, and used.
OSWER disagreed that strict adherence to the
definitions would provide results that can be
compared among the States. It stated that by
design the program results varied between
individual States. It also stated that
accurate, complete and comparable information
is not necessary to manage the LUST program.
It stated that the performance measures were
never intended to be used to manage the LUST
program. The measures were originally
developed to determine the extent of the LUST
problem, to track nationwide remediation
efforts, and to establish a baseline of
performance for individual States.
OSWER disagreed that the activity reports
were used to determine State allocations^ It
said the data was used to determine Regional
allocations and that the measures used in the
allocation formula serve as a surrogate for
State performance. It recognized that the
measures are not perfect, but believe they
are appropriately used to determine EPA
Regional allocations.
OSWER stated that activity report data is
only one of many tools used for management
decisions. It also stated that the Regions
evaluate State program progress, identify
weaknesses and strengths in State programs,
and work with the States to identify
continuous improvement activities.
OIG Evaluation We believe that OSWER's response does not
appropriately address the issues described in
our report. The Agency's response failed to
address our concern that the States are not
reporting their activities accurately.
As explained in the report, our conclusions
were based on our findings that six States
did not accurately report their activities.
We found a high degree of misstatement where
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States generally overstated their
accomplishments. The States that we reviewed
represented about 23 percent of the reported
activities. Overstatements reported by those
States ranged from 7 to 47 percent. That is
a significant reporting problem.
OSWER's response stated that New York,
reported over 12,000 confirmed releases, and
we agree. However, what it failed to address
was that New York did not actually confirm
these releases. Therefore, to report that
the State confirmed over 12,000 releases is
incorrect. OUST's definition of a confirmed
release requires that the implementing agency
(State) has to verify that the release did
occur. We took exception to the State
reporting that these releases were confirmed
when in fact they were not.
OSWER's comments about information gathering
and its use of the data is in direct conflict
with GPRA. In fiscal 1995, the LUST program
continued its participation in a GPRA
performance pilot. OUST used the three
performance activities that we reviewed to
evaluate progress in meeting its performance
goal under the pilot.
The GPRA requires that agencies determine if
their programs have produced real results.
The GAO guidelines to implement the GPRA
state that "Managing better requires that
agencies have, and rely upon, sound financial
and program information. It also states that
to be successful in measuring performance,
agencies must ... link responsibility to
establish accountability for results; and use
data that was sufficiently complete,
accurate, and consistent to be useful in
decision-making."
We believe that OSWER did use activity
reports to manage the program because it
responded that the original intent of the
measures was to determine the extent of the
LUST problem, track remediation efforts, and
to establish a baseline of performance.
We do agree with OSWER that the Regions meet
with the States for mid-year and end-of-year
meetings. Information is gathered informally
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and anecdotally at these meetings. However,
the Regions did not monitor the States'
performance to the extent that significant
reporting errors were identified and
corrected.
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APPENDIX A
ACRONYMS
Acronym Name
BTEX benzene, toluene, ethylbenze, and xylene
CAs Cooperative Agreements
CFR Code of Federal Regulations
EPA Environmental Protection Agency
GPRA Government Performance and Results Act of 1993
LUST Leaking Underground Storage Tank
OIG Office of Inspector General
OMB Office of Management and Budget
OSWER Office of Solid Waste and Emergency Response
OUST Office of Underground Storage Tanks
RBCA risk-based corrective action
RCRA Resource Conservation and Recovery Act
SARA Superfund Amendments and Reauthorization Act
UST Underground Storage Tank
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APPENDIX B
OSWER RESPONSE TO DRAFT REPORT
Attach are the Office of Solid Waste and Emergency Response's
comments to the draft report. The specific comments reference
page numbers of the draft report. The page numbers have changed
in the final report.
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(This page left intentionally blank.)
48
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
SOLID WASTE AND EMERGENCY
JUN 2 7 !996 RESPONSE
MEMORANDUM
SUBJECT: Comments on "Consolidated Report on EPA's LUST Program,
Draft Report No.
FROM: Elliott Laws
Assistant Admf
TO: Michael Simmons
Deputy Assistant IG for Internal & Performance Audits
Thank you for the opportunity to review the draft capping
report on the audits of state leaking underground storage tank
(LUST) programs. The results of nine state audits were utilized
to develop this capping report. Those audits began in August
1987 — nearly nine years ago. This is a very long period of
time from which to consolidate audit results.
The early audits conducted were of nascent state LUST
programs. In fact, the LUST Trust Fund program was authorized by
Congress in late 1986, and EPA awarded the first LUST Trust Fund
Cooperative Agreement to a state in 1987. The audited state
programs, and their peers not audited, have made substantial
improvements since then. Unfortunately, the draft report does
not capture nor adequately reflect the continued development of
these state programs, the tremendous success of our state
partners in completing over 140,000 LUST cleanups, nor the
magnitude of the states' workload. As of March 31, 1996, there
were over 314,000 confirmed releases from underground storage
tanks (USTs). This means that, on average, each state has had to
respond to over 6,000 releases during the last nine years. These
numbers are astronomical and unprecedented in other environmental
programs.
As you are aware, the Agency has moved aggressively towards
establishing a new, more cooperative, and less directive
relationship with our state partners, epitomized in the oversight
reform and performance partnership initiatives. In addition,
because of our strong reliance on state programs the Agency has
begun planning to reduce over time the federal role in the
UST/LUST program except on tribal lands. This is also at a time
when there has been a 35% reduction in our FY 1996 LUST Trust
Fund appropriation. Over 80% of LUST Trust Funds have been
dedicated to cooperative agreements with states. This funding
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shortfall will result in reductions in the number of state LUST
staff. While the President's FY97 budget requested that the FY95
appropriations level be reinstated, the House Appropriations
Subcommittee's recent markup indicated a continuation of the 35%
reduction during FY97. As we continue to work with our state
partners in implementing the LUST program, we must balance the
draft report's conclusions that propose a greater level of
oversight and a more intrusive role for EPA vis-a-vis state
programs. While we certainly agree that fiscal management and
accountability are important, it presents a difficult quandary
when we ask the states to do more with significantly less funding
and at a time when they are forced to reduce staff.
Because a number of the state audits referenced in the draft
report are dated, and since the Regions previously commented on
the individual state audits, we have not commented extensively on
state-specific information or conclusions, nor commented on their
veracity or applicability to the present day. Instead, we have
focused on national issues and the recommendations.
Please contact Lisa Lund or Josh Baylson in the Office of
Underground Storage Tanks at 703-603-9900 if you have any
questions.
Attachment
cc: Lisa Lund, OUST
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OUST'8 COMMENTS ON OZ6 DRAFT CONSOLIDATED REPORT
EPA'8 LEAKING UNDERGROUND STORAGE TANK (LUST) PROGRAM
COMMENTS ON EXECUTIVE SUMMARY AND INTRODUCTION
The second paragraph on pages ill & 1 is awkward and
inadvertently attributes a negative purpose to the capping
report. The paragraph should be recast as follows:
The LUST Program's current focus is on program results and
not on adherence to prescribed procedures. This approach is
consistent with the Government Performance and Results Act
of 1993 (GPRA), which has shifted the focus of federal
management and accountability away from inputs, such as
personnel levels, and adherence to prescribed processes, to
a greater focus on achieving desired program results. We
have identified three areas where LUST Program results can
and should be improved.
Pages iv & 2 state, in describing the statute, "...LUST
Trust Fund, financed by one-tenth of a cent tax on each gallon of
gasoline sold.1* This statement is factually incorrect. The tax
is on motor fuels; it is not limited to gasoline.
Page 2 (under States Receive LUST Funds...) describes
allowable state uses of LUST Trust Funds. The list is incomplete
and should be expanded to include "oversight of responsible-party
lead cleanups." We suggest adding this as iii, making the
current iii -> iv, and the current iv -> v.
COMMENTS ON CHAPTER 2
The draft report states (pages 7 & 10) "...125 sites did not
get adequate oversight or enforcement to ensure protection of
human health and the environment." Yet the draft report fails to
demonstrate that these sites caused any proximate harm to human
health or the environment. As noted in the transmittal
memorandum, this conclusion was based in part on information that
is over five years old. In addition, this alleged deficiency is
reported to have created management and oversight problems for
these sites. No evidence is presented that there were any
negative human health or environmental consequences at these or
anv other sites. We also are disappointed that the draft report
focused on the very small minority of sites where there appeared
to be problems and ignored the vast majority of sites where
things went well. Most of the states have made significant
progress since the audits. In fact, all nine states audited are
now in the process of implementing risk-based corrective action
(RBCA) .
RBCA allows regulatory agencies to focus limited resources
on sites that pose the highest risks, protecting human health and
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the environment while ensuring that all sites move towards
closure. RBCA enables implementing agencies to focus site
assessment data gathering, categorize or classify sites,
determine what (if any) further action is necessary, better
establish cleanup goals, and decide on the level of oversight
necessary.
RBCA represents a paradigm shift in the way LUST regulatory
agencies do business, from following predetermined and
standardized cleanup levels to setting site-specific levels based
on risk. It also allows regulatory agencies to identify high
risk sites based on actual risk — proximity to pathways and
receptors — instead of simplistically classifying all
groundwater sites as high risk, and allows other important
factors to be considered. For example, environmental justice
concerns and the need to address Brownfields, which according to
traditional ranking systems would often be rated low risk because
they have not contaminated drinking water sources, can be better
addressed using a site specific decision-making approach. We
believe increased implementation of RBCA is the best approach to
address the concerns outlined in the draft report.
The column at the top of page 8 states "Management Reports
Were Inaccurate." A more accurate statement is: Management
Reports were Sometimes Inaccurate. Likewise, the associated text
should read "LUST site status reports were not always accurate in
Idaho, Kansas, New York, and Oregon. As a result, these States
did not always have reliable information to effectively monitor
LUST site remediation progress."
The last sentence in the same paragraph makes an unwarranted
leap in judgement by stating "Without a current, accurate, and
complete site status report, management could not assure that
significant sites were cleaned up timely." This statement
discounts, without justification, the extensive knowledge of the
state technical staff overseeing sites and of their management.
Just because information is not recorded in writing, does not
mean that it does not exist. A more accurate statement would be:
...management may not be able to assure that significant sites
were cleaned up in a timely fashion.
Later on page 8; OSWER Directive 9650.10 was revised and
reissued on May 24, 1994, as OSWER Directive 9650.10A. The next
paragraph quotes the directive as stating "The State will ensure
that a priority system for addressing underground storage tank
petroleum release sites is established and maintained." The
appropriate context for this statement is as it applies to state-
lead corrective and/or enforcement actions. This statement does
not apply to oversight of responsible party-lead corrective
actions. The role of priority systems is discussed again (page
20) when the report states "We believe that EPA needs to give
more emphasis to clean-ups of high risk sites." Implicit in this
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statement and others in the draft report is the view that states
should numerically rank LUST sites and spend money (for
corrective action ojr oversight) only on the highest ranked sites.
Given that 97% of LUST sites are cleaned up by responsible
parties, our goal has been to move all sites through the cleanup
process concurrently, regardless of their rank. We agree that
the focus of state oversight activities should be on those sites
with the greatest risk, but not to the exclusion of low risk
sites, at which corrective actions may stall without state
review, approval, and oversight activities. Lack of attention to
lower risk sites creates many problems, including Brownfields,
and environmental justice concerns. We believe that this is
generally a more protective approach than using a priority system
to decide which cleanups may move forward and which will stall
due to the limited capacity of most existing oversight programs.
This policy was explained in detail in an April 25, 1994,
memorandum from David Ziegele to Charles Reisig of the OIG.
Page 11 states, in reference to the audit of California's
LUST program, that "...the priority system for LUST clean-up was
unacceptable and that the State's LUST enforcement program was
ineffective." We continue to agree with Region 9's position in
response to the California audit, i.e., that we do not believe
that their priority system was unacceptable, but needed
refinement, and that we do not believe that their LUST
enforcement program is ineffective; California has taken over
9,000 LUST enforcement actions.
Recommendations 1. 2 & 3 (page 21)
Since RBCA allows regulatory agencies to focus limited
resources on sites that pose the highest risks, protecting human
health and the environment while ensuring that all sites move
towards closure, we believe increased implementation of RBCA is
the best approach to address the concerns outlined in the draft
report.
We will implement the following management controls to
monitor state progress in addressing oversight and enforcement of
high risk sites through the use of RBCA, utilizing the
cooperative agreements as tools to assist in implementing RBCA,
and measuring the progress of state implementation of RBCA.
We will continue to actively participate in the Partnership
in RBCA Implementation (PIRI) with state governments, the
American Society for Testing and Materials, Amoco Oil Corp.,
British Petroleum Oil Co., Chevron USA, Exxon Co. USA, Mobil Oil
Corp., and Shell Oil Co. to reduce the risk from LUSTs by
targeting those releases for cleanup which pose the greatest risk
to public health and the environment. Other groups that will
contribute funding, technical expertise, or other support to this
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effort include Unocal, the American Petroleum Institute, the
Petroleum Marketers Association of America, the Environmental
Bankers Association, and Environmental and Commercial Insurance
Inc. Under a Memorandum of Understanding, each of the partners
contributes funds towards the development and delivery of a
series of training sessions for states to teach the new risk-
based approaches to cleanup. The three module training is
followed by an implementation (policy) design phase and actual
implementation of RBCA. We will track states' progress in
receiving the training modules and implementing RBCA. We will
monitor this progress through PIRI and as part of our annual,
Regional Strategic Overview planning process with the Regions.
In addition, we will educate Regional managers about RBCA, PIRI,
use of the cooperative agreements, and our efforts to track state
progress at the next UST/LUST Regional Managers meeting
(currently planned for September 1996).
COMMENTS ON CHAPTER 3
We acknowledge that improvements would be beneficial to some
state cost recovery programs. We do not believe, however, that
the problems in a few states as described in the draft report are
indicative of systemic, national problems. For example, although
two of the seven state cost recovery programs were judged
ineffective in the draft report, two states' programs were
considered very effective, while three others were .identified as
needing some degree of improvement.
States are required to have a* cost recovery program that is
consistent with EPA's LUST Trust Fund Cost Recovery Policy (OSWER
Directive 9610.10A). Under Subtitle I of RCRA, UST owners and
operators are liable for costs incurred by EPA or a state in
performing enforcement or corrective action at LUST sites. On
page 22, the draft report incorrectly states that Subtitle I
"requires that the parties responsible for contaminating sites
clean them up or reimburse the State for doing so.H While tank
owners and operators are liable for such costs, the Cost Recovery
Policy provides states with significant flexibility and
discretion in determining under what circumstances they will
pursue such costs, which costs to pursue, and how much effort to
devote to pursuit of these costs. OUST further clarified the
Cost Recovery Policy in a memorandum from Lisa Lund to the UST
Regional Program Managers, dated November 8, 1994, which we have
provided previously to the DIG.
Our primary concern with chapter 3 is that it generally
fails to recognize the state flexibility and discretion that
intentionally has been built into the Cost Recovery Policy. For
instance, the OIG is critical of states that failed to both
document and pursue all costs for which UST owners could legally
be held liable under Subtitle I. This position is inconsistent
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with the Cost Recovery Policy. It also is internally
inconsistent with other portions of chapter 3. For example, on
page 24, the draft report is accurate when it asserts that states
are only required to document site-specific costs in a limited
set of circumstances. The draft report is accurate again on page
25, when it asserts that "States are not required to [document
or] recover costs ... for oversight, of responsible party
corrective actions." These provisions of EPA's Cost Recovery
Policy•constitute major exceptions to the draft report's
contention that states must document and pursue all costs for
which UST owners could be held liable. In addition, the draft
report criticizes states that failed to allocate portions of
indirect costs, management and support costs, and to assess
interest on cost recovery claims. The Cost Recovery Policy
encourages but does not require states to either document or
pursue these costs as part of their cost recovery program. Thus,
contrary to several of the statements made in this chapter,
states are not required to both document and pursue all costs for
which UST owners could be held liable under Subtitle I.
We also are concerned by the statements: "Ineffective cost
recovery programs hinder the efforts of the LUST program to
protect human health and the environment" (pages vi and 22) and
"An aggressive cost recovery policy could be used as an effective
tool to stimulate site clean-ups" (page 28). These and similar
statements throughout the chapter are unsupported by any findings
in the draft report. At no point does the draft report provide
any evidence that harm has occurred to human health or the
environment due to ineffective state cost recovery programs. The
fact that chapter 3 criticizes the state of Ohio for lack of a
cost recovery policy while chapter 2 singles out Ohio for praise
in "managing LUST activities and directing its resources to
clean-up high priority sites" (page 19) indicates the lack of a
demonstrated connection between a state's cost recovery program
and protection of human health and the environment. In our
experience managing the national LUST program, the presence of
more than forty state fund reimbursement programs for UST'
cleanups is a far greater influence in stimulating responsible
party-lead cleanups than a state's cost recovery program for LUST
Trust Fund monies.
When considering potential cost recovery actions, the Cost
Recovery Policy encourages states to make decisions that are in
the best interests of their overall LUST program and that reflect
efficient use of Trust Fund monies. Regardless of the action
taken by a state in exercising its discretion in cost recovery
cases, the state is required to fully document its decision and
to formally close out all cases. The draft report acknowledges
this point on page 28 and we agree. We believe in some
instances, however, that the draft report improperly equated lack
of documentation of cost recovery decisions with the absence of a
cost recovery program. For example, page 24 includes the
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statement tha- Kansas does not have a cost recovery program. EPA
Region 7 and the state, however, indicate that Kansas does have a
cost recovery policy, but that cost recovery was not pursued for
various reasons. Both the Region and state agree that the
problem was that these decisions were not documented.
1. 2 and 3 facre 28)
We will implement management controls to ensure that states
develop and implement cost recovery programs in accordance with
Subtitle I requirements and EPA's Cost Recovery Policy for the
LUST Trust Fund. We will use the cooperative agreements as a
tool to assist in achieving these results. We will monitor
states' progress as part of our annual, Regional Strategic
Overview planning process with the Regions and states. In
addition, we will discuss these expectations at the next UST/LUST
Regional Managers meeting (currently planned for September 1996) .
COMMENTS ON CHAPTER 4
The draft report states (page v) "We found that the States'
activity reports were generally unreliable and potentially
misleading." This statement is overstated and unsupported based
on the limited size of the database examined, the actual findings
associated with the data, and EPA's use of the data. A more
appropriate statement is: the states' activity reports were not
always accurate and therefore potentially misleading. Similarly
(pages vi, 29 & 31) there are several references that "activity
reports were not accurate," or "EPA did not accurately report
LUST program results." In all these cases the description should
be modified to read: activity reports were not always accurate
and EPA did not always accurately report LUST program results.
On page 37, the draft report notes "we conclude that the Regions
had not identified the reporting errors and had not taken steps
to ensure that the States were reporting accurate information."
To be accurate, this statement needs to be modified to read: the
Regions had not always identified...and had not taken steps to
ensure that the states were always reporting accurate
information.
The draft report states (page 36) that "... we believe the
misstatements represent a significant reporting problem." OUST
strongly disagrees with this statement. A more accurate
statement would be that the misstatements have caused reporting
problems. We are concerned that the draft report draws
conclusions about all state data based on very few data points.
For example, in New York, it appears that data for 70 sites were
investigated. New York reports over 12,000 confirmed releases,
70 sites constitute significantly less than one percent of the
total release population. The draft report recognizes this by
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stating "we a nnot statistically evaluate the error rate in the
activity reports....H
The statements concerning California (page 32) that "The
activity report...significantly overstated the number of
confirmed releases and cleanups initiated," and (page 33)
"leaking tank sites that had not been confirmed were included in
the report as confirmed leaking sites" are misleading. In fact,
EPA Region 9 believes that the state has been under-reporting due
to the large number of local databases. California was initially
reporting state-regulated tanks. However, after a training
session was conducted for the state, the data was modified and
the reporting problem fixed. Furthermore, it is appropriate for
states to report multiple confirmed releases at the same site if
the new release occurs after work on the original release is well
underway and the second release requires a separate remedial
response. Finally, in California the term "no action" means that
the state or local implementing agency has not had a chance to
either enter the data into the system or has not reviewed the
site assessment or corrective action plan. It does NOT indicate
whether or not the site is a confirmed release. In other words,
a release can be confirmed and documented without additional data
being entered into the database.
OUST disagrees with the statement (page 36) that "Strict
adherence to the definitions would provide results that can be
compared among the States." As with any data base, we
acknowledge that the numbers are not always perfect, people
occasionally make mistakes, and there is not always complete
consistency in the way states interpret the definitions.
However, it is more important to assure consistent interpretation
of the measures within individual states rather than between the
states. We have encouraged constant improvement within state
programs and not competition between programs. This concept is
further reinforced by the design of the national UST program. We
adopted a decentralized model that empowers state and local
programs. This arrangement allows states to run programs that
are tailored to the needs and demands of their local environments
and regulated communities, and by design leads to variations
between individual state programs. These variations make it
invalid to compare state programs to each other using only the
reporting data.
The draft report states (pages vii & 29) that "it is
necessary that the information be accurate, complete, and
comparable to better manage the LUST program." This sentence is
unsubstantiated and should be deleted. The STARS measures were
never intended to be used to manage the LUST program. The data
is only one of many tools we use to make management and program
decisions in the LUST program. The STARS measures were
originally developed to determine the extent of the LUST problem,
to track nationwide remediation efforts, and to establish a
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baseline of performance for individual states. The STARS
measures provide us with a general indication of national program
progress. The measures were not intended to compare states to
each other, but instead to serve as a relative measure and as a
way to identify state progress and areas for improvement. For
example, we have asked the Regions to investigate the reasons why
individual states fall below the national average for completing
cleanups and to determine if this is a program management problem
or merely an indication of a preponderance of complicated
groundwater sites. Regions and states also use the data to
monitor state progress and to continuously improve state
procedures using total quality management tools.
The draft report states (pages 29 & 35) that "EPA
Headquarters uses the information to make nationwide funding
decisions, to report program results to Congress, and to report
the results of the program in the Agency's financial statements."
Since the STARS data is only one source of information, it would
be more accurate to state: EPA Headquarters uses the information
to help make nationwide funding decisions, to help report program
progress to Congress, and to help report the results of the
program in the Agency's financial statements.
The draft report notes that "the cumulative totals for the
above listed activities were used to determine State Trust Fund
allocations...." This is an incorrect statement. The data is
used to determine Regional allocations, not state allocations.
Furthermore, OUST disagrees and no evidence is presented that
substantiates the bold statement (page 37) "that accurate
reporting would provide a more equitable distribution of LUST
Trust Funds among the States." This statement should be deleted.
The STARS measures used in the national allocation formula
serve as a surrogate for state performance. We recognize that
the measures are not perfect, but believe they are appropriately
used to determine EPA Regional allocations, i.e., the amount of
LUST Trust Fund money each Region receives per year. We work
closely with representatives from the ten Regions, in addition to
consulting with states, to determine the components of the
Regional Allocation Formula. Regional Program Managers actually
determine the amount of individual state awards based on a
variety of factors, including additional state data (such as
spending patterns), state reviews, and their day-to-day knowledge
of the state programs.
As noted above, the STARS data is only one of many tools
used for management decisions. Each Region develops an annual
Regional Strategic Overview (RSO) to assess the status of state
progress in implementing the program and identifying key
improvement areas for the coming year. This process is based on
strategic discussions that OUST has with Regional management and
the Regions have with the states. In mid-year and end-of-year
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state evaluations, the Regions evaluate state program progress,
identify weaknesses and strengths in state programs, and work
with the states to identify .continuous improvement activities.
In addition, within each Region, state project officers/program
managers have day-to-day contact with each of the states.
We use information generated from all of these activities to
report program results within the Agency and to Congress. We
believe we are accurately portraying program results and making
sound management decisions. In fact, OUST's judicious use of
data, collegial management approach, and innovative strategic
planning method have long been praised by states and the
regulated community, and similar concepts are being diffused
throughout the Agency under the direction of the White House
under the rubric of Total Quality Management, state empowerment
(performance partnerships), and oversight reform.
Recommendations l & 2 foaae 37)
We will implement the following management controls to
ensure that reliable and timely information is obtained,
maintained, reported, and used.
OUST will revise (or issue revision memorandums) the UST
Grant Guidance and LUST Trust Fund Cooperative Agreement
Guidelines for FY98 and beyond. (It is too late to revise the
guidances for FY97 since negotiations are well underway.) The
revisions to both guidances will address regional and state
verification of state reporting data, clarify the definitions and
clearly delineate reporting requirements (i.e.,, report only
federally regulated Subtitle I USTs).
In the interim, OUST will address this issue at our next
UST/LUST Regional Managers meeting (currently scheduled for
September 1996). The Regions will work with the states in mid-
year and end-of-year state evaluations to assess state data.
Headquarters will monitor the progress of Regional verification
of state data as part of our annual Regional Strategic Overview
planning process with the Regions.
OUST also is in the process of converting approximately
twenty states' data tracking systems to a new windows-based
system know as UST-Access. This will provide these state
programs with a state-of-the-art tracking system and additional
capacity for data verification.
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APPENDIX C
REPORT DISTRIBUTION
Office of Inspector General
Inspector General (2410)
Headquarters Office
Assistant Administrator for
Solid Waste and Emergency Response (5101)
Director, Office of Underground Storage Tanks (5401W)
Agency Followup Official, (3101), Attn: Assistant
Administrator for Administration and Resource
Management
Agency Followup Coordinator (3304), Attn: Director,
Resource Management Division
Audit Followup Coordinator (5101)
Associate Administrator for Regional Operations and
State/Local Relations (1501)
Associate Administrator for Congressional and
Legislative Affairs (1301)
Associate Administrator for Communications, Education
and Public Affairs (1701)
Headquarters Library (3304)
Ten Regional Offices
Regional Administrator
Regional LUST Program Director
Audit Followup Coordinator
Public Affairs Office
Regional Library
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External
General Accounting Office
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