EPA-350-R-03-001 March 2003
OFFICE OF INSPECTOR GENERAL
Ca talyst for Improving the Environment
Annual Superfund Report
to Congress
Fiscal 2002
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OIG Scorecard Summary of Superfund Results
Actions Contributing to Improved Environmental Quality and Human Health- Superfund
• 20 Environmental Recommendations
• 5 Environmental Risks Identified
2 Examples: Environmental Policy, Regulatory, Practice, Process Actions, or Changes
• 9 Environmental Risks Reduced
Action Improving EPA's Management, Accountability, and Program Operations-Superfund
29 Recommendations for management Improvements/Additional Review
4 Best Management Practices Identified
2 Certifications for Action
6 Best management Practices Implemented
5 Examples: Management Policy, Practice,. Process Actions, or Changes
4 Criminal, Civil, Administrative Actions
$25 IK Monetary Fines, Questioned Costs, and Efficiencies/Savings exclusive of contracts and Sim
from audits by Defense Contract Audit Agency, Certified Public Accountants and Federal /
72% OIG Customer Satisfaction Rating on Superfund Assignments (based on survey)
*le Audits
Auditors
Cover Photo by Steve Delaney
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Foreword
This report covers fiscal 2002 activities of the
Environmental Protection Agency (EPA)
Office of Inspector General (OIG), and is
our 16th Annual Superfund Report to the
Congress. The Superfund Amendments and
Reauthorization Act of 1986 requires the OIG to
annually audit the Superfund program and report
the results to Congress. This report summarizes
some of our more significant highlights for the
reporting period.
In April 2002, the OIG assumed responsibility for
EPA's Superfund Ombudsman function.
Ombudsman work involves conducting fact-
finding inquiries, developing options to deal with
difficult problems, and making recommendations
to Agency senior management regarding
procedural and policy changes that will improve
the Superfund program.
I am pleased to report that the OIG issued an
unqualified opinion on EPA's fiscal 2002
financial statements, including those of the
Hazardous Substance Superfund. While the
Agency continues to correct longstanding
problems, we found some internal controls still
needed to be strengthened. These issues were not
material weaknesses which would affect the
reliability of the financial statements. The Office
of Chief Financial Officer generally concurred
with our recommendations.
EPA continued to address vast and complex
environmental issues in its waste management
and cleanup programs, but challenges remain.
Most notably, recent indepth studies of the
Superfund program have identified major
challenges EPA may face in paying for cleanups,
based on current Trust Fund balances and
expected cleanup needs in the future. This
financial situation has generated suggestions for
running the program more efficiently as well as
legislation to reauthorize taxes on industry, which
formed the original basis of the Superfund
program.
Key challenges and questions in the Brownfields
program were largely related to EPA's ability to
implement the newly authorized nationwide
Brownfields program. The new program
provides funding opportunities for new entities
and cleanup activities, introducing new challenges
that EPA must manage.
The Resource Conservation and Recovery Act
program faces potential problems in meeting
future environmental challenges. It is anticipated
that the current system for waste management in
the United States will need to change in order to
meet the environmental challenges of the coming
decades. Changes will be necessary to
accommodate and respond to continuing trends in
the use of more chemicals and new chemical
risks; improved methods for measuring and
managing chemical risks; a more global and
integrated world economy; and new technologies
and industries affecting how resources are used
and disposed of, among others.
We plan to evaluate key issues in each of the
three waste management program areas discussed
above (Superfund, Brownfields, and RCRA). I
remain confident that the collaborative efforts of
Agency and OIG staff will result in the resolution
of hazardous waste manangement challenges and
a cleaner, healthier global environment.
Nikki L. Tinsley
Inspector General
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
Table of Contents
EPA Ombudsman Responsibility Transferred to OIG. 1
Assistance to EPA Management 2
Superfund Senior Regional Management and Acquisition Council Participation Continues 2
Innovative Tool Put Online to Identify Cross-Agency Environmental Efforts 2
Hazardous Substance Superfund Trust Fund 3
EPA Earns Unqualified Opinion on Financial Statements 3
Cooperative Agreements 5
Washington, DC Department of Health Unable to Account for Superfund Cooperative
Agreement Funds 5
Utah Took Appropriate Steps at Jacobs Smelter Site, Needs to Make Some Improvements
in Accounting For Labor Costs 5
Remedial Action Decisionmaking 6
Response Claims 7
Review of Second Parker Landfill Claim Results in Questioned Costs of $265,010 7
Performance Reviews 8
Funding Needs for Superfund Sites 8
EPA Needs to Improve Accuracy of Superfund Data Base 8
Improvements Needed in EPA's Oversight of Department of Energy Superfund Cleanups .... 9
Brownfields Performance Measures Can Be Improved 10
Draft Superfund Environmental Indicators Suitable, but Concerns Remain 10
Investigative Activity 12
Firm Cited for Allegedly Falsifying Test Results 12
Accountant Pleads Guilty to Charges Related to Embezzlement 13
Fiscal 2002 Superfund Reports 14
The complete text of selected reviews is available through the EPA OIG
internet home page, http://www.epa.gov/oigearth
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Printed with vegetable oil based inks on 100% recycled paper (minimum 50% postconsumer)
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
EPA Ombudsman Responsibility Transferred to OIG
In April 2002, the OIG assumed responsibility
for EPA Superfund National Ombudsman
reviews. EPA's National Superfund
Ombudsman was previously housed in the
Office of Solid Waste and Emergency Response
(OSWER). Ombudsman work had focused on
citizen complaints regarding hazardous waste
management and cleanup operations.
One of the initial tasks of the acting OIG
Ombudsman was to identify and research the
open cases transferred from OSWER's National
Ombudsman. We identified 25 open cases from
the prior National Ombudsman and have
received an additional 7 requests for assistance.
The OIG had previously initiated and is
conducting an assignment for 1 of the 25
transferred cases: World Trade Center. As of
September 30, 2002, we have closed five cases,
including three transferred cases and two new
cases. We are making significant progress on
the remaining cases.
EPA Inspector General Nikki Tinsley testified
before the Senate Environment and Public
Works Committee on the progress being made
on implementing and operating the EPA
Ombudsman function in the OIG, assuring the
Committee that Ombudsman work will be
conducted "with independence and
professionalism." The Inspector General also
pointed out that the OIG would be able to
undertake a much larger range of work. "As
part of the transfer, we have expanded the
services of the Ombudsman to include all EPA
administered programs, rather than limiting it to
only Superfund and hazardous waste issues."
She also noted the Ombudsman will be able to
draw from OIG's large pool of resources.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
Assistance to EPA Management
In addition to our traditional mandated and
self-initiated work, the OIG responds to EPA
management requests for review of vulnerable
program areas and OIG input in the development
of regulations, manuals, directives, guidance, and
procurements. These are efforts to prevent
problems that might later result in negative
findings or investigative results, or to respond to
prior audit findings. The OIG reviews and
comments on draft documents prepared by
Agency offices. OIG staff also participate in
conferences and EPA work groups to provide
input.
The OIG continued such efforts in fiscal 2002 to
assist EPA management both in work specifically
focused on Superfund and in crosscuttmg work
affecting Superfund. We summarize below some
of our other Superfund-related activities assisting
management.
Superfund Senior Regional
Management and Acquisition Council
Participation Continues
Representatives of the EPA OIG continued to
attend and participate in biannual meetings of the
Superfund Senior Regional Management and
Acquisition Council.
The Council's meetings are designed to:
(I) promote quality in contracts management;
(2) share regional successes and new ideas for
managing Superfund contracts; and (3) resolve
cross-cutting acquisition issues. The Council also
represents an excellent opportunity for the
exchange of information, ideas, and opinions
between the OIG and various Superfund
acquisition and program officials.
At a June 2002 meeting, we provided an update
on current and future OIG contract audits, many
of which focus on Superfund contracts.
Innovative Tool Put Online to Identify
Cross-Agency Environmental Efforts
To fully understand and resolve environmental
challenges, we determined it was necessary to
look beyond the boundaries of EPA, and consider
other sources of information, research, and
innovative tools in the field of environmental
protection.
To address this challenge, the EPA OIG
developed an online Compendium of Federal
Environmental Programs to identify the various
Federal agencies that participate in environmental
protection. With the support of the President's
Council on Integrity and Efficiency and other
Federal OIGs, we identified 29 Federal agencies
that collectively share responsibility for clean air,
clean and safe water, and better waste
management.
We organized our research into a web-based
database accessible from the EPA OIG's home
page (http://www.epa.gov/oigearth). To access
the database and accompanying narrative report,
click "Compendium of FederalEnvironmental
Programs" on our home page.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
Hazardous Substance Superfund Trust Fund
The Government Management Reform Act
requires Federal agencies to prepare annual
audited financial statements. The requirement
for audited financial statements was enacted to
help bring about improvements in agencies'
financial management practices, systems, and
controls so that timely, reliable information is
available for managing Federal programs. One
of the major entities covered by these financial
statements is the Hazardous Substance
Superfund Trust Fund. The EPA QIC's
requirement to audit EPA's financial statements
also meets our CERCLA audit requirement to
annually audit the Superfund Trust Fund, which
we previously referred to as our Trust Fund
audit. The following summary of our fiscal
2002 financial statement audit relates to all
findings resulting from our audit of EPA's
financial statements, including those of the
Hazardous Substance Superfund Trust Fund.
EPA Earns Unqualified Opinion on
Financial Statements
EPA earned an unqualified opinion on its fiscal
2002 financial statements. In evaluating EPA's
internal controls, we identified reportable
conditions in the following seven areas. We do
not believe these issues are material weaknesses
which would prevent the fair presentation of
reliable financial statement amounts.
Documentation and Approval of Journal
Vouchers - EPA did not always adequately
document vouchers and obtain appropriate
approval signatures.
Reconciling Unearned Revenue for State
Superfund Contracts - EPA did not
reconcile the unearned revenue from State
Superfund Contracts to the general liability
account - Unearned Advances. As a result,
EPA could not ensure the accuracy of the
State Superfund Contract unearned revenue
accounts totaling about $45 million.
Additional OIG work enabled the Agency to
post adjustments to reduce the variance.
Reconciling Deferred Cashouts - EPA did
not properly reconcile Superfund cashouts
at the regional level. Cashouts are funds
that EPA receives from Potentially
Responsible Parties, in advance, to settle
their liability for future response costs
within the terms of a consent decree,
administrative order, or other settlement
agreement.
Integrated Grants Management System
Security Plan - The security plan did not
adequately describe the security
requirements or the controls used to protect
the system and its data, including
requirements by the National Institute of
Standards and Technology. Additionally,
the plan did not include all Core Financial
System technical requirements mandated by
the Joint Financial Management
Improvement Program.
Automated Application Processing
Controls for the Integrated
Financial Management System - As first
reported in our fiscal 1995 audit, we
continue to be unable to assess the
adequacy of the automated internal control
structure as it relates to automated input,
processing, and output controls of EPA's
automated accounting system. EPA is
moving towards replacing its current
accounting system; however, until the new
system is in place, we will not be able to
assess the adequacy of the automated
internal control structure.
Capitalization of Superfund Contractor-
Held Property - EPA expensed all costs
(about $33.3 million) for contractor-held
property used for Superfund site-specific
projects instead of capitalizing and
depreciating these costs in accordance with
Federal accounting standards. As a result,
EPA was understating the value of its
property in the possession of contractors.
Subsequently, the agency made the proper
adjustments.
• Revenue Recognition on Cashouts - EPA
overstated a fiscal 2001 Superfund financial
statement adjustment for earned revenue
from past costs in Superfund special
accounts by $53 million. This also affected
the fiscal 2002 Superfund financial
statements by understating liabilities and
overstating income. Subsequently, the
agency restated fiscal 2001 and made
adjustments for fiscal 2002.
Our tests of compliance with laws and
regulations did not identify any instances of
noncompliance with laws and regulations that
would materially misstate the financial
statements. However, we did identify four
noncompliances under the Federal Financial
Management Improvement Act (FFMIA).
These noncompfiances do not meet the Office
of Management and Budget's (OMB) definition
of substantial noncompliance.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
Managerial Cost Accounting Standard -
Although the Office of the Chief Financial
Officer (OCFO) has made improvements in
cost accounting, more needs to be done to
ensure that EPA provides full cost reports
that are timely and useful to management.
Reconciling Intra-Governmental
Transactions - As reported in previous
audits, EPA, as is the case with other
Federal agencies, continues to experience
difficulties in reconciling some of its
intra-governmental assets and liabilities
because some other Federal agencies did
not perform reconciliations. Withput the
proper confirmations from its trading
partners, EPA has limited assurance that
intra-governmental balances are accurate.
Contract Payment System - This system
was not in compliance with some Joint
Financial Management Improvement
Program system requirements. Without the
current interface controls meeting those
requirements the system could not provide
the intended level of assurance regarding
the complete and accurate transfer of
contract payment information into EPA's
accounting system.
Fiscal 1999 FFMIA Remediation Plan -
FFMIA requires a remediation plan to bring
the Agency's financial management systems
into substantial compliance no later than
3 years after the date a determination is
made that the systems are not in substantial
compliance with FFMIA. In an August
2002 status report to OMB, EPA reported
that all cprrective actions under its
remediation plan were completed in June
2002. However, we found that two key
actions (implement a security certification
process for key personnel and establish a
process for the Chief Information Officer's
independent review of security program
effectiveness) were not completed.
Our tests of compliance with other laws and
regulations also disclosed an additional instance
ofnoncompliance related to the:
• Treasury Financial Manual for
Preparation of Statement of
Transactions (Form 224) - EPA reported
information based on Treasury records
rather than EPA's actual general ledger
amounts. This practice prevented
differences between the Treasury records
and the EPA general ledger from being
reported by Treasury on the Statement of
Differences. Such reporting could result in
a misstatement of EPA's Fund Balance with
Treasury account, as well as a misstatement
of EPA s annual financial statement
amounts.
In its response to our draft report, OCFO
generally concurred with our recommendations
and noted the completion or planning of a
number of cprrective actions. OCFO did note
that they believe they are complying with the
Managerial Cost Accounting Standard by
preparing quarterly subobiective level reports,
taking actions to execute the Agency's plan for
expanding cost information, and moving from
10 goals to 5 in the new Strategic Plan, we
recognize improvements the Agency has made
in this area, but do not agree that the
subobjective level reports provide useful,
timely, and full cost information. OCFO also
stated that they developed a new process and a
report for reconciling the Contract Payment
System with the Integrated Financial
Management System, but we did not review the
new process and report because they were
developed after we completed our work.
We issued our final report (2003-1-00045) on
January 29, 2003. A final response to the report
is due by April 30, 2003. A copy of our report
can be found at http://www.epa.gov/oigearth.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
Cooperative Agreements
During fiscal 2002, the OIG issued two reports
related to Superfund cooperative agreements.
The reports, involving Washington, DC and
Utah, are summarized below.
Washington, DC Department of Health
Unable to Account for Superfund
Cooperative Agreement Funds
We issued an adverse opinion on the
Washington, DC Department of Health's claim
for reimbursement of $603,895 under
Superfund Cooperative Agreement
No. VC983169. The recipient had not
developed and implemented a financial
management system that was capable of
accounting for the source and application of
funds for federally sponsored activities, as
required by EPA regulations.
Specifically, the recipient did not meet the cost
sharing requirements contained in the
agreement, and improperly combined the cost
of two programs that had separate budgets and
different cost sharing requirements. In addition,
the recipient's timekeeping and labor
distribution system was inadequate to identify
and account for time spent on Federal assistance
agreements because employee time records did
not show the specific agreements they worked
on or the activities they performed. EPA was
unable to evaluate the recipient's progress in
meeting the objectives of the agreement because
the recipient's progress and financial status
reports were often late and incomplete. Other
deficiencies identified included: (1) an
unsupported claim for reimbursement of
indirect costs; and (2) untimely completion of
Single Audits required by OMB Circular A-133.
We recommended that the Assistant Regional
Administrator for Region 3: (1) suspend all
activity and payment under Agreement
No. VC983169 until the recipient can
demonstrate accounting practices consistent
with Federal requirements; (2) designate the
recipient a high-risk grantee for other assistance
agreements and develop a corrective action
plan; (3) require the recipient to modify its
financial management system to meet
requirements; (4) require the recipient to
develop a time distribution system that meets
requirements; (5) recover all costs claimed
under Agreement No. VC983169 unless the
recipient properly separates, identifies, and
submits appropriate financial status reports; and
(6) terminate the agreement if the recipient does
not complete all corrective actions within
180 days.
We issued the final report (2002-1-00184) on
September 26, 2002. A response is due by
March 26, 2003.
Utah Took Appropriate Steps at
Jacobs Smelter Site, Needs to Make
Some Improvements in Accounting
For Labor Costs
A review of the Superfund cooperative
agreement for the Jacobs Smelter site found
that, in general, the Utah Department of
Environmental Quality (Utah) met the objectives
of the cooperative agreement. At the time of
our review, the cleanup work at the site (located
in and around Stockton, Utah) was almost
complete and was performed for less than half
the originally anticipated cost of $15.3 million,
due to quality project management. In general,
Utah exercised adequate controls over its
financial management, accounting,
procurement, and contract management
systems, and complied with Federal regulations
and cooperative agreement requirements.
Utah did need to make improvements in its
accounting for labor costs. Utah was not
providing the required 10 percent of payroll
costs to the cooperative agreement. While Utah
initially reallocated some payroll costs to meet
the 10 percent match, it did not continue to do
so. Utah officials stated that they intended on
reallocating payroll costs quarterly but had
forgotten to do so. Utah did not have a written
policy requiring the payroll allocation be done
quarterly.
We recommended Region 8 Acting
Administrator require TJtah officials to reallocate
payroll costs to make up for the deficient state
funding and to develop a policy to require
personnel to perform the reallocation on a
quarterly basis.
We issued the final report (2002-2-00001) on
November 6, 2001. In response, Region 8
officials agreed to take actions to address the
findings and recommendations.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
Remedial Action Decisionmaking
In each Annual Superfund Report for the past
two years, we explained that we have focused our
attention on Superfund site characterization and
remedy selection, in lieu of narrowly addressing
the performance of remedial investigations and
feasibility studies at Superfund sites. We have
continued indepth reviews of the reliability of
site-specific analytical data as a basis for sound
site remediation decisions. The remedial
investigation/feasibility study activity at
Superfund sites is highly data dependent. If
analytical data quality is inadequate even strict
adherence to Agency rules and guidance in
carrying out the remedial investigation/feasibility
study process will not ensure sound
decisionmaking.
Assessments of instances of possible
misrepresentation of analytical data produced in
both Agency and contractor laboratories during
fiscal 2000 and 2001 caused us to devote even
more resources to such assessments in fiscal
2002. A fully functioning automated analytical
data processing system enables us to review
analytical data sets for indications of improper
manual manipulation of noncompliant analytical
results to achieve method-specified or
contract-specified quality. We use this tool to
support ongoing investigations of suspected
laboratory fraud and it is available for assessing
analytical data quality on an ongoing basis.
We continue to believe that our resources are
better used in seeking to ensure data of known
quality to support Superfund remedial
decisionmaking rather than devoting those
resources to site-specific retrospective reviews of
the remedial planning process. In addition to the
investigative efforts discussed elsewhere in this
report, the OIG has worked closely with the
Agency's Office pf Environmental Information to
improve the quality of the data used to
characterize Superfund sites. The OIG has
participated in meetings of the Agency's
Workgroup to Develop Approaches for Detecting
and Deterring Improper Practices in Analytical
Laboratories. Also, the Inspector General has
addressed the American Council of Independent
Laboratories on laboratory fraud detection and
deterrence. Through these actions, the OIG is
working to ensure that Agency decisions on site
remediation are based on data of known quality.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
Response Claims
Section 11 l(a)(2) of CERCLA, as amended by
SARA, authorizes EPA to pay any claim for
response costs incurred by "any other person" as
a result of carrying out the NCP. Additionally,
section 122(b)(l) of CERCLA, as amended by
SARA; authorizes the President to reimburse
Potentially Responsible Parties (PRPs) for
"certain costs of actions under the agreement that
the parties have agreed to perform but which the
President has agreed to finance." The President
delegated this authority to the EPA Administrator
under Executive Order 12580, January 26, 1987,
who further delegated it to EPA's Office of Solid
Waste and Emergency Response. Authority for
decisions regarding claims against the Fund is
currently delegated to the Director, Office of
Emergency and Remedial Response.
PRPs are required to enter into a Preauthorized
Decision Document (PDD) with EPA to cover
work for which some costs will be reimbursed.
The PDD specifies the work to be performed, the
portion of the cost that EPA will reimburse, and
the procedures through which the PRPs can make
claims for reimbursement.
Our response claim reviews are not audits, but
rather follow instructions in the Agency's claims
guidance for the claims adjuster.
Review of Second Parker Landfill Claim
Results in Questioned Costs of $265,010
We reviewed the second claim of $1 629,445
submitted by Ethan Allen, Inc., for the remedial
work performed at the Parker Landfill Superfund
Site in Lyndon, Vermont. We questioned a total
of $265,010 as unreasonable ($29,932) and
ineligible ($235,078). The total Federal share of
these questioned costs was $124,554.
Under the PDD, Ethan Allen, Inc., is entitled to
submit claims covering 47 percent of eligible
costs, not to exceed a total of $3,015,432. To
date, the EPA has reimbursed Ethan Allen, Inc.,
$1,941,875.
The $29,932 (Federal share: $14,068) of costs
questioned as unreasonable represented a
duplicate payment made by Ethan Allen, Inc to
one of its contractors. The $235,078 (Federal
share: $110 486) in costs questioned as ineligible
were legal fees and related costs for litigation
support and mediation, incurred in association
with a legal dispute between Ethan Allen, Inc.,
and its general contractor. The Consent Decree
restricted reimbursement of attorneys' fees to
costs incurred for four specific types of services
and rendered any other types of attorneys' fees to
be ineligible. The questioned costs associated
with the legal dispute were not among the eligible
types of services.
We issued our final report (2002-S-00001) on
October 31, 2001. In response, the coordinating
official accepted the questioned legal fees of
$235,078 based on the regional case review
team's intent and interpretations of legal fees
during the Consent Decree and Preauthorization
Decision Document negotiations. As a result,
only the unreasonable costs of $29,932 were
sustained.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
Performance Reviews
In addition to reviews required by CERCLA, as
amended, we conduct other reviews related to
EPA's management of the Superfund program.
We summarize below some particularly
significant reviews of EPA management
completed in fiscal 2002 not summarized
elsewhere in this report.
Funding Needs for Superfund Sites
On April 17, 2002, Congressmen Dingell and
Pallone of the House Energy and Commerce
Committee requested that we summarize the
funding needs of non-Federal NPL sites for fiscal
2002. On June 24, we reported that, at the time of
our review, regions had requested $450 million
for remedial actions and EPA Headquarters
planned to allocate approximately $224 million.
For long-term response actions, the regions
requested $46.7 million and $33.2 million was
planned for distribution. On July 31, the
Inspector General testified on these results before
the Subcommittee on Superfund, Toxics, Risk,
and Waste Management of the Senate Committee
on Environment and Public Works.
On August 26, the Chairs of the Committee and
Subcommittee requested that we update this
information to provide a complete picture of
fiscal 2002 funding. On October 25, we reported
that, after assessing changing site conditions, the
regions estimated a need of $417 million for
remedial actions and EPA obligated $320 million,
a difference of $97 million. For sites needing
long-term response actions, regions estimated a
need of $60 million and obligated $43 million, a
difference of $17 million.
EPA Needs to Improve Accuracy of
Superfund Database
Over 40 percent of the site actions (activities) we
reviewed in EPA's Superfund database were
inaccurate or not adequately supported. This
database - the Comprehensive Environmental
Response, Compensation, and Liability
Information System (CERCLIS) - is the official
repository for all Superfund site data. As a result
of weaknesses noted, users of CERCLIS data did
not have accurate and complete information
regarding the status and activities of many
Superfund sites, which can adversely impact
planning and management.
CERCLIS is used by EPA to track site activities,
support financial statements and other reports,
maintain an inventory of hazardous waste sites,
and project dates and costs. However, we
identified actions with inaccurate dates, as well as
actions not supported by appropriate
documentation or approval signatures. Also, the
status codes in CERCLIS were often incorrect for
the NPL, non-NPL, and archive field data
elements. Further, we found, primarily at non-
NPL sites, inconsistent use of NPL and non-NPL
status codes, active sites without any actions
entered for at least 10 years, and frequent use of a
nondescriptive status code. These weaknesses
were caused by the lack of an effective quality
assurance process over CERCLIS data quality and
inadequate internal controls.
We recommended that EPA develop and
implement a nationwide quality assurance process
for CERCLIS data, and a process to review older
sites that have not had any actions entered for a
reasonable amount of time. We also
recommended that EPA update policies and
procedures.
We issued our final report (2002-P-00016) on
September 30, 2002. EPA provided a final
response to this report on December 24, 2002.
EPA concurred with the recommendations
contained in our report and indicated that many
of the recommendations had already been
addressed or actions were underway to address
the remaining recommendations. Specifically,
EPA undertook an initiative to establish a high-
level Data Quality Steward to address our
concerns regarding the quality assurance process
for CERCLIS data. The Data Steward is charged
with working with the Office of Emergency and
Remedial Response and regional staff to develop
a Data Quality Assurance/Quality Control
(QA/QC) process. The QA/QC process is
expected to be implemented by September 30,
2003. Additionally, EPA outlined various other
plans to improve data quality processes. The
proposed actions, once implemented, should
adequately address our concerns.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
9
Improvements Needed in EPA's
Oversight of Department of Energy
Superfund Cleanups
We evaluated the effectiveness of EPA Region 4
oversight of cleanup actions at the Department of
Energy's (DOE's) Savannah River and Oak Ridge
nuclear facilities. These sites, respectively, have
the second and fourth highest estimated
Superfund cleanup costs of all DOE facilities.
For both locations, the Federal Facility
Agreement between EPA, DOE, and the
applicable State are generally consistent with
Superfund statutes and regulations. In addition,
cleanup remedies approved under the agreements
generally comply with Superfund statutes,
regulations, and other applicable requirements.
However, we noted the following:
Savannah River Site
Improvements are needed in EPA Region 4's
oversight of DOE's implementation of cleanup
actions at the Savannah River site, near Aiken,
South Carolina. From 1996 through 2002, DOE
discontinued evaluating or ranking sites on
potential risks to the environment and human
health. Although such rankings are required,
EPA did not ensure they were conducted. This is
particularly of concern because 80 percent of the
sites receiving remedial action since cleanup
agreements were reached were in the low risk
category. Further, more than half (about
52 percent) of the estimated cleanup construction
costs for Savannah River were used for low-risk
sites. According to DOE, it has been necessary
for them to focus their resources on low risk,
presumably easier sites, in order to meet their
internal goals associated with the number of
cleanups completed per year.
Also, we found several instances where cleanup
actions at Savannah River sites had been delayed
because EPA has been late in responding to DOE
cleanup decision documents. EPA was late in
responding to 85 percent of the primary cleanup
documents, due primarily to personnel shortages.
Further, EPA did not properly review and
comment on the last official DOE five-year
review of the protectiveness of Savannah River
cleanup remedies, and has not determined the
total long-term estimated costs for Superfund
cleanup actions at the Savannah River facility.
We made recommendations to the Region 4
Administrator to address the issues noted,
including establishing improved oversight
procedures to ensure that cleanups are properly
prioritized based on risk and that there is
sufficient Region 4 staff to provide oversight of
cleanup actions and agreements. Further, we
made recommendations to improve the five-year
review and site evaluation processes, and to assist
Region 4 in determining whether funding levels
are adequate. In responding to our draft report,
Region 4 agreed to improve oversight and, if
available, allocate additional staff.
We issued our final report (2002-P-00014) on
September 26, 2002. In response, th Agency
indicated that: (1) by September 30, 2003, a new
work planning process would be implemented at
DOE Savannah River that prioritized highest risk
sites and Region 4 would ensure that process was
followed; (2) Region 4 declared the deficient
regional staffing for Savannah River oversight as
a management control weakness; (3) Region 4
assigned a staff member to ensure that five-year
reviews were timely received from DOE and
properly reviewed by Regional staff; (4) the
recommended Federal Facility agreement
revisions related to five-year reviews would be
promulgated by September 30, 2003; and
(5) Region 4 is currently receiving DOE long-
term cost projections for long-term response
actions and final cleanups in order to ensure
adequate funding. The OIG closed the report
based on the Agency's response
Oak Ridge Site
Studies conducted by the State of Tennessee at
this facility, located in Oak Ridge, Tennessee,
have identified potential contaminants of concern
that may not be accounted for in existing Federal
Facility Agreement documents and DOE cleanup
actions. Reviewing and evaluating the State
reports, and comparing their results to existing
information on contaminants at Oak Ridge, will
improve EPA oversight of the facility.
In 1999, the Tennessee Department of Health
issued a series of reports that showed that, in
some cases, levels of pollutants being released
from Oak Ridge were substantially higher than
previously acknowledged by the Government.
These reports were issued after EPA's review and
concurrence with DOE's remedial investigations.
However, neither DOE nor EPA had evaluated
the impact the reports may have on current
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
10
cleanup activities or decisions. Consequently,
EPA Region 4 cannot be assured that ongoing and
proposed remedial actions are addressing all
contaminants of concern and that relevant risks to
human health and the environment are being
addressed. In April 2002, during our review,
EPA initiated a comparison of the State reports
with all contaminants evaluated in the DOE
remedial investigations and other relevant
baseline assessments. However, because of
limited contract resources, EPA estimated it
would take at least two years to complete the
review.
In addition, we noted that DOE had not acquired
sufficient funding to support compliance with
approved work plans and milestones specified in
cleanup agreements for fiscal 2002 through 2004.
We recommended that the Region 4
Administrator expedite completion of the review
and comparison of potential contaminants of
concern identified in the State reports with past
remedial investigation documents, and continue
working with DOE to obtain a level of funding
sufficient to perform required work. In response
to draft report, Region 4 agreed with the
recommendations and had already implemented
the corrective actions.
We issued the final report (2002-P-00013), which
was considered closed upon issuance, on
September 26, 2002.
Brownfields Performance Measures
Can Be Improved
The Brownfields program for cleaning up
facilities needs improved performance measures.
The program involves cleaning up for reuse
abandoned, idle, or underutilized industrial or
commercial facilities with real or perceived
environmental contamination to protect human
health and the environment. Congress has
authorized $200 million a year through fiscal 2006
to promote Brownfields redevelopment.
EPA's fiscal 2003 Annual Performance Plan
identifies Brownfields program performance
measures as cumulative site assessments, jobs
generated, and leveraging of cleanup and
redevelopment funds. However, these measures
generally do not indicate EPA's progress in
reducing or controlling risk to human health and
the environment.
EPA can improve performance measures. EPA's
data quality/management work group can review
existing Brownfields performance measures and
consider how provisions of the Brownfields Act
and Government Performance and Results Act
impact the quality, reporting, evaluation, and
collection of Brownfields program data. Also,
EPA could identify short-term or intermediate
outcome measures, since it may take years for
some Brownfields activities to have a noticeable
impact on human health and the environment.
Some possible short-term or intermediate
measures EPA may consider adopting are acres of
Brownfields remediated and redeveloped, and the
population protected by Brownfields cleanup
actions.
We issued our final report (2002-M-00016) on
May 24, 2002. EPA concurred that action was
needed to improve performance measures for the
Brownfields program. The Agency is reviewing
the measures we suggested in addition to others,
and has requested our continued involvement
with their efforts to implement new measures.
Draft Superfund Environmental
Indicators Suitable, but Concerns
Remain
We found that the two draft Superfund
Environmental Indicators (Els) reviewed -
human exposure under control and contaminated
groundwater migration under control - were
suitable because they measure a state of the
environment, rather than just mark the
completion of an administrative step in the
Superfund cleanup process. The two Els are
specific measures of program performance used
to assess progress toward cleaning up a hazardous
waste site. However, we identified some policy
and technical issues that should be resolved.
The two draft Els were modeled after Els used by
the Resource Conservation and Recovery Act
(RCRA) Corrective Action Program, but we
found several policy and technical differences
between the El documentation for Superfund and
RCRA. We understand there are inherent
distinctions between the Superfund and RCRA
programs. Even so, we believe the policy and
technical differences need to be resolved before
implementation of the draft Superfund Els, to
ensure similar results.
We recommended that the Assistant
Administrator for OSWER make changes to
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
11
resolve these policy and technical differences,
make changes to the Superfund El
documentation, and develop supplemental El
guidance more applicable to Superfund. We also
recommended that, in addition to the draft Els of
interim progress Superfund officials have already
developed, Office of Solid Waste and Emergency
Response officials partner with state officials to
develop ecological and final Els. Finally, since
mega-sites (sites that will cost $50 million or
more for cleanup) will require extensive effort
and resources, we suggested that Office of Solid
Waste and Emergency Response officials
consider adopting a supplemental measure of
interim cleanup progress specifically for
mega-sites.
We issued our final report (2002-P-00003) on
December 27, 2001. In response, the Assistant
Administrator for Solid Waste and Emergency
Response stated that the recommendations will be
useful in improving their Els and indicated they
were making progress in resolving the issues
highlighted in our report.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
12
Investigative Activity
The OIG Office of Investigations (OI) continued
to focus its investigative resources on allegations
of fraud, waste, and abuse in high-risk and
high-dollar EPA programs and administrative
areas; including the Superfund program. High
priority was also given to environmental
programs and employees when the action under
investigation had the potential to seriously
undermine the integrity of the Agency and/or the
public trust in its ability to carry out its mission to
protect public health and safeguard the
environment.
Proactive and reactive investigative efforts
covered all stages of the Superfund program:
OI's Laboratory Fraud Directorate continued
its initiative to detect and investigate
laboratory fraud within the environmental
community, involving commercial,
contractual, and Agency laboratories. Many
of these laboratories conduct analysis and
produce data that is used to make decisions
concerning Superfund sites.
OI's Financial Fraud Directorate continued
major efforts in uncovering fraudulent
activities in the award and performance of
contract and assistance agreements. EPA
programs, including Superfund, are
dependent on contractors to perform a
significant portion of the work related to
EPA's mission.
OI's Cyber Crimes Directorate continued to
monitor previously identified computer
security weaknesses, identify new and
emerging vulnerabilities, and advise the
Agency on any additional computer security
enhancements that are needed. We continued
to perform criminal investigations of
intrusive activities affecting EPA systems and
data.
During fiscal 2002, our Superfund investigative
efforts resulted in:
• Three informations
• Three convictions
Five civil actions
Four administrative actions
Monetary fines restitution, and recoveries
resulting from Superfund investigations totaled
more than $18.4 million. We expect to see a
continued increase in significant actions as OI's
investigative emphasis on major Agency
contracting and laboratory fraud continues to
increase.
Following are two examples of Superfund
investigative activities with results in fiscal 2002:
Firm Cited for Allegedly Falsifying Test
Results
The investigation of Intertek Testing Services
Environmental Laboratory (ITS), Richardson,
Texas, was cited by the U.S. Attorney for the
Northern District of Texas as the largest
laboratory fraud investigation in the history of the
United States. The ITS facility conducted as
many as 25,000 separate analyses of air, soil,
liquids, pesticides, explosives, and nerve-gas
agents for both private firms and Government
agencies. The test results, which allegedly were
falsified, were used to monitor some of the
nation's most polluted hazardous waste sites for,
among other things, the presence of known or
suspected human cancer-causing contaminants.
After the inception of the investigation, the
facility was shut down.
In September 2001, a Federal grand jury in Texas
issued a 30-count indictment against 13 former
lab workers and managers, charging them with
conspiracy, mail fraud, wire fraud, andpresenting
false claims against the Government. The
indictment accused the managers and chemical
analysts at ITS with falsifying data samples from
1988 to 1997. According to Federal prosecutors,
the defendants altered data to make testing
instruments appear to be properly calibrated and
within quality control limits when they were not.
ITS pled guilty to one count of conspiracy to
commit an offense against and otherwise defraud
the United States, in violation of 18 U.S. Code
Section 371. In February 2002, ITS was
sentenced as a corporation and ordered to pay a
fine of $9 million, a $400 special assessment fee,
and to serve 42 months of probation. In March
2002, ITS entered into a civil settlement
agreement with the Department of Justice Civil
Litigation Branch, Washington, DC, in which ITS
agreed to pay the United States $8,741,000 to
resolve certain civil claims the United States had
on behalf of the Army Corps of Engineers, the
Department of Defense, and EPA. The criminal
and civil action against ITS resulted in a total
dollar recovery of $17,741,400. In addition, five
ITS employees pled guilty to criminal acts, while
eight were acquitted of criminal culpability by a
jury. The corporation and all 13 employees face
suspension and debarment from Federal
contracting.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
13
The results of this investigation made a national
impact on the laboratory community and resulted
in the issuance of an open letter to the laboratory
community by the EPA Inspector General. This
investigation had a direct impact on EPA's
mission to improve and protect environmental
quality and human health.
This investigation was conducted jointly by the
EPA OIG, me EPA Criminal Investigations
Division, the Defense Criminal Investigative
Service, the United States Army Criminal
Investigation Command, and the Air Force Office
of Special Investigations.
Accountant Pleads Guilty to Charges
Related to Embezzlement
On June 3, 2002, Alfred S. Garappolo, a certified
public accountant, pled guilty in U.S. District
Court to one count of accessory after the fact to
embezzlement and one count of concealing and
covering up a material fact in connection with a
criminal investigation. The guilty plea was
pursuant to a criminal information against
Garappolo charging him with offenses related to
his position as an accountant for the Ironworkers
Apprenticeship and Training Fund,
Washington, DC. The Fund periodically received
Federal program grants, including money from
Superfund, to establish or undertake certain skills
and safety training. To date, the Fund has
received $1.2 million from EPA.
The director of the Fund, Raymond J. Robertson,
previously pled guilty on March 28, 2002, to a
criminal information charging him with one count
of conspiracy, one count of theft, and six counts
of embezzlement from the organization. That
information charged Robertson with conspiring
to conceal from the other trustees of the fund and
contributing union members the nature and
amount of thefts by Robertson and his daughter,
Kerry J. Tresselt, from approximately April 1998
until January 1999. The information further
charged Robertson with embezzlement for using
the Fund credit card for personal purchases.
The June 3, 2002, information charged Garappolo
with making statements to the Fund trustees
assuring them that the Fund's financial operations
and controls were in order, as well as approving
the Fund's 1999 final audit report, despite having
knowledge of the thefts and problems associated^
with Tresselt's bookkeeping.
This investigation was conducted jointly by the
EPA OIG; the Department of Energy OIG; and
the Department of Labor, Pension, Welfare, and
Benefits Association.
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
14
Fiscal 2002 Superfund Reports
Report No. Description Date
2002-1-00004 Foster Wheeler-FY 97 RAC Close-out 68-W8-0110 12-OCT-01
2002-1-00034 Black & Veatch Special Project Corp.-FY 97 RAC 68-W5-0004 29-OCT-01
2002-1-00011 Tetra Tech NUS-CAS 420 15-OCT-01
2002-1-00023 American Management Systems-CACS 68-W9-0038 24-OCT-01
2002-1-00019 American Management Systems-CACS 68-W9-0039 18-OCT-01
2002-1-00021 Lockheed Martin Services, Inc.-FY92 Incurred Cost 23-OCT-01
2002-1-00017 Black & Veatch Special Projects Corp.-FY 98 Incurred Cost 17-OCT-01
2002-S-00001 Review of Parker Landfill Response Claim II 31-OCT-01
2002-1-00026 CH2M Hill Inc.-FY97 Incurred Cost 25-OCT-01
2002-1-00025 Washington Group Intl(Morrison Knudsen)-FY 99 RAC 68-W7-0039 25-OCT-01
2002-1-00020 Washington Group Intl(Morrison Knudsen)-FY 99 ARCS 68-W9-0025 22-OCT-01
2002-M-00002 CLOSED - Contracts 8a KC 16-NOV-01
2002-1-00042 Tapan AM Associates, Inc.-FY 97 RAC Closeout-68-W5-0004 08-NOV-01
2002-4-00005 Tetra Tech NUS-Floorcheck 05-NOV-01
2002-1-00040 IT Group-De1ivery Order CAC- #DACA45-97-D-0012 05-NOV-01
2002-2-00001 Superfund Cooperative Agreements-- Utah 06-NOV-01
2002-P-00003 Mega: Environmental Indicators 27-DEC-01
2002-M-00006 Buena Vista/Klau Mine 14-JAN-02
2002-1-00065 Tetra Tech EMI-Revised Disclosure Statement 25-JAN-02
2002-1-00072 CMC Inc.-FY 98 Incurred Cost 30-JAN-02
2002-1-00058 CH2M Hill Inc. - FY 99 Incurred Cost 16-JAN-02
2002-1-00064 Bionetics Corporation-FY 99 Incurred Cost 24-JAN-02
2002-S-00003 Ecology & Environment - 2001 Floorcheck 26-FEE-02
2002-1-00079 TAMS Consultants Inc.-FY 98 Incurred Cost 15-FEE-02
2002-B-00002 Brownfields' Effects on Community Redevelopment 17-APR-02
2002-1-00111 Black & Veatch SPC-1998 ARCS Annual Closeout 68-W8-0064 12-APR-02
2002-2-00014 CH2M Hill Inc.-FY 98 & 99 RAC 68-W9-8225 15-APR-02
2002-1-00106 Gannett Fleming Inc.-Labor Cost Charging & Allocation Review 09-APR-02
2002-2-00013 IT Group-DACA45-97-D-0012 # 15-APR-02
2002-1-00103 SAIC-CACS 68-W2-0026 Ol-APR-02
2002-1-00113 Earth Tech Remediation Service-FY 98 Incurred Cost 12-APR-02
2002-M-00016 Brownfields' Effects on Community Redevelopment (OPE HQ) 24-MAY-02
2002-M-00018 EQMI 2002 Accounting System Review 30-MAY-02
2002-1-00124 CH2M Hill Inc.-FY 01 CAS 420 19-JUN-02
2002-1-00129 Roy F. WESTON-FY 96 ARCS 68-W9-0018 19-JUN-02
2002-1-00128 Roy F. WESTON-FY 97 ARCS Closeout 68-W9-0022 19-JUN-02
2002-1-00125 CH2M Hill Inc.-FY 01 CAS 408 19-JUN-02
2002-1-00121 SAIC-CACS 68-W9-0011 19-JUN-02
2002-M-00030 Environmental Chemical Corporation Ol-AUG-02
2002-1-00145 Versar, Inc.-CACS 68-01-7053 26-AUG-02
2002-1-00151 Roy F. Weston-FY 97& 98 RAC 68-W7-0026 16-AUG-02
2002-1-00153 ABT Associates Inc.-CAS 404 24-AUG-02
2002-1-00158 CET Environmental Services Inc.-FY 99 Incurred Cost 29-AUG-02
2002-1-00137 Gunther F. Craun & Associates-Proposal PR-NC-01-12372 16-AUG-02
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EPA Office of the Inspector General Annual Superfund Report to the Congress for Fiscal 2002
15
Fiscal 2002 Superfund Reports
Report No.
Description
Date
2002-1-00184 Superfund Cooperative Agreement Washington, DC 26-SEP-02
2002-1-00183 Black & Veatch Special Projects Corp.-FY 99 Incurred Cost 23-SEP-02
2002-1-00163 CET Environmental Services Inc.-FY 98 Incurred Cost ll-SEP-02
2002-1-00190 Ecology & Environment-FY 00 Incurred Cost 30-SEP-02
2002-1-00189 Ecology & Environment-FY 99 Incurred Cost 30-SEP-02
2002-1-00167 Metcalf & Eddy Inc.-FY 99 Incurred Cost 13-SEP-02
2002-1-00166 URS Corporation-FY 98 Incurred Cost 13-SEP-02
2002-4-00010 CH2M Hill Inc.-FY 01 CAS 412 13-SEP-02
2002-1-00174 CH2M Hill Inc.-FY 01 CAS 416 18-SEP-02
2002-1-00181 Tetra Tech NUS, Inc.-FY 99 & 00 RAC 68-W6-0045 23-SEP-02
2002-P-00016 CLOSED: Quality of CERCLIS Data 30-SEP-02
2002-P-00013 Region 4/DOE Federal Facility Cleanups 26-SEP-02
2002-P-00014 Region 4/DOE Federal Facility Cleanups 26-SEP-02
2002-M-00042 Environmental Chemical Corporation 24-SEP-02
2002-M-00043 Environmental Chemical Corporation 24-SEP-02
2002-M-00044 Environmental Chemical Corporation 24-SEP-02
2002-M-00045 Environmental Chemical Corporation 24-SEP-02
2002-M-00046 Environmental Chemical Corporation 24-SEP-02
2002-M-00047 Environmental Chemical Corporation 24-SEP-02
2002-M-00048 Environmental Chemical Corporation 24-SEP-02
2002-M-00049 Environmental Chemical Corporation 24-SEP-02
2002-M-00008 Environmental Chemical Corporation 24-SEP-02
2002-M-00035 Environmental Chemical Corporation 24-SEP-02
2002-M-00036 Environmental Chemical Corporation 24-SEP-02
2002-M-00037 Environmental Chemical Corporation 24-SEP-02
2002-M-00038 Environmental Chemical Corporation 24-SEP-02
2002-M-00039 Environmental Chemical Corporation 24-SEP-02
2002-M-00040 Environmental Chemical Corporation 24-SEP-02
2002-M-00041 Environmental Chemical Corporation 24-SEP-02
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Abbreviations
CERCLA Comprehensive Environmental Response, Compensation, and Liability Act of 1980
CERCLIS Comprehensive Environmental Response, Compensation, and Liability Information
System
CFR Code of Federal Regulations
DOE Department of Energy
El Environmental Indicator
EPA Environmental Protection Agency
FFMIA Federal Financial Management Improvement Act
ITS Intertek Testing Services Environmental Laboratory
NCP National Oil and Hazardous Substances Contingency Plan
NPL National Priorities List
OCFO Office of the Chief Financial Officer
OI Office of Investigations
OIG Office of Inspector General
OMB Office of Management and Budget
OSWER Office of Solid Waste and Emergency Response
PDD Preauthorized Decision Document
PRP Potentially Responsible Party
QA/QC Quality Assurance/Quality Control
RCRA Resource Conservation and Recovery Act
SARA Superfund Amendments and Reauthorization Act of 1986
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