\ / OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
EPA-350-R-04-004
June 2004
Annual Superfund Report
to Congress
for Fiscal 2003
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OIG Scorecard Summary of Superfund Results
O\G GOAL 1
Contributing to Improved Human Health and Environmental Quality
(Below are Superfund Results of OIG Work in Terms of Products, Actions by EPA, and Impacts)
10 Environmental Recommendations
10 Environmental Risks Identified
17 Examples of Environmental Policy, Regulatory, Practice, Process Actions, or Changes Made
3 Examples of Environmental Improvement
2 Environmental Risks Reduced
1 Certification/Validation/Verification (of Environmental Information or Activity Reviewed)
1 Best Environmental Practice Implemented
1 Best Environmental Practice Identified
OIG GOAL 2
Improving EPA's Management, Accountability, and Program Operations
(Below are Superfund Results of OIG Work in Terms of Products, Actions by EPA, and Impacts)
42 Recommendations for Management Improvements/Additional Review
3 Certifications/Validations/Verifications (of Management Information or Activity)
1 Best Management Practice Implemented
1 Best Management Practice Identified
2 Examples of Management Policy, Practice, Process Actions, or Changes
$26,514,172 Questioned Costs*
$340,154 Efficiencies/Savings *
* exclusive of contracts and Single Audits from audits by Defense Contract Audit Agency, other Federal Auditors,
and Certified Public Accountants
72% OIG Customer Satisfaction Rating on Superfund Assignments
To find out more about the U.S. Environmental Protection Agency's
Office of Inspector General, visit our web site at:
http://www.epa.gov/oig
Cover Photo: The Hanford Superfund Site - the largest environmental cleanup project in the world -
was the subject of an EPA OIG report issued in fiscal 2003 (see page 6). The photo on
the cover is of the K-West Reactor located in Hanford's 100-K Area. (Photo by EPA OIG)
Printed with vegetable oil based inks on 100% recycled paper (minimum 50% postconsumer)
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This report covers fiscal 2003 Superfund activity of the Environmental
Protection Agency (EPA) Office of Inspector General (OIG). The
Superfund Amendments and Reauthorization Act of 1986 requires the
OIG to annually audit the Superfund program and report the results to
Congress. This report summarizes some of the more significant highlights
for the reporting period.
The OIG issued an unqualified opinion on EPA's fiscal 2003 financial
statements, including those of the Hazardous Substance Superfund Trust
Fund. During fiscal 2003, we noted that the Superfund Trust Fund
transferred to EPA $82.7 million more than was available to be
transferred. Nonetheless, EPA officials indicated the Superfund program
will continue to operate as long as Congress continues to appropriate
funds for it.
To help Congress better address Superfund funding issues, we provided
the Committee on Environment and Public Works with details it requested
on the specific remedial action funding needs for each non-Federal
National Priorities List site. While we had calculated Regional needs of
$417 million for these sites during fiscal 2002, EPA had only obligated
$320 million, a $97 million shortfall.
More than half of EPA's funding is used for assistance agreements, many
of which involve Superfund work, and improvements continue to be
needed in the managing of these agreements. We provided Congress with
requested information on continuing noncompliance problems related to
assistance agreements. Further, we testified before a Congressional
subcommittee on ways EPA can better manage assistance agreements, and
we issued several reports addressing specific agreements.
During our review of EPA's response to the World Trade Center collapse
caused by terrorist attacks, we determined that while EPA does not have
clear statutory authority to establish and enforce health-based regulatory
standards for indoor air, it is provided the authority to respond to releases
of hazardous substances under the Comprehensive Environmental
Response, Compensation, and Liability Act. Our report was used by
members of Congress to forge an agreement with the Council on
Environmental Quality whereby EPA will lead a multi-agency effort to
more fully evaluate the adequacy of indoor cleanup of Lower Manhattan
and the need for any additional action. In addition, EPA generally agreed
to explore ways to better coordinate response efforts in the event of future
disasters, and to improve sampling methods and health-related
benchmarks.
Based on our review of the Department of Energy's Hanford site in
Washington State - the largest environmental cleanup project in the
world - EPA has agreed to improve oversight at the location. We also
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noted concerns about whether EPA's National Hardrock Mining
Framework contributed to any environmental improvements or protections
at specific hardrock mining sites, many of which are Superfund sites.
Addressing cleanup at Superfund sites throughout the country remains
critical. Therefore, we will continue to assist Congress and EPA in their
efforts to ensure that the public is adequately protected against potential
adverse health and environmental impacts resulting from such sites.
CoJvki"
Nikki Tinsley \J
Inspector General
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Table of Contents
Hazardous Substance Superfund Trust Fund 1
EPA Earns Unqualified Opinion on Financial Statements 1
Assistance Agreements 3
Costs Claimed by Tribal Association on Solid Waste and Emergency Response
Under EPA Assistance Agreement No. CR827181-01 3
Costs Claimed on Stringfellow Superfund Site by the California
Department of Toxic Substances Control 4
Costs Claimed by Georgia Department of Natural Resources Under
EPA Assistance Agreement No. VC984299-98 4
Remedial Action Decision Making 5
OIG Provides Congress Details on Remedial Action Funding Needs 5
Region 10 Needs to Improve Oversight of Hanford Superfund Site 6
Nationwide Pump-and-Treat Remedies Need Improvement 6
Response Claims 8
Review of Missouri Electric Works Claim Results in Questioned Costs of $145,491 8
Review of Tybouts Corner Landfill Claim Results in Questioned Costs and
Interest of $386,283 8
Other Claims Reviewed During Period 8
Performance Reviews 10
Hardrock Mining Framework Not Achieving Sufficient Results 10
CERCLA Gives EPA Authority to Respond to Indoor Air Problems
Such as Those Resulting From World Trade Center Collapse 10
Greater Use of Performance-Based Service Contracts Could Increase Savings 11
Public Liaison 13
EPA Needs Better System for Regional Superfund Ombudsmen 13
Investigative Activity 14
Corporate Employees Debarred from Receiving Federal Funds as a Result
of Falsifying Laboratory Test Results 14
Fund Director Sentenced on Charges Related to Embezzlement 15
Listing of Fiscal 2003 Superfund Reports 17
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
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 OIG's
requirement to audit EPA financial statements
also meets our Comprehensive Environmental
Response, Compensation, and Liability Act
(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 2003
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. During this
review, we noted that the Superfund Trust Fund,
managed by the U.S. Treasury Bureau of Public
Debt, transferred funds to EPA in excess of the
assets available to be transferred by
$82.7 million in fiscal 2003. In our opinion,
because recoveries have declined and the
investment principal upon which interest is
earned has steadily decreased, the current deficit
of $82.7 million and future Superfund Trust
Fund financing would have to be covered by
appropriations from the Treasury's general fund
in order for the Superfund Trust Fund to
continue operations.
EPA Earns Unqualified Opinion on
Financial Statements
EPA earned an unqualified opinion on its fiscal
2003 financial statements. In evaluating EPA's
internal controls, we identified eight reportable
conditions in the following areas. Although we
do not believe they represent material
weaknesses that would prevent the fair
presentation of reliable financial statement
amounts, they are internal weaknesses that still
should be corrected.
EPA did not always adequately document
standard vouchers for transfer requests from
Treasury to EPA Trust Fund accounts
(Superfund and Leaking Underground
Storage Tank Trust Funds) prior to
transactions being entered into the
Integrated Financial Management System.
EPA project officers regularly approved
invoices without the detailed documentation
to support costs.
EPA did not reconcile the unearned revenue
from State Superfund Contracts to the
general ledger, and therefore could not
ensure the accuracy of the approximately
$29 million recorded for that account.
EPA did not promptly record approximately
$2 million in marketable securities received
in fiscal 2003 from companies in settlement
of debts.
• The Integrated Financial Management
System suspense file was not in compliance
with the requirement that the Application
Program Interface provide internal controls,
such as control totals and record counts, to
ensure integrity.
Due to system shortcomings, we continued
to be unable to assess the adequacy of the
automated internal control structure as it
relates to automated input, processing, and
output controls for the Integrated Financial
Management System.
• For accounts receivable, we noted numerous
instances where receivables were not
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
recorded timely due to late submission of
supporting documentation from Department
of Justice, Regional Counsel, or program
offices. Further, one regional financial
management office did not properly
calculate its allowance for doubtful
accounts.
• EPA's Financial Systems Branch bypassed
the Integrated Financial Management
System manual online data entry controls
when making a systemic correction of
erroneous transactions; instead of using the
journal voucher process, it reversed
transactions by processing negative debts
and positive credits. As a result, the audit
trail for these transactions was hidden and
basic evidence requirements for the
transactions were circumvented.
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 identified three
noncompliance s under the Federal Financial
Management Improvement Act. Although EPA
made significant improvements regarding cost
accounting, EPA was not in compliance with the
Statement of Federal Financial Accounting
Standards No. 4 that requires EPA to provide
full costs per output to management in a timely
fashion. Further, we noted noncompliance s
related to reconciliation of intragovernmental
transactions and completion of the fiscal 1999
remediation plan. None of these
noncompliance s met the Office of Management
and Budget's definition of substantial
noncompliance.
In its response to our draft report, the Office of
the Chief Financial Officer generally concurred
with our recommendations and noted the
completion or planning of a number of
corrective actions. Regarding our concerns
related to the Superfund Trust Fund shortfall and
the decline in cost recoveries, the Office of the
Chief Financial Officer indicated the Superfund
program will continue to operate as long as
Congress continues to appropriate funds for it,
and noted that EPA's fiscal 2003 appropriation
came from Trust Fund assets and the general
fund.
We issued our final report (2004-1-00021) on
November 21,2003.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
Assistance Agreements
More than half of EPA's fiscal year 2003 budget
was awarded to organizations outside the
Agency through assistance agreements,
including a significant amount of funds related
to Superfund sites. Therefore, the efficient
management of assistance agreements is
essential for EPA to ensure it efficiently
manages its Superfund efforts.
On July 23, 2003, in response to a
Congressional request, we provided Congress
with a report providing statistics and other
details on continuing noncompliance problems
related to assistance agreements and how EPA
deals with them.
Further, in testimony on assistance agreements,
the Inspector General told a Congressional
subcommittee that while EPA has acted to
improve the management of such agreements, it
needs to ensure that adequate resources are
devoted to the area and personnel are held
accountable. "We are committed to working
with Congress and EPA to ensure that money
awarded every year through assistance
agreements is producing the intended
environmental and public health benefits,"
Inspector General Nikki Tinsley testified on
June 11, 2003, before the U.S. House of
Representatives' Subcommittee on Water
Resources and the Environment, Committee on
Transportation and Infrastructure.
CERCLA requires audits "of a sample of
agreements with States," and we perform
financial and compliance audits of assistance
agreements with States and political
subdivisions. During fiscal 2003, the OIG
issued three reports on specific assistance
agreements related to Superfund, including two
reports on agreements awarded to States.
Details on each follow.
Costs Claimed by Tribal Association
on Solid Waste and Emergency
Response Under EPA Assistance
Agreement No. CR827181-01
We questioned all $2,357,376 presented to the
Tribal Association on Solid Waste and
Emergency Response because the Association's
financial management system was not adequate
to account for claimed costs in accordance with
Federal regulations. The Association also did
not comply with Federal requirements when
procuring contractual services.
The funding was authorized in part under
CERCLA to have the newly formed
Association, headquartered in Washington, DC,
provide a government-to-government
mechanism through which tribes could be
proactively involved in the policy discussions
that affect implementation of environmental
programs on their land.
The Association's financial management system
was inadequate in that the Association could not
or did not: (1) provide a summary of claimed
costs by cost element or reconcile claimed costs
to its general grant ledger, (2) support its
salaries and wages, (3) competitively procure
contractual services or perform any of the
required cost or pricing analyses, (4) provide a
legal written agreement to support its subgrant,
and (5) appropriately draw down cash. As a
result of these deficiencies, we questioned all
$2,357,376 in costs claimed under the
Agreement.
We recommended that EPA recover the
$2,357,276 that was not supported as required,
suspend work under the current agreement and
make no new awards until the Association can
demonstrate that its accounting practices are
consistent with Federal requirements, and
require the Association to modify its financial
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
management system and practices to meet
Federal requirements.
We issued our final report (2003-4-00119) on
September 19, 2003.
Costs Claimed on Stringfellow
Superfund Site by the California
Department of Toxic Substances
Control
when appropriate, and review improvements
made.
We issued our final report (2003-1-00013) on
September 3 0,2003.
Costs Claimed by Georgia
Department of Natural Resources
Under EPA Assistance Agreement
No. VC984299-98
For claims submitted by the State of California
in connection with the Stringfellow Superfund
site, we questioned about $24 million of the
$64 million claimed by the State, primarily
related to advance match and credit claims.
We audited an Interim Financial Status Report
for Cooperative Agreement No. V009380-01,
an advance match claim, and a Superfund
Amendments and Reauthorization Act credit
claim. These all involved cleanup of a former
hazardous waste disposal facility in Riverside
County, California.
For the $30,171,233 credit claim, we questioned
$16,468,059 of that amount, primarily related to
bond interest and accrued interest on borrowings
being claimed even though that is not allowable.
We also questioned $6,505,535 of a $9,480,767
advance match claim, again primarily involving
bond interest and accrued interest being
inappropriately claimed. For the $24,659,869
claimed under Cooperative Agreement No.
V009380-01, we questioned $1,161,643, related
to an ineligible contract and inappropriate travel
and equipment costs.
We recommended that EPA Region 9 disallow
the questioned costs, authorize payments and
allow eligible advance match costs and credits
We questioned $16,559 of the total Federal
share of $3,930,101 claimed by the Georgia
Department of Natural Resources under
Assistance Agreement No. VC984299-98 as
ineligible.
The Agreement was provided to Georgia to
provide it with financial support related to its
Superfund Core Program, designed to improve
its Superfund efforts, as well as the Voluntary
Cleanup Program.
We identified two areas of regulatory
noncompliance during our examination that
resulted in our questioning $16,559 of the
Federal share. Specifically, the State did not:
(1) submit timely and complete performance
reports as required, and (2) conduct physical
inventories of CERCLA-funded property as
required.
We recommended that EPA Region 4 recover
the $16,559 in questioned costs, continue to
monitor the State's submission of quarterly
progress reports, and require appropriate
physical inventories and written procedures.
We issued our final report (2003-4-00101) on
June 26, 2003.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
Remedial Action Decision Making
We performed indepth reviews of the reliability
of site-specific analytical data as a basis for
sound site remediation decisions. In addition,
the OIG has worked closely with the Agency to
characterize Superfund sites. Through these and
other actions, the OIG is working to ensure that
Agency decisions on site remediation are based
on data of known quality.
Based on a Congressional request, we identified
remedial action funding needs for non-Federal
sites on the National Priorities List (NPL). Also
in 2003, we issued reports on activities at the
Hanford Superfund site and on pump and treat
remedies, both of which impact remedial action
decision making. Details follow.
OIG Provides Congress Details on
Remedial Action Funding Needs
In response to his request, we provided Senator
James Jeffords, Chair of the Committee on
Environment and Public Works, with details on
the Fiscal Year 2002 remedial action funding
needs of each non-Federal NPL site. This
October 25, 2002, letter was also sent to Senator
Barbara Boxer, Chair of the Superfund, Toxics,
Risk and Waste Management Subcommittee.
Although we calculated a total Regional need of
$417 million for remedial action construction
activities at non-Federal Superfund NPL sites
for Fiscal Year 2002, EPA only obligated a total
of $320 million for these sites, a shortfall of
$97 million. The amount obligated by EPA
totaled $281 million in obligated funds,
including $95 million deobligated from prior
year funding, plus an additional $39 million
obligated by Regions from State Superfund
contracts and special accounts. These numbers
do not include pre-remedial action costs
associated with remedial investigation/
feasibility studies, remedy selection, remedial
design, and other study/investigation activities.
We also determined that while there had been a
Regional need of $60 million for sites
undergoing long-term response actions for
Fiscal Year 2002, EPA only obligated a total of
$43 million to these sites, a shortfall of
$17 million. These sites are generally those
where construction is complete and long-term
response actions involve continuing treatment
activities. EPA had obligated $27 million from
appropriated funds, including $3 million
deobligated from prior year funding, and an
additional $16 million was obligated by Regions
from State Superfund contracts and special
accounts.
According to officials in EPA's Office of
Emergency and Remedial Response, which
provides the funds, managing uncontrolled
hazardous waste sites is inherently uncertain in
nature, and site funding needs change frequently
based on dynamic site conditions, such as
construction delays and site design revisions.
The Agency indicated it placed a priority on
funding ongoing construction and then on the
highest priority new construction starts, and we
found this generally occurred. However, we
noted three instances where EPA funded lower
priority new starts because these sites had
minimal resource needs and would create
minimal future resource burdens.
We noted that EPA has continued to emphasize
its "enforcement first" approach for the
Superfund cleanup process, in which Superfund
site teams negotiate timely settlements with
responsible parties and have responsible parties
conduct remedial actions whenever possible. If
a settlement cannot be negotiated, the Region is
to issue Unilateral Administrative Orders to all
appropriate parties to compel expeditious
cleanup before the Region proceeds with a
Superfund-financed remedial action. Other EPA
activities for conserving Superfund resources
include reviewing post cleanup activities;
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
tightening the criteria for NPL listing; and
requiring Regions to return to Headquarters a
greater portion of deobligated funds so that the
funds can be used in other Regions.
Region 10 Needs to Improve
Oversight of Hanford Superfund Site
Our review of the adequacy of EPA Region 10's
oversight of Department of Energy Superfund
cleanup actions at the Hanford 100-K Area
Superfund Site has resulted in EPA's agreement
to improve oversight at the site.
The Hanford site, located in southeastern
Washington State, encompasses about
568 square miles and has been identified as the
largest environmental cleanup project in the
world. The potential environmental and human
health risks associated with contamination at the
Hanford site are extreme. Approximately
3.7 million pounds of used nuclear fuel are
stored in unlined concrete basins at the Hanford
100-K Area site. The Columbia River, which is
over 1,000 miles long, runs directly through the
Hanford site for about 50 miles. The spent
nuclear fuel storage basins are less than a half-
mile from the river and in earlier years one of
the basins had leaked.
We found that despite some important cleanup
progress, EPA Region 10 did not:
• Take sufficient action to ensure that timely
milestones for interim cleanup actions at the
area existed.
Ensure that cleanup milestones that did exist
were achievable.
Effectively address insufficient cleanup
progress.
Take sufficient action to address poor
performance of the remedy used to clean up
groundwater contaminated with hexavalent
chromium.
Also, EPA Region 10 could not demonstrate that
it had obtained sufficient information to
conclude that contaminated groundwater in the
reactor section of the 100-K Area did not
require an interim cleanup action. Further, in
consultation with an independent expert, we
found that the existing groundwater monitoring
and sampling system in the Hanford 100-K area
was inadequate to determine whether hazardous
pollutants could be affecting the environment.
We recommended that Region 10 monitor
Department of Energy efforts to successfully
complete remediation requirements and take
appropriate actions as needed if requirements
are not met; evaluate performance of the
upgraded pump-and-treat system; require a
formal assessment on the need for an interim
remedial action in the area's reactor section; and
have the Department of Energy improve its
groundwater monitoring system. We noted that
enforcement actions should be pursued as
appropriate. The Agency generally accepted our
findings and recommendations.
We issued our final report (2003-P-00002) on
November 4, 2002.
Nationwide Pump-and-Treat
Remedies Need Improvement
EPA's Nationwide Pump-and-Treat
Optimization project identified 241
recommendations to improve the effectiveness
and reduce costs at Superfund-financed
groundwater pump-and-treat systems. If
implemented, these recommendations could
result in a 36-percent reduction in annual
Superfund costs for evaluated sites. Although
about half of the 241 recommendations have
been fully implemented or are in progress, it is
not clear that EPA has established a milestone
for completing this project, implementing all the
recommendations, and accounting for the
associated environmental and cost savings
benefits. EPA needs to sustain its progress and
develop focused plans to track the effectiveness
of this nationwide project.
Groundwater contamination is present at the
majority of Superfund and Resource
Conservation and Recovery Act corrective
action sites. Pump-and-treat remedies are the
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
most common groundwater cleanup remedies
used at Superfund NPL sites and are also most
commonly used to remediate Methyl Tertiary-
Butyl Ether (MtBE), a pollutant associated with
leaks or spills from underground storage tanks.
There are over 700 pump-and-treat systems
operating at NPL sites nationwide, 88 of which
are financed by the Superfund program.
Collectively, Phases I and II of this nationwide
project identified the 241 recommendations for
improvements to 17 of the 20 Superfund-
financed pump-and-treat systems evaluated,
while also collecting cost and performance
information for all 88 Superfund-fmanced
systems. The project also identified important
ways that existing systems can be managed more
effectively. Information obtained from EPA
Regions and States generally indicated the
optimization project was valuable, useful, and
identified savings opportunities.
Phase III of the project is ongoing and generally
involves project tracking and capturing progress
toward implementing recommendations. There
is no current scheduled end date, milestone, or
focused plan of action associated with
completion of Phase III, although EPA's initial
plans indicate Phase III was scheduled for
completion by the end of fiscal 2002. EPA
needs to set priorities for which sites or
recommendations are most critical to track,
establish a time line for tracking actions, and
establish credible metrics to measure
environmental and cost benefit outcomes. In the
long term, it will be difficult to determine the
environmental and cost benefits of optimization
projects if accurate and meaningful information
on the results they produce has not been
collected or analyzed.
We issued our final report (2003-P-00006) on
March 27, 2003.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
Response Claims
CERCLA, as amended by the Superfund
Amendments and Reauthorization Act of 1986,
authorizes EPA to pay any claim for response
costs by "any other person" as a result of
carrying out the National Contingency Plan.
Potentially Responsible Parties, who often make
these claims, are required to enter into a
Preauthorized Decision Document (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 Potentially Responsible Parties can make
claims for reimbursement.
We conducted various claim reviews, which are
not audits; rather, they are reviews that follow
the instructions in the Agency's claims guidance
for the claims adjuster. Summaries on the
results of several of our response claim reviews
follow.
Review of Missouri Electric Works
Claim Results in Questioned Costs
of $145,491
We reviewed the first claim submitted by
Armstrong Teasdale LLP for the Missouri
Electric Works Site Trust Fund, in Cape
Girardeau, Missouri, and questioned costs of
$145,491.
Under the PDD, the claimant is entitled to
submit claims for 20 percent of allowable costs
incurred for the remedial action, not to exceed a
total of $3,500,000. The claim contained total
costs incurred of $7,912,352, and requested
reimbursement of $1,582,470.
We questioned $145,491 of the total costs. This
involved $77,590 in ineligible costs, $57,841 in
unsupported costs, and $10,060 in unreasonable
costs. The Federal share of these questioned
costs was $29,098, and the Agency agreed to not
pay that questioned Federal share.
Review of Tybouts Corner Landfill
Claim Results in Questioned Costs
and Interest of $386,283
We reviewed the third claim submitted by the
Tybouts Corner Landfill Site Trust, in New
Castle, Delaware, and questioned costs and
interest of $386,283.
Under the PDD, the claimant is entitled to
submit claims for 21 percent of allowable costs
incurred for the remedial action, not to exceed a
total of $5,886,000. The claim contained costs
incurred of $3,588,680, including $130,459 of
interest expense. The claimant requested
reimbursement of $856,685 (21% x $3,458,221
+ $130,459 of interest).
We questioned $255,824 of costs and $130,459
of interest as ineligible, or a total of $386,283.
The Federal share of these questioned costs was
$184,182 (21% x $255,824 + $130,459 of
interest), and the Agency agreed to not pay that
questioned Federal share.
Other Claims Reviewed
During Period
During three additional response claim reviews
that we completed during fiscal 2003, nothing
came to our attention that caused us to believe
that the claimed costs were unreasonable or
unnecessary. These three reviews were as
follows.
York Oil: We reviewed the second claim
submitted by Alcoa, Inc., for the York Oil OU-1
Superfund Site, in the Town of Moira, Franklin
County, New York. The PDD authorizes the
claimant to submit claims for 16.11 percent of
allowable costs incurred for the remedial action,
not to exceed $2,738,700. Alcoa requested
reimbursement of $228,875 (16.11 percent of
$1,420,699) for costs it incurred between
November 30, 1999, and June 30, 2001.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
Parker Landfill Superfund Site: We reviewed
the claim submitted by Ethan Allen, Inc., for the
Parker Landfill Superfund Site in Caledonia
County, Vermont. The PDD authorizes the
claimant to submit claims for 47 percent of
allowable costs incurred for the remedial action,
not to exceed $3,015,432. Ethan Allen
submitted documentation detailing incurred
costs of $681,212 and requested reimbursement
of $320,170.
Hunterstown Road Superfund Site: We
reviewed the second claim submitted by
Viacom, Inc., for the Hunterstown Road
Superfund Site in Adams County, Pennsylvania.
The PDD authorizes the claimant to submit
claims for 39 percent of allowable costs incurred
for the remedial action, not to exceed
$2,670,320. Viacom submitted documentation
detailing incurred costs of $2,726,492 and
requested reimbursement of $1,063,332.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
Performance Reviews
In addition to reviews required by CERCLA and
the Superfund Amendments and Reauthorization
Act, we conduct other reviews that address
Superfund issues. Following are summaries on
several completed during fiscal 2003.
Hardrock Mining Framework
Not Achieving Sufficient Results
We found no evidence that EPA's National
Hardrock Mining Framework has contributed to
any environmental improvements or protections
at specific hardrock mining sites, many of which
are Superfund sites.
Hardrock mining involves the extraction of
certain metals and minerals from hard
formations of the earth, and include copper,
gold, iron ore, lead, and silver. EPA estimates
there may be as many as 200,000 abandoned
hardrock mines alone in the United States. EPA
issued the Framework in 1997, after 3 years of
development, to deal with environmental issues
posed by proposed, active, and abandoned
hardrock mining sites.
Certain laws and regulations present obstacles to
what EPA can realistically accomplish. For
example, EPA has only an advisory role in
developing environmental impact statements for
hardrock mines on public lands. Further, the
primary programs that allow EPA to prevent
pollution from hardrock mining are delegated to
the States or provide regulatory exclusions for
types of waste generated from hardrock mining.
EPA did not develop or communicate a strategy
for implementing the Framework, management
did not support it, and there was inadequate
coordination within EPA and between EPA and
other agencies. EPA did not have current and
accurate data on the extent of the challenges
posed by hardrock mining activities.
We recommended that EPA develop effective
implementation strategies for the Framework to
account for gaps, lack of coordination, and
regulatory challenges. EPA management
responded that they believed the Framework has
utility, but agreed that improvements can be
made and indicated they will initiate actions.
We issued our final report (2003-P-00010) on
August?, 2003.
CERCLA Gives EPA Authority to
Respond to Indoor Air Problems
Such as Those Resulting From
World Trade Center Collapse
During our review of EPA's response to the
World Trade Center collapse caused by the
terrorist attacks on September 11, 2001, we
concluded that while EPA does not have clear
statutory authority to establish and enforce
health-based regulatory standards for indoor air,
it is provided the authority to respond to releases
of hazardous substances under CERCLA.
Specifically, under Section 104(a) of CERCLA,
EPA is authorized, consistent with the National
Contingency Plan (NCP), to remove or
remediate any hazardous substance that is
released into the environment, or any pollutant
or contaminant that may present an imminent
and substantial danger to the public health or
welfare. Asbestos is a hazardous substance
under CERCLA, and there were such releases as
a result of the World Trade Center collapse.
Neither CERCLA nor the implementing
regulations under the NCP obligate EPA to
undertake response actions. As provided in the
NCP, "activities by the Federal and State
governments in implementing this subpart are
discretionary governmental functions" that do
not create "a right to Federal response" nor "any
duty of the Federal government to take any
response action at any particular time"
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
(40 CFR § 300.404(h)(3)). Moreover, CERCLA
contemplates State participation in response
actions (42 U.S.C. 9621(h)), and the NCP allows
for States to assume the lead agency role.
CERCLA only applies to the release of
hazardous substances "into the environment."
CERCLA defines "environment" as "the
navigable waters ... and ... any other surface
water, ground water, drinking water supply, land
surface or subsurface strata, or ambient air
within the United States." Courts have held the
emissions of dust within enclosed buildings are
not releases "into the environment" and
therefore are not CERCLA releases. However,
in the World Trade Center case, the
contamination of indoor spaces was caused by
an external event - the collapse of the World
Trade Center towers. The collapse itself caused
a release of hazardous substances into the
"environment" when a huge dust plume was
released into the ambient air. Matter from the
dust plume then entered buildings in the
surrounding area. In such a case, when the
release "into the environment" ends up
contaminating enclosed structures, CERCLA
provides EPA the authority to take any actions
necessary to eliminate or mitigate the threat to
public health from the release.
We made recommendations for EPA to
coordinate with others in developing protocols
for determining how indoor environmental
concerns should be handled in large-scale
disasters, and publish oversight criteria for
handling cleanup following terrorist attacks and
other disasters. EPA generally agreed to
explore ways to better coordinate efforts in the
event of future disasters, and to improve
sampling methods and health-related
benchmarks.
We issued our final report (2003-P-00012) on
August 21,2003.
Greater Use of Performance-Based
Service Contracts Could Increase
Savings
EPA has made limited use of Performance-
Based Service Contracting (PBSC), an
acquisition methodology in which the
Government pays for results rather than effort or
process. Office of Management and Budget
(OMB) and EPA studies have shown that PBSC
saves money and improves contractor
performance. For example, with OMB's
assistance, EPA studied PBSC within the
Superfund program. Most projects saved
money, with one project lowering costs by
30-35 percent while improving the quality of
work.
EPA has generally limited use of PBSC to
obtaining commercially available services, such
as janitorial and landscaping work. Further,
EPA awarded non-PBSC contracts for services
previously awarded as performance-based.
Also, many contracts EPA identified as
performance-based were not designed to take
advantage of PBSC's benefits, since the
contracts were too prescriptive or did not
provide meaningful incentives or disincentives.
Based on discussions with Agency officials, this
occurred because EPA did not adequately plan
or hold officials accountable for increasing
PBSC use, and there was a general reluctance to
shift the responsibility for outcomes to
contractors. As a result, EPA missed
opportunities to achieve greater cost savings and
improve contractor performance. Of the
$599 million in PBSC-eligible obligations for
the 9-month period ended June 30, 2002, we
determined that EPA could have saved as much
as $72.5 million through greater use of PBSC.
Also, OMB's Federal Procurement Data System
showed nearly 50 percent fewer PBSC
obligations than EPA reported in its own
Integrated Contracts Management System. This
primarily occurred because the Federal
Procurement Data System did not show
performance-based task orders issued under
11
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
non-performance-based contracts as PBSC, and
because the Integrated Contracts Management
System lacked the capability to provide all data
needed in the Federal Procurement Data System.
As a result, EPA's contracting actions were
inaccurately portrayed in the national database
used for reporting to Congress, the President,
and the public.
We recommended that EPA take various actions
to increase performance-based contracting, and
that the database accuracy be reviewed and
Integrated Contracts Management System and
Federal Procurement Data System data
periodically compared. EPA generally agreed
with our findings and recommendations to
expand PBSC, noted that correct data was sent,
and that EPA's current contracts systems do not
meet its business needs. According to the
Assistant Administrator for Administration and
Resources Management, the systems provide
inadequate reporting, cumbersome tracking
status, and redundant data entries, which result
in extraordinary inefficiencies and errors. The
Office of Administration and Resources
Management hopes to install a web-based
system that will eliminate duplicate data entry,
track actual costs and progress in real time, and
provide a Commercial Off The Shelf application
consistent with the President's e-government
initiatives.
We issued our final report (2003-P-00008) on
March 31,2003.
12
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
Public Liaison
In April 2002, the OIG assumed responsibility
for EPA Superfund National Ombudsman
reviews. This national function was previously
housed in EPA's Office of Solid Waste and
Emergency Response. However, despite this
change, the Agency's Regional Superfund
Ombudsmen continued to work directly for the
Regions, and during 2003 we performed a
review to evaluate the Regional Superfund
Ombudsmen program.
EPA Needs Better System for
Regional Superfund Ombudsmen
We found that EPA does not have a
management system in place to ensure its
Regional Superfund Ombudsmen are
accountable for fulfilling their responsibilities.
The Regional Superfund Ombudsman function
is generally a collateral duty within the
Superfund program. As a result, there is a
perceived lack of independence and impartiality.
Further, a lack of guidance has caused
uncertainty over the function.
The American Bar Association identifies a core
characteristic of an Ombudsman as having the
ability to conduct inquiries and investigations in
an impartial manner. Another core
characteristic is being independent. However,
two General Accounting Office (GAO) reports
(dated July 2001 and October 2002) noted
concerns about the independence and
impartiality of both EPA's National
Ombudsman and Regional Superfund
Ombudsmen.
To correct the independence and impartiality
issues raised by GAO, EPA moved the National
Ombudsman function from EPA's Office of
Solid Waste and Emergency Response to the
EPA OIG, as noted. However, EPA has not yet
addressed GAO's concerns regarding the
Regional Superfund Ombudsmen. The
continued alignment of the Regional Superfund
Ombudsmen with the Superfund program
indicates a lack of independence and
impartiality.
Specifically, 7 of the 10 Regional Ombudsmen
are located in the Superfund program and
receive their annual evaluations from managers
within that program. In 5 of the 7 regions
aligned with the Superfund program, the
Regional Ombudsman duties are collateral
duties, with the estimated time spent on
Regional Ombudsman duties ranging from 5 to
20 percent. None of the Regional Superfund
Ombudsmen with collateral duties maintains
time records specific to their Ombudsman
duties, and Ombudsman duties are often
performed in conjunction with other Superfund
program responsibilities.
While it is not practical for EPA to meet
independence and impartiality standards for
Regional Ombudsmen, due to the limited time
spent on Ombudsman duties, these Regional
Ombudsmen believe they can be effective in
resolving stakeholder complaints at a local level
and assisting in alleviating site disputes.
Therefore, we recommended that the Assistant
Administrator for the Office of Solid Waste and
Emergency Response change the title of the
Regional Superfund Ombudsmen to better
reflect their role, and develop clear and
consistent guidance on their duties.
We issued our final report (2003-S-00004) on
March 13, 2003.
13
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
Investigative Activity
The OIG Office of Investigations continued to
focus its investigative resources on allegations
of fraud, waste, and abuse in high risk and high
dollar 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
the Agency's ability to carry out its mission to
protect public health and safeguard the
environment.
Proactive and reactive investigative efforts by
the OIG Office of Investigations covered all
stages of the Superfund program:
The 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.
• The 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 and assistance
agreement recipients to perform a
significant portion of the work related to
EPA's mission.
• The 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 2003, our Superfund investigative
efforts resulted in:
• Two indictments
• One sentencing
Six administrative actions
Monetary fines and restitution totaled more than
$134,000. During the past 3 fiscal years,
cumulative monetary fines, restitution, and
recoveries resulting from Superfund
investigations totaled more than $80.3 million.
We expect to see a continued increase in
significant actions as OIG's investigative
emphasis on major Agency contracting and
laboratory fraud continues.
Following are two instances of Superfund
investigative activities with results in fiscal
2003.
Corporate Employees Debarred from
Receiving Federal Funds as a Result
of Falsifying Laboratory Test Results
During 2003, six former employees of Intertek
Testing Services Environmental Laboratory
(ITS), Richardson, Texas, were debarred from
doing business with the Federal Government.
This included a corporate Vice President, who
was debarred for a period of 10 years. These
former employees were involved in falsifying
laboratory reports. The U.S. Attorney for the
Northern District of Texas cited the
investigation 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
allegedly falsified test results 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
14
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
cancer-causing contaminants. 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. 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 of ITS.
Charges included conspiracy, mail fraud, wire
fraud, and presenting false claims against the
Government. The indictment accused ITS
managers and chemical analysts with falsifying
data samples from 1988 to 1997.
ITS pled guilty to one count of conspiracy to
commit an offense against and otherwise
defraud the United States, in violation of
18U.S.C. 371. In February 2002, ITS was
sentenced as a corporation and ordered to pay a
fine of $9 million and 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
atotal 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 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, the EPA Criminal Investigation
Division, the Defense Criminal Investigative
Service, the United States Army Criminal
Investigation Command, and the Air Force
Office of Special Investigations.
Fund Director Sentenced on
Charges Related to Embezzlement
The director of the National Iron Workers
Apprenticeship Training and Journeyman
Upgrading Fund, Washington, DC, was
sentenced on July 1, 2003, on charges related to
embezzling Federal grant funds.
Raymond J. Robertson, a trustee of the Fund as
well as the director, was sentenced in U.S.
District Court, District of Columbia, to 6 months
home detention and 3 years probation. He was
also ordered to pay $103,169 in restitution, a
$30,000 fine, and a $800 special assessment.
The sentence was the result of Robertson's
guilty plea on March 28, 2002, to charges of
conspiracy, theft, and embezzlement from the
organization.
Robertson was charged 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. Robertson was further
charged with embezzlement for using the Fund
credit card for personal purchases.
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.
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 Inspector General Annual Superfund Report to Congress for Fiscal 2003
16
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal 2003
Listing of Fiscal 2003 Superfund Reports
Report No.
2003-1 -00006
2003-4-00003
2003-1 -0001 6
2003-4-00008
2003-2-00001
2003-M-00003
2003-P-00002
2003-1 -00032
2003-1 -00033
2003-2-00002
2003-S-00003
2003-M-00006
2003-4-00035
2003-4-00036
2003-1 -00063
2003-1 -00062
2003-1 -00064
2003-1 -00067
2003-1-00061
2003-1 -00079
2003-1 -00080
2003-S-00004
2003-M-00009
2003-P-00006
2003-M-0001 1
2003-4-00053
2003-1-00103
2003-S-00005
2003-2-0001 1
2003-4-00079
2003-4-00082
2003-4-00077
2003-4-00086
2003-4-00083
2003-4-00094
2003-4-00093
2003-4-00101
2003-4-001 1 1
2003-4-00112
2003-1-00131
2003-S-00007
2003-P-00010
2003-P-00012
2003-1-00140
2003-2-0001 4
2003-1-00143
Description
CH2M Hill Inc.-FY 2000 Floorcheck
CH2M Hill Companies, Ltd.-CAS 403
Roy F. Weston Inc.-FY 1995 ARCS 68-W9-0057
Tetra Tech EMI-Budget System
Asset Group Inc.-Preaward
Guardian Environmental Services-CY 2001 I/C Adequacy Review
Oversight of Superfund Cleanup Actions for DOE Hanford Site
Malcolm Pirnie, Inc. - FY 96 Incurred Cost
Malcolm Pirnie, Inc. - FY 97 Incurred Cost
Dyncorp Systems & Solutions LLC-Preaward PR-CI-02-10152
Hunterstown Road CERCLA Claim No. 2
Tybouts Corner Superfund Response Claim No. 3
Roy F. Weston, Inc.-FY 1996 ARCS 68-W9-0046-Cancelled
Tetra Tech NUS, Inc.-Preaward PR-CI-02-10152
TechLaw lnc-FY99 Incurred Cost
TechLaw lnc.-FY98 Incurred Cost
Roy F. Weston-FY97 ARCS Closeout 68-W8-0089
OHM Remediation Services-DACA45-96-D-0014#4
OHM Remediation Services-DACA45-96-D-0014#5
Armstrong Data Services-FY98 Incurred Cost
Foster Wheeler Environmental Corp.-FY2000 RAC 68-W9-8214
EPA's Regional Ombudsmen Program
Assist to Department of Justice - Enviropur West Site
Improving Nationwide Effectiveness of Pump-and-Treat Remedies
York Oil Superfund Site Claim No. 2
Bristol Envtl. & Eng. Services Corp. -Accounting System
Booz Allen & Hamilton- CACS 68-WO-0039
Parker Landfill Response Claim III
Ecology & Environment - Region 6 START Billing Rates
Tetra Tech NUS-Billing System
Tetra Tech, NUS-FY 2000 Floorcheck
Tetra Tech, Inc.-CAS 408
PRC Environmental Management Inc.-CAS 408
PRC Environmental Management lnc.-FY2000 Maar6 Floorcheck
Tetra Tech EMI-Purchasing Existence
Roy F. Weston-DACA45-98-D-0004 #5
Audit of GDNR Cooperative agreement number VC984299980
IT Group (Shaw Environmental)-DACA45-98-D-0003 #4
Tetra Tech, Inc. -Accounting System FY 2003
Metcalf & Eddy Inc.-FYs 96,97 & 98 RAC 68-W6-0042
Missouri Electric Works CERCLA Claim
Mega EPA's National Hardrock Mining Framework
EPA's Response to the World Trade Center Collapse
Black & Veatch Spec Proj Corp-FY99 RAC VII 68-W5-0004
CH2M Hill Inc.-FYs 1996-2000 RAC Close-out 68-W6-0025
Stringfellow Cooperative Agreement 1983-1995
Date
04-OCT-02
09-OCT-02
10-OCT-02
1 0-OCT-02
1 5-OCT-02
25-OCT-02
04-NOV-02
18-NOV-02
18-NOV-02
26-NOV-02
24-JAN-03
31-JAN-03
07-FEB-03
13-FEB-03
13-FEB-03
13-FEB-03
13-FEB-03
19-FEB-03
19-FEB-03
05-MAR-03
06-MAR-03
12-MAR-03
19-MAR-03
27-MAR-03
25-APR-03
25-APR-03
29-APR-03
29-APR-03
30-APR-03
1 6-MAY-03
1 6-MAY-03
1 6-MAY-03
22-MAY-03
22-MAY-03
23-MAY-03
23-MAY-03
26-JUN-03
16-JUL-03
16-JUL-03
23-JUL-03
30-JUL-03
07-AUG-03
19-AUG-03
22-SEP-03
22-SEP-03
30-SEP-03
17
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