EPA-350-R 09-003
May 2009
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Semiannual Report to Congress
October 1, 2008 - March 31, 2009
as*
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- -•
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Abbreviations
BEI Bennett Environmental, Inc.
DCAA Defense Contract Audit Agency
ECO Environmental Careers Organization, Inc.
EPA U.S. Environmental Protection Agency
FMFIA Federal Managers' Financial Integrity Act
FOIA Freedom of Information Act
FY Fiscal Year
GIAMD Grants and Interagency Agreements Management Division
ICTS Institutional Controls Tracking System
IGEMS Inspector General Enterprise Management System
MACT Maximum Achievable Control Technology
NEI National Emissions Inventory
OIG Office of Inspector General
OMB Office of Management and Budget
PART Program Assessment Rating Tool
PBDE Polybrominated Diphenyl Ether
PCBs Polychlorinated Biphenyls
PMRS Performance Measurement and Results System
Cover photos: From left: Damage from an explosion and fire fueled by a substance regulated by the
Risk Management Program (photo courtesy U.S. Chemical Safety and Hazard
Investigation Board); hurricanes, as shown striking a seawall, may occur as a result of
climate change (photo courtesy National Oceanic and Atmospheric Administration); and
container ships, such as the one shown at berth, impact air emissions at U.S. ports (EPA
OIG photo).
To find out more about the U.S. Environmental Protection Agency
Inspector General and its activities, visit our Website at:
http://www.epa.gov/oig
Printed on 100% recycled paper (minimum 50% postconsumer)
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Message to Congress
Overseeing how the U.S. Environmental Protection Agency (EPA) spends the
$7.2 billion it is receiving under the American Recovery and Reinvestment Act of 2009
will be a critical part of our work in the next few years. The EPA Office of Inspector
General has received $20 million for oversight activities through September 30, 2012.
We will perform audits, investigations, and other reviews as needed to determine whether
EPA is spending its Recovery Act funds economically and efficiently, and we will look
carefully for instances of fraud, waste, and abuse. We will also review, as appropriate,
any concerns raised by the public about specific investments. We will strive for
transparency in all our efforts.
As part of our Recovery Act efforts, we have already adopted an initial plan that outlines
our primary objectives, and are developing a detailed audit assignment plan as well as a
detailed investigative plan that encompasses education and outreach programs. We
designed our initial plan to make sure funds are awarded properly, the administrators and
recipients of the funds are trained to identify fraud indicators and report on offenses, the
use of all funds is transparent to the public, funds are used for authorized purposes only,
no unnecessary delays or cost overruns occur, and program goals are achieved. While we
will pay special attention to Recovery Act funds, we will also continue our regular work
to prevent and detect fraud, waste, and abuse.
We have provided the Agency a list of management challenges for Fiscal Year 2009. In
addition to eight challenges that were included in the 2008 list, we have added two new
challenges: "Management of Stimulus Funds" and "Safe Reuse of Contaminated Sites."
The Agency will face significant challenges in meeting Recovery Act requirements while
continuing to carry out its ongoing programs. Recovery Act grant and contract awards
will contain new conditions, and there is an emphasis on awarding the funds quickly.
EPA will need to focus considerable attention on ensuring that Recovery Act funds
produce desired results and minimize cost overruns and project delays.
During the semiannual reporting period ended March 31, 2009, we noted several issues
related to homeland security. EPA can improve management and oversight of the Clean
Air Act's Risk Management Program to better assure that facilities covered by the
program submit or re-submit a Risk Management Plan and comply with program
requirements. The purpose of the program is to reduce the likelihood of airborne
chemical releases that could harm the public and mitigate the consequences of releases
that do occur. However, EPA has not established national procedures to identify covered
facilities that had not submitted plans, and the Agency needs to strengthen its inspection
process. We also found that while the Agency has made progress in implementing
counter terrorism/emergency response initiatives, it is behind schedule in implementing
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
the Radiation Ambient Monitoring System. As a result, EPA may have less information
about levels of radiation should a national radiological or nuclear emergency occur.
We noted in a report that EPA needs a comprehensive plan on climate change. EPA does
not have an overall plan to ensure developing consistent, compatible climate change
strategies across the Agency. EPA regions and offices reported the need for technical
climate change research and tools as well as other climate change policy guidance and
direction. The lack of an overall policy can result in duplication, inconsistent approaches,
and wasted resources.
The reported savings claims for EPA's ENERGY STAR program were inaccurate and the
reported annual savings unreliable. We identified deficiencies with shipment data and
the process used in calculating benefits, as well as the methodology used to compute
commercial sector benefits under the program.
We informed EPA of interagency agreements with at least $6.5 million that should be
deobligated; the Agency has already deobligated $2.3 million of that amount and is
addressing the remainder.
As a result of our investigative work, a company was sentenced to 5 years' probation and
ordered to pay a $1 million fine and more than $1.6 million in restitution to EPA,
stemming from a bid rigging scheme in awarding subcontracts for a New Jersey
Superfund site. As a result of another investigation, two businessmen received prison
sentences after pleading guilty to storing hazardous waste at a textile factory in
Pennsylvania.
We know that the next few years will be challenging ones as the Office of Inspector
General works with the Agency to ensure that Recovery Act and other funding is
expended efficiently and effectively to safeguard human health and the environment.
Bill A. Roderick
Acting Inspector General
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Table of Contents
About EPA and Its Office of Inspector General 1
U.S. Environmental Protection Agency 1
EPA Office of Inspector General 1
Management Challenges for the Agency 7
OIG Recovery Act Efforts 10
OIG Adopts Initial Plan to Monitor EPA Recovery Act Funds 10
OIG Provides Input on Overall Federal Recovery Act Guidance 11
Significant OIG Activity 13
Air 13
Superfund/Land 16
Cross-Media 20
Public Liaison and Special Reviews 22
Grants 24
Contracts 26
Forensic Audits 27
Financial Management 29
Risk Assessment and Program Performance 32
Information Resources Management 34
Investigations 36
Legal Reviews 40
Briefings 42
Other Activities 43
Statistical Data 48
Profile of Activities and Results 48
Audit, Inspection, and Evaluation Report Resolution 49
Hotline Activity 51
Summary of Investigative Results 52
Scoreboard of Results 53
Appendices 54
Appendix 1 - Reports Issued 54
Appendix 2 - Reports Issued Without Management Decisions 57
Appendix 3 - Reports with Corrective Action Not Completed 71
Appendix 4 - OIG Mailing Addresses and Telephone Numbers 72
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Index of Reporting Requirements
Inspector General Act of 1978, as Amended
Requirement Subject
Section 4(a)(2) Review of legislation and regulations 45-47
Section 5(a)(1) Significant problems, abuses, and deficiencies 13-39
Section 5(a)(2) Significant recommendations for corrective action 13-35
Section 5(a)(3) Reports with corrective actions not completed 71
Section 5(a)(4) Matters referred to prosecutive authorities 36-39, 48, 52
Section 5(a)(5) Information or assistance refused None
Section 5(a)(6) List of reports issued 54-56
Section 5(a)(7) Summaries of significant reports 13-35,40-41
Section 5(a)(8) Audit, inspection, and evaluation reports - questioned costs 48-50, 53-56
Section 5(a)(9) Audit, inspection, and evaluation reports - funds to be put to better use 48-50, 53-56
Section 5(a)(10) Prior audit, inspection, and evaluation reports unresolved 49-50, 57-70
Section 5(a)(11) Significant revised management decisions None
Section 5(a)(12) Significant management decisions with which OIG disagreed None
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Its
The mission of the U.S. Environmental Protection Agency (EPA) is to protect human
health and the environment. As America's steward for the environment since 1970, EPA
works to ensure that the public has air that is safe to breathe, water that is clean and safe
to drink, food that is free from dangerous pesticide residues, and communities that are
protected from toxic chemicals. EPA develops and enforces regulations that implement
national environmental laws, and works with its partners and stakeholders to identify,
research, and solve/mitigate current and future environmental problems. EPA's long-
term strategic goals are:
1 . Clean air and reversing global climate change
2. Clean and safe water
3 . Land preservation and restoration
4. Healthy communities and ecosystems
5. Compliance and environmental stewardship
EPA provides grants to States, tribes, nonprofit organizations, and educational institutions;
supports pollution prevention and energy conservation; and promotes environmental
education for all Americans. EPA employs approximately 17,000 people across the
country, including Headquarters offices in Washington, DC; 10 regional offices; and more
than a hundred laboratories and field sites. For Fiscal Year (FY) 2009, EPA has a budget
of $7.6 billion. In addition, EPA has received $7.2 billion under the American Recovery
and Reinvestment Act of 2009 through FY 20 1 1 .
The Office of Inspector General (OIG) is an independent office of EPA that detects and
prevents fraud, waste, and abuse in an effort to help the Agency protect human health and
the environment in a more efficient and cost-effective manner. Although we are part of
EPA, Congress provides us with a separate budget line item from the Agency as part of
ensuring our independence. The EPA OIG was created and is governed by the Inspector
General Act of 1978 (P.L. 95-452). The legislative history for the Inspector General Act
is found in Senate Report 95-1071 and House Report 95-584 and provides background
information on Congress' intent when it enacted the legislation. The Inspector General
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Act was amended twice, first in 1988 (P.L. 100-504) and again in 2002 (P.L. 107-296).
Last year, Congress enacted the Inspector General Reform Act of 2008 (P.L. 1 10-409
[H.R. 928]), which, in part, enhanced the independence of the Inspectors General.
Vision of the EPA OIG
We are catalysts for improving the quality of the environment and government through
problem prevention and identification, and cooperative solutions.
Mission of the EPA OIG
Add value by promoting economy, efficiency, and effectiveness within EPA and the
delivery of environmental programs. Inspire public confidence by preventing and
detecting fraud, waste, and abuse in Agency operations and protecting the integrity of
EPA programs.
OIG Organization
To fulfill our vision and accomplish our mission, we perform audits, evaluations, and
investigations of EPA, as well as its grantees and contractors. We also provide testimony
and briefings to Congress. We recommend solutions to the problems we identify that
ultimately result in providing Americans a cleaner and healthier environment. We are
organized as follows.
Organization Chart
EPA Office of Inspector General
INSPECTOR GENERAL
Vacant
Special Projects/
Quality Assurance
\
Office of Audit
Melissa Heist
Assistant I nspector General
Deputy Inspector General
Bill Roderick
Associate Deputy Inspector
General and Counsel
Mark Bialek
Office of Mission Systems
Patricia Hill
Assistant Inspector General
Office of I nvestigations
Stephen Nesbitt
Assistant Inspector General
n
Special Assistant
Kim Rawls
Office of Congressional,
Public Affairs and Management
Eileen McMahon
Assistant I nspector General
Office of Program Evaluation
Wade Najjum
Assistant I nspector General
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
We currently have two Senior Executive Service vacancies. OIG staff are physically
located at Headquarters in Washington, DC; at the regional headquarters offices for all 10
EPA regions; and other EPA locations, including Research Triangle Park, North
Carolina, and Cincinnati, Ohio. Details on the specific role each OIG office plays in
helping the OIG accomplish its mission follow.
Immediate Office: This office includes the position of the Inspector General, which is
currently vacant, and the Deputy Inspector General, who is serving as the Acting
Inspector General. In addition to providing overall leadership and direction, this office
includes a Quality Assurance Program team that conducts reviews of all draft and final
reports to ensure conformance with standards. The office also manages the OIG's
Continuity of Operations Plan.
Office of Audit: This office performs audits to improve the economy, efficiency, and
effectiveness of Agency programs and prevent fraud, waste, and mismanagement. The
office performs financial audits of assistance agreements and contracts as well as
Agency-wide reviews of programs. Product divisions include:
• Assistance Agreements and Contracts: Improving EPA's use of grants and
contracts.
• Forensic Audits: Identifying fraud, waste, and abuse in grants and contracts.
• Financial Audits: Improving the Agency's financial management.
• Risk Assessment and Program Performance: Improving EPA internal control
processes, structure, and workforce/manpower.
Later in FY 2009, the Office of Audit plans to add an efficiency audit group in response
to the Administration's emphasis on efficiency and economy.
Office of Congressional, Public Affairs and Management: This office performs
communications and resource management functions. This includes providing
communications and liaison services to Congress, the public, and the media; operating
the OIG Hotline; editing, issuing, and distributing OIG reports; and managing
information posted on the OIG Website. The office also manages the OIG's budget
process and coordinates OIG planning, policies and procedures, audit follow-up,
performance measurement and reporting, contracting, and OIG internal control
assessment. Further, the office is responsible for all aspects of human capital programs
and functions and human resources personnel operations and recruitment.
Office of Counsel: This office provides independent legal and policy advice to all
components of the OIG, and represents the OIG in administrative litigation. The office
manages the OIG ethics program, providing ethics training, advice, and financial
disclosure reviews; and coordinates OIG responses to Freedom of Information Act and
other document requests. The office, which employees Special Agents in addition to
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
attorneys, also performs Oversight and Special Reviews. These include criminal and
other investigations of misconduct by EPA employees. Further, the office performs legal
reviews in response to requests by members of Congress and the Agency.
Office of Investigations: This office employs Special Agents, as well as computer
specialists, to perform criminal investigations. The majority of the investigative work is
reactive in nature, responding to specific allegations of criminal activity and serious
misconduct. The office focuses its investigative efforts on financial fraud (contracts and
assistance agreements), computer crimes, infrastructure/terrorist threat, program integrity,
and theft of intellectual or sensitive data. Specifically, investigations focus on:
• Criminal activities in the awarding, performing, and paying of funds under EPA
contracts, grants, and other assistance agreements to individuals, companies, and
organizations.
• Criminal activity or serious misconduct affecting EPA programs that could
undermine or erode the public trust.
• Contract laboratory fraud relating to water quality and Superfund data, and
payments made by EPA for erroneous environmental testing data and results that
could undermine the bases for EPA decision-making, regulatory compliance, and
enforcement actions.
• Intrusions into and attacks against EPA's network, as well as incidents of computer
misuse and theft of intellectual property or other sensitive data and release of or
unauthorized access to sensitive or proprietary information.
Office of Mission Systems: This office performs audits of and issues reports on EPA's
information resources management, to ensure the Agency is adequately maintaining its
systems and data. Audits consider how well EPA collects data, manages its investment in
information technology, and manages information security and privacy. The office also
provides information technology support to the rest of the OIG, manages the technical
aspects of the OIG Website, and provides data mining and analysis support to auditors
and evaluators throughout the OIG.
Office of Program Evaluation: This office performs program evaluations that assess
and answer specific questions about how well a program is working. The office can
assess strategic planning and process implementation to determine whether a program is
designed and operating as intended, as well as the extent to which a program is achieving
its objectives and having an impact. Evaluations examine root causes, effects, and
opportunities leading to conclusions and recommendations that influence systemic
changes and promote improved delivery of the Agency's mission. Evaluations may also
be designed to increase the understanding of a program. Product areas include:
• Air: Helping to make air safe and healthy to breathe.
• Water: Helping to ensure that drinking water is safe and waterbodies are protected.
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
• Superfund/Land: Improving waste management and clean-up.
• Enforcement: Helping to improve compliance with environmental
requirements.
• Research and Development: Helping EPA improve its research and
development efforts and ensure sound science.
• Cross-Media: Evaluating non-traditional approaches to protecting the
environment and challenges that cut across programs.
• Special Reviews: Reviewing issues of fraud, waste, and misuse in EPA
programs.
As part of its efforts, this office looks at issues involving homeland security.
OIG Budget
Congress Provides Additional Funding for the OIG
The Omnibus Appropriations Act of 2009 provided the EPA OIG with an FY 2009
budget funding level of $54,766,000, which was $2,181,000 above the FY 2008 enacted
level. In accordance with a congressional directive, the OIG is continuing a hiring
initiative to increase its staffing level to that of prior years, consistent with the available
funds. To address the staffing gap and accelerate recruiting and selecting highly qualified
staff members, the OIG has engaged the Office of Personnel Management as its primary
source for its staffing processing functions. Additionally, the OIG is seeking Delegated
Examining Unit authority to make direct hiring decisions, and will use contractor services
to further expedite staff recruitment and processing actions.
Below is a summary of the OIG resource levels/expenditures for FYs 2000 though 2009.
Historical Budget and Manpower Summary
Fiscal Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Enacted Budget
(after rescissions
where applicable)
$43,379,700
$45,493,700
$45,886,000
$48,425,200
$50,422,800
$50,542,400
$50,241,000
$50,459,000
$52,585,000
$54,766,000
On-Board Staff
(as of October 1 )
340
351
354
348
363
365
350
326
290
304
Expenditures
(includes
carryover)
$39,384,100
$41,050,807
$45,238,608
$46,023,048
$52,212,862
$61,733,781
$49,583,584
$48,658,217
$52,231,690
TBD
Sources: OIG archives and analysis and EPA Integrated Financial Management System
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
In addition to the budget amounts above, the American Recovery and Reinvestment Act
of 2009 provided the EPA OIG $20 million through September 30, 2012, for oversight
and review of the $7.2 billion received by EPA (see page 10).
OIG Strategic and Annual Plans
The OIG Strategic Plan for FYs 2004-2008 outlines the OIG's 5-year plan for carrying
out its vision by applying and linking the unique role and authority of the OIG, as
prescribed by the Inspector General Act, to the mission and goals of EPA. It builds upon
organizational experience and is designed to be an enduring guide for future direction.
As such, the Strategic Plan has been renewed for FY 2009 through implementing the
OIG's FY 2009 Annual Plan. Implementing the OIG strategy considers questions of
current and emerging concerns, shaped by existing conditions and future trends or
external challenges. The OIG strategy at the macro level, designed by specific
assignments and objectives at the annual planning level, is designed to improve OIG
operational processes and application of resources for greater efficiency and
accountability. Together, these plans have the flexibility to adapt and anticipate changing
conditions as needed. The plans promote dynamic thinking about how the OIG can best
contribute to attaining EPA's mission and goals.
The Strategic Plan identifies three goals, which are further defined by objectives with
specific measures and targets. These goals are:
1. Contribute to improved human health and the environment.
2. Contribute to improved Agency business practices and accountability.
3. Continuously improve OIG products and services.
The Strategic Plan is available at http://www.epa.gov/oig/reports/2004/20040201-EPA-
350-R-OOl.pdf. The FY 2009 Annual Plan is available at
httD://www.epa.gov/oig/reports/2008/EPA%20OIG%20FY2009%20Annual%20Plan.pdf
Our Strategic Plan will be revised once a new Inspector General is appointed.
OIG Follow-up
The OIG has been implementing a strong follow-up strategy for increasing both the
OIG's and Agency's attention to the process for resolving (reaching agreement on actions
to be taken) and completing agreed-to actions on OIG recommendations. Follow-up,
which is a shared responsibility between the Agency and the OIG, is a process by which
the Office of the Chief Financial Officer monitors and reports on Agency implementation
of audit recommendations, and OIG auditors determine the adequacy, effectiveness, and
timeliness of actions taken by management on all reported audit findings. To comply
with Inspector General Act reporting requirements and help EPA managers gain greater
awareness of outstanding commitments for action, we are now issuing semiannually a
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
"Compendium of Unimplemented Recommendations." The Compendium is produced as
an appendix to each Semiannual Report to Congress and as well as a stand-alone report
issued to Agency management. The identification of unimplemented recommendations
through the Compendium has appeared to result in a significant increase in corrective
actions being taken by the Agency. Additionally, at the OIG's behest, the Agency
Annual Integrity Review Policy and Process now requires an examination of all
outstanding audit recommendations. The OIG is also examining its own process for
closing out recommendations leading to successful resolution, and has enhanced its
management information system to provide accountability for each recommendation
within the OIG and through its connection to the Agency's follow-up tacking system.
OIG Quality Assurance Program
The OIG operates a rigorous Quality Assurance Program to provide objective, timely,
and comprehensive reviews to ensure that OIG work complies with pertinent laws,
professional standards, regulations, and policies and procedures, and is carried out
efficiently and effectively. OIG offices, activities, processes, and products are subject to
review. Our OIG Quality Assurance Program team conducts independent referencing
reviews of all draft/final audit and evaluation reports and ensures conformance with the
standards of the Comptroller General and Council of Inspectors General on Integrity and
Efficiency. Our Quality Assurance Program involves:
• Report quality assurance.
• Quality assurance reviews of audit, evaluation, and investigative activities.
• Annual self-assessments of each OIG office.
• Administrative program reviews.
• Independent internal quality review of OIG performance by an outside firm.
• External peer reviews conducted by other OIGs.
• Use of a quality assurance checklist.
We have provided EPA with a list of key management challenges for FY 2009. The OIG
defines management challenges as a lack of capability derived from internal self-imposed
constraints or, more likely, externally imposed constraints that prevent EPA from reacting
effectively to a changing environment. The FY 2009 challenges, as listed below, are based
primarily on our macro-risk assessment, audit, evaluation, and investigative work. The list
includes two new challenges ("Management of Stimulus Funds" and "Safe Reuse of
Contaminated Sites") along with eight challenges that were included for FY 2008.
• Management of Stimulus Funds: The American Recovery and Reinvestment
Act of 2009 will provide EPA with $7.2 billion over the next few years. The
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Agency will face significant challenges in meeting Recovery Act requirements
while carrying out its ongoing programs. Monitoring recipients' activities while
commencing expenditures and activities as quickly as possible will present
further challenges. The grants EPA awards with Recovery Act funding will
contain new conditions that require additional monitoring and oversight. EPA
will need to rely heavily on State agencies, as the primary funding recipients, to
properly monitor sub-recipients' use of funds. Superfund work will generally be
awarded with contracts, and with the emphasis on awarding funds and starting
work quickly, EPA needs to make sure contractors are ready and able to accept
the additional work.
• EPA's Organization and Infrastructure: EPA has about 140 offices and
laboratories. Due to diminishing resources, the autonomous nature of regional
and local offices, and the growing pressure to expand its role globally, EPA will
be challenged to assess the efficiency and effectiveness of its current structure.
• Performance Measurement: EPA must focus on the logic and design of its
measures for success and efficiency, along with data standards and consistent
definitions, to ensure that adequate information is obtained and used to evaluate
and manage EPA programs, operations, processes, and results.
• Threat and Risk Assessments: EPA does not comprehensively assess threats to
human health and the environment across the environmental media for which
EPA is responsible (air, water, etc.) to ensure actions are planned, coordinated,
and budgeted most efficiently and effectively. This fragmentary approach
continues because environmental laws often focus on single media or threats.
• Water and Wastewater Infrastructure: Drinking water and wastewater
treatment systems are reaching the end of their life cycle, and huge investments
will be needed to replace, repair, and construct facilities.
• Meeting Homeland Security Requirements: EPA needs to implement a
strategy to effectively coordinate and address threats, including developing a
scenario to identify resource needs, internal and external coordination points, and
responsible and accountable entities.
• Oversight of Delegations to States: Many States and tribes are responsible for
implementing EPA's programs, enforcing laws and regulations, and reporting on
program performance, with EPA retaining oversight responsibility. Inconsistent
capacity and interpretation among State and tribal entities limit accountability
and compliance.
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
• Chesapeake Bay Program: After more than 20 years of effort by federal, State,
and local governments, Bay waters remain degraded; required nutrient and sediment
reductions will not be met by the 2010 target. EPA needs to institute management
controls ensuring that actions to manage land development, agricultural runoff,
nutrient reduction technology, and air emissions are implemented, and that
consistent sources of funding are identified by EPA partners.
• Voluntary Programs: EPA must ensure that voluntary approaches and innovative
or alternative practices are managed using standards, consistent processes, and
verifiable data. This is needed to ensure that programs are efficiently and effectively
providing intended and claimed environmental benefits.
• Safe Reuse of Contaminated Sites: In the last decade, EPA has placed increasing
emphasis on reusing contaminated or once-contaminated properties. However,
EPA's managing of long-term oversight and monitoring for the safe use of these
sites has lagged, and this gap promises to increase substantially as EPA continues to
heavily promote reusing these sites without the investment needed to ensure safety.
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
The American Recovery and Reinvestment Act of 2009, signed by President Obama on
February 17, 2009, provides the EPA OIG $20 million for oversight activities through
September 30, 2012. The OIG will conduct audits, investigations, and other reviews to
ensure economy and efficiency and to prevent and detect fraud, waste, and abuse in how
EPA uses the $7.2 billion it will receive under the Act. Reports on our findings will be
posted on our Website as published. The OIG will also work with the Agency to provide
information and guidance for ensuring that there are appropriate controls in place and that
decisions, actions, and accountable results are transparent. The OIG will review, as
appropriate, concerns raised by the public about specific investments using funds made
available by the Act. Individuals may report any suspicion of fraud, waste, or abuse of
EPA stimulus funds via the OIG Hotline. Any findings of such reviews not related to
ongoing criminal proceedings will also be posted on our Website.
In addition to looking at how EPA spends its Recovery Act funding and the results
achieved with that funding, we will continue our regular work to raise Agency, customer,
grantee, and contractor awareness regarding fraud, waste, and abuse in all areas. This
will include implementation of the federal Contractor Business Ethics Compliance
Program and Disclosure Rule, which took effect in December 2008. The rule requires all
federal contractors to self-disclose to the OIG all credible evidence of violations of
federal criminal and civil law involving fraud, conflict of interest, bribery, gratuities, and
significant overpayments.
S!Jji*i:
The primary objectives of our Recovery Act efforts will include determining whether:
• Funds are awarded and distributed in a prompt, fair, and reasonable manner.
• The recipients and uses of all funds are transparent to the public, and the public
benefits of these funds are reported clearly, accurately, and in a timely manner.
• Funds are used for authorized purposes and instances of fraud, waste, error, and
abuse are mitigated.
• Projects funded under this Act avoid unnecessary delays and cost overruns.
• Program goals are achieved, including specific program outcomes and improved
results on broader economic indicators.
As EPA prepares to award Recovery Act funds, the OIG is taking a number of actions to
alert Agency managers of risks and recommend cost-effective controls to help prevent
fraud, waste, and abuse; and ensure program goals are achieved and stimulus funds are
accurately tracked and reported. As our auditors and evaluators identify risks, they will
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
give Agency managers flash reports containing recommendations on ways to mitigate
these risks. Our investigators are developing an outreach strategy to educate EPA
employees, contractors, grant recipients, the law enforcement community, and the general
public on grant and contract fraud schemes and how to report suspected fraud. Our work
is being closely coordinated with the Recovery Accountability and Transparency Board,
as well as other audit and law enforcement organizations at the federal, State, and local
levels.
After EPA awards the Recovery Act funds, the OIG will focus on auditing and
investigating EPA's management of the Recovery Act programs, how the funds are being
used, and the accuracy of the information being reported. With the $20 million received,
the OIG is increasing its staffing, including its forensic audits staff, to review how funds
are being used.
Performance audits will evaluate the process for awarding funds, particularly competitive
awards, and whether the funds are being awarded timely, efficiently, and in accordance
with the Act's requirements. We will also evaluate how the Agency is monitoring the use
of funds and measuring performance. In addition, we will conduct interim and final
financial audits of Recovery Act fund recipients; review Single Audit Act reports
involving Recovery Act funds; and, as part of our annual audit of EPA's overall
consolidated financial statements, examine the use of Recovery Act funds.
Our Special Agents will investigate allegations raised by the public and others of fraud,
waste, and abuse committed against EPA involving Recovery Act funds. Special Agents
will identify fraud indicators and program weaknesses, and gather information on
potential instances of fraud. Also, Special Agents will communicate with State recipients
regarding funds they distribute.
Our full initial plan can be found at
http://www.epa.gov/oig/reports/2009/InitialEPAOIG StimulusPlan03-05-09.pdf.
The EPA OIG has reviewed the Office of Management and Budget (OMB) Updated
Implementing Guidance for the Recovery Act. We provided several comments to OMB
for consideration.
We found that, overall, the guidance is prescriptive for agencies to make funding
available in a transparent, need-driven way on an agency-by-agency basis. However,
there does not appear to be a process described for cross-agency coordination of grantee
and other fund recipient review to ensure that recipients are not obtaining funds from
11
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
multiple sources for the same project. We also believe cross-agency checks should be
required, beyond the current process, to ensure that a grantee, contractor, or recipient has
not been debarred, suspended, or otherwise disqualified from receiving federal funds, and
does not have outstanding federal obligations. Further, because States will be primary
recipients of Recovery Act funds, we think it needs to be made clearer what obligations
State auditors have to review and report on the propriety of, accounting for, and use of
the Recovery Act funds, as well as the recipient's accuracy in the reporting of results.
In addition, we made comments on specific sections of the guidance. These involved
such issues as seeking more information on subprime contractors, identifying expected
savings, assessing risk associated with any decision for providing funds to each grantee,
and having a third party arbitrating disputes between the agency contract officer and the
auditor.
Our complete comments on the OMB Guidance are in Report No. 09-P-0132, EPA Office
of Inspector General Recommendations on Office of Management and Budget Guidance
for Recovery Act Implementation, issued March 31, 2009. The report can be accessed at
http://www.epa.gov/oig/reports/2009/20090331-09-P-0132.pdf
12
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Significant OIG Activity
Helping to make air safe and healthy to breathe.
EPA Needs to Improve Its Efforts to Reduce Air Emissions at
U.S. Ports
EPA's strategy to address air emissions from large oceangoing vessels in
U.S. ports is not sufficiently developed.
The United States has about 360 commercial sea and river ports. Air emissions from
activities at these ports have significant environmental and human health impacts. By
2020, many major U.S. ports are expected to double the amount of container traffic they
handle; some will triple.
For over 14 years, EPA has acknowledged that human health has been significantly
harmed by emissions from large oceangoing vessels. Thus far, EPA has only regulated
nitrogen oxide emissions from U.S.-flagged vessels. The Agency has chosen to defer
taking a position on whether it has authority to regulate emissions from foreign-flagged
vessels, although these vessels account for about 90 percent of all U.S. port calls. In
October 2008, much of a U.S. proposal for more stringent air emission standards for
oceangoing vessels was incorporated into an international agreement. Still, if significant
f emissions reductions are to be realized under this
'".'! >!-''.,! agreement, EPA must establish emission control
areas for oceangoing vessels entering U.S. ports.
Although EPA is working through various
regulatory and voluntary programs to reduce air
emissions from port sources, including sources
other than oceangoing vessels, it lacks a
transformation plan to assure that its goals are
realized. In 2008, EPA built upon its efforts by
publishing a Strategy for Sustainable Ports.
However, EPA did not include the appropriate performance measures, milestones, and
other management controls for many of the action items in this strategy. As a result, EPA
lacks the management framework and controls necessary to assure the successful
implementation of its strategy.
We recommended that EPA (1) assess its authorities and responsibilities under the Clean
Air Act to regulate air emissions from foreign-flagged vessels in U.S. ports, and report
A container ship at berth. (EPA OIG photo)
13
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
any shortfalls to Congress; (2) assess the extent to which emissions control areas should
be designated for U.S. coastal areas; and (3) revise its ports strategy to include a
transformation plan. The Agency's comments on the first recommendation were not
responsive; it concurred with the second recommendation and did not agree with the
third. On March 30, 2009, subsequent to our report issuance, the Administrator held a
press conference to announce that the United States had submitted a proposal to the
International Maritime Organization for an emission control area around the United
States' coastline.
(Report No. 09-P-0125, EPA Needs to Improve Its Efforts to Reduce Air Emissions at
U.S. Ports, March 23, 2009 - Report Cost: $1,680,991)
Risk Management Program for Airborne Chemical Releases
Can Be Improved
EPA can improve management and oversight to better assure that facilities
covered by the Clean Air Act's Risk Management Program submit a Risk
Management Plan and comply with Program requirements.
The purpose of the Risk Management Program is to reduce the likelihood of airborne
chemical releases that could harm the public, and mitigate the consequences of releases
that do occur. Stationary sources that have more than the threshold quantity of regulated
substances onsite in any one process must implement a risk management program and
have a Risk Management Plan.
EPA had not established national procedures for identifying covered facilities that had
not submitted Risk Management Plans. For the 5 States reviewed, we identified 48
facilities in 3 States that reported large amounts
of covered chemicals stored onsite that had not
filed plans. Further, the status of nearly one-
third (452 of 1,516) of the facilities EPA
identified in 2005 as being past their due date for
re-submitting a plan had not been resolved and
updated in the Program's National Database as
of March 2008. Also, State permitting agencies
did not properly include Program requirements
as a condition of facilities' Title V operating
permits.
Damage from an explosion and fire at a manufacturing
facility in 2004. Vinyl chloride monomer, a regulated
substance under the Risk Management Program,
fueled the explosion and fire, which caused evacuation
of the nearby community. (Photo courtesy
U.S. Chemical Safety and Hazard Investigation Board)
EPA can also strengthen its inspection process to
provide greater assurance that facilities comply
with Program requirements. EPA had not
inspected or audited over half (296 of 493) of
14
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
the high-risk facilities identified by EPA's Office of Emergency Management. Of the
296 uninspected facilities, 151 could each impact 100,000 people or more in a worst-case
accident. Accident data suggest that uninspected high-risk facilities are more than five
times as likely to have an accident as uninspected lower-risk facilities.
We recommended that EPA implement additional management controls to identify
facilities with regulated chemicals that have not filed Risk Management Plans. We also
recommended that EPA develop a risk-based inspection strategy to target higher-priority
facilities for inspection and track progress in completing inspections. The Agency
concurred with all of our recommendations.
(Report No. 09-P-0092, EPA Can Improve Implementation of the Risk Management
Program for Airborne Chemical Releases, February 10, 2009 - Report Cost: $517,983)
Specific Issues with Risk Management Program for
Airborne Chemical Releases Noted in Region 8
our of the Air
we 8's
The two Region 8 offices jointly responsible for implementing the program - the Office
of Ecosystems Protection and Remediation and the Office of Enforcement, Compliance,
and Environmental Justice - have not effectively planned or coordinated compliance
assurance activities. Further, regional operating guidance is inconsistent concerning the
roles and responsibilities of each office.
Over half the high-risk facilities in the Region have never been audited or inspected. Of
the 61 high-risk facilities identified, 38 (62 percent) had never been inspected or audited
since the Program's inception in 1999. Meanwhile, 59 lower-risk facilities were both
audited and inspected.
Region 8 agreed with our recommendations to develop a strategy and oversight process
for the Program, and has already completed the recommended actions.
(Report No. 09-P-0130, EPA Region 8 Needs to Better Manage the Risk Management
Program for Airborne Chemical Releases, March 30, 2009 - Report Cost: $157,141)
For details on additional air issues, please refer to:
• Page 20, "EPA Needs a Comprehensive Plan on Climate Change."
• Page 37, "Metal Processing Company Sentenced for Making a False Statement."
• Page 40, "Actions to Deny California Emissions Waiver Did Not Deviate from Protocol."
15
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Superfund/Land
Improving waste management and clean-up.
Superfund Special Accounts Need Improved Management
EPA had not used about $65 million in Superfund special accounts that were
available because it lacked some management controls. Additionally, EPA was
holding more than $88.4 million in special account funds in reserve that could
potentially be put to better use.
1990
1995
Shown in Millions
2000 2005
Fiscal Year
2007 2008*
Total Available Dollars in Superfund
Special Accounts as of May 31, 2008
Source: OIG analysis of EPA data.
EPA is authorized to retain and use funds received in
settlements to address Superfund response actions
contemplated in settlement agreements. EPA retains these
funds in site-specific "special accounts." As of May 2008,
EPA had over $1.1 billion in 819 Superfund special
accounts.
EPA's fragmented and uncoordinated approaches to account
for special account funds led to missed opportunities to fund
needed Superfund clean-ups. Visibility was lacking over the
amount and use of special account funds. In three previous
reports, we had recommended that about $59 million of the
$65 million of idle special account funds be reclassified or
transferred to the Hazardous Substance Superfund Trust
Fund. In this report, we recommended that the remaining
approximately $6.6 million be reclassified or transferred to
the Trust Fund. While EPA has addressed various aspects of managing special accounts,
it needs to make some additional improvements. Also, EPA was holding more than
$88.4 million in reserve that could be used to support priority Superfund sites, including
sites where human exposure was not under control.
We recommended that EPA implement needed management controls. EPA needs to
provide a central management official for special account funds, use available account
data, and implement new policies and public reporting requirements. Also, EPA should
reclassify or transfer the remaining $6.6 million in idle special account funds, and
reevaluate the need for holding the $88.4 million in reserve. EPA generally concurred
with our recommendations, although some actions proposed by the Agency do not meet
the intent of what we recommended.
(Report No. 09-P-0119, Improved Management of Superfund Special Accounts WillMake
More Funds Available for Clean-ups, March 18, 2009 - Report Cost, including three
previously issued reports: $94 7,442)
16
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Safety Determination for Delatte Metals Superfund Site Unsupported
EPA's protection determination for the Delatte Metals Superfund Site,
Ponchatoula, Louisiana, was not supported by its data.
Soil and water at Delatte were contaminated with metals from battery recycling and
smelting operations. EPA deleted Delatte from the National Priorities List in 2005,
signifying clean-up goals were achieved through remedial action.
Despite evidence of potential remedy failure, EPA Region 6 determined during its
Five-Year Review at the site in November 2007 that conditions protect human health and
the environment in the short-term. However, our review showed that the permeable
reactive barrier was not treating all of the shallow contaminated groundwater before it
discharges to surface water and migration of metal
contaminants was uncontrolled. Also, metal
concentrations in surface water greatly exceeded site
clean-up standards, site access was uncontrolled,
sufficient testing of the groundwater and surface
water was not performed, and the required inspection
of the permeable reactive barrier was not performed.
EPA research scientists also raised concerns about the
effectiveness of the permeable reactive barrier and
recommended that Region 6 conduct additional
testing.
New housing development built adjacent to the
Delatte Site. (EPA OIG photo)
The data available to Region 6 when it conducted its Five-Year Review, combined with
our results, show that the site's safety cannot be determined until the effectiveness of the
permeable reactive barrier and the risk posed by the migration of metals are assessed.
EPA Region 6 proposed actions to ensure that the Delatte clean-up remedy is performing
as intended. These actions are under review. However, EPA Region 6 did not agree to
amend the determination it made in 2007 to state that more information is needed to
make a safety determination for the site.
(Report No. 09-P-0029, EPA 's Safety Determination for Delatte Metals Superfund Site
Was Unsupported, November 19, 2008 - Report Cost: $398,750)
17
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Sampling at Indiana Superfund Site Was Consistent with EPA's
Historical Results
Groundwater sampling at the Meal's Dump Superfund Site in Indiana showed
that polychlorinated biphenyls (PCBs) did not exceed safe levels for drinking
water.
The OIG is testing long-term monitoring results at selected Superfund sites that EPA
deleted from the National Priorities List. Neal's Dump, near Spencer, Indiana, was one
of the sites we sampled. The site had been contaminated with PCBs from disposal of
electrical equipment and other PCB-contaminated materials. EPA deleted the site from
the National Priorities List in 1999, which signified clean-up goals had been achieved.
Groundwater samples that we independently took in May 2008 from two private drinking
water wells on residential properties adjacent to the site showed that PCBs did not exceed
safe levels for drinking water. These results are consistent with EPA's monitoring
results.
(Report No. 09-P-0110, Results of Independent Groundwater Sampling at Neal's Dump
Superfund Site, March 4, 2009 - Report Cost, including contractor costs: $99,200)
EPA Inappropriately Charged Oversight Costs at California
Superfund Site
EPA Region 9 inappropriately charged oversight costs to responsible parties for
the CIS Printex Site for greening and other activities.
The OIG received a Hotline complaint that alleged mismanagement and abuse of
authority regarding Region 9 management of the CTS Printex Superfund Site in
Mountain View, California. The allegations we
reviewed involved inappropriate oversight costs and the
site boundary definition.
We concluded that Region 9 inappropriately charged the
responsible parties for costs associated with staff time
spent reviewing a housing developer's use of "green
building practices." Region 9 also charged the site
account for its time spent responding to and preparing
New housing development built on the former for our review. These activities are outside the intended
CTS Printex Superfund Site. (EPA OIG photo) gcope Qf ±Q ^ recoyery agreement betw£en Reglon 9
and the responsible parties. Also, Region 9 has not taken
appropriate steps to timely amend the 1991 Record of Decision, even though new human
health risks have been identified (vapor intrusion).
18
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
During our review, we could not substantiate claims that Region 9 expanded the
definition of the CTS Printex Site beyond that described in EPA's 1991 Record of
Decision, or that other clean-up agreements were reached or implemented.
Region 9 agreed with our recommendations to amend the 1991 Record of Decision and
withdraw inappropriate oversight charges. The Region has adjusted its charges to the
responsible parties and so far removed $6,084 from oversight bills. Corrective actions to
address future cost recovery issues and review other oversight charges are undecided and
should be addressed in its final response to this report.
(Report No. 09-P-0131, Results of Hotline Complaint Review for California Superfund
Site, March 31, 2009 - Report Cost: $128,038)
For details on additional Superfund/land issues, please refer to:
• Page 34, "Better Procedures Needed to Manage Tracking System Development."
• Page 36, "Sentence Imposed in Bid-Rigging Case."
• Page 36, "New York Businessmen Sentenced in Hazardous Waste Case."
19
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Cross-Media
Evaluating non-traditional approaches to protecting the
environment and challenges that cut across programs.
EPA Needs a Comprehensive Plan on Climate Change
EPA does not have an overall plan to ensure developing consistent, compatible
climate change strategies across the Agency.
EPA is 1 of 13 federal agencies that make up the U.S. Climate Change Science Program,
which guides federal research through its strategic plan. Part of EPA's role is
understanding the regional consequences of global climate change.
We surveyed EPA regions and offices and found they need more information on a variety
of climate change topics. They reported the need for technical climate change research
and tools as well as other climate change policy guidance and direction. In the absence
of an overall Agency plan, EPA's Office of Water and several regional offices have
independently developed, or are developing, their own climate change strategies and
plans. The lack of an overall climate change policy can result in
duplication, inconsistent approaches, and wasted resources among
EPA's regions and offices. EPA has not issued interim guidance to
give its major components consistent direction to ensure that a
compatible national policy - when it emerges - will not result in
wasted efforts.
EPA's latest plan for future climate change research does not address
the full range of emerging information needs. The projected time of
completion or the scope of some research projects do not match the
timing orthe scope of regions' needs. EPA's Office of Research and
Development does not have a central repository of its climate change
research for its internal users, nor does it effectively communicate
the results of its climate change research to EPA's internal users.
A hurricane striking a sea wall.
(Photo courtesy National Oceanic
and Atmospheric Administration)
We recommended that the EPA Deputy Administrator direct Assistant and Regional
Administrators on how to plan for climate change challenges in their media areas/regions
until the Agency develops an overall strategy, and establish guidance for regularly
entering climate change scientific information in the Science Inventory. We also made
recommendations regarding establishing various management controls. The Agency
concurred with our recommendations.
(Report No. 09-P-0089, EPA Needs a Comprehensive Research Plan and Policies to
Fulfill its Emerging Climate Change Role, February 2, 2009 - Report Cost: $636,217)
20
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Improvements Needed in Reporting ENERGY STAR Benefits
We found the ENERGY STAR program's reported savings claims were
inaccurate and the reported annual savings unreliable.
ENERGY STAR is a voluntary program designed to help businesses and individuals
enhance their energy efficiency. In 2006, ENERGY STAR reported avoiding a total of
37.6 million metric tons of carbon equivalent, preventing greenhouse gas emissions
equivalent to those from 25 million vehicles, and saving Americans $14 billion on their
energy bills.
We identified several deficiencies with shipment data and the process used in calculating
benefits, including the lack of a quality review of the data collected; reliance on
estimates, forecasting, and unverified third party reporting; and the
potential inclusion of exported items. Also, EPA included savings for
one Department of Energy product that the Department of Energy also
claimed. We noted sales of formerly qualified products have been used
to determine ENERGY STAR's market transformation benefits, but we
found that this benefit was computed inconsistently. Also, the
methodology used to compute the ENERGY STAR commercial sector
benefits uses unverified assumptions.
We recommended that EPA implement improved quality controls and a
better methodology to compute market transformation effects, and
validate its model for calculating commercial sector benefits. EPA
disagreed with many of our conclusions, but stated it had implemented
some of the recommendations. At the time of our report issuance, some
of EPA's planned actions did not meet the intent of our
recommendations, and we considered the recommendations open and
unresolved. Subsequently, EPA provided a proposed corrective action
plan that meets the intent of the recommendations.
Promoting the use of energy
efficient products is an
important component of
ENERGY STAR. (From EPA)
(Report No. 09-P-0061, Improvements Needed to Validate Reported
ENERGY STAR Benefits, December 17, 2008 - Report Cost: $538,867)
21
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
EPA Needs to Further Improve Responses to Freedom of Information
Act Requests
We examined whether EPA's FOIA processing and reporting procedures meet current
FOIA requirements and if any improvements can be made. We found that EPA, as a
whole, is not giving timely responses to FOIA requests or appeals. Also, we found that
some of the annual personnel and cost statistics gathered and provided to the National
FOIA Officer for the annual report to the Department of Justice were not accurate. Lack
of complete and correct cost information means that EPA may not know how much it is
spending on FOIA-related costs. EPA also may not be meeting specific statutory
requirements.
We recommended that EPA issue a policy mandating training for those employees with
FOIA responsibilities. Supplementing the policy should be written standard operating
procedures for regional and program offices that issue FOIA responses. EPA should also
review FOIA offices to make recommendations for improvement. EPA concurred with
our recommendations.
(Report No. 09-P-0127, EPA Has Improved Its Response to Freedom of Information Act
Requests But Further Improvement Is Needed, March 25, 2009 - Report Cost: $505,369)
Interim Report Disclosed Results of OIG Access Survey
We sponsored an Agency-wide survey to assess EPA employees' perceptions of their
relationships with OIG staff with regard to access to personnel and information. Our
analysis showed that 83 percent of respondents were either not aware, or did not know, of
any policy or procedures governing interaction with the OIG. Further, 52 percent of
respondents did not believe or did not know whether they can provide documentation or
written responses to the OIG without permission from a supervisor.
22
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
There were also some troubling perceptions among Agency staff about management's
attitudes toward staff who talked to OIG staff without permission - 45 percent of
respondents either agreed or did not know
whether they can face retribution if they
provided information or documentation in
response to an OIG request without the
approval from their program manager or
supervisor.
Don't Know
31%
Disagree
55%
Forty-five percent of respondents either agreed or did not
know whether they may face retribution for providing
information to an OIG request. (Source: OIG survey)
This report is an interim one for information
purposes only; the OIG has not completed its
analysis of the results or drawn any final
conclusions, and we made no
recommendations in this report.
(Report No. 09-P-0079, Interim Report: Office of Inspector General Access Survey
Results, January 13, 2009 - Report cost part of overall report to follow)
-or details on an additional public liaison and special reviews issue, please refer to
page 18, "EPA Inappropriately Charged Oversight Costs at California Superfund Site."
23
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Grants
Improving EPA's use of assistance agreements.
EPA Took Adequate Corrective Actions for Alaska Village Safe Water
Program
In a we EPA 10 the
it to in to an
of
In 2006, the OIG issued two single audit reports, for FYs 2003 and 2004, to EPA
Region 10 regarding the Alaska Village Safe Water Program. The reports supported the
single audit findings and recommended various corrective actions. The most recent
OMB Program Assessment Rating Tool review noted various program deficiencies.
We found that Region 10 had
adequately followed up on each of the
findings and recommendations from the
single audit reports, and had
implemented corrective actions for the
OMB review. The corrective actions
taken by the Region should address the
issues identified.
One corrective action is not complete.
To address concerns with Alaska's
monitoring of subrecipients, the State
performed an independent review of reconciling project costs by the Alaska Native Tribal
Health Consortium. As part of its corrective action plan, the Region agreed to follow up
on the findings from the independent review. However, the review was delayed and is
now expected to be completed by October 1, 2009.
(Report No. 09-P-0085, EPA Region 10 Took Adequate Corrective Actions for Alaska
Village Safe Water Program, January 21, 2009 - Report Cost: $114,006)
Sewage pipe system in an Alaska village. (EPA photo)
24
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Review of Grant Finds Procurement, Financial Management, and
Lobbying Issues
Ml Inc., in
did not not be
a
In 2001, EPA awarded a grant to ML Wastewater Management to construct a wastewater
treatment plant. The grant was amended four times, with EPA's financial assistance
totaling $8,688,000.
The grantee's financial management system was not sufficient to ensure that reported
costs complied with federal regulations. The grantee's claim included unallowable costs
involving procurement, interest, organizational costs, lobbying, indirect costs, and labor
and fringe benefit costs. Further, total project costs may be unreasonable. The grantee
also may not have provided at least .4 new acres of wetlands to replace wetlands filled
during construction.
We recommended that the Regional Administrator, EPA Region 5, recover $801,118 of
the questioned costs, recover any unreasonable project costs, and designate the grantee as
a high-risk grantee.
(Report Number 09-4-0112, ML Wastewater Management, Inc. -Procurement, Financial
Management, and Lobbying Issues Under EPA Grant Number X97572201, March 9,
2009 - Report Cost: $346,181)
25
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Contracts
Improving EPA's use of contracts.
EPA Plans for Managing Counter Terrorism/Emergency Response
Equipment Not Fully Implemented
EPA in
but is in the
M o n i to ri ng .
In response to Homeland Security Presidential Directive No. 7, issued in 2003, which
requires federal agencies to identify, prioritize, and protect Critical Infrastructure and
Key Resources from terrorist attacks, EPA issued its Critical Infrastructure and Key
Resources Protection Plan.
The OIG sought to determine whether EPA had effectively implemented corrective
actions to address findings and recommendations in a 2006 OIG report on counter
terrorism/emergency response equipment. EPA encountered delays and problems with
administering the Radiation Ambient Monitoring System
contract. Further delays may occur as EPA may need to
modify installed monitors after testing is completed. As
a result, the Agency may have less information about the
levels of radiation if a national radiological or nuclear
emergency occurs.
EPA's National Air and Radiation Environmental
Lab, Montgomery, Alabama, responsible for the
Radiation Ambient Monitoring System. (EPA OIG
photo)
EPA has not fully implemented a national equipment
tracking system. While EPA staff said some delays were
due to technical issues, unrealistic milestones and limited resources also contributed to the
nearly 2-year delay in implementing a system. Not having a functional national system to
track and manage equipment may impair EPA's ability to protect public health and the
environment in the event of a terrorist attack or other nationally significant incident.
For almost 2 years, EPA did not track corrective actions in the Management Audit
Tracking System for the 2006 report and did not notify the OIG when it made changes to
the corrective action plan. When the Agency started tracking corrective action, the
information was not accurate. Not properly tracking corrective actions may adversely
affect the completeness and accuracy of the Agency's annual reporting process and
reports to Congress.
(Report No. 09-P-0087, EPA Plans for Managing Counter Terrorism/Emergency
Response Equipment and Protecting Critical Assets Not Fully Implemented, January 27,
2009 - Report Cost: $216,000)
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Forensic Audits
Identifying fraud, waste, and abuse in grants and contracts.
Reviews of Special Appropriation Act Project Grants Note
Potential Savings
We reviewed costs claimed under Special Appropriation Act Project grants, and
noted various instances of ineligible costs claimed.
Since 1992, EPA has awarded over 5,000 Special Appropriation Act Project grants,
totaling over $5 billion, based on congressional earmarks. EPA awarded these grants to
State and local governments and quasi-governmental agencies (such as water
improvement districts) to assist in planning, designing, and constructing wastewater and
drinking water facilities.
In FY 2007, we began reviewing selected Special Appropriation Act Project grants. To
date, we have identified $6,364,717 in ineligible and questioned costs claimed, including
$714,600 identified in reports published during the semiannual reporting period ending
March 31, 2009. We identified the following during the latest semiannual reporting
period.
• The Washoe County Department of Water Resources (Nevada) did not meet
federal financial management requirements. The grantee claimed (1) indirect costs
without approved rates or cost allocation plans, (2) fringe benefit costs that were
not based on approved rates or a cost allocation plan, (3) contract costs under one
grant that were not allocable, and (4) unallowable interest expenses. Also, the
grantee charged estimated labor costs to the grants
without adjusting to actual costs, and procured sole
source contracts without cost analysis. We
recommended that EPA Region 9 disallow and
recover $291,494 in questioned costs and require the
grantee to establish procedures to ensure that it
charges costs according to federal policy, and
conducts procurements according to federal
regulations. As of September 2008, Region 9 had
recovered $26,774 of the questioned
costs from the grantee. (Report No. 09-2-0011, Costs Claimed under EPA Grants
XP96909501 andXP97963701 Awarded to the Washoe County Department of Water
Resources, Nevada, October 20, 2008 - Report Cost: $144,657)
The Lemmon Valley project in Washoe County.
(EPA OIG photo)
27
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
• The City of Rupert, Idaho, did not meet federal requirements for financial
management. In particular, the grantee claimed unsupported costs and
unallowable pre-award, interest, and equipment costs. Also, the grantee reported
cumulative total project costs that were not supported by accounting records. We
recommended that EPA Region 10 disallow $423,106 and recover $63,256 in
costs questioned under Grant XP98011401. (Report No. 09-2-0078,
Costs Claimed under EPA Grant XP 9 8011401 Awarded to the City of Rupert,
Idaho, January 12, 2009 - Report Cost: $101,397)
We plan to continue auditing Special Appropriation Act Project grants.
City of Rupert's 1.1 million gallon water storage
tank. (EPA OIG photo)
28
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
EPA Earns Unqualified Opinion on Financial Statements
Significant deficiencies are deficiencies in internal controls that adversely affect the
entity's ability to report financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a misstatement
of the entity's financial statements will not be prevented or detected. The eight
significant deficiencies noted are as follows:
• EPA's oversight of payroll reconciliation needs improvement.
• EPA did not properly calculate the third quarter FY 2008 accrual for federal
unbilled receivables.
• EPA needs to reconcile Superfund State Contract funds and credits in the general
ledger to subsidiary accounts.
• EPA's review of unliquidated obligations for interagency agreements and
Headquarters-funded grants was incomplete.
• The Integrated Financial Management System Vendor Table was susceptible to
unauthorized changes, and EPA did not retain supporting documentation for
numerous changes.
• EPA did not adequately monitor Superfund Special Account balances.
• The lack of a system implementation process contributed to financial applications
not complying with requirements.
• EPA did not properly account for capitalized software and related accumulated
depreciation.
Regarding compliance with laws and regulations, we found that EPA violated the Anti-
Deficiency Act when it recorded a subsidy re-estimate for the Asbestos Loan Program
without an approved apportionment letter from the Office of Management and Budget.
EPA also violated the Prompt Payment Act by not paying 20 FY 2008
telecommunications invoices timely. Further, EPA needs to continue to reconcile
$192 million of unreconciled differences with 46 trading partners for intragovernmental
transactions.
The Agency generally agreed with the internal control issues and has begun taking
corrective actions. The Agency did not agree with the Anti-Deficiency Act finding, and
29
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
indicated it will instead conduct an internal investigation and work with OMB. Feedback
from these sources will determine the Agency's future course of action.
(Report No. 09-1-0026, Audit of EPA 's Fiscal 2008 and 2007 Consolidated Financial
Statements, November 14, 2008 - Report Cost: $2,174,361)
EPA Should Strengthen Controls over Interagency Agreement
Unliquidated Obligations
not out at of
be an
$2.3 as a of our The-- ' is be for
An interagency agreement is a written agreement between federal agencies in which one
agency provides goods or services to another agency on a reimbursable basis. It is EPA's
policy to close all interagency agreements within 270 days after the project period
expires. As part of close-out,
Funds Deobligated or Needing Deobligation unliquidated obligations should be
Funds deobligated between January 7, 2008, $2.3 million deobligated so that the funds can be
and April 25, 2008, as a result of our audit used for other purposes.
Unneeded funds that should be deobligated 4.2 million
Total $6-5 million Controls for identifying funds for
Source: OIG analysis deobligations were not always
effective. Appropriate EPA
personnel did not effectively monitor interagency agreements to ensure they were closed
out timely and unneeded funds deobligated. The annual unliquidated obligation review
was not effective and did not identify funds that should have been deobligated. EPA staff
cited various reasons, including unfamiliarity with procedures and difficulties working
with other agencies.
We recommended that EPA deobligate the remaining $4.2 million in unliquidated
obligations, and establish various procedures to address the deficiencies noted. The
Agency agreed with our recommendations and has begun establishing needed procedures.
(Report No. 09-P-0086, EPA Should Strengthen Internal Controls over Interagency
Agreement Unliquidated Obligations, January 26, 2009 - Report Cost: $374,414)
30
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Pesticide Registration Fund Earns Unqualified Opinion
We an or on
for FYs and
The Pesticide Registration Improvement Act authorized EPA to assess and collect
pesticide registration fees to expedite the registration of certain pesticides. The fees
collected are deposited into the Pesticide Registration Fund. In our opinion, the financial
statements, including the accompanying notes, present fairly, in all material respects, the
assets, liabilities, net position, net cost, changes in net position, and budgetary resources
of the fund. We found no instances of noncompliance.
(Report No. 09-1-0107, Fiscal Year 2008 and 2007 Financial Statements for the
Pesticide Registration Fund, March 3, 2009 - Report Cost: $157,239)
For details on an additional financial management issue, please refer to page 16,
"Superfund Special Accounts Need Improved Management."
31
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
111 ,iii:
JlJLl
EPA Staffing Levels and Facility Costs Determined
At the of the I on
we on the
and and for all of EPA's
EPA its
For or we the of
the as
We determined that EPA had 18,054 employees working at about 140 facilities. The
costs to operate those facilities totaled almost $298.2 million a year. That encompassed
$235.1 million in rent/lease costs, $41.8 million security costs, and $21.3 million in
utility costs. A breakdown of staffing and the total costs for EPA Headquarters and the
10 regional headquarters offices follow.
Staffing and Total Costs for Main EPA Offices
Staffing
Total Costs
Headquarters
Washington, DC
Arlington, VA
5,302
1,267
$94,515,500
23,045,539
EPA Regional Headquarters Offices
Region 1, Boston, MA
Region 2, New York, NY
Region 3, Philadelphia, PA
Region 4, Atlanta, GA
Region 5, Chicago, IL
Region 6, Dallas, TX
Region 7, Kansas City, KS
Region 8, Denver, CO
Region 9, San Francisco, CA
Region 10, Seattle, WA
Source: EPA Office of Human Resources
658
683
845
923
1,227
811
556
557
829
499
$12,324,474
19,545,240
8,935,323
10,301,204
17,855,377
6,172,968
10,800,505
9,820,735
8,346,231
7,896,654
(Report No. 09-P-0080, Congressionally Requested Report on EPA Staffing Levels
and Total Costs for EPA Facilities, January 14, 2009 - Report Cost: $56,969)
32
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EPA OIG Semiannual Report to Congress October 1 , 2008 - March 31 , 2009
Improvement Needed in Measuring and Reporting Pollution
Prevention Program Results
• .- ' in to the of
'.' r , (PART)
the PART the
I ........ we
The Pollution Prevention Act of 1990 established policy for controlling industrial
pollution at its source. EPA uses the Pollution Prevention Program to facilitate adopting
source reduction techniques by businesses, EPA, and other federal agencies. PART is a
diagnostic tool designed to assess the management and performance of federal programs.
Voluntary Pollution Prevention Activities Pollution Prevention Program's FY 2006
("Centers of Results") Reviewed PART performance measures were not designed
• Design for the Environment to rePort on me program's impacts on human
• Environmentally Preferable Purchasing health and the environment. Program managers
. Green Chemistry believed that reductions in discharges and
• Green Suppliers Network
. Hospitals for a Healthy Environment/ emissions of pollutants represent the best
Partnership for Sustainable Healthcare measures that can be supported, and
. Pollution Prevention Resource Exchange acknowledged that additional outcome measures
• Pollution Prevention Program in , , ,, . , . ~ ,
EPA's 1 0 Regional Offices are needed Als°' the Pr°§ram S venficatlon and
validation procedures did not ensure the accuracy
Source: OIG analysis f ^ j+u+'jf i +
or performance data obtained trom voluntary
partnerships with industry and other
organizations. Further, some EPA actions to address its program improvement plan have
been slow, and the plan did not address all deficiencies identified in the PART
assessment.
We recommended that EPA continue efforts to develop performance indicators that
measure impacts on human health and the environment, require development of a Quality
Assurance Project Plan for data collection and reporting, and develop a program
improvement plan to address all deficiencies identified in the PART assessment. EPA
concurred with our recommendations.
(Report No. 09-P-0088, Measuring and Reporting Performance Results for the Pollution
Prevention Program Need Improvement, January 28, 2009 - Report Cost: $428,435)
33
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Better Procedures Needed to Manage Tracking System Development
In 2003, EPA's Superfund program entered into a contract to develop ICTS to make
information available via the Internet. In 2005, EPA entered into a task order under a
different contractor to continue ICTS development.
We performed this review in response to an anonymous OIG Hotline complaint alleging
mismanagement of the ICTS project. Although we could not substantiate the alleged
claims, the absence of key decision documents and significant turnover of key ICTS
personnel could have contributed to the complainant's perception that ICTS project
decisions were made in a haphazard manner. In April 2006, EPA assigned a certified
project manager to oversee ICTS development. In 2007, EPA merged ICTS with the
Superfund Document Management System, and EPA has taken steps to develop a System
Management Plan. We made three recommendations for EPA to better manage system
development and the Agency agreed with our recommendations.
(Report No. 09-P-0128, Lack of Project Plan Resulted in Transition and Contractor
Performance Problems for the Institutional Controls Tracking System, March 25, 2009 -
Report Cost: $155,121)
Technical Network Vulnerability Assessed at Various Locations
The OIG contracted with a firm to conduct network vulnerability testing at various
locations to identify any local area network risk vulnerabilities, and present the
results to the appropriate EPA officials, to promptly remediate the vulnerability or
document p anned actions to do so.
Vulnerability testing at various locations, done per the Federal Information Security
Management Act, disclosed the following at specific EPA locations:
• EPA Headquarters, Washington, DC: EPA could only identify 118 of the 391
Internet Protocol addresses identified by audit as containing vulnerabilities. This
prevented EPA from taking immediate actions to address vulnerabilities. Also,
34
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
field work disclosed weaknesses in the quality of information EPA uses to track
the ownership of Internet Protocol addresses. The report also addressed several
Region 9 problems (see below) that need to be addressed by EPA Headquarters
since Headquarters personnel manage those assets. (Report No. 09-P-0097,
Results of Technical Network Vulnerability Assessment: EPA Headquarters,
February 23, 2009 - Report Cost [contract and OIG oversight]: $22,153)
• Research Triangle Park Campus, Research Triangle Park, North Carolina:
We originally issued this report to the National Computer Center at Research
Triangle Park outlining several weaknesses that remained uncorrected since
issuing the draft vulnerability assessment report. The National Computer Center
provided an updated status to address the weaknesses under their control, and
upon further discussion we learned that several weaknesses must be corrected by
other organizations within the Research Triangle Park Campus. We reissued this
report to make further distribution of the vulnerability test results to other
responsible organizations within the Research Triangle Park Campus. (Report
No. 09-P-0055, Results of Technical Network Vulnerability Assessment: EPA 's
Research Triangle Park Campus, December 9, 2008 - Report Cost [contract and
OIG oversight]: $22,153)
• Las Vegas Finance Center, Las Vegas, Nevada: Internet Protocol addresses
with medium-risk vulnerabilities were identified. Although Center personnel
took actions to remediate the findings, supporting documentation is needed.
(Report No. 09-P-0054, Results of Technical Network Vulnerability Assessment:
EPA 's Las Vegas Finance Center, December 9, 2008 - Report Cost [contract
and OIG oversight]: $22,153)
• Radiation and Indoor Environments National Laboratory, Las Vegas,
Nevada: Internet Protocol addresses with medium-risk vulnerabilities were
identified. The Laboratory took appropriate actions to resolve the network
vulnerabilities under their control. (Report No. 09-P-0053, Results of Technical
Network Vulnerability Assessment: EPA 's Radiation and Indoor Environments
National Laboratory, December 9, 2008 - Report Cost [contract and OIG
oversight]: $22,153)
• Region 9, San Francisco, California: Internet Protocol addresses with high-
and medium-risk vulnerabilities were identified. Although Region 9 took actions
to remediate most of the documented findings, several vulnerabilities (both high
and medium) remained unresolved. (Report No. 09-P-0052, Results of Technical
Network Vulnerability Assessment: Region 9, December 9, 2008 - Report Cost
[contract and OIG oversight]: $22,153)
35
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Sentence Imposed in Bid-Rigging Case
On December 15, 2008, in U.S. District Court for the District of New Jersey, Bennett
Environmental, Inc. (BEI), a Canadian company, was sentenced to 5 years probation and
ordered to pay a $1,000,00 fine and $1,662,000 in restitution to EPA. The restitution
order applies jointly to BEI and several co-conspirators. This sentencing is a result of
BEI's guilty plea in a bid-rigging scheme in connection with awarding subcontracts at the
Federal Creosote Superfund site in Manville, New Jersey.
In addition to the criminal sentence, BEI entered into a compliance agreement with EPA.
As part of this agreement, BEI will establish a corporate responsibility program, which
includes establishing ethical standards and a business code of conduct, as well as training
its employees in these areas.
BEI previously pled guilty to conspiracy to defraud EPA at the Federal Creosote site by
inflating the prices it charged to a prime contractor and paying kickbacks to employees of
that contractor from approximately May 2002 until spring 2004. BEI was given
confidential bid information that it used to inflate invoices to cover almost $1.3 million in
kickbacks to employees of the prime contractor in exchange for their assistance in
steering subcontracts to BEI. The kickbacks were in the form of money wire transfers,
cruises for senior officials, various entertainment tickets, and home entertainment
electronics. As part of the fraudulent scheme, BEI and its co-conspirators also included
amounts it kept for itself in the inflated invoices.
This case is being conducted with the Internal Revenue Service Criminal Investigation
Division. (Case Cost: $332,310)
New York Businessmen Sentenced in Hazardous Waste Case
On November 4, 2008, Moshe Rubaskin of Brooklyn, New York, was sentenced in
U.S. District Court for the Eastern District of Pennsylvania to 16 months in prison to be
followed by 3 years of supervised release, and was ordered to pay $450,000 in restitution
and a $7,500 fine. Rubaskin previously pled guilty to storing hazardous waste at a textile
factory in Allentown, Pennsylvania. His son, Sholom Rubaskin, also pled guilty to
making a materially false claim to EPA. On March 24, 2009, his son was sentenced to
4 months in prison to be followed by 3 years of supervised release, and was ordered to
perform 250 hours of community service and pay a $5,000 fine. In addition, the son will
be held jointly liable, along with his father, for the $450,000 in restitution.
36
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
The convictions stem from the Rubaskins' ownership and operation of Montext Textiles,
a textile dyeing, bleaching, and weaving business. When the business ceased operations
in 2001, numerous containers of hazardous waste were stored at the site without the
necessary environmental permits. After local authorities responded to two fires at the
site, EPA and the City of Allentown initiated a clean-up at the facility to dispose of
numerous containers of hazardous waste and hazardous substances. The Rubaskins are
jointly liable for the restitution, which will be paid to EPA and the City of Allentown to
cover the clean-up cost.
This case is being conducted with the EPA Criminal Investigation Division. (Case Cost:
$139,925)
Metal Processing Company Sentenced for Making a False Statement
On January 21, 2009, Heraeus Metal Processing, Inc., Santa Fe Springs, California, was
convicted and sentenced in the U.S. District Court for the Eastern District of Tennessee
for filing a false material statement in documents required to be maintained under the
Clean Air Act. Heraeus was sentenced to 18 months probation and ordered to pay a
$350,000 fine.
Heraeus falsified baghouse pressure logs and scrubber logs that were required to be
maintained at its Wartburg, Tennessee, facility pursuant to permits issued by the
Tennessee Department of Environment and Conservation under delegations from EPA.
The Clean Air Act requires that logs be maintained to record the various operating
parameters of the scrubber and baghouse air pollution control devices. Heraeus was
required to submit an annual report to the Tennessee Department of Environment and
Conservation in March 2005, to include the logs. The investigation determined that
between October 2004 and at least February 2005, no contemporaneous logs were
maintained by the Wartburg facility as required by the permits. Subsequently, Heraeus's
Operations Manager created, or caused to be created, false logs for the Wartburg facility.
After the falsification became known, Heraeus fully cooperated with the federal
investigation.
Based upon the conviction, a Clean Air Act Listing was published whereby Heraeus is
prohibited from receiving any government contract, loan, or benefit at the violating
facility until the conditions that gave rise to the Clean Air Act violation have been
corrected.
This case is being conducted with the East Tennessee Environmental Crimes Task Force,
which includes EPA 's Criminal Investigation Division and Office of Inspector General;
the Tennessee Department of Environment and Conservation; and the Tennessee Valley
Authority Office of Inspector General. (Case Cost: $149,975)
37
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Former Tribal Governor and Finance Director Convicted of
Conspiracy, Fraud, and False Statements
On November 21, 2008, Robert Newell, the former governor of the Passamaquoddy Tribe
Indian Township Reservation, and James Parisi, the former finance director under Newell,
were convicted after a 2-week jury trial in U.S. District Court for the District of Maine.
Newell was convicted of conspiring to defraud the United States, intentionally
misapplying tribal government funds, intentionally misapplying funds of a federal health
care benefit program, making false statements to U.S. agencies, and submitting false
claims to the government. The charges relate to the use of restricted funds awarded to the
tribe while Newell was the governor from 2002 to 2006. Parisi was convicted of
conspiracy, intentionally misapplying tribal funds and health care benefit program funds,
and submitting false statements and false claims.
The investigation established that from 2003 to 2006, Newell and Parisi conspired to
defraud the government by misapplying approximately $1.7 million in restricted federal
funds that had been awarded to the tribe for the benefit of its tribal programs. Newell and
Parisi also diverted funds from the tribal employees' retirement account. Newell used the
restricted federal funds to benefit himself, his family, and other tribal members. Parisi
assisted Newell by transferring funds between tribal bank accounts and submitting a false
statement and false claims for reimbursement to the government.
This case is being conducted with the Offices of Inspector General at the U.S.
Department of Interior, U.S. Department of Justice, U.S. Department of Health and
Human Services, and U.S. Department of Housing and Urban Development; as well as
the U.S. Department of Labor, Employee Benefits Security Administration. (Case Cost:
$212,566)
Individual Sentenced for Impersonation Related to Hurricane Katrina
On November 13, 2008, Justin Vassas was sentenced in U.S. District Court for the
Middle District of Louisiana to 6 months of home detention and 5 years probation, and
ordered to pay a $2,000 fine. The sentence relates to Vassas' guilty plea to falsely
impersonating an employee of the Federal Government. After Hurricane Katrina, Vassas
sought to obtain monies from an individual by falsely representing that EPA would
reimburse him for costs associated with the clean-up of debris from his property.
Specifically, Vassas attempted to have the individual pay for a trash dumpster that was
not needed. Vassas further attempted to execute his scheme by using information
obtained from EPA's Website to create an employee identification number for a fictitious
EPA employee.
(Case Cost: $44,446)
38
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Former EPA Intern Sentenced for Submitting False Timesheets
On December 3, 2008, Stephanie Jackson, of Arlington, Texas, was sentenced in U.S.
District Court for the District of Massachusetts to 3 years of probation and ordered to pay
$23,712 in restitution to EPA. Jackson was previously charged in June 2008. Jackson
was employed with The Environmental Careers Organization, Inc. (ECO). ECO placed
Jackson in an internship position with EPA in March 2006; however, EPA contacted
ECO within 2 weeks and requested that Jackson be replaced with another intern. After
she left her internship at EPA, Jackson submitted forged timesheets to ECO, which
subsequently continued to pay Jackson a salary for approximately 1 year after her
internship had been terminated. Her salary was paid from funds provided to ECO
through an EPA grant.
(Case Cost: $41,339)
39
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
No Violations Found in Removal of Comments from Peer Review
Report
In response to a request from the EPA Deputy Administrator, we conducted a review of
whether EPA violated existing federal law, regulations, guidance, or other relevant
requirements when it removed the peer review panel chair's comments from a peer
review report on polybrominated diphenyl ethers (PBDEs). After the completion of the
external peer review of PBDE, EPA received allegations of a lack of impartiality and
objectivity by the chair, Dr. Deborah Rice. EPA examined the allegations, removed
Dr. Rice's comments from the PBDE peer review report, and published an explanatory
message in the report and on the associated Website. Although we did not make a
recommendation, we suggested that EPA consider establishing a process for reviewing
allegations of conflict of interest or lack of impartiality raised after a peer review panel
has convened. (Report No. 09-P-0084, No Violations Found Regarding Removal of
Comments from an External Peer Review, January 16, 2009 - Report Cost: $48,398)
Actions to Deny California Emissions Waiver Did Not Deviate from Protocol
In response to a congressional request from the Subcommittee on Interior, Environment,
and Related Agencies of the U.S. Senate's Appropriations Committee, we reviewed
whether then EPA Administrator Stephen Johnson's actions to deny California's request
for a waiver to implement a law to reduce greenhouse gas emissions from automobiles
satisfied the procedural statutory requirements. On December 19, 2007, the
Administrator sent a letter to California's Governor informing him that EPA "will be
denying" California's waiver request. The explanation for the Administrator's decision
was set out in a lengthy Federal Register decision on March 6, 2008. We found that the
Administrator conducted a notice and hearing phase and based his decision to deny the
waiver on one of the three criteria set out in Section 209(b) of the Clean Air Act, which
satisfied the procedural statutory requirements. (Report No. 09-P-0056, EPA 's
California Waiver Decision on Greenhouse Gas Automobile Emissions Met Statutory
Procedural Requirements, December 9, 2008 - Report Cost: $17,946)
Release of "Talking Points" to Former Administrator Not Found
to Be a Violation
In response to a request from a member of the Committee on Environment and Public
Works, we reviewed the preparation and subsequent release in October 2007 of "Talking
Points" related to the California waiver petition to former EPA Administrator William
Reilly and determined that the preparation and release did not constitute a violation of
40
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
law, regulation, or policy. We found that Anti-Lobbying Act provisions are not
applicable to these events, and the activities did not violate the ethics regulations
governing use of government equipment, resources, and position. We found that no
"inside" or confidential information had been disclosed, and the preparing of the
information was consistent with EPA's unwritten practice of sharing information with
stakeholders. (Report No. 09-P-0043, Response to Congressional Inquiry Concerning
EPA 's Preparation and Provision of Information Regarding California Waiver Decision,
November 26, 2008 - Report Cost: $52,858)
41
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Acting Inspector General Briefs Key House Appropriators on
Challenges Facing EPA
Mr. Roderick identified three financial management issues warranting attention:
• Unliquidated grant obligations, which are funds awarded to recipients that
have not been spent.
• Superfund special accounts.
• Special Appropriation Act Project grants.
The OIG found that unliquidated grant obligations totaling millions of federal dollars sit
idle for years in EPA's border programs and Superfund special accounts. These funds
could be deobligated and used to address other pressing needs. As a result of OIG work,
EPA has taken action to reduce the amount of unliquidated obligations and has reported
improved processes. However, this work is not complete. We also found that most of
the Special Appropriation Act Project grant recipients we have audited lacked adequate
financial controls and systems to manage federal funds received.
Mr. Roderick discussed program management issues facing the ENERGY STAR
program; these issues are also applicable to other voluntary programs offered by EPA.
Voluntary programs, which substitute mandatory behavior with voluntary actions, have
proliferated at EPA in recent years and have been relied upon to address a wide variety of
environmental challenges. OIG work has shown, however, that these programs often
lack consistent and reliable data because they rely on unverified third party reporting or
self-certification. Without assurances in the quality of its data, the effectiveness and
reported benefits of partnership programs such as ENERGY STAR may be questionable.
42
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
OIG Issues 2008 Annual Performance Report and Statistical Abstract
The OIG issued its Annual Performance Report for FY 2008, its seventh such annual
report. This year, the report has been enhanced with a statistical abstract. The report
presents narrative and statistical summaries of OIG performance, and demonstrates the
OIG's value added and return on investment to the public. The report includes historical
financial and performance data tables that demonstrate time series trends and relationships.
This report fulfills the reporting requirements of the Government Performance and Results
Act in demonstrating how well the EPA OIG achieved results in FY 2008 compared to its
2008 Annual Performance Targets. It also presents OIG cumulative results for FYs 2003
through 2008 compared to the cumulative goal targets for those periods.
This Annual Performance Report, designed to provide full accountability for the operations
of the OIG, supplements the OIG summary statistics in EPA's FY 2008 Performance
Accountability Report. It includes a bulleted account of OIG performance highlights and
operational improvement, financial summaries, management challenges, summaries of
OIG operations and productivity, narrative highlights of how OIG work is improving EPA
operations, and the costs and timeliness of all issued products. The report is available at
http://www.epa.gov/oig/reports/2009/AnnualPerformanceReport2008.pdf
OIG Continues Integrating Technology for Greater Efficiency
and Transparency
The OIG expanded the development and application of its integrated management
information system (Inspector General Enterprise Management System, or IGEMS) by
creating a new module for the OIG Performance Measurement and Results System
(PMRS). The PMRS captures, aggregates, sorts, and reports on the outputs and monetary
and cumulative results of OIG work through a variety of measures. PMRS combines the
costs of each assignment by type, timeliness, associated team members, and quality score
for a balanced scorecard and return-on-investment approach to activity and performance
accountability. PMRS, in conjunction with IGEMS, provides a means to track actions on
individual recommendations to enhance follow-up and accrue continuing outcome results
and benefits attributable to OIG recommendations. PMRS provides real-time
performance progress reporting against annual Government Performance and Results Act
targets, and will be used to fulfill the OIG reporting requirements of the Recovery Act.
43
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
EPA Needs to Strengthen Its Guidance for Reporting on
Internal Control Assessments
Under the Federal Managers' Financial Integrity Act (FMFIA), EPA annually assesses its
internal controls and provides an assurance letter to the President. The assessment assists
EPA managers in guarding against fraud, waste, and abuse; and in identifying challenges
to program performance. In assessing controls and preparing their assurance letters, EPA
offices are to use the Standards for Internal Control in the Federal Government, issued by
the Government Accountability Office. Those standards cite five elements of an
effective internal control program:
• Control Environment
• Risk Assessment
• Control Activities
• Information and Communication
• Monitoring
In a January 30, 2009, memorandum to the Acting Chief Financial Officer, we pointed out
that EPA's FY 2009 guidance for implementing FMFIA, while citing all five elements,
only required program offices to report on the Control Environment. Reporting on all
elements would enhance the effectiveness of the internal control assessment process and
provide added support for the program offices' annual assurance letters. We suggested that
the Office of the Chief Financial Officer revise its FY 2009 FMFIA guidance to require
program offices to report on all five aspects of the internal control standards.
In response to our memorandum, the Office of the Chief Financial Officer indicated it
plans to revise the template for FY 2010. The Office of the Chief Financial Officer also
agreed to strengthen the 2009 personal statements of assurance required of all Assistant
and Regional Administrators in their assurance letters to the Administrator to specifically
require that they assessed effectiveness of internal controls based on the Government
Accountability Office's five standards.
OIG Reviews EPA's FY 2008 Draft Performance and Accountability
Report
Our review of EPA's FY 2008 draft Performance and Accountability Report found the
report to, overall, be complete in its fulfillment of Government Performance and Results
Act requirements.
Congress directed OIGs to annually review and report on their agencies' general
compliance with the Government Performance and Results Act. We fulfilled this
direction by reviewing and reporting to the Agency on its draft annual Performance and
44
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Accountability Report any omissions and areas for improvement. We generally did not
verify the accuracy of the data.
EPA's draft had a number of improvements based on our suggestions in prior years, and
continues the positive trend of being more specific. However, the report had areas that
still needed to be structurally strengthened. For example:
• Better balance and perspective needed. While challenges were presented, they
tended to be general. Measures and accomplishments need to be put into
perspective in terms of time, the universe, baselines, and overall goal.
• Greater emphasis on collaboration and relative contribution needed. Many
of the results and challenges are dependent upon interaction of both federal and
State/tribal partners. This report should better describe the contribution to results
or barriers attributable to those partners.
• EPA results narrow. The presentation of results by goals and objectives is
narrow, and does not recognize confluence across goals and objectives. EPA
should attempt to reference those interactions to present a better view of EPA's
overall performance.
In response to our review comments, EPA's Office of the Chief Financial Officer made a
number of improvements in the final version of the Agency's Performance and
Accountability Report.
Legislation and Regulations Reviewed
Section 4 (a) of the Inspector General Act requires the Inspector General to review
existing and proposed legislation and regulations relating to the program and operation of
EPA, and to make recommendations concerning their impact. The primary basis for our
comments are the audit, evaluation, investigation, and legislative experiences of the OIG,
as well as our participation on the Presidents Council on Integrity and Efficiency. During
the reporting period, we reviewed 33 proposed changes to legislation, regulations, policy,
and procedures that could affect EPA, and we provided comment on 22 of those
reviewed. We also reviewed drafts of OMB Circulars, program operation manuals,
directives, and reorganizations. Details on several items follow.
H.R. 1, "American Recovery and Reinvestment Act of 2009." H.R. 1, also known as
the "Stimulus Bill," was enacted on February 17, 2009. This legislation provides
supplemental appropriations for job preservation and creation, and establishes an
oversight board to ensure accountability and transparency of stimulus funds. The OIG
provided comments on a draft version of this bill to the Council of the Inspectors General
on Integrity and Efficiency Legislation Committee expressing concerns that some of the
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
board's authorities may conflict with existing OIG authorities. Comments were also
provided on the potential impact of the legislation's whistleblower provisions on the
OIG. Other Inspectors General expressed similar concerns, which were shared by the
Council's Legislation Committee with the Senate Homeland Security and Governmental
Affairs and House Oversight and Government Reform Committees on behalf of the
Inspector General community.
Proposed Resource Management Directive Chapter 2540-16, Financial Emergency
Management Policy Standard and Procedure. EPA's Office of the Chief Financial
Officer proposed the addition of Chapter 2540-16, Financial Emergency Management
Policy Standard and Procedure, to the Resource Management Director. The proposed
chapter is designed to provide guidance on financial management in emergency
situations. This guidance will help program and financial managers determine financial
management activities to perform, internal control requirements, and documentation
requirements, and also measure success. The proposed policy procedure provides a
framework for the Agency to comply with the Robert T. Stafford Disaster Relief and
Emergency Assistance Act.
We noted that the policy is primarily directed at EPA's involvement in helping during
national disasters, such as hurricanes. In these cases, it is how soon assistance can get to
the area that would be EPA's focus in the crisis. The "Measures of Success" do not
sufficiently address how well EPA responded during the disaster, as well as factors that
may occur in the financial process, such as the handling of receivables, collections, loan
payments, payroll processing, billings, or obligations. When dealing with Hurricanes
Katrina and Rita, reimbursements to EPA were slow in coming because the agency with
responsibility over the crisis demanded more support than what EPA normally provides in
an interagency activity. The policy does not direct the coordination effort for the types of
support needed and turnaround of invoices for reimbursement. It does refer to the Federal
Emergency Management Agency and other policies, but does not provide direction on what
EPA staff should do to ensure reimbursement of funds.
Council of Inspectors General on Integrity and Efficiency Exposure Draft for the
Guide for Conducting External Peer Reviews of the Audit Operations of Offices of
Inspector (the Guide). We reviewed and provided comments on the Guide in October
2008, and the revision in February 2009. This document presents guidance for
conducting external peer reviews of federal OIG audit organization. The Guide was
developed to ensure the adequacy and consistency of the reviews in accordance with the
policy statement issued by the Council's Audit Committee. We made a number of
comments to strengthen and clarify the proposed Guide, including:
• The checklist should require a more thorough and detailed review of how well
the evidence supporting a report's findings and conclusions is documented.
Government Auditing Standard 7.77 requires that audit documentation be
46
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
prepared "... in sufficient detail to enable an experienced auditor, having no
previous connection to the audit, to understand from the audit documentation the
nature, timing, extent, and results of procedures performed, the audit evidence
obtained and its source and the conclusions reached." None of the checklist
questions address the standard.
• The concept of the "Pass with Deficiencies" is an area of significant subjective
judgment and interpretation. "Pass with Deficiencies" (as opposed to "Pass" or
"Fail") means there are deficiencies but they are not significant enough to call for
a failing grade. We suggest that the Guide list stronger criteria for the use of a
"Pass with Deficiencies," and specific actions that an OIG would have to take to
improve to a "Pass" status.
• We suggest that a new section be created under Planning and Performing the
External Peer Review that takes a broader view of the organizational structure
and reporting relationships, the overall audit planning process, and the process
for following up on audit recommendations.
Proposed Revision to the Resource Management Directive Chapter 2550D-12,
Superfund Cost Documentation and Cost Recovery. EPA's Office of the Chief
Financial Officer proposed a revision to Chapter 25SOD-12, Superfund Cost
Documentation and Cost Recovery, of the Directive. This chapter provides guidance to
ensure Superfund site costs are adequately identified and documented. Additionally, this
guidance includes the requirement to identify costs that are not billed and to document
the explanation for not billing the costs. This policy procedure provides a framework for
the Agency to comply with the Comprehensive Environmental Response, Compensation,
and Liability Act. We made a number of comments to strengthen and clarify the
proposed revision, including:
• We recommended that the document include some time frames. Section II,
Areas of Responsibility, describes the roles and responsibilities of the offices in
the cost recovery process, but Section II does not say when or how often the
offices perform these functions. For example, Section II.D, Program Costing
Staff, Office of Financial Management, states that the Program Costing Staff
compute the indirect cost rates and the contractor annual allocation rates used in
cost recovery, but it does not say when or how often this is determined.
• In Section III.A.4, Contracts, invoices are included as paper documentation but
not under electronic documentation. We recommended that because EPA
receives many invoices electronically, invoices should be included under both
paper and electronic documentation.
47
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Profile of Activities and Results
Audit Operations
Office of Inspector General Reviews
October 1, 2008 to
March 31, 2009
($ in millions)
Questioned Costs *
• Total
• Federal
Recommended Efficiencies *
• Federal
Costs Disallowed to be Recovered
• Federal
Costs Disallowed as Cost Efficiency
• Federal
Reports Issued - Office of Inspector General
Reviews
Reports Resolved
(Agreement by Agency officials
to take satisfactory corrective actions) **
$8.0
$1.2
$37.0
$0.84
$39.5
34
88
Audit Operations
Other Reviews
(Reviews Performed by Another Federal Agency
or Single Audit Act Auditors)
October 1, 2008 to
March 31, 2009
($ in millions)
Questioned Costs *
• Total $25.2
• Federal $1.9
Recommended Efficiencies *
• Federal $0
Costs Disallowed to be Recovered
• Federal $1.8
Costs Disallowed as Cost Efficiency
• Federal $0
Reports Issued - Other Reviews
• EPA Reviews Performed by
Another Federal Agency 37
• Single Audit Act Reviews 61
Total 98
Agency Recoveries
Recoveries from Audit Resolutions of Current
and Prior Periods (cash collections or offsets
to future payments) *** $9.0
Investigative Operations
Total Fines and Recoveries ****
Cost Savings
Cases Opened During Period
Cases Closed During Period
Indictments/Informations of
Persons or Firms
Convictions of Persons or Firms
Civil Judgments/Settlements/Filings
October 1, 2008 to
March 31, 2009
($ in millions)
$3,681
$0
24
25
6
Questioned Costs and Recommended Efficiencies
are subject to change pending further review in the
audit resolution process. Total Questioned Costs
include contracts of other Federal agencies.
Reports Resolved are subject to change pending
further review.
Information on Recoveries from Audit Resolutions is
provided by EPA's Office of Financial Management
and is unaudited.
Fines and recoveries resulting from joint
investigations.
48
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Status Report on Perpetual Inventory of Reports in Resolution Process
for Semiannual Period Ending March 31, 2009
Report Category
A. For which no management
decision was made by
October 1 , 2008*
B. Which were issued during the
reporting period
C. Which were issued during the
reporting period that required
no resolution
Subtotals (A + B - C)
D. For which a management
decision was made during the
reporting period
E. For which no management
decision was made by
March 31, 2009
F. Reports for which no
management decision was
made within 6 months of
issuance
No. of
Reports
129
132
51
210
88
122
58
Report Issuance
($ in thousands)
Questioned
Costs
$21,910
$3,059
$0
$24,969
$4,159
$20,810
$18,684
Recommended
Efficiencies
$60,607
$36,994
$0
$97,601
$95,361
$2,240
$2,240
Report Resolution Costs
Sustained
($ in thousands)
To Be
Recovered
$2,068
$586
$0
$2,654
$2,654
$0
$0
As
Efficiencies
$2,570
$36,994
$0
$39,564
$39,564
$0
$0
Any difference in number of reports and amounts of questioned costs or recommended efficiencies between this
report and our previous semiannual report results from corrections made to data in our audit tracking system.
Status of Management Decisions on Inspector General Reports
This section presents statistical information as required by the Inspector General Act of 1978, as
amended, on the status of EPA management decisions on reports issued by the OIG involving monetary
recommendations. As presented, information in Tables 1 and 2 cannot be used to assess results of
reviews performed or controlled by this office. Many of the reports were prepared by other federal
auditors or independent public accountants. EPA OIG staff do not manage or control such assignments.
Auditees frequently provide additional documentation to support the allowability of such costs
subsequent to report issuance.
49
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Table 1 - Inspector General-Issued Reports with Questioned Costs for Semiannual Period Ending
March 31, 2009 (dollars in thousands)
Report Category
A. For which no management decision was made by
October 1 , 2008 **
B. New reports issued during period
Subtotals (A + B)
C. For which a management decision was made during the
reporting period
(i) Dollar value of disallowed costs
(ii) Dollar value of costs not disallowed
D. For which no management decision was made by
March 31, 2009
Reports for which no management decision was made
within 6 months of issuance
No. of
Reports
44
23
67
28
22
6
39
26
Questioned
Costs *
$21,910
$3,059
$24,949
$4,159
$2,654
$1,505
$20,810
$18,684
Unsupported
Costs
$14,638
$1,007
$15,645
$2,099
$1,247
$852
$13,546
$13,242
Questioned costs include the unsupported costs.
Any difference in number of reports and amounts of questioned costs between this report and our previous
semiannual report results from corrections made to data in our audit, inspection, and evaluation tracking system.
Table 2 - Inspector General-Issued Reports with Recommendations that Funds Be Put to Better Use
for Semiannual Period Ending March 31, 2009 (dollars in thousands)
Report Category
A. For which no management decision was made by October 1 , 2008 *
B. Which were issued during the reporting period
Subtotals (A + B)
C. For which a management decision was made during the reporting period
(i) Dollar value of recommendations from reports that were
agreed to by management
(ii) Dollar value of recommendations from reports that were
not agreed to by management
(ii) Dollar value of non-awards or unsuccessful bidders
D. For which no management decision was made by March 31, 2009
Reports for which no management decision was made
within 6 months of issuance
No. of
Reports
6
3
9
8
3
5
0
1
1
Dollar
Value
$60,607
$36,994
$97,601
$95,361
$39,564
$55,797
$0
$2,240
$2,240
Any difference in number of reports and amounts of funds put to better use between this report and our previous
semiannual report results from corrections made to data in our audit, inspection, and evaluation tracking system.
Audits, Inspections, and Evaluations with No Final Action as of March 31, 2009, Which Are Over 365 Days
Past the Date of the Accepted Management Decision (including Audits, Inspections, and Evaluations in Appeal)
Audits, Inspections, and Evaluations
Program
Assistance Agreements
Contract Audits
Single Audits
Financial Statement Audits
Total
Total
34
22
0
19
0
75
Percentage
46%
29%
0%
25%
0%
100.0%
50
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
The following table shows EPA OIG Hotline activity regarding complaints of fraud, waste, and abuse in
EPA programs and operations that occurred during the past semiannual period.
Semiannual Period
(October 1,2008-
March 31, 2009)
Inquiries Open at the Beginning of the Semiannual Period 12
Inquiries Received during the Semiannual Period 133
Inquiries Closed during the Semiannual Period 108
Inquiries Pending at the End of the Period 37
Issues Referred to:
OIG Offices 20
EPA Program Offices 28
Other Federal Agencies 7
State/Local Agencies 46
51
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Summary of Investigative Activity during Period
Cases open as of October 1, 2008
Cases opened during period
Cases closed during period
Cases pending as of March 31, 2009
79
24
25
78
Investigations Pending by Type as of March 31, 2009
Contract
Assistance Agreement
Employee Integrity
Program Integrity
Computer Crime
Laboratory Fraud
Other
Total
Superfund
8
0
0
1
0
1
1
11
Management
4
32
0
7
3
13
5
64
Split Funded
1
1
0
1
0
0
0
3
Total
13
33
0
9
3
14
6
78
Results of Prosecutive Actions
Criminal Indictments / Informations / Complaints
Convictions
Civil Judgments / Settlements / Filings
Fines and Recoveries (including Civil)
Prison Time
Prison Time Suspended
Probation
Community Service
EPA OIG Only
1
1
0
$26,812
0 months
6 months
96 months
0 hours
Joint*
5
7
0
$3,654,544
34 months
0 months
300 months
290 hours
Total
6
8
0
$3,681,356
34 months
6 months
396 months
290 months
Administrative Actions
Suspensions
Debarments
Compliance Agreements
Other Administrative Actions
Total
Administrative Recoveries
EPA OIG Only
4
5
0
3
12
$0
Joint*
2
2
1
1
6
$0
Total
6
7
1
4
18
$0
With another federal agency.
52
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Scoreboard of OIG Second Quarter (March 31, 2009)
Performance Results Compared to Annual Performance Goal Targets
All results reported in FY 2009, from current and prior years' work, are as reported in OIG
Performance Measurement and Results System, Inspector General Operations Reporting System,
and Inspector General Enterprise Management System.
OIG FY 2009 Government Performance and Results Act
Annual Performance Targets Compared to FY 2009
Results Reported
Supporting Measures
Goal: Contribute to Human Health and Environmental Quality Through Improved Business Practices,
Accountability, and Integrity of Program Operations
Environmental Improvements/Actions/Changes
Improvements in Business/Systems/Efficiency
Risks Reduced or Eliminated
Target: 318; Reported: 203 (64%)
1 Legislative/regulatory change/decision
0 Examples of environmental improvement
0 Best practices implemented
10 Environmental or management policy, process,
practice, control changes/decisions
12 Environmental or management risks reduced or
eliminated or management results resolved
39 Certifications/validations/verifications/corrections
44 Recommendations reported as implemented
previously identified unimplemented by follow-up
97 Actions taken or resolved prior to report issuance
Environmental and Business Recommendations,
Challenges, Best Practices, and Risks Identified
Target: 903; Reported: 416 (46%)
337 Environmental and management recommendations
(for Agency/stakeholder action/improvement)
6 Critical congressional/public concerns addressed
12 Best practices identified
17 Referrals for Agency action
4 Environmental or management risks or challenges
identified
40 Unimplemented recommendations identified
Return on Investment: Potential Dollar Return
as Percentage (150%) of OIG Budget ($52.3 million)
Target: $63 M; Reported: $46.3 M (EPA) (73.5%)
(Dollars in Millions)
$ 3.1 Questioned costs (net EPA)
$ 37.3 Recommended efficiencies, costs saved (EPA)
$ 3.7 Fines, recoveries, settlements
$ 2.2 Monetary actions taken prior to report issuance
Criminal, Civil, and Administrative Actions
Reducing Risk of Loss/Operational Integrity
Target: 80; Reported: 43 (54%)
8 Criminal convictions
6 Indictments/informations/complaints
0 Civil judgments/settlements/filings
19 Administrative actions
10 Allegations disproved
Sustained Monetary Recommendations and Savings
Achieved from Current and Prior Periods: $72.4 M
Sustained Environmental and Management
Recommendations for Resolution Action: 26
Reports Issued: 123
(Dollars in Millions)
$ 1.6 Questioned costs sustained
$70.8 Cost efficiencies sustained or realized *
140 Sustained recommendations *
34 OIG-produced reports
98 Reports by other audited entities w/OIG oversight
Second Quarter Targets = 50% of Annual Goal.
* Includes amounts from prior periods not previously claimed and resolved before report issuance and therefore
not otherwise reported in the Agency resolution process.
53
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Appendices
The Inspector General Act requires a listing, subdivided according to subject matter, of each report issued by
the OIG during the reporting period. For each report, where applicable, the Inspector General Act also requires
a listing of the dollar value of questioned costs and the dollar value of recommendations that funds be put to
better use.
Questioned Costs
Report No.
Project Title
Date
Ineligible
Costs
Unsupported Unreasonable
Costs Costs
Federal
Recommended
Efficiencies
PERFORMANCE REPORTS
09-P-0014 Compendium of Unimplemented Recommendations as of September 30,2008 31-0ct-08 0 0
09-P-0029 EPA's Safety Determination for Delate Metals Superfund Site 19-Nov-08 0 0
09-P-0043 Congressional Inquiry on EPA's Providing Information on California Waiver 26-Nov-08 0 0
09-P-0052 Technical Network Vulnerability Assessment: Region 9 9-Dec-08 0 0
09-P-0053 Technical Network Vulnerability Assessment: EPA's Radiation/Indoor Lab 9-Dec-08 0 0
09-P-0054 Technical Network Vulnerability Assessment: EPA's Las Vegas Finance Center 9-Dec-08 0 0
09-P-0055 Technical Network Vulnerability Assessment: EPA's Research Triangle Park 9-Dec-08 0 0
09-P-0056 EPA's California Waiver Decision on Greenhouse Gas Automobile Emissions 9-Dec-08 0 0
09-P-0061 Validating Reported ENERGY STAR Benefits 17-Dec-08 0 0
09-P-0079 Office of Inspector General Access Survey Results 13-Jan-09 0 0
09-P-0080 Congressionally Requested Report on EPA Staffing Levels and Facility Costs 14-Jan-09 0 0
09-P-0084 Review of Removal of Comments from External Peer Review 16-Jan-09 0 0
09-P-0085 EPA Region 10 Actions for Alaska Village Safe Water Program 21-Jan-09 0 0
09-P-0086 Controls over Interagency Agreement Unliquidated Obligations 26-Jan-09 0 0
09-P-0087 Counter Terrorism/Emergency Response Equipment and Critical Assets 27-Jan-09 0 0
09-P-0088 Measuring/Reporting Performance Results for Pollution Prevention Program 28-Jan-09 0 0
09-P-0089 Comprehensive Plan and Policies for Emerging Climate Change Role 2-Feb-09 0 0
09-P-0092 Risk Management Program for Airborne Chemical Releases 10-Feb-09 0 0
09-P-0097 Technical Network Vulnerability Assessment: EPA Headquarters 23-Feb-09 0 0
09-P-0110 Independent Groundwater Sampling at Neal's Sump Superfund Site 4-Mar-09 0 0
09-P-0119 Management of Superfund Special Accounts 18-Mar-09 0 0
09-P-0125 EPA Efforts to Reduce Air Emissions at U.S. Ports 23-Mar-09 0 0
09-P-0127 Response to Freedom of Information Act Requests 25-Mar-09 0 0
09-P-0128 Transition/Contractor Performance for Institutional Controls Tracking System 25-Mar-09 0 0
09-P-0129 Managing Working Capital Fund Overhead Costs 30-Mar-09 0 0
09-P-0130 EPA Region 8's Risk Management Program for Airborne Chemical Releases 30-Mar-09 0 0
09-P-0131 Results of Hotline Complaint Review for California Superfund Site 31-Mar-09 0 0
09-P-0132 OIG Comment on Office of Management and Budget Recovery Act Guidance 31-Mar-09 0 0
TOTAL PERFORMANCE REPORTS = 29 $0 $0
ASSISTANCE AGREEMENT REPORTS
09-2-0011 Costs Claimed under Grants by Washoe County, Nevada 20-0ct-08 0 $291,494
09-2-0078 Costs Claimed under Grants by City of Rupert, Idaho 12-Jan-09 0 $63,256
09-4-0112 ML Wastewater Management, Inc. - Issues Under EPA Grant XP97572201 9-Mar-09 $801,118 0
TOTAL ASSISTANCE AGREEMENT REPORTS = 3 $801,118 $354,750
SINGLE AUDIT REPORTS
09-3-0001 Pleasant Point Passamaquoddy Tribal Council, FY 2006 3-Oct-08 0 0
09-3-0007 Michigan Department of Environmental Quality, FY 2006-2007 10-0ct-08 $45,015 $339,761
09-3-0010 Delaware, State of, FY 2007 17-0ct-08 $59,535 0
09-3-0024 Indian Township Tribal Government, FY2007 12-Nov-08 0 0
09-3-0025 Hydaburg Cooperative Association, FY 2006 13-Nov-08 0 0
09-3-0027 Polk County, TN.FY2007 17-Nov-08 0 0
09-3-0028 Woods Hole Oceanographic Institution, FY2006 18-Nov-08 0 0
09-3-0030 H John Heinz Center for Science Economics and Environment, FY 2006 19-Nov-08 0 0
09-3-0038 Water Environment Federation, FY 2006 21-Nov-08 0 0
09-3-0039 New Jersey University of Medicine and Dentistry, FY 2006 25-Nov-08 0 0
09-3-0040 Upper Allen Township, FY 2006 26-Nov-08 0 0
09-3-0041 National Fish and Wildlife Foundation, FY 2006 26-Nov-08 0 0
09-3-0042 St. Regis Mohawk Tribe, FY 2006 26-Nov-08 0 $4,873
09-3-0050 St. Regis Mohawk Tribe, FY 2007 8-Dec-08 0 0
09-3-0051 New Jersey University of Medicine and Dentistry, FY 2007 8-Dec-08 0 0
09-3-0057 South Alabama, University of, FY 2007 15-Dec-08 0 0
09-3-0058 Puerto Rico Department of Health, FY 2005 16-Dec-08 0 0
09-3-0059 Shreveport-Bossier Community Renewal, Inc., FY2006 16-Dec-08 0 0
09-3-0060 Swinomish Indian Tribal Community, FY 2006 16-Dec-08 0 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
0
0
0
0
0
0
0
$6,500,000
0
0
0
0
0
0
$6,617,700
0
0
0
0
0
0
0
$13,117,700
0
0
0
$0
54
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Questioned Costs
Report No.
09-3-0062
09-3-0063
09-3-0064
09-3-0065
09-3-0070
09-3-0073
09-3-0074
09-3-0075
09-3-0076
09-3-0077
09-3-0081
09-3-0082
09-3-0083
09-3-0090
09-3-0091
09-3-0093
09-3-0094
09-3-0095
09-3-0096
09-3-0098
09-3-0099
09-3-0100
09-3-0101
09-3-0102
09-3-0103
09-3-0104
09-3-0105
09-3-0106
09-3-0108
09-3-0109
09-3-0111
09-3-0114
09-3-0115
09-3-0116
09-3-0117
09-3-0118
09-3-0120
09-3-0121
09-3-0122
09-3-0123
09-3-0124
09-3-0126
Project Title
Missouri, University of, FY 2006
Cayuga County Soil and Conservation District, FY 2006
San Diego County Water Authority, FY 2006
Santa Ysabel Band of Indians, FY 2006
Fort Bidwell Indian Community Council, FY 2006
Environmental Council of the States and Affiliates, FY 2006
Alabama-Quassarte Tribal Town, FY 2006
Lone Pine Shoshone Reservation, FY2006
Kashia Band of Porno Indians/Stewards Point Rancheria, FY 2005
La Jolla Band of Luiseno Indians, FY 2006
New Mexico Institute of Mining and Technology, FY 2006
Nambe, Pueblo of, FY 2006
Milwaukee, Redevelopment Authority for the City of, FY 2006
Pit River Tribe, FY 2006
West Virginia, State of, FY 2007
Seminole Nation of Oklahoma, FY 2006
Aleut Community of St Paul Island, FY 2006
Kasaan, Organized Village of, FY 2006
Milwaukee, Redevelopment Authority for the City of, FY 2007
Agdaagux Tribal Council, FY 2006
Salt River Pima Maricopa Indian Community, FY 2007
Assiniboine and Sioux Tribes of Fort Peck Indian Reservation, FY 2006
Skokomish Indian Tribe, FY 2006
Northern Cheyenne Tribe, FY 2006
Hill City, City of, FY 2006
Snoqualmie Tribe, FY 2006
Ouzinkie Tribal Council, FY 2006
Florida, State of, FY 2007
Seminole Nation of Oklahoma, FY 2007
Nooksack Indian Tribe, FY 2006
Mescalero Apache Tribe, FY2006
North Lawrence Water Authority, FY2004
Las Vegas Valley Water District, FY 2006
Picuris Pueblo, FY 2006
Coyote Valley Band of Pomo Indians, FY 2005
Medford, City of, FY 2005
Battelle Memorial Institute, FY 2007
Harris County, FY 2006
Galeton, Borough of, FY 2007
Augusta, City of, FY 2006
Coyote Valley Band of Pomo Indians, FY 2006
Alliance for the Chesapeake Bay, FY 2007
TOTAL SINGLE AUDIT REPORTS = 61
Date
18-Dec-08
18-Dec-08
19-Dec-08
19-Dec-08
22-Dec-08
6-Jan-09
6-Jan-09
8-Jan-09
8-Jan-09
8-Jan-09
14-Jan-09
14-Jan-09
15-Jan-09
6-Feb-09
6-Feb-09
11-Feb-09
11-Feb-09
11-Feb-09
11-Feb-09
24-Feb-09
24-Feb-09
24-Feb-09
24-Feb-09
24-Feb-09
25-Feb-09
25-Feb-09
25-Feb-09
26-Feb-09
3-Mar-09
3-Mar-09
5-Mar-09
16-Mar-09
16-Mar-09
16-Mar-09
17-Mar-09
17-Mar-09
20-Mar-09
20-Mar-09
20-Mar-09
20-Mar-09
23-Mar-09
23-Mar-09
Ineligible
Costs
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$20,963
0
0
0
0
0
0
$70,129
0
0
$8,250
0
0
0
0
0
0
$203,892
Unsupported
Costs
$62,832
0
0
$96,233
0
0
0
$136,000
0
0
0
0
$9,950
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$2,932
0
0
0
0
0
0
0
0
0
0
0
0
0
$652,581
Unreasonable
Costs
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
Federal
Recommended
Efficiencies
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
$0
DEFENSE CONTRACT AUDIT AGENCY (DCAA) CONTRACT REPORTS
09-1-0004
09-1-0005
09-1-0006
09-1-0009
09-1-0034
09-1-0035
09-1-0036
09-1-0045
09-1-0049
09-2-0002
09-2-0003
09-2-0008
09-2-0023
09-2-0031
09-2-0033
09-2-0037
09-2-0048
09-2-0067
09-2-0069
09-4-0012
09-4-0013
09-4-0015
09-4-0016
09-4-0017
09-4-0018
09-4-0019
09-4-0020
09-4-0021
09-4-0022
09-4-0032
09-4-0044
ICF Consulting Group Inc - FY 2006 Incurred Cost
FEV Engine Technology - FY 12/31/2005 Incurred Cost
Cadmus Group, Inc. - FY 2006 Incurred Cost
Earth Tech Remediation Services - FY 2006 Incurred Cost
Lockheed Martin Services Group - FY 2006 Incurred Cost
Eastern Research Group FY 2006 - Incurred Cost
Environmental Management Support - FYE 2006 Incurred Cost
Earth Tech Remediation Services - FY 2005 Incurred Cost
Northbridge Environmental Management - FY2006 Incurred Costs
InfoPro, Inc. - FY 2006 Incurred Cost
EGG Industries, Inc. - FY2001 Incurred Cost
COM Federal Programs Inc. - FY 2006 RAG Contract No. 68-W9-8210
COM Federal Programs Corp FY 2005 RAG Contract No. 68-S7-3003
CH2M Hill Inc. - FY 2004 RAG 68-W6-0036
URS Corporation - FY2003 RAG Annual Close-Out 68-W9-8228
CH2M Hill Inc. - FY 2005 RAG 68-W6-0025
Tetra Tech, Inc./BVSPC Joint Venture - FY 2002 RAG 68-S7-3002
COM Federal Programs Inc. - FY 2006 RAG Contract No 68-S7-3003
Tetra Tech NUS, Inc. - FY 2004 RAG 68-W6-0045
Aqua Terra Consultants - Floor Check
Syracuse Research Corporation MAAR 6
Mactec Engineering and Consulting Inc - CAS 403
Battelle Memorial Institute - CAS 414
Battelle Memorial Institute - Accounting and Control of Labor Costs
Booz Allen Hamilton CAS 409
Arcadis Geraghty & Miller Inc. - Floor Check
Sonoma Technology Inc. - Accounting System
Syracuse Research Corporation MAAR 13
Bristol Environmental and Engineering - Floor Check
FEV Engine Techology Modified Financial Capability
Ecology and Environment, Inc. - Home Office Disclosure Statement FY2005
7-Oct-08
9-Oct-08
9-Oct-08
16-0ct-08
24-Nov-08
21-Nov-08
21-Nov-08
2-Dec-08
3-Dec-08
6-Oct-08
7-Oct-08
16-0ct-08
10-Nov-08
20-Nov-08
20-Nov-08
21-Nov-08
3-Dec-08
22-Dec-08
22-Dec-08
22-Oct-08
24-Oct-08
4-Nov-08
4-Nov-08
4-Nov-08
4-Nov-08
5-Nov-08
5-Nov-08
10-Nov-08
10-Nov-08
20-Nov-08
1-Dec-08
$7,269
0
$3,778
$3,183
$710,170
0
0
$17,944
$109,282
0
0
0
$11,853
0
0
0
$179,136
0
$4,006
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
55
-------
EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
Questioned Costs
Federal
Report No.
Project Title
Date
Ineligible
Costs
Unsupported
Costs
Unreasonable
Costs
Recommended
Efficiencies
09-4-0046 Eastern Research Group Labor Floorcheck
09-4-0047 Eastern Research Group Financial Condition Risk Assessment
09-4-0066 TetraTech EC, Inc. - Labor Floorcheck
09-4-0068 Project Resources, Inc. - FY 2008 Paid Vouchers
09-4-0071 CH2M Hill CCI MAAR 6 Floorcheck
09-4-0072 CH2M Hill Inc. MAAR 6 Floorcheck
TOTAL DCAA CONTRACT REPORTS = 37
FINANCIAL STATEMENT REPORTS
09-1-0026 EPA's FY 2008 and 2007 Consolidated Financial Statements
09-1-0107 FY 2008 and 2007 Financial Statements, Pesticide Registration Fund
TOTAL FINANCIAL STATEMENT REPORTS = 2
TOTAL REPORTS ISSUED = 132
2-Dec-08
2-Dec-08
22-Dec-08
22-Dec-08
22-Dec-08
22-Dec-08
14-Nov-08
3-Mar-09
0
0
0
0
0
0
$1,046,621
0
0
$0
0
0
0
0
0
0
$0
0
0
$0
0
0
0
0
0
0
$0
0
0
0
0
0
0
$0
$2,051,631 $1,007,331
0 $23,876,300
0
$0 $23,876,300
$0 $36,994,000
56
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
For Reporting Period Ending March 31, 2009
The Inspector General Act requires a summary of each audit report issued before the commencement of the
reporting period for which no management decision has been made by the end of the reporting period, an explanation
of the reasons such management decision has not been made, and a statement concerning the desired timetable for
achieving a management decision on each such report. OMB Circular A-50 requires resolution within 6 months of a
final report being issued. In this section, we report on audits with no management decision or resolution within
6 months of final report issuance. In the summaries below, we note the Agency's explanation of the reasons
management decision has not been made, the Agency's desired timetable for achieving a management decision, and
the OIG follow-up status as of March 31, 2009.
Office of Air and Radiation
Report No. 2004-P-00033, Effectiveness of Strategies to Reduce Ozone Precursors, September 29, 2004
Summary: Our analysis of EPA emissions data for "serious," "severe," and "extreme" ozone nonattainment areas
indicated that some major metropolitan areas may not have achieved the required 3-percent annual emission
reductions in ozone precursor emissions. While EPA air trends reports have emphasized that ozone levels are
declining nationally and regionally, only 5 of 25 nonattainment areas designated serious to extreme had substantial
downward trends. Data for some areas indicated that emissions had generally offset growth but had not substantially
reduced ozone levels. States may have used inaccurate data, assumptions, or projections.
Agency Explanation: EPA recently issued a lower ozone standard and expects to finalize the associated
implementation rule in fall 2009. Based on the resulting classifications of ozone attainment and non-attainment
areas, EPA will revisit the effectiveness of OIG's recommendation for Milestone Compliance Demonstration guidance.
Expect resolution by December 2009.
OIG Follow-up Status: Incomplete response received
Report No. 2005-P-00003, Development of the Proposed MACT for Utility Units, February 3, 2005
Summary: Evidence indicated that EPA senior management instructed EPA staff to develop a Maximum Achievable
Control Technology (MACT) standard for mercury that would result in national emissions of 34 tons annually, instead
of basing the standard on an unbiased determination of what the top performing coal-fired units were achieving in
practice. The Clean Air Act requires that a MACT standard should, at a minimum, be based on the emissions levels
achieved by the top performing 12 percent of units - not a targeted national emissions result. We believed it was
likely that the standard understated the average amount of mercury emissions reductions achieved by the top
performing 12 percent of power units. Thus, the MACT standard, if adopted, would not achieve the maximum
emission reductions achievable. Shortly after we issued our report, EPA de-listed mercury as an air toxic subject to
MACT standards and issued the Clean Air Mercury Rule that established a trading program for mercury emissions.
However, 16 States filed lawsuits challenging the rule, we agreed to hold the recommendations in abeyance until the
court case is settled. As of October 17, 2008, the Agency had asked the Supreme Court to review the federal
appeals court ruling that struck down the cap-and-trade program. We continue to hold the recommendations in
abeyance pending the Supreme Court decision.
Agency Explanation: Per the OIG, resolution is on hold, beyond Agency control. EPA is seeking a reversal of the
ruling on the Clean Air Mercury Rule and is awaiting a Supreme Court decision.
OIG Follow-up Status: Resolution on hold pending outcome of Supreme Court decision
Report No. 08-P-0020, MACT Implementation Progress and Challenges, October 31, 2007
Summary: EPA's National Emissions Inventory (NEI) data indicate an overall decline in air toxic emissions
concurrent with implementation of the MACT standards. EPA plans to use NEI data to assess the public health risk
remaining from MACT sources of air toxics emissions, but the reliability of NEI data for site-specific emissions varies
considerably. EPA has not established objectives that define an acceptable level of quality for NEI data used in the
57
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
residual risk process. EPA guidance recommends that program offices develop data quality objectives for using data
in such decision-making processes. Given the uncertainties associated with NEI data, EPA could over- or under-
estimate public health risk from MACT sources of emissions. Overstating risk could result in EPA placing on
industries regulations that are not cost beneficial. Conversely, understating risk could result in EPA not requiring
regulations where needed to protect public health. The Agency has not agreed with our recommendation to establish
the recommended State reporting requirements, and we consider the issue unresolved.
Agency Explanation: The Agency is working with the OIG to resolve differences concerning the recommendation,
and expects resolution by the end of April 2009.
OIG Follow-up Status: Resolution under negotiation in Headquarters
Report No. 08-P-0174, Efforts to Address Indoor Risks from Radon, June 30, 2008
Summary: Nearly two decades after passage of the 1988 Indoor Radon Abatement Act, exposure to indoor radon
continues to grow. Efforts to reduce exposure through mitigation or building with radon-resistant new construction
have not kept pace. EPA agreed to develop a strategy for achieving the long-term goal of the Act, as well as other
recommendations. For our recommendation that EPA identify limitations to meeting the goal to Congress, EPA
responded that it does not believe the Act's goal is achievable, but did not agree to notify Congress that the goal is
unachievable. We consider this issue open and unresolved.
Agency Explanation: On March 20, 2009, the OIG sent a memo to the Office of Air and Radiation's Acting Assistant
Administrator closing recommendations 2-1 and 2-3. The OIG requested additional information/clarification or
commitments from the Office of Air and Radiation for recommendations 2-2 and 2-4. OAR is currently preparing a
response addressing the OIG's concerns in an effort to reach agreement on a planned completion date.
OIG Follow-up Status: Incomplete response received
Financial Analysis and Rate Negotiation Service Center
Report No. 2004-1-00099, Lockheed Martin Services Group - FYE 12/31/2002 Incurred Cost, August 23, 2004
Summary: The Defense Contract Audit Agency (DCAA) questioned indirect costs of $3,595,399, of which $2,128 is
applicable to EPA contracts. DCAA qualified the audit results pending receipt of assist audit reports.
Agency Explanation: Resolution on hold due to other cognizant federal agency (Department of Defense).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2006-4-00120, National Academy of Sciences - FY 2006 Info Tech System, July 20, 2006
Summary: DCAA determined that the contractor's Information Technology system general internal controls are
inadequate in part.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2006-4-00165, National Academy of Sciences - FY 2006 Indirect/ODC System, September 27, 2006
Summary: In DCAA's opinion, the contractor service centers cost system and related internal control policies and
procedures are inadequate in part. DCAA's examination noted certain significant deficiencies in the design or
operation of the Indirect/Other Direct Costs system process.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information
58
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Report No. 2006-4-00169, National Academy of Sciences - FY 2006 Labor System, September 29, 2006
Summary: In DCAA's opinion, the contractor's labor system and related internal control policies and procedures are
inadequate in part. DCAA's examination noted certain significant deficiencies in the design or operation of the
internal control structure.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-4-00011, National Academy of Sciences - FY 2006 Electronic Time System, October 24, 2006
Summary: DCAA determined that the contractor's Electronic Timekeeping System internal controls are inadequate in
part.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Department of Defense).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-1-00016, URS Corporation (c/o URS Greiner, Inc.) - FY 2001 Incurred Cost, November 13, 2006
Summary: DCAA questioned a total of $188,772,784 in direct and indirect costs. Of these, $5,585,929 are claimed
direct costs, of which $1,328,189 are from EPA Contract No. 68-W9-8225. The questioned indirect expenses
impacted all eight fringe, overhead, and general and administrative rates. Of the questioned indirect costs, EPA's
share is $401,412, for a total of $1,729,601 in questioned direct and indirect costs.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Department of Defense).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-4-00038, Weston Solutions - FY 2006 Floor Checks, January 8, 2007
Summary: DCAA expressed no opinion on the adequacy of the contractor's labor accounting system taken as a
whole, as it had determined that certain labor practices required corrective action to improve the reliability of the labor
accounting system. The conditions are detailed in the "Statement of Conditions and Recommendations" section of
the report. This audit will be held open pending the results of the follow-up audit in 6 months.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-1-00059, National Academy of Sciences - FY 12/31/2004 Incurred, April 5, 2007
Summary: In DCAA's opinion the claimed direct costs are acceptable; however, there are $787,774 in questioned
indirect costs, of which $70,900 are applicable to EPA contracts.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-1-00061, Lockheed Martin Services Group - FY 12/31/2004 I/C, April 10, 2007
Summary: DCAA questioned $34,708,911 in claimed direct costs and proposed indirect costs. Further, DCAA
unresolved $338,864,655 in claimed direct and indirect costs for assist audits not yet received or for received assist
audit reports whose impact on the contractor's cost objectives has not yet been calculated. Additionally, DCAA
upwardly adjusted ($48,224,805) in claimed base costs.
Questioned Costs - Direct $21,581,464
Questioned Costs - Indirect 13,127,447
Total Questioned Costs $ 34,708,911
EPA ADV Percentage .02
EPA Share of Questioned Costs $ 694,178
59
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
DCAA did not provide any Cumulative Allowable Cost Work Sheet or Schedule of Allowable Costs by Cost Element
by Contract because the most current year with negotiated indirect rates is calendar year 1998. DCAA will issue a
supplemental audit report upon completion of its analysis of the assist audit results, and as the outstanding fiscal
years' indirect rates are negotiated, the requested Cumulative Allowable Cost Work Sheet and Schedule of Allowable
Costs by Cost Element by Contract will be provided.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Department of Defense).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-4-00058, SAIC - Companies 1, 6, and 9 - FY 2006 Floorchecks, April 30, 2007
Summary: DCAA determined that certain labor practices require corrective action to improve the reliability of the
contractor's labor accounting system. DCAA did not express an opinion on the adequacy of the contractor's labor
accounting system taken as a whole.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-1-00079, Science Applications Intl. Corporation - FYE 1/31/2005 I/C, July 18, 2007
Summary: DCAA submitted three audit reports under this assignment. DCAA accepted the claimed direct costs at
Companies 1 and 6 (there are no claimed direct costs at Company 9), and questioned proposed indirect costs and
rates at Companies 1, 6, and 9. DCAA questioned a total of $17,224,585 of Company 9 claimed indirect expenses
($9,938,874) and Fringe Benefits costs and rates ($7,285,711), of which $7,762,651 was allocated to other
companies which do not perform government work. Questioned indirect costs of $3,525,230 and $4,552,250 were
allocated to and questioned in the claimed general and administrative costs and rates of Companies 1 and 6,
respectively. The questioned fringe benefit rates in Company 9 resulted in questioned fringe benefit costs of
$865,365 and $519,089 for Companies 1 and 6, respectively. DCAA questioned an additional $1,995,869 of
Company 1 claimed indirect expenses, and an additional $511,822 of Company 6 claimed indirect expenses.
Total questioned costs in Companies 1 and 6 are $11,969,625, of which $119,696 are applicable to EPA contracts.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-1-00080, Lockheed Martin Services, Inc. - FY 2005 Incurred Cost, August 6, 2007
Summary: DCAA questioned $595,792,539 in claimed direct costs and $10,982,460 in proposed indirect costs and
rates. None of the questioned direct costs are chargeable to any of the EPA contracts. A number of the EPA
contracts have indirect ceiling rates that are lower than the contractor's proposed indirect rates, and are not impacted
by the questioned indirect expenses and rates. However, there are EPA contract/subcontracts which do not have
indirect ceiling rates and are impacted by the questioned indirect rates.
Questioned Costs EPA's Share
Indirect Costs $17,623,213 1.21% $213,531
Adjustment to G&G Base Costs ( 6,640,753) 1.21% ( 80,462)
Total Questioned Indirect Costs $10,982,460 $133,069
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
60
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Report No. 2007-1-00090, ABT Associates Inc. - FY 2002 Incurred Cost, August 29, 2007
Summary: DCAA questioned a total of $2,206,870 - $5,363 of proposed direct costs and $2,201,507 of proposed
indirect costs and rates. EPA's share of the questioned indirect costs is $123,686. None of the questioned direct
costs impact an EPA contract.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (U.S. Agency for International
Development).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-1-00097, National Academy of Sciences FYE 12/31/2003 Incurred Cost, September 20, 2007
Summary: In DCAA's opinion, the contractor's questioned costs increased to $300,645, of which EPA's portion is
$27,058 (9 percent). This supplemental report supersedes the prior report in its entirety.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Office of Naval Research).
IG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-4-00079, Weston Solutions, Inc. - FY 2006 Billing System, September 25, 2007
Summary: In DCAA's opinion, the contractor's billing system and related internal control policies and procedures
were inadequate in part. DCAA's examination noted certain significant deficiencies in the design or operation of the
internal control structure, which in its judgment could adversely affect the contractor's ability to record, process,
summarize, and report billings in a manner that is consistent with applicable government contract laws and
regulations.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2007-4-00080, National Academy of Sciences - FY 2006 Budget System, September 26, 2007
Summary: In DCAA's opinion, the budget and planning system and related internal control policies and procedures
are inadequate in part.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-4-0002, SAIC - Company 1 Compensation Follow-Up, October 2, 2007
Summary: In DCAA's opinion, the contractor's compensation system and related internal control policies and
procedures are inadequate in part. DCAA's examination noted certain significant deficiencies in the design or
operation of the internal control structure, which could adversely affect the contractor's ability to record, process,
summarize, and report compensation in a manner that is consistent with applicable government contract laws and
regulations.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-1-0114, Weston Solutions Inc. - FY 12/31/2004 Incurred Cost, March 24, 2008
Summary: DCAA determined that the contractor's claimed direct costs are acceptable; however, DCAA questioned
$2,082,837 in proposed indirect costs and rates. Further, DCAA applied penalties in accordance with Federal
Acquisition Regulation 42.709, and identified expressly unallowable costs subject to penalty that had been allocated
to various contracts specified in Federal Acquisition Regulation 42.709(b), including 11 EPA contracts. Of the
questioned costs, EPA's total share of questioned costs is $197,869, of which $164,163 is questioned overhead costs
61
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
and $33,706 is questioned general and administrative costs. DCAA did not include the Schedule of Allowable Costs
by Cost Element by Contract or the Cumulative Allowable Costs by Contract Worksheet as requested.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-1-0129, National Academy of Science - FY2005 Incurred Costs, April 10, 2008
Summary: In DCAA's opinion, the contractor's direct costs are acceptable; however, DCAA questioned the proposed
carryforward amounts of $377,330, of which EPA's share is 12 percent, or $45,280.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Office of Naval Research).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-1-0131, Washington Group International, Inc. - FY 2001 Incurred Costs, April 15, 2008
Summary: DCAA questioned $2,208,686 of claimed direct costs and $13,757,945 of proposed indirect costs and
rates, a total of $15,966,631. EPA's share of the questioned Package Policy Insurance costs is $6,126, or
0.28 percent of $2,208,686, which were directly charged to the contract. EPA OIG used the percentage of
questioned insurance pool costs to determine EPA's share of the questioned indirect costs. EPA OIG's calculations
are as follows:
Questioned Costs EPA's Share
Corporate Residual Pool $13,757,945 $38,522
Package Policy Insurance 2.208.686 6.126
Total $15,966,631 $44,648
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-1-0130, Morrison Knudsen Corporation - FY 1999 Incurred Costs, April 15, 2008
Summary: DCAA questioned $3,705,233 in claimed direct costs and $3,472,023 in proposed indirect costs and
rates, a total of $7,177,256. Of these, DCAA identified $10,393 of $1,305,233 questioned Package Policy Insurance
Costs as direct costs charged to EPA contracts. These costs are 8 percent of the total questioned costs. EPA OIG
used that percent in calculating the remaining questioned direct costs and questioned proposed indirect costs to
determine EPA's share of the questioned costs. EPA's share of questioned costs is as follows:
Questioned Costs EPA's Share
Corporate Residual Pool $2,704,900 $21,639
Standard Labor Burden 767,123 6,137
Package Policy Insurance Costs 1,305,233 10,393
Corporate Direct Charges 2.400.000 19.200
Totals $7,177,256 $57,369
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-1-0133, Alion Science & Tech (formerly IITRI) - FY 2004 Incurred Costs, April 28, 2008
Summary: In DCAA's opinion, the claimed direct costs are acceptable; however, the proposed indirect costs and
rates are questioned. Total questioned costs are $5,279,322, of which EPA's estimated share is 1.00 percent, or
$52,793. Since DCAA did not provide a Schedule of Allowable Costs by Cost Element by Contract, we used the
1.00 percent share of Total Contract as calculated in the Alion FY 2002 Incurred Cost audit. We note that the
contractor did not provide DCAA with the necessary information to prepare the schedule.
62
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-4-0155, Applikon Analyzers, Inc. - Proposal, May 20, 2008
Summary: In DCAA's opinion, the cost or pricing data submitted by the contractor are inadequate in part. However,
the inadequacy described is considered to have limited impact on the subject proposal. The proposal was not
prepared in all respects in accordance with appropriate provisions of Federal Acquisition Regulation Part 31;
however, the impact of the noncompliances is considered relatively insignificant. Because the noncompliances and
inadequacy are considered insignificant, DCAA considers the proposal to be an acceptable basis for negotiation of a
fair and reasonable price. DCAA questioned $2.24 million in proposed costs. In DCAA's opinion, the costs
associated with the lack of technical analysis on the proposed direct labor hours, subcontract labor hours, and the
amount of travel required as discussed in the qualification section of the report, are significant enough to materially
impact the results of the audit. Therefore, DCAA recommends that contract price negotiations not be concluded until
the results of the technical analysis are considered by the contracting officer.
Agency Explanation: According to the EPA contacting officer, most of the questions costs by DCAA were sustained;
however, several (such as travel) were not. Included in the contract was a contracting officer-added clause to
re-negotiate the contract for option period III-IV since the prices they estimated could be very different from actual
prices, as the final price of an instrument is partially dependent on how EPA modifies the instrument. Expect
resolution by April 2009.
OIG Follow-up Status: No response
Report No. 08-4-0157, EG&G - FY 2006 Accounting System Audit, May 20, 2008
Summary: In DCAA's opinion, the contractor's control environment and the overall accounting system and related
internal control policies and procedures are inadequate in part. DCAA noted one significant deficiency in the design
or operation of the internal control structure. The deficiency could adversely affect the organization's ability to record,
process, summarize and report costs in a manner that is consistent with applicable government contract laws and
regulations.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-1-0198, Metcalf & Eddy, Inc. - FY 2006 Incurred Cost, July 10, 2008
Summary: In DCAA's opinion, the contractor's direct costs, except for the qualification regarding subcontractor costs
claimed, are acceptable; however, DCAA questioned the indirect cost rates. The total questioned indirect costs are
$46,627, of which EPA's share is 31 percent (or $14,453). The assignment is on hold pending cognizant agency's
response.
Agency Explanation: Resolution on hold.
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-4-0207, Metcalf & Eddy Inc. - Floorcheck, July 24, 2008
Summary: DCAA believes certain contractor labor practices require corrective action to improve the reliability of the
contractor's labor accounting system.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
63
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Report No. 08-4-0208, MACTEC Engineering & Consulting, Inc. - CAS 409, July 24, 2008
Summary: In DCAA's opinion, the contractor was in noncompliance with Cost Accounting Standard 409 - Depreciation
of Tangible Capital Assets and Federal Acquisition Regulation 31.205-11, Depreciation, during the period of January 1,
2006, through December 31, 2006. DCAA determined that the contractor does not follow its disclosed practice to
estimate the residual value for its tangible capital assets. Further, the contractor's disclosed and actual practice is to
not deduct the residual value in determining the depreciable costs for its real property assets. The disclosed and actual
practice does not comply with Cost Accounting Standards 409 and Federal Acquisition Regulation 31.205-11.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-1-0214, CH2M Hill, Inc. - FY 2006 Incurred Cost, August 5, 2008
Summary: In DCAA's opinion, the contractor's claimed direct costs and proposed fringe rate are acceptable as
proposed; however, DCAA questioned the proposed overhead and general and administrative indirect rates in the
amount of $2,315,789, of which EPA's share is $833,683.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-4-0259, MACTEC Engineering & Consulting, Inc. - MAAR 6, September 12, 2008
Summary: Based on the procedures performed, DCAA believes certain contractor labor practices require corrective
action to improve the reliability of the contractor's labor accounting system. DCAA determined that the contractor is
not complying with its written policies and procedures, and blank manual timesheets are not being controlled.
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-4-0308, Tetra Tech EC, Inc. - EDP General Controls, September 30, 2008
Summary: In DCAA's opinion, the contractor's information technology system of general internal controls is
inadequate in part. DCAA's examination noted significant deficiencies in the design or operation of the internal
control structure, which could adversely affect the contractor's ability to record, process, summarize, and report direct
and indirect costs in a manner consistent with applicable government contract laws and regulations. This audit is
awaiting additional information on the resolution of the cited issues by the cognizant federal agency (Defense
Contract Management Agency).
Agency Explanation: Audit resolution on hold due to other cognizant federal agency (Defense Contract Management
Agency).
OIG Follow-up Status: Resolution pending receipt of additional information
Grants and Interagency Agreements Management Division
Report No. 2002-2-00008, MBI International Assistance Agreement, January 29, 2002
Summary: MBI did not have adequate justification to support the award of sole source contracts. Also, MBI's
procurement practices did not meet federal requirements. As a result, $1,301,365, consisting of $1,201,857 in
contract costs and $99,508 in consultant costs, is not eligible for federal reimbursement. Further, there were
apparent conflicts of interest between MBI, its subsidiary (CRT), and companies created by CRT.
Agency Explanation: The Final Decision Letter has been drafted in the Grants and Interagency Agreements
Management Division (GIAMD) and has been forwarded to the Office of General Counsel, which will address the
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
legal arguments MBI raised and revise the final decision letter to reflect those comments. Expect resolution by
April 30, 2009.
OIG Follow-up Status: Report reactivated/awaiting response
Report No. 2003-S-00001, Region 7 Grants Proactive, May 29, 2002
Summary: We questioned over $2 million because the Coordinating Committee on Automotive Repair did not
account for the funds in accordance with federal rules, regulations, and terms of the agreement.
Agency Explanation: The Coordinating Committee on Automotive Repair has submitted the indirect cost rate
documentation for the audit period and has provided documentation that its financial management system and time
distribution system meet the requirements of EPA's assistance regulations and OMB Circular A-122. The Committee
also provided reconstructed records for FYs 1996 and 1997 along with a report from an independent auditor to
document that the costs charged to the project were allowable, reasonable, and allocable. GIAMD has contacted the
EPA project officer for input in analyzing these re-constructed records. We anticipate completing our review of the
re-constructed records by the end of February 2009 and making a determination on whether the Committee's approach
is adequate support for the costs incurred. If EPA approves the Committee's process for reconstructing its FY 1996
and 1997 records, reconstruction can begin for succeeding fiscal years. If the Committee's approach cannot support
the costs incurred, all of the questioned costs will have to be disallowed. Expect resolution by September 30, 2009.
OIG Follow-up Status: Incomplete response received
Report No. 2003-4-00120, Geothermal Heat Pump Consortium, Inc. - Costs Claimed, September 30, 2003
Summary: Questioned $1,153,472 due to material financial management deficiencies. The Consortium's financial
management system was inadequate for various reasons, including that the Consortium did not separately identify
and accumulate costs for all direct activities, such as membership support and lobbying; account for program income
generated by the activities funded by the EPA agreements; and prepare or negotiate indirect cost rates.
Agency Explanation: The Branch Chief and Association Award Official have weekly review sessions scheduled to
determine the appropriate resolution to this audit. The analysis of the administrative and financial documents that
Consortium submitted has been completed. There is a substantial amount of information that the Branch Chief is being
briefed on. We are expecting some discussions in the next few weeks with the Office of General Counsel and possibly
the OIG to present our proposal and negotiate the final determination. Resolution is expected by July 31, 2009.
OIG Follow-up Status: No response
Report No. 2005-3-00036, National Indian Health Board, FY 2002, December 30, 2004
Summary: The Board was allocating salary costs to grants based on pre-determined formulas. No support, in the
form of time sheets, was located for those allocations. Also, amounts charged to various grants were not always
supported by original documentation. Therefore, we questioned $31,960 as unsupported.
Agency Explanation: The recipient provided information, but it was not enough to support the audit findings. The
Board claims to have revised its policies to address the time sheet and original document issues, but the policy
remains very broad and general. GIAMD continues to work with the recipient to obtain specific documentation to
support the unsupported cost. The estimated date for the audit resolution is April 30, 2009.
OIG Follow-up Status: No response
Report No. 2006-3-00006, Alfred University, FY 2004, October 13, 2005
Summary: The University's current accounting system provides certified payroll information on an individual grant
basis. However, the payroll distribution system does not provide a proportionate breakdown of each employee's total
time between each sponsored program he/she may be working on and other non-sponsored activities. The auditor
questioned costs of $649,506, but could not determine the direct impact upon EPA's program.
Agency Explanation: The Grants Specialist met with the Award Official, who has decided to provide grantee with a
30-day deadline to prove that the recommendations have been met. The outcome will depend upon whatever
develops. For example, the grantee might have to repay costs if allowability cannot be determined. The Grants
Specialist is drafting correspondence for the Award Official's approval. Expect resolution by June 30, 2009.
OIG Follow-up Status: No response
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Report No. 2006-4-00122, Association of State & Interstate Water Pollution Control Administrators, July 31, 2006
Summary: The Association did not comply with the financial and program management standards and the
procurement standards promulgated in Title 40, Code of Federal Regulations, Subchapter B, Part 30. For example,
the Association could not provide support for any of its general journal entries; included duplicate recorded costs in its
accounting system; could not always trace grant draws to the accounting records; and could not always support labor
charged to the EPA grants. As a result, we questioned as unsupported a total of $1,883,590 in EPA grant payments
for seven grants.
Agency Explanation: The Association submitted indirect cost rate proposals for the fiscal years covered by the OIG
audit. The Office of Grants and Debarment is waiting on approval of the indirect cost proposal submitted to support
the cost. Expect resolution by May 2009.
OIG Follow-up Status: No response
Report No. 2006-3-00199, Howard University, FY 2005, September 7, 2006
Summary: The University had numerous program noncompliances related to timekeeping, funds matching,
sub-recipient monitoring, financial reporting, and equipment disposal.
Agency Explanation: Office of Grants and Debarment is gathering additional information regarding the corrective
actions. Expect resolution by April 2009.
OIG Follow-up Status: No response
Report No. 2007-4-00026, International City County Management Association, November 28, 2006
Summary: Questioned costs due to (a) lack of competition for contracts, (b) lack of oversight for sub-awards, (c) lack
of documentation on sub-grants, and (d) illegal indirect costs.
Agency Explanation: GIAMD looked very critically at the circumstances of each grant, the applicable regulations, and
the documentation available to support both the OIG and Association's positions. As a result, GIAMD intends to
allow much of the contract costs by deviation. GIAMD will not propose to allow much of the questioned amount for
donated in-kind assistance. Office of Grants and Debarment will propose to allow all costs for subagreements that
were characterized by the OIG as noncompetitive procurement, but are better characterized as subrecipient as
outlined by OMB A-133 and EPA's Subaward Policy. Expect resolution by April 30, 2009.
OIG Follow-up Status: No response
Report No. 2007-4-00027, National Rural Water Association - Congressional, November 30, 2006
Summary: The Association's method of allocating indirect costs over total direct costs is contrary to the requirements
of OMB Circular A-122. Currently, the Association does not exclude subcontracts or subawards from its indirect cost
allocation base. As a result, the EPA grants are bearing a disproportionate amount of indirect costs. For the period
from March 1, 1999, to February 29, 2004, EPA grants may have been over-allocated by $2,021,821 in indirect costs.
The exact amount of the indirect over-allocation will be determined during negotiating the indirect cost rate.
Agency Explanation: Office of Grants and Debarment has requested revised information to support the sub-contract
cost. Office of Grants and Debarment staff are still working with the recipient to obtain the indirect cost proposals to
support the cost cited in the audit. Expect resolution by July 2009.
OIG Follow-up Status: No response
Report No. 2007-3-00037, Alfred University - FY 2005, December 11, 2006
Summary: The University's accounting system provided certified payroll information on an individual grant basis.
However, the payroll distribution system did not provide a proportionate breakdown of each employee's total time
between each sponsored program he/she may be working on and other non-sponsored activities. The auditor
questioned costs of $649,506, but could not determine the direct impact upon EPA's program
Agency Explanation: The Grants Specialist met with the Award Official, who has decided to provide grantee with a
30-day deadline to prove that the recommendations have been met. The grantee might have to repay costs if
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
allow/ability can not be determined. The Grants Specialist is drafting correspondence for the Award Official's
approval. Expect resolution by June 30, 2009.
OIG Follow-up Status: No response
Report No. 08-3-0248, Alliance to Save Energy - 2006, September 4, 2008
Summary: Discrepancies were noted between the dollar amounts calculated using information from outside
departments compared to accounting departments' information for grant expenses. Federal financial reports were
not filed in a timely manner, as required. The Alliance was not able to provide supporting documentation for selected
procurement transactions. According to the single auditor the selected procurement transactions for EPA totaled
$11,345.
Agency Explanation: The recipient was informed of the request of additional information on February 18, 2009, and
will respond as soon as possible. Expect resolution by April 2009.
OIG Follow-up Status: No response
Report No. 08-1-0277, National Caucus and Center on Black Aged, Inc., Incurred Cost, September 25, 2008
Summary: In our opinion, the outlays reported in the recipient's Quarterly Financial Status Reports as of September
30, 2007, present fairly, in all material respects, the allowable outlays incurred in accordance with the terms and
conditions of the agreements and applicable laws and regulations. We found, however, that the recipient did not
clearly disclose its allocation methods in its indirect cost proposals. The recipient also charged employee leave costs
to grants disproportionately to the amount of time employees spent on each assistance agreement.
Agency Explanation: Office of Grants and Debarment requested additional documentation from the recipient
regarding the findings from the audit. Office of Grants and Debarment has received the documentation and expects
the final decision letter in May 2009.
OIG Follow-up Status: No response
Office of Acquisition Management
Report No. 08-4-0146, Cambridge Labor Charging Verification Review, May 1, 2008
Summary: Based on our review, nothing came to our attention that caused us to believe that the labor charges
(including subcontract labor) billed under Contract EP-W-05-044 are not in compliance with federal laws, regulations,
or terms and conditions of the contract. However, during our review, we noted a potential violation of Title 13, Code
of Federal Regulations, Part 121, Small Business Size Regulations, which we believe requires immediate attention.
Agency Explanation: At the OIG's recommendation, the Headquarters Procurement Operations Division submitted a
request to the Small Business Administration for a formal size/subcontractor ostensibility determination on
September 26, 2008. The Small Business Administration required additional documentation to conduct the review
(i.e., copy of OIG's report, copy of solicitation, copy of contractor's proposal, etc.), which the Headquarters
Procurement Operations Division provided. The Division anticipates receipt of the Small Business Administration's
determination in June or July 2009, and will take immediate action based on their recommendation.
OIG Follow-up Status: Incomplete response received
Office of Environmental Information - Office of Technology Operations and Planning
Report No. 08-P-0273, Management of EPA Headquarters Internet Protocol Addresses, September 23, 2008
Summary: The OIG contracted with a firm to conduct the FY 2008 audit. The firm found that processes used to
assign and track Internet Protocol addresses within EPA Headquarters needs strengthening to enforce accountability.
Agency personnel were not aware of the Internet Protocol addresses assigned to them. EPA Headquarters network
identified 391 Internal Protocol addresses with high-risk and/or medium-risk vulnerabilities, but could not identify the
offices responsible for 273 of the addresses.
Agency Explanation: The Office of Environmental Information provided a response to the final report on October 8,
2008, and no response received to date from the OIG. Corrective actions for recommendations 1 and 2 are
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
accomplished. Office of Environmental Information expects to complete the remaining corrective actions before
August 31, 2009.
OIG Follow-up Status: No response
Office of Enforcement and Compliance Assurance
Report No. 08-P-0278, Strategic Planning in Priority Enforcement Areas, September 25, 2008
Summary: The Office of Enforcement and Compliance Assurance has instituted a process for strategic planning in
its national enforcement priority areas. The FYs 2008-2010 strategic plans we reviewed - for air toxics, combined
sewer overflows, and mineral processing - contain an overall goal, a problem statement, and other key elements.
However, each of the plans is missing key elements to monitor progress and accomplishments and efficiently utilize
Agency resources. All three strategies lack a full range of measures to monitor progress and achievements. Two
strategies lack detailed exit plans. Additionally, the combined sewer overflow strategy does not address the States'
key roles in attaining the strategy's overall goal. The absence of these elements hinders the Office of Enforcement
and Compliance Assurance from monitoring progress and achieving desired results in a timely and efficient manner.
Agency Explanation: The Agency and OIG are working to resolve corrective action #2. The Agency and OIG were
scheduled to discuss this matter on April 2, 2009, and a decision was expected after this meeting.
OIG Follow-up Status: Incomplete response received
Region 1- Regional Administrator
Report No. 2006-3-00203, Indian Township Tribal Government, FY 2002, September 18, 2006
Summary: The Tribe invested in non-governmental investments; had virtually no written investment policies and
procedures; did not have an adequate accounting system to record, process, and summarize accounting
transactions; did not maintain numerous bank accounts; has a chronic problem of late financial statement audits;
maintains manual general ledger and bookkeeping systems decentralized from the tribal books; and did not always
have support receipts.
Agency Explanation: Resolution on hold by OIG.
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2006-3-00204, Indian Township Tribal Government, FY 2003, September 18, 2006
Summary: We noted the same issues disclosed in Report No. 2006-3-00203, for FY 2002. We also found that the
Tribe had numerous bank accounts with financial institutions, and approximately $557,000 was uninsured or
uncollateralized cash as of September 30, 2003.
Agency Explanation: Resolution on hold by OIG.
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 2006-3-00205, Indian Township Tribal Government, FY 2004, September 19, 2006
Summary: We noted the same issues disclosed in Report Nos. 2006-3-00203 and 2006-3-00294, for FYs 2002 and
2003, respectively. Also, approximately $592,634 in its numerous bank accounts with financial institutions was
uninsured or uncollateralized cash as of September 30, 2004. Further, the Tribe did not timely submit quarterly
federal reports SF-269 and SF-272 for September 30, 2004.
Agency Explanation: Resolution on hold by OIG.
OIG Follow-up Status: Resolution pending receipt of additional information
Report No. 08-3-0250, Indian Township Tribal Government, FY 2006, September 5, 2008
Summary: The Tribe did not submit SF-269s and SF-272s within required timeframes. For the EPA Partnership
Performance grants, the single auditor reported that the Tribe did not have records or formal calculations to
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
demonstrate that it met the matching requirements under these grants. Payroll issues were noted, as well as
$26,134 in unsupported costs. There also were 17 cross-cutting findings. The U.S. Department of Health and Human
Services is the oversight agency responsible for audit resolution, but we reported these findings to EPA as they may
impact EPA grant funds.
Agency Explanation: The resolution of the 2006 audit will be addressed in the 2007 audit since the
infrastructure/system issues are generally the same. A second conference call to continue discussions on corrective
action plan is scheduled. Participants will include the Tribe, contracted single auditor, and EPA officials. The target
date for resolution is September 2009.
OIG Follow-up Status: No response
Region 2 - Office of Policy and Management
Report No. 2007-3-00139, New York, State of - FY 2006, July 26, 2007
Summary: The auditors noted that the Department of Health had 191 audit reports with findings that were required to
have management decisions rendered within 6 months. Of these, only 72 had been completed in a timely manner.
Further, the Department of Health did not have policies and procedures that adequately recorded, tracked, and
provided for the safeguarding of program assets; have any evidence of a physical inventory of assets; and have any
evidence of a policy or procedures in place to ensure proceeds from the sale or disposal of the assets could be
identified and returned to the federal program if necessary. Also, the Department of Environmental Conservation did
not issue a formal management decision on the audit finding contained in the single audit report for the New York
Environmental Facilities Corporation within the required 6-month time frame.
Agency Explanation: Corrective action on two of three findings is complete. The grantee needs to address one
minor issue on the plan for the third finding, and Region 2 awaits the grantee's written confirmation of its plan. Expect
resolution by June 30, 2009.
OIG Follow-up Status: No response
Region 3 - Regional Administrator
Report No. 08-4-0156, Canaan Valley Institute, May 19, 2008
Summary: We questioned $3,235,927 of the $6,686,424 in reported net outlays because the recipient reported
unallowable outlays for indirect, contractual, and in-kind costs. Specifically, the recipient: (1) claimed indirect costs
without approved indirect rates; (2) did not credit back to the agreements all program income; (3) did not demonstrate
that it performed cost analysis of contracts; (4) reported costs for services outside of the scope of one agreement;
(5) did not comply with terms and conditions of contracts; and (6) used EPA funds to match another federally-funded
cooperative agreement. Also, the recipient could improve its subrecipient monitoring program.
Agency Explanation: Due to the large amount of questioned costs and findings the proposed final determination
letter has been delayed. Region 3 has an extension from the OIG until April 30, 2009, to submit the proposed final
determination letter.
OIG Follow-up Status: No response
Region 8 - Regional Administrator
Report No. 2007-4-00078, Cheyenne River Sioux Tribe, September 24, 2007
Summary: The Tribe did not comply with the financial and program management standards under Title 40, Code of
Federal Regulations, Parts 31 and 35, and OMB Circular A-87. We questioned $3,101,827 of the $3,736,560 outlays
reported. The Tribe's internal controls were not sufficient to ensure that outlays reported complied with federal cost
principles, regulations, and grant conditions. In some instances, the Tribe also was not able to demonstrate that it
has completed all work under the agreements and has achieved the intended results of the agreements.
Agency Explanation: We continue to review monthly requests for disbursements. We will provide recommendations
for resolution of past costs by the end of April 2009.
OIG Follow-up Status: No response
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EPA OIG Semiannual Report to Congress October 1, 2008 - March 31, 2009
Report No. 08-3-0247, North Dakota, State of - FY 2006, September 4, 2008
Summary: Program income was not properly recognized and reported by North Dakota State University. As a result,
pesticide certification and enforcement revenue of $602,551 collected during FYs 2006 and 2005 was not properly
handled. Also, the University had one personnel activity confirmation that did not support the actual payroll expense
charged to the federal program, resulting in about $2,170 in salary cost overcharges. Further, the University did not
have any personnel activity confirmations for 2 of 16 periods tested, and the unsupported error projects to $491,482
for the audit period.
Agency Explanation: Region 8 plans to work with their Pesticides Program, the University of North Dakota, and the
auditor to resolve these issues. Expect resolution by June 2009.
OIG Follow-up Status: No response
Report No. 08-3-0307, Oglala Sioux Tribe - FY 2004, September 30, 2008
Summary: In reviewing the report findings, we have determined that they significantly impact the costs the Tribe
claimed during 2004. The single auditor findings indicate the Tribe may not be able to support costs claimed under
EPA grants. As a result, we are questioning the costs claimed of $1,158,903.
Agency Explanation: An onsite visit was planned for the week of April 6 to review the Tribe's accounting records and
supporting documentation. We expect resolution by June 19, 2009.
OIG Follow-up Status: No response
Total reports issued before reporting period for which
no management decision has been made as of March 31, 2009 = 58
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
In compliance with reporting requirements in the Inspector General Act, Section 5(a)(3), "Identification
of Reports Containing Significant Recommendations Described in Previous Semiannual Reports on
Which Corrective Action Has Not Been Completed," and to help EPA managers gain greater awareness
of outstanding commitments for action, we have developed a "Compendium of Unimplemented
Recommendations." This separate document provides the information required in Appendix 3 to this
Semiannual Report to Congress. This compendium (available upon request or at
http://www.epa.gov/oig/reports/2009/20090430-09-N-0148.pdf) is produced semiannually for Agency
leadership and Congress based upon Agency reports on the status of action taken on OIG
recommendations and OIG selective verification of that reported status.
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EPA OIG Semiannual Report to Congress
October 1, 2008 - March 31, 2009
-IT •-;•,,',,
Headquarters
U.S. Environmental Protection Agency
Office of Inspector General
1200 Pennsylvania Ave., NW (2410T)
Washington, DC 20460
(202) 566-0847
Atlanta
U.S. Environmental Protection Agency
Office of Inspector General
61 Forsyth Street, SW
Atlanta, GA 30303
Audit/Evaluation: (404) 562-9830
Investigations: (404) 562-9857
Boston
U.S. Environmental Protection Agency
Office of Inspector General
One Congress Street, Suite 1100
Boston, MA 02114-2023
Audit/Evaluation: (617) 918-1470
Investigations: (617) 918-1468
Chicago
U.S. Environmental Protection Agency
Office of Inspector General
77 West Jackson Boulevard
13th Floor (IA-13 J)
Chicago, IL 60604
Audit/Evaluation: (312) 353-2486
Investigations: (312) 353-2507
Cincinnati
U.S. Environmental Protection Agency
Office of Inspector General
26 West Martin Luther King Drive
Cincinnati, OH 45268-7001
Audit/Evaluation: (513)487-2360
Investigations: (513)487-2364
Dallas
U.S. Environmental Protection Agency
Office of Inspector General (6OIG)
1445 Ross Avenue, Suite 1200
Dallas, TX 75202-2733
Audit/Evaluation: (214)665-6621
Investigations: (214)665-2790
Offices
Denver
U.S. Environmental Protection Agency
Office of Inspector General
1595 Wynkoop Street, 4th Floor
Denver, CO 80202
Audit/Evaluation: (303) 312-6969
Investigations: (303) 312-6868
Kansas City
U.S. Environmental Protection Agency
Office of Inspector General
901 N. 5th Street
Kansas City, KS 66101
Audit/Evaluation: (913) 551-7878
Investigations: (913) 551-7875
New York
U.S. Environmental Protection Agency
Office of Inspector General
290 Broadway, Room 1520
New York, NY 10007
Audit/Evaluation: (212)637-3080
Investigations: (212)637-3041
Philadelphia
U.S. Environmental Protection Agency
Office of Inspector General
1650 Arch Street, 3rd Floor
Philadelphia, PA 19103-2029
Audit/Evaluation: (215) 814-5800
Investigations: (215) 814-5820
Research Triangle Park
U.S. Environmental Protection Agency
Office of Inspector General
Mail Drop N283-01
Research Triangle Park, NC 27711
Audit/Evaluation: (919) 541-2204
Investigations: (919) 541-1027
San Francisco
U.S. Environmental Protection Agency
Office of Inspector General
75 Hawthorne St. (IGA-1)
7th Floor
San Francisco, CA 94105
Audit/Evaluation: (415) 947-4521
Investigations: (415) 947-4500
Seattle
U.S. Environmental Protection Agency
Office of Inspector General
1200 6th Avenue, 19th Floor
Suite 1920, M/SOIG-195
Seattle, WA 98101
Audit/Evaluation: (206) 553-4033
Investigations: (206) 553-1273
Winchester
U.S. Environmental Protection Agency
Office of Inspector General
200 S. Jefferson Street, Room 314
P.O. Box 497
Winchester, TN 37398
Investigations: (423) 240-7735
72
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It's your money
It's your environment
Report fraud, waste or abuse
e-mail: OIG_Hotline@epa.gov
write: EPA Inspector General Hotline 2491T
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Washington DC 20460
fax: 202-566-2549
phone: 1-888-546-8740
www.epa.gov/oig/hotline/how2file.htm
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