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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Evaluation Report
EPA Needs to Improve
Internal Controls to Increase
Cost Recovery
Report No. 09-P-0144
April 27, 2009
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Report Contributors:
Carolyn Copper
Steve Hanna
Chad Kincheloe
Anne Emory
Tapati Bhattacharyya
Abbreviations
CERCLA Comprehensive Environmental Response, Compensation, and Liability Act
CERCLIS Comprehensive Environmental Response, Compensation, and Liability
Information System
EPA U.S. Environmental Protection Agency
FY Fiscal Year
GPRA Government Performance and Results Act
IFMS Integrated Financial Management System
NPL National Priority List
OCFO Office of the Chief Financial Officer
OECA Office of Enforcement and Compliance Assurance
OIG Office of Inspector General
OSWER Office of Solid Waste and Emergency Response
PRP Potentially Responsible Party
SCORPIOS Superfund Cost Recovery Package Imaging and On-Line System
SIS Superfund Information System
SOL Statute of Limitations
SPEVI Superfund Program Implementation Manual
SSID Site Spill Identification Number
ZZ Non-site-specific Identifier Code
Cover photo: Hazardous containers at National Lacquer and Paint Company in Illinois.
(Source: EPA photo)
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5
U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
09-P-Q144
April 27, 2009
Catalyst for Improving the Environment
Why We Did This Review
We evaluated the U.S.
Environmental Protection
Agency's (EPA's) Superfund cost
recovery at a sample of non-
National Priority List (NPL)
removal sites. The objectives
were to determine what internal
I controls EPA uses to (1) monitor
cost recovery, (2) ensure
potentially responsible party
searches are completed and
documented, (3) monitor costs
attributed to generic site codes,
(4) ensure removal milestones are
documented in the Superfund
database, and (5) ensure accurate
cost recovery data.
Background
The Comprehensive
Environmental Response,
Compensation, and Liability Act
(CERCLA, also known as
Superfund) authorizes EPA to
address releases of hazardous
substances that require a rapid
response. These actions (called
removal actions) often require
EPA to pay for cleanup costs
before identifying a responsible
party. CERCLA authorizes EPA
to recover these costs.
For further information, contact
our Office of Congressional,
Public Affairs and Management
at (202) 566-2391.
To view the full report,
click on the following link:
www.epa.qov/oiq/reports/2009/
20090427-09-P-0144.pdf
EPA Needs to Improve Internal Controls to
Increase Cost Recovery
What We Found
Within a sample of removal actions we reviewed, EPA collected from
responsible parties approximately 11 percent ($31.4 of $294.5 million) of the
Federal Government's costs for conducting the removal actions. According to
EPA, about another 30 percent ($86 million) of the costs are pending further
government action. EPA attributed most of the remaining $177.1 million of
unrecovered costs to a lack of viable potentially responsible parties (PRPs).
EPA has a control for monitoring the statute of limitations (SOL) on cost
recovery. EPA reports show that the Agency has a high rate of success in
addressing cost recovery requirements prior to the expiration of the SOL.
However, EPA has limited controls in other key areas that affect its ability to
recover the government's costs from responsible parties. These include limited
oversight of PRP searches, inconsistent documentation of PRP searches, and
data quality problems in EPA databases that track Superfund cleanup status and
cost recovery. EPA also does not review and monitor charges made to all
Superfund accounts so all appropriate site costs can be recovered. A sample of
Superfund accounts used to capture removal costs shows as much as
$25 million that EPA could potentially pursue for cost recovery, but has not.
What We Recommend
We recommend that EPA implement improved controls to (1) monitor PRP
search completions, (2) document PRP searches consistently, (3) ensure data
quality in EPA databases, and (4) review all appropriate Superfund accounts to
ensure the government's costs are identified for possible recovery. EPA
concurred with our recommendations with minor qualifications, and has
proposed actions to address them. All recommendations are open with
agreed-to actions pending. In its final response to this report, EPA should
provide estimated or actual completion dates for recommendations 2-1 through
2-4; 3-1 and 3-2; and 4-1 through 4-3.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
MEMORANDUM
SUBJECT:
FROM:
TO:
April 27, 2009
EPA Needs to Improve Internal Controls to Increase Cost Recovery
Report No. 09-P-0144
t .._/4' /
Wade T. Najjum l' "
Assistant Inspector General
Office of Program Evaluation
/.J
Catherine McCabe
Acting Assistant Administrator
Office of Enforcement and Compliance Assurance
Maryann Froehlich
Acting Chief Financial Officer
Office of the Chief Financial Officer
Barry Breen
Acting Assistant Administrator
Office of Solid Waste and Emergency Response
This is our report on the subject evaluation conducted by the Office of Inspector General (OIG)
of the U.S. Environmental Protection Agency (EPA). This report contains findings that describe
the problems the OIG has identified and corrective actions the OIG recommends. The OIG
responded to the Agency's draft report comments by making changes to the report and providing
responses to EPA, as appropriate. This report represents the opinion of the OIG and does not
necessarily represent the final EPA position. Final determinations on matters in this report will
be made by EPA managers in accordance with established resolution procedures.
The estimated cost of this report - calculated by multiplying the project's staff days by the
applicable daily full cost billing rates in effect at the time - is $621,682.
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Action Required
In accordance with EPA Manual 2750, you are required to provide a written response to this
report within 90 calendar days. Your response should include a corrective action plan for agreed
upon actions, including actual or estimated milestone completion dates. We have no objections
to the further release of this report to the public. This report will be available at
http://www.epa.gov/oig.
If you or your staff have any questions, please contact Carolyn Copper, Director for Program
Evaluation, Hazardous Waste Issues, at 202-566-0829 or copper.carolyn@epa.gov: or Steve
Hanna, Project Manager, at 415-947-4527 or hanna.steve@epa.gov.
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EPA Needs to Improve Internal Controls 09-P-0144
to Increase Cost Recovery
Table of Contents
Chapters
1 Introduction 1
Purpose 1
Background 1
Noteworthy Achievements 2
Scope and Methodology 2
Prior Evaluation Coverage 4
2 EPA Has Internal Controls to Recover Superfund Removal Costs,
But Key Controls Need Improvement 5
Not All Costs Recovered at Non-NPL Removal Sites 5
EPA Monitors the Statute of Limitations on Cost Recovery 5
EPA Oversight Needs to Include Routine Reviews of PRP Search Status.... 6
PRP Search Results Are Not Consistently Documented 6
Conclusions 8
Recommendations 8
Agency Comments and OIG Evaluation 8
3 EPA Does Not Routinely Review Some Superfund Accounts
That Can Contain Recoverable Government Costs 10
EPA Does Not Review Non-Site-Specific Accounts 10
Recommendations 11
Agency Comments and OIG Evaluation 11
4 EPA Information Systems Necessary for Cost Recovery
Have Data Integrity Problems 13
CERCLIS Sites Are Not Always Identified in SCORPIOS 13
SSIDs and Names in SCORPIOS Have Some Data Quality Problems 14
EPA Public Information Systems Yield Different Results 14
Conclusions 15
Recommendations 15
Agency Comments and OIG Evaluation 16
Status of Recommendations and Potential Monetary Benefits 17
Appendices
A Agency Response to Draft Report and OIG Evaluation 18
B Distribution 28
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09-P-0144
Chapter 1
Introduction
Purpose
The purpose of this evaluation was to assess the U.S. Environmental Protection
Agency's (EPA's) internal controls to ensure it is recovering Superfund removal
costs from sites not on the National Priority List (NPL).
We addressed the following questions:
1. What internal controls does EPA use to monitor expenditures and cost
recovery at non-NPL removal sites?
2 How does EPA ensure that potentially responsible party (PRP) searches are
completed and documented for non-NPL removal sites?
3. What processes and controls does EPA (regions and Headquarters) use to
monitor costs attributed to generic site spill identification number (SSID)
codes?
4. What processes and controls does EPA (regions and Headquarters) use to
ensure removal milestones are documented in the Comprehensive
Environmental Response, Compensation, and Liability Information System
(CERCLIS)?
5. What processes and controls do EPA (regions and Headquarters) use to ensure
accuracy and consistency of Superfund Cost Recovery Package Imaging and
On-Line System (SCORPIOS) data?
Background
The Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA) authorizes EPA to expedite removing hazardous substances if these
substances pose a threat. CERCLA authorizes EPA to recover Superfund cleanup
expenses (costs) from responsible parties. In some cases, EPA pays for these
removal actions and later recovers its costs from PRPs. However, the presence of
viable PRPs, with their ability to pay cleanup costs, influences cost recovery. If
no viable PRPs are associated with a removal site, or EPA does not locate viable
PRPs, it may not be able to recover any Superfund expenditures at the site.
Cost Recovery
As part of its Superfund cost recovery process, EPA uses an automated system
known as the Superfund Cost Recovery Package Imaging and On-Line System
(SCORPIOS) to calculate Superfund site costs. SCORPIOS is a data repository
from the EPA Integrated Financial Management System (IFMS). SCORPIOS
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09-P-0144
includes both direct Superfund costs from IFMS and indirect rates, which are
developed on a region and fiscal year specific basis, from data contained in IFMS.
Direct Superfund costs include personnel costs, travel, and contract costs, among
others. Indirect Superfund costs reflect costs for managing facilities and other
Superfund overhead costs not linked to specific sites. Superfund sites and major
site actions, such as removals and cost recovery, are tracked in CERCLIS.
Noteworthy Achievements
According to EPA, their noteworthy achievements related to removal actions,
removal expenditures, and cost recovery at non-NPL removal sites include:
• To address immediate threats to communities, EPA obligated more than
$140.7 million to conduct and oversee 351 emergency response and removal
actions in Fiscal Year (FY) 2007. These emergency response and removal
actions ranged in size from a catastrophic explosion and fire in Danvers,
Massachusetts, to a residential mercury release in Yakima, Washington.
• One of EPA's FY 2008 enforcement goals is to address cost recovery at all
National Priority List and non-National Priority List sites with a statute of
limitations (SOL) on total unaddressed past costs equal to or greater than
$200,000. In FY 2008, EPA achieved this goal for 100 percent of these sites,
and for an average of 99 percent of these sites from FY 2005- FY 2007.
• Superfund officials have emphasized to EPA staff that PRPs should perform
removal actions whenever possible. PRPs completed approximately one-half
of the non-NPL removals from FY 2000- FY 2007. In FY 2008, PRPs
completed 51 non-NPL removal actions under EPA enforcement instruments
with values estimated by EPA at over $60 million. In the last 5 years, PRPs
completed 191 non-NPL removals with values estimated by EPA at over $260
million as a result of EPA enforcement efforts.
Scope and Methodology
We completed our work from March 2008 to February 2009 in accordance with
Government Auditing Standards, issued by the Comptroller General of the United
States. Those standards require that we plan and perform the evaluation to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our objectives. We believe the evidence obtained provides
a reasonable basis for our findings and conclusions based upon our objectives.
We assessed internal controls over the cost recovery process for non-NPL
Superfund sites.
We determined the internal controls EPA uses to monitor expenditures and cost
recovery at non-NPL sites. From January 1, 2000, through December 31, 2007,
there were 707 completed non-NPL removals in EPA's CERCLIS database for
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09-P-0144
Regions 5, 9, and 10. These removals include both EPA Superfund-fmanced and
PRP-led removals, but do not include removals at proposed NPL sites. Using
EPA's SCORPIOS database, we identified total costs for those sites. We
identified site collection reports for 155 sites with costs greater than $500,000,
which represents approximately 85 percent of the total costs. We provided the
regions with summaries of these total cost and collections reports and asked
specific questions related to each site in terms of sites that were billed, unbilled,
or lacked an SSID, and the status of cost recovery efforts. In these responses,
regional staff provided various explanations for unrecovered costs at each site.
We did not review site files to verify the accuracy of these reasons. However, we
were able to classify these reasons into several categories, to include a lack of
viable PRPs, pending Government actions, or collected.
We examined internal controls by performing analyses to determine whether EPA
was achieving cost recovery within the statute of limitations for all non-NPL
removals with total costs greater $200,000. We analyzed CERCLIS data to
determine whether EPA uses CERCLIS to track removal milestones (Question 1).
We conducted site file reviews at the regions and looked for cost recovery
decision documents and PRP search records, and we reviewed policies and
procedures for conducting PRP searches (Question 2). We obtained a list of non-
specific site costs and the associated action codes from the Agency and checked
this against agency guidance (Question 3). We conducted interviews with
Regions 5, 9, and 10, and with the Office of Solid Waste and Emergency
Response (OSWER), the Office of Enforcement and Compliance Assurance
(OECA), and the Office of the Chief Financial Officer (OCFO) to determine
relevant policies and procedures in place, including system controls, regarding the
cost recovery process for non-NPL Superfund sites (Questions 1, 2, 3, 4, and 5).
We obtained and analyzed selected data from SCORPIOS and CERCLIS to
evaluate data quality between and within the systems (Questions 4 and 5).
Limitations
The following limitations potentially affect the interpretation of SCORPIOS
information:
• Prior to 2001, EPA applied a different definition of indirect costs than it uses
now. Because of this difference, applying the current indirect rate to past
"direct" expenses may overstate or understate those past expenses.
• Depending upon when EPA issues bills, a provisional (i.e., draft) or final
indirect rate is applied to the total costs. Because provisional and final rates
may be different, if EPA calculates sites costs using a provisional rate, future
attempts to reconstruct past costs may not show the same results. SCORPIOS
maintains only one indirect rate per region for each year. After EPA finalizes
the final rate, SCORPIOS overwrites the provisional rate with the final.
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09-P-0144
We reviewed a judgmental sample of 15 of 39 site files in regions 5, 9, and 10
with total site costs greater than $2 million to examine documentation for PRP
searches, including using the PRP checklist. We selected these sites based on
their total costs in excess of $2 million and because CERCLIS indicated cost
recovery efforts were complete. None of the site files reviewed contained the
checklist of PRP search tasks described in EPA's PRP Search Manual. EPA staff
confirmed that no regions routinely use the PRP checklist.
Prior Evaluation Coverage
The following recent EPA Office of Inspector General (OIG) reports addressed
regional cost recovery issues or data issues pertaining to Superfund. Findings
from these reports included erroneous bills and delays in issuing the bills, as well
as issues with data integrity in CERCLIS.
• Comprehensive Environmental Response, Compensation, and Liability
Information System (CERCLIS) Data Quality, Report No. 2002-P-00016,
September 30, 2002.
• EPA Could Improve Its Redistribution of Superfund Payments to Specific
Sites, Report No. 2006-P-00027, July 31, 2006.
• EPA Can Recover More Federal Superfund Money, Report No. 08-P-0116,
March 26, 2008.
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09-P-0144
Chapter 2
EPA Has Internal Controls to Recover
Superfund Removal Costs, But Key Controls
Need Improvement
Although EPA has some documented controls for conducting and documenting
PRP searches, we found these controls are not followed. EPA does not
consistently monitor PRP searches. Some regions have their own PRP search
procedures, but EPA does not ensure PRP searches are consistently documented
for all sites. PRP searches are a critical control in cost recovery. Limited controls
in this area may result in missed cost recovery opportunities. EPA has an internal
control to ensure that cost recovery at Superfund non-NPL removal sites is
completed within the statute of limitations (SOL), but key controls for PRP
searches need improvement.
Not All Costs Recovered at Non-NPL Removal Sites
Within a sample of removal actions we reviewed with costs greater than
$500,000, EPA collected from responsible parties approximately 11 percent
($31.4 of $294.5 million) of the Federal Government's costs for conducting the
removal actions. EPA staff gave reasons for not recovering all costs from these
sites. According to EPA regional staff, about another 30 percent ($86 million) of
the costs are pending further government action. EPA attributed most of the
remaining $177.1 million of unrecovered costs to the lack of viable PRPs.
EPA Monitors the Statute of Limitations on Cost Recovery
EPA has an internal control for addressing Superfund removal cost recovery
within the SOL. The Agency has a Government Performance and Results Act
(GPRA) measure for meeting the SOL requirement and has reported almost 100
percent success. EPA staff stated they send a list out every year to address sites
18 months ahead of the SOL expiration. Based on our review of CERCLIS data,
22 of 152 (14.5 percent) removal sites appeared to have exceeded the SOL.
However, our review confirmed that EPA had resolved the SOL issues at these
sites. These sites appeared to have potential SOL issues in CERCLIS because
regional staff had not updated CERCLIS to reflect the SOL resolution. In 2009,
EPA plans to enhance the automated targeting of SOL sites.
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09-P-0144
EPA Oversight Needs to Include Routine Reviews of PRP Search
Status
The PRP search process identifies PRPs for a site and establishes PRP liability,
capability, and financial viability in order to compel PRPs to perform the response
action or for the potential recovery of EPA's cleanup costs. PRP Search Starts
and PRP Search Completions are program measures used to track PRP search
progress and are identified in an Agency manual that describes how the Superfund
program should be implemented. This manual is known as the Superfund
Program Implementation Manual (SPIM).
For the sites in our evaluation, we found that EPA oversight of PRP searches
needs improvement. EPA does not consistently track PRP search start or
completion milestones in CERCLIS or other reports. Of the 561 sites with site
spill identification numbers (SSIDs) in our sample, only 116, or 21 percent, had
PRP search completion dates in CERCLIS. Therefore, based on information
available in CERCLIS, we were unable to determine from a national oversight
perspective whether regional staff completed PRP searches for non-NPL removal
sites. This causes uncertainty regarding completion of this critical step in cost
recovery. Because PRP searches are a critical control in cost recovery, improved
oversight controls in this area could increase EPA's recovery of the Federal
Government's costs for conducting Superfund removals.
EPA headquarters staff stated they do not oversee (monitor) the status of PRP
searches through CERCLIS or Agency-wide reports. EPA provided summary
examples of five separate regional procedures for monitoring PRP searches.
These procedures vary among the regions and include generally using the date of
the cost recovery decision document as the PRP search completion date, specific
regional policies and procedures, documentation using a regional Enforcement
First Report, and oversight by an enforcement coordinator. However, the
effectiveness of these regional procedures is not verified by any Agency-wide
reporting. The lack of Agency-wide PRP search reports and incomplete
CERCLIS PRP search data provide little or no knowledge of the status of PRP
searches at sites in each region or nationwide.
PRP Search Results Are Not Consistently Documented
We found that EPA regions 5, 9, and 10, do not use a standard process to
document the results of PRP searches. Our review of Superfund site files shows a
lack of consistent and clear documentation of PRP searches.
EPA published the PRP Search Manual Guidance (manual) in September 2003.
The manual provides a framework for conducting complete and thorough PRP
searches. The purpose of the PRP search is to identify the universe of PRPs with
comprehensive evidence of liability at a site. The manual provides an outline of
the general objectives of the PRP search, describes typical baseline and follow-up
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Checklist for PRP SearchTasks:
1 .
2.
3.
4.
5.
6.
7.
8.
9.
1 0.
1 1.
1 2.
1 3.
1 4.
1 5.
1 6.
1 7.
1 8.
1 9.
20.
21.
22.
23.
24.
25.
Agency Record Collection & File Review
Title Search
Interview with Go ve rnm e nt O fficials
Records Compilation
Compliance History
PRP Status/PRP History
PRP Name and Address Update
CERCLA 104(e) Letters
Finan cial Status
History of Site Operations
Repo rt pre paration (PRPSearch Report)
Aerial photographs and Sanborn Maps
CERCLA Subpoena Authority
F ield S urvey
Industrial S urvey
PR P File Review
Private Citizen/PRP Interview
EPA Investigatio ns
CERCLIS
Waste Stream Inventory
Process Chemistry Analysis
Database s
Financial Assessment
Generator Ranking
Property Appraisal/Property Survey
Table 1 - PRP Search Checklist.
(Source: EPA PRP Search Manual)
PRP search tasks, and provides
specific tools and references. The
manual contains a checklist of
PRP search tasks (see Table 1)
and a checklist for removal/pre-
remedial sites. Using the
checklist is not required.
According to EPA staff, regions
use the checklist as a guide along
with their professional experience
to perform the PRP search. Staff
further informed us that a one size
fits all checklist is not appropriate
due to difference in site-specific
details, regions, and subject
matter.
The SPIM requires that when a
PRP search is complete, regions
should document in the site file
that they have met all reasonable
achievable criteria. According to
the SPIM, A PRP search completion constitutes the completion of the activities
taken by the region to identify PRPs at a site. In conducting the PRP search, the
region must consider which of the criteria outlined below are cost effective and
reasonable to meet relative to the anticipated overall cleanup costs at the site.
Upon completion, regions should document in the site file that they have met all
reasonable achievable criteria. Criterion 1 is mandatory for all PRP search
completions. The PRP search should ideally be completed prior to completion of
cleanup negotiations; however, it is recognized that this may not be achievable in
all situations. The recommended criteria for a thorough PRP search are:
1. Initiating a dialogue with early identified PRPs for the purpose of
providing an opportunity for PRP input into the PRP search.
2. Collecting the financial and contribution data needed to perform
equitable share calculations.
3. Following up on all leads as a way to identify parties to the site.
4. Making de minimis and non-exempt de micromis determinations
for all parties at the site.
5. Categorizing all parties [e.g., Generator/Transporter, Owner/-
Operator, Small Business ($2 million or less gross annual revenue
and 25 or fewer employees), Municipal Solid Waste Contributor,
etc.]; and
6. Performing a financial viability determination on all PRPs
asserting ability-to-pay problems.
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In our review of site files, we were unable to verify that the PRP search activities
Regions 5, 9, and 10 performed were consistent with the manual guidance. PRP
searches were not documented consistently in the site file.
Conclusions
EPA has an internal control for addressing Superfund removal cost recovery
within the statute of limitations, and has reported almost 100 percent success with
this measure. Cost recovery from non-NPL removal sites is between 10 and 40
percent. EPA staff attributed most of the unrecovered costs to a lack of viable
PRPs. However, controls for tracking and documenting PRP searches lack
consistent monitoring and verification. Improvements in oversight controls of
PRP searches could potentially increase cost recovery for these sites.
Recommendations
We recommend the Assistant Administrator for Enforcement and Compliance
Assurance:
2-1 Develop and implement a control to monitor the status and timeliness of
PRP searches at non-NPL sites.
2-2 Develop standard and mandatory regional requirements for PRP search
documentation that regions should complete as part of the cost recovery
decision document (closeout memo).
2-3 Develop and implement a control to verify and monitor that regions have
included PRP search documentation in the cost recovery decision
document.
2-4 Update PRP search guidance to reflect the mandatory requirements for
PRP search documentation.
Agency Comments and OIG Evaluation
The OIG made changes to the report based on the Agency's comments where
appropriate. Appendix A provides the full text of the Agency comments and OIG
response.
EPA generally agreed with all recommendations. For recommendation 2-1, EPA
stated that it agreed with the purpose of the recommendation. In its comments,
the Agency provided examples of ongoing activities it believed addressed
recommendation 2-1 and demonstrated controls were in place. However, more is
needed to ensure that these control activities are working as designed and
intended. We discussed with the Agency additional actions needed, such as
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09-P-0144
documenting these activities in the SPIM. The Agency agreed to take additional
actions.
The OIG agrees with OECA's response to recommendations 2-2 through 2-4. We
accept OECA's proposed limitation to recommendations 2-2 and 2-3 to include
only non-NPL removal sites with unaddressed past costs in excess of $200,000.
We agree that the proposed actions for recommendations 2-1 through 2-4, when
implemented, will meet the intent of the recommendations. All recommendations
are open with agreed-to actions pending. In its final response to this report, EPA
should provide estimated or actual completion dates for these recommendations.
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09-P-0144
Chapter 3
EPA Does Not Routinely Review Some
Superfund Accounts That Can Contain
Recoverable Government Costs
EPA may be missing opportunities to recover the government's costs for
conducting all Superfund removal activities. EPA may incur Superfund expenses
before a formal site-specific cost account is established. When this happens, EPA
can identify these costs under a general and non-site-specific Identifier Code
(ZZ), and, after later review, transfer the costs if a site-specific account is
established. However, EPA does not always review these costs for transfer to
formal site-specific Superfund accounts. Doing so would then allow these costs
to be reviewed for possible recovery. ZZ costs are large, yet EPA does not have
internal controls for annually reviewing all ZZ costs. Our work has identified
costs that should have been reviewed for proper coding or transfer to formal site-
specific accounts.
EPA Does Not Review Non-Site-Specific Accounts
EPA's financial management system accounts for and accumulates response
costs, such as removal costs, at a site-specific level. EPA financial systems
formally track site-specific costs using unique site spill identification numbers
(SSIDs). Generally, EPA establishes SSIDs when there is a reasonable
expectation that a response action will occur. When EPA establishes an SSID,
EPA can identify and track the Federal Government's site-specific costs that may
later be recovered from responsible parties.
EPA engages in pre-removal activities at sites that do not have an SSID, such as
preliminary site assessments. EPA uses the ZZ code to track these Superfund
costs. When EPA's pre-removal activities do not result in a removal action, costs
can remain categorized as ZZ costs. However, by the time EPA has taken a
removal action, an SSID should be assigned, and EPA should reassign appropriate
ZZ costs to the formal SSID. Following this process should allow all the
Government's site costs to be tracked and identified for potential recovery.
Between calendar years 2000 and 2007, ZZ costs were approximately $90 million
in Regions 5, 9, and 10. Nearly $25 million could be costs that can be assigned to
a specific site for possible recovery, or should have been coded to another
account. This has not occurred because neither the regions, nor OECA or OCFO
Headquarters have implemented controls to annually review or monitor ZZ costs.
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09-P-0144
On December 23, 2008, OCFO, issued a directive titled Direct Charging of
Super fund Costs: Site Specific Cost Accounting Methods, which includes the
following statement regarding ZZ accounts:
The approving official, usually the project officer, should request
adjustment of previous charges from the ZZ identifier to the site
account during the first billing cycle after the site-specific SSID
code is established. Intramural costs also should be adjusted
during the first billing cycle after the site-specific SSID code is
established.
Recommendations
We recommend that the EPA Chief Financial Officer, in cooperation with the
Assistant Administrator for Solid Waste and Emergency Response and the
Assistant Administrator for Enforcement and Compliance Assurance, require
Regions 5, 9, and 10 to:
3-1 Perform a review of regional ZZ accounts to verify the appropriate use of
the code, and reassign costs to the appropriate account or SSID, including
a summary of the reassignment of the estimated $25 million in miscoded
ZZ costs.
We recommend that the EPA Chief Financial Officer, in cooperation with the
Assistant Administrator for Solid Waste and Emergency Response and the
Assistant Administrator for Enforcement and Compliance Assurance, require all
EPA regions to:
3-2 Perform an annual review of ZZ accounts to verify the appropriate use of
the code and reassign costs to the appropriate account or SSID.
Agency Comments and OIG Evaluation
The OIG made changes to the report based on the Agency's comments where
appropriate. Appendix A provides the full text of the Agency comments and OIG
response.
EPA concurred with all recommendations. EPA proposed limitations on the
review of costs in recommendation 3-1 to include only extramural costs for the
FYs 2005-2007. We accept these limitations, with the qualification that EPA
provides documentation of the quantity of extramural costs in the summary of
reassigned of costs. We agree with the proposed actions in response to
recommendation 3-2, which will create an annual review process for ZZ
expenditures.
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We agree that the proposed actions for recommendations 3-1 and 3-2, when
implemented, will meet the intent of the recommendations. All recommendations
are open with agreed-to actions pending. In its final response to this report, EPA
should provide estimated or actual completion dates for these recommendations.
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Chapter 4
EPA Information Systems Necessary for
Cost Recovery Have Data Integrity Problems
CERCLIS and SCORPIOS database systems lack internal controls necessary for
effective cost recovery and have data quality problems that may affect EPA's
ability to identify costs associated with a specific site. For example, the lack of a
CERCLIS identification number (ID) or an invalid SSID in SCORPIOS, or major
differences in the site name could cause regional staff to overlook some costs
associated with a site. These data quality issues are caused by not routinely
comparing data elements between and within the two systems. As a result, cost
recovery could be compromised by difficulties in associating site costs with the
appropriate SSID.
CERCLIS Sites Are Not Always Identified in SCORPIOS
Removal sites are identified in CERCLIS by their 12-digit CERCLIS ID, while
cost recovery in SCORPIOS is based on the 4-digit SSID. CERCLIS contains
information on site actions, while SCORPIOS contains information on total site
costs and cost recovery. For effective cost recovery, costs associated with an
SSID must be associated with the CERCLIS ID. This may be accomplished by
storing both IDs in SCORPIOS, or by matching the sites in the two systems based
on the site name.
CERCLIS contains data on approximately 62,000 Superfund sites, nationwide.
SCORPIOS contains information on approximately 14,000 SSIDs assigned for
site-specific cost recovery. We found the following limitations in associating site
information between CERCLIS and SCORPIOS:
• Missing CERCLIS IDs - In SCORPIOS, the total costs and SSIDs for a site
can be identified by querying on the CERCLIS ID. During the course of this
review, we discovered some SSIDs without CERCLIS IDs. Analysis of
SCORPIOS data revealed that CERCLIS IDs may be missing from up to 15
percent of SSIDs for sites in CERCLIS. Identifying the SSIDs and costs for
these sites must therefore rely on less exact methods to identify the SSIDs,
such as matching by the site names in CERCLIS and SCORPIOS. After
discussing this issue, EPA regions have started adding CERCLIS IDs to sites
in SCORPIOS.
• Different site names - Of sites in SCORPIOS with valid CERCLIS IDs, 59
percent have different site names than those in CERCLIS. Most of these
appear to be minor discrepancies such as abbreviations, punctuation, or
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additional characters at the end of one of the names. However, some of the
names bear little resemblance to each other, and would be in different
locations in an alphabetic list of site names. This can complicate the ability to
correlate SCORPIOS SSID with CERCLIS sites, and could potentially reduce
cost recovery.
SSIDs and Names in SCORPIOS Have Some Data Quality Problems
Complete cost recovery through SCORPIOS relies on validly identifying costs by
the SSID. Some SSID data quality issues exist in SCORPIOS that could prevent
the appropriate identification of costs for a site and thereby reduce potential cost
recovery. These issues include:
• No site name associated with an SSID - Forty-four SSIDs have a name
indicated as "Site name does not exist." An additional 46 SSIDs have names
such as "Unknown," "Do not use - inactive," "SSID not used," or other text
that indicates the SSID is a duplicate or inappropriate. However, costs can
still be associated with these SSIDs in SCORPIOS, and some of these SSIDs
have total costs listed. In these cases, any costs associated with the SSIDs
could easily be overlooked when regions attempt to identify site-specific costs
for recovery.
• Use of problematic characters in SSIDs - Some SSIDs contain special
keyboard characters such as "!," "#," "$," "*," and "@." Some SSIDs have
similar-looking values but use an "I" instead of a numeric "1" or an "O"
instead a numeric "0." Mistakes can easily occur in keying these characters,
by mistakenly typing or not typing a special character by using or not using
the "shift" key, or by misreading an "I," "1," "O," or "0." As a result, site
costs may be associated with an incorrect SSID.
• Different site names - Some sites have multiple SSIDs. Some of these sites
have site names that are different from each other. In addition, some site
names begin with a space or the word "the," which complicates an effort to
locate a site by name on an alphabetic list.
EPA Public Information Systems Yield Different Results
EPA has at least three different Superfund Web-based queries accessible by the
public. These systems are the CERCLIS Basic/Advanced queries, the Superfund
Information System (SIS) and Envirofacts. These systems may yield different
results to the same query, or misleading results to a query, that could misinform a
member of the public attempting to obtain information on Superfund sites.
Examples are:
• CERCLIS Basic/Advanced query is not updated - This query has not been
updated with all data since January 9, 2003, but this qualification is not
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readily apparent. As a result, queries may not provide the same information
as SIS and Envirofacts. Further, the system provides different categories of
searches than SIS does.
• SIS contains information not in Envirofacts - The Office of Environmental
Information administers the Envirofacts database, and SIS may contain
information that is different from or not present in EPA's Envirofacts. Data
not present in Envirofacts includes sub-actions such as the issuance of notice
letters, and actions that have a start date but no completion date.
• SIS queries are inconsistent - Some Superfund actions have a completion date
but no start date. If these actions are queried by a start date range in SIS, no
results will be found even though the action exists and has been completed.
This situation can be misleading.
Conclusions
Various data quality issues within SCORPIOS, and data inconsistencies between
SCORPIOS and CERCLIS, indicate missing internal controls that could reduce
cost recovery. EPA's public information systems present potentially conflicting
results by providing differing answers to similar queries among various systems.
Recommendations
We recommend the EPA Chief Financial Officer:
4-1 Implement process controls to ensure consistent site data in SCORPIOS
and CERCLIS, including mechanisms to ensure valid CERCLIS IDs are
included in SCORPIOS for all SSIDs.
4-2 Implement system controls to ensure only valid SSIDs exist in
SCORPIOS, including processes to correct SSIDs without a site name and
SSID values that have been incorrectly entered.
We recommend the EPA Assistant Administrator for Solid Waste and Emergency
Response:
4-3 Until fixed, qualify the discrepancies among queries of EPA's public
Internet data systems CERCLIS Basic/Advanced Query, SIS, and
Envirofacts. These qualifications should include information on the
Internet query sites that alerts the public to the potential differences among
EPA's systems.
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Agency Comments and OIG Evaluation
The OIG made changes to the report based on the Agency's comments where
appropriate. Appendix A provides the full text of the Agency comments and OIG
response.
EPA concurred with all recommendations. EPA proposed actions to address the
data quality issues identified in recommendations 4-1 and 4-2, and to add
additional disclaimers to address recommendation 4-3.
We agree that the proposed actions for recommendations 4-1 through 4-3, when
implemented, will meet the intent of the recommendations. All recommendations
are open with agreed-to actions pending. In its final response to this report, EPA
should provide estimated or actual completion dates for these recommendations.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
Rec.
No.
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
POTENTIAL MONETARY
BENEFITS (in SOOOs)
Claimed Agreed To
Amount Amount
2-1 8 Develop and implement a control to monitor the
status and timeliness of PRP searches at non-NPL
sites.
2-2 8 Develop standard and mandatory regional
requirements for PRP search documentation that
regions should complete as part of the cost
recovery decision document (closeout memo).
2-3 8 Develop and implement a control to verify and
monitor that regions have included PRP search
documentation in the cost recovery decision
document.
2-4 8 Update PRP search guidance to reflect the
mandatory requirements for PRP search
documentation.
3-1 11 Require Regions 5, 9, and 10 to perform a review
of regional ZZ accounts to verify the appropriate
use of the code, and reassign costs to the
appropriate account or SSID, including a summary
of the reassignment of the estimated $25 million in
miscoded ZZ costs.
3-2 11 Require all EPA regions to perform an annual
review of ZZ accounts to verify the appropriate use
of the code and reassign costs to the appropriate
account or SSID.
4-1 15 Implement process controls to ensure consistent
site data in SCORPIOS and CERCLIS, including
mechanisms to ensure valid CERCLIS IDs are
included in SCORPIOS for all SSIDs.
4-2 15 Implement system controls to ensure only valid
SSIDs exist in SCORPIOS, including processes to
correct SSIDs without a site name and SSID values
that have been incorrectly entered.
4-3 15 Until fixed, qualify the discrepancies among queries
of EPA's public Internet data systems CERCLIS
Basic/Advanced Query, SIS, and Envirofacts.
These qualifications should include information on
the Internet query sites that alerts the public to the
potential differences among EPA's systems.
Assistant Administrator for
Enforcement and
Compliance Assurance
Assistant Administrator for
Enforcement and
Compliance Assurance
Assistant Administrator for
Enforcement and
Compliance Assurance
Assistant Administrator for
Enforcement and
Compliance Assurance
Chief Financial Officer,
in cooperation with the
Assistant Administrator for
Solid Waste and Emergency
Response and the Assistant
Administrator for
Enforcement and
Compliance Assurance
Chief Financial Officer,
in cooperation with the
Assistant Administrator for
Solid Waste and Emergency
Response and the Assistant
Administrator for
Enforcement and
Compliance Assurance
Chief Financial Officer
Chief Financial Officer
Assistant Administrator for
Solid Waste and Emergency
Response
$25,000
0 = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is undecided with resolution efforts in progress
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Appendix A
Agency Response to Draft Report
and OIG Evaluation
OIG Note: The Agency response was dated and received March 19, 2009. Page numbers
referenced in the Agency response refer to pages of the Draft Report, and may not be accurate
references to pages in this final report.
MEMORANDUM
SUBJECT: Response to OIG Draft Evaluation Report, "EPA Needs to Improve Internal Controls
to Increase Cost Recovery," Assignment Number: 2008-0004, February 17, 2009
FROM: Catherine R. McCabe
Acting Assistant Administrator
TO: Carolyn Copper, Director
Program Evaluation
Hazardous Waste Issues
Office of Inspector General
Thank you for giving us the opportunity to review the subject OIG draft evaluation report.
The Office of Enforcement and Compliance Assurance (OECA), Office of the Chief Financial
Officer (OCFO), and Office of Solid Waste and Emergency Response (OSWER) have reviewed the
report, identified the lead office for each OIG recommendation, and responded to each
recommendation. I am responding to the draft report on behalf of OECA, OSWER and OCFO. Our
staffs have told us that this evaluation went smoothly and that they have a good working relationship
with OIG staff. We appreciate your help to continually improve the Superfund program. We
particularly appreciate your approach to the informal review of the discussion draft and your
responsiveness to our ideas and suggestions.
OECA, OCFO, and OSWER provide the following comments in response to this report:
Recommendation 2.1: OIG recommends that the Assistant Administrator for Enforcement and
Compliance Assurance develop and implement a control to monitor the status and timeliness of PRP
searches at non-NPL sites.
OECA Response: OECA agrees with the purpose of this recommendation. OECA notes that it
currently relies on a series of existing controls relating to the status and timeliness of PRP searches.
OECA believes that taking an enforcement action against PRPs, either to perform the response
action or to seek cost recovery, is indicative of a timely PRP search. OECA currently tracks these
activities in CERCLIS. Another indicator that a PRP search is complete is the issuance of a decision
not to pursue cost recovery. OECA also tracks these decisions in CERCLIS. As acknowledged in
this report by the OIG, OECA has a process in place to ensure that either a cost recovery action is
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taken or a decision is made not to pursue cost recovery prior to the expiration of the statute of
limitations. This helps ensure that PRP search activities are completed in a timely manner. This
process applies to all Superfund sites with unaddressed past costs greater than $200,000, including
non-NPL removals. We believe a system of "controls" based on the monitoring of these elements
will ensure that the timeliness of PRP searches is monitored adequately.
OIG Response: The steps identified in OECA's response to recommendation 2-1 appear to
constitute sufficient information to measure the status and timeliness of PRP searches at non-
NPL sites. However, this information functions as a control only if EPA staff monitors the
information to ensure PRP searches are performed in a timely manner. In additional discussions,
OECA has identified an existing report from CERCLIS that summarizes the information. This
report and its use should be included the SPEVI, and the anticipated date for changes to the SPIM
should be included in EPA's 90-day response to this report. The recommendation is open with
agreed-to actions pending.
Recommendation 2.2: OIG recommends that the Assistant Administrator for Enforcement and
Compliance Assurance develop standard and mandatory requirements for PRP search documentation
that Regions should complete as part of the cost recovery decision document (closeout memo).
OECA Response: OECA agrees with this recommendation. OECA agrees to modify its case
conclusion/write-off guidance to require that, for non-NPL removal sites having unaddressed past
costs greater than $200,000 where the region decides not to pursue cost recovery, the decision
document/close out memorandum for that site will reference all PRP search documents used to make
that decision and identify where those documents are located. Please note that the decision
document memo, and the supporting documents it references, would be treated as enforcement
sensitive and would not be subject to release under FOIA.
We plan to limit this requirement to decisions not to pursue cost recovery because for all other sites
the PRP search activities are well documented in the "Findings of Fact" portion of any orders issued
or in the 10-point settlement analysis associated with any judicial enforcement action.
OIG Response: The OIG accepts OECA's suggestion to limit the applicability of the guidance
to sites with unaddressed past costs greater than $200,000. The recommendation is open with
agreed-to actions pending.
Recommendation 2.3: OIG recommends that the Assistant Administrator for Enforcement and
Compliance Assurance develop and implement a control to verify and monitor that regions have
included PRP search documentation in the cost recovery decision document.
OECA Response: OECA agrees with this recommendation. OECA will perform an annual
evaluation using a sample of non-NPL removals with unaddressed past costs greater than $200,000
where a decision was made not to pursue cost recovery. OECA will use criteria that include, but are
not limited to, the number and dollar value of the decision documents in a given region during the
prior fiscal year.
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OIG Response: The OIG accepts OECA's suggestion to limit the annual evaluation to non-NPL
removal sites with unaddressed past costs greater than $200,000, where a decision was made not
to pursue cost recovery. The recommendation is open with agreed-to actions pending.
Recommendation 2.4: OIG recommends that the Assistant Administrator for Enforcement and
Compliance Assurance update PRP search guidance to reflect the mandatory requirements for PRP
search documentation.
OECA Response: OECA agrees with this recommendation. OECA will update the PRP search
manual to reflect mandatory documentation requirements added to the case conclusion/write-off
guidance as described in our response to recommendation 2.2.
OIG Response: The OIG agrees with OECA's proposed actions in response to recommendation
2-4. The recommendation is open with agreed-to actions pending.
Recommendation 3.1: OIG recommends that the EPA Chief Financial Officer, in cooperation
with the Assistant Administrator for Solid Waste and Emergency Response and the Assistant
Administrator for Enforcement and Compliance Assurance, require Regions 5, 9, 10 to perform a
review of Region ZZ accounts from 2000 through 2007 to verify the appropriate use of the code
and reassign the costs to the appropriate account or SSID, including a summary of the estimated
$25 million in miscoded ZZ costs.
OCFO Response: OCFO partially agrees with this recommendation. Since the discussion draft
was provided in December 2008, Region 5 has already conducted an initial review of its ZZ
expenditures, and OCFO is working with Region 5 to document its redistribution efforts. OCFO
will conduct similar efforts with Regions 9 and 10. However, according to CERCLA
§113(g)(2)(A), the Statute of Limitations (SOL) for cost recovery is three years from completion
of a removal action. Because the SOL will have expired for older expenditures, OCFO will limit
the review to only FY 2005-FY 2007 expenditures. OCFO will also limit this FY 2005-FY 2007
expenditures review to extramural funds only, since approximately 95 percent of all ZZ costs in
Regions 5, 9, 10 for this period were charged to contracts and grants.
OIG Response: The OIG accepts the OCFO's proposed limitations in the review of ZZ costs.
However, we expect the OCFO to fully document and quantify these limitations in the summary
of the estimated $25 million. The anticipated date of this summary should be included as a
milestone in the 90-day response. The recommendation is open with agreed-to actions pending.
Recommendation 3.2: OIG recommends that the EPA Chief Financial Officer, in cooperation
with the Assistant Administrator for Solid Waste and Emergency Response and the Assistant
Administrator for Enforcement and Compliance Assurance, require all regions to perform an
annual review of ZZ accounts to verify the appropriate use of the code and reassign costs to the
appropriate code or SSID.
OCFO Response: OCFO agrees with this recommendation and will require each Region to
perform an annual review of ZZ expenditures to verify the appropriate use of the ZZ SSID and
associated codes, and to ensure that ZZ expenditures are redistributed to appropriate accounts, if
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necessary. The annual certification validating these costs will be implemented as part of the
Agency's annual Management Integrity Assurance Letter process starting in 2010.
OIG Response: The OIG agrees with the OCFO's proposed actions in response to
recommendation 3-2. The recommendation is open with agreed-to actions pending.
Recommendation 4.1: OIG recommends that the EPA Assistant Administrator for Enforcement
and Compliance Assurance and the Assistant Administrator for Solid Waste and Emergency
Response implement process controls to ensure consistent site data in SCORPIOS and CERCLIS
including mechanisms to ensure valid CERCLIS IDs are included in SCORPIOS for all SSIDs.
OCFO Response: This recommendation should be directed to OCFO, the owner of SCORPIOS.
OCFO agrees with this recommendation. OCFO wants to clarify that SCORPIOS contains non-
Superfund site information because it is also used as cost recovery system for Brownfields, OPA
(Oil Pollution Act), LUST (Leaking Underground Storage Tank) and other appropriations. These
sites will not have CERCLIS IDs. Therefore, OCFO in conjunction with the Regions, OECA, and
OSWER, will work to link Superfund site IDs with CERCLIS IDs for all those Superfund sites in
SCORPIOS that receive a CERCLIS ID.
OIG Response: OIG agrees with the OCFO's proposed actions in response to recommendation
4.1. The action official will be changed in the report to the EPA Chief Financial Officer. The
recommendation is open with agreed-to actions pending.
Recommendation 4.2: OIG recommends that the EPA Assistant Administrator for Enforcement
and Compliance Assurance and the Assistant Administrator for Solid Waste and Emergency
Response implement system controls to ensure only valid SSIDs exist in SCORPIOS including
processes to correct SSIDs without a site name and SSID values that have been incorrectly entered.
OCFO Response: This recommendation should be directed to OCFO, the owner of SCORPIOS.
OCFO agrees with this recommendation and plans to implement system controls to ensure only valid
site identifiers exist in SCORPIOS. OCFO will work with OECA, OSWER, and the Regions to
review the SCORPIOS database, and take necessary actions to remove inaccurate site names and
SSIDs from the database.
OIG Response: The OIG agrees with the OCFO's proposed actions in response to
recommendation 4.2. The action official will be changed in the report to the EPA Chief
Financial Officer. The recommendation is open with agreed-to actions pending.
Recommendation 4.3: OIG recommends that the EPA Assistant Administrator for Enforcement
and Compliance Assurance and the Assistant Administrator for Solid Waste and Emergency
Response, until fixed, qualify the discrepancies among queries of EPA's public Internet data systems
CERCLIS Basic/Advanced Query, SIS, and Envirofacts. These qualifications should include
information on the Internet query sites that alerts the public to the potential differences among
EPA's systems.
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OSWER Response: This recommendation should be directly solely to the Assistant Administrator
for OSWER, the owner of CERCLIS.
OSWER agrees with this recommendation. For the CERCLIS basic and advanced query, the system
currently contains the following disclaimer:
Disclaimer
The data contained in these reports are intended solely for use by employees of the U.S.
Environmental Protection Agency (EPA) for management of the Superfund program. They are
not intended for use in calculating Cost Recovery Statutes of Limitation and cannot be relied
upon to create any rights, substantive or procedural, enforceable by any party in litigation with
the United States. EPA reserves the right to change these data at any time without public
notice.
OSWER proposes to add the following language to the disclaimer:
Data elements may not be updated. Search capabilities may differ from other Superfund
site search query pages and EPA's Envirofacts.
With respect to the Superfund Information System (SIS), OSWER proposes to add a disclaimer link
to the SIS query page with the following language:
The data contained in these reports are intended solely for use by employees of the U.S.
Environmental Protection Agency (EPA) for management of the Superfund program. They are
not intended for use in calculating Cost Recovery Statutes of Limitation and cannot be relied
upon to create any rights, substantive or procedural, enforceable by any party in litigation with
the United States. EPA reserves the right to change these data at any time without public
notice.
Data elements may not be updated. In accordance with the Superfund Program
Implementation Manual (SPIM), not all actions require a start date or a completion date.
Search capabilities may differ from other Superfund site search query pages and EPA's
Envirofacts. The Envirofacts database is administered by the Office of Environmental
Information, and the Superfund Information System may contain information which is
different from, or not present in Envirofacts.
OIG Response: The OIG agrees with OSWER's proposed actions in response to
recommendation 4-3. The action official will be changed in the report to the EPA Assistant
Administrator for Solid Waste and Emergency Response. The recommendation is open with
agreed-to actions pending.
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ADDITIONAL COMMENTS:
OIG Response: We modified text of the report as appropriate, based on Agency comments in
this section. Specific OIG comments are included in this section only in response to Agency
comments on ZZ costs.
At a Glance -
"What We Found"
We ask that the second sentence in paragraph 2 of this section be modified to read: "EPA reports
show that the Agency has a high rate of success in addressing cost recovery requirements prior to the
expiration of the SOL." (Currently the sentence reads: EPA reports show that the Agency has a
high rate of success in complying with cost recovery requirements within the SOL.)
Chapter 1, Introduction -
"Cost Recovery"
The second sentence of this section states that the Superfund Cost Recovery Package Imaging and
On-Line System (SCORPIOS) includes both indirect and direct Superfund costs. Actually,
SCORPIOS contains direct costs from IFMS and indirect rates which are developed, on a Region
and Fiscal Year specific basis, from data contained in IFMS.
"Noteworthy Achievements"
We suggest the first sentence of the first bullet of this section be modified by changing the phrase
"total past costs" to "total unaddressed past costs" to more accurately reflect OECA's GPRA goal.
We would like to include a statement with respect to OECA's accomplishments in the removal
enforcement area, specifically, having PRPs perform removal actions rather than pursuing them in
cost recovery. Therefore, we ask that you add the following bullet to this section:
• In FY 2008, PRPs completed 51 non-NPL removal actions under EPA enforcement
instruments valued at over $60 million. In the last 5 years, PRPs completed 191 non-NPL
removals valued at over $260 million as a result of EPA enforcement efforts.
"Scope and Methodology"
Paragraph 2 references 707 completed non-NPL removals during January 1, 2000 through December
31, 2007, in Regions 5, 9, and 10. We ask that the report explain that this number includes both
Fund-lead and PRP-lead removals and does not include removals at Proposed NPL sites.
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"Limitations"
We suggest the second sentence of the first bullet be changed to say: "Because of this difference,
applying the current indirect rate to past "direct" expenses may overstate or understate those past
expenses."
Chapter 2, "EPA Has Internal Controls to Recover Superfund Removal Costs, but Key
Controls Need Improvement"
"EPA Does Not Oversee PRP Searches"
Although OECA does not review each individual PRP search, we do track when the regions compel
PRPs to perform the response action or pursue PRPs for cost recovery. OECA has not engaged in
routine reviews of regional decisions not to pursue cost recovery to ensure that those decisions are
supported with adequate PRP search documentation; however, we have performed such reviews on
an ad-hoc basis. We believe that a more appropriate title for this section would be: "EPA Oversight
Needs to Include Routine Review of Decisions Not to Seek Cost Recovery" and ask that you
consider making this change.
To reflect the dual purpose of PRP searches, we request that the first sentence of this section be
changed to read as follows: "The PRP search process identifies PRPs for a site and establishes PRP
liability, capability, and financial viability in order to compel PRPs to perform the response action or
for the potential recovery of EPA's cleanup costs." This statement conveys EPA's first priority with
respect to a PRP search, which is to obtain information necessary to get PRPs to perform the
response action. Only in circumstances where there is the need to take action quickly (e.g.,
emergency removal actions) or in the absence of cooperative or viable PRPs is the primary goal of
the PRP search to support cost recovery.
On page 6 the title of Table 1 (excerpted from the PRP Search Manual) is "PRP Search Checklist"
rather than "PRP Checklist."
We recommend on Page 6 that the entire PRP Search Completion language from the SPIM be
included rather than just including the criteria. As such, we request that the OIG insert the following
language prior to the criteria:
A PRP search completion constitutes the completion of the activities taken by the region to
identify PRPs at a site. In conducting the PRP search, the region must consider which of the
criteria outlined below are cost effective and reasonable to meet relative to the anticipated
overall cleanup costs at the site. Upon completion, regions should document in the site file
that they have met all reasonable achievable criteria. Criterion 1 is mandatory for all PRP
search completions. The PRP search should ideally be completed prior to completion of
cleanup negotiations; however, it is recognized that this may not be achievable in all
situations. The recommended criteria for a thorough PRP search are:
We also want to make you aware that since the OIG began its research, these criteria have been
modified in the revised version of the PRP Search Manual, which we're expecting to finalize in
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2009, and also will be modified in the next revision of the SPIM. We've attached the modified
criteria, for your reference.
Chapter 3, "EPA Does Not Review Some Superfund Accounts That Can Contain Recoverable
Government Costs"
EPA requests that the title to this chapter be modified as follows: "EPA Does Not Routinely Review
Some Superfund Accounts That Can Contain Recoverable Government Costs."
The OIG report implies that the only reason that $25 million of ZZ costs have not been
reassigned to an SSID is that they haven't been reviewed. While we agree with the need for
Regions to review ZZ costs, we ask that the OIG Report acknowledge that there are legitimate
reasons why some significant costs will remain in ZZ accounts. For example, many removal
assessments do not result in an EPA removal action, and therefore an SSID is never established.
Some of these assessments can be quite expensive, especially if they include laboratory costs.
OIG Response: The text in the report was modified to indicate that there can be reasons for
costs remaining in ZZ accounts. The report correctly states that $25 million of ZZ costs could be
costs that were incorrectly assigned because they were not reviewed by EPA. According to
information supplied by EPA, ZZ costs were $90 million in Regions 5, 9, and 10. Almost $25
million of these costs appear to have been miscoded according to EPA's criteria in the SPIM.
"EPA Does Not Review Non-Site-Specific Accounts"
We ask that the OIG Report acknowledge a recent OCFO directive on Superfund site cost
accounting. On December 23, 2008, OCFO, issued a directive titled Direct Charging of
Superfund Costs: Site Specific Cost Accounting Methods. Among other things, this directive
identifies a "key internal control" that directly addresses the need for Regions to provide EPA
finance centers, in a timely manner, the site-specific accounting information needed to
redistribute costs that were recorded with a ZZ identifier prior to establishment of an SSID code.
Specifically, the directive says on page 11:
The approving official, usually the project officer, should request adjustment of previous
charges from the ZZ identifier to the site account during the first billing cycle after the
site-specific SSID code is established. Intramural costs also should be adjusted during the
first billing cycle after the site-specific SSID code is established.
Chapter 4, "EPA Information Systems Necessary for Cost Recovery Have Data Integrity
Problems"
"EPA Public Information Systems Yield Different Results"
We request that the OIG clarify in the first bullet on page 13 that the Envirofacts database is
administered by the Office of Environmental Information, and that the Superfund Information
System may contain information which is different from or not present in EPA's Envirofacts.
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We appreciate the opportunity to comment on the draft report. We look forward to working with
you on this and other matters in the future. Should you have any questions regarding this response,
please contact Gwendolyn Spriggs, OECA's Audit Follow-Up Coordinator, at 202-564-2439.
Attachment
cc: M. Owen (OIG)
B. Breen (OSWER)
M. Froehlich (OCFO)
M. Mulkey (OECA/OSRE)
E. Gilberg (OECA/OSRE)
J. Woolford (OSWER/OSRTI)
E. Southerland (OSWER/OSRTI)
D. Deitrich (OSWER/OEM)
D. Tulis (OSWER/OEM
M. Schneider (OECA/OAP)
S. Silzer (OCFO/OFM)
K. O'Brien (OCFO/OTS)
G. Spriggs (OECA/OAP)
J. Webster (OSWER)
K. Mainess (OCFO)
B. Freggens (OCFO)
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09-P-0144
Attachment
PRP Search Completions as defined in the revisions of the PRP Search Manual, currently in
progress.
A PRP search completion constitutes the completion of the activities taken by the region to identify
PRPs at a site. In conducting the PRP search, the region must consider which of the criteria outlined
below are cost effective and reasonable to meet relative to the anticipated overall cleanup costs at the
site. Upon completion, regions should document in the site file that they have met all reasonable
achievable criteria. Criteria 1, below, is mandatory for all PRP search completions. The PRP search
should ideally be completed prior to completion of cleanup negotiations; however, it is recognized
that this may not be achievable in all situations. The recommended criteria for a thorough PRP
search are:
1. PRPs have been afforded opportunities to participate in or contribute to the PRP search, and the
information contributed has been verified and/or authenticated and incorporated into the PRP
search;
2. All relevant and material leads from CERCLA Section 104(e) responses, interviews, and other
primary or source documents have been pursued;
3. Sufficient information and evidence have been obtained to support the government's liability
case, or determine that no viable PRPs exist or can be found;
4. PRPs have been categorized and financial and waste contribution information needed to perform
orphan share calculations has been collected;
5. Ability to pay determination (including but not limited to the investigation and analysis of any
applicable insurance coverage) have been made for those PRPs who have asserted inability to
pay in good faith; and
6. General notice letters have been issued to all PRPs being pursued.
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09-P-0144
Appendix B
Distribution
Office of the Administrator
Acting Chief Financial Officer
Acting Assistant Administrator, Office of Enforcement and Compliance Assurance
Acting Assistant Administrator, Office of Solid Waste and Emergency Response
Acting Regional Administrator, Region 5
Acting Regional Administrator, Region 9
Acting Regional Administrator, Region 10
Deputy Chief Financial Officer
Principal Deputy Assistant Administrator, Office of Enforcement and Compliance Assurance
Principal Deputy Assistant Administrator, Office of Solid Waste and Emergency Response
Agency Follow-up Official (the CFO)
Agency Follow-up Coordinator
Office of General Counsel
Acting Associate Administrator for Congressional and Intergovernmental Relations
Acting Associate Administrator for Public Affairs
Audit Follow-up Coordinator, Office of the Chief Financial Officer
Audit Follow-up Coordinator, Office of Enforcement and Compliance Assurance
Audit Follow-up Coordinator, Office of Solid Waste and Emergency Response
Audit Follow-up Coordinator, Region 5
Audit Follow-up Coordinator, Region 9
Audit Follow-up Coordinator, Region 10
Acting Inspector General
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