EPA-350-R-08-001
                       January 2008
   OFFICE OF INSPECTOR GENERAL
Annual Superfund
Report to Congress for
Fiscal Year 2007
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      OIG Scorecard Summary ofSuperfund Results

                  by OIG Goal -  Fiscal Year 2007


OIG GOAL: Contribute to human health and environmental quality through improved business
practices, accountability, and integrity of program operations. Below are Superfund results of OIG
work in terms of outputs, actions by EPA, and impacts.
Dollars in Millions

   Audits, Program Evaluations, and Special Reviews

        2  Legislative/Regulatory Changes, Decisions, or Actions
        3  Examples of Environmental Improvement
        8  Management Best Practices Implemented
       18  Policy, Practice, Process Actions, or Changes Made
        5  Critical Public or Congressional Concerns Addressed
       51   Recommendations for Agency/Stakeholder Action
       36  Certifications/Validations/Verifications
        8  Best Management Practices Identified
        1   Environmental Risk Identified
        1   New FMFIA/Management Challenge/A-123 Risk Identified
     $2.9  Total Questioned Costs (all EPA)
    $15.1   Cost Efficiencies, All Federal (all EPA)
     $4.5  Total Questioned Cost Sustained by Management Decision
    $15.1   Total Cost Efficiencies Sustained by Management Decision


   Investigative Operations

     $0.3  Fines, Settlements, Restitutions
        2  Indictments
        1   Sentencing
        1   Civil Settlement
        5  Administrative Actions

Sources: Performance Measurement and Results System, Inspector General Operations and Reporting System, and
other OIG reports
               To find out more about the U.S. Environmental Protection Agency
               Office of Inspector General and its activities, visit our Website at:
                         http://www.epa.gov/oig
Cover photos:   Clockwise, from top left: The Libby, Montana, mine site (EPA photo); a caution sign
               at the Ringwood Mines/Landfill site in New Jersey (EPA OIG photo); and the
               Tremont City Landfill near Springfield, Ohio, which is a Superfund Alternative site
               (EPA photo).
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                   pL.>^  Printed on 100% recycled paper (minimum 50% postconsumer)

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This report covers Fiscal Year 2007 Superfund activity of the U.S.
Environmental Protection Agency (EPA) Office of Inspector General
(OIG). The Superfund Amendments and Reauthorization Act of 1986
requires the OIG to annually audit the Superfund program and report the
results to Congress.

We found several ways EPA can improve its management of Superfund
resources and free up funds for better use. We identified funding on
Superfund cooperative agreements that could be deobligated in both New
York and New Jersey.  New York could have deobligated $486,744 on a
project that had been frequently amended since 1987.  For New Jersey,
although EPA had identified $9.1 million for deobligation in November
2005 as part of its Fiscal Year 2006 deobligation plan, it had still not
deobligated those amounts as of September 2006. In another review, we
noted that EPA missed an opportunity to make timely and better use of
$2.8 million in the special account for the Thermo Chem Superfund site
in Michigan. The Agency could have funded other priority response
activities by reclassifying the funds no longer needed at that site.

Superfund interagency agreements with the U.S. Army Corps of
Engineers is an area where EPA needs to better justify and support its
decisions. EPA made over $500 million in interagency agreement
payments to the Corps  in Fiscal Years 2005 and 2006.  However, EPA
had limited assurance that the agreements were based on sound financial
decisions. EPA's lack of oversight also contributed to the Corps
accumulating $2.5 million in excess management and support fees from
the  Superfund program that should either be refunded or put to better use.

I am pleased to report that as a result of our work concerning the
Superfund site in Libby, Montana, EPA has agreed to fund and execute an
asbestos toxicity assessment.  This assessment is critical to the
determination of the health risk  from asbestos contamination in Libby.

From our review of EPA's oversight of the cleanup at the Ringwood
Mines/Landfill Superfund site in New Jersey we concluded that EPA met
many requirements but could have conducted a more thorough initial
investigation. EPA had selected a remedy that addressed site
groundwater and surface water concerns, but EPA could have ensured
that a more comprehensive survey was conducted of the 500-acre  site.
EPA removed the  site from the National Priorities List in 1994, but when
residents continued to discover paint sludge, EPA for the first time in
Superfund's history restored a site to the list.  In a separate review at the

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Ringwood site, we did not find evidence that EPA's actions to remediate
environmental conditions at the site were affected by the area's racial,
cultural, or socioeconomic status. However, we did note communication
problems.

Although EPA has taken actions to improve its 5-year review process for
Superfund sites, additional steps are needed to support and communicate
conclusions, improve review timeliness, and provide fuller assurance that
cleanup actions protect human health and the environment.  Addressing
Superfund funding and program management issues remains important.
We will continue to assist Congress and EPA in their efforts to protect
against the potential adverse health and environmental impacts resulting
from Superfund sites.  Early identification, communication, and
evaluation of issues needed to reform the Superfund program can better
prepare the Agency to address Superfund issues.
                                  Bill A. Roderick
                                  Deputy Inspector General

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     EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
                       Table of Contents
Hazardous Substance Superfund Trust Fund	   1
        EPA Earns Unqualified Opinion on Financial Statements	    1
        Deobligations for Superfund Cooperative Agreements with
           New York and New Jersey Noted	    2
        EPA Could Better Use $3.324 Million from Special Account for
           Thermo Chem Superfund Site	    2
        EPA Can Improve Its Management of Superfund Interagency Agreements
           with U.S. Army Corps of Engineers	    3

Assistance Agreements	   4
        Cheyenne River Sioux Tribe Outlays of $3.1 Million Questioned	    4

Remedial Action Decision Making	   5
        Limited Investigation at Ringwood Superfund Site Led to Missed Contamination	    5
        EPA Needs to Complete a Toxicity Assessment in Libby, Montana	    6
        EPA Needs to Improve Controls for Superfund Alternative Sites Approach	    6
        Five-Year Review Process for Superfund Remedies Improved,
           But Further Steps Needed	    7
        Superfund's Board of Directors  Needs to Complete Recommendations
           from The 120-Day Study	    7

Response Claims	   9
        Review of Bofors-Nobel Superfund Site Claim	    9
        Review of York Oil Superfund Site Claims	    9
        Review of Armour Road Superfund Site  Claim	    9

Performance Review	  10
        Environmental Justice and Communication Concerns
           Complicated Ringwood Cleanup	   10

Investigative Activity	  11
        EPA Contract Laboratory Settles Civil Suit for $200,000	   11

OIG Financial Statements	   12
Listing of Fiscal Year 2007 Superfund Reports	  13

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
         Hazardous Substance Superfund Trust Fund
The Government Management and Reform Act requires Federal agencies to prepare annual audited
financial statements. The Act was passed to help improve agencies' financial management practices,
systems, and controls so that timely, reliable information is available to manage Federal programs.

One of the major entities covered by the U.S. Environmental Protection Agency's (EPA's) financial
statements is the Hazardous Substance Superfund Trust Fund. Our audit of EPA financial statements also
meets our Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
requirement to annually audit the Superfund Trust Fund.  EPA presented the financial statements for
Fiscal Year 2007 in a consolidated format and did not include a separate presentation on the Superfund
Trust Fund.

The following summary of our Fiscal Year 2007 financial statement audit relates to findings from our
audit of EPA's financial statements, including those of the Hazardous Substance Superfund Trust Fund.
After the details on the financial statement audit are summaries on several other reviews we conducted
that note ways EPA can improve its management of Superfund resources.
              EPA Earns Unqualified Opinion on Financial Statements

              EPA earned an unqualified opinion on its Fiscal Year 2007 financial statements. That
              means we found the statements to be fairly presented and free of material misstatements.
              However, in evaluating internal controls, we noted seven significant deficiencies.
              Significant deficiencies are deficiencies in internal control 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.

              One of the significant deficiencies represented a material weakness in internal controls.
              This deficiency primarily involved Superfund receivables.  During Fiscal Year 2006,
              EPA materially understated the Fiscal Year 2006 asset value for 31 accounts by writing
              off $150 million that was collectible. EPA recorded the write-offs based on
              implementation of its new "Currently Not Collectible" policy, which mandates automatic
              write-off from accounts receivable for those receivables that had no collection activity for
              2 years.  However, during Fiscal Year 2007, EPA collected the $150 million in
              receivables written off.

              Further, we noted the following six significant deficiencies:

                  •   EPA did not properly compute an allowance for doubtful accounts.
                  •   In addition to the material weakness discussed above, EPA needs to improve
                     internal controls in recording and accounting for accounts receivable.
                  •   Key applications do not meet Federal and EPA information security requirements.
                  •   Access and security practices for critical information technology assets need
                     improvement.
                  •   EPA needs to improve controls over the Integrated Financial Management
                     System Suspense Table.

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
          •  EPA did not maintain adequate documentation for obligating accounting
             adjustments.

      Regarding compliance with laws and regulations, we found that EPA did not comply with
      regulations relating to reconciling intragovernmental transactions. EPA had over
      $375 million in net unreconciled differences with 46 of its trading partners.

      The Agency agreed with the issues raised and indicated it has begun taking corrective
      actions.

      We issued our report (08-1-0032) on November 15, 2007.

      Deobligations for Superfund Cooperative Agreements with
      New York and New Jersey Noted

      We examined the status of funds obligated for Superfund cooperative agreements for two
      States and noted funding that could be deobligated.

      For New York, $486,744 could have been deobligated. EPA continued to amend and
      extend the project period and award amounts for this multi-site agreement, even though
      some sites were completed. This agreement, awarded in 1987 for an initial period of
      18 months, was amended 21 times.

      For New Jersey, EPA identified $9.1 million for deobligation in its Fiscal Year 2006
      deobligation plan, prepared in November 2005. However, as of September 2006, the
      deobligations had not occurred.

      For one of three cooperative agreements we reviewed in New York,  costs incurred
      totaling $3 million were not billed timely. In New Jersey, two multi-site cooperative
      agreements totaling about $3.4 million were not billed timely, resulting in unused
      obligated funds remaining idle.

      We issued our report (2007-2-00003) on October 30, 2006.

      EPA Could Better Use $3.324 Million from Special Account for
      Thermo Chem Superfund Site

      EPA Region 5 missed an opportunity in 2005 to make timely and better use
      of $2.8 million in the special account for the Thermo Chem Superfund site.  Specifically,
      the Region could have funded other priority response activities by reclassifying funds no
      longer needed at the Thermo Chem site. Region 5 can also make use of an additional
      $524,000 of the remaining special account funds that have no current planned use.

      Superfund legislation authorizes EPA 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 in EPA's Hazardous Substance Superfund
      Trust Fund. Thermo Chem is a former waste solvent reprocessing and storage site near
      Muskegon, Michigan.

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
      In 2004, Region 5 staff recommended the reclassification of approximately $2.8 million
      from the Thermo Chem special account because these funds were not needed at the site.
      However, these funds were not reclassified because the site managers were unaware that
      action was needed or required.

      We recommended that Region 5 reclassify approximately $2.8 million (plus additional
      accrued costs) from the Thermo Chem special account to fund other priority response
      activities.  We also recommended that Region 5 reclassify, or transfer to the Trust Fund
      as appropriate, approximately $524,000 of the Thermo Chem special account that has no
      planned future use.

      We noted our findings in an "Early Warning" report; our review of Thermo Chem is
      continuing.

      We issued our report (2007-S-00002) on August 20, 2007.

      EPA Can Improve Its Management of Superfund
      Interagency Agreements with U.S.  Army Corps of Engineers

      EPA needs to better justify and support its decisions to enter into Superfund interagency
      agreements with the  U.S. Army Corps of Engineers.

      In Fiscal Years 2005-2006, EPA made over $500 million in Superfund interagency
      agreement payments to the U.S. Army Corps of Engineers to perform cleanups.

      Both the decision memoranda EPA used to justify use of the Corps and methods of
      oversight for monitoring the Corps' work needed improving.  The decision memoranda
      did not contain comparisons of alternatives considered.  Further, EPA did not develop
      independent cost estimates. As a result, EPA had limited assurance that the interagency
      agreements it awarded to the Corps were based on sound financial decisions. EPA also
      did not always receive quality and timely progress reports from the Corps, or understand
      the services for which the Corps was billing and the Agency was paying.  EPA's lack of
      oversight also contributed to the Corps accumulating $2.5 million in excess management
      and support fees from Superfund that should either be refunded or put to better use.

      In response to our recommendations, EPA agreed to revise its policy to ensure it
      implemented procedures for holding regions accountable to develop and document their
      own independent cost estimates for Corps in-house costs, and conduct cost analysis of
      alternatives when determining whether to use the Corps. EPA also agreed to develop a
      plan for using feedback reports as an oversight tool to monitor and improve the Corps'
      performance. The improved monitoring would eliminate $2.5 million in excess and idle
      management and support fees that EPA paid the Corps.

      In its report on EPA's Fiscal Year 2008 budget, the  House Appropriations Committee
      cited the OIG report as important work regarding Superfund and agreed with the report's
      conclusions and recommendations.

      We issued our report (2007-P-00021) on April 30, 2007.

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
                          Assistance  Agreements
About half of EPA's Fiscal Year 2007 budget was awarded to organizations outside the Agency through
assistance agreements, including a significant amount of funds related to Superfund sites. CERCLA
requires audits "of a sample of agreements with States." During 2007, we examined the status of funds
obligated for Superfund cooperative agreements for the States of New York and New Jersey, and noted
funding that could be deobligated. Details are on page 2 of this report, in the "Hazardous Substance
Superfund Trust Fund" section. In addition, during 2007, we issued one report that involved a specific
assistance agreement related to Superfund.
              Cheyenne River Sioux Tribe Outlays of $3.1 Million Questioned

              We questioned $3,101,827 of $3,736,560 in EPA outlays reported by the Cheyenne River
              Sioux Tribe under five grants because of financial management problems.

              EPA awarded five agreements to the Tribe to fund a variety of environmental activities.
              One of the five agreements funded a Superfund pilot project that provided management
              assistance to enable the Tribe to coordinate data collection, human health and ecological
              risk assessment planning, and response activities with EPA and other Federal activities.
              Of the $588,695 in outlays forthis Superfund grant, we questioned costs of $554,633.

              Overall, the Tribe did not comply with financial and program management standards.
              The Tribe did not:

                  •   Follow labor cost documentation requirements for Federal grants;
                  •   Compete contracts, justify sole-source procurements, or perform cost analyses;
                  •   Demonstrate that fuel costs charged were equitably allocated;
                  •   Properly account for vehicle leases;
                  •   Comply with regulations and internal policy when purchasing equipment;
                  •   Properly compute and claim indirect costs; and
                  •   Maintain documentation for the recipient share of costs reported.

              The Tribe also was not able to demonstrate that it completed all work under the
              agreements.

              We recommended that EPA Region 8's Regional Administrator disallow and recover the
              Federal share of ineligible costs of $64,765. None of the ineligible costs applied to the
              Superfund grant. For the remaining $3,037,062 questioned, including costs for the
              Superfund grant, the Region  should require the Tribe to provide sufficient documentation
              and disallow and recover the Federal share of any outlays the Tribe cannot support. The
              Region should confirm that all work under the agreement has been satisfactorily
              completed.

              We issued our report (2007-4-00078) on September 24, 2007.

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
                  Remedial Action Decision  Making
We performed in-depth reviews of the reliability of site-specific analytical data for sound site remediation
decisions.  Also, we worked closely with the Agency to characterize Superfund sites. Through these and
other actions, we are working to ensure that EPA decisions on site remediation are based on data of known
quality.  During 2007, we found ways in which EPA could improve remedial action decision making.
              Limited Investigation at Ringwood Superfund Site Led to
              Missed Contamination

              EPA's oversight of cleanup at the Ringwood Mines/Landfill Superfund site in
              New Jersey met many requirements, but EPA could have conducted a more thorough
              investigation.

              EPA placed the Ringwood site on the Superfund National Priorities List in 1983 and
              removed the site from the list in 1994 after determining that the site was protective of
              human health and the environment. After 1994, more cleanup actions occurred at the
              site, and residents continued to discover paint sludge, prompting EPA for the first time in
              Superfund's history to restore a site to the list.  Members of Congress asked us to look at
              several issues related to the site.

              We found that based on a limited initial site investigation, EPA Region 2 selected a
              remedy that addressed site groundwater and surface water concerns.  EPA ensured
              implementation of the remedy and removal of identified paint sludge. However, EPA did
              not comply with the community notification requirements when conducting 5-year
              reviews.

              The initial site investigation was performed by Ford Motor Company - one of the parties
              responsible for the contamination. Paint sludge continued to be discovered because EPA
              did not ensure that Ford conducted a comprehensive investigation. EPA could have
              ensured that Ford conducted a more comprehensive survey of the 500-acre site and made
              better use of aerial photographs.  Also, EPA itself could have conducted a more thorough
              search for records involving waste disposal activities at the site by better enforcing
              disclosure requirements on Ford.

              Currently, under EPA orders, Ford is conducting an ongoing, comprehensive site
              investigation. If done properly, this investigation should address concerns about the
              initial site investigation.  We recommended that EPA Region 2 provide the Ringwood
              community with sufficient notification on initiation and results of 5-year reviews, and
              ensure that Ford submits all relevant information. EPA agreed with those
              recommendations. EPA Region 2 did not agree with another recommendation on
              providing staff with written guidance on records management policies; Region 2 stated it
              has already complied with pertinent EPA policies.  The issue remains open and
              unresolved.

              We issued our report (2007-P-00039) on September 25, 2007.

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
       EPA Needs to Complete a Toxicity Assessment in Libby, Montana

       EPA has not completed atoxicity assessment of asbestos in Libby, Montana, so it cannot
       be sure human exposure to Libby asbestos is at acceptable levels.

       After 1999 media reports called attention to Libby citizens' health problems, EPA
       officials requested that we review EPA's actions in cleaning up asbestos contamination.
       In January 2000, due to citizen concerns, EPA started sampling and analyzing lawn and
       garden products that contained vermiculite mined at Libby.  In March 2001, we reported
       that EPA had addressed asbestos contamination at other sites, but had failed to institute
       controls that might have protected Libby's citizens from the health effects of asbestos
       contamination. In 2002, EPA began an emergency response cleanup.

       In our most recent review, based on a request by Montana's two Senators, we found that
       EPA has neither planned nor completed a risk and toxicity assessment of the Libby
       asbestos to determine an acceptable level of human exposure. Thus, EPA cannot be sure
       that the ongoing Libby cleanup is sufficient to prevent humans from contracting asbestos-
       related diseases.  Also, EPA presented inconsistent positions on safety issues in two
       public information documents.

       As a result of our review, EPA agreed to fund and execute a toxicity assessment. EPA
       also agreed to replace the public information documents on Libby asbestos.

       We issued our report (2007-P-00002) on December 5, 2006.

       EPA Needs to Improve Controls for Superfund Alternative Sites
       Approach

       EPA will not be able to demonstrate outcomes and results of the Superfund Alternative
       sites approach until it addresses management control limitations and makes controls more
       transparent.

       The Superfund Alternative sites approach is an alternative to listing sites on the National
       Priorities List. Since the 1980s, EPA has used variations of this approach to clean up
       hazardous waste  sites, but has been criticized for its management and implementation of
       this  approach.

       We found that EPA has not finalized the universe of Superfund Alternative sites.
       Further, EPA does not have controls over designating Superfund Alternative sites in
       Superfund information systems or documenting hazard assessments for the sites. In
       addition, EPA only measures results at Superfund Alternative sites for one of six
       Superfund cleanup measures. Until EPA addresses these limitations in management
       controls and makes these controls more transparent, it cannot demonstrate outcomes and
       results of the Superfund Alternative approach.

       We recommended that EPA track and report cleanup progress at Superfund Alternative
       sites, and improve its communications, information, and transparency about the approach.
       EPA concurred with most of the recommendations.

       We issued our report (2007-P-00026) on June 6, 2007.

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007


       Five-Year Review Process for Superfund Remedies Improved,
       But Further Steps Needed

       Since our last review in 1999, EPA has taken actions to improve the 5-year review
       process for Superfund sites. However, additional steps are needed to support and
       communicate conclusions, improve review timeliness, and provide fuller assurance that
       cleanup actions protect human health and the environment.

       EPA's Superfund 5-year review process examines the remedies at hundreds of Superfund
       sites where hazardous substances remain at levels that potentially pose an unacceptable
       risk. The purpose is to determine whether remedies protect human health and the
       environment.

       Since our last review, EPA has issued the Comprehensive Five-Year Review Guidance,
       provided training, and reduced the review backlog. Nonetheless, while our examination
       of 39 of the 5-year review reports issued between Fiscal Years 2002 and 2004 did not
       determine whether remedies were successful at protecting human health and the
       environment, we found that:

          •  21 percent did not fully support conclusions on protectiveness,
          •  21 percent did not provide protectiveness conclusions that were complete,
          •  21 percent did not have sufficient information to implement recommendations,
             and
          •  23 percent did not meet public notification requirements.

       We recommended that EPA expand the scope of quality assurance reviews of 5-year
       review reports, and revise guidance to more clearly define short- and long-term
       protectiveness determinations. We also recommended evaluating region workloads, and
       using data in a new information system module to measure review effectiveness and
       impacts.  EPA generally concurred with our recommendations.

       We issued our report (2007-P-00006) on December 5, 2006.

       Superfund's Board of Directors Needs to Complete
       Recommendations from The 120-Day Study

       EPA needs to complete action on the recommendations from its 2004 study on how the
       Superfund program could be more efficient.

       In April 2004, EPA completed a report, requested by then Acting Deputy Administrator
       Stephen Johnson, entitled Superfund:  Building on the Past, Looking to the Future, more
       commonly known as The 120-Day Study. The report had 102 recommendations. In
       response to the report, the EPA's Acting Deputy Administrator created a Superfund
       Board of Directors to prepare, coordinate, and execute action  plans to address the report's
       recommendations. We followed up on three of the report's recommendations, involving:

          •  Analyzing Superfund sites to determine how many were Resource Conservation
             and Recovery Act (RCRA) facilities and if they were a burden to the program,
          •  Determining whether RCRA-regulated facilities would continue to  be in the
             Superfund program, and

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
          •   Determining whether promulgating new regulations for non-RCRA-regulated
              facilities would reduce the future needs of the Superfund program.

      While EPA has completed its work on the first two recommendations, it has not yet done
      so for the third. We recommended that the Board review a sample of the implemented
      study recommendations to confirm that the actions taken were complete and responsive
      to the original study recommendations.

      We issued our report (2007-P-00029) on August  1, 2007.

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
                               Response Claims
CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986, authorizes EPA
to pay any claim for response costs as a result of carrying out the National Contingency Plan. Potentially
Responsible Parties, who often make these claims, are required to enter into a Preauthorized Decision
Document with EPA to cover work for which some costs will be reimbursed. The document specifies the
work to be performed, the portion of the cost EPA will reimburse, and the procedures through which the
Potentially Responsible Parties can make claims for reimbursement. While we do not audit response
claims, we review claims by following the instructions in EPA's claims guidance for the claims adjuster.
During 2007, we performed several such reviews, as discussed below.
              Review of Bofors-Nobel Superfund Site Claim

              We reviewed the second mixed funding claim submitted by De Maximis, Inc., on behalf
              of the settling defendants for the Bofors-Nobel Superfund Site in Muskegon, Michigan.
              The Preauthorized Decision Document authorizes the claimant to submit claims for an
              amount which was the lesser of $7,200,000 or 47 percent of eligible, reasonable, and
              necessary costs incurred for design of the remedial action pursuant to the Record of
              Decision and Consent Decree. We recommended that EPA accept the claim as perfected,
              and accept for reimbursement $2,097,056 of the total allowable eligible costs of
              $4,461,821. We issued our report (2007-4-00053) on April 4, 2007.

              Reviews of York Oil Superfund Site Claims

              We reviewed the third, fourth, and fifth mixed funding claims submitted on behalf of
              Alcoa, Inc., for CERCLA response action at the York Oil Superfund Site in Franklin
              County, New York. The Preauthorized Decision Document authorizes the claimant to
              submit claims against the Superfund Trust for an amount not to exceed $2,738,700 or
              16.11 percent of eligible, reasonable, and necessary costs incurred for designing the
              remedial action pursuant to the Record of Decision and Consent Decree. We
              recommended that EPA accept the claims as perfected, and accept for reimbursement
              $308,596 of the total allowable eligible costs of $1,915,552. We issued our reports
              (2007-4-00056 and 2007-4-00069) on April 26 and July 31, 2007, respectively.

              Review of Armour Road Superfund Site Claim

              We reviewed the second mixed funding claim submitted by Morrison and Foerster LLP,
              on behalf of U.S. Borax, Inc., for the Armour Road Superfund Site in North Kansas City,
              Missouri. The Preauthorized Decision Document authorizes the claimant to submit
              claims against the Superfund Trust for an amount not to exceed $1,240,000 or 30 percent
              of eligible, reasonable, and necessary costs incurred for (1) building demolition and
              disposal; (2) soil excavation, treatment, and disposal; and (3) site restoration. We
              recommended that EPA accept the claim as perfected, and accept for reimbursement
              $1,200,000 of the total allowable eligible costs of $6,063,264. We issued our report
              (2007-4-00064) on June 4, 2007.

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       EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
                            Performance  Review
In addition to the reviews required by CERCLA and the Superfund Amendments and Reauthorization Act,
we conduct other reviews related to Superfund issues. Following is a summary of one completed during
Fiscal Year 2007.

              Environmental Justice and Communication Concerns
              Complicated Ring wood Cleanup

              We did not find that EPA's actions to remediate environmental conditions at the
              Ringwood Mines/Landfill Superfund site in New Jersey were discriminatory, but we did
              note communication problems.

              About 500 acres around the mines in Ringwood, New Jersey, became a Superfund site in
              1983 because of dumped hazardous paint sludge. Paint sludge was removed several
              times and the site was deleted from the Superfund list in 1994. But after several more
              removal actions were necessary, the Agency put the site back on the Superfund list in
              2006.  Residents said they were unfairly treated because of their racial makeup and
              socioeconomic status. Several believed their health was adversely affected by exposure
              to site contamination.  Three members of the New Jersey congressional delegation
              requested that we look into residents' concerns.

              We did not find evidence to indicate that EPA's actions to investigate or remediate
              environmental conditions at the Ringwood site were affected by the area's racial, cultural,
              or socioeconomic status. However, problems with communication and relationships
              impeded effective cooperation between  EPA and residents. Thus, we recommended that
              EPA address the Ringwood community's perceptions, prepare a community involvement
              plan, and increase communication. EPA concurred with our recommendations.
              We issued our report (2007-P-00016) on April 2, 2007.
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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
                             Investigative Activity
The OIG Office of Investigations continued to focus its investigative resources on allegations of fraud,
waste, and abuse in high risk and high dollar areas, including in the Superfund program.  During Fiscal
Year 2007, our Superfund investigative efforts resulted in:

    •   $295,502 in monetary fines and restitution
    •   2 indictments
    •   1 sentencing
    •   1 civil settlement
    •   5 administrative actions

Following is an instance of Superfund investigative activity with results in Fiscal Year 2007.

               EPA Contract Laboratory Settles  Civil Suit for $200,000

               On November 16, 2006, while admitting no wrongdoing, Liberty Analytical Corporation
               entered into a $200,000 Civil Settlement Agreement with the U.S. Attorney's Office for
              the Eastern District of North Carolina to settle allegations that the company submitted
               false claims to EPA.

               Compuchem  Environmental, a division of Liberty Analytical, Gary, North Carolina,
              provided false analytical data to EPA under the Superfund Analytical Services Contract
               Laboratory Program. Specifically, the company failed to properly calibrate gas
               chromatograph/mass spectrometer (GC/MS) instruments used in the analysis of samples
               from EPA Superfund sites. Each invoice submitted to EPA that contained false analytical
               data resulted  in a false claim.

               The investigation determined that quality control standards were routinely bypassed, in
              that improper calibration procedures extended the "run time" of the  GC/MS instruments,
              therefore producing false analytical data. Some analysts admitted that they had been
               following this procedure since as early as 1992.  Three Compuchem analysts involved in
              the improper  calibration practice were criminally charged and entered guilty pleas in U.S.
               District Court. All three analysts received  probation, fines or restitution, and community
               service, and were subsequently debarred (these actions had occurred and were reported in
               a prior reporting period). Because of missing data, it was not possible to determine
              which samples were affected by improper calibration and, therefore, which Superfund
               sites were potentially affected. Compuchem has been a part of the EPA Contract
               Laboratory Program since the 1980s.
                                              11

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
                        OIG Financial  Statements
                  Analysis of OIG's Fiscal Year 2007 Superfund Use
                                and Carryover Balance
Superfund
Budget
Object
Class
PC&B
Travel
Site Travel
Expenses
Contracts
WCF
Grants
FY 2006
Carryover
Avail in 07
($327,231)
700,679
5,000
163,618
716,769
(221 ,633)
2,390
FY 2006
Carryover
Used in 07
($263,396)
695,773
5,000
158,253
659,405
(221,718)
2,090
FY2006
Lapsed
Funds
($63,835)
4,906
0
5,365
57,364
85
300
FY 2007
Approp
$11,116,053
588,000
0
341 ,800
690,000
551 ,000
50,000
FY2007
Used in 07
$10,358,947
530,706
0
107,004
525,327
551,000
26,486
FY 2007
Carryover
$757,106
57,294
0
234,796
1 64,673
0
23.514
Total Cost
of FY 07
Operations
$10,095,551
1 ,226,479
5,000
265,257
1,184,732
329,282
28,576
Total Cost
as % of
07 Approp
91%
209%
--
78%
172%
60%
57%
Total SF
$1,039,592   $1,035,407    $4,185   $13,336,853  $12,099,470   $1,237,383   $13,134,877
                                                                                      98%
FY 2007 OIG Superfund FTE Usage
FY 2007 Available
FY 2007 FTEs Used
% of FTEs Used
       93.8 (88 on board 10/1/06)
       84.0
       89.6%
FTE    Full-Time Equivalent
FY     Fiscal Year
PC&B   Personnel Compensation and Benefits
SF     Superfund
WCF   Working Capital Fund
                                            12

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2007
Listing of Fiscal Year 2007 Superfund Reports
Report No.
2007-1-00007
2007-2-00003
2007-4-00019
2007-M-00001
2007-M-00002
2007-4-00028
2007-P-00002
2007-P-00006
2007-4-00032
2007-2-00012
2007-4-00042
2007-2-00017
2007-2-00018
2007-2-00019
2007-P-00016
2007-4-00053
2007-1-00064
2007-4-00056
2007-P-00021
2007-4-00063
2007-4-00064
2007-P-00026
2007-2-00028
2007-2-00029
2007-4-00069
2007-P-00029
2007-2-00032
2007-2-00034
2007-2-00035
2007-S-00002
2007-2-00036
2007-2-00037
2007-2-00038
2007-P-00039
2007-2-00041
2007-2-00044
2007-2-00043
Description
Gannett Fleming Inc. - FY December 31, 2004, Incurred Cost
Superfund Agreement Obligations with New York and New Jersey
E&E Subcontract Cost Impact
OECA and OSWER
OSWER and OW
Mabbett and Associates, Inc. - Preaward - PR-HQ-06-13341
Asbestos Cleanup in Libby, Montana
Five-Year Review Process for Superfund Remedies
The Johnson Company - Financial Capability
The Johnson Company- Preaward - PR-HQ-06-13341
Mabbett and Associates, Inc. - Financial Condition Risk Assessment
Mabbett and Associates, Inc. - Proposal PR-HQ-06-13341
Tetra Tech NUS Inc. - FY 2002 RAC 68-W6-0045
Tetra Tech FW, Inc. - FY 2004 RAC 68-W9-8214
Ringwood Mines/Landfill Superfund Site - Environmental Justice
Bofors-Nobel Superfund Site Claim No. 2
URS Operating Services Inc. - FY 1997 Incurred Cost
York Oil CERCLA Response Claims 3 and 4
EPA Superfund Contracting through U.S. Army Corps of Engineers
E&E FY 2005 Adequacy Review
Armour Road Superfund Site Claim No. 2
Status of Superfund Alternative Sites with No Signed Agreement
Tetra Tech NUS Inc. - FY 2004 RAC - 68-S6-3003
Tetra Tech/BVSPC Joint Venture - FY 2001 RAC Closeout 68S73002
York Oil CERCLA Response Claim No. 5
Superfund Board of Directors Needs to Evaluate Improvement Actions
Black & Veatch Special Proj. Corp. - FY 2001 RAC 68-W-99-043
CH2M Hill, Inc. - FY 2004 RAC - 68-W6-0025
CH2M Hill, Inc. - FY 2003 RAC - 68-W9-8225
Thermo Chem Superfund Special Accounts
CH2M Hill, Inc. - FY 2004 RAC 68-W9-8225
COM Federal Program Corp - FY 2003 RAC 68-W9-8210
CH2M Hill, Inc. - FY 2002 RAC 68-W9-8225
Ringwood Mines/Landfill Superfund - Review of Investigation
COM Federal Prog. Corp. - FY 2003 RAC Annual Closeout 68-S7-3003
COM Federal Prog. Corp. - FY 2003 RAC Annual Closeout 68-W5-0022
URS Corporation - FY2000 RAC Closeout 68-W9-8228
Date
24-OCT-06
30-OCT-06
02-NOV-06
06-NOV-06
15-NOV-06
30-NOV-06
05-DEC-06
05-DEC-06
07-DEC-06
18-DEC-06
16-JAN-07
16-JAN-07
16-JAN-07
23-JAN-07
02-APR-07
04-APR-07
23-APR-07
26-APR-07
30-APR-07
23-MAY-07
04-JUN-07
06-JUN-07
29-JUN-07
31-JUL-07
31-JUL-07
01-AUG-07
01-AUG-07
14-AUG-07
20-AUG-07
20-AUG-07
28-AUG-07
18-SEP-07
21-SEP-07
25-SEP-07
27-SEP-07
27-SEP-07
27-SEP-07
08-1-0032*
EPA's Fiscal 2007 and 2006 (Restated) Financial Statements
15-NOV-07
* Report issued in Fiscal Year 2008
                                                13

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