EPA-350-R 10-001
                          February 2010
   U.S. ENVIRONMENTAL PROTECTION AGENCY
   OFFICE OF INSPECTOR GENERAL
Annual Superfund
Report to Congress
for Fiscal Year 2009

                  m
           Tributary 1
                   Approximate L6cation of
                  Permeable Reactive Barrier
         Tributary 2

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     O/G Scoreboard Summary ofSuperfund Results

                   by OIG Goal - Fiscal Year 2009


Office of Inspector General (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
       17  Policy, Practice, Process Actions, or Changes Made
        2  Critical Public or Congressional Concerns Addressed
        8  Certifications/Validations/Verifications
       57  Environmental or  Business Recommendations for Improvement
        5  Referrals for Agency Action
        3  Environmental or  Business Best Practices Identified
       17  Environmental or  Business Recommendations/Actions Sustained
        2  Environmental or  Business Risks Reduced or Eliminated
        4  Environmental or  Business Risks Identified
       12  Recommendations Reported as Implemented Previously Identified Unimplemented by Follow-up
       15  Unimplemented Recommendations Identified
     $0.5  Questioned Costs
    $31.6  Cost Efficiencies
    $0.02  Total Questioned  Costs Sustained (includes costs questioned in prior periods)
    $63.7  Total Cost Efficiencies Sustained (includes efficiencies identified in prior periods)


    Investigative Operations

     $3.3  Fines, Settlements, Restitutions
        9  Indictments
        5  Convictions
        5  Sentencings
        4  Administrative Actions
        2  Allegations Disproved

Sources: Performance Measurement and Results System, Inspector General Enterprise Management 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 photo:    Aerial photograph of the northern portion of the Delatte Metals Superfund Site,
               Ponchatoula, Louisiana, showing the permeable reactive barrier and surface water
               features. This photograph was taken before houses were constructed northwest of
               Selsers Creek. (Source: EPA, with labels added by OIG)
                          Printed on 100% recycled paper (minimum 50% postconsumer)

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This report covers Fiscal Year 2009 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.

As of May 2008, EPA had more than $1.1 billion in over 800 Superfund
special accounts. While EPA has addressed various aspects of managing
special accounts, we found that EPA was holding in excess of $88 million
in reserve - funds that we believe could be used to support priority
Superfund sites, including sites where human exposure is not under
control. EPA generally agreed that it should reclassify or transfer
$6.6 million in idle special account funds and reevaluate the need for
holding the $88 million reserve.

A lack of viable potentially responsible parties is preventing EPA from
recovering as much as 59 percent of the Superfund removal costs it incurs
related to rapid response removal actions at non-National Priorities List
sites. The Agency's ability to recover the government's costs from
potentially responsible parties could be improved by better controls to
monitor and document searches for potentially responsible parties, by
ensuring EPA database quality, and by identifying all government costs
related to Superfund accounts for possible recovery.

The data used to  support EPA decisions on site remediations need to be of
known quality. We found that the data available to Region 6 when it
conducted its Five-Year Review of the Delatte Metals Superfund Site in
Ponchatoula, Louisiana, were insufficient, and that the site's safety cannot
be determined until further assessments are completed. However, at
Neal's Dump Superfund Site near Spencer, Indiana, and at Jones
Sanitation Superfund Site in Hyde Park, New York, our testing results
generally supported EPA's monitoring results.

Hotline complaints related to Superfund activities are another source for
our work. In one case, we found that EPA had provided for appropriate
community involvement in the design of the East Mission Flats, Idaho,
repository. Nevertheless, we concluded that analysis  of geochemical and
physical conditions should be completed and the adequacy of the
repository design confirmed. In another case, involving the  CTS Printex
Superfund site in Mountain View, California, we determined that EPA
inappropriately charged the responsible parties for costs that were outside
the intended scope of the cost recovery agreement.

The Office of Solid Waste and Emergency Response's Regional Public
Liaison program, which links EPA and stakeholders, has assisted many
stakeholders despite limited resources. However, we  found that the
program does not sufficiently focus on or measure specific

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outputs and outcomes and does not ensure offices consistently take steps
to make stakeholders aware of the program.

Our criminal investigative work resulted in sentencing in a bid rigging
case at the Federal Creosote Superfund Site in Manville, New Jersey; to
date, seven individuals and three companies have pled guilty as part of
this investigation. In another case, a New York businessman and his son
were sentenced in connection with storing hazardous waste at a textile
factory in Allentown, Pennsylvania.

We recognize the importance of Superfund activities to the health of our
nation and the quality of our environment. We will continue to address
Superfund program management and funding to assist Congress and EPA
in their efforts to protect against potential adverse impacts resulting from
Superfund sites.
                                  Bill A. Roderick
                                  Acting Inspector General

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     EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
                       Table  of Contents
Hazardous Substance Superfund Trust Fund	   1
        EPA Earns Unqualified Opinion on Financial Statements	    1
        Superfund Special Accounts Need Improved Management	    2
        EPA Could Increase Superfund Cost Recovery at Non-National Priorities List Sites	    2
        Agency-wide Policy Would Improve Monitoring of Obligations under
        Superfund Cooperative Agreements	    3
        EPA Should Strengthen Controls over Interagency Agreement
        Unliquidated Obligations	    4

Remedial Action Decision Making	   5
        Safety Determination for Delatte Metals Superfund Site Unsupported	    5
        Sampling Results at New York Superfund Site Generally Consistent with EPA Data	    5
        Sampling at Results at Indiana Superfund Site Consistent with EPA Results	    6
        Hotline Allegation on East Mission Flats Repository Unsubstantiated	    6
        EPA Inappropriately Charged Oversight Costs at CTS Printex
        Superfund Site in California	    7

Response Claims and Contract Reviews	   8
        Contractor Billed Ineligible  Costs	    8
        Joint Venture Should Be Considered	    8
        Response Claim for North Carolina Site Found Acceptable	    9

Performance Reviews	  10
        Regional Public Liaison Program Should Focus on Results and Customers	   10
        Great Lakes Clean-up May Take More than 77 Years to Complete	   11
        Better Procedures Needed to Manage Tracking System Development	   11
        EPA Should Stop Providing Labor Hour Estimates to Contractors	   12

Investigative Activity	  13
        Sentence Imposed, Criminal Charges Continue in Bid-rigging Case
        at New Jersey Superfund Site	   13
        New York Businessmen Sentenced in Hazardous Waste Case	   15

OIG Superfund Financial Statements	   16
Listing of Fiscal Year 2009 Superfund Reports	  17

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
         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 included in 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 2009 in a consolidated format and did not include a separate presentation on the Superfund
Trust Fund.

The summary below of our Fiscal Year 2009 financial statement audit highlights areas that pertain to
the Hazardous Substance Superfund Trust Fund.  After the details on the financial statement audit are
summaries of several other reviews we  conducted that note ways EPA can improve its management of
Superfund resources.
              EPA Earns Unqualified Opinion on Financial Statements

              We rendered an unqualified opinion on EPA's Consolidated Financial Statements for
              Fiscal Years 2009 and 2008 (restated), meaning that they were fairly presented and free
              of material misstatement. However, in evaluating internal controls, we noted three
              material weaknesses. A material weakness is a significant deficiency, or combination of
              significant deficiencies, that results in more than a remote likelihood that a material
              misstatement of the financial statements will not be prevented or detected. The three
              material weaknesses are as follows:

                  •  EPA understated accounts receivable for Fiscal Year 2008.
                  •  EPA understated unearned revenue.
                  •  Improvement is needed in billing costs and reconciling unearned revenue for
                     Superfund State Contract costs.

              In addition, we noted eight significant deficiencies.  Significant deficiencies are
              deficiencies in internal controls that adversely affect the entity's ability to report financial
              data reliably in accordance with generally accepted accounting principles such that there
              is more than a remote likelihood that a misstatement of the entity's financial statements
              will not be prevented or detected. The eight significant deficiencies noted are as  follows:

                  •  EPA misstated uncollectible debt and other related accounts.
                  •  EPA needs to improve billing and accounting for accounts receivable.
                  •  Headquarters property items were not inventoried.
                  •  EPA should improve its financial statement preparation process.
                  •  Unneeded funds were not deobligated timely.
                  •  Improvement is needed in managing data system user accounts.
                  •  Las Vegas Finance Center needs improved physical access controls.
                  •  Improved planning is needed for Customer Technology Solutions equipment.

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
       Further, we noted one noncompliance issue involving EPA's need to continue efforts to
       reconcile intra-governmental transactions.

       In a memorandum from the Chief Financial Officer dated November 12, 2009, the
       Agency recognized the issues raised and indicated it will take corrective actions.

       We issued our report (10-1-0029) on November 16, 2009.

       Superfund Special Accounts Need Improved Management

       EPA had not used about $65 million in Superfund special accounts that were available
       because it lacked some management controls. Additionally, EPA was holding more than
       $88.4 million in special account funds in reserve that could potentially be put to better use.

       EPA is authorized to retain and use funds received in settlements to address Superfund
       response actions contemplated in settlement agreements. EPA retains these funds in site-
       specific "special accounts."  As of May 2008, EPA had over $1.1 billion in 819
       Superfund special accounts.

       EPA's fragmented and uncoordinated approaches to account for special account funds led
       to missed opportunities to fund needed Superfund clean-ups. Visibility was lacking over
       the amount and use of special account funds.  In three previous reports, we had
       recommended that about $59 million of the $65 million of idle special account funds be
       reclassified or transferred to the Superfund Trust Fund. In this report, we recommended
       that the remaining approximately $6.6 million be reclassified or transferred to the Trust
       Fund.  While EPA has addressed various aspects of managing special accounts, it needs
       to make some additional improvements. Also, EPA was holding more than $88.4 million
       in reserve that could be used to support priority Superfund sites, including sites where
       human exposure was not under control.

       We recommended that EPA implement needed management controls.  EPA needs to
       provide a central management official for special account funds, use available account
       data, and implement new policies and public reporting requirements. Also, EPA should
       reclassify or transfer the remaining $6.6 million in idle special account funds, and
       reevaluate the need for holding the  $88.4 million in reserve. EPA generally concurred
       with our recommendations.

       We issued our report (09-P-01 19) on March 18, 2009.

       EPA Could  Increase Superfund Cost Recovery at Non-National
       Priorities  List  Sites

       EPA is only recovering a fraction of the Superfund removal costs it incurs related to rapid
       response removal  actions at non-National Priorities List sites because it says there is a
       lack of viable potentially responsible parties.  Improvements in EPA's controls over
       identifying responsible parties may improve recovery of the government's clean-up costs.

       CERCLA authorizes EPA to address releases of hazardous substances that require a rapid
       response and to pay for clean-up costs before identifying a responsible party.  The Act
       authorizes EPA to recover these costs.

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
       A review of a sample of removal actions showed that EPA collected from responsible
       parties approximately 11 percent ($31.4 million of $294.5 million) of the Federal
       Government's costs for conducting removal actions. According to EPA, about another
       30 percent ($86.0 million) of the costs are pending further government action.  EPA
       indicated most of the remaining $177.1 million is unrecovered because of a lack of viable
       potentially responsible parties.

       Although EPA has a high rate of success in addressing cost recovery requirements prior
       to the expiration of the statute of limitations, it has limited control in other key areas that
       affect its ability to recover the government's costs from responsible parties. EPA also
       does not review and monitor charges made to all Superfund accounts so all appropriate
       site costs can be recovered.

       We recommended that EPA implement improved controls to monitor potentially
       responsible party search completions and consistently document these searches, ensure
       EPA database quality, and ensure the government's costs related to Superfund accounts
       are identified for possible recovery. EPA concurred with our recommendations.

       We issued our report (09-P-0144) on April 27, 2009.

       Agency-wide  Policy Would Improve Monitoring of Obligations under
       Superfund Cooperative Agreements

       An Agency-wide policy for monitoring obligations under Superfund Cooperative
       Agreements and identifying amounts available for deobligation is needed.

       A Cooperative Agreement is a legally binding obligating document that provides funding
       to a State to carry out or assist with Superfund removal and/or remedial  activities.
       Timely review and deobligation of unneeded funds allow these funds to be used on other
       Superfund priorities.

       We identified several best practices used by Regions 3, 5, and 8, such as (1) requiring
       that States submit detailed reports on the status of each Superfund site twice a year,
       (2) requiring that budget officers solicit information from project officers and other staff
       twice a year to identify potential funds for deobligation, and (3) performing a
       deobligation exercise twice a year for Superfund Cooperative Agreements.

       We identified $331,802 of open obligations in Region 3 that needed to be deobligated.
       During our audit, the Agency deobligated $330,370 of that amount. The Agency
       deobligated $1,432 less than the amount originally identified for one agreement because
       of a final drawdown.

       We recommended that EPA incorporate the best practices noted into a uniform policy for
       reviewing unliquidated obligations under Superfund Cooperative Agreements in all
       regions.  The Agency agreed with our recommendation.

       We issued our report (09-P-0214) on September 22, 2009.

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009


       EPA Should Strengthen Controls over Interagency Agreement
       Unliquidated Obligations

       EPA has not closed out interagency agreements that have at least $4.2 million of
       unneeded funds that should be deobligated, including $2.9 million in Superfund
       agreements. EPA deobligated an additional $2.3 million as a result of our audit. These
       funds could be used for other environmental projects.

       An interagency agreement is a written agreement between federal agencies in which one
       agency provides goods or services to another agency on a reimbursable basis. EPA has
       interagency agreements with the U.S. Army Corps of Engineers and other agencies to
       conduct clean-up work at Superfund sites.  It is EPA's policy to close all interagency
       agreements within 270 days after the project period expires.  As part of close-out,
       unliquidated obligations should be deobligated so that the funds can be used for other
       purposes.

       Controls for identifying funds for deobligations were not always effective. Appropriate
       EPA personnel did not effectively monitor interagency agreements to ensure they were
       closed out in a timely manner and that unneeded funds were deobligated. The annual
       unliquidated obligation review was not effective and did not identify funds that should
       have been deobligated. EPA staff cited various reasons, including unfamiliarity with
       procedures and difficulties working with other agencies.

       We recommended that EPA deobligate the remaining $4.2 million in unliquidated
       obligations, and establish various procedures to address the deficiencies noted. The
       Agency agreed with our recommendations and has begun establishing needed procedures.

       We issued our report (09-P-0086) on January 26, 2009.

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
                  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 2009, we found ways in which EPA could improve remedial action decision making.
              Safety Determination for Delatte Metals Superfund Site Unsupported

              EPA's protection determination for the Delatte Metals Superfund Site, Ponchatoula,
              Louisiana, was not supported by its data.

              Soil and water at Delatte were contaminated with metals from battery recycling and
              smelting operations.  EPA deleted Delatte from the National Priorities List in 2005,
              signifying clean-up goals were achieved through remedial action.

              Despite evidence of potential remedy failure, EPA Region 6 determined during its
              Five-Year Review at the site in November 2007 that conditions protect human health and
              the environment in the short term.  However, our review showed that the permeable
              reactive barrier was not treating all of the shallow contaminated groundwater before it
              discharges to surface water, and migration of metal contaminants was uncontrolled.
              Also, metal concentrations in surface water greatly exceeded site clean-up standards, site
              access was uncontrolled, sufficient testing of the groundwater and surface water was not
              performed, and the required inspection of the permeable reactive barrier was not
              performed. EPA research scientists also raised concerns about the effectiveness of the
              permeable reactive barrier and recommended that Region 6 conduct additional testing.

              The data available to Region 6 when it conducted its Five-Year Review, combined with
              our results, show that the site's safety cannot be determined until the effectiveness of the
              permeable reactive barrier and the risk posed by the migration of metals are assessed.

              EPA Region 6 proposed actions to  ensure that the Delatte clean-up remedy is performing
              as intended. These actions are under review. In  its official comments, EPA Region 6 did
              not agree to amend the determination it made in 2007 to state that more information is
              needed to make a safety determination for the site. However, during the audit resolution
              process, Region 6 agreed with the OIG and amended its safety determination.

              We issued our report (09-P-0029) on November  19, 2008.

              Sampling Results at New York Superfund Site Generally Consistent
              with  EPA Data

              Our independent sampling results at the Jones Sanitation Superfund Site in Hyde Park,  New
              York, were generally consistent with EPA Region 2 historical data. However, better
              documentation is needed to explain Region 2's conclusion that sodium and nickel
              exceedances do not threaten human health and the environment.

              Jones  Sanitation had received  and treated septic and industrial wastes containing hazardous
              substances. The site, which operated from approximately 1956 to 1990, was deleted from

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
       the National Priorities List in 2005.  The OIG is testing long-term monitoring results at
       Superfund sites EPA has deleted from the List.

       In April 2008, the OIG obtained groundwater and surface water samples from Jones
       Sanitation and nearby areas and conducted a site inspection. Our independent sampling
       results were generally consistent with the sampling data that Region 2 has historically
       obtained.  In addition, our site inspection showed the site was properly maintained and
       secured and is consistent with information Region 2 has obtained on the site conditions.
       Of the 113 chemical compounds that could be compared,  only sodium and nickel were
       found to exceed standards in the residential wells or to have the ability to potentially
       migrate off-site at levels above  standards. Region 2 did not document a concern with these
       and concluded the site remedy remains protective to human health and the environment.

       We recommended that Region 2 demonstrate and document that off-site migration of
       sodium, nickel, and any other compounds exceeding applicable standards are controlled at
       the site, and that the Region modify and/or re-initiate some off-site monitoring if the Region
       determines such monitoring is needed. EPA agreed with our recommendations.

       We issued our report (09-P-0243) on September 23, 2009.

       Sampling Results at Indiana Superfund Site Consistent with
       EPA Results

       Groundwater sampling at the Neal's Dump Superfund Site in Indiana showed that
       polychlorinated biphenyls (PCBs) did not exceed safe levels for drinking water.

       Neal's Dump, near Spencer, Indiana, was one of the sites  we sampled as part of our testing
       of long-term monitoring results. The site had been contaminated with PCBs from disposal
       of electrical equipment and other materials. EPA deleted the site from the National
       Priorities List in 1999, which signified clean-up goals had been achieved. Groundwater
       samples that we independently took in May 2008 from two private drinking water wells on
       residential properties adjacent to the site showed that PCBs did not exceed safe levels for
       drinking water. These results are consistent with EPA's monitoring results.

       We issued our report (09-P-0110) on March 4, 2009.

       Hotline Allegation  on East Mission Flats Repository Unsubstantiated

       EPA  Region 10 and the Idaho Department of Environmental Quality allowed appropriate
       community involvement and provided adequate notice when selecting the East Mission
       Flats, Idaho, repository location and soliciting comments on the proposed plan, location,
       and designs.  Remedial actions  in the Bunker Hill Mining and Metallurgical Complex
       Superfund Site will generate the soils to be stored at the repository.  However, the amount
       of water that will be introduced into the repository with flooding and rising groundwater
       levels remains unresolved.

       An environmental organization in Kellogg, Idaho, alleged in a Hotline complaint that the
       public was not appropriately notified of repository plans and did not have an opportunity
       to provide comments. CERCLA incorporates public involvement in the remediation

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
       process. We found that appropriate notice and community involvement were provided,
       and that many physical aspects of flooding have been investigated and considered in the
       design process.

       However, we found that the geochemical aspects and potential for releasing dissolved
       contaminants had yet to be investigated. The proposed repository site is located in an
       area that floods annually.  Region 10 and Idaho have not sufficiently analyzed
       geochemical conditions expected to form near the repository base, the potential for
       annual flooding to introduce water into the repository, and the possibility that dissolved
       contaminants will migrate away from the repository. In response to our concerns,
       Region 10 and the Idaho Department of Environmental Quality prepared a draft scope of
       work for the needed analysis; much of that work was completed.

       We recommended that Region 10 finish analyzing the geochemical and physical
       conditions and confirm the adequacy of the repository design. Region 10 concurred with
       the recommendation and prepared a technical analysis.

       We issued our report (09-P-0162) on June 8, 2009.

       EPA Inappropriately Charged Oversight Costs at CTS Printex
       Superfund  Site in California

       EPA Region 9 inappropriately charged oversight costs to responsible parties for the
       CTS  Printex Site for greening and other activities.

       The OIG received a Hotline complaint that alleged mismanagement and abuse of
       authority regarding Region 9 management of the CTS Printex Superfund  Site in
       Mountain View, California. The allegations we reviewed involved inappropriate
       oversight costs and the site boundary definition.

       We concluded that Region 9 inappropriately charged the responsible parties for costs
       associated with staff time spent reviewing a housing developer's use of "green building
       practices." Region 9 also charged the site account for its time spent responding to and
       preparing for our review. These activities are outside the intended scope of the cost
       recovery agreement between Region 9 and the responsible parties. Also,  Region 9 has
       not taken appropriate steps to timely amend the 1991 Record of Decision, even though
       new human health risks have been identified (vapor intrusion).

       During our review, we could not substantiate claims that Region 9 expanded the
       definition of the CTS Printex Site beyond that described in EPA's 1991 Record of
       Decision, or that other clean-up agreements were reached or implemented.

       Region 9 agreed with our recommendations to amend the 1991 Record of Decision and
       withdraw inappropriate oversight charges.  The Region also agreed to conduct training to
       ensure that regional staff charge time consistent with the consent decree and national
       guidance. The Region has  adjusted its charges to the responsible  parties and removed
       $6,084  from oversight bills.

       We issued our report (09-P-0131) on March 31, 2009.

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
            Response Claims  and  Contract Reviews
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 2009, we completed several such reviews, as discussed below.

              Contractor Billed Ineligible Costs

              Based on Agency concerns related to questionable labor staffing and charging practices
              of one of its Superfund Technical Assessment and Response Team contractors, we
              conducted a labor and subcontract cost verification review. We found that:

                  •   The contractor  improperly billed for labor costs of employees who did not meet
                     the minimum contract requirements.
                  •   No subcontractor met the minimum contract requirements for education and
                     training.
                  •   The contractor  billed for employees who were not approved at the time the labor
                     costs were incurred.
                  •   The contractor  improperly billed for employees who did not complete required
                     Basic Incident Command System Level 200 training.

              Although this review only covered 1 year of the 5-year contract, we found the Agency
              was billed $253,089 in  ineligible labor and subcontract costs. The Contracting Officer
              sustained $163,328 of the costs questioned, maintaining that this amount reflects an
              equitable adjustment of the services the contractor provided.

              Joint Venture Issues Should  Be Considered

              We initiated an examination of costs billed under a joint venture for Superfund Technical
              Assessment and Response Team services in a region. Our examination focused on the
              joint venture's compliance with federal laws, rules, and regulations under the specific
              contract. During our examination, we identified information of a time-critical nature that
              the Agency needed to consider in future contracting decisions concerning the joint
              venture. We informed the contracting officer, project officer, and other regional
              contracting personnel of the following information for consideration in deciding whether
              to exercise the award term options on this contract:

                  •   The joint venture did not maintain any books or records.
                  •   Labor hours billed under the contract did not reconcile with the accounting
                     records of the managing venturer.
                  •   The managing venturer used an employment agency to staff the contract.

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
          •   Known billing errors were not corrected and thus represented over-billings to the
              Agency.
          •   The nonmanaging venturer appeared to be doing the majority of the work, thus
              calling into question the joint venture's classification as a Service Disabled
              Veteran Owned Small Business.
          •   The nonmanaging venturer appeared to be acting as the project manager, contrary
              to Small Business Administration regulations.
          •   The managing venturer has a history of partnering in joint venture agreements
              and being a member of mentor-protege programs.
          •   The managing venturer's ability to contribute staff to all of its joint venture
              arrangements was questionable.

       The Agency concurred with our recommendation, and decided not to award the award
       term option to the joint venture.  The contract expired on June 18, 2009, and the Agency
       indicated no future work will be awarded to the joint venture.

       Response Claim for North Carolina Site Found Acceptable

       We reviewed a reimbursement mixed funding claim for $1,133,543 submitted by the
       responsible parties for a Superfund site in North Carolina. We performed this review
       solely to assist the EPA Office of Solid Waste and Emergency Response in evaluating the
       claimant's mixed funding claim. Our review noted no exceptions to the claimed amount.
       We recommended that EPA accept the claim and reimburse the claimant $1,133,543 of
       the total eligible costs of $3,675,562.

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
                            Performance  Reviews
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 several such reviews
completed during Fiscal Year 2009.

              Regional Public Liaison  Program Should Focus on Results and
              Customers

              Office of Solid Waste and Emergency Response's Regional Public Liaison program does
              not sufficiently focus on or measure specific outputs and outcomes and does not ensure
              offices consistently take steps to make stakeholders aware of the program.

              The Regional Public Liaison program is an important link between concerned
              stakeholders and EPA. Liaisons help the public and regulated community by providing
              information, facilitating informal contact with EPA staff,  and assisting in resolving
              problems and concerns related to programs administered by the Office of Solid Waste
              and Emergency Response. Despite limited resources, Regional Public Liaisons have
              assisted many stakeholders.
  Duties of Regional Public Liaisons
    • Provide information and facilitate informal
     contact with EPA staff.
    • Help resolve problems.
    • Make recommendations to Agency senior
     management to improve Office of Solid Waste
     and Emergency Response programs.

  Source: Office of Solid Waste and Emergency Response
  Guidance for Regional Public Liaisons, issued March 2004.
                                      The program could be a key internal control
                                      for reducing the risk that significant
                                      stakeholder concerns might go unaddressed.
                                      However, the program lacks clearly stated
                                      program logic, which would include outputs
                                      and outcomes and provide a results-oriented
                                      approach to implementation. As a result,
                                      regional offices implement the program
                                      differently and report results in varied
                                      formats. There is no consolidated report to
                                      show what the program  achieves.
                                      Inconsistent implementation has led some
liaisons to take specific steps to ensure stakeholders are aware of the program and others
to adopt a more passive, reactive approach.

We recommended that the Office of Solid Waste and Emergency Response use a logic
model approach to revise the Regional Public Liaison program, focusing on outputs and
outcomes. We also recommended consolidated reporting, consistent implementation,
minimum requirements for stakeholder awareness activities, and a national Website. The
Agency concurred with our recommendations.

We issued our report (09-P-0176) on June 24, 2009.
                                             10

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
       Great Lakes Clean-up May Take More than 77 Years to Complete

       EPA is challenged by the overall extent of the contaminated sediment problem in the
       Great Lakes Areas of Concern and has not developed or implemented a coordinated
       approach to manage clean-ups. At the current rate of progress, it may take more than 77
       years to complete all the clean-ups.

       Thirty-one Areas of Concern have been identified around the U.S. border of the Great
       Lakes. All but one are polluted with contaminated sediments.  EPA is responsible for
       working with States, localities, and other stakeholders to remove this contaminated
       sediment. Since 2004, EPA has completed five Great Lakes Legacy Act-funded
       contaminated sediment clean-ups and remediated approximately 800,000 cubic yards of
       contaminated sediment.

       Without improved management, coordination, and accountability, EPA will not succeed
       in achieving the results intended for the Areas of Concern program. Although EPA is the
       designated lead for the clean-ups, it does not have a system for coordinating remediation
       activities across its program offices, or with States, localities, and other stakeholders.
       Complexities related to the overlapping statutes include Superfund jurisdiction over
       numerous sites within the Areas of Concern, Resource Conservation and Recovery Act
       contamination removal, and statutory limitation of Legacy Act funds to remediate a site
       that is being cleaned up using Superfund money.

       Potential clean-up sites have an estimated federal cost of $2.25 billion.  Local partners
       will have to come up with $1.21 billion in nonfederal matching funds before assistance is
       provided. Moreover, remediation will be conducted in the order that local governments
       and stakeholders can afford rather than with regard to the risks posed to human health or
       the environment.

       We recommended that the Great Lakes National Program Manager establish a
       management plan with written designations of authority and responsibility for each EPA
       program office, as well as other actions.  EPA's Corrective Action Plan adequately
       addressed each of the recommendations.

       We issued our report (09-P-0231) on September 14, 2009.

       Better  Procedures Needed to Manage Tracking System Development

       Lack of compliance with established project management procedures resulted in
       transitional problems in 2005 that delayed developing the Institutional Controls Tracking
       System (ICTS) and negatively affected contractor performance.

       In 2003, EPA's Superfund program entered into a contract to develop ICTS to make
       information available via the Internet.  In 2005, EPA entered into a task order under a
       different contractor to continue ICTS development.

       We performed this review in response to an anonymous OIG Hotline complaint alleging
       mismanagement of the ICTS project. Although we could not substantiate the alleged
       claims, the absence of key decision documents and significant turnover of key ICTS
       personnel could have contributed to the complainant's perception that ICTS project
                                      11

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
       decisions were made in a haphazard manner.  In April 2006, EPA assigned a certified
       project manager to oversee ICTS development. In 2007, EPA merged ICTS with the
       Superfund Document Management System, and EPA has taken steps to develop a System
       Management Plan. We made three recommendations for EPA to better manage system
       development and the Agency agreed with our recommendations.

       We issued our report (09-P-0128) on March 25, 2009.

       EPA Should Stop Providing Labor Hour Estimates to Contractors

       For 6 of 22 contracts reviewed, EPA provided contractors with the government's estimate
       for total labor hours prior to receiving contractor proposals.  Consequently, EPA may be
       diminishing its ability to obtain a fair and reasonable price on such contracts.

       An independent government cost estimate is a detailed estimate of what a reasonable
       person should pay to obtain the best value for a product or service.  EPA contract
       management and program staff indicated that providing the contractor with total labor
       hours is common practice under level-of-effort contracts. Some staff informed us they
       provide contractors with estimated labor prior to receiving the proposal to indicate to the
       contractor the level of effort EPA anticipates will be needed.

       We found that for most of the Superfund contracts reviewed, EPA did not routinely
       provide total labor hours to the contractor before receiving the proposal. Some EPA staff
       informed us they did not provide the total labor hours because doing so would undermine
       the negotiation process. When EPA provides its estimate of total labor hours before
       receiving the proposal, the contractor does not have an incentive to seek a more efficient
       or innovative approach to meet the government's requirement.

       EPA agreed with our recommendations to modify EPA acquisition regulations and will
       communicate new guidance to contracting staff and those who prepare independent
       government cost estimates. On January 13, 2010, EPA issued guidance limiting the
       situations in which providing government cost estimates is permissible and requiring the
       Contracting Officer to document his/her reasons for doing so.

       We issued our report (09-P-0229) on September 9, 2009.
                                      12

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
                             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 2009, our Superfund investigative efforts resulted in:

    •   $3.3 million in monetary fines, settlements, and restitutions
    •   9 indictments
    •   5 convictions
    •   5 sentencings
    •   4 administrative actions
    •   2 allegations disproved

Following are instances of Superfund investigative activity with results in Fiscal Year 2009.

               Sentence Imposed, Criminal Charges Continue in Bid-rigging Case at
               New Jersey Superfund Site

               A sentence was imposed in connection with a bid rigging case at the Federal Creosote
               Superfund site in Manville, New Jersey. Further, a firm entered into a compliance
               agreement, several guilty pleas were entered into, and an indictment was unsealed.

               On December 15, 2008, in U.S. District Court of New Jersey, Bennett Environmental,
               Inc. (BEI), a Canadian company, was sentenced to 5 years probation and ordered to pay a
               $1,000,00 fine and $1,662,000 in restitution to EPA. The restitution order applies jointly
               to BEI and several co-conspirators. This sentencing is a result of BEI's guilty plea in a
               bid-rigging scheme in connection with awarding subcontracts at Federal Creosote.

               In addition to the criminal sentence, BEI entered into a compliance agreement with EPA.
               As part of this agreement, BEI will establish a corporate responsibility program, which
               includes establishing ethical standards and a business code of conduct, as well as training
               its employees in these areas.

               BEI previously pled guilty to conspiracy to defraud  EPA at the Federal Creosote site by
               inflating the prices it charged to a prime contractor and paying kickbacks to employees of
               that contractor from approximately May 2002 until spring 2004. BEI was given
               confidential bid information that it used to inflate invoices to cover almost $1.3 million in
               kickbacks to employees of the prime contractor in exchange for their assistance in
               steering subcontracts to BEI. The kickbacks were in the form of money wire transfers,
               cruises  for senior officials, various entertainment tickets, and home entertainment
               electronics. As part of the fraudulent scheme,  BEI and its co-conspirators also included
               amounts they kept for themselves in the inflated invoices.

               Also, on June 25, 2009, Frederick Landgraber, co-owner of a Martinsville, New Jersey,
               landscaping company, pled guilty in the U.S. District Court of New Jersey to conspiracy
               to defraud EPA.  As part of the conspiracy, Landgraber provided more than $30,000 in
               kickbacks to an employee of the prime contractor at Federal Creosote in exchange for
               landscaping subcontracts.  Landgraber and his co-conspirator subverted the competitive
                                              13

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
       bidding process by submitting intentionally high bids on behalf of fictitious companies.
       In total, Landgraber's company received approximately $1.5 million in subcontracts at
       Federal Creosote.

       On July 6, 2009, Robert P. Griffiths, a former executive of BEI, pled guilty to charges
       that he conspired to defraud EPA by inflating the prices he charged to a prime contractor
       and providing kickbacks to employees of that contractor.  Griffiths and his co-
       conspirators were given the bid prices of BEI's competitors, which allowed BEI to
       submit the highest possible bid prices and still be awarded the subcontracts.  On one
       occasion, Griffiths  and his co-conspirators inflated the bid prices to cover approximately
       $1.3 million in kickbacks and amounts BEI kept for itself. The kickbacks were in the
       form of money transferred by wire to a co-conspirator's shell company, lavish cruises for
       senior officials of the prime contractor, various entertainment tickets, pharmaceuticals,
       and home entertainment electronics. The co-conspirators were able to allocate at least
       $43 million in fraudulently awarded subcontracts to BEI for the removal, treatment, and
       disposal of contaminated soil at the Federal Creosote site and fraudulently concealed that
       BEI had submitted false invoices for the disposal of approximately 20,000 tons of soil.

       Griffiths also pled guilty to conspiracy to commit international money laundering.
       Griffiths, along with a co-conspirator who received more than $1 million in kickbacks,
       laundered approximately $207,000 of the kickback proceeds from the co-conspirator's
       bank account to Griffiths' bank account  in Canada. Griffiths also pled guilty to
       obstructing an official proceeding before the Securities and Exchange Commission,
       which was investigating whether Griffiths and others had obtained information not
       available to the public and relied upon that information to conduct certain improper
       securities transactions.

       Further, on September 11, 2009, a 12-count indictment was unsealed in the U.S. District
       Court of New Jersey. The indictment charged Gordon D. McDonald, a former project
       manager for a prime contractor, with engaging in separate kickback and fraud
       conspiracies with subcontractors John A. Bennett and James E. Haas, Jr. Bennett is the
       former chief executive officer of subcontractor BEI. Haas is a former representative of a
       subcontractor that provides common backfill, a type of soil material used to refill an
       excavation. McDonald, Bennett, and Haas were charged with committing fraud against
       the United States. McDonald is  also charged with engaging in a bid-rigging conspiracy
       and separate kickback and fraud conspiracy with two other subcontractors at the Federal
       Creosote  and Diamond Alkali Superfund sites. He is also charged with international
       money laundering,  tax violations, and obstruction of justice.

       In February 2009, Christopher Tranchina, an employee of a Sewell, New Jersey,
       company that provided temporary electrical utilities, pled guilty to participating in a
       separate kickback and fraud conspiracy at Federal Creosote. Tranchina was  sentenced on
       July 13, 2009, to 20 months in prison, to be followed by 3 years' probation.  He was
       ordered to pay $154,594 in restitution.

       To date, seven individuals and three companies have pled guilty as part of this investigation.
       This case is being conducted with the Internal Revenue Service Criminal Investigation
       Division.
                                       14

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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
       New York Businessmen Sentenced in Hazardous Waste Case

       On November 4, 2008, Moshe Rubaskin of Brooklyn, New York, was sentenced in
       U.S. District Court for the Eastern District of Pennsylvania to 16 months in prison to be
       followed by 3 years of supervised release, and was ordered to pay $450,000 in restitution
       and a $7,500 fine.  Rubaskin previously pled guilty to storing hazardous waste at a textile
       factory in Allentown, Pennsylvania.  His son, Sholom Rubaskin, also pled guilty to
       making a materially false claim to EPA. On March 24, 2009, his son was sentenced to
       4 months in prison to be followed by 3 years of supervised release, and was ordered to
       perform 250 hours of community service and pay a $5,000 fine.  In addition, the son will
       be held jointly liable, along with his father, for the $450,000 in restitution.

       The convictions stem from the Rubaskins' ownership and operation of Montext Textiles,
       a textile dyeing, bleaching, and weaving business.  When the business ceased operations
       in 2001, numerous containers  of hazardous waste were stored at the site without the
       necessary environmental permits.  After local authorities responded to two fires at the
       site, EPA and the City of Allentown initiated a clean-up at the facility to dispose of
       numerous containers of hazardous waste and hazardous substances. The Rubaskins are
       jointly liable for the restitution, which will be paid to EPA and the City of Allentown to
       cover the clean-up cost.

       This case is being conducted with the EPA Criminal Investigation Division.
                                      15

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       EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
              OIG Superfund Financial Statements
           Analysis of OIG's Fiscal Year 2009 Funds Available and Usage
Superfund
Budget
Object
Class
PC&B
Travel
Expenses
Contracts
WCF
Grants
FY08
Carryover
Avail, in 09
$1,162,764
289,655
47,437
47,326
110,000
269
FY08
Carryover
Used in 09
$1,140,485
287,674
45,893
45,028
108,204
0
FY08
Lapsed
Funds
$22,279
1,981
1,544
2,298
1,796
269
FY09
Approp.
$7,921,000
422,000
272,000
582,000
762,000
16.000
FY09
Funds
Used in 08
$7,233,080
151,983
200,954
537,236
762,000
15.000
FY09
Carryover
$687,920
270,017
71 ,046
44,764
0
1.000
Total Cost
of FY 09
Operations
$8,373,565
439,657
246,847
582,264
870,204
15.000
Total cost
as Percent
of FY 09
Approp.
106%
104%
91%
100%
114%
94%
Total SF
$1,657,451  $1,627,284
$30,167    $9,975,000   $8,900,253   $1,074,747  $10,527,537
106%
Source: EPA Integrated Financial Management System.
FY 2009 OIG Superfund FTE Usage

FY 2009 Available     70.0
FY 2009 FTEs Used    60.1
% of FTEs Used      85.9%
FTE    Full-Time Equivalent
FY     Fiscal Year
PC&B   Personnel Compensation and Benefits
SF     Superfund
WCF    Working Capital Fund
                                          16

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        EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2009
        Listing of Fiscal Year 2009 Superfund Reports
Report No.      Description	      Date

09-2-0009       COM Federal Program Corp. - FY 2006 RAC - 68-W9-8210                  16-OCT-08

09-2-0023       COM Federal Programs Corp. - FY 2005 RAC - 68-S7-3003                  10-NOV-08
09-P-0029       EPA's Safety Determination for Delatte Metals Superfund Site Unsupported     19-NOV-08
09-2-0031       CH2M Hill, Inc. - FY 2004 RAC 68-W6-0036                              20-NOV-08
09-2-0033       URS Corporation - FY 2003 RAC Annual Close-Out 68-W9-8228              20-NOV-08
09-2-0037       CH2M Hill, Inc. - FY 2005 RAC 68-W6-0025                              21-NOV-08

09-2-0048       Tetra Tech, Inc./BVSPC Joint Venture - FY 2002 RAC 68-S7-3002            OS-DEC-08
09-2-0067       COM Federal Programs Corp. - FY 2006 RAC - 68-S7-3003                  22-DEC-08
09-2-0069       Tetra Tech NUS, Inc. - FY 2004 RAC 68-W6-0045                         22-DEC-08

09-P-0110       Independent Groundwater Sampling at Meal's Dump Superfund Site           04-MAR-09
09-P-0119       Improved Management of Superfund Special Accounts Needed               18-MAR-09
09-P-0128       Institutional Controls Tracking System Transition Problems Noted              25-MAR-09
09-P-0131       Results of Hotline Complaint Review for California Superfund Site             31-MAR-09

09-4-0133       STN Environmental Contract Review                                    03-APR-09
09-4-0135       Tetra Tech EM Inc. Base Year Labor Verification Review                    03-APR-09
09-3-0140       Anaconda-Deer Lodge County - FY 2007                                 20-APR-09
09-P-0144       EPA Needs to Improve Internal Controls to Improve Cost Recovery            27-APR-09
09-N-0146       "Rumple Report" on Investigation of Asbestos Clean-up in Libby, Montana       28-APR-09

09-P-0176       Regional Public Liaison Program Needs Greater Focus                      24-JUN-09

09-R-0196       Open Recommendations Impacting Recovery Act Funds Reviewed            14-JUL-09

09-4-0225       CERCLA Credit Claim - Concord, North Carolina                           31-AUG-09

09-P-0229       EPA Should Stop Providing Estimates of Labor Hours to Contractors           09-SEP-09
09-P-0241       EPA Needs Uniform Policy for Superfund Unliquidated Obligations            22-SEP-09
09-P-0243       Independent Sampling Confirms Data at Jones Sanitation Superfund Site       23-SEP-09

10-1-0029 *      EPA's Fiscal 2009 and 2008 (Restated) Consolidated Financial Statements     16-NOV-09
* Report issued in Fiscal Year 2010
                                              17

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It's your money
It's your environment
Al^st^
    Report fraud, waste or abuse
    e-mail: OIG_Hotline@epa.gov
    write: EPA Inspector General Hotline (2431M)
        1200 Pennsylvania Avenue NW
        Washington DC 20460
    fax:  202-566-1610
    phone: 1-888-546-8740

    www.epa.gov/oig/hotline/how2file.htm	

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