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.
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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
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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.
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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
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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.
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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.
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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
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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
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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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