OFFICE OF INSPECTOR GENERAL
EPA-350-R-06-002
Catalyst for Improving the Environment
August 2006
Annual Superfund Report to
Congress for Fiscal Year 2005
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O/G Scorecard Summary of Superfund
Results by OIG Goal - Fiscal Year 2005
OIG GOAL 1
Contributing to Improved Human Health and Environmental Quality
(Below are Superfund Results of OIG Work in Terms of Outputs, Actions by EPA, and Impacts)
1 Example of Environmental Improvement
2 Examples of Environmental Policy, Regulation, Practice, Process Actions, or Changes Made
1 Environmental Risk Reduced
9 Best Environmental Practices Implemented
10 Critical Public or Congressional Environmental Concerns Addressed
1 Environmental Best Practice Identified
3 Environmental Recommendations
3 Environmental Risks Identified
OIG GOAL 2
Improving EPA's Management, Accountability, and Program Operations
(Below are Superfund Results of OIG Work in Terms of Outputs, Actions by EPA, and Impacts)
16 Certifications/Validations/Verifications/Allegations Disproved
5 Examples of Management Policy, Practice, Process Actions, or Changes
11 Best Management Practices Implemented
17 Criminal, Civil, and Administrative Actions
2 Critical Public or Congressional Management Concerns Addressed
33 Recommendations for Management Improvements/Additional Review
1 Best Management Practice Identified
3 Actions to Resolve or Reduce Management FMFIA Risks/Challenges
$20,782,695 Total Questioned Costs ($2,963,677 Federal Share)
$ 2,012,515 Cost Efficiencies (all Federal)
$ 6,500,000 Fines, Settlements, and Restitutions
To find out more about the U.S. Environmental Protection Agency's
Office of Inspector General, visit our Website at:
http://www.epa.gov/oig
Cover Photos: Photographs of (from top to bottom) a soil treatment facility at Picillo Superfund Site in
Coventry, Rhode Island (EPA photo); the Hercules 009 Landfill near Brunswick, Georgia
(Hercules Incorporated photo); and a Superfund removal site in Soldotna, Alaska (EPA photo).
Printed with vegatable oil based inks on 100% recycled paper (minimum 50% postconsumer)
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This report covers Fiscal Year 2005 Superfund-related 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.
In April 2004, we submitted to EPA the management challenge
"Superfund Evaluation and Policy Identification," to help focus the
Agency on addressing Hazardous Substance Superfund Trust Fund
shortfalls and decreasing general appropriations. During Fiscal Year
2005, EPA made progress. In particular, it conducted an internal review
that made recommendations to improve the Superfund program, and
developed the 120-Day Study Action Plan to outline how EPA will carry
out the recommendations.
In our audit of the Agency's consolidated financial statements, which
include the Superfund Trust Fund, we noted that errors led to overstating
State Superfund Contract unearned revenue by $31 million and unbilled
oversight costs by $ 14 million. Although regions were required to certify
that they reviewed their accrual calculations, certification did not prevent
or discover the errors. As a result, EPA could not ensure the accuracy of
the unearned revenue and the unbilled oversight accounts.
More than half of EPA's Fiscal Year 2005 budget was awarded to
organizations outside the Agency through assistance agreements,
including a significant amount related to Superfund sites. We found that
California's procurement process for assistance agreements needed
improvement, and that Alaska inappropriately used "match" funds for a
project. Further, Oregon claimed over $2 million in erroneous and
unallowable costs related to the McCormick and Baxter Superfund site in
Portland.
We found that the testing method EPA uses to monitor the presence of
toxaphene in groundwater at the Hercules 009 Landfill, a former
Superfund site near Brunswick, Georgia, is inadequate. We determined
that the method only tests for the chemical that has not degraded, even
though toxaphene degrades over time and the breakdown products can
pose a human health risk. EPA agreed to test not only for toxaphene but
also for its breakdown products.
In addition to helping EPA better manage hazardous waste sites, we
compiled a list of relevant promising practices that the Department of the
Interior could use to better identify and inventory its own hazardous
waste sites. The Department of the Interior manages one-fifth of the
land mass in the United States, and the Department has been criticized
for weaknesses related to environmental liability controls. We worked
with the Interior Department's Inspector General in a joint effort to
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identify potential areas for improvement. While the Department of the
Interior does not seek to create its own Superfund program, similarities
exist between EPA's processes and those used by the Interior
Department to identify, assess, and prioritize hazardous sites on its land.
Addressing Superfund shortfalls is a critical issue; we will continue to
assist Congress and EPA in their efforts to protect against potential
adverse health and environmental impacts resulting from Superfund sites.
Early identification, communication, and evaluation of issues needed to
reform the Superfund program can better prepare the Agency to address
challenges.
Acting Inspector General
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
Table of Contents
Hazardous Substance Superfund Trust Fund 1
EPA Earns Unqualified Opinion on Financial Statements 1
Brownfields Administrative Resources Can Be Better Managed 2
Assistance Agreements 3
California Department of Toxic Substances Control Needs to Improve Procurement Process 3
Alaska Inappropriately Applied Match Costs to an EPA Grant 3
Oregon Outlays of $2 Million for Superfund Site Agreement Questioned 4
EPA Adequately Competed Brownfields Grants 4
OIG Provides Congressionally Requested Data on Grants 4
Remedial Action Decision Making 6
Management Challenge Stresses Superfund Issues 6
Hercules 009 Landfill Superfund Site Needs Appropriate Testing and Timely Reporting 6
Atlanta Zoning Change Is Appropriate 7
Additional Actions Reviewed 7
Response Claims 8
Reviews of Elizabethtown Landfill Superfund Site Claims 8
Review of Hunterstown Road Superfund Site Claim 8
Review of Old Southington Landfill Superfund Site Claim 8
Review of Picillo Superfund Site Claim 9
Review of Batavia Landfill Superfund Site Claim 9
Performance Reviews 10
EPAOIG Helps the Department of the Interior Better Identify and Prioritize Hazardous Sites 10
EPA Can Improve Response Action Contracts 10
Investigative Activity 12
Laboratory President Sentenced to Prison Term 12
Contractor Enters into $6.5 Million Settlement 13
Listing of Fiscal Year 2005 Superfund Reports 14
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
Hazardous Substance Superfund Trust Fund
The Government Management and Reform Act
requires Federal agencies to prepare annual
audited financial statements. The requirement for
audited financial statements was enacted to help
bring about improvement in agencies' financial
management practices, systems, and controls so
that timely, reliable information is available for
managing Federal programs.
One of the major entities covered by these
financial statements is the Hazardous Substance
Superfund Trust Fund. The requirement for the
U.S. Environmental Protection Agency (EPA)
Office of Inspector General (OIG) to audit EPA
financial statements also meets our
Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) audit
requirement to annually audit the Superfund Trust
Fund. EPA presented the financial statements for
Fiscal Year 2005 in a consolidated format, which
was a change from prior years' presentations in
which the Superfund Trust Fund was presented
separately.
The following summary of our Fiscal Year 2005
financial statement audit relates to all findings
resulting from our audit of EPA's financial
statements, including those of the Hazardous
Substance Superfund Trust Fund.
EPA Earns Unqualified Opinion on
Financial Statements
EPA earned an unqualified opinion on its Fiscal
Year 2005 financial statements. However, in
evaluating EPA's internal controls, we noted nine
reportable conditions. Our unqualified, or clean,
opinion means that we found EPA's statements to
be fairly presented and free of material
misstatements. The reportable conditions noted
do not represent weaknesses that would cause a
material misstatement of financial statement
amounts; rather, they represent significant
deficiencies in the design or operation of internal
controls.
One of the nine reportable conditions specifically
involved a Superfund issue. We found errors on the
third quarter State Superfund Contract calculations
spreadsheet and/or the Superfund unbilled oversight
spreadsheet in 9 of 10 regions. These errors led to
overstating State Superfund Contract unearned
revenue by $31 million and unbilled oversight costs
by $14 million. Although the Office of the Chief
Financial Officer required the regions to certify that
they reviewed their accrual calculations, certification
did not prevent or discover the errors. As a result,
EPA could not ensure the accuracy of the unearned
revenue and the unbilled oversight accounts.
The eight other reportable conditions are:
• EPA inappropriately made approximately
$74,000 in payments to separated (transferred,
retired, or resigned) employees under the new
People Plus payroll system.
• Employees received salary payments in excess
of the biweekly maximum limitations.
• Certain regional offices did not properly adjust
accounts receivable and allowance for doubtful
accounts after transferring those accounts to
the finance center.
• Although EPA has made advances in
performing quality assurance reviews, the
reviews were still limited in scope and not
adequately documented.
• EPA overstated the year-end distribution of
amounts recorded in a budget clearing account.
• EPA made $89 million in adjustments to entries
in the Integrated Financial Management System
without proper and adequate documentation.
• EPA did not correct, in a timely manner,
PeoplePlus data that the Integrated Financial
Management System rejected during the
transfer process.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
• Contingency plans for several Office of the
Chief Financial Officer applications at the
Research Triangle Park campus in North
Carolina did not fully comply with guidelines.
We also found that EPA did not fully comply with
accounting standards requiring it to provide full
costs per output to management in a timely fashion,
and continued to experience difficulties in
reconciling intragovernmental transactions due to
some Federal entities not providing needed
information. However, these instances of
noncompliance did not result in material
misstatements to the audited financial statements.
The Agency agreed with the issues raised and
stated it has begun to evaluate the best methods to
address each issue.
We issued our report (2006-1-00015) on
November 14, 2005.
Brownfields Administrative Resources
Can Be Better Managed
EPA's ability to effectively manage Brownfields
administrative resources is challenged by policy
and organizational impediments.
Congress has authorized up to $250 million a year
through 2006 for the Brownfields program, which
is designed to foster expanding, redeveloping, or
reusing properties that may be complicated by the
presence of hazardous wastes or other
contaminants. We conducted this review in
response to a congressional request to evaluate
Brownfields administrative and program costs.
The authority for managing Brownfields resources
is dispersed across numerous headquarters and
regional offices. As a result, EPA offices
responsible for expending Brownfields resources
are not aligned in their efforts to define and track
program costs, and EPA offices cannot account for
or efficiently utilize staff resources. Also, EPA
expends significant financial and personnel
resources on Brownfields outreach at conferences
and meetings without evaluating or prioritizing
these efforts.
We recommended that EPA offices align
themselves more closely to better manage
Brownfield resources, define and better track
Brownfields administrative and programmatic
payroll costs, provide sufficient documentation to
account for all administrative resources, and revise
the regional staffing model to support current
workload. Further, the Agency should determine
how many Brownfields staff members should
become project officers, hold the EPA-sponsored
Brownfields conference every other year rather
than annually, and develop a process to prioritize
attendance at other conferences and meetings.
We issued our report (2005-P-00017) on
June 7, 2005.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
Assistance Agreements
About half of EPA's Fiscal Year 2005 budget was
awarded to organizations outside the Agency
through assistance agreements, including a
significant amount of funds related to Superfund
sites. Therefore, the efficient management of
assistance agreements is essential for EPA to
ensure it efficiently manages Superfund efforts.
CERCLA requires audits "of a sample of
agreements with States," and we perform financial
and compliance audits of assistance agreements
with States and political subdivisions. During 2005,
the OIG issued five reports on specific assistance
agreements related to Superfund, including three
reports on agreements awarded to States. Details
on each follow.
California Department of Toxic
Substances Control Needs to Improve
Procurement Process
Our review of reported outlays under a grant with
the California Department of Toxic Substances
Control found that the State fairly presented
outlays, with the exception of contract outlays.
EPA awarded a total of $ 1.3 million to the State
under cooperative agreement V99925204 for
Superfund site assessments and Brownfields
activities for the period July 2002 to June 2004.
The State performed the activities in the
agreement's work plan and complied with
deliverable requirements. However, the State's
procurement process needs improvement to ensure
that contracts were negotiated and administered in
accordance with Federal regulations. The State
did not perform cost or price analysis, negotiate
profit as a separate line item, ensure that
contractors monitored subcontractors, or include all
the required clauses in contracts.
We recommended that EPA disallow contract
outlays of $215,946, but the Agency disagreed with
that recommendation. The Agency agreed with
other recommendations for EPA to revoke the
State's procurement self-certification until
adequate policies and procedures are in place,
review and approve State solicitations and
contracts under EPA cooperative agreements, and
determine the adequacy of State actions to update
policies and procedures.
We issued our report (2005-4-00099) on
September 8,2005.
Alaska Inappropriately Applied Match
Costs to an EPA Grant
Alaska's proposed use of past expenditures on a
separate project as "matching" funds for a grant
involving cleanup at the River Terrace
Recreational Vehicle Park (RTRVP), Soldotna,
Alaska, is unallowable.
A complainant expressed concerns regarding the
use of Federal grant money by the State of Alaska
for a cleanup effort at RTRVP. Concerns involved
the validity of Alaska's matching funds, as well as
whether Alaska appropriately selected contractors,
made appropriate charges for legal costs, and
could extend the grant expiration date. The
$3 million EPA grant involved cleaning up
contamination at a former dry cleaning facility now
serving as a fish processing facility.
We concluded that the costs proposed by Alaska
for a nearby Alaska Department of Transportation
project should not have been considered matching
funds for the RTRVP grant. Alaska had spent the
money on a different project not actually at the
RTRVP site. EPA Region 10 had returned the
match submission to Alaska due to a technical
issue, and Alaska has not resubmitted the request.
We found that Alaska followed acceptable
contracting practices that sufficiently allowed
for competition. The legal costs incurred by
Alaska were allowable because they were
incidental to administering the grant. Alaska can
extend the grant funding beyond the expiration
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
date of June 30, 2006, because the grant is not
required to be considered expired until the funds
are expended.
EPA Region 10 concurred with our findings, but did
not agree with our recommendation that EPA
disallow Alaska's match. EPA Region 10 felt the
recommendation focused on a future grant award
rather than the grant amount already awarded, but
we maintain our position.
We issued our report (2005-P-00029) on
September 28,2005.
Oregon Outlays of $2 Million for
Superfund Site Agreement Questioned
We questioned over $2 million of erroneous and
unallowable expenses that the Oregon Department
of Environmental Quality claimed under an EPA
cooperative agreement.
EPA awarded $25.9 million to Oregon in
cooperative agreement V99060103 for remedial
design, remedial action, and long-term response
actions at the McCormick and Baxter Superfund
site in Portland, Oregon. Significant concentrations
of wood-treating chemicals have been found in soil
and groundwater at the site of the former wood-
treating facility, and in river sediments adjacent to
the site.
We questioned $ 1,523,481 claimed for future
expenses because they represent the unexpended
value of contracts entered into by Oregon, not
actual expenses. Oregon incorrectly included
these future costs in the Financial Status Reports
although the State was not paid for these future
costs.
We also questioned $532,821 in contract costs
because Oregon did not comply with certain
Federal procurement requirements, as well as
$ 12,922 in labor and indirect outlays because of
deficiencies in allocating leave and compensatory
time.
We recommended that EPA disallow the
questioned costs, invalidate the State's self-
certification of its procurement systems, and
require Oregon to make various other
improvements.
We issued our report (2005-4-00129) on
September 29,2005.
EPA Adequately Competed Brownfields
Grants
EPA's competition process for awarding
Brownfields grants complied with the requirements
of the Small Business Liability Relief and
Brownfields RevitalizationActof 2002. However,
EPA did not comply with Agency policy for
performing cost reviews.
EPA was required to award grants to eligible
organizations that have the highest rankings under
the 10 criteria established in the Act, and EPA used
these criteria to the extent they were applicable.
EPA cost reviews, however, did not comply with
Agency policy. EPA only had cost review
documentation for 4 of 24 grants we evaluated. In
some cases, project officers said the reviews were
performed but not documented. For the reviews
not performed, the project officers thought
someone else was responsible for performing
them. As a result, EPA risked the possibility of
reimbursing recipients for costs that were
unreasonable or unallowable. The agency agreed
with our recommendation to remind project
officers to document cost reviews.
We issued our report (2005-P-00009) on
March?, 2005.
OIG Provides Congressionally
Requested Data on Grants
The House Committee on Transportation and
Infrastructure provided us a sample of 15 grants
EPA had awarded to nonprofit organizations, and
asked us to report on the purpose, justification,
and progress for each grant. Several of the
grants involved hazardous and solid waste issues.
Our report provides factual information on the
grants and has no audit findings or
recommendations.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
EPA awarded a 5-year, $5.3 million grant to the
Association of State and Territorial Solid Waste
Management Officials. The grant's purpose is to
promote exchanging information between State
and EPA hazardous and solid waste officials so
they can jointly resolve implementation and other
emerging issues. EPA did not compete this award,
and justified awarding it non-competitively because
the Association already represented the interests of
co-regulators. The Association, headquartered in
Washington, DC, has received EPA grants since
the early 1980s. EPA currently provides 85
percent of the Association's funding.
EPA competed and awarded a $150,000 grant to the
Milwaukee Community Service Corps to educate
and train at-risk young adults in the Milwaukee,
Wisconsin, area to work in Brownfields remediation.
This onging project, which runs until September 30,
2006, has been funded through previous EPA grants.
EPA funded the grant under the statutory authority
of CERCLA, which allows for funding nonprofit
organizations to provide Brownfields remediation
training.
We issued our report (2005-S-00007) on
September?, 2005.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
Remedial Action Decision Making
We performed in-depth reviews of the reliability of
site-specific analytical data for sound site
remediation decisions. Also, we have worked
closely with the Agency to characterize Superfund
sites. Through these and other actions, we are
working to ensure that Agency decisions on site
remediation are based on data of known quality.
EPA has made some progress on the management
challenge we identified in 2004 on Superfund
evaluation and policy identification. We found that
the testing method EPA uses to monitor the
presence of toxaphene in groundwater at a
Superfund site is inadequate. We also looked into
several other issues involving remedial action
decision making. Details follow.
Management Challenge Stresses
Superfund Issues
One of the management challenges that we initially
identified for 2004 is "Superfund Evaluation and
Policy Identification." EPA faces significant
challenges in meeting current and future Superfund
needs, and must achieve a strong working
relationship with States and tribes to achieve its
environmental goals.
We identified the following specific areas of
concern:
• The lack of Trust Fund appropriations and
decreasing general appropriations.
• The inability to fund all sites that require
funding.
• The need to determine potential future financial
and environmental liability from sites not yet
formally entered into the Superfund program.
• Lack of viable, or fully cooperative, responsible
parties; inadequate financial assurance for site
cleanup; and the inability to consistently rely on
other programs to support Superfund needs.
• Use of credible measures of the ecological
benefits that result from Superfund cleanups.
We submitted this management challenge to the
Administrator in April 2004; during Fiscal Year
2005, EPA made progress regarding our concerns.
In particular, EPA noted that it:
• Published Superfund: Building on the Past,
Looking to the Future, an internal review that
contains recommendations to improve the
Superfund program.
• Developed a 120-Day Study Action Plan that
outlines how EPA will carry out
recommendations.
• Completed the Superfund Tribal Strategy and
implementation plan to better enable it to make
improvements on tribal lands.
Hercules 009 Landfill Superfund Site
Needs Appropriate Testing and Timely
Reporting
The testing method that EPA uses to monitor the
presence of toxaphene in groundwater at the
Hercules 009 Landfill site near Brunswick,
Georgia, is inadequate.
A community organization brought several
concerns to the attention of the Ombudsman
about the Hercules 009 site. Between 1975 and
1980, Hercules Incorporated operated the
Hercules 009 Landfill to dispose of waste
material from producing toxaphene, an
agricultural pesticide. The site became part of
EPA's Superfund program in 1984; EPA
completed cleanup of the site in 1999, but some
contaminants remained. As a result, EPA needs
to review the landfill every 5 years; EPA's
current report is over 1 year late.
We determined that the method EPA uses to
monitor for toxaphene only tests for the chemical
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
that has not degraded. Toxaphene degrades over
time, changing into other products (breakdown
products). Because these breakdown products
may pose a risk to human health, EPA should
monitor for toxaphene using a method that also
tests for the breakdown products.
We recommended that EPA Region 4 use an
analytical method that monitors both toxaphene and
its breakdown products in the groundwater at the
Hercules 009 Landfill, take appropriate action if it
finds breakdown products, and issue the report on
the 5-year review. The Agency generally agreed
with our recommendations.
We issued our report (2005-P-00022) on
September 26,2005.
Atlanta Zoning Change Is Appropriate
We found no evidence that a zoning condition
change for an Atlanta, Georgia, Brownfields project
would have a negative effect on the ability of the
State to attain the ambient air quality standards of its
State Implementation Plan. We performed this
review in response to a hotline complaint.
The Atlantic Steel project is a Brownfields
redevelopment effort designated as a
transportation control measure in Georgia's State
Implementation Plan. A complainant alleged that
Atlanta changed provisions of a zoning condition to
limit cut-through traffic without submitting a State
Implementation Plan revision to EPA for approval.
We found that the revised zoning condition
replaces vague language with specific prescribed
actions and timetables; the changes do not result in
the State Implementation Plan being "substantially
inadequate" to attain standards. We did determine
that more public meetings could have been held,
and EPA agreed to hold more.
We issued our report (2005-S-00005) on
February 16, 2005.
Additional Actions Reviewed
We reviewed several complaints regarding
hazardous waste sites that did not result in formal
OIG reports, although in one case EPA did agree
to take additional action.
One complaint alleged numerous issues with
removing contaminated soil and future
development at the Libby Asbestos National
Priorities List site in Libby, Montana, that could
release asbestos fibers from asbestos-
contaminated vermiculite. We found that EPA
Region 8 cleanup actions during the early stages of
emergency removal action were not entirely
adequate or cost effective. However, we found
that as time progressed Region 8's removal actions
improved greatly. We agreed with the complainant
that excavation for real estate development in
Libby has the potential to release asbestos into the
air, posing a risk to residents. We conveyed the
results to the Region 8 Regional Administrator and
recommended that the Record of Decision require
contractors and tradesmen to report to EPA any
vermiculite they find.
Based on a congressional request, we examined an
allegation that EPA lessened the radiation
standards proposed for the repository of nuclear
waste at Yucca Mountain, Nevada. According to
the allegation, the standards were lowered as a
result of a meeting between the Nuclear
Regulatory Commission, Department of Energy,
and EPA. We found that EPA had not weakened
the final standards.
We also examined a complaint regarding the
inadequacy of monetary settlements between
the State of California and the estate of the
owner of the Casmalia Landfill Site in Santa
Barbara. Our review of financial documents
determined that the amount of the settlement
was appropriate, based on liability issues and the
estate's financial assets.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
Response Claims
CERCLA, as amended by the Superfund
Amendments and Reauthorization Act of 1986,
authorizes EPA to pay any claim for response
costs by "any other person" 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 Preauthorized
Decision Document specifies the work to be
performed, the portion of the cost that EPA will
reimburse, and the procedures through which the
Potentially Responsible Parties can make claims
for reimbursement.
We do not audit response claims, but instead
review claims by following the instructions in the
Agency's claims guidance for the claims
adjuster. During 2005, we performed several
such reviews, as discussed below.
Reviews of Elizabethtown Landfill
Superfund Site Claims
We reviewed the first claim submitted by Waste
Management Disposal Services of Pennsylvania,
Incorporated, for the CERCLA response action at
the Elizabethtown Landfill Superfund Site, in West
Donegal Township, Pennsylvania. The
Preauthorized Decision Document authorizes the
claimant to submit claims against the Superfund
Trust for an amount not to exceed $ 1,125,000 or
25 percent of eligible, reasonable, and necessary
costs incurred for designing the remedial action
pursuant to the Record of Decision and Consent
Decree. The claimant submitted documentation
detailing incurred costs of $1,509,592 and
requesting reimbursement of $377,398. The costs
were incurred between July 1999 and June 2003.
Due to a math error and voluntary deletions, the
claim was reduced to $1,436,367, and the
reimbursement to $353,492.
We issued our report (2005-4-00009) on
November 16, 2004.
We also reviewed the second claim submitted by
Waste Management Disposal Services for the
CERCLA response action at the Elizabethtown site.
The Preauthorized Decision Document had the
same limitations as the first claim submitted. The
claimant submitted documentation detailing incurred
costs of $ 1,904,567 and requesting reimbursement of
$476,142. The costs were incurred between July
1999 and June 2003. Due to a math error and
voluntary deletions, the claim was reduced to
$1,791,654, and the reimbursement to $447,913.
We issued our report (2005-4-00071) on
June 7,2005.
Review of Hunterstown Road
Superfund Site Claim
We reviewed the third claim submitted by Viacom,
Incorporated, for the CERCLA response action at
the Hunterstown Road Superfund Site in Adams
County, Pennsylvania. The Preauthorized Decision
Document authorizes the Potentially Responsible
Parties to submit claims against the Superfund
Trust for an amount not to exceed $2,670,320 or
39 percent of eligible, reasonable, and necessary
costs incurred for the waste removal action. The
claimant submitted documentation detailing
incurred costs of $2,269,182, and requested
reimbursement of $884,981. These costs were
incurred between May 1999 and September 2004.
Due to timing issues and math errors, the
reimbursement was reduced to $872,562.
We issued our report (2005-4-00059) on
April 22,2005.
Review of Old Southington Landfill
Superfund Site Claim
We reviewed the third claim submitted by United
Technologies and the Town of Southington,
Connecticut, for the CERCLA response action at
the Old Southington Landfill Superfund Site. The
Preauthorized Decision Document authorizes the
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
Potentially Responsible Parties to submit claims
against the Superfund Trust for an amount not to
exceed the lesser of $8,800,165 or 63.09 percent of
eligible, reasonable, and necessary costs incurred
for the waste removal action. The claimants
submitted documentation detailing costs incurred of
$1,790,792 between May 2001 and February 2004.
During our review, nothing came to our attention
that caused us to believe the claimed costs were
ineligible, unreasonable, or unnecessary.
We issued our report (2005-4-00006) on
October 28, 2004.
Review of Picillo Superfund Site Claim
We reviewed the second claim submitted by the
five Potentially Responsible Parties for the
CERCLA response action at the Picillo Pig Farm
Superfund Site in Coventry, Rhode Island. The
Preauthorized Decision Document authorizes the
Potentially Responsible Parties to submit claims
against the Superfund Trust for an amount not to
exceed the lesser of $1,400,000 or 40 percent of
eligible, reasonable, and necessary costs incurred
for the waste removal action. The Claim
Administrator submitted documentation detailing
incurred costs from November 2002 through
December 2003 of $116,516, and requested
reimbursement of $46,606. During our review,
nothing came to our attention that caused us to
believe that the claimed costs were ineligible,
unreasonable, or unnecessary.
We issued our report (2005-4-00058) on
April 21,2005.
Review of Batavia Landfill Superfund
Site Claim
We reviewed the first claim submitted by the
Potentially Responsible Parties for the CERCLA
response action at the Batavia Landfill Superfund
Site in Batavia, New York. The Preauthorized
Decision Document authorizes the Potentially
Responsible Parties to submit claims against the
Superfund Trust for an amount not to exceed
$645,930 or 7.26 percent of eligible, reasonable,
and necessary costs incurred for the waste
removal action. The Claim Administrator
submitted documentation detailing incurred costs
from June 2001 through December 2003 of
$8,897,113, and requested reimbursement of
$645,930. During our review, nothing came to our
attention that caused us to believe that the claimed
costs were ineligible, unreasonable, or
unnecessary.
We issued our report (2005-4-00092) on
August 22,2005.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
Performance Reviews
In addition to the reviews required by CERCLA
and the Superfund Amendments and
Reauthorization Act, we conduct other reviews
that address or are related to Superfund issues.
Following are summaries on several completed
during Fiscal Year 2005.
EPA OIG Helps the Department of the
Interior Better Identify and Prioritize
Hazardous Sites
To help the Department of the Interior better
identify and inventory hazardous waste sites, we
compiled a list of relevant promising practices that
the Department of the Interior could use to
improve its processes.
As one way of accomplishing its objectives, EPA
coordinates with other Federal land managers, such
as the Department of the Interior. The Department
of the Interior manages one-fifth of the land mass in
the United States, and its stewardship responsibilities
include inventorying and assessing sites on its land
that pose threats to human populations, wildlife, and
sensitive environments.
The Department of the Interior has been criticized
in recent audits for weaknesses related to
environmental liability controls. Since EPA has
over 20 years experience in identifying and
inventorying hazardous waste sites, we worked
with the Department of the Interior's Inspector
General in a joint effort to identify potential areas
for improvement. While the Department of the
Interior does not seek to create its own Superfund
program, similarities exist between EPA's
processes and the processes the Department of
the Interior should use to identify, assess, and
prioritize hazardous sites on its land.
We found the following potential areas for
improvement:
• To improve site discovery, the Department of
the Interior could work better with States to
obtain new site information, develop better
screening procedures, and consult EPA
guidance on assessments.
• To better assess and prioritize sites, the
Department of the Interior could develop
necessary automated tools, a prioritization
method that ranks health risks, and a tracking
mechanism for sites not initially requiring
cleanup action to become aware of any
changing conditions.
• To better estimate costs, the Department of the
Interior could create a Web-based "cost
estimating toolbox" as a one-stop resource to
document cost assumptions, and should
frequently reevaluate and adjust cost estimates
throughout cleanups.
We issued our report (2005-P-00020) on
August 22,2005.
EPA Can Improve Response Action
Contracts
EPA can improve the structure of Response Action
Contracts to better protect the Government's
interests when it contracts for Superfund cleanups.
Response Action Contracts are Cost Plus Award
Fee Level of Effort contracts used to obtain
professional Architect-Engineer, technical, and
management services supporting EPA's Superfund
cleanup responsibilities. EPA's current Response
Action Contracts assign to EPA a disproportionate
share of the risk of cost overruns; expose EPA to
the risk of loss of funds through litigation; limit
competition; and forego potential cost savings
associated with other approaches to contracting,
such as Performance-Based Service Acquisition.
EPA regions do not consistently document the
rationale used to decide whether to contract
directly or obtain services through an interagency
agreement with the U.S. Army Corps of
Engineers. The Agency does not have a process
10
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
to measure and disseminate information on the
U.S. Army Corps of Engineers' past performance
in support of EPA.
Evaluations of contractor performance were not
documented timely and consistently, which could
prevent EPA and other Federal agencies from
considering contractors' past performance.
Further, information needed to evaluate results and
make decisions was not always readily available in
the national automated database, resulting in
underutilization of the system despite EPA
spending about $1.5 million a year on it.
We recommended that EPA develop and implement
a plan to increase the use of different contract
types, require better documentation on all source
selection decisions, develop a method for holding
contracting officers accountable for conducting past
performance evaluation timely and accurately, and
conduct a cost-benefit analysis to determine
whether the Remedial Action Contract Management
Information System should be retained. EPA
generally agreed with our recommendations.
We issued our report (2005-P-00001) on
December 6, 2004.
11
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
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 EPA programs and administrative areas,
including the Superfund program. High priority
was also given to environmental programs and
employees when the action under investigation
had the potential to seriously undermine the
integrity of the Agency and/or the public trust in
the Agency's ability to carry out its mission to
protect public health and safeguard the
environment.
Proactive and reactive investigative efforts by the
Office of Investigations covered all stages of the
Superfund program:
• The Laboratory Fraud Directorate continued its
efforts to detect and investigate laboratory
fraud, focusing on erroneous environmental
testing data and results that could undermine
the bases for EPA decision making, regulatory
compliance, and enforcement actions. Many of
these laboratories conduct analyses and
produce data that are used to make decisions
concerning Superfund sites.
• The Financial Fraud Directorate continued
major efforts in uncovering fraudulent activities
in the award, performance, and payment of
funds under contracts, grants, and other
assistance agreements. EPA programs,
including Superfund, are dependent on
contractors and assistance agreement recipients
to perform a significant portion of the work
related to EPA's mission.
• The Computer Crimes Directorate continued to
monitor previously identified computer security
weaknesses, identify new and emerging
vulnerabilities, and advise the Agency on any
additional computer security enhancements that
are needed. We continued to perform criminal
investigations of intrusive activities affecting
EPA systems and data.
During Fiscal Year 2005, our Superfund
investigative efforts resulted in:
• One Civil Settlement
• One Sentencing
• Fifteen Administrative Actions
Monetary fines and restitution totaled more than
$6.5 million. During the past 3 fiscal years,
cumulative monetary fines, restitution, and
recoveries resulting from Superfund investigations
totaled more than $18.7 million. We expect to see a
continued increase in significant actions as OIG's
investigative emphasis on major Agency contracting
and laboratory fraud continues.
Following are two instances of Superfund
investigative activities with results in Fiscal
Year 2005.
Laboratory President Sentenced to
Prison Term
On March 15, 2005, Edward V. Kellogg, President,
owner, and Quality Control Officer of Johnson
Laboratories, Inc., New Cumberland,
Pennsylvania, was sentenced in U.S. District
Court, Eastern District of Pennsylvania, to
16 months in prison, followed by 36 months of
probation, and ordered to perform 80 hours of
community service. Kellogg was also ordered to
pay restitution of $7,181 and a $3,400 special
assessment. In addition, Kellogg has been
debarred for 3 years.
On August 17,2004, following a jury trial, Kellogg
was found guilty of 34 counts of mail fraud. A
May 2003 indictment charged that from May 1998
through July 2000, Kellogg engaged in a scheme to
defraud customers of Johnson Laboratories by
creating and billing customers for false and
fraudulent environmental test reports.
Johnson Laboratories provided analytical testing of
environmental samples, including water and
12
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
wastewater, to EPA at the Bruin Lagoon
Superfund Site in Bruin, Pennsylvania, as well as to
municipalities and commercial clients required to
comply with environmental laws and regulations
administered by EPA. Among the tests prepared
by Johnson Laboratories were tests for volatile
organic compounds (VOCs), a contaminant whose
presence in water is regulated by EPA. VOCs
can contaminate drinking water, and VOCs in
wastewater may be discharged into rivers and
streams, potentially affecting fish, wildlife, and
drinking water sources.
As the head of the business, Kellogg allowed
environmental test results to be fraudulently
prepared and billed to customers. These test
reports purported to contain the results of VOC
testing performed in accordance with EPA method
601/602, when in fact Kellogg knew this testing
method had not been used. Instead, VOC testing
had been performed under the lesser inclusive EPA
method 624. Johnson Laboratories did not have
the necessary laboratory instruments in operating
condition to perform the tests in accordance with
EPA method 601/602 as reported to customers.
This investigation was conducted jointly with
the EPA Criminal Investigation Division, the
Pennsylvania Attorney General's Office, and
the Pennsylvania Department of Environmental
Protection.
Contractor Enters into $6.5 Million
Settlement
On March 15, 2005, Dehon, Inc., formerly known
as Arthur D. Little, Inc. (ADL), Cambridge,
Massachusetts, entered into a $6.5 million
settlement agreement with the U.S. Attorney's
Office for the District of Massachusetts, Civil
Division, to settle claims that ADL overbilled the
Federal Government on its contracts.
From 1990 to 2000, ADL inflated costs it charged
to Federal Government contracts by improperly
shifting costs uniquely associated with its
commercial contracts to Federal contracts. The
Defense Contract Audit Agency analyzed the costs
charged to Federal contracts and estimated $13.9
million was overbilled to numerous Government
agencies, including EPA, the Department of
Defense, and the Department of Energy. The
EPA work involved Superfund and engineering
activities.
In February 2002, ADL filed for relief under
Chapter 11 of the U.S. Bankruptcy Code.
Payment of this settlement agreement will be in
accordance with the terms and conditions of the
bankruptcy filing.
This investigation was conducted jointly with
the Defense Criminal Investigative Service.
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EPA Office of Inspector General Annual Superfund Report to Congress for Fiscal Year 2005
Listing of Fiscal Year 2005 Superfund Reports
Report No.
2005-1-00010
2005-2-00002
2005-4-00003
2005-4-00002
2005-4-00006
2005-M-00001
2005-1-00018
2005-1-00019
2005-4-00009
2005-1-00027
2005-4-00013
2005-P-00001
2005-1-00033
2005-1-00034
2005-2-00012
2005-1-00037
2005-S-00004
2005-1-00047
2005-1-00056
2005-2-00017
2005-S-00005
2005-2-00024
2005-4-00043
2005-4-00044
2005-P-00009
2005-2-00026
2005-1-00093
2005-1-00097
2005-1-00098
2005-4-00058
2005-4-00059
2005-4-00063
2005-4-00071
2005-P-00017
2005-1-00114
2005-M-00009
2005-1-00116
2005-4-00079
2005-S-00006
2005-1-00122
2005-1-00129
2005-1-00131
2005-1-00132
2005-1-00133
2005-1-00136
2005-4-00084
2005-4-00083
2005-4-00085
2005-1-00142
2005-4-00088
2005-1-00147
2005-1-00150
2005-4-00092
2005-P-00020
2005-S-00007
2005-4-00099
2005-1-00155
2005-1-00158
2005-1-00167
2005-M-0001 1
2005-P-00022
2005-P-00029
2005-4-00129
Description
COM Federal Programs Corporation - FY 1999 Incurred Cost
Shaw E & I (Formerly IT Group) DACA45-98-D-0003 D.O. 56
COM Federal Programs Corporation - FY 1999 Incurred Cost
E&E Billing System Review - Region 9
Old Southington Landfill CERCLA Claim No. 3
Ohio Underground Storage Tank Review
Alpha-Gamma Technologies, Inc. - Preaward PR-HQ-04-11304
Weston Solutions, Inc. - FY 1997 ARCS Closeout 68-W9-0057
Waste Management - Elizabethtown Response Claim #1
E2, Inc. - Preaward PR-HQ-04-1 12304
Alpha-Gamma Technologies Inc. -Accounting System Review
Response Action Contracts
URS Corporation - FY1999 Supplemental RAC 68-W9-8228
Black & Veatch Special Projects Corp. - FY 1999 ARCS 68-W9-0055
Weston Solutions, Inc. - FY 2000 RAC 68-W7-0026
Black & Veatch Special Projects Corp. - FY 2000 RAC 68-W5-0004
Ecology & Environment Revised Disclosure Statement Review
COM Federal Programs Corporation - FY 2001 RAC 68-W5-0022
Alpha-Gamma Technologies Inc. - Financial Capability Review
Weston Solutions, Inc. - FY 2001 RAC Closeout 68-W7-0026
Review of Changes to the Atlantic Steel Transportation Control Measure
Shaw Environmental & Infrastructure, Inc. - Delivery Order #40
E&E's ESD Disclosure Statement Is Inadequate
Ecology & Environment Revised Disclosure Statement Review
Brownfields Competition Process
Weston Solutions, Inc. - FY 1999 ARCS 68-W9-0057
Washington Group Int'l - FY 2003 RAC
COM Federal Programs Corporation - FY 2002 Annual RAC Closeout 68-W5-0022
COM Federal Programs Corporation - FY 1999 ARCS 68-W9-0024
Picillo Farm CERCLA Claim #2
Hunterstown Road PRP Group CERCLA Claim #3
E&E FY 2001 Incurred Cost Adequacy Review
Response Action Claim No. 2, Elizabethtown Landfill Superdund Site
Brownfields Request: Resource Needs
Tetra Tech Inc./B&V SPC Joint Venture - FY 2000 RAC 68-S7-3002
Indirect Rate Negotiation Support
Tetra Tech Inc./B&V SPC Joint Venture - FY 1999 RAC 68-S7-3002
E2, Inc. -Accounting System Review PR-HQ-04-11304
McGladrey & Pullen LLP Single Audit of Geothermal
COM Federal Programs Corporation - FY 1999 ARCS 68-W9-0056
Bechtel Group, Inc. - FY 1999 Incurred Cost
COM Federal Programs Corporation - FY 2001 RAC Closeout 68-W9-8210
COM Federal Programs Corporation - FY 2002 RAC Closeout 68-S7-3003
COM Federal Programs Corporation - FY 2001 RAC 68-S7-3003
COM Federal Programs Corporation - FY 1997 & 1998 RAC 68-S7-3003
E2 Consulting Engineers, Inc. - FY 2005 Financial Capability
Pacific Western Technologies, Ltd. - FY 2005 Financial Capability
Pacific Western Technologies, Ltd. - FY 2005 Preaward Accounting System
Tetra Tech EM Inc. - FY 2000 RAC Closeout 68-W6-0037
E2 Consulting Engineers, Inc. - FY 2005 Preaward Accounting System
E2 Consulting Engineers, Inc. - Preaward PR-HQ-04-1 1611
Tetra Tech NUS, Inc. - FY 2000 RAC - 68-W6-0045
Mixed Funding Claim, Batavia Landfill Superfund Site
DOI - IG Hazardous Waste Joint Effort
Congressionally Requested Review of Selected Grants
California Dept. of Toxic Substances Control Reported Outlays
Pacific Western Technologies, Ltd. - Preaward PR-HQ-04-1 1611
Black & Veatch - 68-W8-0091 RAC
Metcalf & Eddy Inc. - RAC FY 2003 Annual Close-Out 68-W6-0042
Indirect Rate Negotiation Support
Ombudsman Review of the Hercules 009 Landfill Superfund Site
Alaska's Actions for the River Terrace Recreational Vehicle Park, Soldotna, Alaska
Oregon Superfund Cooperative Agreement Audit
Date
15-OCT-04
18-OCT-04
19-OCT-04
19-OCT-04
28-OCT-04
01-NOV-04
03-NOV-04
04-NOV-04
16-NOV-04
30-NOV-04
03-DEC-04
06-DEC-04
10-DEC-04
13-DEC-04
15-DEC-04
17-DEC-04
17-DEC-04
06-JAN-05
12-JAN-05
12-JAN-05
16-FEB-05
25-FEB-05
28-FEB-05
28-FEB-05
07-MAR-05
28-MAR-05
04-APR-05
13-APR-05
15-APR-05
21-APR-05
22-APR-05
1 8-MAY-05
07-JUN-05
07-JUN-05
14-JUN-05
16-JUN-05
27-JUN-05
28-JUN-05
28-JUN-05
05-JUL-05
08-JUL-05
15-JUL-05
15-JUL-05
15-JUL-05
19-JUL-05
26-JUL-05
26-JUL-05
26-JUL-05
28-JUL-05
01-AUG-05
05-AUG-05
11-AUG-05
22-AUG-05
22-AUG-05
07-SEP-05
08-SEP-05
08-SEP-05
09-SEP-05
22-SEP-05
23-SEP-05
26-SEP-05
28-SEP-05
29-SEP-05
14
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