U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
11-P-0527
August 25, 2011
Why We Did This Review
We conducted this review to
determine whether the U.S.
Environmental Protection
Agency (EPA) has controls in
place to recover its Gulf Coast
oil spill response costs as
required and recommended by
policy and guidance.
Background
On April 22, 2010, the
Deepwater Horizon mobile
offshore drilling unit sank,
causing the largest oil spill in
U.S. history. The U.S. Coast
Guard, as lead agency for the
response, authorized EPA to
monitor and respond to
potential public health and
environmental concerns. To
do so, EPA collected and
managed environmental data,
oversaw waste management
activities, and provided
technical assistance. As of
December 31,2010, the
Coast Guard had authorized
EPA to spend approximately
$61.9 million on response
work. EPA bills its costs and
receives reimbursement from
the Coast Guard.
For further information,
contact our Office of
Congressional, Public Affairs
and Management at
(202)566-2391.
The full report is at:
www.epa.qov/oiq/reports/2011/
20110825-11-P-0527.pdf
Catalyst for Improving the Environment
EPA's Gull Coast Oil Spill Response Shows Need for
Improved Documentation and Funding Practices
What We Found
EPA needs additional management controls to track and recover its Gulf Coast oil
spill response costs. EPA needs controls to ensure documentation for its response
activities is consistent and provides a clear audit trail that links response costs to
authorized activities. While response costs were charged to a site code, we were
unable to determine the specific tasks associated with certain costs to ensure they
were related to authorized activities. Further, EPA needs controls in its billing
review to ensure that cost documentation packages are clear and complete.
EPA also needs to reach agreement with the Coast Guard regarding the sharing of
contractor-designated confidential business information; this impasse has affected
reimbursement of EPA's response costs. EPA contract costs represent over
67 percent of its total response costs. Until this matter is resolved, reimbursement
of EPA's response costs may be further delayed or denied, and EPA may be at risk
of incurring additional Anti-Deficiency Act (ADA) violations, beyond the one it
incurred in November 2010, as well as Prompt Payment rule penalties.
EPA needs a new approach to enable it to fund emergency responses to oil spills.
EPA had limited cash on hand to fund its response work. In an attempt to prevent
a cash shortfall and avoid an ADA violation, EPA received a cash advance of
$32 million from the Coast Guard in August 2010. Despite the advance, EPA
incurred an ADA violation in November 2010. EPA also temporarily charged non-
oil-spill appropriations, such as Superfund, and reprogrammed funds to fund its
response work. EPA's temporary charging to Superfund resulted in a purpose
violation because Superfund cannot be used for oil spill response. While EPA's
actions ultimately provided it with access to funds, the ADA and purpose
violations, coupled with the extra work required by EPA to find sufficient funds
during an oil spill disaster, indicate a need for a new funding approach.
What We Recommend
We recommend that EPA implement controls to ensure that documentation
supports authorized response activities and that response bills and supporting cost
documentation packages are clear and complete. We also recommend that EPA
reach an agreement with the Coast Guard on the confidential business information
issue. EPA should also seek new or additional emergency response funding
authority for oil spills. During the course of this review, EPA took action to seek
this authority. EPA disagreed with our first recommendation, but agreed with the
three remaining recommendations.
------- |