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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Limitations on the EPA's Authority
Under the Safe Drinking Water Act
Resulted in Unaddressed
Concerns at a Tribal Drinking
Water Plant
Report No. 13-P-0308
July 2, 2013
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Report Contributors:
Patrick Gilbride
Erin Barnes-Weaver
Todd Goldman
Luke Stolz
Abbreviations
ARRA	American Recovery and Reinvestment Act of 2009
CFR	Code of Federal Regulations
DWIG-TSA	Drinking Water Infrastructure Grant - Tribal Set Aside
DWTP	Drinking Water Treatment Plant
EPA	U.S. Environmental Protection Agency
FBIC	Fort Belknap Indian Community
OIG	Office of Inspector General
SDWA	Safe Drinking Water Act
Cover photo: Corrosion in the chemical room of the Fort Belknap Indian Community
Drinking Water Treatment Plant approximately 7 months after the plant
went operational. (EPA photo)
Hotline
To report fraud, waste, or abuse, contact us through one of the following methods:
email: OIG Hotline@epa.gov	write: EPA Inspector General Hotline
phone: 1-888-546-8740	1200 Pennsylvania Avenue, NW
fax:	202-566-2599	Mailcode 2431T
online:
http://www.epa.gov/oiq/hotline.htm
Washington, DC 20460

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At a Glance
Why We Did This Review
The U.S. Environmental
Protection Agency provided
American Recovery and
Reinvestment Act of 2009
funds for tribal drinking water
infrastructure projects. The
EPA provided the funds to the
U.S. Department of Health and
Human Services-Indian Health
Service through a 2009
interagency agreement.
In response to a hotline
complaint, we sought to
determine whether the EPA
followed applicable criteria in
awarding and monitoring of
funds provided to the Fort
Belknap Indian Community
Drinking Water Treatment Plant
in Montana, and whether the
EPA met its responsibility
under the Safe Drinking Water
Act.
This report addresses the
following EPA Goals or
Cross-Cutting Strategies:
•	Protecting America's
waters.
•	Strengthening state, tribal
and international
partnerships.
Limitations on the EPA's Authority Under the
Safe Drinking Water Act Resulted in Unaddressed
Concerns at a Tribal Drinking Water Plant
What We Found
In 2007, prior to providing funding to the FBIC DWTP project, the EPA contracted
with Rural and Tribal Environmental Solutions to provide plan and specification
reviews for public water system construction in Indian Country. The contractor
reviewed the FBIC DWTP and provided numerous comments to Region 8,
including concerns about the plant design. Region 8 provided the comments to
the FBIC and discussed key concerns with the tribe on two occasions.
Despite the plan and specification review comments, the EPA contributed
$572,700 toward the project. EPA Region 8 staff said that, due to a limitation
under the National Primary Drinking Water Regulations, they did not have the
authority to require the tribe to address the plan and specification review
comments outlining the EPA's concerns. The FBIC's DWTP went operational in
March 2010 but continues to not be in compliance with the SDWA, specifically
the Disinfection Byproduct Rule.
Although the EPA followed applicable criteria in awarding and monitoring funds
provided for the FBIC DWTP, we found that the EPA believed—based on an
incorrect interpretation of its authority under the SDWA—that it could not require
tribes to address plan and specification review comments prior to awarding
funds.
Recommendations and Planned Agency Corrective Actions
We recommended that the Office of Water reexamine its interpretation of the
drinking water regulations that purportedly prevented the agency from requiring
tribes to address plan and specification review comments. If the determination
was still that this limitation exists, we recommended that the Office of Water
pursue a regulatory or guidance change to address it. The agency concurred with
the recommendation and provided its intended corrective action and estimated
completion date. The agency determined that it can require tribes to address plan
and specification review comments prior to grant awards and plans to include
language to reinforce this in guidelines currently under revision.
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.aov/oia/reports/2013/
20130702-13-P-0308.pdf

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
July 2, 2013
MEMORANDUM
SUBJECT: Limitations on the EPA's Authority Under the Safe Drinking Water Act
Resulted in Unaddressed Concerns at a Tribal Drinking Water Plant
Report No. 13-P-0308
FROM: Arthur A. Elkins Jr.
TO:	Nancy K. Stoner, Acting Assistant Administrator
Office of Water
Shaun McGrath, Regional Administrator
Region 8
This is our report on the subject audit conducted by the Office of Inspector General of the
U.S. Environmental Protection Agency. This report contains findings that describe the problems
the OIG has identified and corrective actions the OIG recommends. This report represents the
opinion of the OIG and does not necessarily represent the final EPA position. Final
determinations on matters in this report will be made by EPA managers in accordance with
established audit resolution procedures.
Reason for Review
In March 2012, the EPA OIG received a hotline complaint expressing concerns about the design
and construction of the drinking water treatment plant at the Fort Belknap Indian Community in
Montana. The FBIC DWTP is classified as a small system that serves less than 3,300 people (the
FBIC system serves a population of 2,200). After preliminary fact finding on the merits of this
complaint, we opened an assignment to examine the EPA's business decision to award American
Recovery and Reinvestment Act of 2009 funding to Phase 2 of the FBIC DWTP project.
Specifically, our objectives were to determine whether the EPA followed applicable criteria in
awarding and monitoring funds provided to the FBIC DWTP and met its responsibility under the
Safe Drinking Water Act. This memorandum summarizes the results of our review.
Background
In 2007, prior to providing project funding, the EPA contracted with Rural and Tribal
Environmental Solutions to provide plan and specification reviews for public water system
construction in Indian Country. Staff in Region 8's Montana Operations Office indicated that
they made the decision to fund plan and specification reviews due to concerns about
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13-P-0308
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unscrupulous engineering firms doing work in Indian Country, and because tribes generally do
not have in-house staff who can review technical engineering materials. They added that the
review was done as part of technical assistance per the EPA's role under Part 141 when neither a
state nor tribal government has primacy. The director of the Region 8 Water Program said the
region provides comments to help plants be protective of public health.
Under the statement of work, the Rural and Tribal Environmental Solutions contractor reviewed
the FBIC DWTP.1 Rural and Tribal Environmental Solutions provided numerous comments to
the EPA on July 23, 2007, including concerns about the facility's design. Region 8 provided the
comments to the FBIC, and Region 8 staff in the Montana Operations Office also discussed key
concerns with the FBIC on two occasions. After addressing some but not all of the EPA's
concerns, the FBIC and its contractor proceeded with construction planning.2
The SDWA authorizes the EPA to establish minimum standards for drinking water quality and
allows the EPA to award primary enforcement responsibility for public water systems to states
and tribes. The National Primary Drinking Water Regulations and implementation and
enforcement of such regulations are found in 40 CFR Parts 141 and 142. Per definitions in
Part 141, when neither a state nor tribal government has primacy under the SDWA, the EPA
regional administrator will be referred to as the "state" who retains authority for Part 141.
Part 142 outlines the requirements for states to receive a determination of and maintain primacy,
including a provision that states assure that the design and construction of water system facilities
will be capable of compliance with drinking water regulations. The EPA Region 8 has Part 141
authority over the FBIC as the tribal community does not have SDWA primacy. The FBIC began
planning for a new DWTP in the late 1990s. The FBIC and its contractor commenced with
planning on Phase 2 of the project in 2007, primarily through funding by the U.S. Department of
Agriculture-Rural Development.
In May 2009, EPA signed an interagency agreement with the U.S. Department of Health and
Human Services-Indian Health Service transferring $30 million of Drinking Water Infrastructure
Grants-Tribal Set Aside ARRA funds from the EPA to the Indian Health Service. The
interagency agreement listed EPA-approved projects to fund, identified by the Indian Health
Service Sanitary Deficiency System scoring process, including Phase 2 of the FBIC DWTP with
funding of $572,700. EPA's funds were used for a pre-fabricated metal building, drinking water
modules, and electrical panels. Construction on Phase 2 ran from August to November 2009, and
the plant went operational in March 2010. Complying with drinking water standards for tribal
water systems was one of the key challenges listed by the EPA in its fiscal year 2011 annual
performance report.
1	One Region 8 staff person said that the EPA had the plan and specification review comments done as a courtesy to
the U.S. Department of Agriculture-Rural Development. The agency also said the comments were done as a
courtesy to the FBIC.
2	Staff in Region 8's Montana Operations Office said that, after receiving the EPA's comments, any implementation
decisions would be made by the FBIC.
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Scope and Methodology
We performed our review from November 2012 to April 2013 in accordance with generally
accepted government auditing standards. Those standards require that we plan and perform our
review to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings
and conclusions based on our objectives. We believe the evidence obtained provides a reasonable
basis for our findings and conclusions presented in this report.
We reviewed relevant regulations, agreements, policies and procedures pertaining to the
DWIG-TSA ARRA funding, including the interagency agreement between the EPA and the
Indian Health Service, the March 2009 DWIG-TSA program guidance for projects funded using
ARRA, and other relevant program guidance. Concerning EPA's responsibility under SDWA,
we limited our regulatory review to 40 CFR Parts 141 and 142 to understand EPA's authority for
the plan and specification comments provided to the FBIC. We also reviewed the comments by
Rural and Tribal Environmental Solutions as well as EPA enforcement information on FBIC's
SDWA compliance. We interviewed staff from the EPA Region 8's Montana Operations Office,
Region 8's Denver office, the Office of Water, the Rural and Tribal Environmental Solutions
engineer, the U.S. Department of Health and Human Services-Indian Health Service, and the
U.S. Department of Agriculture-Rural Development.
Results of Review
Although the EPA followed applicable criteria in awarding and monitoring funds provided for
the FBIC DWTP, we found that the EPA believed—based on an incorrect interpretation of its
authority under the SDWA—that it could not require tribes to address plan and specification
review comments prior to awarding funds. While our review only covered the FBIC DWTP, this
limitation could impact other tribal drinking water projects. The EPA's Office of Water issued
DWIG-TSA program guidance for projects funded using ARRA on March 10, 2009. The
guidance provided guidelines for the management and oversight of appropriated ARRA funds
and also noted congressional and administration mandates to move funds quickly.3 Per the
guidance, to identify projects for the interagency agreement between the EPA and the Indian
Health Service, EPA regions were to consult with their tribes and Indian Health Service areas to
identify shovel-ready drinking water infrastructure projects that would be under contract or
construction within 12 months of the date of enactment. These projects also needed to meet the
selection criteria established in the EPA's DWIG-TSA program guidelines dated October 1998.
The 1998 guidelines allowed the regions to elect to use the Indian Health Service Sanitary
Deficiency System to help select projects.
For ARRA, Region 8 elected to use the Sanitary Deficiency System list as the methodology to
select projects for funding through the interagency agreement and, per regional guidance,
Region 8 notified tribes of this process. The FBIC DWTP ranked the highest among Region 8
projects to receive ARRA funding, and Region 8 staff said they could not skip over a project for
3 The decision memo accompanying the EPA's interagency agreement with the Indian Health Service noted that
"ARRA requires commencing expenditures and activities as quickly as possible consistent with prudent
management" and that the accelerated project schedule would not allow for each region to solicit grant proposals
and negotiate detailed work plans within the required time.
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funding on the list given the region's communications to the FBIC on the ARRA project
selection process. Region 8 staff said they could not consider plan and specification review
comments—such as the 2007 comments from Rural and Tribal Environmental Solutions—
in awarding funds given limitations on the agency's role under Part 141. While Part 142 includes
a provision that states or tribal governments with primacy assure that the design and construction
of water system facilities will be capable of compliance with the state primary drinking water
regulations (i.e., plan and specification review authority), Region 8 staff said that Part 142 does
not apply to the EPA as Part 141 does not contain a parallel provision on plan and specification.
As a result, even though Region 8 discussed its concerns with the FBIC on the facility's design
based on the Rural and Tribal Environmental Solutions review, Region 8 staff said the FBIC and
its contractor were able to proceed with construction planning even though it only addressed
some but not all of the EPA's concerns.
Outside of ARRA, Region 8's annual method to identify projects—as described in its April 2009
program guidelines—includes using a project proposal form and all supporting information to
consider project eligibility. However, according to Region 8 staff, "all supporting information"
would not have included the plan and specification review comments. Region 8 staff said that, in
most cases, they do not receive plan and specification comments - if at all - until after project
funding, and we confirmed this in Region 8's annual program guidelines for 2009. Thus,
regardless of whether special or annual appropriations (ARRA DWIG-TSA or annual
DWIG-TSA) are involved, for water infrastructure projects where tribes do not have primacy,
Region 8 staff said that they did not believe they had the authority to require the tribe to address
the EPA's concerns in the plan and specification review comments. Although the FBIC DWTP
went operational in March 2010, it continues to be out of SDWA compliance. Specifically, the
DWTP fails to meet Disinfection Byproducts Rule where disinfectants like chlorine react with
naturally-occurring source water materials and create byproducts that, if consumed in excess of
the EPA's standards over many years, may lead to increased health risks. Additionally, the
Indian Health Service continues to provide funding to the plant in an effort to bring it into
compliance.
The limitation identified in this review could impact other tribal drinking water projects. Staff in
the EPA's Office of Water indicated that several regions have said that addressing plan and
specification review comments is authority EPA should have. Staff noted that federal agencies
have spent funds fixing problems previously identified in plan and specification reviews.
Recommendation
We recommend that the assistant administrator, Office of Water:
1. Reexamine its interpretation that, in tandem, 40 CFR Parts 141 and 142 prevent the
agency from requiring tribes to address plan and specification review comments. If the
determination is still that this limitation exists, pursue a regulatory or guidance change to
address it.
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Agency Comments and OIG Evaluation
The EPA agreed with the recommendation and confirmed that the agency can require tribes to
address plan and specification review comments prior to being awarded a grant. Language to
reinforce this statement will be included in the DWIG-TSA guidelines currently under revision.
Appendix A includes the agency's response to our draft report. We believe the agency's actions,
when implemented, should address the recommendation.
Action Required
Your response to the draft report included a proposed corrective action and completion date.
The recommendation is open with corrective action underway. We have no objections to the
further release of this report to the public. We will post this report to our website at
http://www.epa.gov/oig.
Because other federal agencies contributed greater funding to the FBIC DWTP than the EPA,
we plan to notify the OIGs for the U.S. Department of Agriculture and the U.S. Department of
Health and Human Services.
If you or your staff have any questions regarding this report, please contact Rich Eyermann,
acting assistant inspector general for audit, at (202) 566-0565 or Eyermann. Richard@epa.gov;
or Patrick Gilbride, director for risk and program performance audits, at (303) 312-6969 or
Gilbride.Patrick@epa.gov.
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Status of Recommendations and
Potential Monetary Benefits
POTENTIAL MONETARY
BENEFITS (In $000s)
Claimed Agreed-To
Amount Amount
40 CFR Parts 141 and 142 prevent the agency	Office of Water
from requiring tribes to address plan and
specification review comments. If the determination
is still that this limitation exists, pursue a regulatory
or guidance change to address it.
RECOMMENDATIONS
Planned
Rec. Page	Completion
No. No.	Subject	Status1 Action Official	Date
1 4 Reexamine its interpretation that, in tandem,	0 Assistant Administrator, 3/31/2014
1 0 = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is unresolved with resolution efforts in progress
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Appendix A
Agency's Official Draft Report Comments
(Received June 4, 2013)
MEMORANDUM
SUBJECT: Response to OIG's Draft Report/Project No. OA-FY13-0076: Limitations on
EPA's Authority Under the SDWA Resulted in Unaddressed Concerns at a Tribal
Drinking Water Plant
FROM: Nancy K. Stoner /s/ Original Signed by Michael Shapiro for:
Acting Assistant Administrator
TO:	Arthur A. Elkins, Jr.
Inspector General
Thank you for the opportunity to respond to the issues and recommendation in the subject audit
report. Following is a summary of the U.S. EPA's overall position, along with its position on the
report's recommendation. We have provided a high-level intended corrective action and
estimated completion date. For your consideration, we have included a Technical Comments
Attachment to supplement this response.
AGENCY'S OVERALL POSITION
The agency concurs with the one recommendation detailed in the report.
AGENCY'S RESPONSE TO REPORT RECOMMENDATIONS
Agreements
No.
Recommendation
High-Level Intended Corrective
Action(s)
Estimated
Completion by FY
1
Reexamine the interpretation of 40
CFR Parts 141/142 and that it
prevents the Agency from
requiring tribes to address plan and
specification review comments. If
the determination is still that this
limitation exists, pursue a
regulatory or guidance change to
address it.
The EPA confirmed that the Agency can
require tribes to address plan and
specification review comments prior to
being awarded a grant.
Language to reinforce this statement
will be included in the Drinking Water
Infrastructure Grants- Tribal Set Aside
Guidelines currently under revision.
FY14Q2
CONTACT INFORMATION
If you have any questions regarding this response, Michelle Schutz, Associate Branch Chief of
Drinking Water Protection Division at (202) 564-7374.
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Appendix B
Distribution
Office of the Administrator
Assistant Administrator for Water
Regional Administrator, Region 8
Agency Follow-Up Official (the CFO)
Agency Follow-Up Coordinator
General Counsel
Principal Deputy Assistant Administrator for Water
Deputy Administrator, Region 8
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for External Affairs and Environmental Education
Associate Branch Chief, Drinking Water Protection Division, Office of Water
Assistant Regional Administrator, Office of Partnerships and Regulatory Assistance, Region 8
Director, Water Program, Office of Partnerships and Regulatory Assistance, Region 8
Audit Follow-Up Coordinator, Office of Water
Audit Follow-Up Coordinator, Region 8
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