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Region 2's Billing of Superfund Oversight Costs
 |
Office of Inspector General
Audit Report |
| Region 2's Billing of Superfund Oversight Costs | |
| E1SFF8-02-0007-8100206 | |
| August 13, 1998 | |
EXECUTIVE SUMMARY
PURPOSE
We performed an audit of Region 2's billing of Superfund oversight costs because of problems noted during our audit of the Agency’s Financial Statements. The objectives of this audit were to determine whether the Region was (a) timely billing the responsible party for Superfund oversight costs, and (b) successfully collecting untimely billed oversight costs, and (c) implementing the Agency’s Superfund reform regarding oversight.
BACKGROUND
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) authorizes EPA to recover its costs from responsible parties to help replenish the Superfund Trust Fund. The law, as amended by the Superfund Amendments and Reauthorization Act of 1986, stipulates that EPA may help fund state government efforts to remediate hazardous waste sites. Both EPA and the states are to comply with the cost documentation requirements found in the Code of Federal Regulations to ensure that the maximum amount of cost is recovered.
Oversight costs are incurred by EPA or a state while monitoring cleanup work being performed by responsible parties (RPs) at "Enforcement-lead" Superfund sites. Such costs can include charges for personnel (salary, indirect costs, and travel) as well as charges by contractors. EPA recovers these costs through the use of enforcement documents, i.e., either a Consent Decree (CD) or an Administrative Order on Consent (AOC). An AOC is a legally-binding agreement between EPA and the RPs; a CD is a similar document, except that it is filed in court for a judge’s approval.
RESULTS-IN-BRIEF
In many cases Region 2 did not (a) bill, (b) bill timely, (c) issue accurate bills or (d) successfully collect accumulated Superfund oversight costs from RPs. These conditions were generally caused by the Region’s inadequate management controls for timely billing of oversight costs. Specific contributing factors were (i) other competing priorities, (ii) inadequate tracking systems, (iii) vague or nonexistent billing requirements in AOCs or CDs, (iv) inadequate coordination between program offices and Office of Regional Counsel (ORC), (v) difficulty in segregating oversight from other response costs, and (vi) lack of resources.
Untimely billings and collections resulted in unnecessary delays in replenishing the Superfund Trust Fund and limited EPA’s ability to timely clean up other priority sites and further protect human health and the environment. Specifically, oversight costs of more that $31 million at 89 sites had not been billed as of September 30, 1997. In addition, there were $4 million in disputed oversight costs. Costs not billed for many years represent unrecorded receivables and affect EPA financial statements causing understated account receivable and revenue account balances. Significant amounts of interest that would have accrued to the Trust Fund were also lost or postponed.
Region 2 also did not fully implement the reduced oversight reform as described in EPA’s OSWER Directive No. 9200.4-15. Methods for measuring reduced oversight had not been developed. As a result, Region 2 did not document or report any reductions as required at the six sites it selected. Additionally, the Region did not provide RPs with estimated oversight costs for the next year because it had not developed a process to do so. The Region and Headquarters were working to develop the necessary tools to carry out this reform.
RECOMMENDATIONS
We recommend that the Region 2 Administrator improve the oversight billing management controls by (1) prioritizing oversight billings to assure that all pending bills are issued by the end of FY 98, (2) ensuring that future oversight costs are billed in accordance with enforcement agreements or within 120 days of the anniversary date, (3) modifying existing oversight billing procedures to include time frames for initiating, assembling, reviewing, and issuing oversight bills by participating offices, (4) expediting implementation of the Superfund Oversight Billing Tracking System making it fully functional and accessible to personnel, and (5) initiating and documenting periodic meetings between ERRD, Finance and ORC officials to improve coordination and timeliness.
REGION 2 RESPONSE and OIG EVALUATION
On June 23, 1998 the Region responded that it agreed it should endeavor to issue oversight bills on a timely, regular basis, and noted recent efforts to improve its record in this regard. The Region plans to clear the backlog of old enforcement oversight billings by the end of FY 98, except where case management strategies would be compromised. The response also provided updated information at some sites and other comments. The Region agreed with three of the five oversight billing recommendations, but had concerns about including timeframes in Regional procedures, and documenting meetings.
We still believe those two recommendations are necessary and request that the Region reconsider them and provide specific corrective actions and milestone dates for implementing all recommendations. The response has been summarized at the end of Chapter 2 and other comments were inserted in the body of the report. See Appendix A for the complete Regional response. An exit conference was held with Region 2 representatives on July 21, 1998.