U.S. ENVIRONMENTAL PROTECTION AGENCY 

OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

 Evaluation Report 

Leaking Underground Storage 

Tank Recovery Act Grants 

Contained Requirements but 

Priority Lists Need More Oversight 

 Report No. 11-R-0018 

 November 22, 2010 
 

Report Contributors: John Coll 

 Dan Engelberg 

 Fredrick Light 

 Tim Roach 

 Gerry Snyder 

 Michael Wagg 

Abbreviations 

ARRA American Recovery and Reinvestment Act of 2009 

CFR Code of Federal Regulations 

EPA U.S. Environmental Protection Agency 

GAO U.S. Government Accountability Office 

LUST Leaking Underground Storage Tank 

OIG Office of Inspector General 

OUST Office of Underground Storage Tanks 

SWDA Solid Waste Disposal Act, as amended 

UST Underground Storage Tank 
 

 

 

U.S. Environmental Protection Agency 11-R-0018 

November 22, 2010 Office of Inspector General 

At a Glance 

Catalyst for Improving the Environment 

Why We Did This Review 

We reviewed the U.S. 

Environmental Protection 

Agency’s (EPA’s) 

management of American 

Recovery and Reinvestment 

Act of 2009 (ARRA) funding 

for the Leaking Underground 

Storage Tank (LUST) 

program. We sought to 

determine whether this 

oversight ensures that ARRAfunded LUST cooperative 

agreements comply with 

applicable laws, regulations, 

and guidance. 

Background 

EPA allocated $190.7 million 

of ARRA funds to support 

state and territorial LUST 

cleanup programs. The 

overall purposes of LUST 

Recovery Act money are to 

clean up contaminated LUST 

sites effectively while 

maximizing job creation and 

retention, and providing 

economic and environmental 

benefits to citizens of the 

United States. 

For further information, 

contact our Office of 

Congressional, Public Affairs 

and Management at 

(202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov/oig/reports/2011/ 

20101122-11-R-0018.pdf 

Leaking Underground Storage Tank 

Recovery Act Grants Contained Requirements 

but Priority Lists Need More Oversight 

What We Found 

While the Recovery Act grants we reviewed contained most of the requirements 

specified in Agency regulations and guidance, there were three management 

control deficiencies with these grants: (1) EPA had not clarified to states 

whether municipally owned LUST sites would be eligible for ARRA LUST 

funds, (2) EPA had no plan to deobligate unspent ARRA funds from grant 

recipients, and (3) EPA in many instances does not use state data to ensure that 

grants comply with site priority requirements of the Solid Waste Disposal Act, 

as amended (SWDA). EPA corrected the first two deficiencies by spring 2010 

through additional guidance to the regions. However, EPA has not yet corrected 

the third deficiency. 

In accordance with ARRA’s economic and environmental purposes, the Office 

of Underground Storage Tanks’ June 2009 Recovery Act guidance instructed 

states to use ARRA funds at sites that best met program priorities of being both 

shovel ready and most threatening to human health and the environment. While 

every ARRA LUST cooperative agreement we reviewed contained language to 

fund shovel-ready sites, the agreements varied considerably in how they 

addressed the SWDA site prioritization requirement. This management 

deficiency means that EPA regions are unable to ensure that states have directed 

ARRA funds to shovel-ready sites that provide the greatest environmental 

benefit. 

What We Recommend 

We recommend that the Assistant Administrator for Solid Waste and 

Emergency Response ensure that the SWDA site priority requirement is 

consistently incorporated into the terms and conditions of future LUST Trust 

Fund grant agreements. The Agency agreed with our recommendation. 
 

 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

November 22, 2010 

MEMORANDUM 

SUBJECT:	 Leaking Underground Storage Tank Recovery Act Grants Contained 

Requirements but Priority Lists Need More Oversight 

Report No. 11-R-0018 

FROM: Arthur A. Elkins, Jr. 

 Inspector General 

TO: Mathy Stanislaus 

Assistant Administrator for Solid Waste and Emergency Response 

This is our report on the subject evaluation conducted by the Office of Inspector General (OIG) 

of the U.S. Environmental Protection Agency (EPA). 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. 

The estimated cost of this report, calculated by multiplying the project’s staff days and expenses 

by the applicable daily full cost billing rates in effect at the time, is $766,895. 

Action Required 

In accordance with EPA Manual 2750, you are required to provide a written response to this 

report within 90 calendar days. You should include a corrective actions plan for agreed-upon 

actions, including milestone dates. Your response will be posted on the OIG’s public website, 

along with our memorandum commenting on your response. Your response should be provided 

as an Adobe PDF file that complies with the accessibility requirements of section 508 of the 

Rehabilitation Act of 1973, as amended. The final response should not contain data that you do 

not want to be released to the public; if your response contains such data, you should identify the 

data for redaction or removal. 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. 

If you or your staff have any questions regarding this report, please contact Wade Najjum at 

(202) 566-0832 or najjum.wade@epa.gov, or Dan Engelberg at (202) 566-0830 or 

engelberg.dan@epa.gov. 
 

 

 

 

 

 

 

 

 

 

Leaking Underground Storage Tank Recovery Act Grants 11-R-0018 

Contained Requirements but Priority Lists Need More Oversight 

Table of Contents 

Chapters 

1 Introduction ....................................................................................................... 1 

Purpose ...................................................................................................... 1 

Background ................................................................................................ 1 

 Scope and Methodology.............................................................................. 3 

 Noteworthy Achievements .......................................................................... 4 

2 Leaking Underground Storage Tank Recovery Act Grants Contained 

 Requirements but Priority Lists Need More Oversight .................................. 5
 

Grants Contained Most Agency Regulations and

 Guidance Requirements......................................................................... 5 

EPA Unable to Ensure That Cleanups Meet Prioritization Requirements... 6 

Eligibility Not Clarified Prior to ARRA Awards ............................................. 7 

OUST Initially Lacked a Plan to Redistribute Unspent ARRA Funds .......... 8 

Conclusions................................................................................................. 8 

 Recommendation ........................................................................................ 8 

Agency Response and OIG Comment ........................................................ 8 

Status of Recommendations and Potential Monetary Benefits.............................. 9 

Appendices 

A ARRA-Related Reports from EPA OIG and GAO............................................. 10 

B State Checklist Requirements ......................................................................... 11 

C Agency Comments............................................................................................. 12 

D OIG Evaluation of Agency Comments.............................................................. 14 

E Distribution ......................................................................................................... 15 
 

Chapter 1

Introduction 

Purpose 

We reviewed the U.S. Environmental Protection Agency’s (EPA’s) management 

of American Recovery and Reinvestment Act of 2009 (ARRA) funding for the 

Leaking Underground Storage Tank (LUST) program through ARRA LUST 

Trust Funds. The Office of Underground Storage Tanks (OUST) is responsible for 

oversight of the ARRA LUST Trust Funds. We sought to determine whether 

OUST’s oversight ensures that ARRA-funded LUST cleanups comply with 

applicable laws, regulations, and guidance. 

Background 

On February 17, 2009, President Obama signed ARRA into law. One of the 

primary purposes of ARRA was to preserve and create jobs and promote 

economic recovery. ARRA awarded $7.2 billion to six EPA programs. Of that 

total amount, the LUST program was allotted $200 million for cleanup activities 

related to federally regulated underground storage tanks (USTs), as authorized by 

section 9003(h) of the Solid Waste Disposal Act, as amended (SWDA). These 

funds are administered by OUST, which is housed in the Office of Solid Waste 

and Emergency Response. 

The Agency allocated the $200-million ARRA LUST appropriation as follows: 

 Grants (an award of financial assistance, including cooperative 

agreements) with states and territories—$190.7 million 

 Cleanups on tribal lands—$6.3 million 

 Federal management and oversight—$3 million 

EPA was required to obligate all funds to the states and territories by 

September 30, 2010. Unobligated funds must be returned to the U.S. Treasury. 

Each year, states spend roughly $1 billion of state funds on LUST cleanups. EPA 

supplements this spending with appropriations from the federal LUST Trust Fund. 

States can use LUST funds to pay for cleanup activities at sites where the 

responsible party is unknown, unwilling, or unable to finance cleanup, or the 

cleanup is an emergency response. Prior to ARRA, annual LUST appropriations 

of about $60 million were spent on cleanups, site assessments, and state staff 

salaries. ARRA funds also may be used to pay for these activities. States normally 

shoulder most of the costs for LUST cleanups. 

11-R-0018 1 
 

Congress estimated that 3,200 jobs would result from the $200 million in ARRA 

LUST funds. Although the government does not collect cumulative jobs data, it 

reports the number of jobs funded in each quarter. From April 1, 2010, through 

June 30, 2010, the end of the most recent reporting period where jobs data are 

publicly available, the ARRA LUST Trust Fund appropriation funded 271 jobs. 

Activities Covered by ARRA LUST Appropriation 

The ARRA LUST appropriation should maximize job retention and creation, 

assess and clean up high-priority and shovel-ready LUST sites, and provide other 

environmental benefits (such as protecting ground water and cleaning up and 

reusing contaminated land). Shovel-ready sites, according to the June 2009 

guidance, are sites ready for assessment and cleanup. The Agency intended these 

grants to fund LUST-related human health and environmental protection 

activities, such as: 

 Site investigations and assessments 

 Petroleum contamination release cleanups 

 State management and oversight costs 

 Soil and ground water pollutant monitoring 

OUST estimated that ARRA funds will pay for at least 1,000 site cleanups and 

2,000 site assessments. These activities will help to reduce the national cleanup 

backlog of approximately 100,000 LUST sites that existed at the time Congress 

passed ARRA. In fiscal year 2009, EPA and its partners completed 12,944 LUST 

cleanups. 

Federal LUST Requirements 

To receive a LUST award, recipients had to agree to comply with a number of 

requirements in the Code of Federal Regulations (CFR). These ARRA grants are 

administered under 40 CFR Parts 31 and 35. Part 31 contains standard grant 

conditions regarding period of availability of funds, monitoring and reporting 

program performance, retention and access requirements for records, and 

enforcement. Part 35 contains requirements regarding work plans and evaluation 

of performance. The UST program regulations, 40 CFR 280, provide specific 

requirements for addressing LUST sites through site assessments and cleanup 

activities. Finally, section 9003(h) of the SWDA requires that states prioritize site 

cleanups that pose the greatest threats to human health and the environment. 

EPA’s ARRA LUST Requirements 

To support ARRA’s job creation goals, OUST established interim obligation and 

expenditure requirements for its grant recipients. States had to obligate 35 percent 

and spend 15 percent of their ARRA grant awards within 9 months of the grant 

award date. OUST’s June 2009 Recovery Act guidance indicated that failure to 

11-R-0018 2 
 

meet these obligation and spending goals could result in a number of enforcement 

actions, potentially leading to reallocation of a state’s ARRA award to another 

state. 

For sites not funded under ARRA, states only had to provide performance 

reporting semiannually to OUST. States were not required to provide OUST with 

any information on site assessments. As a condition of the ARRA LUST grants, 

recipients were required to report quarterly on the number of site assessments and 

cleanups that they were funding through ARRA. OUST’s national summary of 

quarterly ARRA performance reports include: 

 Site assessments initiated 

 Site assessments completed 

 Cleanups initiated 

 Cleanups completed 

EPA is also conducting enhanced baseline monitoring on all ARRA grants. EPA 

Order 5700.6A2 CHG2 defines baseline monitoring as the periodic review of a 

recipient’s progress in, and compliance with, a specific award’s scope of work; 

terms and conditions; and regulatory requirements. While all regular LUST Trust 

Fund grants are subject, as all other grants are, to annual baseline monitoring, 

ARRA LUST grants are subject to more frequent monitoring. EPA headquarters 

is requiring that the regions conduct quarterly baseline monitoring on all ARRA 

grants. 

EPA developed a specific Recovery Act Program Plan and guidance for its ARRA 

LUST funds. EPA developed the program plan in May 2009. In this plan, OUST 

detailed the formula that it would use to distribute ARRA funds to states and 

territories. The plan also described the allowable uses for these funds. In June 

2009, OUST also provided the regions with guidance to assist in the negotiation 

and approval of the grants. The guidance provided details about eligible and 

ineligible costs, and ARRA-specific requirements including Davis-Bacon wage 

rates, the Buy American provision, and unique reporting requirements. The 

Agency’s ARRA LUST guidance provides examples of construction activities to 

which the Buy American provision applies (e.g., piping to public water systems 

and paving) and to which the Davis-Bacon prevailing wage rate requirements 

apply (e.g., piping to public water systems, excavation, tank removal, and 

paving). 

Scope and Methodology 

We conducted a review of OUST and regional oversight of state ARRA LUST 

grants from November 2009 through September 2010. We conducted this review 

in accordance with generally accepted government audit standards issued by the 

Comptroller General of the United States. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide a 

11-R-0018 3 
 

 

 

reasonable basis for our findings and conclusions based on our audit objectives. 

We believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

We reviewed reports, guidance documents, and correspondence to determine 

whether OUST developed and implemented adequate management controls to 

ensure that ARRA-funded LUST cleanups complied with applicable laws, 

regulations, and guidance. We list the significant prior OIG and U.S. Government 

Accountability Office (GAO) reports that we reviewed in Appendix A. We also 

interviewed OUST managers, and staff and managers in Regions 4, 5, 7, and 9. 

We chose these regions because their states and territories accounted for a large 

share of the ARRA LUST funds that had been awarded ($131.8 million, or 66 

percent of the ARRA allocation for grants with states and territories). 

We selected states based on each state’s knowledge of its underground tanks 

universe, the size of its annual LUST Trust Fund allocation, and program 

approval status. We selected two states within each of the four regions for 

intensive review—California, Florida, Georgia, Indiana, Iowa, Nebraska, Nevada, 

and Wisconsin. We obtained additional information from Illinois after we learned 

that it had some difficulty making site eligibility determinations. For each state, 

we reviewed its work plan, cooperative agreement, and other documentation, and 

interviewed state staff and managers. As part of our review, we developed a 

checklist to document the extent to which state grant applications were in 

compliance with applicable federal laws, regulations, and guidance. The 

checklists contain the applicable requirements from SWDA, the National Energy 

Policy Act of 2005, ARRA, EPA’s Recovery Act Program Plan (dated May 15, 

2009), EPA’s UST Program regulations, EPA Grants Management regulations, 

OUST’s June 2009 Recovery Act guidance, and Office of Management and 

Budget guidance (see appendix B). 

Noteworthy Achievements 

OUST reported that it was one of the few EPA offices to have 100 percent of its 

grant recipients submit all of their required performance reports for both the first 

and second quarter ARRA performance reporting periods. OUST has also taken 

steps to further improve the quality of reported data. In December 2009, March 

2010, and June 2010, OUST published “lessons learned” from the first three 

quarters of ARRA performance reporting. In addition to informing states of 

common errors, the March publication indicated that OUST had added reporting 

subsystems to the LUST 4 database that allow states and regions to review their 

submitted data. 

11-R-0018 4 
 

 

Chapter 2

Leaking Underground Storage Tank Recovery Act 

Grants Contained Requirements but LUST Priority 

Lists Need More Oversight
 

While the Recovery Act grants we reviewed contained most of the requirements 

specified in Agency regulations and guidance, there were three management 

control deficiencies with these grants: 

(1) EPA had not clarified to states whether municipally owned LUST sites 

would be eligible for ARRA LUST funds. 

(2) EPA had no plan to deobligate unspent ARRA funds from grant 

recipients. 

(3) EPA in many instances does not use state data to ensure that grants 

comply with site priority requirements of SWDA. 

EPA corrected the first two deficiencies by spring 2010 through additional 

guidance to the regions. However, EPA has not yet corrected the third deficiency. 

In accordance with ARRA’s economic and environmental purposes, OUST’s June 

2009 Recovery Act guidance instructed states to use ARRA funds at sites that 

best met program priorities of being both shovel-ready and most threatening to 

human health and the environment. While every ARRA LUST cooperative 

agreement we reviewed contained language to fund shovel-ready sites, the 

agreements varied considerably in how they addressed SWDA’s site prioritization 

requirement. This management deficiency means that EPA regions are unable to 

ensure that states have directed ARRA funds to shovel-ready sites that provide the 

greatest environmental benefit. 

Grants Contained Most Agency Regulations and Guidance 

Requirements 

The eight ARRA LUST Trust Fund grants that we reviewed largely contained 

requirements specified in Agency regulations and guidance. Prior to awarding the 

ARRA LUST grants, OUST issued its Guidance to Regions for Implementing the 

LUST Provision of the American Recovery and Reinvestment Act of 2009. While 

nearly all of these requirements were also reflected in the state work plans and 

grants that we reviewed, we found two instances in which the Buy American 

provision was omitted. 

None of the work plans or grants that we reviewed in EPA Region 4 contained an 

explicit reference to ARRA’s Buy American requirement. Even though Florida 

staff told us they informed their contractors to implement Buy American where 

11-R-0018 5 
 

 

 

 

 

 

practical, and Georgia officials stated that this requirement was unlikely to affect 

their ARRA LUST work, the requirement should still have been an explicit part of 

the terms and conditions of their cooperative agreements as it was in other 

regions. 

In addition to referencing EPA’s standard grant requirements, the grants usually 

included all of the requirements that were unique to ARRA LUST Trust Fund 

awards. In all eight of the cooperative agreements we reviewed, for example, the 

states committed to complying with Davis-Bacon requirements in their 

expenditures. The EPA regions also ensured that both OUST’s 35/15 obligation 

and expenditure requirement1 and its quarterly ARRA performance reporting 

requirements were part of all of state cooperative agreements that we reviewed. 

EPA Unable to Ensure That Cleanups Meet Prioritization 

Requirements 

OUST maintains that ARRA funds were intended to achieve multiple goals and, 

while environmental benefit was paramount in its considerations, so was the need 

to invest ARRA funds quickly at shovel-ready sites. From April 1, 2010, through 

June 30, 2010, ARRA funded 271 jobs, funded site assessments, and led to 

improved environmental conditions through site cleanups (table 1). 

Table 1: Cumulative site assessments/cleanups funded with ARRA funds 

as of June 30, 2010 

ARRA performance Quarter 3 FY 2010 Cumulative Percent 

measure results long-term target complete 

Site assessments initiated 649 2,000 32 

Site assessments completed 340 2,000 17 

Cleanups initiated 402 1,000 40 

Cleanups completed 326 1,000 33 

Source: EPA, American Recovery and Reinvestment Act - Quarterly Performance Report 

(Quarter 3 - Cumulative Results as of June 30, 2010). 

Note: Recovery Act funds have contributed to other assessments and cleanups at a total of 1,424 

sites that did not begin as Recovery Act projects. 

We found that all eight state ARRA LUST cooperative agreements contained 

language to fund shovel-ready sites and, therefore, are supportive of Congress’s 

job creation goals. However, they varied considerably in the extent to which they 

also included the SWDA site prioritization requirement. As a result, EPA is 

unable to ensure that all ARRA-funded LUST cooperative agreements for site 

cleanup activities authorized by 9003(h) of SWDA are consistent with the SWDA 

site prioritization requirement. 

OUST’s June 2009 guidance instructed states to use ARRA funds at sites that best 

met the program priorities of being shovel ready and most threatening to human 

1

 OUST’s interim obligation and expenditure requirements for its grant recipients stipulated that states had to 

obligate 35 percent and spend 15 percent of the ARRA award within 9 months of the award date. 

11-R-0018 6 
 

health and the environment. These funding priorities supported the job 

creation/retention and economic goals of ARRA as well as the environmental 

goals of SWDA, but created competing goals for states, which, prior to ARRA, 

only had to direct funds toward sites that posed the greatest threats to human 

health and the environment. 

Seven of the eight regional LUST program managers we interviewed did not report 

using state priority site information. This information could have been used by 

regional staff to verify that ARRA funds would be directed to high-priority sites 

that states also identified as shovel ready. Of the eight program managers we 

interviewed, only the regional program manager for the State of Nebraska reported 

using site priority information during the grant application review process. In many 

cases, regional staff lacked the necessary information to discuss how states planned 

to conduct their ARRA LUST work in accordance with the SWDA site 

prioritization requirement. No regional staff reported supplementing the state’s 

initial submission with their own review of the state’s LUST database. For 

example, while Florida’s cleanup backlog contains sites with priority scores as high 

as 111, none of the Florida LUST sites that received ARRA LUST funds had state 

priority scores over 56. The state has over 300 sites with priority scores above 56, 

some of which may have been shovel-ready sites eligible for ARRA LUST funds. 

Even though the states determined sites for cleanups, we found that regional staff 

knowledge of state priority lists was incomplete. 

Furthermore, regional program managers were unaware that sites lacked risk 

information. Even though at least 11 of Wisconsin’s ARRA LUST sites lacked 

petroleum risk information, the Region 5 state program manager stated that he 

was unaware of the large number of Wisconsin LUST sites lacking petroleum risk 

rankings. We analyzed Wisconsin’s LUST backlog and identified a total of 573 

Wisconsin LUST sites that did not have petroleum risk information. Likewise, the 

Region 5 Indiana program manager was unaware of any additional, eligible sites 

in that state that might have been candidates for ARRA-funded assessments 

because their site risk was listed as “unknown.” As of November 2009, Indiana 

had 31 active LUST sites lacking priority rankings. One of these was located at an 

elementary school (Porter Lakes Elementary) that relies on its own ground water 

sources to meet the building’s drinking water needs. 

Eligibility Not Clarified Prior to ARRA Awards 

OUST and the regions dealt with many state-specific eligibility issues before the 

regions approved states’ grants. ARRA did not change the eligible uses for LUST 

Trust Fund monies and OUST expected states to be familiar with eligibility 

requirements. OUST reported that discussions with states revealed that some were 

shifting their historic uses of LUST Trust Funds from personnel costs to direct 

site work and had questions about eligibility. OUST and regions responded to 

such requests for clarification. However, OUST did not provide states with 

guidance on how to determine site eligibility in situations in which local 

11-R-0018 7 
 

governments obtained title to sites until March 2010—almost 6 months after the 

regions approved the last ARRA LUST grant. Since OUST had not provided 

states with complete site eligibility determination guidance in its original 

directives, the March 2010 supplemental guidance allows work to proceed on 

municipally owned sites where a financial commitment had already been made. 

The OIG Office of Counsel analyzed this supplemental guidance document and 

concluded that OUST did not exceed its discretion when it issued this guidance. 

OUST Initially Lacked a Plan to Redistribute Unspent ARRA Funds 

OUST established interim obligation and expenditure requirements for its grant 

recipients to support ARRA’s economic and job creation goals. States had to 

obligate 35 percent and spend 15 percent of the ARRA award within 9 months of 

the award date. This timeframe was established to provide OUST adequate time 

to redistribute any unused ARRA funds prior to the September 30, 2010, statutory 

deadline. The June 2009 guidance states that failure to reach obligation and 

expenditure requirements could be considered a “material failure,” potentially 

resulting in states losing a portion of ARRA awards. Although OUST and the 

regions monitored expenditures of funds, OUST did not complete its development 

of a plan to redistribute funds until June 2010. On June 23, EPA’s Office of 

Grants and Debarment issued an expedited grant termination process in the 

Federal Register because OUST reported that if it had decided to take funds away 

from nonperforming states, the potentially lengthy appeals process would have 

extended beyond the September 30 deadline. 

Conclusions 

EPA was largely successful in ensuring that ARRA grants contained applicable 

laws, regulations, and guidance. Moreover, in the first year of implementation, 

OUST corrected two of three cases in which there were management control 

deficiencies. The remaining challenge for EPA is consistent implementation of 

the SWDA site prioritization requirement. 

Recommendation 

We recommend that the Assistant Administrator for Solid Waste and Emergency 

Response: 

2-1 Ensure that the SWDA site priority requirement is consistently 

incorporated into the terms and conditions of future LUST Trust 

Fund grant agreements. 

Agency Response and OIG Comment 

The Agency agreed with our recommendation. 

11-R-0018 8 
 

 

 

 

 

 

 

 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed To 

Amount 

2-1 8 Ensure that the SWDA site priority requirement is 

consistently incorporated into the terms and 

conditions of future LUST Trust Fund grant 

agreements. 

O Assistant Administrator for 

Solid Waste and Emergency 

Response 

O = recommendation is open with agreed-to corrective actions pending 

C = recommendation is closed with all agreed-to actions completed 

U = recommendation is undecided with resolution efforts in progress 

11-R-0018 9 

1 
 

 

 

Appendix A 

ARRA-Related Reports from EPA OIG and GAO 

While the EPA OIG has not conducted prior reviews of ARRA LUST Trust Fund assessments 

and cleanups, there have been reviews of other ARRA-funded programs: 

	 EPA Recovery Act Recipient Reporting and Data Review Process, Report No. 10-R-0020, 

October 29, 2009 

	 PA Action Needed to Ensure Drinking Water State Revolving Fund Projects Meet the 

American Recovery and Reinvestment Act Deadline of February 17, 2010, Report No. 

10-R-0049, December 17, 2009 

	 EPA Needs Definitive Guidance for Recovery Act and Future Green Reserve Projects, 

Report No. 10-R-0057, February 1, 2010 

GAO has issued several reports on ARRA job creation and reporting issues: 

	 RECOVERY ACT: Recipient Reported Jobs Data Provide Some Insight into Use of 

Recovery Act Funding, but Data Quality and Reporting Issues Need Attention, 

GAO 10-223, November 19, 2009 

 RECOVERY ACT: Project Selection and Starts Are Influenced by Certain Federal 

Requirements and Other Factors, GAO-10-383, February 2010 

 RECOVERY ACT: One Year Later, States’ and Localities’ Uses of Funds and 

Opportunities to Strengthen Accountability, GAO-10-437, March 2010 

 RECOVERY ACT: States’ and Localities’ Uses of Funds and Actions Needed to Address 

Implementation Challenges and Bolster Accountability, GAO-10-604, May 2010 

We also reviewed two GAO reports on EPA’s LUST program: 

	 ENVIRONMENTAL PROTECTION: More Complete Data and Continued Emphasis on 

Leak Prevention Could Improve EPA’s Underground Storage Tank Program, 

GAO-06-45, November 2005 

	 LEAKING UNDERGROUND STORAGE TANKS: EPA Should Take Steps to Better 

Ensure the Effective Use of Public Funding for Cleanups, GAO-7-152, February 2007 

11-R-0018 10 
 

 

 

 

 

Appendix B 

State Checklist Requirements 

We reviewed the grants between EPA and the states to determine whether they contained 

requirements of Agency regulations and guidance. The checklists compiled for reviewing the 

state agreements contained the following requirements. 

1. Applicable Laws 

a.	 Solid Waste Disposal Act, as amended 

b.	 Energy Policy Act of 2005, provisions regarding Underground Storage Tank 

Compliance 

c.	 American Recovery and Reinvestment Act of 2009 

2. Applicable Regulations 

a. 40 CFR 280.60-280.67, Subpart F—Release Response and Corrective Action for 

UST Systems Containing Petroleum or Hazardous Substances 

b. 40 CFR 31, Subpart C—Post-Award Requirements 

c. 40 CFR 31.23—Period of availability of funds 

d. 40 CFR 31.40—Monitoring and reporting program performance 

e.	 40 CFR 31.42—Retention and access requirements for records 

f. 40 CFR 31. 43—Enforcement 

g.	 40 CFR 31.45—Quality Assurance

 h. 40 CFR 35.107—Workplans 

i. 40 CFR 35.115—Evaluation of Performance 

3. Applicable Guidance 

a.	 Guidance To Regions For Implementing The LUST Provision Of The American 

Recovery And Reinvestment Act Of 2009, Office of Underground Storage Tanks, 

EPA-510-R-09-003, June 2009 

b.	 LUST Trust Fund Cooperative Agreement Guidelines OSWER Directive 

9650.10A, May 24, 1994 

c.	 OSWER Directive 9610.17—Use of Risk-based Decision-Making in UST 

Corrective Action Programs, March 1, 1995 

d.	 Supplemental Guidance on Recovery Act Recipient Reporting (section 1512) of 

the American Recovery and Reinvestment Act of 2009, Office of Underground 

Storage Tanks, October 2, 2009 

e.	 Clarification of LUST Eligibility and Grant Implications, Office of Underground 

Storage Tanks, March 17, 2010 

11-R-0018 11 
 

 

 

 

Appendix C 

Agency Comments 

October 20, 2010 

MEMORANDUM 

SUBJECT: Response to Draft Audit Report: Leaking Underground Storage Tank Recovery 

Act Grants Contained Requirements but EPA Needs to Improve State Oversight, 

 Project No. 2010-1068 

FROM: Mathy Stanislaus/s/ 

 Assistant Administrator 

TO: Dan Engelberg 

Director, Water and Enforcement Issues 

Office of Inspector General 

Thank you for the opportunity to comment on the draft report entitled, "Leaking 

Underground Storage Tank Recovery Act Grants Contained Requirements but EPA Needs to 

Improve State Oversight," dated September 22, 2010. We are in general agreement with the 

findings and recommendation, and will ensure all corrective actions are completed as required. 

Comments on Recommendation: 

We recommend that the Assistant Administrator for Solid Waste and Emergency 

Response ensure that the SWDA site priority requirement is consistently incorporated into the 

terms and conditions of future LUST Trust Fund grant agreements. 

Response: We concur with this recommendation. Ensuring LUST funds are spent on 

high priority sites is one of many responsibilities states must accept when receiving LUST Trust 

Fund corrective action grants. OSWER's LUST Trust Fund Guidance (Directive 9650.10A) 

requires states to develop a site priority system for addressing LUST sites. OUST's June 2009 

Recovery Act LUST guidance also reiterated the requirement to give priority to sites posing the 

greatest risks, while balancing the need to create/retain jobs. Despite such guidance, OIG 

identified inconsistent application of the site priority requirement in the ARRA LUST grant 

agreements. We will work to ensure this important priority is more consistently addressed in 

future LUST cleanup grants. 

Timing: OSWER will incorporate this requirement into the next iteration of the National 

Program Manager (NPM) guidance (Spring 2011). In addition, OSWER will work to ensure 

Regional programs incorporate such a term and condition into all LUST cleanup grants awarded 

after June 30, 2010. 

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Additional Comments: 

Job Creation - At two places (page 2 and page 6) the draft report characterizes jobs 

created in a manner that suggests cumulative figures. In both cases the numbers provided 

represent jobs created during the quarter ending June 30, 2010, rather than cumulatively through 

that time. We recommend you characterize the jobs created numbers as quarterly data. 

Redistribution - The first paragraph of this section indicates the process to deobligate and 

redistribute would extend beyond the September 30, 2010 deadline. We believe we would have 

completed the process before that deadline, had it been necessary. In fact, on June 23, 2010, we 

issued an expedited grant termination process in the Federal Register to help ensure we would 

meet the deadline [75 FR 35799]. Also, the second paragraph indicates that OUST should be 

able to redistribute the funds returned from Florida before the September 30, 2010 deadline. 

While OUST was fully prepared to redistribute the funds, the Education and Medicaid 

Assistance Act rescinded $9.2 million, eliminating our ability to redistribute the funds. 

Should you have any questions regarding this response, please contact Mark Barolo in the 

Office of Underground Storage Tanks at (703) 603-7141. 

CC: Tim Roach, OIG 

Renee Wynn, OSWER 

Johnsie Webster, OSWER 

Carolyn Hoskinson, OUST 

Mark Barolo, OUST 

Adam Klinger, OUST 

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Appendix D 

OIG Evaluation of Agency Comments 

The Office of Solid Waste and Emergency Response agreed with our recommendation. 

The Office of Solid Waste and Emergency Response had a concern on pages 2 and 6 of our 

report regarding job creation. We revised the report to reflect the job creation figures were for 

one quarter only. 

The Office of Solid Waste and Emergency Response had a concern on page 8 of our report 

regarding the redistribution of ARRA funds. We revised this section to include actions taken by 

the Agency to ensure that it would be able to redistribute funds by the September 30, 2010, 

deadline. We also removed text regarding Florida’s decision to return ARRA funds to EPA, 

because, according to EPA, the passage of the Education and Medicaid Assistance Act of 2010 

eliminated EPA’s ability to redistribute these funds. 

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Appendix E 

Distribution 

Office of the Administrator 

Assistant Administrator for Solid Waste and Emergency Response 

Director, Office of Underground Storage Tanks, Office of Solid Waste and Emergency Response 

Agency Followup Official (the CFO) 

Agency Followup Coordinator 

General Counsel 

Associate Administrator for Congressional and Intergovernmental Affairs 

Associate Administrator for External Affairs and Environmental Education 

Audit Followup Coordinator, Office of Solid Waste and Emergency Response 

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