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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about the EPA OIG. 
 

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: 

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202-566-2599 

1200 Pennsylvania Avenue, NW 

Mailcode 2431T 

online: http://www.epa.gov/oig/hotline.htm Washington, DC 20460 
 

 

 

U.S. Environmental Protection Agency 13-P-0308 

July 2, 2013 Office of Inspector General 

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. 

For further information, contact 

our Office of Congressional and 

Public Affairs at (202) 566-2391. 

The full report is at: 

www.epa.gov/oig/reports/2013/ 

20130702-13-P-0308.pdf 

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. 
 

 

 

 Nancy K. Stoner, Acting Assistant Administrator 

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: 

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 

13-P-0308 1 
 

 

 

 

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. 

13-P-0308 2 
 

 

 

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. 

13-P-0308 3 
 

 

 

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. 

13-P-0308 4 
 

 

 

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. 

13-P-0308 5 
 

 

 

 

 

 

 

 

 

 

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 

1 4 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. 

O Assistant Administrator, 

Office of Water 

3/31/2014 

O = 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 

13-P-0308 6 

1 
 

 

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. 

13-P-0308 7 
 

 

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 

13-P-0308 8