Federal Register / Vol. 65, No. 107 / Friday, June 2, 2000 / Notices 35339

1Available as SFFAS 4 at www.financenet.gov/

financenet/fed/fasab/concepts.htm.

2Available from the 104th Congress catalog at

www.access.gpo.gov/nara/publaw/104publ.html.

3 ‘‘(5) To rebuild the accountability and

credibility of the Federal Government, and restore

public confidence in the Federal Government,

agencies must incorporate accounting standards

and reporting objectives established for the Federal

Government into their financial management

systems so that all the assets and liabilities,

revenues, and expenditures or expenses, and the

full costs of programs and activities of the Federal

Government can be consistently and accurately

recorded, monitored, and uniformly reported

throughout the Federal Government.

(6) Since its establishment in October 1990, the

Federal Accounting Standards Advisory Board

(hereinafter referred to as the ‘‘FASAB’’) has made

substantial progress toward developing and

recommending a comprehensive set of accounting

concepts and standards for the Federal Government.

When the accounting concepts and standards

developed by FASAB are incorporated into Federal

financial management systems, agencies will be

able to provide cost and financial information that

will assist the Congress and financial managers to

evaluate the cost and performance of Federal

programs and activities, and will therefore provide

important information that has been lacking, but is

needed for improved decision making by financial

managers and the Congress.’’ (Public Law 104–208,

110 STAT 3009–389–390).

‘‘Each agency shall implement and maintain

financial management systems that comply

substantially with Federal financial management

systems requirements, applicable Federal

accounting standards, and the United States

Government Standard General Ledger at the

transaction level.’’ (Id.)

comments should be received in the

SAB Staff Office at least one week prior

to the meeting date so that the

comments may be made available to the

committee for their consideration.

Comments should be supplied to the

appropriate DFO at the address/contact

information noted above in the

following formats: one hard copy with

original signature, and one electronic

copy via e-mail (acceptable file format:

WordPerfect, Word, or Rich Text files

(in IBM-PC/Windows 95/98 format).

Those providing written comments and

who attend the meeting are also asked

to bring 35 copies of their comments for

public distribution.

Meeting Access

Individuals requiring special

accommodation at this meeting,

including wheelchair access to the

conference room, should contact the

DFO at least five business days prior to

the meeting so that appropriate

arrangements can be made.

Dated: May 26, 2000.

Donald G. Barnes,

Staff Director, Science Advisory Board.

[FR Doc. 00–13847 Filed 6–1–00; 8:45 am]

BILLING CODE 6560–50–P

ENVIRONMENTAL PROTECTION

AGENCY

[FRL–6708–8]

Guidance on Exercising CERCLA

Enforcement Discretion in Anticipation

of Full Cost Accounting Consistent

With the ‘‘Statement of Federal

Financial Accounting Standards No. 4’’

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Notice.

SUMMARY: The EPA Office of

Enforcement and Compliance

Assurance, Office of Site Remediation

Enforcement is providing guidance to its

regional components on the exercise of

enforcement discretion, from May 30,

2000 through October 2, 2000, in

anticipation of EPA’s implementation of

full cost accounting.

Attachments 1 and 2 were prepared

by the Office of the Chief Financial

Officer. They describe the reasons for

full cost accounting and the

methodology being used to implement

full cost accounting.

EFFECTIVE DATE: May 30, 2000.

FOR FURTHER INFORMATION CONTACT:

Chad Littleton, Office of Enforcement

and Compliance Assurance, Office of

Site Remediation Enforcement, U.S.

EPA, 1200 Pennsylvania Ave., NW,

Washington, DC 20460 (MC 2273A); email: littleton.chad@epa.gov; phone:

(202) 564–6064.

SUPPLEMENTARY INFORMATION:

Memorandum

Subject: Guidance on Exercising

CERCLA Enforcement Discretion In

Anticipation of Full Cost

Accounting Consistent with the

Statement of Federal Financial

Accounting Standards No. 4

From: Steven A. Herman, Assistant

Administrator, Office of

Enforcement and Compliance

Assurance

To:

Regional Administrators, Regions I–X

Deputy Regional Administrators,

Regions I–X

Regional Counsel, Regions I–X

Superfund Division Directors, Regions

I–X

This memorandum provides guidance

to EPA personnel on how to exercise

enforcement discretion as it relates to

upcoming changes in EPA’s indirect

cost accounting methodology.

A. Upcoming Revisions to Indirect Cost

Accounting

EPA’s Office of the Chief Financial

Officer (OCFO) recently announced that

it is revising the Agency’s methodology

for allocating indirect costs to

Superfund sites. These steps will bring

Superfund into compliance with cost

accounting standards issued by the

Federal Accounting Standards Advisory

Board (FASAB) on July 31, 1995,

(Statement of Federal Financial

Accounting Standards No. 4 (SFFAS No.

4)).1 The principal goal of those

standards is to make it possible for

Federal agencies to determine and

report the true costs of their programs

and activities. The Federal Financial

Management Improvement Act of 1996

(Title VIII, Public Law 104–208)2

requires all Federal agencies to develop

and use cost accounting methodologies

that are consistent with the SFFAS No.

4 and other applicable standards.3

A copy of the OCFO memorandum

announcing and describing EPA’s

implementation of an accounting

methodology complying with the

SFFAS No. 4 is attached for your

reference (Attachment 1). That

memorandum describes important

background events and EPA’s approach

to implementing the revised

methodology, defines many important

accounting terms as they apply to EPA,

lists preliminary estimated regional

indirect rates based on the revised

methodology, and states that OCFO will

calculate actual indirect costs rates

using the revised methodology

(hereinafter ‘‘revised rates’’ or ‘‘revised

indirect rates’’) for all fiscal years after

1989. The OCFO expects the revised

rates to be completed and issued by

October 2, 2000, at which time EPA will

begin using the revised rates.

B. The Revised Rates and Superfund

Site Costs

As described more fully in the

attached OCFO memorandum, direct

costs are costs an organization incurs

when it produces a specific result. Most

of the other costs of running the

organization are indirect costs. EPA’s

current indirect cost accounting

methodology allocates to Superfund

sites only about one-third of the indirect

costs that are incurred by EPA and

properly allocable to sites. SFFAS No. 4

requires ‘‘full cost accounting,’’ which

means that Superfund indirect costs

must be allocated to sites. For that

reason, implementing an indirect cost

methodology based on SFFAS No. 4 will

increase the aggregate amount of

indirect costs allocated to sites.

The effect of applying the revised

rates will vary from site to site because

the SFFAS-compliant methodology and

the current methodology use different

techniques for allocating indirect costs

to individual sites. The SFFAScompliant methodology allocates

35340 Federal Register / Vol. 65, No. 107 / Friday, June 2, 2000 / Notices

indirect costs in proportion to direct

costs, whereas the current methodology

uses the number of Superfund staff

hours charged to a site. As a result, sites

with large direct Federal expenditures

compared to the number of Superfund

staff hours will generally see the largest

indirect cost increases, and few if any

decreases. Sites with smaller Federal

expenditures compared to the number

of Superfund staff hours, such as sites

cleaned up by potentially responsible

parties (PRPs) where EPA’s costs are

largely for oversight performed by EPA

staff, will generally see smaller indirect

cost increases, and are also more likely

to see decreases.

C. Enforcement Discretion as It Relates

to the Revised Indirect Rates

As noted above, the OCFO expects the

revised rates to be available on October

2, 2000, and will begin using them as

soon as they are issued. In general this

means that after October 2, 2000, site

costs, including oversight costs, will be

calculated using the revised rates. The

following sections address areas of

particular enforcement interest and

describe how the Agency intends to

exercise its enforcement discretion in

individual cases to provide a fair and

efficient transition to the revised

accounting methodology.

1. Concluded Matters

EPA has previously settled or litigated

numerous claims for past response

costs. The costs EPA sought in those

cases included indirect costs based on

the current rates. EPA recognizes the

importance of repose and finality in

those cases and therefore the Agency

has no plans to re-open any concluded

matters to apply the revised rates to

claims for past costs that were presented

and resolved in those matters. This

includes consent decrees, litigated

judgments and administrative orders on

consent. It also includes ceilings

established in settlements and

judgments for oversight or other

response costs that the Agency can bill

to PRPs under those existing settlements

or judgments.

2. Oversight Billings

The Agency has no plans to

recompute oversight bills that were

prepared and sent to PRPs before the

revised rates are issued.

3. Claims in Litigation Prior to October

2, 2000

When EPA issues the revised indirect

rates there will be a number of cost

recovery cases pending in Federal

courts. The past costs EPA is seeking in

those cases will have been calculated

using the current indirect rates. There

may be special circumstances in those

cases, especially if the litigation is at an

advanced stage, that cause the case team

to decide not to seek to amend the claim

by applying the revised indirect rates.

An example might be certain cases in

which costs have already been

presented to the court and the parties

are awaiting the court’s decision. These

decisions will be made by the EPA/

Department of Justice (DOJ) case team

on a case-by-case basis. This approach

is intended to be consistent with prior

practice (See, Policy on Recovering

Indirect Costs in CERCLA Section 107

Cost Recovery Actions, OSWER

Directive 9832.5, June 27, 1986)

(superseded by this guidance).

4. Interim Settlement Policy in

Anticipation of the Revised Rates

This memorandum gives advance

notice of the revised rates. One purpose

of the advance notice is to provide PRPs

who have unresolved cost recovery

liabilities an opportunity to settle with

the United States at the current rates.

For sites where the revised rates would

result in higher indirect costs, it may be

advantageous for the PRPs to settle with

the United States under the current

rates. Therefore, until the revised rates

are issued, which the OCFO expects to

occur on October 2, 2000, the Agency

will entertain settlement offers resolving

the claims of the United States for

CERCLA response costs based on the

current indirect rates.

Generally, the Agency will consider a

settlement offer based on site costs

computed using the current indirect

cost rates, if: (1) The offer is made prior

to October 1, 2000; (2) the Agency

determines, in its sole discretion, that

there is sufficient information available

on which to base a settlement decision;

and (3) it appears to the Agency that the

offer is likely to lead to an executed

final settlement by March 30, 2001. For

cases in litigation or that have been

referred to DOJ, the DOJ/EPA case teams

will determine the appropriate response

to any settlement offer. For all other

matters, regional case teams will

determine the appropriate response to

any settlement offer. Case teams may set

alternative milestone dates for any

individual PRP or site, if appropriate,

based on PRP-specific or site-specific

circumstances after consultation with

the Regional Support Division (RSD) in

the Office of Site Remediation

Enforcement (OSRE).

After such an offer has been received,

if settlement negotiations are

unproductive or it becomes evident that

the applicable milestone dates have not

been met, or are not likely to be met, the

Agency may, at its sole discretion,

withdraw the opportunity to enter a

settlement based on the current rates.

D. Proving Indirect Costs

Implementing the SFFAS accounting

methodology will not alter the burden of

proof that the Agency must meet when

seeking recovery of indirect costs. EPA

will continue to provide evidence

acceptable in a court of law to prove

that the indirect costs sought are

allocable to the site that is the subject

of the enforcement action.

E. National Consistency/Coordination

Except for the specific transition

related adjustments noted above,

existing policy and guidance applicable

to considering or accepting settlement

offers is unchanged. Implementing the

revised indirect rates will not affect the

discretion of the Agency or DOJ to settle

or compromise cost recovery claims,

including those cases where costs are

based on the revised rates. Litigation

risk, equitable considerations, and other

factors that are considered in

determining whether to settle or

compromise claims may still be taken

into account. As always, EPA will

exercise its discretion to ensure that any

resulting settlements are fair,

reasonable, and consistent with

CERCLA.

When EPA begins using the revised

rates, we expect that the Agency will

face questions about matters associated

with the transition to the revised rates.

EPA has a substantial interest in

promoting a nationally consistent

approach during this transition period.

Therefore, I have asked the RSD to

monitor EPA’s implementation of the

revised indirect rates. I also ask each

regional office to designate a point of

contact to assist RSD in our effort to

quickly resolve key questions about

EPA’s use of the revised rates, and to

promote national consistency among the

regional offices. Please send the name

and telephone number of your

workgroup member to Maria CintronSilva, RSD, no later than three weeks

after the date of this memorandum.

Workgroup contacts will be expected to

provide information regarding each of

the offers received and their

dispositions. For questions about this

memorandum and OECA’s

implementation of the revised rates,

please contact Chad Littleton, in the

Office of Site Remediation Enforcement,

at 202–564–6064.

Federal Register / Vol. 65, No. 107 / Friday, June 2, 2000 / Notices 35341

Attachments

Dated: May 26, 2000.

Steven A. Herman,

Assistant Administrator, Office of

Enforcement and Compliance Assurance.

Memorandum

Subject: Accounting for Indirect Costs

Associated with Superfund SiteSpecific Activities

From: Joseph Dillon, Acting Comptroller

(2731)

To: Senior Resource Officials

This Policy Announcement provides

the policies and procedures for

implementing Statement of Federal

Financial Accounting Standards

(SFFAS) No. 4, Managerial Cost

Accounting Standards for the Federal

Government, for the Superfund Site

Cleanup Program by providing a revised

indirect cost methodology. This

methodology along with existing

policies and procedures regarding direct

costs results in accounting for the ‘‘full

costs’’ of actions taken at or in

connection with Superfund Sites.

Background

The Office of Management and Budget

(OMB) issued SFFAS No. 4 on July 31,

1995, with an effective date of October

1, 1997. SFFAS No. 4 requires federal

agencies to determine the full cost of

their outputs (programs). The full cost of

programs includes both those costs

specifically identifiable with each

particular program, or direct costs, and

those costs which collectively support

the many programs, or indirect costs.

Since 1985, EPA has been identifying

the indirect costs associated with

Superfund site-specific activities for all

fiscal years after 1982. However, the

indirect cost methodology developed at

that time was conservative and did not

result in allocating all indirect costs to

sites. As a result, the General

Accounting Office, the EPA Office of

Inspector General, OMB and Congress

have repeatedly criticized EPA’s

methodology. The Office of the Chief

Financial Officer (OCFO) has developed

an indirect cost methodology to

compute indirect cost rates for

Superfund site-specific activities in

accordance with SFFAS No. 4. By

incorporating the resulting indirect cost

rates into their analyses, Superfund

Managers will be able to compute the

full cost of their program.

Policy and Procedures

The OCFO has developed a

Superfund indirect cost methodology

based upon full cost accounting

concepts. Using that new methodology,

OCFO is presently calculating and will

issue indirect cost rates based upon the

full cost accounting methodology

(‘‘revised rates’’). The OCFO will issue

revised rates for each Fiscal Year, by

Region beginning with FY 1990. The

revised rates will be issued after the

date of this Policy Announcement and

are expected to be completed and issued

by October 2, 2000. Once the revised

rates are issued, Superfund managers

should use the revised rates to

determine the full cost of Superfund site

specific activities. In the meantime, EPA

Superfund program managers may use

the preliminary, estimated indirect cost

rates identified in Attachment 1 as the

basis for estimating the full cost of

Superfund site-specific activities.

Beginning with FY 2001, the Agency

will no longer compute nor issue, as

provisional or final, indirect cost rates

based upon the earlier Ernst & Whinney

methodology.

A brief description of the full cost

methodology is as follows: EPA’s annual

costs are analyzed to determine whether

the costs represent general Agency or

Regional support activities, program

support activities, or program direct

costs. Those general Agency support

activities and the Superfund program

support activities are included in

calculations that allocate these costs to

programs and produce a Superfund

indirect cost pool for each region. Each

Region’s indirect cost pool, including

appropriate Regional support costs, is

divided by the Region’s direct costs

incurred for site-specific activities to

determine the Region’s indirect cost rate

for the fiscal year, which is expressed as

a percentage of direct site costs. The

Region’s indirect cost rate is multiplied

against the direct costs incurred for a

particular Superfund site to determine

the amount of indirect costs that will be

allocated to that site. By adding the

direct site costs and the indirect costs

allocated to a particular site, or group of

sites, the total cost for that site or group

of sites is determined.

For a more detailed description of the

Superfund Indirect Cost Rate

Methodology, please refer to

Attachment 1.

Effective Date

OCFO expects to complete and issue

the new Superfund Full Indirect Cost

Rates by October 2, 2000, at which time

they will be effective for all accounting

purposes.

Additional Information

If you need further information on

this Policy Announcement, please

contact Charles Young of the Program

and Cost Accounting Branch, Financial

Management Division at (202) 564–

4914.

Attachment 2

Superfund Full Cost Indirect Cost Rate

Methodology

Background

OMB, the Secretary of the Treasury

and the Comptroller General established

the Federal Accounting Standards

Advisory Board (FASAB) in October

1990 to set Federal Government

Accounting Standards. In September

1993, the Vice President in his report on

the National Performance Review

recommended an action which required

the FASAB to issue a set of cost

accounting standards for all federal

agencies. FASAB issued the Statement

of Federal Financial Accounting

Standards (SFFAS) No. 4, Managerial

Cost Accounting Concepts and

Standards for the Federal Government

on July 31, 1995, which became

effective for EPA on October 1, 1997.

Title VIII of the Federal Financial

Management Improvement Act of 1996

(Title VIII, Public Law 104–208)

requires federal agencies to comply with

the Federal Financial Accounting

Standards and emphasizes that

agencies’ systems must report the total

costs of programs and activities. EPA

will comply with this requirement for

all the Agency’s programs, based on

specific needs of each program and

applicable accounting requirements.

The methodology described in this

Policy Announcement applies to EPA’s

Superfund site-specific activities as set

forth below.

SFFAS No. 4 sets forth five

fundamental elements of managerial

cost accounting to provide information

on the cost of federal programs. One of

those elements is to determine the full

cost of government goods and services.

According to the Standard, full cost

includes both direct and indirect costs.

Direct costs are defined as ‘‘costs that

can be specifically identified with an

output.’’ Indirect costs are costs that are

common to multiple outputs but cannot

be specifically identified with any

particular output. In the context of the

Superfund program, direct costs include

those that are directly incurred by the

United States for site-specific activities

performed at or in connection with a

particular site or a particular group of

sites. Site-specific activities include the

assessment, investigation and clean-up

of a site, ancillary site-associated

activities, and related enforcement

actions. Indirect costs are those that

support the Superfund program as a

whole and cannot be identified to any

one site or other ‘‘output’’ of the

35342 Federal Register / Vol. 65, No. 107 / Friday, June 2, 2000 / Notices

program. The government’s full cost at

a Superfund site consists of the direct

costs incurred for site-specific activities

and the proportionate share of all the

costs that provide indirect support to

the site.

In 1985, EPA, with the assistance of

the accounting firm Ernst & Whinney,

developed an indirect rate methodology

for determining the government’s cost of

site-specific activities under CERCLA.

The indirect rates developed were

conservative. As a result of the

conservative methodology, a substantial

portion of the indirect cost pool was not

allocated to individual Superfund sites,

even though site-specific activities are

the direct output that the indirect costs

support. As a result, the General

Accounting Office (GAO), the EPA

Office of Inspector General (OIG), OMB

and Congress have repeatedly criticized

the methodology for failing to identify

the full cost of Superfund site clean-ups

and therefore failing to allow potential

recovery of all indirect costs. The OIG

considered this method of recovering

less than full overhead costs as a

Federal Manager Financial Integrity Act

(FMFIA) ‘‘material weakness’’ and

suggested the Agency identify it as such.

EPA has revised the Superfund

indirect cost methodology to enable the

Agency to report the full cost of the

program in compliance with SFFAS No.

4 and with other federal mandates

requiring the reporting of cost

information. During the preparation of

the revised methodology, EPA sought

separate independent reviews of the

methodology by both GAO and the

national accounting firm KPMG. KPMG

found the revised methodology in

compliance with SFFAS No. 4, as well

as ‘‘easier to understand, more thorough

and more complete than the previous

methodology.’’ GAO reviewed the

revised methodology and found ‘‘that

the design of EPA’s proposed Superfund

indirect cost methodology complies

with cost accounting standards for

federal government’’ as well as the

requirements of SFFAS No. 4.

Approach

EPA’s approach to developing a full

cost indirect cost methodology for

Superfund is based on the guidance

provided by SFFAS No. 4. In addition,

certain other factors are also taken into

account. These include the nature and

classification of Agency costs, private

sector cost accounting practices and the

cost/benefit of obtaining the data

necessary to compute indirect cost rates.

Indirect cost rates will be developed for

each region and each Fiscal Year

beginning with FY 1990. We are

beginning with FY 1990 because active

Superfund sites have costs incurred in

prior years generally no earlier than FY

1990, with limited exceptions. Thus,

computing full cost indirect rates back

to FY 1990 will allow Superfund

managers to determine the full cost of

site-specific activities for nearly all

active sites, while going back before FY

1990 would be of primarily historic

interest. Therefore, we consider it most

cost effective to compute rates no

further back than 1990; if managers

need indirect cost information for years

prior to 1990, the rates computed using

the current methodology may be used

for those earlier years. Use of the revised

indirect cost rates will provide

Superfund managers, other EPA

management and Congress with the full

cost of Superfund site-specific activities.

The current Superfund indirect cost

methodology uses indirect rates which

are expressed as a rate per hour of labor

effort. This rate is computed using a

base consisting of all labor hours

(including both site and non-site labor),

but is applied to only site labor hours.

This results in an under-allocation of

indirect costs. This approach, although

acceptable from an accounting

standpoint, is conservative in its

allocation of indirect costs to individual

sites and led to the criticisms noted

above. The principal conceptual change

the Agency will make as it moves to full

cost accounting in compliance with

SFFAS No. 4 with respect to Superfund

site-specific activities, is to ensure that

indirect costs that support site clean-up

are fully allocated to site charges. In

order to do so, EPA will allocate the

appropriate indirect cost pool using

total direct site costs as an allocation

base. This will result in indirect cost

rates expressed as a percentage of total

direct site costs rather than a dollar rate

per hour as is the current method. The

change in the allocation base is the most

important difference between the full

cost accounting methodology and the

prior methodology, with only minor

changes to the indirect cost pool (further

described below). The indirect cost pool

identified for calculation of the new

indirect cost rate will reflect only those

costs which are appropriately allocable

to and support the Superfund sitespecific activities.

In determining the indirect costs

associated with the Superfund program,

certain costs funded from nonSuperfund appropriations are included

as indirect costs because they provide

services that benefit the Superfund

program and are necessary to reflect full

cost. SFFAS No. 4 states that one of the

components of full cost is the ‘‘cost of

support services provided by other

responsibility segments * * * and by

other reporting entities.’’ We include

other appropriations because our

approach determines the allocability of

indirect costs according to the

organizational unit that provides the

support services regardless of which

appropriation has been charged with the

costs. We begin with the total costs of

organizational units and then allocate

these costs to all units receiving support

services.

Not all appropriations, however, are

included as indirect costs. For example,

charges under the Oil Spill

appropriation are not included. Oil Spill

disbursements support only the Oil

Spill program and should not be

allocated to other programs. State and

Tribal Assistance Grants appropriations

are also excluded. These are grants to

states, local and tribal governments

which fund a variety of environmental

programs and infrastructure projects

pertaining to water quality initiatives.

Funding under the Science and

Technology appropriation is excluded.

These funds support research and

development initiatives. The treatment

of research and development costs is

discussed under the section on direct

costs. The programs funded by the

appropriations listed above are

considered to be separate from

Superfund and have their own outputs.

These appropriations do not include

any indirect costs that are allocable to

the Superfund program.

As explained below under Exclusions

from the Pool, costs associated with

certain organizational units are also

removed from the indirect cost pool

depending on their relationship to the

Superfund program.

The concept of full cost, according to

the Standard, also requires that interentity costs or the costs of services

received from other entities be

recognized. Costs of employee benefits

funded by the Office of Personnel

Management (OPM) are considered

inter-entity costs and will be included

as indirect costs. Because methodologies

to estimate the costs of services received

from federal agencies other than OPM

are still under development, these costs

are not included in the indirect cost

pool at this time.

The methodology for determining

indirect costs allocable to Superfund

site-specific activities is patterned after

private sector models that group costs

according to levels of organization and

benefit. Indirect costs are classified

hierarchically. At the highest level are

Agency-wide costs, i.e., national costs

which benefit all organizations.

Examples of these are facilities

management, budget functions, human

resource management, and OPM interVerDate 11<MAY>2000 13:02 Jun 01, 2000 Jkt 190000 PO 00000 Frm 00026 Fmt 4703 Sfmt 4703 E:\FR\FM\02JNN1.SGM pfrm08 PsN: 02JNN1
Federal Register / Vol. 65, No. 107 / Friday, June 2, 2000 / Notices 35343

entity costs. The next level incorporates

regional costs which benefit each of the

Agency’s ten regions. These are general

costs which are essentially counterparts

of national costs but benefit regions

only. Examples include the costs of

regional administration, support, and

policy and planning functions.

Superfund program management costs

comprise the next two levels. These are

the support costs incurred at both

headquarters and regions to implement

Superfund site-specific activities. Costs

from each of these four levels form the

basis of the indirect cost pool. The final

product—separate indirect cost rates for

each of EPA’s ten regions—will be

expressed as a percentage of direct (sitespecific) costs for each region.

Direct Costs

In determining the direct costs of the

Superfund program, we use SFFAS No.

4’s definition of direct costs. However,

the direct costs of the Superfund

program as a whole, are not necessarily

synonymous with the direct costs of

Superfund site-specific activities.

Superfund site-specific activity is one

component of the Superfund program.

Site-Specific Costs

The major component of Superfund

direct costs is the costs of site-specific

activities, i.e. the cost of all activities

that go toward the assessment,

investigation and actual clean up of a

site, related enforcement actions, and

other site-associated activities.

Examples include, but are not limited

to, the costs of salaries and benefits of

employees who work directly at the site

or provide other site-related effort,

contractor costs of removal or remedial

activities, and analytical work

performed for the site.

Certain other Superfund-related costs

are also considered direct costs,

although they may or may not be

associated with site-specific activities.

These costs are described in the next

several paragraphs.

ZZ Costs

‘‘ZZ’’ costs are expenses incurred for

site work before a site is established as

a Superfund site and assigned a sitespecific identifier. If a site-specific

identifier is established, the ZZ costs

incurred in connection with the site are

reclassified to that site-specific

identifier. If reclassified, they become

part of direct site-specific costs, but for

purposes of the indirect rate calculation,

ZZ costs are classified as direct costs

even if not reclassified.

R&D Costs

Research and Development (R&D)

costs are treated as direct costs. All costs

incurred within the Office of Research

and Development, a separate and

distinct organizational unit within the

Agency, are excluded from the indirect

cost pool. Research and Development

costs are considered to be directly

incurred for production of R&D outputs.

Superfund-related research and

development costs are mainly related to

the Superfund Innovative Technology

(SITE) program. This program evaluates

the application of emerging remediation

technologies.

NIEHS Costs

Costs associated with the National

Institute of Environmental Health

Sciences (NIEHS) interagency agreement

(IAG) are treated as direct costs. This

indirect cost methodology is designed to

determine the indirect costs that

support Superfund site-specific

activities. Therefore NIEHS costs are

excluded in their entirety from the

indirect cost pool.

OSWER Immediate Office Program Area

Costs

Costs associated with certain offices

within the Office of Solid Waste and

Emergency Response (OSWER)

Immediate Office are treated as direct

costs. Although these costs are related to

the Superfund program and are direct

costs of the functions they perform, they

are not allocable to Superfund sitespecific activities and so are not

included in the indirect cost pool for

site-specific response costs. For

example, the Chemical Emergency

Preparedness and Prevention Office

(CEPPO), which reports directly to the

OSWER Assistant Administrator,

implements Agency-wide chemical

emergency preparedness and prevention

programs. The costs connected with

Federal Facilities activities, whether

within OSWER or OECA, as well as the

costs of activities associated with

Brownfields and the Emergency

Planning and Community Right-to-know

Act, are also considered direct and thus

excluded from the indirect cost pool.

Indirect Cost Pool

The indirect cost pool consists of all

costs classified as indirect for all

appropriations that fund administrative,

management and support functions. The

pool includes Superfund non-sitespecific costs that provide support to

Superfund site-specific activities and

the other direct Superfund activities.

The indirect cost pool includes the nonsite portion of: Personnel compensation

and benefits, travel, rent,

communications, utilities, contracted

services, materials and supplies costs.

Depreciation and inter-entity costs are

also included. The major organizational

units contributing costs to the indirect

cost pool are described below.

EPA headquarters organizations

providing services on an Agency-wide

or national basis include the Office of

the Administrator, the Office of

Administration and Resources

Management (human resources,

procurement, facilities), the Office of the

Chief Financial Officer (Comptroller,

budget, finance), the Office of

Information Resources Management, the

Office of Policy, Planning and

Evaluation, the Office of the Inspector

General and the Office of General

Counsel. The ten EPA regional offices

have corporate structures similar in

function to those of headquarters. Each

region has a regional administrator’s

office and offices providing general

regional support services such as

personnel, finance, policy and

information management. Costs for

these organizations comprise regional

indirect costs.

Management and support costs

associated with carrying out the

Superfund program are another

component of the indirect cost pool.

These costs are incurred at both

headquarters and the regions. At the

headquarters level, these are the

program management and support costs

incurred by the Office of Solid Waste

and Emergency Response (OSWER) and

by the Office of Enforcement and

Compliance Assurance (OECA). At the

regional level, Superfund program

management costs incurred by regional

program divisions in support of

Superfund site-specific activities are

included in the indirect cost pool. Any

of the offices noted above may also have

Superfund site-specific charges. Those

site-specific charges are subtracted from

the total cost of the organization during

the indirect cost computation.

The Superfund indirect cost pool, that

is, the pool of indirect costs which is

ultimately allocable to Superfund sites,

will consist of proportionate amounts of

Agency-wide, regional and programrelated costs. In other words, the

Superfund indirect cost pool will be

comprised of only the portion of

Agency-wide, regional and programrelated costs which supports Superfund

sites, with the remaining costs

supporting all other Agency programs.

Exclusions From the Pool

Superfund non-site specific contractor

costs, such as program management,

that are distributed through the annual

allocation process are excluded from the

35344 Federal Register / Vol. 65, No. 107 / Friday, June 2, 2000 / Notices

indirect cost pool. Annual allocation is

the process by which response action

contractor non-site support costs are

allocated to sites on which the

contractor worked. The site-allocable

portion of these contracts is removed

from the pool because it is allocated to

individual sites under a separate

process and is treated as a portion of

direct site-specific costs incurred by

EPA.

Costs of organizational units that

provide no direct or indirect support to

Superfund are excluded. Examples

include the Office of International

Activities and certain organizations

within the Office of the Administrator,

such as the Science Advisory Board and

the Office of Administrative Law Judges.

Indirect Cost Base

To properly distribute costs, the

indirect cost base must reflect the

services provided to each organizational

recipient and finally, to the Superfund

sites themselves. There are several

intermediate allocations of costs, as

described below, which use appropriate

allocation bases. The choice of

allocation base depends on the type of

cost to be allocated.

Agency-wide or national indirect

costs, also referred to as general and

administrative (G&A) costs, are

allocated using one of two allocation

bases. Facilities, human resources and

OPM inter-entity costs are allocated to

all EPA organizations based on

personnel compensation and benefits

(PC&B) costs. The rationale for using

PC&B costs as the allocation statistic is

that these indirect costs are purely

workforce-related and would not

otherwise be incurred. Costs associated

with other organizations providing

Agency-wide benefits, such as

procurement, budget, finance,

information management, policy,

planning, general counsel and inspector

general, are distributed across the entire

Agency based on total Agency costs.

Depreciation will be allocated to all EPA

organizations using appropriate cost

accounting principles. We are in the

process of gathering these costs and

determining the appropriate allocation

base. Depreciation costs will be

incorporated into the rates as soon as

possible.

The next level of indirect costs is

regional costs which provide general

and administrative support similar to

that provided at the Agency-wide level.

Regional G&A cost pools, including

each region’s share of national G&A,

personnel and facilities costs,

depreciation and inter-entity costs are

distributed across the entire region

based on total regional costs. This is

similar to the distribution of Agencywide support costs across total Agency

costs.

Headquarters program management

and support costs incurred by OSWER

and OECA must be allocated to program

areas within each office of an EPA

Assistant Administrator and to the

regions. Program areas are designated by

sub-organization or by funding vehicle

such as interagency agreements which

fund a particular type of activity. The

allocation of headquarters program

management and support costs is based

on the total costs associated with each

program area and region. The

headquarters allocation base includes

administrative and program costs from

appropriations other than Superfund

and Superfund site-specific and nonsite-specific costs. The regional

allocation base consists of regional site

charges made within each office of an

EPA Assistant Administrator.

The final Superfund indirect cost pool

is allocated using Superfund site

charges. These site charges include both

headquarters and regional site charges,

ZZ charges, site charges made under the

Department of Justice (DOJ), Corps of

Engineers, Bureau of Reclamation, etc.,

interagency agreements and the

Superfund response contract program

management costs that are allocated to

sites in a separate process. EPA charges

arising from mixed funding settlements

are direct site costs and are also

included in the indirect cost base. The

charges for the Agency for Toxic

Substances and Disease Registry

(ATSDR) are not included in the

indirect cost base because their funding

mechanism—a ‘‘transfer allocation’’—

does not result in a charge to EPA’s

accounting system. Again, instead of a

rate per hour as in the current

methodology, the indirect cost rate will

be expressed as a percentage of direct

(site) costs.

Computation of Indirect Cost Rates

Data used for the indirect cost

computations are obtained from the

Agency’s Integrated Financial

Management System.

The indirect cost pool supporting

Superfund site-specific activities in

each region for a given fiscal year

consists of proportionate shares of the

following: program management and

support costs incurred by relevant units

of EPA headquarters (including their

share of nationwide G&A); the region’s

G&A; and the region’s non-site

Superfund costs.

The computation of the indirect cost

rates consists of nine steps. A detailed

document more fully describing the

accounting methodology employed will

be released with the calculated rates by

region by fiscal year. That document

will contain a detailed description of

each of the nine steps. Briefly, steps 1

and 2 compute the nationwide G&A rate

and step 3 computes the regional G&A

rates. Steps 4 through 9 perform various

allocations and refinements of costs

ensuring that the regional Superfund

cost pools, which are summarized in

step 9, reflect only costs by region

associated with Superfund site-specific

activities.

Estimated Indirect Rates by Region

As noted above, the revised indirect

cost rate methodology will for the first

time provide information on the full

costs of the outputs of Superfund sitespecific activities. The process of

computing rates using the full cost

methodology is ongoing. As noted

above, the revised rates by region by

fiscal year will not be issued for several

months. In the meantime, we are

providing an approximation of the rates

that can be used as a means to estimate

the full cost of Superfund site-specific

activities. These rates are based on the

average of preliminary computed rates

for fiscal years 1994, 1997 and 1998. It

should be noted that rates for any given

region may vary considerably from year

to year; therefore, the final calculated

rates may differ from the estimated

average rates listed below.

Estimated Rates*

(Subject to Change)

Region 1—30.0%

Region 2—30.8%

Region 3—43.6%

Region 4—48.1%

Region 5—41.6%

Region 6—29.0%

Region 7—54.4%

Region 8—35.1%

Region 9—40.9%

Region 10—38.6%

* Based on the average of preliminary rates

for Fiscal Years 1994, 1997 and 1998.

The overall effect of implementing the

full cost accounting methodology for

Superfund indirect costs will be to

increase the aggregate amount of

indirect costs allocated to site-specific

activities. As compared to indirect costs

allocated using the current

methodology, the indirect costs

allocated to individual sites may

increase or decrease, depending on a

number of factors, and will not be

known with certainty until all the rates

are computed. The estimated rates

provided above, however, may be used

to predict generally the amount of

indirect costs to be allocated to a

particular site using the full cost

accounting methodology.

Federal Register / Vol. 65, No. 107 / Friday, June 2, 2000 / Notices 35345

To apply these rates to an individual

site, identify the total direct site-specific

costs of that site (including any DOJ

costs but excluding any ATSDR costs)

and multiply that total by the

appropriate region’s indirect cost rate. If

you have total site costs including

indirect costs using the current labor

hours-based rates, total direct sitespecific costs consists of the total site

costs minus the previously-assessed

indirect costs. Adding the direct sitespecific costs and the indirect costs

calculated under the new methodology

will result in the full cost of that site.

[FR Doc. 00–13845 Filed 6–1–00; 8:45 am]

BILLING CODE 6560–50–P

FEDERAL COMMUNICATIONS

COMMISSION

Public Information Collections

Approved by Office of Management

and Budget

May 25, 2000.

The Federal Communications

Commission (FCC) has received Office

of Management and Budget (OMB)

approval for the following public

information collections pursuant to the

Paperwork Reduction Act of 1995,

Public Law 104–13. An agency may not

conduct or sponsor and a person is not

required to respond to a collection of

information unless it displays a

currently valid control number. For

further information contact Shoko B.

Hair, Federal Communications

Commission, (202) 418–1379.

Federal Communications Commission

OMB Control No.: 3060–0927.

Expiration Date: 05/31/2003.

Title: Auditor’s Annual Independence

and Objectivity Certification.

Form No.: N/A.

Respondents: Business or other for

profit.

Estimated Annual Burden: 7

respondents; 10 hours per response

(avg). 70 total annual burden hours.

Estimated Annual Reporting and

Recordkeeping Cost Burden: $0.

Frequency of Response: On occasion;

Annually.

Description: The Responsible

Accounting Officer Letter (RAO) 28,

released December 1, 1999 requires that

carriers’ independent auditors disclose

in writing all relationships between the

auditor and its related entities and the

carrier and its related entities that in the

auditor’s professional judgment may

reasonably be thought to bear on

independence; confirm in writing in its

professional judgment it is independent

of the carrier; and discuss the auditor’s

independence. The information will be

used to determine whether the auditors

are performing their audits

independently and unbiased of the

carrier they audit. Obligation to

respond: Mandatory.

OMB Control No.: 3060–0514.

Expiration Date: 05/31/2003.

Title: Section 43.21(b)—Holding

Company Annual Report.

Form No.: N/A.

Respondents: Business or other forprofit.

Estimated Annual Burden: 20

respondents; 1 hour per response (avg.);

20 total annual burden hours.

Estimated Annul Reporting and

Recordkeeping Cost Burden: $0.

Frequency of Response: Annually.

Description: The SEC 10K Form is

needed from holding companies of

communications common carriers to

provide the Commission with the data

required to fulfill its regulatory

responsibilities and by the public in

analyzing the industry. Selected

information is compiled and published

in the Commission’s annual common

carrier statistical publication. Obligation

to respond: Mandatory.

OMB Control No.: 3060–0894.

Expiration Date: 05/31/2003.

Title: Certification Letter Accounting

for Receipt of Federal Support, CC

Docket Nos. 96–45 and 96–262.

Form No.: N/A.

Respondents: State, Local or Tribal

Government.

Estimated Annual Burden: 51

respondents; 3 hours per response

(avg.); 153 total annual burden hours.

Estimated Annual Reporting and

Recordkeeping Cost Burden: $0.

Frequency of Response: On occasion;

Annually.

Description: The Commission requires

states to certify that carriers within the

state had accounted for its receipt of

federal support in its rates or otherwise

used the support pursuant with Section

254(e). A state may file a supplemental

certification for carriers not subject to

the state’s annual certification. This

information will be used to show that

federal high-cost support is being

provided to the carrier to assist in

keeping rates affordable in those

subscribers’ area. Further, the collection

of information will be used to certify

that the carriers have accounted for its

receipt of federal support in its rates or

otherwise used the support for the

provision, maintenance, and upgrading

of facilities and services for which the

support is intended in accordance with

section 254(e). Obligation to respond:

Required to obtain or retain benefits.

OMB Control No.: 3060–0755.

Expiration Date: 05/31/2003.

Title: 47 CFR Sections 59.1–59.4—

Infrastructure Sharing.

Form No.: N/A.

Respondents: Business or other forprofit.

Estimated Annual Burden: 75

respondents; 31 hours per response

(avg.); 2325 total annual burden hours.

Estimated Annual Reporting and

Recordkeeping Cost Burden: $0.

Frequency of Response: On occasion;

Third party disclosure.

Description: In CC Docket No. 96–237,

the Commission implemented the

infrastructure sharing provisions of the

Communications Act of 1934, as

amended. Section 259 requires

incumbent LECs to file any

arrangements showing the conditions

under which they share infrastructure.

See also 47 CFR Section 59.2. (No. of

respondents: 75; hours per response: 15;

total annual burden: 375 hours). Section

259 also requires incumbent LECs to

provide information on deployments of

new services and equipment to

qualifying carriers. See also 47 CFR

Section 59.3 (No. of respondents: 75;

hours per response: 24 hours; total

annual burden: 1800 hours). The

Commission requires incumbent LECs

to provide 60-day notices prior to

terminating section 259 agreements. See

47 CFR Section 59.2. (No. of

respondents: 75; hours per response: 2

hours; total annual burden: 150 hours).

The information collected under the

requirement that incumbent LECs file

any tariffs, contracts or other

arrangements for infrastructure sharing

would be made available for public

inspection. The information collected

under the requirement that incumbent

LECs provide timely information on

planned deployments of new services

and equipment would be provided to

third parties. The information collected

under the requirement that providing

incumbent LECs furnish sixty days

notice prior to termination of a section

259 sharing agreement would be

provided to third parties to protect

customers from sudden changes in

services. Obligation to respond:

Mandatory.

OMB Control No.: 3060–0933.

Expiration Date: 11/30/2000.

Title: Community Broadband

Deployment Database Reporting Form.

Form No.: FCC Form 460.

Respondents: Not-for-profit

institutions; Federal Government; State,

Local or Tribal Government.

Estimated Annual Burden: 30

respondents; .25 hours per response

(avg.); 7 total annual burden hours.

Estimated Annual Reporting and

Recordkeeping Cost Burden: $0.