Drug Enforcement Administration Hazardous Waste Cleanup and Disposal

Report 99-24
August 1999
Office of the Inspector General

We have completed an audit of the Drug Enforcement Administration's (DEA) use of the Assets Forfeiture Fund (AFF) ¹ to pay for clandestine drug laboratory (clan lab) cleanups. The audit was performed at the request of the Justice Management Division's Asset Forfeiture Management Staff (AFMS). The AFF can be used to pay for the costs of seizure, management, and disposal of seized and forfeited assets. Annually, DEA is allocated a sum of AFF monies for the removal and disposal of contaminated clan lab materials (considered hazardous waste) seized for forfeiture. Throughout the year, DEA requests reimbursement from the AFF up to the allocated amount for cleanup costs incurred.

Our audit focused on the cleanup and disposal of clan lab hazardous waste that occurred between October 1, 1996 and March 31, 1998. There were 1392 clan lab cleanups during FY 1997 and 772 cleanups during the first six months of FY 1998. As of May 1999, DEA had requested reimbursement of $6.8 million for the FY 1997 cleanups and $4.0 million for all of the FY 1998 cleanups. Because of concerns about DEA's AFF usage, AFMS froze reimbursements towards the end of FY 1997. The amounts frozen include $2.8 million in FY 1997, $4.0 million in FY 1998, and $103,000 in FY 1999.

The cleanup program is administered by the Hazardous Waste Disposal Unit (the Unit) of DEA's Office of Forensic Sciences, located in Arlington, VA. The Unit maintains control over the obligation of funds for clan lab cleanups and prepares and administers the contracts under which private companies perform the cleanup work. The DEA's field offices initiate the cleanup process by determining the need for a clan lab cleanup, obtaining authorization from the Unit to pay for a cleanup, and notifying the contractors. The field offices are also responsible for reporting seized assets in DOJ's computerized Consolidated Asset Tracking System (CATS). The DEA's Asset Forfeiture Section, located in Arlington, is responsible for assuring that seized clan lab assets are forfeited. These assets are generally summarily forfeited, which means they can be seized and destroyed without prior notice to affected parties. However, DEA does have to provide "after-the-fact" notice and documentation that the asset was forfeited.

Our audit assessed whether: (1) DEA's reimbursement requests were actually for hazardous waste cleanup and disposal costs, and (2) the requests were for cleanups of assets that were seized for forfeiture as required. We also tested to determine if DEA was the seizing entity and if DEA was actively involved in the case leading to the cleanup, i.e., whether the cleanup cost was properly a DEA obligation chargeable to the AFF. Finally, we reviewed certain contract management and fiscal controls, as well as the costs associated with specific cleanups identified by AFMS.

We examined a total of 279 cleanups that occurred between October 1, 1996 and March 31, 1998. These cleanups consisted of three samples: (1) a stratified random sample of 213 FY 1997 cleanups obligated at under $20,000; (2) a census sample of all 23 FY 1997 cleanups obligated at over $20,000; and (3) a judgmental sample of 43 FY 1998 cleanups. The total cost of the cleanups we reviewed was about $1.7 million. Based on our examination, we found the following conditions.

• Almost all of the costs comprising the reimbursement requests we reviewed were for hazardous waste cleanup and disposal. There was one charge for evidence storage and three invoices were missing.

• The DEA requested reimbursement of at least about $1.2 million from the AFF in FYs 1997 and 1998 for the cleanup and disposal of hazardous waste assets for which proof of seizure and forfeiture was lacking. The DEA field offices are not entering seizure data into CATS as required, which prevents DEA's Asset Forfeiture Section from processing the forfeitures. The DEA also requested reimbursement of about $168,000 for the cleanup of assets that had been seized but for which we could not find proof that forfeiture had occurred. A tracking mechanism between those who obligate cleanup funds, seize assets, and process forfeitures is needed.

• In both FYs 1997 and 1998, DEA requested AFF reimbursement for the cleanup of assets that, based on available evidence, do not appear to have been seized by DEA or another federal entity, as required. We found that about one-third of the cleanups we reviewed lacked clear evidence of DEA or other federal seizure. Additionally, reimbursement may have been requested for cleanups associated with cases in which DEA did not appear to be actively, significantly involved. We found that about 59 percent of the cases we reviewed lacked evidence of DEA's significant involvement. In both situations, the other participants were state or local law enforcement entities. The DEA and AFMS need to come to agreement about the extent and type of DEA participation required to utilize AFF monies to fund cleanups in which state or local entities are involved.

• Some contract controls were tighter than others. The Unit generally obtained from the contractor required information that provided sufficient information about the type and amount of waste cleaned up and how the waste was managed. However, many cleanup files were missing required Certificates of Disposal/ Destruction or their equivalent. As a result, the Unit could not verify what ultimately happened to the waste or that AFF monies were requested for asset disposal. During our audit period, there was also little DEA verification of contractors' labor and waste quantity claims. This problem was subsequently addressed by DEA.

• The fiscal management controls we reviewed were essentially sound. However, controls over contractor payments and deobligation of unneeded funds could be tightened. We also encountered a problem obtaining payment information for FY 1998 cleanups due to inadequate information in the accounting reports.

• For seven specific additional cases we reviewed, all disposal charges were supported in the Unit's cleanup files. About $23,000 of labor charges were only partially supported. Most of the cases had entries in CATS for the assets seized.

The details of our work are contained in the Findings and Recommendations section of the report. The Objectives, Scope, and Methodology can be found in Appendix III.

1. The Assets Forfeiture Fund (AFF) was established by 28 U.S.C. Section 524 (c) (1) to hold the proceeds of DOJ program forfeitures and to fund certain forfeiture-related expenses and law-enforcement activities.