Superfund Activities in the Environment and Natural Resources Division
for Fiscal Years 2000 and 2001

Report No. 03-34
September 2003
Office of the Inspector General

On December 11, 1980, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (known as CERCLA or Superfund) was signed into law.  CERCLA provides for liability, compensation, cleanup, and emergency response for hazardous substances released into the environment and uncontrolled and abandoned hazardous waste sites.  Executive Order 12580, issued January 23, 1987, gives the Attorney General responsibility for the conduct and control of all CERCLA litigation, which is conducted by the Environment and Natural Resources Division (ENRD).  In accordance with the legislation, the Environmental Protection Agency (EPA) issues interagency agreements to the ENRD to reimburse it for costs incurred in performing such litigation.

In Fiscal Year (FY) 1987, under the statutory authority of 31 U.S.C. §535, the EPA began transferring appropriated funds to the Department of Justice through interagency agreements.  These agreements authorized the ENRD to be reimbursed for costs incurred in performing Superfund activities.  The EPA authorized the ENRD reimbursements of $28.6 million for FY 2000 and $28.4 million for FY 2001 in accordance with EPA Interagency Agreements DW15937968-01-5 and DW15937968-01-7, respectively.  These agreements also require the ENRD to maintain a system that documents the cost of the litigation.  To this end the ENRD uses a cost distribution process designed and maintained by a private contractor.

The system was designed to process financial data from Expenditure and Allotment (E&A) Reports into:  (1) Superfund direct costs by specific case, broken down between direct labor costs and all other direct costs; (2) non-Superfund direct costs; and (3) allocable indirect costs.¹  The system serves as the basis to distribute labor costs and indirect costs to cases.

We designed the audit to compare reported costs on the contractor developed Accounting Schedules and Summaries for FY 2000 and FY 2001 to those recorded on Department of Justice accounting records, and to review the cost distribution system used by the ENRD to allocate incurred costs to Superfund and non-Superfund cases.  To accomplish this we performed the following steps:

• Compared total costs recorded as paid on the E&A Reports to the amounts reported as Total Amounts Paid on the year end Accounting Schedules and Summaries, and traced such costs to the reported cost distribution to Superfund cases.


• Reviewed the ENRD’s methodology for identifying Superfund cases on its Superfund case list by comparing a select number of cases against the ENRD case assignment criteria.


• Reviewed direct labor costs and indirect costs distributed to Superfund against the contractor-developed methodology.


• Compared Other Direct Costs (ODC) to source documents to validate their allocability.

Based on the results of the audit, in our judgment the ENRD provided an equitable distribution of total labor costs, other direct costs, and indirect costs to Superfund cases during FY 2000 and FY 2001.  We made one recommendation that the ENRD implement a procedure to ensure that ENRD officials responsible for authorizing official travel for staff document approval of such travel in advance of such travel being initiated.

The details of our review are contained in the Audit Results section of the report.  Additional information about our audit objectives and scope is contained in Appendix I.

1. Other direct costs charged to individual cases include: special masters, expert witnesses, interest penalties, travel, filing fees, transcription (court and deposition), litigation support, research services, graphics, and noncapital equipment.