Superfund Activities in the Environment and Natural Resources Division for Fiscal Years 2002 and 2003

Report No. 04-38
September 2004
Office of the Inspector General

Executive Summary

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. 1535, 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 $28.1 million for FY 2002 and $27.9 million for FY 2003 in accordance with EPA Interagency Agreements DW-15-93796801-9 and DW-15-93796801-B, 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 cost distribution system serves as the basis to distribute labor costs and indirect costs to Superfund cases. It was designed to process financial data from ENRD 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 objective of our audit was to determine if the cost allocation process used by the ENRD and its contractor provided an equitable distribution of total labor, other direct costs, and indirect costs to Superfund cases during FY 2002 and FY 2003. We designed the audit to compare reported costs on the contractor developed Accounting Schedules and Summaries for FY 2002 and FY 2003 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 the costs to the Superfund cases.

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

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

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

In our judgment, the ENRD provided an equitable distribution of total labor costs, other direct costs, and indirect costs to Superfund cases during FY 2002 and FY 2003. We provided ENRD officials with an opportunity to discuss the audit results during an exit conference and the offer was declined. The audit report contains no recommendations and is therefore closed with no response required from the ENRD. 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 non-capital equipment.