Superfund: EPA's Use of Funds for Brownfield Revitalization (Letter
Report, 03/19/98, GAO/RCED-98-87).

Pursuant to a congressional request, GAO reviewed the grants and
agreements the Environmental Protection Agency (EPA) awarded since
fiscal year 1993 under two program categories of brownfield
expenditures, focusing on the: (1) criteria and process EPA used to
award these grants and agreements; (2) uses recipients made of these
funds; and (3) monitoring and oversight EPA provided for them.

GAO noted that: (1) EPA primarily uses its brownfield funds to help
state, local, and tribal governments build their capacities to assess,
clean up, and revitalize brownfield sites; (2) EPA is using the majority
of its $126 million in brownfield funds for fiscal years 1997 and 1998
to: (a) help these groups identify, assess, characterize, and develop
cleanup plans for brownfield sites; (b) provide them with seed money to
create revolving loan funds that they could use to award low-interest
loans for cleanups; (c) support state development of programs that
provide incentives for voluntary cleanup of sites, especially
brownfields; and (d) provide outreach to groups affected by brownfields,
technical assistance to them on cleanup and redevelopment methods, and
research for them on brownfield issues; (3) EPA is using the remaining
brownfield funds for support and other program activities, such as EPA's
personal costs; (4) EPA set up four broad criteria and an approval
process to award funds noncompetitively to nonprofit organizations for
their unsolicited proposals to provide outreach, technical assistance,
research, and job training; (5) the criteria included increasing
community involvement at brownfields, promoting redevelopment, providing
for site assessments, and sustaining a clean environment for the future;
(6) if the proposals met one of the four criteria, the managers
responsible for most of the brownfield activities explained that they
generally would fund the proposals if the nonprofit organization
represented unique constituents affected by brownfields, such as tribes,
or offered unique brownfield expertise or experience; (7) although EPA
has used the same process and criteria to award a few job training
grants and agreements, it is developing a strategic plan to use as
criteria for making future awards; (8) since fiscal year 1993, award
recipients have used $3.7 million from the 24 outreach and job training
awards GAO reviewed to conduct brownfield-specific activities; (9) award
recipients used additional funds from the 24 awards for outreach and job
training activities in support of the broader Superfund program or other
EPA programs, although some of these activities would also indirectly
help promote brownfield cleanup and redevelopment; and (10) EPA staff
responsible for managing the 24 awards GAO reviewed were monitoring the
overall status of the budget for each award and the content and quality
of recipients' activities through various means.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-98-87
     TITLE:  Superfund: EPA's Use of Funds for Brownfield Revitalization
      DATE:  03/19/98
   SUBJECT:  Urban economic development
             Grant award procedures
             Waste disposal
             Hazardous substances
             Environment evaluation
             Pollution control
             Grants to states
             Industrial facilities
             Economically depressed areas
IDENTIFIER:  EPA Brownfields Economic Development Initiative
             Superfund Program
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Report to the Chairman, Committee on Commerce, House of
Representatives

March 1998

SUPERFUND - EPA'S USE OF FUNDS FOR
BROWNFIELD REVITALIZATION

GAO/RCED-98-87

Superfund

(160408)


Abbreviations
=============================================================== ABBREV

  CERCLA - Comprehensive, Environmental Response, Compensation, and
     Liability Act
  EPA - Environmental Protection Agency
  OGC - Office of General Counsel
  OIG - Office of Inspector General
  OMB - Office of Management and Budget
  RCRA - Resource Conservation and Recovery Act

Letter
=============================================================== LETTER


B-279206

March 19, 1998

Honorable Thomas J.  Bliley, Jr.
Chairman, Committee on Commerce
House of Representatives

Dear Mr.  Chairman: 

Federal, state, and local governments have focused much attention on
the cleanup and economic redevelopment of abandoned and idled urban
properties, known as brownfields, that have real or perceived
chemical contamination.  Partly because of the potentially high costs
to clean contaminated sites in accordance with federal and state
environmental laws, businesses have often chosen to locate on
uncontaminated sites outside of urban areas, known as greenfields. 
Consequently, cities can lose tax revenues and employment
opportunities.  The Congress has been very interested in supporting
initiatives to promote the cleanup and redevelopment of brownfields
and has considered several legislative proposals to address this
goal.  In the meantime, the Environmental Protection Agency (EPA) has
implemented several brownfield initiatives and has been setting aside
portions of its budget to fund them. 

To help ensure that EPA is using these funds to maximize the
abilities of state, local, and tribal governments to assess, clean
up, and redevelop brownfields, you first asked us to determine the
activities EPA has supported with funds targeted for brownfields in
its budgets for fiscal years 1997 and 1998.  Subsequently, you asked
us to focus specifically on two program categories of brownfield
expenditures--the outreach, technical assistance, and research
category and the job training category--because they are not as
directly related to assessing sites for the extent of contamination
present, a key first step toward cleanup, as the other program
categories.  Specifically, for the two program categories, you asked
us to identify any grants and agreements EPA awarded since fiscal
year 1993--the first year the agency began its brownfield efforts--to
determine (1) the criteria and process EPA used to award these grants
and agreements,\1 (2) the uses recipients made of these funds, and
(3) the monitoring and the oversight EPA provided for them.  In
responding to these audit objectives, we reviewed EPA's files for the
24 grants and agreements in these two program categories that had
been exclusively or partially used for brownfield activities.  We
also conducted detailed on-site audits of the recipients' files for 3
of the 11 completed grants and agreements in these two categories. 
Appendix I contains a more detailed description of our objectives,
scope, and methodology. 


--------------------
\1 Throughout this report, we refer to grants and cooperative
agreements as grants and agreements or awards.  Both provide funding
to organizations to undertake certain activities.  EPA uses grants
when it does not expect to be substantially involved in the
activities and cooperative agreements when it does expect to be
involved. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

EPA primarily uses its brownfield funds to help state, local, and
tribal governments build their capacities to assess, clean up, and
revitalize brownfield sites.  EPA is using the majority of its $126
million in brownfield funds for fiscal years 1997 and 1998 to (1)
help these groups identify, assess, characterize, and develop cleanup
plans for brownfield sites; (2) provide them with seed money to
create revolving loan funds that they could use to award low-interest
loans for cleanups;\2 (3) support state development of programs that
provide incentives for voluntary cleanup of sites, especially
brownfields; and (4) provide outreach to groups affected by
brownfields, technical assistance to them on cleanup and
redevelopment methods, and research for them on brownfield issues. 
EPA is using the remaining brownfield funds for support and other
program activities, such as EPA's personnel costs. 

EPA set up four broad criteria and an approval process to award funds
noncompetitively to nonprofit organizations for their unsolicited
proposals to provide outreach, technical assistance, research, and
job training.  The criteria included increasing community involvement
at brownfields, promoting redevelopment, providing for site
assessments, and sustaining a clean environment in the future.  If
the proposals met one of the four criteria, the managers responsible
for most of the brownfield activities explained that they generally
would fund the proposals if the nonprofit organization represented
unique constituents affected by brownfields, such as tribes, or
offered unique brownfield expertise or experience.  Although EPA has
used the same process and criteria to award a few job training grants
and agreements, it is developing a strategic plan to use as criteria
for making future awards. 

Since fiscal year 1993, award recipients have used $3.7 million from
the 24 outreach and job training awards we reviewed to conduct
brownfield-specific activities.  These activities included sponsoring
conferences and meetings to discuss and solicit input on brownfield
issues and publishing documents that describe brownfield assessments,
cleanup, and best practices for redevelopment.  Award recipients used
additional funds from the 24 awards for outreach and job training
activities in support of the broader Superfund program or other EPA
programs, although some of these activities would also indirectly
help to promote brownfield cleanup and redevelopment.\3 To accomplish
these technical assistance and research activities, recipients spent
a majority of the funds on personnel costs; indirect costs, such as
overhead; and contractual services, such as consultants. 

EPA staff responsible for managing the 24 awards we reviewed were
monitoring the overall status of the budget for each award and the
content and quality of recipients' activities.  The project officers
conducted this monitoring through various means, including periodic
telephone calls to the recipients, attendance at meetings and forums,
and a review of the recipients' final reports to EPA.  In addition,
the project officers took the added step of requiring and reviewing
quarterly reports from recipients to help ensure adequate progress on
the approved workplan.  These 24 grants and agreements most likely
would not be selected for a detailed financial audit because their
dollar value--ranging from $20,000 to $2.7 million, with a median of
$168,000--is relatively small.  During our on-site audit of the
financial records for the three recipients with completed agreements,
we determined that, overall, they were spending the funds in
accordance with guidance from the Office of Management and Budget. 


--------------------
\2 EPA's fiscal year 1998 appropriations law includes language that
prohibits the use of brownfield funds for this purpose unless
specifically authorized in subsequent legislation. 

\3 Superfund is the common name for EPA's program to clean up
abandoned hazardous waste sites. 


   BACKGROUND
------------------------------------------------------------ Letter :2

EPA defines brownfields as abandoned, idled, or underused industrial
or commercial sites where expansion or redevelopment is complicated
by real or perceived environmental contamination.  Usually, the
contamination is less extensive than sites on EPA's priority list for
cleanup.  We have reported that liability and other concerns have
deterred many potential developers from using brownfields and that,
instead, they use uncontaminated sites in suburban areas referred to
as greenfields.\4 The Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) authorizes EPA to clean up
hazardous waste sites and to compel parties responsible for
contamination to perform or pay for the cleanups.  Developers'
avoidance of brownfields has contributed to a loss of employment
opportunities for city residents, a loss of tax revenues for city
governments, and an increase in urban sprawl. 

To encourage more redevelopment of brownfields and promote cleanups,
the Congress has considered several legislative proposals, both as
separate bills and as part of legislation to reauthorize the
Superfund program, that would help address liability concerns and
provide economic incentives.  In November 1993, EPA introduced the
Brownfield Economic Redevelopment Initiative, for which the Outreach
and Special Projects Staff--referred to in this report as the
brownfield program office--has primary responsibility.  This office
reports to the Assistant Administrator for Solid Waste and Emergency
Response, who also manages the Superfund program.  The brownfield
initiative is a commitment by EPA to help communities revitalize
brownfields, both environmentally and economically, and mitigate
potential health risks.  EPA has begun four major efforts to
implement this initiative:  (1) providing grants for brownfield pilot
projects for site assessment and cleanup planning; (2) clarifying
liability and other issues associated with cleaning up sites to
return them to productive use; (3) building partnerships and outreach
for brownfield redevelopment among federal agencies, state and local
governments, and communities; and (4) fostering local job development
and training initiatives related to brownfield activities. 


--------------------
\4 Superfund:  Barriers to Brownfield Redevelopment (GAO/RCED-96-125,
June 17, 1996), Superfund:  Proposals to Remove Barriers to
Brownfield Redevelopment (GAO/T-RCED-97-87, Mar.  4, 1997), and
Superfund:  State Voluntary Programs Provide Incentives to Encourage
Cleanups (GAO/RCED-97-66, Apr.  9, 1997). 


   EPA IS USING MOST OF ITS
   BROWNFIELD FUNDING TO HELP
   STATE, LOCAL, AND TRIBAL
   GOVERNMENTS ASSESS SITES AND
   BUILD VOLUNTARY CLEANUP
   PROGRAMS
------------------------------------------------------------ Letter :3

EPA is spending most of the $126 million it allotted for brownfield
activities--$37.5 in fiscal year 1997 and $88.5 in fiscal year
1998--to help state, local, and tribal governments build their
capacities to revitalize brownfields.  Table 1 illustrates the eight
major categories of activities into which EPA is dividing its
brownfield funding:\5



                                Table 1
                
                 EPA's Use of Brownfield Funds, Fiscal
                          Years 1997 and 1998

                         (Dollars in millions)

                                                   Planned
                                        Fiscal      fiscal  Percentage
                                     year 1997   year 1998      change
                                    obligation  obligation   from 1997
Program category                             s           s     to 1998
----------------------------------  ----------  ----------  ----------
Assessment pilot projects                 $7.7       $20.0        160%
Cleanup revolving loan fund                8.4         0\a        N.A.
State voluntary cleanup programs           9.4        15.0         60%
Targeted site assessments                  2.3         3.0         30%
Job training                               0.3         5.8      1,833%
Outreach, technical assistance,            6.3         4.5       (29)%
 and research
Policy, planning, and evaluation           0.6         0.7         17%
EPA personnel                              2.5         4.5         80%
======================================================================
Total                                    $37.5     $88.5\a        136%
----------------------------------------------------------------------
Note:  EPA generally requires recipients to share a portion of the
costs associated with grants and agreements.  Typically, EPA provides
95 percent of the funds and the recipient provides 5 percent.  The
Superfund Trust Fund supplies about 60 percent of EPA's total funds. 

\a The Congress approved EPA's request to spend a total of $88.5
million on brownfield activities in fiscal year 1998 but directed
that EPA not spend any of these funds for revolving loan fund
activities.  Consequently, EPA is requesting the Office of Management
and Budget's (OMB) approval to use the $35 million it had requested
for the loan program on assessments, state voluntary cleanup
programs, and related activities. 

Source:  GAO's analysis of data from EPA's Outreach and Special
Projects Staff. 


--------------------
\5 Under EPA's regulations, the agency may use the Superfund Trust
Fund to finance remedial actions only at sites that are on the
agency's list of priority sites for cleanup.  The trust fund was
financed primarily by taxes on crude oil and certain chemicals until
January 1996, when the taxes expired.  The Congress has not
reauthorized the taxes, but the fund has a remaining balance. 


      ASSESSMENT PILOT PROJECTS
---------------------------------------------------------- Letter :3.1

EPA funds assessment pilot projects through cooperative agreements
with state, local, and tribal governments, which use the funds to
assess, identify, characterize, and plan cleanup activities at
contaminated sites targeted for redevelopment.  In general, an
individual recipient can get a one-time grant of up to $200,000.  EPA
began funding these pilot projects in September 1993.  At the time of
our review, the agency had used $21 million to fund 121 projects in
41 states, including 45 projects in fiscal year 1997.  EPA plans to
fund an additional 100 projects in fiscal year 1998. 


      CLEANUP REVOLVING LOAN FUND
---------------------------------------------------------- Letter :3.2

EPA provided financial support to state, local, and tribal
governments to help them create revolving loan funds that would
provide low-interest loans to public and private entities for site
cleanups.  Any site that had been formally assessed before October 1,
1995, to characterize the nature and extent of contamination could be
eligible for a loan.  EPA allocated $8.4 million in fiscal year 1997
funds to 24 state, local, and tribal governments to begin these
revolving funds.  Because the Congress directed EPA not to use any of
its fiscal year 1998 funds on this program activity, EPA is planning
to reallocate $35 million it intended to use on revolving loan funds
to some of the remaining program categories. 


      STATE VOLUNTARY CLEANUP
      PROGRAMS
---------------------------------------------------------- Letter :3.3

EPA provides state and tribal governments with funds to enhance and
develop voluntary cleanup programs that states often use to clean up
brownfields.  States have used fiscal year 1997 funds for such
activities as (1) completing regulations for voluntary cleanup
programs, (2) purchasing equipment to support program administration,
(3) paying the salaries of agency staff to develop program
procedures, (4) helping states and tribes to build their own capacity
to oversee cleanups, and (5) promoting greater community involvement. 
In fiscal year 1997, EPA allocated $9.4 million for programs to
assist 42 states and two tribal governments; in fiscal year 1998, the
agency plans to allocate $15 million for programs to assist all 50
states and more tribal governments. 


      TARGETED SITE ASSESSMENTS
---------------------------------------------------------- Letter :3.4

EPA uses funds from the program category for targeted site
assessments to pay either its contractors or the states through
cooperative agreements to identify the extent of contamination at
those sites where the work can be performed faster and more cheaply
than if done by the local governments.  EPA regions reported that
they used $2.3 million in fiscal year 1997 to fund 27 targeted site
assessments and that they plan to fund an additional 30 assessments
with the $3 million budgeted for fiscal year 1998. 


      JOB TRAINING
---------------------------------------------------------- Letter :3.5

EPA enters into environmental job training grants and agreements with
educational institutions and professional organizations for (1)
environmental curriculum development that incorporates brownfields,
(2) community outreach and information dissemination on brownfields,
and (3) job training in hazardous waste cleanup and employment
assistance at cleanup sites.  Since fiscal year 1993, EPA has
allocated a small portion of general funds to make five job training
awards, three of them in fiscal year 1997.  The agency plans to make
an additional 10 awards with a $2.8 million increase in Superfund
resources that was made available for job training in fiscal year
1998.  Through an interagency agreement, the remaining $3 million
that had been budgeted for environmental job training has been
allocated to the National Institute for Environmental Health Sciences
to provide training on such issues as workers' safety.\6


--------------------
\6 The National Institute for Environmental Health Sciences is part
of the National Institutes of Health, whose mission is to conduct
research on environmentally related diseases. 


      OUTREACH, TECHNICAL
      ASSISTANCE, AND RESEARCH
---------------------------------------------------------- Letter :3.6

EPA funds outreach to constituents affected by brownfields; technical
assistance to state, local, and tribal governments on brownfield
redevelopment; and brownfield-related research.  Typically, the
agency awards grants and agreements to educational, governmental,
research, and community organizations to, among other things,
disseminate information and conduct research on issues related to
site redevelopment and potential health risks from contaminants. 
During fiscal year 1997, EPA funded 11 such grants and agreements. 
The decreased amount from $6.3 million in fiscal year 1997 to $4.5
million in fiscal year 1998 reflects EPA's plan to fund more agency
personnel to manage the increased number of assessment pilots. 


      POLICY, PLANNING, AND
      EVALUATION
---------------------------------------------------------- Letter :3.7

EPA's Office of Policy, Planning, and Evaluation awards agreements
and contracts to research and community organizations to provide
analytical tools and products for urban development and brownfield
activities.  For example, EPA awarded a $45,000 cooperative agreement
in fiscal year 1997 for a 2-day conference and workshop that included
some discussion of brownfield issues specifically affecting
developers and lenders.  The office awarded four agreements totaling
$183,000 and five contracts totaling $422,000 in fiscal year 1997. 
The office plans about the same level of activity for fiscal year
1998. 


      EPA PERSONNEL
---------------------------------------------------------- Letter :3.8

In fiscal year 1997, EPA assigned approximately 33 employees in
headquarters and field offices to manage brownfield activities at a
cost of $2.5 million; in fiscal year 1998, the agency plans to almost
double the amount of funds and increase staff to 57 employees.  The
managers within the Outreach and Special Projects Staff--referred to
in this report as the brownfield program managers--explained that EPA
needs more staff to manage the increasing number of grants,
cooperative agreements, and pilot projects to state, local, and
tribal governments. 


   EPA'S CRITERIA AND PROCESS TO
   EVALUATE UNSOLICITED PROPOSALS
   FOR FUNDS FOR ITS OUTREACH,
   TECHNICAL ASSISTANCE, AND
   RESEARCH PROGRAM AND JOB
   TRAINING PROGRAM
------------------------------------------------------------ Letter :4

Although recipients do not have to compete against each other for
funds from either EPA's outreach, technical assistance, and research
program category or its job training program category, the agency has
established criteria and set up an approval process to award funds
for brownfield activities.\7 EPA's Outreach and Special Projects
Staff awarded funds to nonprofit organizations if their unsolicited
proposals addressed one of the following four broad criteria:\8

  -- increase community involvement in brownfields;

  -- promote the redevelopment of brownfields;

  -- provide for site assessment and cleanup; and

  -- promote the principal of sustainable development--that future
     economic well-being depends on the ability to sustain a healthy
     environment and productive, renewable natural resources.\9

The managers said they often rejected proposals that did not meet at
least one of the four criteria, but they could not document the
number and type of rejected proposals. 

According to the brownfield program managers, they used the following
process to approve the 24 awards we reviewed.  If a proposal met at
least one of the four criteria, it went through an internal EPA and,
under some circumstances, an external review process.  The brownfield
program managers first checked their computerized tracking system of
all federally funded outreach, technical assistance, research, and
job training activities to ensure that the proposal would not
duplicate ongoing awards.  They then sent various proposals to other
EPA offices, such as the Office of Research and Development and the
Office of Policy, Planning, and Evaluation, that had conducted
similar activities for their concurrence.  They also sent proposals
to the Office of General Counsel (OGC) to determine if the action
complied with existing law, although they were not required to do
this to approve an award.  Furthermore, they sent certain proposals
to other federal agencies, such as the Department of Housing and
Urban Development, that had conducted similar activities for review
of the proposals' technical and scientific merit. 

The brownfield program managers explained that EPA did not use a
process whereby organizations had to compete for outreach, technical
assistance, research, and job training funds as it used to make
funding awards in some of the other brownfield program categories,
such as assessment pilot projects.  This is because, generally, the
organization submitting an outreach or job training proposal serves a
unique group of constituents that is affected by brownfields or has
unique brownfield expertise.\10 EPA guidance allows the agency to use
unique qualifications as a justification for a noncompetitive award. 
The EPA brownfield program managers maintained that going through the
expense of widely publicizing available funding and conducting a
competitive process to screen hundreds of applications is not
cost-effective, especially given the small amounts of the awards. 

For example, these managers explained that one recipient, the
International City/County Management Association, represents city and
county managers nationwide whose jurisdictions are directly affected
by brownfields.  EPA believes this association could more quickly
poll its members to determine what brownfield assistance they need
EPA to provide and more quickly disseminate information to them about
successful brownfield redevelopment efforts than EPA could. 
According to the program managers, EPA also provided a cooperative
agreement to the Institute for Responsible Management because its
director has years of experience in brownfields.\11 They explained
that because of this experience, the director can help the pilot
communities organize themselves and focus on brownfield cleanup and
redevelopment options.  The director can also provide research,
information, and troubleshooting to these groups as well as document
the lessons learned and success stories so other communities can
benefit from them. 

EPA has used the same approval process for the five grants it had
awarded for job training at the time of our review.  For example, the
agency provided funds in fiscal year 1997 to the Hazardous Materials
Training and Research Institute at East Iowa Community College
District to conduct workshops for community college faculty on how to
build environmental curricula for job training, especially relating
to cleaning up contaminated sites.\12 According to the program
managers, this award was made because of the Institute's success in
developing training programs through awards from EPA's Office of
Research and Development.  They said that EPA is now working on a
strategic plan for its training activities and will use it to
determine whether or not to fund future job training proposals. 


--------------------
\7 Requesters must compete to receive funds from some of the other
program categories. 

\8 Of the 24 grants and agreements we reviewed, EPA's Outreach and
Special Projects Staff issued 15:  12 as cooperative agreements, 1 as
an interagency agreement, and 2 as grants.  For the remaining nine
awards, EPA's Office of Policy, Planning, and Evaluation issued five
cooperative agreements, EPA's Office of Small and Disadvantaged
Business Utilization issued one grant, and EPA's Region 5 issued
three grants.  We did not evaluate the criteria and approval process
these three offices used to make awards because the number of awards
they made and their total dollar value are relatively small. 

\9 As its criteria for making these awards, EPA adopted these four
goals for brownfield revitalization that the Administration had
established as part of its February 1997 National Partnership
initiative to coordinate brownfield activities across all federal
agencies. 

\10 EPA has established more specific criteria that state, local, and
tribal governments had to meet in order to obtain funding for an
assessment pilot project and has set up a panel to screen the project
applications and determine which ones to fund. 

\11 This nonprofit organization describes its mission as achieving
effective collaboration and cooperation between the public and
private sectors on public policy issues related to the environment,
public safety, and health concerns. 

\12 According to EPA brownfield program managers, EPA used funds
authorized under the Solid Waste Disposal Act for these job training
awards. 


   RECIPIENTS USED FUNDS PRIMARILY
   TO SPONSOR FORUMS, CONDUCT
   RESEARCH, AND PUBLISH DOCUMENTS
   ON BROWNFIELD ISSUES AND ON
   REDEVELOPMENT BEST PRACTICES
------------------------------------------------------------ Letter :5

The 24 awards made since 1993 that we reviewed with
brownfield-related activities totaled $9.6 million.  These funds came
from the allotment to the brownfield program office, the Superfund
Trust Fund, and general funds from either the brownfield or other EPA
program offices.  Recipients used these awards to provide outreach,
technical assistance, research, and job training to support both
brownfields specifically and Superfund or other programs more
generally.  We determined that about $3.7 million of these funds were
for the following more specific brownfield activities, although some
portion of the activities provided by the remaining funds could also
indirectly benefit brownfields: 

  -- issue reports or other documents on redevelopment activities;

  -- sponsor forums, conferences, or other meetings to disseminate
     research regarding brownfield issues and policies;

  -- conduct or sponsor workshops on brownfield issues or policies
     and on developing environmental curricula for job training
     related to hazardous waste cleanup;

  -- conduct research on brownfield and redevelopment issues, such as
     insurance coverage for entities conducting cleanups; and

  -- establish or develop programs to identify barriers to brownfield
     development. 

Recipients also used the awards to perform other activities,
including the development of educational materials or tools and
databases on redevelopment case studies.  Appendix II provides a more
detailed description of the activities funded under each of the 24
grants and agreements. 

In conducting these activities, recipients have spent most of the
awarded funds on (1) their own personnel costs, including fringe
benefits; (2) indirect costs, such as overhead; and (3) contractual
services, such as any consultants used.  They also have spent smaller
portions of their funds on expenses for travel to enable their staff
and participants to attend conferences and forums; equipment, such as
copying machines; and supplies. 


   PROJECT OFFICERS WERE
   MONITORING THE BROWNFIELD
   GRANTS AND AGREEMENTS, BUT THE
   AWARDS WILL NOT LIKELY BE
   SUBJECT TO FINANCIAL AUDITS
   BECAUSE OF THEIR SMALL DOLLAR
   VALUE
------------------------------------------------------------ Letter :6

Our review of the files for each of the 24 awards and our interviews
with various members of the Outreach and Special Projects Staff
responsible for managing some of the individual awards showed that
project officers were monitoring recipients' activities.  This
monitoring consisted primarily of project officers' making periodic
telephone calls to recipients to discuss the status of funded
activities, attending some of the functions sponsored by the
recipients, meeting with recipients at EPA headquarters, and
reviewing quarterly and final reports that the recipients were
required to submit to EPA.  In these reports, recipients give
detailed descriptions of the activities that were accomplished under
their awards, and, in some cases, describe the status of the overall
budget, if EPA had made this a specific reporting requirement.  While
EPA's Office of Administration and Resources Management encouraged
project officers to conduct both on-site visits to recipients and
more formal semiannual or annual project reviews, the files for our
sample of 24 awards did not document that project officers were
conducting these activities.  Although the brownfield program
managers stated that project officers were meeting informally with
recipients, the project officers for two of the three recipients we
audited had not visited them.  The brownfield program managers
explained that because of the relatively small monetary value of
these awards, ranging from $20,000 to $2.7 million with a median of
$168,000, the formal on-site visits were not cost-effective and that
more formal reviews were not necessary because the project officers'
other monitoring activities were adequate. 

Once a grant or agreement has been completed, each project officer is
also responsible for conducting a final closeout review to determine
whether the recipient has completed all technical work and met all
requirements before EPA makes or denies the final payment to the
recipient and recovers any unused funds.  We determined that 2 of the
11 completed awards in our sample were due to be closed out--closeout
must occur within 180 days of a completed grant or agreement--and EPA
had conducted both closeouts.  For example, to close out a
cooperative agreement issued to the Northeast-Midwest Institute,
whose project period ended on March 31, 1997, the recipient submitted
its final financial status report on April 25, 1997, certifying that
it had spent the funds.  The project officer for this cooperative
agreement reviewed this report along with the recipient's final
quarterly report to close out the agreement on May 5, 1997. 

Project officers are not required to conduct a detailed financial
audit of the recipients' expenditures as part of the closeout review. 
The brownfield program mangers stated that an audit would not be
cost-effective because the awards have relatively small monetary
values.  Instead, EPA's regulations require recipients to maintain
supporting financial records of all expenditures, such as receipts
and invoices, on-site for 3 years after completion of a grant or
agreement.  During that period, recipients can be subject to an audit
either by EPA's OIG or a single audit under provisions in OMB
Circular A-133, entitled "Audits of States, Local Governments, and
Non-Profit Organizations." According to this guidance, a recipient
that spends at least $300,000 in federal funds in 1 year shall have a
single or program-specific audit conducted for that year.  The
federal agency that has provided the most funds to the recipient for
that year is responsible for coordinating that audit.  The grant and
agreement files we reviewed contained information that verified such
single audits were being conducted, however, EPA's awards were not
sampled during these audits because of their relatively low monetary
amounts.  In addition, EPA OIG staff stated that they were unlikely
to audit these grants and agreements unless they received information
of wrongdoing.  In our detailed on-site audit of the financial
records for three recipients, we determined that, overall, they were
spending the funds in accordance with OMB's guidance. 


      EPA'S GENERAL COUNSEL RAISED
      QUESTIONS ABOUT THE
      STATUTORY BASIS FOR SOME
      AWARDS
---------------------------------------------------------- Letter :6.1

During our review of agency files for the 24 awards, we noted that
EPA's OGC had cautioned the program offices that initiated the awards
that external reviewers might determine that some of the activities
were not allowable under the statute EPA had used to make the awards. 
If so, recipients would have to return all funds, even if they had
completed the agreed-to activities.  EPA used section 311(c) of
CERCLA as authority for awarding at least portions of 14 of the
awards we reviewed.\13 This section authorizes EPA to use grants,
cooperative agreements, and contracts to conduct and support research
on ways to detect hazardous substances and evaluate the risks they
pose to human health.  However, in internal memorandums to the
program offices that initiated 9 of the 14 awards, EPA's OGC stated
that, while section 311(c) can be construed to authorize those
awards, it did not explicitly authorize the proposed activities and
thus warned that subsequent reviewers could question whether those
activities were really health-related research and disallow the
expenditures.  For example, OGC raised this issue on a $1 million
cooperative agreement authorized under section 311(c), whose
recipient conducted meetings and training and issued publications to
educate local communities on issues regarding Superfund, brownfields,
and special concerns of minority communities located near hazardous
waste sites.  OGC has encouraged the program offices to seek explicit
statutory authority from the Congress for the activities funded
through the nine awards. 

According to the brownfield program managers and OGC representatives,
because the statutory language is relatively broad, EPA has
interpreted it to authorize the use of funds for these types of
brownfield research activities.  They also said that as a result, OGC
did not disapprove the awards and the program offices went forward
with them.  Because the activities being conducted are mainly related
to the Superfund program and funded with trust fund money, EPA has
had to use CERCLA authority to make these awards rather than other
environmental statutes, even though these other statutes more clearly
provide for the types of sociological, economic, and policy research
EPA has conducted with these awards.  The program managers stated
that although the administration, in its 1994 Superfund
reauthorization proposal, did include language to clarify the
authority, the bill did not pass, and the agency is considering
whether to pursue clearer statutory authority through other means. 
We did not try to independently determine whether the nine awards
were made in accordance with CERCLA because EPA's OIG is addressing
this issue as part of an ongoing review covering a broader sample of
grants and agreements across numerous EPA programs and environmental
statutes. 


--------------------
\13 EPA also uses (1) CERCLA section 104(d) to award funds for pilot
projects, revolving loan funds, and state voluntary cleanup programs;
(2) portions of CERCLA section 311(b) to award funds for training
related to the handling of hazardous waste; and (3) section 8001 of
the Resource Conservation and Recovery Act (RCRA)--the program EPA
uses to clean up hazardous waste at operating facilities--to award
funds for outreach, technical assistance, research, and job training
related to solid and hazardous waste management.  Some agreements
combine funds authorized under CERCLA with funds from the Outreach
and Special Projects Staff's general program and management account. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We provided copies of a draft of this report to EPA for review and
comment.  The agency generally agreed that the report accurately
describes EPA's brownfield activities.  (See app.  III for a copy of
EPA's comments.) The agency asked us to clarify that it used various
statutory authorities to fund the different types of brownfield
activities it conducted.  For example, the agency noted that it used
either CERCLA section 311(c) or RCRA section 8001 to make awards for
brownfield research.  The authority used depended on whether the
activities were to detect and assess hazardous substances and
evaluate their effects on the environment or were related to more
general solid and hazardous waste management activities.  In
response, where appropriate, we noted the statutory bases used to
fund brownfield awards.  The agency also noted that only portions of
several of the awards we discuss in appendix II, such as its award
with the University of Maryland at Baltimore for training regarding
hazardous substances, are being used for brownfield activities.  We
had already noted this in several sections of the report because the
scope of our work included any award that supported brownfield
activities, either wholly or in part.  Finally, EPA suggested several
technical changes to the report, which we incorporated where
appropriate. 


---------------------------------------------------------- Letter :7.1

We performed our work from July 1997 through February 1998 in
accordance with generally accepted governmental auditing standards. 
As arranged with your office, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 30 days from the date of this letter.  At that time, we will
send copies to the EPA Administrator and other interested parties. 
We will also make copies available to others upon request.  If you or
your staff have any questions, please contact me at (202) 512-6111. 
Major contributors to this report are listed in appendix IV. 

Sincerely yours,

Lawrence J.  Dyckman
Associate Director, Environmental
 Protection Issues


OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I

The Chairman of the House Committee on Commerce asked us to review
EPA's brownfield expenditures.  Specifically, we were to determine
(1) what activities EPA supported with the funds it targeted for
brownfields in its fiscal years 1997 and 1998 budgets; (2) what
criteria and approval process EPA used to award grants and agreements
within its program categories for Outreach, Technical Assistance, and
Research and Job Training that included brownfield funds or
activities since 1993; (3) how recipients used the funds provided by
the awards in these two categories; and (4) how EPA monitors and
oversees these grants and agreements. 

To determine the activities EPA supported with its brownfield
allotments and the criteria, approval process, and monitoring applied
to outreach and job training awards; we contacted EPA brownfield
program managers within the Outreach and Special Projects Staff, the
office with jurisdiction for brownfield activities within the Office
of Solid Waste and Emergency Response.  We also obtained program data
from two of EPA's databases, its overall grants database and its
specific brownfield awards database, and funding data from the
agency's supporting budget documents.  To determine how recipients
used funds in the outreach and job training program categories, we
reviewed EPA's files for 24 of the 30 grants and agreements
containing some brownfield funding or activities that EPA had awarded
in these two categories between fiscal years 1993 through 1997.  We
did not receive information for the remaining six grants and
agreements that EPA had awarded late in fiscal year 1997 in time to
conduct a review of EPA's files for these awards.  To obtain
additional information for each grant or agreement, we contacted
EPA's Grants Administration Office, which has oversight jurisdiction
for grants and agreements, and EPA's Financial Management Office. 

To further test how recipients had used the funds, we selected 3 of
the 11 completed outreach and job training grants and agreements for
a more detailed, on-site financial audit.  We focused on completed,
rather than ongoing, grants and agreements because they would allow
us to more fully cover all our review objectives, including questions
on oversight.  We focused on grants and agreements from 1993 through
1996 because 1993 was the earliest year EPA had made brownfield
awards, and awards from 1997 did not have a long history of
recipients' expenditures.  We audited three awards with the highest
total dollar value--one within the EPA program category of outreach,
technical assistance, and research; the second within the EPA program
category of job training; and a third that had been awarded by an EPA
regional office within either category to determine if the region
used criteria and oversight that differed from headquarters.  We
discussed our selection of awards with EPA's Outreach and Special
Projects Staff and these program managers concurred with our
selection of awards made to the Hazardous Materials Training and
Research Institute at Eastern Iowa Community College District, the
International City/County Management Association, and the
Northeast-Midwest Institute. 

For the detailed audit of the three completed awards, we (1)
interviewed the technical and financial managers with
responsibilities for those awards; (2) reviewed a majority of the
records, invoices, receipts, and other documentation that justified
the expenditures in each of the budget categories; (3) determined the
purpose of those expenditures; and (4) determined whether those
expenditures had been made in accordance with Office of Management
and Budget (OMB) circulars.  This guidance included OMB Circular A-21
(rev.  August 29, 1997) and OMB Circular A-122 (rev.  August 29,
1997). 


BROWNFIELD-RELATED FUNDS AND
ACTIVITIES INCLUDED IN EPA AWARDS
FOR OUTREACH, TECHNICAL
ASSISTANCE, RESEARCH, AND JOB
TRAINING, FISCAL YEARS 1993
THROUGH 1997
========================================================== Appendix II

                                  (Dollars in thousands)

                               Funding associated
                        Total     with brownfield
Award recipient         award          activities  Major activities covered by award
-------------------  --------  ------------------  --------------------------------------
Outreach, Technical
 Assistance, and
 Research
 Agreements (21)

 Americans for           $400                $100   Develop an organization to facilitate
 Indian Opportunity                                 and help ensure full tribal
                                                    participation in EPA's decision-
                                                    making process on waste management
                                                    issues that will affect tribal health
                                                    and the environment.

                                                    Provide outreach and technical
                                                    assistance to identify environmental
                                                    issues to help ensure full tribal
                                                    participation in the brownfield pilot
                                                    application process.
Conference of             300                 300  Promote ways to clean up and redevelop
 Mayors Research                                    brownfield sites by such activities
 and Education                                      as
 Foundation
                                                    --conducting roundtable meetings to
                                                    address various brownfield issues
                                                    (e.g., barriers to redevelopment and
                                                    innovative approaches for brownfield
                                                    revitalization),

                                                    --develop and maintain a national
                                                    brownfield redevelopment database of
                                                    brownfield sites, and

                                                    --establish a network of local
                                                    officials to serve as technical
                                                    experts on issues related to
                                                    brownfield cleanup.
Department of             125                 125  Study and report on the relative
 Housing and Urban                                  importance of environmental hazards
 Development\a                                      and regulatory requirements as
                                                    barriers to brownfield redevelopment.
Environmental Law       2,663                50\b  Analyze the potential effects of a
 Institute                                          proposed residential capital gains
                                                    tax cut and develop a workshop to
                                                    market this provision for brownfield
                                                    redevelopment.
The George                117                 117  Study and report on policies and
 Washington                                         programs that can help reduce health
 University                                         risks and other problems associated
                                                    with brownfield redevelopment, and
                                                    identify and quantify the reduced
                                                    developmental pressures on
                                                    greenfields.
International City/     1,495                 200  Develop publications from a series of
 County Management                                  forums on Superfund effects on local
 Association                                        communities.

                                                    Develop a consortium and guidance
                                                    manual on base closures.

                                                    Produce two videos on ways
                                                    governments can work together to
                                                    clean brownfield sites.
International City/       168                68\b  Develop an independent membership
 County Management                                  organization to promote
 Association                                        environmentally and economically
                                                    smart development decisions. The
                                                    organization will support members by
                                                    researching policies and tools on
                                                    brownfield redevelopment and serve as
                                                    a clearinghouse for information and
                                                    peer exchange.
International City/     1,042                 534  Conduct meetings and training and
 County Management                                  issue publications to educate local
 Association                                        governments and communities on
                                                    various issues associated with
                                                    contamination at hazardous waste
                                                    sites, including international and
                                                    other brownfield issues and local
                                                    government involvement at Superfund
                                                    sites.
National                  225               225\b  Through the creation of the Joint
 Association of                                     Center for Sustainable Communities,
 Counties                                           provide local elected officials with
                                                    advice, information, and financial
                                                    support on sustainable community
                                                    development issues, such as
                                                    brownfield redevelopment and curbing
                                                    urban sprawl.
National Conference        90                  90  Develop a model brownfield
 of Black Mayors                                    redevelopment plan for member mayors
                                                    to use to adapt to their unique
                                                    situations.
National Council of        50                  50  Hold six consultations to increase the
 Negro Women, Inc.                                  awareness of locating hazardous waste
                                                    sites in low-income neighborhoods and
                                                    communities of color, and publish the
                                                    results and findings of those
                                                    consultations.
National Governors'       797                  75  Conduct research, convene meetings,
 Association                                        provide training, and issue
                                                    publications on state and EPA issues
                                                    related to the Superfund program,
                                                    such as state requirements for
                                                    cleanup programs and brownfield
                                                    revitalization.
Northeast-Midwest         115                 115  Research and publish 20 case studies
 Institute                                          on the cleanup and reuse of
                                                    brownfield sites and share the
                                                    results with targeted groups of local
                                                    leaders through at least two
                                                    constituent meetings.
Northeast-Midwest         250                 250  To help reduce the health risks and
 Institute                                          other problems associated with
                                                    brownfields, conduct a series of
                                                    activities, including

                                                    --monitor changes to brownfield and
                                                    other cleanup legislation and publish
                                                    information on these changes to
                                                    educate constituents, and

                                                    --publish "how-to" booklets on
                                                    environmental site cleanup, workforce
                                                    development, and other issues
                                                    important to brownfield cleanup and
                                                    redevelopment.
Northeast-Midwest         250               250\c  Conduct conferences, develop models,
 Institute                                          and issue research papers on federal
                                                    barriers to brownfield redevelopment
                                                    and ways to achieve smart growth
                                                    while protecting public health.
Northeast-Midwest          77                77\d  Conduct forums to promote public
 Institute                                          discussion on brownfield
                                                    redevelopment.
Sixteenth Street           20                20\d  Form a Brownfield Oversight Community
 Community Health                                   Action Team to learn about and
 Center                                             monitor the progress of community
                                                    brownfield cleanups, as well as
                                                    educate communities and publicize
                                                    information on associated health
                                                    effects, redevelopment barriers, and
                                                    other brownfield issues.
The Institute for         489                 489  Compile and disseminate information,
 Responsible                                        such as lessons learned, on EPA's
 Management                                         brownfield pilot projects.
United Negro               50                  50  Assist members in participating in
 College Fund                                       community-based brownfield
                                                    redevelopment activities through
                                                    public dialogues, research, and other
                                                    outreach initiatives, and in
                                                    establishing and maintaining a
                                                    national brownfield internet site.
Urban Land                300                45\b  Sponsor a conference and workshop to
 Institute                                          make developers, lenders, and local
                                                    governments aware of smart growth
                                                    (i.e., environmentally and
                                                    economically smart decisions),
                                                    brownfield redevelopment, and other
                                                    issues.
Wayne County              100               100\d  Publish a catalogue of organizations
 Department of                                      that focus on issues directly related
 Environment                                        to sustainable development and
                                                    identify actions to overcome its
                                                    barriers.
Training Agreements
 (3)

 Hazardous                262               262\e   Conduct several workshops for
 Materials                                          community colleges on opportunities
 Training and                                       for environmental education and
 Research Institute                                 training, and provide on-going
 at East Iowa                                       follow-up and technical assistance to
 Community College                                  colleges in such issues as brownfield
 District                                           redevelopment.
National                   50                50\f  Deliver training to small and
 Association of                                     minority-owned contractors that
 Minority                                           remove hazardous waste from
 Contractors                                        contaminated sites, including
                                                    brownfield sites.
University of             140                40\e  Develop a curriculum to educate law
 Maryland at                                        students and practicing attorneys on
 Baltimore                                          a variety of human health and
                                                    environmental protection issues,
                                                    including brownfield redevelopment.
=========================================================================================
Total                  $9,576              $3,683
-----------------------------------------------------------------------------------------
Note 1:  Unless otherwise noted, funds were provided by EPA's
Outreach and Special Projects Staff. 

Note 2:  Funding associated with brownfield activities includes
funding from Superfund, EPA's general funds, and other sources. 

\a An interagency agreement with the Department of Housing and Urban
Development. 

\b Funded by EPA's Office of Policy, Planning, and Evaluation. 

\c A total of $220,000 was funded by EPA's Office of Policy,
Planning, and Evaluation; the remaining $30,000 was funded by EPA's
Outreach and Special Projects Staff. 

\d Funded by EPA Region 5. 

\e Funded by the Outreach and Special Projects Staff with general
funds rather than EPA's brownfield allotment. 

\f Funded by EPA's Office of Small and Disadvantaged Business
Utilization. 

Source:  GAO's analysis of award files maintained by EPA's Office of
Grants Administration and Outreach and Special Projects Staff. 




(See figure in printed edition.)Appendix III
COMMENTS FROM THE ENVIRONMENTAL
PROTECTION AGENCY
========================================================== Appendix II



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Eileen R.  Larence, Assistant Director

NORFOLK REGIONAL OFFICE

Everett O.  Pace, Evaluator-in-Charge
Mary A.  Crenshaw, Staff Evaluator
Deandrea M.  Leach, Staff Evaluator

CHICAGO REGIONAL OFFICE

Harriet Drummings, Staff Evaluator


*** End of document. ***