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APPENDIX I: Interim Financial Procedures Governing Use of the LUST Trust Fund Comptroller's Policy Announcement No. 87-13 OSWER Directive 9360.0-16a Guidance for Conducting Federal-Lead Underground Storage Tank Corrective Actions July 25, 1988

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

JUN 3 1987

COMPTROLLER POLICY ANNOUNCEMENT
NO. 87-13

OFFICE OF
ADMINISTRATION AND RESOURCES MANAGEMENT
                                                                                       
                                                                                               
                                                                                                


MEMORANDUM

SUBJECT: Interim Financial Policies and Procedures
         Governing Use of the Leaking Underground
         Storage Tank (LUST) Trust Fund

FROM:    David P. Ryan
         Comptroller

TO:      Assistant Regional Administrators
         Management Division Directors
         Senior Budget Officers
         Director, Office of Underground Storage Tanks
         Regional Comptrollers
         Financial Management Officers

   This memorandum provides interim Agency financial policies and
procedures governing the use of the Leaking Underground Storage Tank
(LUST) Trust Fund. In addition, this Policy Announcement clearly
establishes the Agency's policy that States, with Cooperative
Agreements, and EPA are responsible for pursuing cost recovery from
responsible owner/operators. Until such time as more detailed
policies and procedures are developed, you should adhere to the
guidance provided in this Policy Announcement.

BACKGROUND

   The recently funded LUST Trust Fund program was authorized by the
Superfund Amendments and Reauthorization Act of 1986. Its purpose is
the cleanup of petroleum (gasoline, diesel and aviation fuels)
releases from underground storage tanks. The program is funded by an
excise tax of 1/10 of one cent per gallon on motor fuels. The taxing
authority was effective on January 1, 1987 and is expected to
generate $500 million over five years. The new LUST Trust Fund, which
is a cleanup program, is distinctly different from the existing UST
regulatory and grant program, which is a "prevention" effort. UST
activity is funded under the S&E and AC&C appropriations.

   The Agency's intent is that States play the primary role in
implementing this new legislation. Cooperative Agreements between
individual States and EPA will enable States to draw on Trust Fund
resources for cleanups and certain associated program and
directly-related administrative expenses. Consolidated Letter of
Credit procedures will be utilized with each State, allowing the
drawdown of monies as costs are incurred.

    States are expected to make a reasonable effort to pursue cost
recovery from responsible owners/operators for sites that are
State-lead cleanup. EPA will conduct cost recovery efforts, where
reasonable, in those instances of direct Federal response actions.
Although expected to be rare, EPA's direct Federal response would be
called for in situations which pose an imminent threat to human
health and the environment. EPA would be required to act in those
life-threatening instances where; 1) there is no State Cooperative
Agreement in place; 2) the State is unable to respond; 3) there is no
identifiable owner/operator; or 4) the owner/operator refuses to act.
Since cost recovery provisions are inherent in the legislation, both
EPA and the States must have an accounting structure and system that
is capable of tracking site-specific costs. This policy Announcement
establishes the system structure and documentation requirements to
support the cost recovery process.

   In addition to funding the State/EPA Cooperative Agreements, the
Trust Fund also provides resources for administration of the Fund,
including the cost of work years, enforcement actions, Federal
response to emergencies, and cost recovery in connection with
enforcement actions and cleanups.

POLICIES AND PROCEDURES

   To ensure that all charges applicable to the new appropriation are
recorded against the proper account number, and that the necessary
documentation will be available in the event of subsequent cost
recovery cases, we are establishing the following account structures
and interim policies and procedures relative to the LUST Trust Fund.

Appropriation, Account Structure and Activity Codes

   All offices that receive Advices of Allowance funded by
the LUST Trust Fund, appropriation 68-20X8153, should charge
their applicable personnel compensation and benefits (PC&B)
and other operating expenses to the appropriate program element
and attendant account number.

   The Financial Management System (FMS) 10-digit account
number structure for LUST will allow tracking of costs by
major activity type and on a site-specific basis in those 
rare instances where a direct Federal response is initiated.
The account structure identifies Cooperative Agreements by
State and major activity within State. There will be no 
site-specific tracking of State-lead cleanups in the FMS
since States are responsible for pursuing cost recovery on
their responses. Attachment I contains the LUST Trust Fund
account number structure and should be followed closely when
establishing account numbers.

   LUST activity codes and definitions are provided in
attachment II. All State Cooperative Agreements will 
initially be obligated under activity code "G". Each time
a State requests funds on a Letter of Credit drawdown, they
must provide an activity code breakout based on the three
major activity codes identified in Attachment II. The
Regional Financial Management Office will make appropriate
adjustments to distribute the Cooperative Agreement payments,
from activity code "G:, to the various activity codes as 
each funding request is recorded in the FMS.

Establishing Account Numbers

   Each allowance holder is responsible for establishing the
appropriate account number(s) in the FMS for LUST Trust Fund
activity within their program area. Regional Financial Management
Offices will use the Collection of Account Number (CAN) process for
entering their account numbers. Headquarters allowance holders should
contact Scott Culver in the Financial Reports and Analysis Branch
(FRAB) on 475-8725 to establish LUST Trust Fund account numbers. FRAB
is responsible for verifying the accuracy and authorized use of the
various account numbers. To ensure proper accountability, allowance
holders should establish a central point of contact with their
offices for controlling issuance and use of the Trust Fund account
numbers.

   Site-specific identifiers for LUST Federal responses will be
assigned in the Regions based on the procedures currently used to
assign Superfund site numbers. There is no restriction on using site
identifiers for LUST that have been previously assigned to a
Superfund site, since they are distinguished by different
appropriations and program element symbols.

Charging Methods

   The following methods must be used when charging costs to the LUST
Trust Fund Appropriation. The allowance holder must have adequate FTE
ceiling and dollars prior to charging any costs to a LUST Trust Fund
account number.

A. Timekeeping Procedure for Employees Performing LUST Trust
Fund Work.

     General. Allowance holders engaging in work activities to
carry out the provisions of the LUST program are provided LUST FTE
ceilings and dollar allowance. The allowance holder, or designee, is
responsible for the complete and accurate charging of personnel time
to LUST. In addition, specific documentation must be maintained to
support all charges to the Trust Fund. The standard Agency Payroll
Distribution Timesheet (EPA Form 2560-28) serves as 1) documentation
of payroll charges to a LUST Trust Fund account number, and 2) the
source documentation for entry of payroll labor distribution data
into the payroll system. Supervisors are responsible for assuring
that timesheets are properly prepared and submitted to their
employees' timekeeper for submission to the servicing Financial
Management Office to permit timely entry into the payroll labor cost
distribution system.

     Employee Account Number Identification.
Employees who are expected to work more than 50% of their time on
LUST will be assigned a LUST fixed account number. Employees expected
to work less than 50% of their time on LUST will be assigned a
regular, non-LUST, fixed account number. A fixed account number will
assigned to each employee by the allowance holder, or designee,
through the supervisor. Salaries and benefits for an employee will
charged to that employee's fixed account number unless the timesheet
indicates that another account number should be charged for all or
part of the employee's time for that pay period.

    Timesheet Requirements for LUST Trust Fund Work. 
Whenever an employee charges a LUST account number, a timesheet
must be maintained unless the employee has a LUST fixed account
number and all of the employee's work was related to that
fixed account number. Employees who do not have a LUST fixed account
number, and want to charge costs to LUST, must fill out daily
timesheets accounting for all hours in that pay period. Detailed
instructions for completing the timesheet can be found on the reverse
of the timesheet form. The special instructions on the timesheet for
Superfund site-specific charges apply to site-specific LUST Trust
Fund charges also. All employees who perform site-specific LUST Trust
Fund work must use a site-specific account number containing the
appropriate site and activity codes on their timesheet. These codes
are contained n the last three digits of the account number (four
digits for Headquarters staff) assigned to each site.

B. Other Costs Requirements for LUST Trust Fund Work.

   Other costs, such as travel, printing, supplies, equipment, and
contracts, should be charged, where applicable, to the appropriate
LUST Trust Fund account number. Particular attention should be paid
to any Federal-lead contractual effort to ensure that costs
applicable to the LUST Trust Fund are charged accordingly, including
identification to specific sites for direct Federal response actions.

C. Allocation of Costs for LUST Trust Fund Work.

   The previous two sections addressed "direct" charging of costs for
LUST Trust Fund work. However, in some instances, Agency costs cannot
be identified as benefiting solely one or another appropriation. For
example, a work assignment under an Agency contract may benefit both
the Superfund and LUST programs. As an alternative, these costs may
be "allocated" among the benefiting appropriations.

FTEs and PC&B Costs. An office that wants to allocate
their FTEs and PC&B costs to more than one appropriation must
receive Office of the Comptroller's approval of the method they wish
to use to allocate these costs. We will be issuing a Policy
Announcement shortly detailing procedures to follow. In the interim,
please contact the Fiscal Policies and Procedures Branch of
assistance.


Travel. If it is not practical to segment travel to
identify costs benefiting one or another appropriation, travel costs
should be charged to the program that benefits predominately from that
travel.

Equipment and Supplies. Purchase of equipment, supplies, or
equipment rentals should be allocated where necessary in accordance
with the criteria defined in the Financial Management Manual, Chapter
17, Section 6. Essentially, purchases less than $25,000 per item may
be charged to the program that predominately benefits. Purchases of
$25,000, or greater should be divided based on the estimated
proportion of use in support of each program.

Multiple Apportion Funded Contracts. If any task or
sub-task under a contract is funded from more than one appropriation,
and the costs of that activity cannot be directly charged, the
Project Officer must request the Director, Financial Management
Division's approval of the proposed method for allocating those costs.

                         Cost Recovery

   The Superfund Amendments and authorization Act of 1986 clearly
states that the owner of operator is liable for cost incurred by EPA
or a State with respect to the release of petroleum from an
underground storage tank. Therefore, EPA will pursue cost recovery on
Federal-lead cleanups and the States are expected to do so on
State-lead cleanups.

   Pending guidance on LUST fiscal systems and cost recoveries,
States must comply with the cost recovery requirements as specified
in the Cooperative Agreements. For Federal-lead actions, charging and
documentation requirements are the same as for Superfund. All costs
identifiable to a specific site should be charged to a site-specific
account number. Records for LUST cost recovery actions will be
maintained in a accordance with existing Superfund requirements.
Detailed guidance on the LUST cost recovery process is being
developed and will identify both State and Financial Management Office
requirements.

                 State Cooperative Agreements

   The major thrust of this new Trust Fund program will be through the
EPA/State Cooperative Agreements negotiated by the Regional UST
Coordinators. State officials are expected to be closer to the local
situation and generally know more than Federal officials about the
underground storage tanks and site conditions in their respective
jurisdictions.

   The agency's intent is that these initial Cooperative Agreements
be negotiated and proved quickly in order to facilitate early
distribution of Trust Fund resources. Such early action will ensure
rapid program development, initiation of cleanups or other corrective
action and enforcement activity.

Effective Date

   These interim policies and procedures are effective immediately.
They will remain in effect until more detailed guidance is developed.
At that time, you will notified that this Policy Announcement is
superseded.

Inquires

   If you have any questions regarding this Policy Announcement,
please contact Fiscal Policies and Procedures Branch staff, Doug
Barrett on 382-5658 or Liz Milstead on 382-4205.

Attachments

cc: Headquarters Allowances Holders
    Hazardous Waste Management Division Directors
    J. Richard Bashar
    Alvin Pesachowitz
    John J. Sandy
    Vincette L. Goerl
    Tony Musick
    John Elliott
    Carole Ansheles
    FMD Branch Chiefs

	

Attachment I

LUST Trust Fund Account Number Structure

The LUST Trust Fund 10-digit account number consists of the following :

  1. First Position - Source of funds Code.
    The first position of the account number is an alpha-numeric field representing the appropriate year. For 1987, the first position is "7".
  2. Second, Third and Fourth Positions - Program Element.
    The second, third and fourth positions of the account number consist of the first three characters of the six-digit program element number.
  3. Fifth and Sixth Positions - Allowance Holder.
    The fifth and sixth positions represent the allowance holder, i.e., "88" for the Office of Underground Storage Tanks; "01" for Region I.
  4. Seventh position - Regional Identifier/Responsibility Center and State Identifier.
    The seventh position of the account number is a multi-purpose field and its use depends on whether the account number is for a Regional allowance, (i.e., allowance Holders 01 through 10) or a Headquarters allowance, (i.e., Allowance Holders 11 - 88).
    • Headquarters Allowance Holders - The use of the seventh position by Headquarters allowance holders depends on whether the account number is site-specific or nonsite-specific. For site-specific numbers this field is used to identify the Region where the site is located and therefore must have a numeric character 0-9 (0 for Region 10). For nonsite-specific account numbers the seventh position represents the Responsibility Center (i.e., Division, Branch, Project, etc).
    • Regional Allowance Holders - The use of the seventh position by Regional Allowance Holders depends on whether the account number is for funding an EPA.State Cooperative Agreement or some other type of charge. For cooperative Agreements this position is used to identify the State that the agreement is with. Page 3 of this attachment provides the codes used to identify the States. For all charges other than Cooperative Agreements, this field represents the Responsibility Center.

  5. Eight Position - Activity Code.
    The eighth position of the account number consists of an alpha-numeric character which represents the major activities under the LUST Trust Fund. See Attachment II for a listing of the LUST activity codes and their definitions.
  6. Ninth and Tenth Positions - Non-Site/Site Identifier.
    The ninth and tenth positions are reserved for site identification. The site identifier is an alpha-numeric code. The codes to be assigned follow a set pattern: Series one consists of 01 - 99; Series two is A1 - A9, B1- B9, etc.; Series three is 1A - aZ, 2A - 2Z, etc.; series four is AA - Az, BA - BZ, etc. Exceptions: Do not use the letters "I" or "O" in any series, since they are easily confused with "ones" and "zeros." The identifier "00" indicates non-site specific costs and is also used when obligating State Cooperative Agreements. Site-specific numbers will established only for direct Federal response.

EXAMPLE


LUST TRUST FUND ACCOUNT NUMBER

TEN-DIGIT ACCOUNT NUMBER
7 FPY 01 1 G 00

FISCAL YEAR

7

LUST PROGRAM ELEMENT

FPY

ALLOWANCE HOLDER

01

REGIONAL/RESPONSIBILITY CTR/STATE IDENTIFIER

1

ACTIVITY CODE

G

NON-SITE/SITE IDENTIFIER

00

NOTE: this is an example of a Region I account number for a State Cooperative Agreement with Connecticut.

OTHER EXAMPLES:

  1. 7FPY011700 State LOC Drawdown for Activity Code 7
  2. 7FPY01C700 Regional Charge Non-site specific
  3. 7FPY88B700 Headquarters Charge Non-site specific
  4. 7FPY881E01 Headquarters Site-specific charge for a Region I site
  5. 7FPY01CE01 Regional Site-specific Charge

State Codes for Use in 7th Position
of Account Number on LUST
State Cooperative Agreements
Region I Region II Region III Region IV Region V
CT . . . 1
ME. . . 2
MA. . . 3
NH. . . 4
RI. . . . 5
VT . . . 6
NJ . . . 1
NY. . . 2
PR. . . 3
VI . . . 4
DE . . . 1
DC. . . 2
MD. . . 3
PA . . . 4
VA . . . 5
WV. . . 6
AL. . . 1
FL. . . 2
GA. . . 3
KY. . . 4
MS. . . 5
NC. . . 6
SC. . . 7
TN. . . 8
IL . . . 1
IN. . . 2
MI. . . 3
MN . . 4
OH. . . 5
WI . . . 6
Region VI Region VII Region VIII Region IX Region X
AR . . . 1
LA . . . 2
NM. . . 3
OK. . . 4
TX . . . 5
IA. . . . 1
KS . . . 2
MO. . . 3
NB . . . 4
CO. . . 1
MT. . . 2
ND. . . 3
SD . . . 4
UT . . . 5
WY. . . 6
AZ. . . 1
CA. . . 2
HI . . . 3
NV. . . 4
SA. . . 5
GU. . . 6
PI. . . . 7
CQ. . . 8
AK. . . 1
ID . . . 2
OR. . . 3
WA . . 4


Attachment II

LEAKING UNDERGROUND STORAGE TANK TRUST FUND ACTIVITY CODES

"7" - General Support and Management (Extramural and Intramural)

Includes all intramural support and management costs which benefit the overall LUST Trust Fund program's management. Also includes extramural costs associated with general management, administrative support, program guidance and implementation, training, general community relations support, report and proposal writing, contingency planning, and contractor support.

"E" - Site Cleanup Actions (Extramural and Intramural)

Includes all costs associated with site responses taken to prevent or mitigate threats to public health, welfare, or the environment posed by a release (or suspected release) or petroleum from an underground storage tank, including emergency responses, site investigations, exposure assessments, the planning and design or corrective actions, and the conduct, management and oversight of long-term remedial corrective actions.

For site-specific Federal lead actions and technical assistance, includes all costs (extramural and intramural) associated with the Environmental Response Team (ERT), the Technical Assistance Team (TAT), ERCS,EERU, laboratory analysis costs, and ESD laboratory quality assurance.

"4" - Enforcement (Extramural and Intramural)

Includes all activities necessary to identify a potentially responsible party (PRP), such as PRP searches, title searches, and financial assessments. Also includes activities involved in issuance of letters, notices and orders to PRP's to provide information, test tanks, correct leaks and conduct cleanups associated with petroleum releases from an underground storage tank. Includes oversight of responsible party cleanups, whether taken in response to an enforcement action (e.g., letters, notices,orders, orders on consent, consent decrees, judicial decrees, etc.) or not. Includes all activities associated with the development and support of cost recovery cases.

"G" - State Cooperative Agreements (Extramural)

Used solely for recording initial obligation of LUST Trust Fund State Cooperative Agreements in the financial Management System. Each time the individual States request funds on a Letter of Credit drawdown, they will provide an activity code breakout based on the three codes defined above. The respective Regional Financial Management Office will process appropriate adjustments to distribute the costs to the correct activity code.

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