State May Lose $1.8 Million in U.S. Toxic Funds

Responding to a blistering federal audit of Deukmejian Administration contracts for cleaning up three major hazardous waste dumps, the U.S. Environmental Protection Agency has proposed holding up payments to the state totaling $1.8 million, according to documents released Thursday by the federal agency.

In addition, the EPA added six months to an earlier-imposed probationary period during which the state Health Services Department is prohibited from writing cleanup contracts for more than $10,000 without first obtaining federal approval. As a result of its auditors’ findings, the agency in April suspended the state’s authority to spend federal cleanup grants.

Harry Seraydarian, the agency’s San Francisco-based regional toxics chief, made it clear that the EPA is not satisfied that nearly $2 million questioned by the auditors was appropriately spent.

Pay Only $94,908

Seraydarian proposed denying payments to the state of $152,000. Another $1,711,551 would be held up until the state toxics unit justifies the spending. Of the total $1,959,005 called into question by the auditors, the agency officials are prepared to pay only $94,908 to the state.

The EPA’s proposed actions, outlined in a document dated Wednesday, were sent to the auditors, who in an August report raised questions about “the reasonableness” of state contracts for more than $28 million in cleanup projects under the federal superfund program.

Failed to Follow Rules

The auditors charged that the state had failed to follow both federal and state contracting rules by ignoring competitive bidding requirements or by failing to negotiate for the lowest possible price when competitive bidding was not possible.

State officials have countered by saying the EPA’s regional office in San Francisco was always informed of the state’s contracting decisions, and in many cases approved of the disputed actions in advance.

Last month, Gov. George Deukmejian admitted that the state may have bent some rules in its cleanup efforts. But he accused the auditors of “nit-picking.” Deukmejian insisted that his toxics unit always acted in the best interest of the public health, and he said he was “not troubled by the (audit) report at all.”

Will Be Given 90 Days

The auditors, who work for the EPA’s inspector general, will be given 90 days to comment on the proposed sanctions before the recommendations are modified or put into effect.

The agency’s official response to the auditors’ recommendations, prepared by Seraydarian, noted that the state department’s toxics unit has begun taking steps to improve its contracting procedures.

In particular, state toxics officials have begun reorganizing their cleanup contract files, which the auditors found in disarray. In addition, the state has agreed to change its contracting procedures to ensure that they meet federal requirements.

If the EPA denies the $1.8 million in payments, California’s taxpayers will have to pick up the costs to reimburse the state.

All the funds in question were spent by the state under its agreement with the agency to clean up three sites on the federal superfund list--the Stringfellow Acid Pits near Riverside, the McColl refinery dump in Fullerton and the Purity Oil site near Fresno.

The three are all deemed major public health risks because of heavy contamination that threatens to seep into surrounding neighborhoods or water supplies.