Probe Targets Employees at Water Board

State and federal officials have launched an investigation into allegations of fraud and conflict of interest by some employees of the Los Angeles Regional Water Quality Control Board, the agency responsible for cleaning up chemical pollution that threatens sources of local drinking water.

The most serious allegations, according to officials, involve inflation of cleanup costs, collusion with private consultants and secret investments by water board personnel in property that increased in value as the result of cleanups.

“The allegations at this point cover several people,” said Gary Pena, audit manager of the U.S. Environmental Protection Agency’s Office of Inspector General in Sacramento.

Pena said the federal investigation, headed by the U.S. attorney’s office in Los Angeles, is focusing on the water board’s underground tank program that supervises the containment of leaks and spills from gas stations and other petroleum storage facilities.

With a budget of nearly $11 million and a staff of 125, the agency’s broad jurisdiction includes oversight of landfills and sewage treatment plants as well as supervision of the decontamination of federal Superfund sites. About 40% of the board’s budget comes from the federal government.

State officials who asked not to be named confirmed that the investigation is underway and said that some employees have been reassigned pending the outcome.

Robert Ghirelli, executive officer of the regional water quality control board, is not a target of the probe, sources said.

Ghirelli acknowledged recently that an investigation is taking place but refused further comment.

Pena and sources said the investigation is focusing on allegations that certain employees of the underground tank operation secretly invested in polluted property that stood to gain in value after it was cleaned up.

In addition, Pena said, investigators are looking into charges that some sites were kept on the agency’s contaminated property list longer than necessary. Such a practice could ensure the continued flow of cleanup funds to the agency and to favored consultants who worked for the owners of the contaminated property, officials said.

Pena and other officials said investigators also are looking into the possible mismanagement of government funds in connection with the federal Superfund program and with the regulation of businesses that discharge chemical waste into the sewer system.

Although Superfund is a federal program, the EPA delegates responsibility for Superfund sites in California to the state and its regional water boards. Superfund is the federal cleanup program that addresses the nation’s most hazardous accumulations of toxic waste.

The EPA first became suspicious that something was wrong at the regional board after conducting an audit several years ago, Pena said.

“We began to see a problem in the early ‘90s with cases being kept open, some for several years,” he said.

State officials said the investigation began a year ago when state water board officials tried to find out why so little money was being sent to Los Angeles to close underground tank cases, considering the size of the caseload.

Through a state tax on fuel tanks that is passed on to consumers, California drivers pay about $140 million annually to finance the cleanups statewide.

The concern about case closures, sources said, along with internal allegations of inefficiency and misconduct, led to an audit and the discovery that there was no desire to move sites off the leaking-tanks list.

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State investigators eventually encountered allegations of conflicts of interests--of staff allegedly buying, for personal gain, property that was subject to cleanup, state officials said. At that point, officials said, the state board turned over its findings to federal authorities for possible criminal prosecution.

In addition, state officials temporarily took charge of the regional water board’s underground tank caseload and, between July and October, closed 827 cases--or about one-third of outstanding cases. These cases involved sites no longer considered to pose threats of serious contamination.

“We are pleased to note we’ve been getting good feedback from the regulated community--the consultants, the tank owners and people who have been noticed for deficiencies in the past, those who are now doing business with the board. They are saying things are now going great,” said Daniel Pellisier, Cal-EPA communications director.

But closing so many cases proved to be controversial in some quarters when critics, including Santa Monica city officials, protested that some of the sites were sufficiently contaminated to endanger the water table.

“We are very concerned that at least some of the closures represent an unscientific selection and not good policy,” said Craig Perkins, Santa Monica’s director of public works.

“We’re concerned about premature closures of sites within Santa Monica. We do not think in those instances the board is meeting its responsibilities to protect the beneficial use of ground water.”