Funds Control Manual

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U. S. Environmental Protection

Agency

Office of the Chief Financial Officer Policy

Manual

Funds Control Manual

Administrative Control of Funds

Effective Date: Upon issuance

Supersedes February 2008

Resource Management Directives System 2520

Contents

Introduction.................................................................................................................................. vi

How Organized ......................................................................................................................... vii

Mandatory Review .................................................................................................................... vii

Chapter 1: Federal Entities Influencing the EPA’s Financial Management........................ 1-1

Summary .................................................................................................................................. 1-1

A. Congress ............................................................................................................................ 1-1

B. Department of Commerce, National Institute of Standards and Technology (NIST)....... 1-2

C. General Services Administration (GSA)........................................................................... 1-2

D. Government Accountability Office (GAO) ...................................................................... 1-2

E. Office of Inspector General (OIG) .................................................................................... 1-3

F. Department of Justice (DOJ)............................................................................................. 1-3

G. Office of Management and Budget (OMB) ...................................................................... 1-3

H. Office of Personnel Management (OPM) ......................................................................... 1-4

I. Department of the Treasury .............................................................................................. 1-4

J. Cross-Government Task Forces and Coordinating Groups .............................................. 1-4

K. States, Tribes and Territories ............................................................................................ 1-5

Chapter 2: Federal Laws, Regulations and Guidance............................................................ 2-1

Summary .................................................................................................................................. 2-1

A. Environmental Authorizing Statutes ................................................................................. 2-1

B. Appropriation Statutes ...................................................................................................... 2-9

C. Government-Wide Management and Administrative Statutes ......................................... 2-9

D. Government-Wide Guidance and Regulations................................................................ 2-15

Chapter 3: Federal and EPA Budget and Financial Terms................................................... 3-1

Summary .................................................................................................................................. 3-1

A. Federal Spending Terms ................................................................................................... 3-1

B. EPA Budget Management Terms...................................................................................... 3-2

Additional Information and Training ....................................................................................... 3-4

Chapter 4: The EPA’s Financial and Associated Systems ..................................................... 4-1

Summary .................................................................................................................................. 4-1

A. Automated Standard Application for Payments (ASAP) .................................................. 4-1

B. Budget Automation System (BAS) ................................................................................... 4-1

C. Compass ............................................................................................................................ 4-1

D. Concur ............................................................................................................................... 4-2

E. Contracts Payment System (CPS) ..................................................................................... 4-2

F. Department of Interior, Interior Business Center (IBC) ................................................... 4-2

G. EPA’s Acquisition System (EAS)..................................................................................... 4-2

H. Grant Payment Allocation System (GPAS) ...................................................................... 4-2

I. Integrated Grants Management System (IGMS)............................................................... 4-3

J. Intergovernmental Payment and Collections (IPAC) System........................................... 4-3

K. Office of Management and Budget (OMB) MAX ............................................................ 4-3

L. PeoplePlus ......................................................................................................................... 4-3

M. Superfund Enterprise Management System (SEMS) ........................................................ 4-3

Chapter 5: Sources of Funding for the EPA and Associated Processes................................ 5-1

Summary .................................................................................................................................. 5-1

A. Annual Federal Budget Process ........................................................................................ 5-2

B. Budget Execution Process — Operating Plan Guidance and Allowance Management . 5-11

C. Supplemental Appropriations/Natural Disasters............................................................. 5-21

D. Reimbursable Allowances and Interagency Agreements................................................ 5-24

E. Intergovernmental Agreements (Agreements with Other Government Entities) ........... 5-27

F. Fees and Fee Programs.................................................................................................... 5-29

G. Special Accounts ............................................................................................................. 5-30

Additional Information........................................................................................................... 5-32

Chapter 6: EPA’s Budget and Financial Organization and Structure ................................. 6-1

Summary .................................................................................................................................. 6-1

A. Account Code Structure .................................................................................................... 6-2

B. Appropriation Number (Treasury Account Symbol) ...................................................... 6-13

C. Object Classes ................................................................................................................. 6-13

D. EPA Appropriations ........................................................................................................ 6-14

E. EPA Appropriation Accounts ......................................................................................... 6-14

F. Accounting ...................................................................................................................... 6-19

G. Payroll Management and Tracking/PeoplePlus .............................................................. 6-20

Chapter 7: Budget Execution Rules and Guidance ................................................................ 7-1

Summary .................................................................................................................................. 7-1

Overview of Major Spending and Charging Guidelines and Rules ......................................... 7-1

A. Purpose, Time and Amount Explanations: Appropriation Law Concepts ........................ 7-2

B. Tracking and Managing Funds ....................................................................................... 7-13

Chapter 8: Roles and Responsibilities...................................................................................... 8-1

Summary ................................................................................................................................. 8-1

More Detailed Discussion of EPA Responsible Officials Roles and Responsibilities ............ 8-2

A. SROs ................................................................................................................................. 8-2

B. AAs, National Program Managers (NPMs), and Responsible Planning and Implementation

Offices (RPIOs)................................................................................................................. 8-3

C. RAs.................................................................................................................................... 8-4

D. SBOs ................................................................................................................................. 8-4

E. Regional Comptrollers ...................................................................................................... 8-5

F. Regional Budget Officers (RBOs) .................................................................................... 8-6

G. Allowance Holders............................................................................................................ 8-7

H. FCOs ................................................................................................................................. 8-7

I. Originators ........................................................................................................................ 8-8

J. Approving Officials .......................................................................................................... 8-8

K. Obligating Officials........................................................................................................... 8-9

L. Finance Center Directors................................................................................................. 8-10

M. EPA Acquisitions (Contracts) Management ................................................................... 8-11

N. Grants Management: Roles and Responsibilities of EPA Officials................................ 8-13

O. Interagency Agreements: Roles and Responsibilities ..................................................... 8-14

P. Accounts Payable Certifying Officers and Disbursing Officers ..................................... 8-14

Q. OCFO .............................................................................................................................. 8-15

R. Office of General Counsel .............................................................................................. 8-19

Chapter 9: Analysis and Controls ............................................................................................ 9-1

Summary .................................................................................................................................. 9-1

A. Risk Management and Internal and Management Controls/A-123 Reviews .................... 9-1

B. Workload Analysis............................................................................................................ 9-1

Appendix A: Fund Control Relationships at the EPA .......................................................... A-1

Appendix B: Designation of Funds Control Officer Letter .................................................. B-1

Appendix C: A-123 Process Flow ............................................................................................ C-1

Appendix D: List of Key Internal Controls ............................................................................ D-1

Appendix E: Management Integrity Milestones .................................................................... E-1

Appendix F: Acquisitions (Procurement) Process ..................................................................F-1

Appendix G: Finance Center Listing ...................................................................................... G-1

Appendix H: Abbreviations and Terms and Definitions ...................................................... H-1

Appendix I: Index of Major Revisions/New Material ............................................................ I-1

Introduction

The U.S. Environmental Protection Agency’s (EPA’s) Funds Control Manual is intended as a

guide on how EPA employees can effectively and efficiently manage funds while following

applicable rules, statutes and regulations. The manual summarizes the EPA’s fund control

principles, policies and procedures and describes their legal basis. These provisions apply to all

of the EPA’s organizations, appropriations and funds.

The control of funds in the federal government is governed by statutes and implemented by

directives from the Office of Management and Budget (OMB), the U.S. Department of Treasury,

and Congress and informed by opinions and accounting standards issued by the Government

Accountability Office (GAO). Although this document is primarily targeted toward the EPA’s

allowance holders and Funds Control Officers, it is a useful reference for all members of the

resource management community. Effective and efficient resource management is everyone's

responsibility.

Per 31 U.S.C. 1514, the head of each agency must prescribe a system for administrative control

of funds. OMB Circular A-11, Part 4, “Instructions on Budget Execution,” provides government-

wide guidance on how to execute the budget and a checklist to use in preparing funds control

regulation for approval by the OMB. This Funds Control Manual explains the policies and

procedures the EPA has in place to ensure that it does not violate legal requirements or OMB

directives. The complexity of the EPA’s mission, the differences between some of its authorizing

statutes and the diversity of its programs means the agency had to carefully design policies and

procedures to track, report on and properly ensure control of the agency’s funds throughout

headquarters offices, regional offices, and laboratories and other offices.

This manual also implements OMB Circular A-123, “Management’s Responsibilities for Internal

Controls,” which provides guidance on using the range of tools at the disposal of agency

managers to achieve desired program results and meet the requirements of the Federal Managers’

Financial Integrity Act of 1982 (FMFIA) which encompasses accounting and administrative

controls; including program, operational, and administrative areas as well as accounting and

financial management.

Management has a fundamental responsibility to develop and maintain effective internal

controls. The proper stewardship of federal resources is an essential responsibility of agency

managers and staff. Federal employees must ensure that federal resources are used efficiently

and effectively to achieve authorized objectives. Programs must operate and resources must be

used consistent with the agency mission; in compliance with laws and regulations; and with

minimal potential for waste, fraud, and mismanagement.

An overview of the FMFIA and OMB Circular A-123, as well as key Office of the Chief

Financial Officer (OCFO) annual guidance memorandums can be found at

http://intranet.epa.gov/ocfo/management_integrity/index.htm.

Congress provides funds for the agency to carry out its mission through specific appropriations,

each one of which is provided for a particular purpose, time and amount. These three

characteristics are regulated through guidelines and restrictions such as the Necessary Expense

Rule (purpose), the Bona Fide Needs Statute (time), and the prohibition on augmentation of

appropriations (amount). The Anti-Deficiency Act (ADA) prohibits (1) spending in excess of an

amount available in an appropriation, (2) authorizing expenditures in advance of an

appropriation, (3) accepting voluntary services without authority, and (4) spending in excess or

in advance of an apportionment. In addition, the EPA also receives funds through other sources

such as Interagency Agreements, fees and special accounts that it also must manage under

similar rules.

This Funds Control Manual:

• Prescribes a system for positive administrative control of funds designed to restrict

obligations and expenditures against each appropriation or fund account to the amount

available therein. Obligations and expenditures from each appropriation or fund account are

limited to the lesser of the amount of apportionments made by OMB or the amount available

for obligation and/or expenditure in the appropriation or fund account.

• Describes procedures to follow in budget execution and specifies basic fund control

principles and concepts. Establishes policy regarding the administrative control of funds.

• Enables the Administrator to determine responsibility for over-obligation and over-

disbursement of appropriations, apportionments, statutory limitations, allotments and other

administrative subdivisions, as well as violations of limitations imposed by agency policy.

• Provides procedures for addressing violations of the ADA as well as violations of limitations

imposed by agency policy.

• Discusses agency administrative control of funds policies that apply to revolving funds,

management funds and trust funds, including those that are not apportioned.

Supplemental guidance regarding the financial management of selected areas, such as travel, and

unique appropriations, such as those derived from the Superfund and Leaking Underground

Storage Tank Trust Funds, can be found in other sections of the RMDS 2500 series. The entire

series, as well as all other OCFO policy documentation, can be accessed online at

http://intranet.epa.gov/ocfo/policies/policies.htm.

How Organized

The Funds Control Manual is divided into chapters, each one of which includes basic information

about a topic area. Each chapter begins with a summary of overall principles in that area,

followed by more detailed explanations on particular topics that include links to additional

information. There is one partial exception: detailed instructions on managing funds at each stage

of the federal funding process are contained in the section on annual appropriations in chapter 5,

since annual appropriations are EPA’s largest source of funds. Please refer to this section for

requirements and processes at each funding stage (such as apportionments).

Mandatory Review

This 2015 version has been updated to reflect the EPA’s Compass financial system

implementation; OMB’s A-11 and A-123; workload review; new conference management

requirements; GAO and Inspector General recommendations; audit findings; and statutory,

process, procedural, and policy changes. This policy will be reviewed and revised as warranted

by new federal laws, regulations, applicable Federal Accounting Standards Advisory Board

requirements or agency policy, with a complete review planned within three years from its date

of issuance.

This document, the EPA’s Funds Control Manual (Resources Management Directives System,

Chapter 2520), is issued as interim guidance until the EPA receives final OMB approval.

Chapter 1: Federal Entities Influencing the EPA’s Financial Management

Summary

Several outside entities play a crucial role in the EPA’s management of funds and in reviewing

the EPA’s requests for funding. Major EPA stakeholders include:

• Congress

• Office of Management and Budget

• Government Accountability Office

• Inspector General

• Department of Justice

• Department of the Treasury

• States and tribes

Provided below are detailed descriptions of these entities and the roles they play.

A. Congress

The EPA may only obligate and spend funds that have been appropriated by Congress. Both the

House and Senate have two major sets of committees and subcommittees that direct the EPA:

1. Congressional Committees

Congress manages its decision-making through many committees and subcommittees.

Congress generally has three types of committees: oversight, authorizing and

appropriating committees. Each fiscal year’s annual budget normally contains specific

direction and requirements from these subcommittees, as do supplemental budgets.

a. Authorizing Committees write the principal statutes or laws that direct government

agencies. Authorizing committees review and propose statutory language.

• Authorizers write the authorizing language for the EPA’s environmental

activities.

b. Appropriating Committees review annual and supplemental budget proposals. Three

main appropriating subcommittees oversee EPA programs: Environment and Public

Works (in the Senate); Energy and Commerce (in the House); and Interior,

Environment, and Related Agencies (in the House).

• Appropriators write specific appropriation bills. The EPA’s budgets are developed

in the Department of Interior (DOI) subcommittee.

http://appropriations.house.gov/ http://www.appropriations.senate.gov/

• Each fiscal year, the EPA generally has hearings with each appropriating

committee and must respond to detailed questions from each committee (called

Questions for the Record).

c. Oversight Committees can be permanent or special temporary committees. They

oversee certain, delineated topic areas, such as government operations. EPA officials

are occasionally required to testify about agency programs.

2. Congressional Budget Office (CBO)

The CBO produces independent analyses of budgetary and economic issues to support

the Congressional budget process. CBO economists and policy analysts conduct analyses

supporting dozens of reports and hundreds of cost estimates each year. The CBO does not

make policy recommendations, and each report and cost estimate discloses an agency’s

assumptions and methodologies. All of the CBO’s products, apart from informal cost

estimates for legislation being developed privately by members of Congress or their

staffs, are available to the Congress and the public on the CBO’s website.

The EPA’s annual budgets are submitted directly to Congressional appropriators as part

of the President’s budget and are not subject to review by the CBO. However, the EPA

policy and budget proposals may be analyzed and scored (through a CBO estimate of

budget implications). Further information can be found at http://www.CBO.gov.

B. Department of Commerce, National Institute of Standards and Technology (NIST)

NIST is one of the nation’s oldest physical science laboratories, where science connects to

real-world applications. With a varied research portfolio, unique facilities, national networks

and international partnerships on standards and technology, NIST works to support U.S.

industry and innovation. From cybersecurity to mammograms and advanced manufacturing,

innumerable technologies, services and products rely upon NIST expertise, measurement and

standards. The EPA must follow NIST direction in cyber-security. NIST has a century-long

tradition of partnering with business, universities, and other government agencies to support

the nation’s vast innovation ecosystem. http://www.commerce.gov/national-institute-

standards-and-technology

C. General Services Administration (GSA)

The GSA oversees the business of the U.S. federal government, travel, buildings and

facilities, procurement, etc. Its acquisition solutions supply federal purchasers with cost-

effective high-quality products and services from commercial vendors. The GSA provides

workplaces for federal employees, and oversees the preservation of historic federal

properties. Its policies covering travel, property and management practices promote efficient

government and consistent operations. http://www.gsa.gov. These policies include the

Federal Acquisitions Regulation, the Federal Management Regulation (successor to the

Federal Property Management Regulation) and the Federal Travel Regulation.

D. Government Accountability Office (GAO)

The GAO audits EPA activities and writes guides for federal agencies on the appropriate use

of funds. The GAO is a congressional agency that investigates how the federal government

spends taxpayer dollars, as well as making recommendations to improve performance and

ensure the accountability of the federal government. The GAO conducts reviews at the

request of congressional committees or subcommittees. Its reviews include:

• Auditing agency operations to determine whether federal funds are being spent efficiently

and effectively.

• Investigating allegations of illegal and improper activities.

• Reporting on how well government programs and policies are meeting their objectives.

• Performing policy analyses and outlining options for Congressional consideration.

• Issuing legal decisions and opinions, such as bid protest rulings and reports on agency

rules.

• Advising Congress and the heads of executive agencies about ways to make government

more efficient, effective, ethical, equitable and responsive.

The GAO issues reports for which the EPA must provide information and responses. The

OCFO’s Office of Budget includes a GAO coordination team that helps the GAO set up its

investigation and find the information it seeks; the team also coordinates the official EPA

responses to GAO recommendations. In addition, each Region and Program Office has a

GAO liaison to coordinate GAO work within it. More information can be found at

http://www.gao.gov/.

E. Office of Inspector General (OIG)

The OIG is an independent office within the EPA that helps the agency protect the

environment more efficiently and cost-effectively. It was created and governed by the

Inspector General Act of 1978, as amended (5 U.S.C. App. 3). The OIG seeks to influence

resolution of the agency’s major management challenges, reduce risk, improve practices and

program operations, and save taxpayer dollars, leading to positive human health and

environmental impacts and attainment of the EPA’s strategic goals. The OIG performs

audits, evaluations and investigations of the EPA, as well as its grantees and contractors, to

promote economy and efficiency, and to prevent and detect fraud, waste and abuse.

http://intranet.epa.gov/oig/

F. Department of Justice (DOJ)

The EPA will occasionally seek advice related to fiscal law from the DOJ’s Office of Legal

Counsel. Where the GAO’s advice differs from the DOJ’s, as an Executive Branch agency,

the EPA follows DOJ’s counsel. More information is at http://www.justice.gov/olc.

• Another part of the DOJ also prosecutes many civil and criminal environmental cases for

the EPA, primarily the Environment and Natural Resources Division.

http://www.justice.gov/enrd/

G. Office of Management and Budget (OMB)

Manages the U.S. federal budget, including budget planning, developing regulations,

management and IT guidance. The OMB implements policies across the Executive Branch. It

carries out its mission through five critical processes that help the President’s planning for

and implementation of priorities across the Executive Branch:

• Budget Development and Execution — the mechanism by which a President implements

decisions, policies, priorities and actions.

• Management — oversight of agency performance, federal procurement, financial

management and information/IT (including paperwork reduction, privacy, and security).

• Coordination and Review of All Significant Federal Regulations by executive agencies,

to reflect Presidential priorities and to ensure that economic and other impacts are

assessed as part of regulatory decision-making, along with review and assessment of

information collection requests.

• Legislative Clearance and Coordination — review and clearance of all agency

communications with Congress, including testimony and draft bills to ensure consistency

of agency legislative views and proposals with Presidential policy.

• Executive Orders and Presidential Memoranda to agency heads and officials, the

mechanisms by which the President directs specific government-wide actions by

Executive Branch officials.

The EPA works extensively with the OMB in all of these areas. The OMB’s website

(http://www.whitehouse.gov/omb) provides further information as well as links to extensive

U.S. government, economic, demographic and other historical data.

H. Office of Personnel Management (OPM)

The OPM works in several broad categories to recruit, retain and honor a world-class

workforce for the American people. It manages federal job announcement postings at

USAJOBS.gov and sets policy on government-wide hiring procedures. The OPM conducts

background investigations for prospective employees and security clearances across

government. It upholds and defends the merit systems in federal civil service, making sure

that the federal workforce uses fair practices in all aspects of personnel management. It

manages pension benefits for retired federal employees and their families while also

administering health and other insurance programs for federal employees and retirees. The

OPM provides training and development programs and other management tools for federal

employees and agencies. It also assumes the lead in developing, testing and implementing

new government-wide policies that relate to personnel issues. http://www.opm.gov

I. Department of the Treasury

Treasury manages government payments systems and sets many government accounting

standards. (Note that “DoT” is normally used for the U.S. Department of Transportation,

“Treasury” for the Department of the Treasury.) http://www.treasury.gov

J. Cross-Government Task Forces and Coordinating Groups

In the last few years, the EPA has also been tasked to coordinate efforts through several

cross-agency Presidential Task Forces, including the Gulf Coast Task Force, the Hurricane

Sandy Task Force and the Recovery Act Transparency Board. These groups have been

established by Presidential Executive Order and require the EPA to work closely with other

government agencies to achieve the Administration’s goals. These groups have also required

the EPA to produce additional financial reports and work with other agencies in designing

and implementing management and control plans.

K. States, Tribes and Territories

Almost all of the EPA’s programs are implemented through or with state, tribal and local

partners. Much of the EPA’s funding also consists of grants to states and tribes. More

information is available on the EPA’s Office of International and Tribal Affairs website at

http://intranet.epa.gov/oiaintra/. The Environmental Council of the States (ECOS) is the

national nonprofit, nonpartisan association of state and territorial environmental agency

leaders. The purpose of ECOS is to improve the capability of state environmental agencies

and their leaders to protect and improve human health and the environment of the United

States of America. http://www.ecos.org/

Chapter 2: Federal Laws, Regulations and Guidance

Summary

The EPA’s fund control practices must comply with the EPA’s authorizing statutes,

appropriations laws, other general management statutes, and rules and regulations issued to all

federal agencies from overall federal government coordinating and oversight offices (such as the

Office of Management and Budget [OMB], Treasury and the General Services Administration

[GSA]). In summary, the EPA must follow the directives in:

• Environmental laws (statutes)

• Appropriations statutes

• Government-wide management laws (statutes)

• Government-wide guidance/regulations

Law Links (http://intranet.epa.gov/ogc/lawlinks.htm) can be used to find full texts of legislation.

Below are summaries of the EPA’s major authorizing legislation and directives, followed by

descriptions of some major statutes directing government-wide management, financial and

administrative requirements and practices.

A. Environmental Authorizing Statutes

Environmental programs are legislated by Acts of Congress in the form of authorizing or

program legislation. Authorizing legislation provides zero funding in itself; it is not an

appropriation of funds. For the EPA, authorizing legislation establishes the agency‘s

environmental mission, which may be undertaken with funds provided by subsequent

appropriations legislation.

Many EPA authorizing statutes — e.g., the CWA, the SWDA, CERCLA or FIFRA (see

Appendix H for a list of abbreviations) — have specific financial authorizations and

requirements.

1. Clean Air Act of 1970

The Clean Air Act (CAA), amended in 1977 and 1990, is intended to foster the protection

and enhancement of the nation’s air quality, and to safeguard public health and welfare

and the productive capacity of the population. The act is divided into six titles:

• Title I includes provisions for setting and achieving ambient air quality standards.

• Title II deals with control of pollution from mobile sources.

• Title III addresses general and administrative matters.

• Title IV deals with requirements to control pollution that leads to acid deposition.

• Title V includes requirements for the issuance of operating permits for certain

stationary sources.

• Title VI deals with pollution that contributes to depletion of the stratospheric ozone.

Motor Vehicle and Engine Compliance Program Fees were authorized by the 1990 CAA

and are administered by the Air and Radiation Program. The fees are set at a level to

cover the cost to the EPA of certifying new engines and vehicles and monitoring

compliance of new and in-use engines and vehicles and are deposited into a special fund

pursuant to section 217 of the CAA. The EPA does not have access to the fees unless

Congress makes appropriations from this special fund.

Fees apply to all manufacturers including makers of heavy-duty, in-use, and non-road

vehicles and engines; large diesel and gas equipment (earthmovers, tractors, forklifts,

compressors, etc.); handheld and non-handheld utility engines (chainsaws, weed-

whackers, leaf-blowers, lawnmowers, tillers, etc.); marine (boat motors, watercraft, jet-

skis); locomotives; aircraft; and recreational vehicles (off-road motorcycles, all-terrain

vehicles, snowmobiles) as well as evaporative requirements for non-road engines. The

EPA may apply new certification fees for additional industry sectors as new programs are

developed.

2. Comprehensive Environmental Response, Compensation and Liability Act of 1980

(CERCLA)

CERCLA, generally referred to as “Superfund” (42 U.S.C. 9601, et seq.), was enacted in

1980 and amended by:

• Superfund Amendments and Reauthorization Act of 1986 (SARA)

• Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA)

• Small Business Liability Relief and Brownfields Revitalization Act of 2002

The CERCLA, as amended by the SARA, makes the agency responsible for providing

emergency response for hazardous substances released into the environment and cleaning

up inactive or abandoned hazardous waste disposal sites. The agency is authorized under

the SARA to respond to releases of hazardous substances, pollutants and contaminants by

either a removal or remedial action or by compelling responsible parties to undertake the

response action. The reauthorized statute significantly broadened Superfund authorities in

key response, enforcement and research areas. The statute established cleanup standards

and mandatory schedules to ensure rapid and permanent solutions in cleaning up sites. It

contained new and stronger enforcement provisions to encourage expeditious settlements

with responsible parties, and to implement a more formal cleanup process for federal

facilities. The law significantly increased Superfund health-related and research and

development authorities, including provisions for an innovative and alternative treatment

demonstration program and health effects research. Overall, the statute expands state and

public participation at all stages of the cleanup process.

a. Emergency Planning and Community Right-to-Know Act (EPCRA) — A subpart of

SARA Title III, the national EPCRA was signed into law on October 17, 1986, as the

key legislation of community safety. Congress enacted this law to help local

communities protect public health, safety and the environment from chemical

hazards. Two of the main goals of EPCRA are to “provide a basis for each

community to develop a chemical emergency preparedness and planning program that

suits its individual needs,” and “provide the public with the identity, quantity,

location, and properties of hazardous substances in the community, as well as data on

annual release of certain chemicals into the environment.”

b. Special Accounts — Under CERCLA 122(b)(3), the EPA is authorized to “retain and

use” funds the agency receives from settlements with potentially responsible parties

and to set up “Special Accounts” to finance work at sites. Special Accounts may pay

for specified activities at particular site(s) and must be used according to the terms of

the individual settlement agreement with the responsible party (or parties).

c. The Small Business Liability Relief and Brownfields Revitalization Act was signed

into law on January 11, 2002. It amends CERCLA to encourage cleanup and reuse of

brownfields and other potentially contaminated or lightly contaminated properties.

The law establishes a statutory brownfields program and clarifies Superfund liability

for certain parties, as well as the state and federal roles in hazardous waste cleanup.

The brownfields program includes grants for assessment; cleanup; capitalizing

cleanup revolving loan funds; state and tribal response programs; and training,

research, and technical assistance.

3. Energy Policy Act of 2005 (EPAct)

The EPAct was signed into law on August 8, 2005, as part of the federal government’s

efforts to stimulate development and use of more efficient and environmentally friendly

domestic energy sources. It was authorized under Title VII (“the Diesel Emissions

Reduction Act”) to fund grants to reduce diesel emissions. The EPAct also required the

agency to develop fuel regulations, revise emission models, and undertake fuel-related

studies and analyses.

4. Federal Insecticide, Fungicide and Rodenticide Act of 1972 (FIFRA)

FIFRA requires that all pesticides, with minor exceptions, must be registered with the

EPA before they can be sold or distributed in the United States. Pesticide products must

be registered if the EPA determines they do not cause unreasonable adverse effects on

humans or the environment. As part of the registration process, scientific data and

proposed label instructions for use and cautionary statements are submitted by registrants

and reviewed by the EPA to ensure that when registered products are used in accordance

with label instructions they will not cause unreasonable adverse effects. FIFRA also

provides that the EPA can designate the more dangerous pesticide products for restricted

use by certified applicators only.

FIFRA fees are as follows:

• The Pesticide Registration Improvement Extension Act of 2012 (PRIA 3, expiring on

September 30, 2017) authorized two fees by amending the FIFRA of 1988.

• Pesticides maintenance fee — Section 4(i) of the FIFRA authorizes the EPA to

charge annual maintenance fees for pesticide registrations.

• Enhanced registration services fee — Section 33 of FIFRA authorizes fees for

services related to registration of pesticides in the United States. This fee-for-service

provision sets deadlines by which the EPA must make decisions on applications.

Congress must authorize the EPA to obligate the PRIA fees it collects in the EPA’s

annual appropriation act.

5. The Clean Water Act (CWA) of 1972

The CWA was based on the Federal Water Pollution Control Act of 1948 (amended 1956

and 1966). It was amended in 1977, reauthorized in 1981, and amended again several

times since. Two major related pieces of legislation are 1) the Water Quality Act of 1987

and 2) the Beaches Environmental Assessment and Coastal Health Act of 2000.

a. The Federal Water Pollution Control Act, 33 U.S.C.7251 et seq., of 1948, was

amended in 1956 and 1966 to authorize a program of grants to municipalities for

construction of sewage treatment plants and institute a program of mandatory water

quality standards for interstate waters, and was substantially revised in 1972 by

amendments referred to as the CWA. The stated objective of the CWA is to restore

and maintain the “chemical, physical, and biological integrity of the Nation’s waters,”

and the stated goals were to achieve “fishable and swimmable” waters by 1983 and

total elimination of pollutant discharges into navigable waters. The CWA spells out

requirements for water quality standards and an implementation system of permits for

technology-based effluent limitations that apply to industrial and municipal

discharges. Congress made certain fine-tuning amendments of the CWA in 1977 and

reauthorized and revised the construction grants program in 1981.

b. The WQA brought major revisions to the CWA. It authorized new water quality

programs; reauthorized existing programs; called for additional water-quality-based

pollution controls; increased requirements pertaining to toxics, sludge, and nonpoint

sources of pollution; and authorized funds for nonpoint source grants, the National

Estuary Program, and the Great Lakes and Chesapeake Bay programs. The WQA also

reauthorized the construction grants program through 1990 and provided for its

phase-out and replacement with a State Revolving Fund program, to be capitalized by

grants to the states.

c. The Beaches Environmental Assessment and Coastal Health Act of 2000 amended the

CWA to improve the quality of coastal recreation waters. This act authorizes a

national grant program to assist state, tribal, and local governments in developing and

implementing monitoring and public notification programs for their coastal recreation

waters. It also requires states to adopt improved water quality standards for pathogens

and pathogen indicators and requires the EPA to conduct studies and develop

improved microbiological water quality criteria guidance.

6. Food Quality Protection Act of 1996 (FQPA)

The EPA regulates the allowable levels of pesticide residues on food under section 408 of

the Federal Food, Drug, and Cosmetic Act (FFDCA). Section 408 was amended in 1996

as part of the FQPA. The FQPA amended the FFDCA by establishing a risk-only

standard for allowable pesticide residues (called tolerances) in raw and processed food.

Under the amended terms of the FFDCA, the EPA can approve a tolerance only if it is

considered safe, and the law defines “safe” as bearing “a reasonable certainty of no

harm.” The FQPA also directed the EPA to give special consideration to children’s health

in establishing or reviewing pesticide tolerances, and directed the EPA to reassess by

2006 all tolerances in existence before 1996 to make sure those tolerances satisfy the new

safety standard.

7. Hazardous Waste Electronic Manifest Establishment Act

On October 5, 2012, the President signed the Hazardous Waste Electronic Manifest

Establishment Act (Public Law 112-195). The act provided for the electronic submission

of hazardous waste manifests to the EPA and established a mechanism for financing the

development and operation of the program through user fees. The EPA’s access to the

fees is subject to annual appropriations. The Resource Conservation and Recovery Act of

1976 (RCRA) requires hazardous waste handlers to document information on the waste’s

generator, destination, quantity and route. The current tracking system relies on paper

manifests. An electronic manifest system will increase transparency and public safety,

making information on hazardous waste movement more accessible to the, states, and the

public. As part of its goal to reduce the burden on regulated entities, where feasible, the

EPA is developing a program to electronically collect manifests to reduce the time and

cost associated with complying with regulations governing the transportation of

hazardous waste. When fully implemented, e-Manifest is estimated to reduce the

reporting burden for firms regulated under RCRA’s hazardous waste provisions by $75

million annually.

8. Leaking Underground Storage Tank (LUST) Trust Fund

The SARA also amends Subtitle I of the Hazardous and Solid Waste Amendments and

authorizes the establishment of a LUST Trust Fund to clean up releases from leaking

underground petroleum storage tanks. The LUST Trust Fund is financed by taxes on

motor fuels. Owners and/or operators are initially responsible for cleanup of their leaking

tanks. At abandoned sites or at sites where owners/operators do not meet their cleanup

responsibilities, the Trust Fund provides the resources for the EPA or states to undertake

or enforce necessary corrective action and to recover costs expended from the fund.

LUST Trust Fund resources are only available through appropriation.

The EPA’s objective is to implement this program primarily through cooperative

agreements with states. To this end, the agency may take corrective action when an

owner/operator or a state fails to respond to a substantial threat to human health and the

environment.

Title XV, Subtitle B, of the Energy Policy Act of 2005 made major changes to the EPA’s

LUST Program to further reduce underground storage tank releases to the environment. It

also authorized the EPA to develop new inspection requirements and provide grants with

LUST Trust Fund money to the states to expand their inspections of leaking underground

storage tanks and undertake compliance assistance and other leak prevention activities.

The EPA was authorized under this new act to enforce fuel standards.

9. Marine Protection, Research, and Sanctuaries Act of 1972 (MPRSA)

The Marine Protection, Research, and Sanctuaries Act generally (unless authorized by

permit) prohibits (1) the transportation of material from the United States for the purpose

of ocean dumping, (2) the transportation of material from any location for the purpose of

ocean dumping by U.S. agencies or U.S.-flagged vessels, and (3) the dumping of material

transported from outside the United States into the U.S. territorial sea (MPRSA § 101).

Permits under the MPRSA may not be issued for the dumping of sewage sludge or

industrial waste (MPRSA § 104B (a)) or radiological, chemical, and biological warfare

agents; high-level radioactive waste; or medical waste (MPRSA § 102(a)). The dumping

at sea of low-level radioactive waste requires a joint resolution of Congress. (MPRSA §

104(i)). Permits may be issued for other materials if the dumping will not unreasonably

degrade or endanger human health, welfare, or the marine environment (MPRSA §

102(a) and 103(a)). The EPA is charged with developing criteria to be used in evaluating

applications for ocean dumping permits (MPRSA § 102(a)). The EPA also is responsible

for designating recommended sites for ocean dumping (MPRSA § 102(c)). The EPA is

the permitting authority for ocean dumping of all materials except dredged material

(MPRSA § 102(a)). The U.S. Army Corps of Engineers is the permitting authority for

dredged material, subject to EPA concurrence and the use of the ocean dumping criteria

developed by the EPA (MPRSA § 103).

10. Oil Pollution Act of 1990 (OIL)

The Oil Pollution Act establishes liability for oil spill response costs and damages, and

imposes significant civil and criminal penalties. Liable parties must pay oil spill response

costs and to compensate parties damaged by them. Additional money for cleanup and

compensation is available through the Oil Spill Liability Trust Fund, managed by the

U.S. Coast Guard. This fund is supported by an oil tax but subject to annual

appropriations. The fund is to be used by the federal government to fund oil spill

response, to perform natural resource damage assessments, and to compensate parties

who have been damaged by the oil spill when the responsible party does not pay for those

costs.

The OPA also requires double hulls on most oil tankers and barges, and contingency

planning on the part of potential dischargers and federal, state and local governments.

The law continues to allow states to impose unlimited liability on shippers and contains

various provisions to ensure navigation safety. The OPA authorizes research on

environmental impacts and response methods of spills. It also amends the CWA to

require the President to direct all public and private response efforts for certain types of

discharge events.

a. 1990 Amendment — Included Responsible Parties’ oil spill and natural resource

damage assessment costs along with annual appropriations for research, prevention,

and preparedness activities; functions; and actions in support of implementation.

11. Pollution Prevention Act of 1990 (PPA)

The PPA requires the EPA to establish an Office of Pollution Prevention to develop and

coordinate a pollution prevention strategy and develop source reduction models. In

addition to authorizing data collection on pollution prevention, the act requires owners

and operators of facilities required to file an annual toxic release form under section 313

of EPCRA to report annually on source reduction and recycling activities.

Enactment of the PPA added a new direction to U.S. environmental protection policy.

From an earlier focus on reducing or repairing environmental damage by controlling

pollutants at the point where they are released to the environment (e.g., at the end of the

pipe or smokestack, at the boundary of a polluter’s private property, in transit over public

highways and waterways, or after disposal), Congress looked to reduce generating

pollutants at their point of origin. This policy change was based on the notion that

traditional approaches to pollution control had achieved progress but should be

supplemented with approaches that control pollution from dispersed or nonpoint sources

of pollution.

12. Radon Abatement Act of 1988

In October 1988 Congress amended the Toxic Substances Control Act (TSCA) by adding

Title III-Indoor Radon Abatement (15 U.S.C. 2661 et seq., P.L. 100-551). The basic

purpose of Title III is to provide financial and technical assistance to the states that

choose to support radon monitoring and control; neither monitoring nor abatement of

radon is required by the Act.

13. Resource Conservation and Recovery Act of 1976 (RCRA)

Congress passed RCRA in 1976 as an amendment to the Solid Waste Disposal Act of

1965. Major amendments and /or related legislation since include:

• Hazardous and Solid Waste Amendments of 1984

• Superfund Amendments and Reauthorization Act of 1986

• Title XV, Subtitle B, of the Energy Policy Act of 2005

• Hazardous Waste Electronic Manifest Act of 2012

14. Safe Drinking Water Act of 1974 (SDWA)

The SDWA, as amended in 1986 and 1996, is the basis for protecting drinking water

systems that serve the public. The act directs the Administrator of the EPA to establish

primary (enforceable) and secondary (advisory) national drinking water regulations based

on maximum contaminant levels of specific pollutants, provides for state enforcement of

the requirements, and establishes a program for protection of underground sources of

drinking water. It also provides for a Drinking Water State Revolving Fund (DW-SRF) to

be established in each state to lend money (sometimes with additional grants as well) to

drinking water systems in carrying out the act.

15. The Solid Waste Disposal Act

As amended by RCRA and the Hazardous and Solid Waste Amendments of 1984, this act

is intended to address the health and environmental dangers arising from the generation,

management and disposal of solid and hazardous wastes. Subtitle C of RCRA provides

for comprehensive cradle-to-grave regulation of hazardous wastes: owners or operators of

hazardous waste treatment, storage or disposal facilities must obtain a permit to operate,

and must meet standards appropriate to the type of unit managing the waste; hazardous

wastes must be treated prior to land disposal; and offsite movements of hazardous wastes

must be accompanied by a document known as a “manifest.”

The requirement for a manifest applies from the waste’s point of generation to its point of

final treatment or disposal, and helps ensure that wastes are not discarded

indiscriminately in the environment by listing precise origin, volume and amounts of

each waste. Although much of RCRA is focused on the current and future management

of hazardous wastes, the statute also includes a significant cleanup program: for example,

owner/operators seeking an operating permit are required to clean up past releases of

hazardous wastes and constituents at their facility in order to obtain a permit. In addition,

RCRA Subtitle D establishes a largely state-administered program for the management of

solid, non-hazardous wastes.

16. Toxic Substances Control Act of 1976 (TSCA)

Congress enacted TSCA to test, regulate and screen all chemicals produced in or

imported into the United States. Many thousands of chemicals and chemical compounds

are developed each year with unknown toxic characteristics. To prevent tragic

consequences should they come in contact with the general public, TSCA requires that

any chemical that reaches the consumer marketplace be tested for possible toxic effects

prior to first commercial manufacture.

Any existing chemical that is determined to pose unreasonable health and environmental

hazards is also regulated under TSCA (example: polychlorinated biphenyls, or PCBs, are

controlled under TSCA). Procedures are also authorized for corrective action under

TSCA in cases of cleanup of toxic materials contamination.

Fees — TSCA authorized two major fees:

a. Premanufacturing Notice (PMN) fee — A PMN fee is collected for the review and

processing of new chemical PMN submitted to the EPA by the chemical industry.

b. Accreditation and Certification Fee — TSCA Title IV, Section 402(a)(3), mandates

the development of a schedule of fees to cover the costs of administering and

enforcing the standards and regulations for persons operating lead training programs

accredited under the 402/404 rule and for lead-based paint contractors certified under

this rule.

Changes to TSCA, including fees, are being proposed in TSCA amendments being

considered by Congress.

17. The National Environmental Policy Act of 1969 (NEPA)

NEPA established a broad national framework for assessing the environmental impacts of

major federal actions that significantly affect the quality of the human environment.

NEPA has two major objectives: to prevent damage to the environment and to ensure that

federal agency decision-makers give appropriate consideration and weight to

environmental factors before taking any major federal action that significantly affects the

quality of the human environment.

NEPA also established the Council of Environmental Quality (CEQ) to advise the

President on environmental matters. The CEQ promulgated regulations implementing

section 102(2) of NEPA. Under NEPA and the CEQ regulations, unless an action is

categorically exempted, agencies conduct an environmental review in the form of an

Environmental Assessment or Environmental Impact Statement, as appropriate. These

reviews analyze the environmental impacts of and alternatives to the proposed action.

Most of the EPA’s actions are not subject to NEPA because either they are statutorily

exempt from NEPA or functionally equivalent to NEPA. EPA actions that are subject to

the NEPA include issuance of the National Pollutant Discharge Elimination System

permits for new sources under the CWA, award of grants for certain projects funded

through the EPA’s annual appropriations acts, research and development activities, and

facilities construction. The EPA has adopted a voluntary NEPA policy under which it

may prepare the NEPA documents voluntarily when it is not legally required to do so if

such documents would be beneficial in addressing agency actions. In addition, in

conjunction with other statutes, the NEPA generally provides authority for the EPA to

conduct international environmental activities.

B. Appropriation Statutes

Congressional appropriations statutes provide discretionary funding for federal government

activities. Congress has a two-step process associated with discretionary spending:

authorization bills and appropriations bills. Authorization bills establish, continue or modify

agencies or programs. Appropriations measures subsequently provide funding for the

agencies and programs authorized (although occasionally Congress will include authorization

in an appropriations bill). Almost all of the EPA’s programs are generally considered to be

discretionary, as opposed to mandatory programs such as Social Security or Medicare.

There are generally two main types of appropriation statutes:

1. Annual Appropriations

Each year Congress passes annual appropriations to fund discretionary programs for a

given fiscal year. These appropriations generally include specific funding levels with

directives and requirements in law and report language.

2. Supplemental Appropriations

Congress also may pass supplemental bills to provide additional funding, usually for

emergency purposes, such as for natural disasters. Examples include the Disaster Relief

Appropriations Act; Hurricane Sandy; Coastal Wetland Planning, Protection and

Restoration Act funds; the Recovery Act; the RESTORE Act, etc. Supplemental

appropriations normally also contain specific tracking reporting and other requirements.

Chapter 5, “EPA Sources of Funding and Associated Processes,” describes the major steps,

processes and major rules governing annual and supplemental appropriations.

C. Government-Wide Management and Administrative Statutes

Below are some of the most important statutes that direct how the federal government must

manage its funds. This is not a comprehensive list, and financial managers should consult

with the Office of General Counsel about whether additional statutes might apply to major

upcoming decisions.

1. Antideficiency Act, 31 U.S.C. 1314,1342 & 1517 (ADA)

The ADA consists of provisions of law passed by Congress (beginning in the nineteenth

century and later codified in Title 31 of the U.S. Code) to prevent departments and

agencies from spending their entire appropriations during the first few months of the

year. (Note – the acronym is also used for American with Disabilities Act)

a. The ADA prohibits:

• Spending in excess of an amount available in an appropriation.

• Authorizing expenditures in advance of an appropriation.

• Accepting voluntary services without authority.

• Spending in excess or in advance of an apportionment.

• Entering into contracts that exceed the enacted appropriations for the year.

• Exceeding budgetary authority, including apportionments

• Purchasing services and merchandise before appropriations are enacted.

b. The ADA:

• Requires that the OMB apportion the appropriations, that is, approve a plan that

spreads out spending over the fiscal period for which the funds were made

available.

• Requires, subject to the OMB’s approval, the head of each executive agency to

prescribe by regulation a system of administrative control of funds (31 U.S.C.

1514(a)).

• Restricts deficiency apportionments to amounts approved by the agency heads

only for “extraordinary emergency or unusual circumstances.”

• Establishes penalties for ADA violations. Violations are obligations or

expenditures in excess of the lower of the amount in the affected account, the

amount apportioned, or administrative subdivision of funds.

2. Budget and Accounting Act and Supplemental Appropriations Act

The Budget and Accounting Act of 1921 and the Supplemental Appropriations Act of

1955 provide the budget and appropriations authority of the President, budget contents

and submissions to Congress, supplemental appropriations, and advances. The specific

requirements for recording obligations, such as documentary evidence, are set forth in 31

U.S.C. 1501.

3. Chief Financial Officers Act of 1990 (CFO Act)

The CFO Act requires 24 federal departments and agencies to prepare and audit financial

statements for trust funds, revolving funds and commercial activities accounts. As one of

the 24 agencies, the EPA follows the OCFO Act structure.

CFOs are designated by each federal department or agency and have the fundamental

responsibility to assure that its use of public funds adheres to the terms of the pertinent

authorization and appropriations acts, as well as any other relevant statutory provisions.

The Assistant Administrator, Office of the Chief Financial Officer, serves as the EPA’s

CFO. Previous to the CFO Act, the EPA relied on a comptroller within the Office of

Administration and Resource Management to coordinate the agency’s financial

operations. Financial Statement Audits are conducted or supervised and issued by the

EPA Office of Inspector General each year by November 15 (unless delayed by approval

of OMB).

4. Congressional Budget Impoundment and Control Act of 1974 (Impoundment Act)

Under this act, an impoundment is defined as an action or inaction by an officer or

employee of the United States that precludes the obligation or expenditure of budget

authority provided by Congress. There are two types of impoundment actions: deferrals

and rescissions.

a. A deferral is a postponement of budget authority in the sense that an agency

temporarily withholds or delays an obligation or expenditure. Deferrals may be

proposed by agencies but must be communicated to Congress by the President in a

special message. Deferred budget authority may not be withheld from obligation

unless Congress passes legislation to approve the deferral and that legislation is

enacted.

b. A rescission involves the cancellation of budget authority previously provided by law

(before that authority would otherwise expire).

If a federal agency fails to obligate appropriated funds, the Comptroller General is

authorized by 2 U.S.C. 682 to bring a civil action against that agency. The expiration of

budget authority, or delays in obligating if resulting from a legitimate programmatic

delay or ineffective or unwise program administration, are not regarded as impoundments

unless the facts establish that the agency intentionally withheld funds.

For short title of Title X of Pub. L. 93–344, found at 2 U.S.C. 681–688, which enacted

this chapter as the ‘‘Impoundment Control Act of 1974,’’ see section 1(a) of Pub. L. 93–

344, as amended, set out as a note under section 621 of this title. The 1974 Congressional

Budget and Impoundment Control Act modified the role of Congress in the federal

budgetary process. It created standing budget committees in both the House and the

Senate, established the Congressional Budget Office, and moved the beginning of the

fiscal year from July 1 to October 1.

5. The Digital Accountability and Transparency Act of 2014 (DATA Act)

The DATA Act aims to make information on federal expenditures more easily accessible

and transparent. The act requires the EPA to work to make detailed information available

on all procurements, grants and interagency agreements.

6. Economy Act of 1932

Federal agencies frequently provide goods or services to other federal agencies. The

Economy Act authorizes agencies to obtain goods or services either directly from other

federal agencies or through contracts awarded by other agencies when it promotes

economy and efficiency for the government. Both agencies must have the authority for

the underlying activities proposed in the agreement. At the EPA, the mechanism to do so

is an interagency agreement between the EPA and the other federal agency.

An Economy Act agreement may not exceed the period of availability of the source

appropriation. In addition, a time-limited appropriation (such as the EPA’s

Environmental Programs and Management appropriation) that is obligated under an

Economy Act agreement must be deobligated at the end of its period of availability to the

extent that the performing agency has not performed or incurred valid obligations under

the agreement. For any appropriation, this rule applies at the end of the source

appropriation’s period of availability.

7. Federal Managers’ Financial Integrity Act of 1982 (FMFIA)

The FMFIA is designed to:

• Protect government resources from fraud, waste, abuse or mismanagement.

• Require systematic self-examination of management controls by program managers.

• Require agency heads to report annually to the President and Congress on the state of

management control systems, identify material management control weaknesses, and

provide corrective action plans and milestones.

The FMFIA requires the establishment of systems of internal accounting and

administrative controls, according to standards prescribed by the Comptroller General,

which provide reasonable assurance that:

• Obligations and costs comply with applicable law.

• Funds, property and other assets are safeguarded against waste, loss, unauthorized use

or misappropriation.

• Agency revenues and expenditures are properly recorded and accounted for to permit

the preparation of accounts and reliable financial and statistical reports, and to

maintain accountability over assets. The agency’s annual report must provide a

separate statement of whether the agency’s accounting system conforms to the

principles, standards and related requirements prescribed by the Comptroller General

under Section 112 of the Accounting and Auditing Act of 1950.

OMB Circular A-123 establishes broad guidelines for agency self-evaluation of

management control systems. The EPA follows A-123 with an annual process of internal

control reviews and A-123 assessments. The OCFO issues annual guidance to the agency

on how each year’s process will be organized and managed.

8. Government Performance and Results Act of 1993 (GPRA) and GPRA

Modernization Act of 2010 (GPRAMA)

Originally, GPRA was enacted to align strategic goals with annual plans, budgets and

serves as a basis for financial and performance accountability reporting. Congress passed

GPRAMA on January 4, 2011. It made substantial changes to the original GPRA law:

• It continues three agency-level products (the EPA Strategic Plan, Annual Plan, and

Budget and Annual Performance Report) from the GPRA 1993, but with changes.

• It establishes new products and processes that focus on goal-setting and performance

measurement in policy areas that cut across agencies (Priority Goals, “unmet goals”

report).

• Brings attention to using goals and measures during policy implementation.

• Increases reporting on the Internet.

• Requires individuals, Goal Leaders (i.e., officials named by the agency head or COO

who will be held accountable for leading implementation efforts to achieve a goal), to

be responsible for some goals and management tasks.

In making these changes, the GPRAMA aligns the timing of many products to coincide

with Presidential terms and budget proposals. The law also includes more central roles

for the OMB, which advances the President’s policy preferences. The GPRAMA also

contains specific requirements for consultations with Congress. By design, many of the

GPRAMA’s products are required to be submitted to Congress for scrutiny and potential

use. The law also provides opportunities for Congress and non-federal stakeholders to

influence how agencies and the OMB set goals and assess performance.

9. Impoundment Control Act of 1974 (please see 4. Congressional Budget

Impoundment and Control Act of 1974.)

10. Independent Offices Appropriations Act (IOAA)

Codified at 31 U.S.C. 9701, the IOAA provides agencies with authority to collect user

fees in certain circumstances. The IOAA does not provide agencies with authority to

“retain and use” the fees, so any monies agencies collect under the IOAA must be

deposited into the Treasury as miscellaneous receipts. The OMB provided implementing

guidance on the IOAA in OMB Circular A-25. Under court decisions sustaining the

OMB’s interpretation of the IOAA, agencies may only charge fees to “identifiable

recipients for a measurable unit or amount of government service or property from which

he derives a special benefit.” Fees may not be imposed under the IOAA “when the

identification of the ultimate beneficiary is obscure and the service can be primarily

considered as benefitting broadly the general public.”

11. Inspector General Act of 1978

This act, amended 1988, requires the Inspector General to conduct and supervise

independent and objective audits, evaluations, investigations and other reviews relating to

the agency programs and operations (including contracts, grants, and acquisition

management; financial transactions; fund control; and financial statements). The

Inspector General also makes recommendations to promote economy, efficiency, and

effectiveness; prevents and detects fraud, waste, and abuse; and keeps agency heads and

Congress fully and currently informed of problems. The EPA Office of the Inspector

General (OIG) conducts and promotes program evaluations of the EPA programs and

activities (including process, outcome, impact and cost-benefit).

The OIG Office of Investigations is a law enforcement entity that conducts criminal, civil

and administrative investigations of possible violations of laws under the criminal code

and alleged misconduct and abuse by agency, contractor or grantee employees. To ensure

objectivity, the Inspector General Act provides the Inspector General with independent

authority to carry out activities such as determining what reviews to perform and

obtaining all necessary information, developing and executing budgets through

independent appropriations, selecting and appointing OIG employees including Senior

Executive Service positions, and entering into contracts. This independence protects the

OIG from interference by agency management and allows it to function as the agency’s

fiscal and operational watchdog.

From the budget formulation process through execution, agency management may not

reduce or reallocate OIG resources if the OIG conforms to OMB and Congressional

guidance. Under the provisions of the IG Reform Act, the OIG may require OMB to

report to Congress if the amount included for the OIG is insufficient for the OIG to carry

out its mission.

12. “M” Account Legislation

The National Defense Authorization Act of 1990 amended controls on the availability of

appropriation accounts and the procedures for closing appropriation accounts (31 U.S.C.

1551–57). The act cancelled all merged or “M account” surplus authority (unobligated

balances in expired appropriations) as of December 5, 1990. The act also requires that,

from 1990 on, unobligated balances and unliquidated obligations will be cancelled five

years after an appropriation has expired, and then that account will be closed out.

The EPA has an exception to the five-year cancellation requirement time period. The

EPA requested and received special statutory authority for the agency’s time-limited

appropriations to remain available to liquidate obligations for seven years after the period

of availability for new obligations expires (Public Law 106-377). This means that the

EPA’s accounts with obligation deadlines (normally called two-year accounts due to the

two-year deadline to obligate funds) have a total of nine years to outlay all funds (2 + 7 =

9). This special authority came into effect in fiscal year 2001.

After an appropriation account has been cancelled or closed out, bills received against

cancelled obligations must be paid from current appropriations available for the same

purpose. The total amount of charges to a current appropriation account may not exceed 1

percent of the total appropriations for that account. OMB Bulletin 91-07, which

implements this legislation, requires federal agencies to have available up to 1 percent of

current-year appropriations to liquidate liabilities that arise from accounts that have been

cancelled. Should a payment be needed that exceeds the 1 percent funding availability,

the agency must go back to Congress and request a supplemental appropriation.

13. Miscellaneous Receipts Act (MRA)

The MRA requires any agency official who receives or is in constructive receipt of funds

(i.e., controls how the funds are used) from an outside source (including other federal

agencies) without explicit authority must deposit the funds into the Treasury’s general

fund.

14. Money and Finance

Public Law 97-258, § 1, September 13, 1982, 96 Statute 877, provides that “Certain

general and permanent laws of the United States, related to money and finance, are

revised, codified, and enacted as title 31, United States Code, ‘Money and Finance’…”:

This includes:

• Sections 1341–1342, 1349–1351, 1511–1519 (part of the Antideficiency Act, as

amended).

• Sections 1101, 1104–1108, 3324 (part of the Budget and Accounting Act, 1921, as

amended).

• Sections 1501–1502 (part of section 1311 of the Supplemental Appropriations Act of

1950).

• Sections 1112, 1531, 3511–3512, 3524 (part of the Budget and Accounting

Procedures Act of 1950).

D. Government-Wide Guidance and Regulations

Federal agencies do not independently determine how they should follow the management

statutes discussed above. Specific federal offices and agencies issue regulations, guidance,

circulars and other direction that agencies must follow. The most prominent guidance

documents, sources and legal opinions upon which government-wide budgeting and

accounting depend are:

• OMB Circulars, particularly:

○ A-11—Preparation, Submission and Execution of the Budget

○ A-123—Management’s Responsibility for Internal Control

○ OMB Circulars at http://www.whitehouse.gov/omb/circulars_default/

• Government Accountability Office (GAO) rulings and opinions—Green Book, Red

Book, etc. http://www.gao.gov/

• Office of Personnel Management (human resources), GSA (space, procurement),

Department of Commerce’s National Institute of Standards and Technology (cyber-

security), Treasury, etc.

Below are some more detailed descriptions of the some of the most critical circulars and

guidance documents pertaining to federal fiscal management.

1. Executive Orders (EOs) and Presidential Memoranda

Through EOs and memoranda, Presidential administrations direct specific government-

wide actions by Executive Branch officials. This guidance covers general management

goals (such as transparency), government-coordinated action on specific challenges (such

as the Deepwater Horizon oil spill) and general policy direction (such as climate change

adaptation and environmental justice); it directs agency heads and officials to take or

consider certain actions.

2. Office of Management and Budget (OMB) Circular A–11

Contains many detailed instructions and requirements for Federal budget and financial

management, including:

a. OMB Circular A–11 (2014) requires the agency head to report any ADA violations to

the President through the OMB Director, Congress and the Comptroller General.

Under the ADA, obligating or expending more than the amount in the Treasury

Account Fund Symbol, or the amount apportioned or the amount in any other

subdivision of funds identified in agency fund control regulations as being subject to

the ADA, will be cause for appropriate administrative discipline. (Fuller description

of the ADA’s provisions and the penalties for violating the ADA can be found in the

ADA description in this document.)

ADA violations are potentially criminal, and any violation must described in writing

through the EPA’s CFO to the President. All officials involved will be asked to

explain in detail how the situation occurred, how it was rectified and what measures

were taken to prevent any re-occurrence. Violators will be subject to appropriate

administrative discipline, including — when circumstances warrant — a written

reprimand, suspension from duty without pay or removal from office. In addition, if

convicted of willfully and knowingly overobligating or overexpending the amount,

violators shall be fined not more than $5,000, imprisoned for not more than two

years, or both.

b. OMB Circular A-11 (Part 2), Preparation and Submission of Budget Estimates,

contains government-wide requirements and guidance on the preparation and

submission of federal budget requests for the next budget cycle (upcoming fiscal

years). Circular A-11 includes policies and instructions for building the budget

database, preparing the budget documents, providing supporting data for the budget

submission and transmitting the budget.

In relation to budget formulation, OMB Circular A-11 requires agencies to report

costs in terms of object classification, defined in Part II of the Circular. Object

classification is used to report obligations for each account according to the nature of

the goods and services procured. Obligations are categorized by their purpose and are

designated to one of the following groupings: personnel compensation and benefits,

contractual services and supplies, acquisition of capital assets, grants and fixed

charges, and other. These classifications tie into RMDS 2590 Part IV, which includes

all of the EPA’s sub-object class codes and definitions.

c. OMB Circular A-11 (Part 4), Instruction on Budget Execution, contains government-

wide requirements and guidance regarding budget execution. Contents include

guidance on requirements and instructions, concepts, agency accounting and fund

control systems, reports on budget execution, apportionments, rescissions and

deferrals, etc.

3. OMB Circular A-123, Management’s Responsibility for Internal Controls

This circular defines management’s responsibility for internal control in federal agencies.

It provides guidance on using the range of administrative controls. Such controls include

program, operational and administrative areas, as well as accounting and financial

management. Circular A-123 and the statute it implements, the FMFIA of 1982, are at the

center of the existing federal requirements to improve internal control. Internal controls

— organization, policies and procedures — are tools to help program and financial

managers achieve results and safeguard the integrity of their programs.

4. Opinions of the Office of Legal Counsel (OLC)

OLC provides definitive legal advice to Executive Branch agencies on appropriations

law. Based on the Constitution’s separation of powers principle, when there is a conflict

between the OLC’s opinions and those of the Comptroller General of the GAO (which is

an arm of Congress), the OLC’s positions are binding on the Executive Branch. See

Memorandum for Janis A. Sposato, GC, Justice Management Division, from John O.

McGinnis, Deputy Assistant Attorney General, OLC (August 5, 1991), separation of

legislative and executive powers (the McGinnis Memo). The EPA has implemented the

OLC’s advice in EPA Order 2515.1, Policy and Procedures for Relieving Certifying and

Disbursing Officers from Liability (March 17, 2000).

5. Government Accountability Office (GAO)

The Principles of Federal Appropriations Law, also known as the “Red Book,” is a

document updated and published by the GAO. The OLC recognizes that while GAO

decisions are not legally binding on Executive agencies, the GAO’s opinions are “useful

sources” on matters of appropriations law. See Memorandum for Emily C. Hewitt,

General Counsel, General Services Administration, from Richard L. Shiffrin, Deputy

Assistant Attorney General, OLC (August 11, 1997). The EPA’s Office of General

Counsel adheres to GAO positions that do not conflict with OLC positions, unless the

General Counsel determines otherwise in a specific case.

6. General Services Administration (GSA) Regulations

The GSA issues government-wide regulations on how agencies conduct business,

including procurement, property management, travel and acquisition. These include:

a. GSA Federal Acquisitions Regulation (FAR) is jointly issued by the Department of

Defense, the GSA, and the National Aeronautics and Space Administration for use by

Executive agencies in acquiring goods and services.

b. GSA Federal Management Regulation (FMR) is the successor regulation to the

Federal Property Management Regulation (FPMR). It contains updated regulatory

policies originally found in the FPMR.

c. GSA Federal Travel Regulation (FTR) is the regulation contained in title 41 of the

Code of Federal Regulations, chapters 300 through 304, which implements policies

for travel by federal civilian employees and others authorized to travel at government

expense.

GSA.gov has links to these regulations, as well as travel per diem rates and other

information.

Chapter 3: Federal and EPA Budget and Financial Terms

Summary

The federal government as a whole, and the EPA specifically, use many specialized terms in

budget and financial management. Some of these terms have more precise or slightly different

meanings than they do when used outside government. Below are some short descriptions of

some of the most important terms and links to other, more extensive explanations.

Federal financial management is generally divided into two parts:

• Formulation — planning for what will be spent in future years. (Thus, formulating budgets in

fiscal year [FY] 2015 for FY 2016 and beyond.)

http://intranet.epa.gov/ocfo/budget/formulation.htm

• Execution — ensuring that funds are correctly spent. (Thus, in FY 2015, executing the FY

2015 budget and managing monies from prior fiscal years.)

http://intranet.epa.gov/ocfo/budget/execution.htm

A. Federal Spending Terms

The word “spend” has no particular defined meaning in the federal government, but each step

of the U.S. federal funding process has specific definitions government-wide. Below are the

major spending terms corresponding to the order in which the dollars are provided (and, in

parentheses, the organization performing the action).

1. Appropriation (Congress): Congress passes a bill giving (appropriating) particular

entities permission to spend a certain amount of money for a particular purpose for a set

period of time.

2. Apportionment (OMB): The Office of Management and Budget, on behalf of the

Executive Branch, allows agencies to use specified amounts of appropriated dollars in

Federal financial systems for particular programs.

• It violates the Antideficiency Act (ADA) to use federal dollars without an

apportionment.

3. Allotment (Department): Cabinet-level agencies allot funds to their bureaus; the EPA

has one central allotment residing in the Office of Budget.

• The EPA also uses the word “allotment” in the State Revolving Funds program.

4. Allocation or Allowance (Agency, Bureau): The EPA allocates or provides an

allowance to particular parts of the agency (national program managers [NPMs] and EPA

regions or portions thereof).

• The EPA designates allowance holders who, once they receive the allocation, can

commit, obligate and outlay their portions of the EPA’s budget.

5. Commitment (Allowance Holder): An administrative reservation of funds for a

particular purpose in anticipation of their obligation.

6. Obligation (Allowance Holder): A definite legal liability of the government to pay

money for goods and services ordered or received. For example, an obligation arises

when a grant or contract is awarded.

• Recording an Obligation — Formally recording the obligation in a federal financial

system (Compass for EPA) to satisfy (recognize) the government’s liability.

7. Expenditure, Liquidation, Disbursements, Outlays (Normally Accounting): The EPA

pays the bill. The EPA expends, disburses or outlays the funds. Accounting distinction is

that when the EPA uses a resource it is expended; when it actually sends cash, it is

disbursed or outlaid.

• Accruals — The EPA uses accruals to account for the difference between when

something is done and when the bill is paid. An accrual is an accounting entry with

estimated cost of a resource used for which the bill has not been paid. For example, in

payroll the cost of your time for work is accrued.

8. Remaining Balances: Financial managers must keep a close eye on fund balances, the

name for which is generally: “un” + the basic budget term. The three major types are:

• Uncommitted Funds — How much does an allowance holder have allocated that has

not been committed?

• Unobligated Balances — How much does an allowance holder have committed that is

not yet obligated?

• Unliquidated Obligations — How much has been obligated but not expended? This is

sometimes called unexpended, undisbursed or un-outlaid, but (borrowing the private

business finance term “liquidity”) federal managers tend to say “unliquidated.”

Unliquidated balances are particularly important in long-term projects such as grants

— where some projects and obligations are many years old.

B. EPA Budget Management Terms

1. Allowance Holders: Many NPMs and regions control money at a lower level (normally

by Division) with each sub-organization given (allocated) monies separately as an

allowance holder.

2. Available: Available funds may be obligated and expended.

3. Cancelled: Cancelled funds may no longer be obligated or expended.

4. Carryover: Money not obligated in one year that can be obligated (or carried over) into

the next.

5. Continuing Resolution: A temporary appropriation that requires an agency to continue

operating under the status quo established by the previous appropriations acts until

Congress completes action on appropriations acts for the remainder of the fiscal year.

Generally programs cannot fund new programs (programs that were not authorized in the

prior fiscal year) — and funding is capped at the lower of PB and the previous year’s

budget.

6. De Facto: When an organization goes into the red in a detailed line of accounting

(normally due to payroll). Compass will not allow an ADA violation. Financial managers

must correct these.

7. Expired Funds: Funds that may no longer be used to create new commitments, but may

be expended (used to pay bills).

8. Fiscal Year (FY): The federal FY begins on October 1 and runs through September 30

of the following calendar year. It does not necessarily coincide with many states’ or

corporations’ fiscal years.

• Federal pay raises and benefit cost adjustments are tied to the calendar, not fiscal year

— which complicates calculations.

9. Fiscal Quarters: The federal FY is divided into four three-month fiscal quarters:

October–December, January–March, April–June and July–September.

• OMB and other stakeholders frequently review progress by fiscal quarter.

10. Intramural and Extramural (not formal terms):

• Intramural includes payroll and other fixed costs — funds used inside the EPA.

• Extramural includes contracts, grants, IAs — funds used outside the EPA.

11. Intra-Governmental Payment and Collection System: Treasury’s system for moving

funds from one federal agency to another. Used for making payments on interagency

agreements.

12. Lapse Rate: The portion of a budget not used, i.e. what percentage “lapsed.”

13. National Program Managers (NPMs): The EPA’s major programs. It is also used to

describe the headquarters portion of the program only. This means that you can count

NPMs’ budgets in two ways — with and without Regional dollars.

14. Pro Rata Reduction: When all budgets are reduced by a certain percentage.

15. Reprogramming: Money moved from program project, program area, budget object

class or organization to another.

• All reprogramming requires Compass action. (See other sections for further

explanation.)

• For movements between program projects and program areas, the EPA must inform

Congress when net changes are more than $1 million or 10 percent of the value of the

program. This is a cap for all EPA organizations, not just a particular region or NPM.

In addition, Congress normally specifies additional limits on particular programs.

16. Rescission: When Congress takes money back from an agency. There are two types of

rescissions:

• Across-the-Board Rescission — Congressional appropriations reduce agency

appropriations across the board by a certain percentage.

• Targeted Rescission — Congress pinpoints certain items, previously appropriated that

they want the EPA to give back to Treasury.

17. Responsible Program Implementation Office: The major EPA organizations consisting

of the 13 NMPs and the 10 regions.

18. Sweeps: When organizations have not met specific commitment or obligation deadlines,

the Office of the Chief Financial Officer takes back or “sweeps” the unused funds.

19. Taps: When money is needed to fund a specific project, funds are sometimes “tapped,”

or moved from other budgets.

Additional Information and Training

http://intranet.epa.gov/ocfo/budget/training.htm

Chapter 4: The EPA’s Financial and Associated Systems

Summary

The EPA relies on several major budget, financial and administrative systems to manage its

finances. Below are short descriptions for the major systems. A major challenge for all financial

managers is to make sure that data is accurately communicated and reconciled between all

systems.

A. Automated Standard Application for Payments (ASAP)

The EPA uses Treasury’s ASAP system to make and manage payments to states and tribes.

ASAP is a secure, Web-based, all-electronic payment and information application managed

by Treasury and the Federal Reserve Bank. This application is a system through which

grantee organizations receiving federal funds can draw from accounts pre-authorized by

federal agencies.

The Las Vegas Finance Center (LVFC) establishes and maintains grant accounts in ASAP

for the agency’s grant recipients. Upon obligation of assistance agreement and amendments

in Compass, the LVFC enters spending authorizations into recipients’ ASAP accounts.

Subsequently, recipient organizations initiate payment requests through ASAP to meet

immediate cash needs. Payments are disbursed next day unless recipient specifies same day

payment.

ASAP payment transactions are electronically allocated in accordance with EPA accounting

policy and uploaded to Compass daily via the Grant Payment Allocation System (GPAS).

B. Budget Automation System (BAS)

The EPA uses an Oracle database to manage its budget formulation processes. BAS is being

upgraded in stages to a new Budget Formulation System beginning in 2016.

http://intranet.epa.gov/ocfo/systems/bas/index.htm

C. Compass

The EPA’s budget execution system, built on a Momentum platform. Compass is the

agency’s core financial system. Compass data can be accessed through several reporting and

summary tools. All agency financial transactions including commitments, obligations and

expenditures must be correctly recorded in Compass. The agency also has reporting related to

Compass that provide fund managers with automatic and special report capabilities,

including:

1. Compass Business Objects Reporting (CBOR)

CBOR contains many structured reports and additional ad hoc reporting capabilities.

https://ssoprod.epa.gov/sso/jsp/BOSCHlogin.jsp

2. Compass Data Warehouse (CDW)

The CDW contains financial data for review and use by financial managers.

https://ocfosystem1.epa.gov/neis/adw.welcome

3. Compass Financials

https://compassmomentum.epa.cgipdc.net/momexauthservice/login.jsp

D. Concur

The agency’s travel management system. https://cge.concursolutions.com/

E. Contracts Payment System (CPS)

The Research Triangle Park–Finance Center contract payment staff uses the obligation

document to identify the information that is entered and used to support the processing of

contract-related documents (such as obligations and payments). Information is then entered

into the CPS via direct data entry, based on specific details on the contracts, delivery orders

and invoices.

F. Department of the Interior (DOI), Interior Business Center (IBC)

The DOI IBC provides the EPA’s payroll services through the Human Resources Line-of-

Business (HR-LOB) function. The IBC provides high-quality, comprehensive personnel and

payroll solutions through the Federal Personnel and Payroll System, comprehensive payroll

operations services, an analytical and reporting tool (DataMart), and other related HR

systems and services. The EPA’s HR-LOB standardizes, automates and integrates the HR

and payroll systems. The system interfaces with the EPA’s time and attendance system,

PeoplePlus (described below).

G. EPA’s Acquisition System (EAS)

The data in the EAS that is required and or allowed under the Federal Acquisition

Regulations for the business process of acquiring goods and services in support of the

agency’s mission. This includes planning, solicitation, award, contract administration and

close out of contracts and purchase orders.

The sources of the data are the EPA internal acquisition process, the EPA financial systems

and the vendor/contracting community. Contractor and vendor data in the system are also

provided by the General Services Administration–managed Shared System Inventory, which

is part of the President’s Management Agenda Integrated Acquisition Environment.

H. Grant Payment Allocation System (GPAS)

GPAS is an Intranet-based application used by the LVFC in the processing of the agency’s

grant payments, as well as Local Government Reimbursements and Pollution Allowance

Auction payments.

The major functionalities of GPAS are the automatic allocation of grant payments to specific

accounting lines in accordance with business rules and the nightly upload of transactions to

Compass.

GPAS also allows for special instructions or reminders to be placed in the system as needed,

such as notes on how to apply payments, final drawdown notification, accounts receivable

notification or instructions that project officer approval is required before payment may be

made. Furthermore, project officer and/or recipient email information can be added to

generate an automated email notification each time a payment has been processed.

I. Integrated Grants Management System (IGMS)

The IGMS’s purpose is to provide an electronic format for all state grant activities and

communications between the EPA’s headquarters, EPA regions and state participants. The

system, which is currently under redesign, automates the grant process — including policy,

guidance, application, award, negotiation, tracking and reporting functions — for

participating states and regions to use in their state grant process. This system will streamline

the grant process and provide electronic management from the application phase to the

closeout phase of a project.

J. Intergovernmental Payment and Collections (IPAC) System

Treasury’s system for moving funds from one federal agency to another. Used for making

payments on interagency agreements. Sometimes turned into a verb, e.g. “The EPA IPACed

FEMA for the mission assignment.”

K. Office of Management and Budget (OMB) MAX

The OMB system that is used to collect and process most of the information required for

preparing the budget. MAX compiles the budget data using a series of schedules, or sets of

data, within the MAX database. Each schedule describes a different view of the President's

budget. Reporting categories include, but are not limited to, budget authority, obligations,

outlays, object classes, goals and discretionary versus mandatory funding. An overview of all

the schedules is provided in OMB Circular A-11, section 79.4. Data are reported at the

budget account level in MAX (see section 20.12(a)). This information is aggregated to

provide the totals presented in many of the tables in the President’s budget.

More information can be found at:

• OMB Circular A-11, section 79, “The Budget Data System”:

http://www.whitehouse.gov/sites/default/files/omb/assets/a11_current_year/s79.pdf

• Max A-11 Tool Homepage: https://max.omb.gov/maxportal/webPage/a11/maxa11

• Max A-11 Tool User Guide:

https://max.omb.gov/maxportal/webPage/a11/maxA11UsersGuide

L. PeoplePlus

The EPA uses PeoplePlus, an integrated management system for HR, benefits, payroll, time

and labor. Payroll guidance and instructions for the PeoplePlus system and software have

been distributed under separate cover through normal agency channels. These efforts will

improve business performance, increase efficiency and provide a more supportive work

environment.

M. Superfund Enterprise Management System (SEMS)

SEMS provides information about Superfund special accounts using information from the

CDW.

Chapter 5: Sources of Funding for the EPA and Associated Processes

Summary

The EPA uses dollars from six primary sources:

• Regular Annual Appropriation — Each year’s annual appropriation contains detailed specific

descriptions of how the EPA may spend its funding.

• Supplemental Appropriations — For specific “emergency” needs, Congress appropriates

money in addition to regular annual appropriations, mainly for large natural disasters like

Hurricane Katrina.

• Reimbursables — The EPA performs work for another federal or state agency and is

reimbursed through that agency’s funds. Examples include reimbursement through the

Federal Emergency Management Agency Mission Assignments.

○ Settlements — The EPA receives some monies through the Natural Resources Damages

Assessments, arising from incidents such as the Deepwater Horizon oil spill or in specific

court settlements.

• Trust Funds — The EPA’s main trust funds are the Comprehensive Environmental Response,

Compensation, and Liability Act (CERCLA), or Superfund; OIL; and Leaking Underground

Storage Tanks. Generally, Congress must also appropriate these funds before the EPA can

use them.

• Fees — Charges for particular services that must be independently tracked and managed.

• Special Accounts — When the EPA enters into Superfund settlement agreements with

potentially responsible parties, money may be kept in special accounts to be used for

cleaning up that site. http://intranet.epa.gov/ocfo/superfund_A/index.htm

○ State Cost Share Provisions for Superfund State Contracts — Before the EPA can commit

or spend congressionally appropriated funds for remedial actions, a state must make

specific assurances, including providing for payment of the state’s share of the cost.

Regardless of the source of funds, federal management laws and regulations and requirements

still apply. Since annual budget appropriations are the largest source of funds for EPA

operations, this section has the most extensive discussion of how these budgets are developed

and carried out. Generally, the requirements and procedures used to manage annual

appropriations also apply to other types of funding; for example, requests for funding must be

clearly explained, funds must be apportioned by the Office of Management and Budget (OMB),

and funding commitments must be tracked and managed.

Before explaining the details of budget policies and procedures, this section lays the groundwork

for a general understanding of the annual federal budget process. Figure 1 shows the major steps

in first formulating the budget, and then executing, or carrying it out, once it is passed by

Congress. The dates for each step of the federal budget process — when there are no delays —

appear in brackets. The EPA must follow similar steps in formulating budgets for other sources

of funding, and follow the exact steps in executing budgets for all funding sources.

...

A. Annual

Federal

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The budget formulation process at the EPA has evolved greatly. As the EPA seeks to

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budget,

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The following information is a quick overview of a typical budget formulation process:

1. National Program Manager Budgets (March–August)

The EPA works internally to prepare a proposed budget to submit to the OMB in

September (about 13 months before the start of the relevant fiscal year). Generally, in

spring or summer, the OMB provides the EPA with a budget target level that the agency

must use in planning its submission.

A critical step is for the EPA to reach out to stakeholders, state and tribal organizations to

discuss their concerns and priority areas. This input moves the agency toward achieving

goals and meeting statutory requirements, and also factors in to discussions and decisions

at the EPA’s annual planning meeting. At the planning meeting, the Administrator and

the agency's senior leadership review and prioritize major policy changes that will move

the agency toward achieving the environmental goals in the EPA’s Strategic Plan.

Based on agreements reached at the annual planning meeting, as well as through other

discussions, the Office of the Chief Financial Officer (OCFO) issues budget policy and

technical guidance to the agency to develop its budget. The Office of Budget (OB), with

input from the Office of Planning, Analysis, and Accountability (OPAA), issues a

guidance memorandum, which includes the framework and formats each agency office

should use in developing budget requests.

Each Assistant Administrator, the General Counsel and the Inspector General (IG) serve

as national program managers, or NPMs. These agency executives work with the senior

managers in their program offices and with the regions to formulate a budget request that

reflects the EPA’s Strategic Plan and the needs of headquarters and the regional offices.

The Assistant Administrators/Regional Administrators (AA/RAs) typically submit their

requests to the OCFO. The OCFO reviews and analyzes the requests and works with

various offices in the EPA to make recommendations to the agency’s senior managers.

The recommendations can take the form of a budget straw proposal and include amended

budget decisions. The agency’s senior managers meet at the annual budget forum in June

or July to discuss and make recommendations on proposed budget decisions. The

Administrator’s final decisions are communicated to the agency along with technical

instructions for preparing and submitting the OMB budget.

2. The EPA’s Budget Submission to the OMB (September–December)

a. OMB Submission — Based on the Administrator’s final decisions, the AA/RAs

prepare their portions of the agency’s OMB budget submission and provide them to

the OB and the OPAA for consolidation into a single document. Each AA/RA’s

submission is usually due to the OMB on the first Monday after Labor Day (13

months in advance of the fiscal year of the request). The OMB submission precedes

any decision-making and is thus not a public document.

b. OMB Review — Following a period of review, the OMB holds hearings with select

AA/RAs to offer them an opportunity to justify their funding requests and proposed

policy changes. The OMB also usually requests additional program and budget

information from the agency. OMB analysts then review EPA’s submissions, and

work within the OMB’s government-wide planning process for that year. Generally

this includes an OMB director’s review. After the director’s review, the OMB

prepares proposed budget levels, policy changes and any additional stipulations and

requirements to send back to the agency.

c. Passback, Appeal, and Resolution — The OMB sends all federal agencies letters

(normally about 10 to 40 pages) with proposed budget levels, policy changes and

additional requirements, which inform agencies how much will be allocated for that

agency in the President’s budget request. The process is commonly called OMB

“passback” (for OMB passing the budget back to the agency) and normally contains

policy directives, information requests and budget numbers.

Almost always, agencies must formally respond to the OMB within 72 hours, in

writing with the Administrator’s signature. When the EPA appeals its budget levels or

any other policy issue, it must decide which issues to respond to and how to respond,

develop arguments and write the appeal letter — and obtain approval from all levels

of management — all within three days. (The EPA almost always appeals some

budget levels and usually policy issues as well.)

Following the appeal, usually OMB and the agencies negotiate back and forth until

they reach a final agreement. This stage is complete after all outstanding issues

between the agency and OMB have been resolved. Issues that cannot be resolved

between the agency and OMB may be appealed to the President. Normally one or two

issues remain open until late in the process, and the budget community must prepare

all the other portions of the budget while these final details are settled.

3. President’s Budget/Congressional Justification (December–January)

Per the Budget and Accounting Act of 1921, the President must submit a budget to

Congress, called the President’s budget, no later than the first Monday in February. The

EPA and other agencies submit detailed descriptions of their budget proposals in a

specific format called the Congressional Justification (CJ). The EPA’s CJ includes the

EPA’s Annual Plan and thus has a formal name, “The Annual Performance Plan and

Congressional Justification.” The EPA CJ includes summaries and special analyses,

displays resource levels for three fiscal years (prior year, current year and budget year);

includes explanations of change (how much each budget line item changed from current

year to the budget year); and narrates the strategies, accomplishments, and budget

requests for each of the agency’s programs.

Each NPM submits his or her portion of the CJ in final form to the OB and the OPAA,

which prepare supplemental schedules, exhibits, final documents and data.

Throughout this preparation period, there is a continuous exchange of information among

various federal agencies, the OMB and the President, including revenue estimates and

economic outlook projections from Treasury, the Council of Economic Advisers, the

Department of Commerce and the Department of Labor. During the President’s budget

preparation, all information, correspondence and data are strictly confidential, and remain

confidential until the President’s budget is officially released to the public.

The OMB, which is charged with broad oversight, supervision and responsibility for

coordinating and formulating a consolidated budget submission to Congress, produces

numerous documents for the President’s budget. The most noteworthy is the Budget

Appendix.

The EPA submits the CJ to the Interior, Environment, and Related Agencies

Appropriations Subcommittees of the House of Representatives and the Senate Interior

Appropriations Subcommittee. Most agencies schedule a press conference on the day of

the President’s budget submission and release their portion of the President’s budget

request to the general public. Many agencies (including the EPA) also develop and

distribute a summary document called a Budget-in-Brief as well as numerous summary

charts and additional explanations requested by the appropriating committees.

After release to the appropriators, the CJ is also published on the Web as the detailed

justification that accompanies the EPA’s portion of the annual President’s budget request

to Congress.

4. Congressional Consideration (February–September)

a. Congressional (House and Senate) Hearings and Data Requests — Congress holds

formal hearings on the President’s budget for which the Administrator and EPA

senior officials usually testify. Generally the House and Senate Appropriations

Subcommittees hold hearings (Senate Environment and Public Works, House Energy

and Commerce and House Interior, Environment and Related Agencies) and

sometimes Congressional authorizing committees also hold hearings. The

Administrator, and sometimes other officials, testify on the requested levels and

respond to questions received from Congressional committees. Committees also

frequently ask for additional analyses and reports on specific items of interest.

b. Congressional (House and Senate) Review and Mark-Up — The House Interior

Appropriations Subcommittee then conducts a hearing to mark up, or make changes

to, the President’s budget request. A full House Appropriations Committee mark-up

hearing follows. The House Committee mark-up goes to the House floor for a final

vote. Traditionally, once the House passes an appropriations bill, the Senate follows

the same process as the House. Both the House and Senate Appropriations

Subcommittee issue language detailing each house’s mark-ups to the proposed

President’s budget. This information is distributed to the AA/RAs and Regional

Administrators who follow the steps of the legislative process and make note of the

proposed changes, such as increases or reductions to their programs. Senior managers

frequently must also explain the potential impact of proposed funding changes in

impact papers and other documents. Through the Congressional appropriations

process, Congress prescribes restrictions on how the EPA may use funds, such as

amounts that can be expended for facility repairs, or reprogramming limitations.

These will be discussed in more detail in subsequent sections of this directive.

c. Questions for the Record (QFRs) — Committees submit formal QFRs to the agency

that EPA must answer in a timely fashion. All programs must provide an official

response with clear and accurate information.

d. Congressional Conference Action — The Senate and House appropriations bills and

accompanying report language normally vary. To negotiate these differences,

Congress organizes a Conference Committee with representatives from both the

House and the Senate. After the committee reaches agreement, the full House, then

the Senate must vote to approve the Conference Committee Report. If the

appropriations bill is rejected by either the full House or the Senate, the process must

reconvene at the Conference Committee level again.

5. Enacted Appropriation

After the House and Senate pass the appropriations bill, the bill is “enrolled” and sent to

the President for signature or veto. Currently, there are 12 regular appropriations acts,

which could be passed and enacted annually. However, Congress sometimes enacts an

Omnibus Appropriations Act, in which many separate appropriations are grouped into

one bill. The EPA’s appropriations are part of the Department of the Interior,

Environment, and Related Agencies Appropriations Act. Additional appropriations

decisions and restrictions applicable to all federal agencies, such as annual payroll cost of

living increases, may be included in a Financial Services and General Government

Appropriations Act. Late Congressional action on an appropriations act can delay

development of the EPA’s enacted budget.

a. Continuing Resolutions/Omnibus Appropriations/Shutdown — Although the

Congressional Budget Act requires completing the governmentwide process by

October 1, in recent years Congress has not met this deadline. In this case, when an

agency’s annual appropriations act is not enacted by the start of the new fiscal year

(October 1), the Congress will usually pass one or more Continuing Resolutions

(CRs), which allow agencies to continue operations for a specific period of time

generally under the same conditions, limitations and other provisions as those

contained in the last enacted appropriations act. The CR is typically at the amount

that was appropriated the year before, pro-rated to the number of days specified in the

CR. During the fiscal year, Congress ultimately passes the agency’s annual

appropriations act, which could take the form of a CR through the end of the fiscal

year, or an Omnibus Appropriations Act covering all agencies whose individual

appropriations acts have not been enacted.

b. Shutdown — If no new money is appropriated by either a CR or an appropriations act,

the agency must shut down, since it lacks the authority to spend any new money.

There are limited exceptions for specific functions and tasks for which an agency may

be authorized to incur committed funds in advance of appropriations. Activities may

be shut down even where there are some funds available to carry them out due to

inter-related programs not being funded because of an appropriations lapse.

EPA’s “Contingency Plan for Shutdown” (updated October 1, 2015) includes more

detailed shutdown information, and is available at

http://www2.epa.gov/sites/production/fiehttp://www.epa.gov/lapse/resources/epa-

contingency-plan-2013.pdf.s/2015-09/documents/2015-epa-contingency-plan-

september242015.pdf

c. Apportionment — OMB apportions the CR using an automatic apportionment

bulletin. The bulletin states the rate that expenditures may be incurred under the CR.

Under a CR, the OB provides guidance to each allowance holder (AH) stating the

level and rate of expenditures that the AH may incur by appropriation/allowance.

This guidance may include a temporary Advice of Allowance (AOA). AHs must

restrain spending during a CR to ensure that the EPA does not violate Congressional

or OMB limitations.

6. OMB Apportionments (October)

Following Congressional enactment of appropriations legislation (including annual

appropriations, continuing resolutions or supplemental appropriations) the EPA OB

Director must request apportionments from the OMB. Apportionment requests for

carryover balances, recovery authority (deobligations of prior year funds) and

reimbursable authority (to cover agreements to provide goods and/or services for other

agencies) do not require legislation but are included in the apportionment request. In

accordance with OMB Circular A-11, Part 4, “Instructions on Budget Execution,” OMB

Standard Form SF-132 (letter apportionment format) is submitted by the EPA to make

these requests. OMB reviews the request and, when satisfied, it signifies approval by

signing the document(s).

EPA must request apportionments from OMB prior to using funds, for the reasons below:

• 31 U.S.C. 1513, requires that all appropriations be administratively apportioned by

the OMB Director to ensure expenditure at a controlled rate, which will prevent

deficiencies from arising at the end of a fiscal year.

• 31 U.S.C. 1512(b) provides that apportionments need not be made strictly on a

monthly, quarterly or other fixed time basis, nor must they be for equal amounts in

each time period. The apportioning officer may also consider the activities, functions,

projects, or objects of the program being funded and the usual pattern of spending for

such programs in deciding how to apportion the funds.

The OMB may apportion budgetary resources for calendar quarters (Category A

apportionments); for “other than quarterly basis” for activities, projects, objects

(Category B apportionments, generally annual); or for a combination thereof. The

apportionment requirement is designed to prevent an agency from spending its entire

appropriation before the end of the fiscal year and thus putting the Congress in a position

in which it must either grant an additional appropriation or allow the entire activity to

come to a halt.

Many agencies do not receive the full amount of their appropriations at the beginning of

the fiscal year. However, since FY 1995, OMB has generally apportioned all of the

EPA’s funds in the first quarter. This has been transmitted using a letter format, which

apportions all agency funding. Beginning with FY 2002, the standard apportionment

form, SF-132, was transmitted to the OMB electronically. Once an OMB-approved SF-

132 is returned to the agency, the funds may be used. The OB reconciles the

apportionment SF-132 from the OMB with the agency budgets that are loaded into

Compass, which is the agency’s financial system, to ensure that there are no

discrepancies.1

• Carryover — Carryover (unobligated, unexpired funds from the previous year) does

not automatically remain apportioned. With regard to carryover of funding that has

not expired and that makes funds available beyond the current fiscal year, new

apportionment action is required for the new fiscal year unless OMB determines

otherwise. For balances of prior year budget authority, initial estimated

apportionment schedules for the year are due to the OMB by August 21 of each year,

per 31 U.S.C. 1513(b)(1)(A).

For more detailed information on apportionments, see both OMB Circular A-11 (Part

4) and Chapter 6 of the Principles of Federal Appropriation Law.

7. OMB Apportionments — Operating Plan (October–November)

After signing the appropriation, the President generally requests the agency to submit a

formal Operating Plan implementing the newly enacted budget. The deadline is normally

30 days to develop and submit to the appropriating committees.

All Congressional changes in the enacted budget must be reflected in the agency’s

Operating Plan. Generally, adjustments must be made, as well as specific directions that

must be followed, such as directed increases or decreases along with overall funding level

changes. In addition, the Administrator may determine in the development of the

Operating Plan that available resources need to be redirected to meet emerging unfunded

priorities and some technical adjustments may need to be made for factors such as

changing payroll or benefits costs. Making these decisions and implementing these

changes result in the development of the agency’s enacted Operating Plan, which is then

submitted first to OMB for review and then to Congress for information.

Since the President’s budget was submitted at least seven months prior to the actual

passage of an appropriation, cost estimates must be updated and shown in a new

document. In addition, frequently events transpire in the intervening months, such as

court cases, that also must be addressed in the updated budget. This plan is accompanied

by detailed descriptions of any proposed changes. Congress may then expect or reject

some of the proposed changes.

1 Key internal controls provide reasonable assurance that material errors will be prevented or timely detected and can be tested to

provide assurance over financial assertions.

8. EPA Distribution Process (Allocation) (October–November)

a. Allotments (October) — OMB apportions all appropriated funds to the EPA’s OB

Director, who serves as the agency’s apportionment holder and single allotment

holder. The agency does not have sub-allotments. The allotment is the only formal

administrative subdivision of funds under 31 U.S.C. 1514 and 31 U.S.C. 1517 and is

the OB Director’s authority to issue “Advices of Allowance” to EPA AHs. (These

formal allotments apply to Cabinet-level departments. The department as a whole

“allots” funds to a bureau. For example, the Department of Commerce allots funds to

the National Oceanic and Atmospheric Administration.)

b. Allowances (November) — EPA provides funds to headquarters program offices and

regions for meeting agency operational needs through allowances. They are not

formal sub-allotments of apportionments or administrative divisions of funds for the

purposes of 31 U.S.C. 1514 or 15171 (Administrative Division of Apportionments

and Prohibited Obligations and Expenditures). Allowances are the amount of money

made available to program offices and regions in Compass.

c. Allowance Holders — Almost all NPMs and regions control their budget at a lower

level, called an AH. This means that rather than managing one large budget, the NPM

has several AHs within the NPM. Generally these AHs are major subprograms or

offices within the NPM, for example the Drinking Water program within the Office

of Water.

Compass has administrative controls to ensure that AHs do not commit or obligate

funds in amounts that exceed their allowance. Allowances are only issued after

Congress has passed an appropriations bill the President has signed, and an Operating

Plan that has been approved and entered into Compass.

In some years, the budget has been enacted and the agency’s operating plan has been

submitted to the appropriations subcommittee’s staff but there remain pending items that

the appropriating subcommittees must approve such as reprogrammings. Generally, the

OB will load the Operating Plan into Compass but withhold issuing items that are

pending coordination with the appropriations subcommittees.

The AHs are responsible for staying within the full-time equivalent (FTE) ceilings and

fund ceilings contained in the agency’s Operating Plan.

The EPA cannot issue allowances that in the aggregate exceed the amount of the EPA’s

apportionment. Allowances establish an EPA organizational framework for managing

funding and permits the appropriate agency officials to commit and obligate portions

their portions of the agency’s Operating Plan.

The majority of AHs are NPMs or Regional Administrators who organizationally manage

portions of many EPA appropriations. The agency has financial management controls in

place to ensure that AHs do not commit or obligate funds in excess of the amount of their

allowance. Further, the AH has the responsibility, authority and technical capability to

issue, withhold or withdraw any or all allowances or portions of allowances as

appropriate. The AH, which is the OB, also has the authority to consolidate allowances

centrally (or designate new AHs), if AHs are not properly managing their allowance.

Figure 2. Budget formulation and execution timeline.

B. Budget Execution Process — Operating Plan Guidance and Allowance Management

Figure 3. Advice of allowance.

a. Nature of Allowances — 31 U.S.C. 1514 provides that agency allotments will be

established at the highest practical level. At the EPA, OMB apportions the

appropriated funds to the EPA OB Director as the agency’s single AH. Note there is a

separate allotment for every appropriation (Treasury account symbol) for every fiscal

year. The OB Director retains the original signed apportionment documents on behalf

of the agency. This is the agency’s formal designation regarding “Administrative

Subdivisions of Funds.” The agency does not have sub-allotments. The one restriction

on the agency’s allotment is that it cannot exceed the amount of the apportionment.

b. AOA Memorandum — EPA’s formal guidance to financial managers about the

critical administrative, financial and other special directions that apply to that year’s

budget. The OCFO’s OB works with other administrative offices (the Office of

Administration and Resources Management’s Office of Grants and Debarment and

the Office of Acquisitions Management’s Office of Environmental Information, as

well as other OCFO offices) to look carefully at the annual appropriations and

associated bill language to find all important administrative, financial and other

directions that programs must follow. The memorandum is intended to provide all the

critical instructions on the use of funds that Headquarters Program Offices and

Regions need to know. It is not a formal sub-allotment of apportionments or an

administrative division of funds for the purposes of 31 U.S.C. 1514 or 1517.

The memorandum contains:

• Operating guidance for the year

• Agency ceilings (if any)

• Limitations to the Operating Plan

• OCFO OB Control Team analysts assigned to each organizations

• Action items

• Major changes from previous years

Fund Control Officers (FCOs) and other financial managers should make sure they

read and understand each year’s AOA as soon as it is issued. Copies of the current

and previous AOA memoranda can be found at

http://intranet.epa.gov/ocfo/budget/execution.htm.

c. Allowances Issuance — Allowances of funds are made available to the respective

AHs through Compass when Operating Plans are completed (or other funding is

similarly approved). The amounts match those in the Operating Plan which is entered

into BAS, the agency’s formulation system. If an appropriation is delayed,

Continuing Resolution funds are issued and loaded into Compass. When an

appropriation is completed, the difference between the sum of the CR amounts and

the amounts in the appropriation bill is entered into Compass for each AH. The total

amounts loaded correspond to those in the Operating Plan. The Operating Plan is a

more detailed budget that adds up to an allowance. Once the Operating Plan is loaded

into Compass, the OB sends an email to all budget contacts to inform them that

Compass is ready for entry of funding commitments and obligations, and any internal

reprogrammings that may be needed. Occasionally, OCFO will have to hold back

portions of the budget that remain in dispute.

d. Adhering to AOAs — The allowances issued and represented in Compass by Budget

Query level 4 specify how much the AH may commit and obligate in the fiscal year.

Level 4 updates instantaneously to reflect commitments, obligations, payments and

reprogrammings processed in Compass.

e. Compass Levels of Detail — Compass captures this detail by structuring the budget

in 9 levels and provides EPA with the capability to set fund control at either the total

Operating Plan level or by using a combination of data elements shown below.

i. Appropriation — Total amounts appropriated by Congress for a particular fund

such as environmental programs and management (EPM) or Superfund.

ii. Apportionment — Normally the same as #1 above, but occasionally OMB will

delay apportionments of portions of the budget.

iii. Allocation to the Resource Planning and Implementation Office (RPIO) —

Allocation to the EPA’s major organizational units, the 10 regions and 13

headquarters offices.

iv. Sub-allocation to AH — Most RPIOs divide the management of funds by

divisions within the RPIO.

v. Allotment to Program Area — Congress appropriates funds to certain program

areas which the EPA must track and report on. Program area must be carefully

tracked because of re-programming limits. (Less of $1 million or 10 percent of the

total value of the program.)

vi. Sub-allotment to Program Results Code (Program Project) — The EPA’s budget

is formally submitted and reviewed by Program Project. (Some program projects

also must be tracked for reprogramming limits.)

vii. Allowance to Budget Object Class (BOC) — The EPA must report on how it uses

funds, by grants, payroll, contracts, travel, etc., which are tracked using BOCs.

Note that the actual obligations of funds are made using Finance Object Classes.

viii. Sub-allowance to Organization — Some organizations, principally the Office of

Research and Development, also track funds by organization.

ix. Additionally, Compass captures reimbursable funds provided to specific funds-in

reimbursable projects.

Budgets must be downloaded at detailed levels in order to comply with Congressional

direction. A control on a combination of data elements may specify any particular

appropriation, RPIO, AH, Program Results Code or BOC. AHs also have the capability

in Compass to set their own spending controls on sub-AH levels (such as the

Responsibility Center level or lower) without OB approval.

Some organizations are sufficiently large or geographically spread that an AH subdivides

its organization and Operating Plan into smaller units of control called Responsibility

Centers. In Compass, the Responsibility Center is at level 8. AHs and Responsibility

Centers may view their respective allowances or Operating Plan at any time in Compass.

The financial system prevents funds from being committed or obligated before the

enacted budget has been loaded by the OB.2 The fund control lockout level at the EPA is

set in Compass at the BOC level, i.e. level 7. AHs will have a record for each

appropriation for which they hold an allowance. This includes carryover. For example,

the AH who is the Director of the XYZ Program may hold the following four allowances

under their respective appropriations:

• EPM

• Leaking underground storage tanks (LUST)

• Superfund

• Superfund Reimbursable

3. Reprogramming

EPA maintains strict tracking and controls on moving funds. FCOs and other financial

managers need to become familiar with the rules and make sure they are followed. In

addition, they must be sure to clearly explain any movements of funds.

2 Key internal control

a. Definition and Purpose — A reprogramming is a “shifting of funds within an

appropriation or fund account to use for different purpose(s) than those contemplated

at the time of the appropriation” (A Glossary of Terms Used in the Federal Budget

Process, Government Accountability Office, September 2005). A reprogramming

also consists of any significant departure from the program described in the

Congressional Justification even without a change in funding. Those responsible for

preparing/processing reprogrammings should consult the annual AOA Memorandum

for explicit congressional direction and reprogramming controls. Additionally, the

EPA has agreed to notify the Congressional Committees of reorganization of offices,

programs or activities prior to the planned implementation of such reorganizations.

The EPA performs four different types of reprogrammings within Compass: RPs,

CRPs, DRPs and IRPs.

• RPs (reprogrammings) are done for resource changes between organizations and

between budget object codes.

• CRPs (Congressional reprogrammings) are done when there are resource changes

between program areas or Congressional protected program projects and

subprogram projects.

• DRPs (deobligation reprogrammings) are done for recertification of funds.

• IRPs (IRMS reprogrammings) are done for Office of Research and Development

IRMS reprogrammings.

Normal reprogrammings (DRPs, IRPs and RPs that are within Congressional limits)

occur daily — but CRP reprogrammings that may impact the Congressional limits of

$1 million or 10 percent are limited in number and are reserved for high-priority

agency needs. All CRP reprogrammings require a clear explanation in Compass.

4. Conditions

The EPA is limited in how much it may move funds.

a. Within an Appropriation Only — Resources may only be reprogrammed within a

single appropriation or fund in Compass. Movement between appropriations requires

“appropriation transfer” or balance transfer authority, which Congress has to enact in

law. The only transfer that Congress has provided to the EPA is the Superfund

transfer to the science and technology and IG accounts. EPA officials must obtain

explicit legal authority to execute other transfers.

• Funds must also be available. Only funds available for use — uncommitted,

unobligated and unexpended — may be reprogrammed. This can be verified

through a budget query in Compass.

• May not violate any Congressional directives — certain funds have

Congressionally mandated minimum levels of spending, and other programs have

additional limits.

Reprogramming activity at the start of the fiscal year does not usually begin until the

EPA has submitted the enacted budget to Congress. As a matter of policy, the EPA

adheres to reprogramming limitations contained in the Congressional Appropriations

Committee Reports accompanying the annual appropriations act. In cases where

either the House or Senate Appropriations Committee report displays an allocation of

an appropriation below a budget activity level, the more detailed level shall be the

basis for the reprogramming action. Managers use reprogrammings to meet the

changing needs and priorities of the agency.

Some examples of reprogramming actions are:

• Resource changes between program results codes or program areas

• Resource changes between organizations (e.g., AHs, Responsibility Centers)

• General resource reductions or increases

• Resources changes between BOCs

BAS and Compass are set up to monitor resource ceilings and floors through

comparisons between operating plans and obligations and expenditures. All

organizations are responsible for monitoring their obligations against the Operating

Plan and then reprogramming when needed in advance of commitment and

obligation. Failure to adhere to this policy could result in a lower level of

organizational lockout and/or withdrawal of allowances by the Agency Allotment

Holder, the OB Director.

Advice of

Allowance

• Review for specific

instructions regarding payroll,

defacto, and Congressional

controlled program project

reprogrammings.

Amount of

Reprogramming

• Inform Congress prior to shifting more than $1 million or 10 percent

(whichever is smaller), in or out of Program Areas and certain program

projects and Sub-Program Projects

• If the reprogramming is less than a $1M or 10%, but ensure the

availability of funds.

Availablility of

Funds

• Funds must be available (uncommitted, unobligated, and

unexpended) in the accounting line the funds are coming from.

• Cannot take from one appropriation and give to another(ie.

Superfund to EPM)

Entering a

Reprogramming

• Office of Budget works with the

organization’s budget office to enter

and process the reprogramming.

Commitment &

Obligation

• Organizations are

reponsible for monitoring

their obligations against

the Operating Plan and

reprogram in advance of

any commitment/

obligation.

5. Congressional Limits

Figure 4. Reprogramming process.

Congressional appropriating subcommittees have set limits on how much funding the

EPA may move across program areas, select program projects, and select sub-program

projects that the agency adheres to as a matter of policy. The subcommittees’ report

language directs the EPA to inform Congress before shifting more than $1 million or 10

percent (whichever is smaller), in or out of program areas and certain program projects

and sub-program projects. This restriction includes all movement of funds including

those caused by payroll cost shifts. The House or Senate Committee on Appropriations

report language generally also includes additional information, directions and/or

restrictions on agency reprogrammings and other financial matters. The OB reviews this

language and issues an annual AOA memorandum to all agency financial managers with

these directions.

Each year’s AOA includes an attachment showing how that year’s program projects are

grouped together in program areas. For the most part, money can be reprogrammed

between program projects that are in the same program area — except for some program

projects that Congress specifies in its report language for which the $1 million/10 percent

limit also applies. For example, in 2014 program projects civil enforcement, criminal

enforcement, enforcement training, environmental justice and NEPA implementation all

fell under the enforcement program area — and Congress only placed additional specific

restrictions on the program project environmental justice. This means that monies may be

shifted between all the program projects within the enforcement program area without

checking for re-programming limits — except for the environmental justice program

project, for which the $1 million and 10 percent limit also applies.

Congressional committee language has historically provided an exception to the

reprogramming limitation for the State and Tribal Assistance Grants (STAG) account

relating to (1) requests to move funds between wastewater and drinking water objectives

for grants targeted to specific communities; and (2) reprogramming of performance

partnership grant funds.

The OB will assist RPIOs in providing Congressional notification for reprogrammings in

excess of the Congressional limitation if an office wishes to proceed with the request.

Anticipated need to reprogram funds in excess of the Congressional limitation should be

provided with advance notice to the Formulation, Control and Policy Staff in the OB.

They will provide guidance on current procedures such as format, content and timing.

However, the proposed reprogramming should not be entered into Compass until the

agency has a response from the Committees and the program is notified by the

Formulation, Control and Policy Staff. It is important to stress that Congressional

language limits reprogrammings to urgent or emergency matters. Approval is not certain

and may take more than a month. In addition, OMB must also clear any formal

reprogramming requests.

OB also will monitor and enforce compliance with both the letter and spirit of these

Congressional limitations.

RPIOs will not be permitted to compromise the Congressional limitations by:

• Splitting reprogrammings (for the same general purpose) into more than one

document to circumvent the limitation.

• Reprogramming incremental amounts (for the same general purpose) into or out of

more than one organization (such as 10 regions) where the cumulative amount

moving between programs/projects is in excess of the limitation.

• Reprogramming or spending any amount of statutorily mandated Congressional add-

on/earmarked funding for a purpose other than that stipulated by the Congress in law,

(add-on plus base in some instances).

• Over-obligating a program/project in excess of a Congressional limitation and

circumventing the reprogramming process (de facto reprogramming).

• Reprogramming between activities within a PRC goal/objective that does not move

Operating Plan resources but represents a major policy shift.

Information regarding the current restrictions and limitations can be found in the annual

AOA.

6. Budget Automated System (BAS) Pre-Approval of Reprogrammings

As a result of the limits set by Congress on reprogrammings, and the lack of Compass

controls to prevent reprogramming changes, the OB has established a reprogramming

pre-approval process in BAS. For all net movement of funds across program areas,

program projects or sub-program projects subject to Congressional limits,

RPIOs must request approval via a BAS reprogramming document before funds can be

moved in Compass via reprogramming request. On a regular basis, OB reviews the

reprogramming requests and evaluates them for potential approval. OB will approve

reprogrammings under Congressional limits. Proposed reprogrammings that require

Congressional involvement will be evaluated to determine the appropriate action.

Reprogrammings that do not cross programs/projects are not BAS reprogrammings and

can be entered directly into Compass.

7. Reprogramming Limitations (Ceilings and Floors)

Any agency ceiling and/or floor, which may be imposed on EPA appropriations for a

given year, is transmitted by the OB to the agency in the annual AOA.

a. Ceilings — Certain agency resources are designated by Congress or the OMB with a

cap or limitation referred to as a “ceiling.” Ceilings are not resources. Ceilings

impose planning and spending limitations for resources that may not be exceeded.

In a number of EPA appropriations, one or more ceilings may be imposed on the

agency for FTE work years, site-specific and non-site-specific travel, administrative

expenses, and sometimes even specific programs. In addition, the agency may violate

the ADA if its obligations or disbursements exceed specified statutory ceilings in an

appropriations act. Note that the Office of the Inspector General appropriation

account does not have ceilings. The EPA establishes and maintains agency limitations

for the following non-statutory ceilings:

i. Work Year Ceilings – Work years are also known as FTEs. An FTE is the total

number of hours worked or to be worked divided by the number of compensable

hours applicable to each fiscal year. A work year is equal to between 2,080 and

2,096 employee work hours per year, listed by year in OMB Circular A-11

depending on annual calendar fluctuations. All employees count against the

agency work year ceilings.

FTE ceilings are no longer imposed by the OMB or mandated by Congress.

However, EPA continues to maintain FTE (or work year) ceilings as a policy tool

to restrain the obligation of payroll, compensation and benefits resources and to

control the size of the agency’s workforce.

Congress may put language within the act or legislative history to the act that has

explicit FTE implications. At times, FTE caps to certain agency offices have also

been included as administrative provisions in the EPA’s act. Within the agency,

FTE ceilings in workforce appropriations are issued to the appropriate

RPIOs/regions. Each RPIO is responsible for monitoring and managing its FTEs.

RPIOs are also expected to manage FTEs consistent with existing budgets, and

should implement hiring plans such that end-of-year on-board staff levels leave

the agency with flexibility to deal with reasonable budget changes in the next

fiscal year.

Work year ceilings are issued annually and do not carry over from one year to the

next. All other multi-year and no-year ceilings do carry over in conjunction with

the dollar balances. Neither carryover ceilings nor dollars are part of an AH’s

budget until the OB has made them accessible in the Compass Operating Plan.

The agency may not carry over more ceiling than it has carryover dollars, and nor

may any RPIO/region.

ii. Payroll — Payroll costs represent approximately 25 percent of the EPA’s budget.

Each year, payroll costs increase due to cost of living adjustments and within-

grade increases. In 2010, the OB analyzed payroll and FTE utilization with the

goal of finding more efficient and equitable ways to manage and control payroll

costs. Beginning in FY 2011, the OB changed the policy to provide that

reimbursable work years may exceed an office’s FTE ceiling. Under the new

policy, only those reimbursable FTEs where the funding is fairly certain will be

included in the budget. If an office receives additional reimbursable interagency

agreement (IA) funding or fees during the year, or wishes to use CERCLA

122(b)(3) special account funding for FTE, those funds could be used for payroll

without limitation due to the FTE ceiling. Any payroll expenditures are subject to

the terms and conditions of the IA, the CERCLA settlement agreement for the

special account, or other binding requirements. OB will continue to include

routine projected reimbursable FTEs in the budget ceilings levels, but additional

reimbursable FTEs may be utilized without adjustment to the ceiling.

iii. Travel Ceilings and Rules — These administrative ceilings apply to limitations on

travel funded from appropriations such as EPM, science and technology,

Superfund, and LUST and restrict travel obligations for the agency. They are

based on the travel funding levels in BOC 21 in the enacted Operating Plan. Due

to the agency’s need to travel to Superfund sites to respond to emergencies as well

as provide federal oversight at these sites, Superfund site-specific travel does not

count against the travel ceiling set by the agency.

There have been many different limitations and restrictions placed on the use of

travel funds. For example, paying non-federal government employees to attend an

EPA-sponsored conference is not an allowable use of appropriated funds. In

general 31 U.S.C. 1345 “prohibits the payment of travel, transportation, or

subsistence expenses” of private parties at meetings without specific statutory

authority.” Exceptions may be made for invitational travel authorized by 5 U.S.C.

5703 if attendees are providing a direct benefit to the government such as

providing advice under the Federal Advisory Committee Act (FACA). FACA

travel expenses count against the travel ceiling.

Travel expenses also count against the ceiling when a field employee and his or

her spouse travel to headquarters to receive an award under the Government

Employees Incentives Award Act.

Detailed information on invitational travel and other travel related subjects is

available in RMDS 2550B, Official Travel.

To ensure that the agency is in compliance with its ceilings, agency organizations

are provided with limitations of their own (sub-ceilings). An organization, for

ceiling purposes, may be defined as any level within the EPA including RPIOs,

regions, AHs, or even Responsibility Centers. All organizations must stay within

each of the ceilings imposed and must take affirmative measures in advance to

ensure that ceilings are not exceeded at any time.

b. Floors (minimum amounts to be expended) — In multi-year appropriations, all floors

carry over from one year to the next in conjunction with any associated dollar

balances being reissued.

8. Compass Reprogramming Process

The AH/senior budget officer/regional budget officer initiates a reprogramming

document as a result of any planned change, either programmatic or budgetary, to the

current year Operating Plan in Compass. They are responsible for editing and correcting

the reprogramming document.

a. Reprogrammings That Do Not Violate Any Controls or Limitations Will Process

Without the OB’s Approval — The OB control team staff reviews reprogrammings

that potentially exceed ceilings or impact programmatic and policy concerns.

Reprogrammings can be found by going to “Transactions,” “Form/Document

Selection,” and entering the document number.

b. Reprogramming Explanation Required — All reprogramming must have a well-

written, informative purpose statement (justification) in the reprogramming

document. Reprogramming justifications provide the permanent audit trail of the

EPA’s resources and protect the initiator by documenting the rationale.

Reprogramming justifications should simply state:

• What the action achieves for the program(s) or office(s) receiving an increase and,

• What the impact is to the program(s) or office(s) losing resources.

Once all steps are completed, the reprogramming document is approved and

processed in Compass. The initiator can view approval of the document by searching

the document number in Compass’s form/document section. Approved

reprogrammings are reflected as processed.

9. Carryover of Unobligated Balances

Carryover funds are defined as unobligated balances of appropriation accounts, which

have not expired at the end of the fiscal year. Because OMB apportionments expire every

September 30, these carryover balances must be reapportioned to the agency by OMB in

the new fiscal year. Annually, the OB estimates carryover balances that will be

unobligated at year-end and submits carryover apportionment requests to OMB by

August 21 in accordance with OMB Circular A-11 requirements. This helps to ensure

that authority has been granted by the OMB to have carryover funding available to the

agency at the start of the new fiscal year. However, because this authority is based on

amounts estimated almost two months prior to the EPA closing its books for year-end,

the agency must be prudent in the use of these estimated carryover amounts until final

totals are available and estimated apportionments are revised to reflect actual balances.

a. Multi-Year Funds — The EPM, science and technology, and IG operating plans

automatically roll over from the first to the second year of funds availability in

Compass and are available for spending up to the apportioned levels. AHs are not

required to request recertification of second-year recovered funds. Each AH will have

to anticipate and cover any overruns that might occur, since overruns will also impact

the original accounting data as costs are posted in the second year.

b. No-Year Funds — The EPA implemented a new procedure in FY 2014 to apply to

that and future years. However, since the agency cannot go back in time, the former

rules still applied to past years’ funding.

i. Budget Fiscal Year (BFY) 2013 — Similar to the multi-year funds, STAG,

Superfund, LUST, buildings and facilities, and oil spill carryover balances

automatically rolled over in Compass and are available for spending up to the

apportioned levels. These funds will maintain their original BFY/fund identifier

(for example, 2013 T) during FY 2014. If deobligated during FY 2014, these

funds will immediately become available to the AH — recertification is not

necessary.

ii. Budget FY 2012 and Prior — STAG, Superfund, LUST, buildings and facilities,

and oil spill carryover available balances were swept from the budget in mid-

October 2012 via a Compass carryover batch process. Available balances from

the FY 2012 and prior funds were combined into a single carryover fund. At that

time, we reinstated use of the “C” fund codes for carryover of available balances

from FY 2012 and prior funds. The “C” funds are used BFY 2013 to indicate

funds from the prior year (for example, FY 2013 TC).

The OB will centrally manage the Superfund, LUST, buildings and facilities, and

oil spill carryover funds for BFY 2012 and prior years. STAG funds will be

redistributed by the relevant NPMs or redirected for agency priorities. Users

should consult with the Control Team on reclassification of Trust Funds. For

more information on reclassifications please refer to the section discussing

deobligations.

C. Supplemental Appropriations/Natural Disasters

The EPA may receive funding through supplemental appropriations either directly or through

other federal agencies. During the fiscal year, the President may submit to Congress

proposed deficiency and supplemental appropriation requests that he/she decides are

necessary because of laws enacted after the submission of the President’s budget or that are

in the public interest, such as hurricanes (e.g., Sandy, Katrina) and emergency investments

such as the Recovery Act. As with annual appropriations, supplemental appropriations are

submitted to the President through the OMB and are generally submitted as a consolidated

package by the OMB to Congress.

1. Formulation of Supplemental Appropriations

Generally, supplemental appropriations are developed and submitted normally through a

compressed appropriation cycle. EPA must submit spending plans to the OMB and the

appropriators, respond to numerous OMB and Congressional questions, and develop

budgets in BAS. The OMB and the appropriators then prioritize between various

agencies requests and then continue to confer with the agency. All the while (since, in

most cases, supplemental requests are for major disasters), the EPA is working with other

federal agencies through an interagency structure described below.

2. National Response Framework (NRF)/National Disaster Recovery Framework

(NDRF)

The Federal Emergency Management Agency’s (FEMA’s) mission assignments are

issued within the NRF and NDRF structures. The EPA and many other federal agencies

have signed these multi-agency agreements committing all agencies to work together to

best support communities’ response to and recovery from disasters. Under these

agreements, the EPA has agreed to support the federal government’s overall response,

recovery and mitigation goals and to use its own statutory authorities as they may apply

in the emergency situation. Further information about the NRF and NDRF are available

on FEMA’s website, FEMA.gov.

In many larger disasters, the EPA also must coordinate federal oversight and permitting

with other federal regulatory agencies and provide critical expertise as needed. Some of

the major disaster programs that EPA oversight or expertise applies to include:

• FEMA Public Assistance (FEMA-PA) (infrastructure repair) grants.

• FEMA Individual Assistance grants (FEMA-IA) (direct help to people).

• FEMA Hazard Mitigation Grants (HMGP).

• Housing and Urban Development’s (HUD’s) Community Development Block Grant

(CDBG) program, which provides flexible grants for cities, counties and states to use

for a wide variety of projects. (For EPA, it is important to stress that HUD CDBG

grants also include disadvantaged community requirements akin to the EPA

environmental justice goals and that HUD CDBG funds may be used to meet

matching requirements for the EPA grants such as for brownfields cleanups in certain

circumstances.)

• Department of Transportation grant programs across the department’s four operating

administrations (highway, railway, transit and aviation).

• US Coast Guard (USCG) Pollution Removal Funding Authorization (PRFA) are also

used to fund EPA activities.

• The EPA may receive reimbursement from these agencies for some of these oversight

costs under mission assignments or IAs.

3. Federal Emergency Management Agency (FEMA) Disaster Funding — Mission

Assignments

In addition to receiving supplemental appropriations directly, the EPA frequently

receives funding through FEMA mission assignments under the authority of the Stafford

Act and FEMA’s implementing regulations. FEMA issues mission assignments to the

EPA and other agencies to perform specific tasks in a certain time frame.

For example, FEMA issues mission assignments to pay the costs of deploying on-scene

coordinators; evaluating environmental risks, air and water emissions, and/or water

system damage; and performing followup activities. When responding to disasters,

agency managers and employees must be careful to assign all applicable costs to these

mission assignments. This includes all applicable payroll costs and any related contracts

and grants costs for two principal reasons: first, the EPA’s regular appropriations do not

always include authority to perform these tasks, and second, FEMA’s funding is

specifically appropriated to pay for these costs. A mission assignment is similar to an IA

that FEMA issues directly to the EPA in an emergency situation. The OCFO’s Cincinnati

Finance Center (CFC) received the official mission assignments from FEMA. Regional

comptrollers and other financial managers should coordinate directly with that Finance

Center during a major disaster.

4. USCG Pollution Removal Funding Authorization (PRFA)

The EPA may also use a PFRA to employ other agencies to assist with oil spill removal.

5. Internal Control Plans

For supplemental appropriations and other specific separate funding sources, the EPA is

frequently required to develop and implement Internal Control Plans that summarize how

it will manage the appropriated funds. These plans should be designed to focus, not

supplant, the EPA’s existing internal controls so that the agency can efficiently report

progress and results from these separate funding sources to stakeholders and capture the

data needed to ensure that funds are used appropriately, effectively, and expeditiously.

Previously these plans were sometimes referred to as Stewardship Plans.

6. Supplemental Execution Requirements

a. Regular Federal Accounting and Financial requirements Still Apply — The EPA

must still request funds apportionment, track by program project, etc.

b. Additional Requirements — Supplemental appropriations frequently have additional

requirements or conditions which the EPA must manage, and/or separate reporting

requirements. For example, Hurricane Sandy supplemental funds added a new

criterion “resiliency” for water projects, and required financial status reporting and

delivery of an Internal Control Plan to Congress, the IG and the Government

Accountability Office.

c. Don’t Co-Mingle Funds — The EPA must be careful not to co-mingle funds provided

in regular and supplemental appropriations unless expressly authorized to do so by

the terms of the supplemental appropriation.

d. Emergency Related Expenses Tracking — Particularly in natural disasters, the EPA

must begin tracking expenses incurred before the passage (or frequently even the

consideration) of supplemental appropriations. Managers involved in response efforts

should look for guidance from the OCFO advising how employees should track time

and dollars devoted to these efforts. In large disasters, the OMB frequently asks how

much agencies have spent supporting disaster efforts, and these records become

crucial in supporting agency efforts to request either funding for or reimbursement for

these efforts. In addition, supplemental appropriations sometimes include funding for

the EPA’s management and oversight expenses.

D. Reimbursable Allowances and Interagency Agreements

Reimbursable authority is additional budgetary authority authorized by congressional statute

and apportioned to the EPA by the OMB. This additional authority is requested by the

agency and permits the EPA, if authorized by statute, to obligate collections and other

funding sources (both federal and non-federal) that are in addition to the EPA's annual

appropriations. The authority is established using an Apportionment and Reapportionment

request (OMB Standard Form SF-132).

At the EPA, reimbursable allowances are only issued if the EPA is the receiving agency.

Some of the instances for which the EPA has utilized the reimbursable allowance mechanism

in the past are listed below.

1. Reimbursable Interagency Agreements

This is by far the most common reimbursable situation. Under this arrangement, other

federal agencies provide funding to the EPA for services which the agency provides

directly or for which one of the EPA’s contractors are utilized. The authority cited for

such agreements may be (1) the EPA’s “cooperation” authority for IAs (note that these

sections are found in the EPA’s authorizing legislation — e.g., the Resource

Conservation and Recovery Act, the Clean Air Act, the Clean Water Act); (2) the

Clinger-Cohen Act, also known as the Information Technology Management Reform

Act; and (3) the Economy Act.

IAs are overseen and processed by the Office of Administration and Resource

Management’s Office of Grants and Debarment, which must approve a determination and

finding relating to Economy Act IAs that involve contracts. Once signed, an agreement is

forwarded to and recorded by the CFC, which handles the details of the billing.

2. Indirect Costs

Under the Economy Act and the 1996 National Defense Authorization Act, section

325(d), “Cooperative Authority,” EPA has the authority to bill other Agencies for indirect

costs. Since January 28, 2008, EPA’s policy has been that all new agreements must

include indirect costs. This does apply to IAs established prior to 2008. The only

exception is when there is a clear legal rationale and requirement not to charge indirect

costs. However, these exceptions must be approved by the OCFO and the Office of

General Counsel. Reimbursable IAs with indirect costs require proper documentation

before reimbursable authority may be requested.

3. Incurring Obligations

Incurring obligations under an IA is similar to incurring obligations under a contract. At

the time the agencies involved in an interagency transaction execute an IA (whether an

Economy Act IA or an IA under another authority), the requesting agency (sometimes

referred to as the customer/ordering/initiating agency) must incur an obligation for the

costs of the work to be performed. The agency providing the services is commonly

referred to as the servicing agency.

To properly record an obligation, the ordering or initiating agency must have

“documentary evidence of a binding agreement” (the IA) for “specific good(s) to be

delivered…or work or service(s) to be provided,” per 31 U.S.C. 1501(a)(1)(B). This

requirement for specificity is a long-standing principle of appropriations law. As a result,

an IA must describe with reasonable specificity the services that will be performed or the

goods that will be provided, so that the ordering agency may properly record an

obligation.

4. Time Limitations of Funds Still Apply

If an agency identifies a bona fide need, it must execute an IA (whether it is an Economy

Act IA or an IA under another authority) before the end of the period of availability of

the funding for obligation.

5. ADA Still Applies

Making disbursements in excess of an appropriation cash balance implicates the ADA

and close monitoring of the available cash balance for the affected appropriation should

be exercised. For IAs where the EPA is receiving funds from another agency (also known

as funds-in IAs) to provide a certain good or service, the EPA must first ensure that the

funds were received from the other agency to avoid creating an over-obligation in which

the other agency might fall behind in making payments to the EPA. If the cash balance

falls below $2,000,000, further obligations from the fund should be stopped until

reimbursement or an advance is received from the paying agency to replenish the cash in

the appropriation.

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7. Interagency Agreement Funds-In Responsibilities

a. Project Officer (PO): The responsibilities of the PO include providing programmatic

management and oversight of unliquidated obligations (ULOs) for the IA. In

particular, the PO obtains the current indirect cost rate and develops the IA funding

package, including the relevant programmatic terms and conditions. The PO is also

responsible for (1) monitoring project progress; (2) determining whether funds should

be deobligated or remain available for authorized project activities; (3) timely

notifying the IA specialist and the CFC, as appropriate, of issues impacting the

project or requiring the adjustment of funds; (4) initiating deobligation action as

necessary; and (5) maintaining adequate documentation of project management

activities from inception to closeout. 90 days prior to expiration, the PO will initiate

discussion with other the other agency to determine whether an extension is needed.

b. Fund Control Officer (FCO): The FCO has the primary responsibility for reviewing

and committing funding documents related to the IA, preparing necessary

reprogramming requests to the OB, and monitoring budgets and spending of the IA.

The FCO assists the IA specialist and the PO in (1) requesting reimbursable authority

for the IA from the OB; (2) committing IA funding documents; (3) monitoring

commitments and budgets for the IA; (4) decommitments of IA funds when

requested; (5) providing any budget or spending reports for the IA when requested;

and (6) ensuring proper review for any ULO related to the IA.

c. IA specialist: The IA specialist has the primary responsibility for the award and

administration of the IA through final closeout. The IA specialist works with the PO

to ensure that appropriate terms, conditions and enforcement of the IA are taken as

necessary to resolve issues. In consultation with the PO and CFC, the IA specialist

takes action to deobligate funds that the PO determines are no longer needed under

the IA. The IA specialist also ensures that proper documentation is maintained in the

IA administration file to support related administrative actions.

d. Cincinnati Finance Center (CFC): The CFC has the primary responsibility of

conducting quarterly reviews and all billing related to the IA. This includes (1)

calculating indirect costs based on the negotiated rate in the IA, (2) uploading

invoices and indirect rates into Compass, (3) entering IPAC and collection upload, (4)

the distribution of indirect collections, and (5) reconciling the IA.

E. Intergovernmental Agreements (Agreements with Other Government Entities)

1. State or Local Governments — These are provided for under the Intergovernmental

Cooperation Act of 1968. In this arrangement, the EPA provides specialized services to

state or local governments on a reimbursable basis. Note that the services must be

provided by the EPA employees rather than agency contractors.

2. Foreign Governments and International Organizations — These are provided for by

specific legislation, such as section 607 of the Foreign Assistance Act (22 U.S.C. 2357),

which allows the EPA to receive funds from foreign governments and certain

international organizations in exchange for services.

3. Private Firms - Federal Technology Transfer Act (FTTA) — FTTA is authority for

Cooperative Research and Development Agreement (CRADA) income and royalty

payments from licensing agreements with private firms, which will pay royalties to the

federal government for an exclusive license to use federally developed technology. FTTA

CRADA funds are held in trust for the cooperators and may be used solely for purposes

specified in the CRADA. CRADA funds are subject to recertification and the same

internal controls as appropriated funds.

FTTA royalty funds lapse at the end of the fiscal year following the one during which

they were received.

a. Advance State Match/State Cost Share — This is the percentage of site response costs

matched by the individual states either after-the-fact or, under rare circumstances, in

advance in the Superfund program.

b. Reimbursable Work Years — Additional work years to undertake the terms of an IA

may be included if funding is provided and the period of performance permits hiring

staff, or for smaller IAs assigning existing staff.

c. FIFRA IPAs — Intergovernmental Personnel Act Mobility Program employees under

the Intergovernmental Personnel Act of 1970 and the Federal Insecticide, Fungicide

and Rodenticide Act of 1972.

d. Recycling Fees: Collections from the agency’s recycling program.

Not all instances for which the EPA uses the reimbursable allowance mechanism are

situations of actual reimbursement. Many are up-front collections, such as fee programs,

inter-governmental agreements, and CERCLA cash-outs where the agency has statutory

authority to retain and use funds, and it is the best mechanism for OMB to provide the

obligational authority to the agency. In all cases, however, where other organizations are

providing funding, there is a net zero impact (the result is neither an increase nor

decrease) on the EPA’s enacted appropriations following disbursement and/or

reimbursement. Also, the reimbursable apportionment authority is not a budgetary

resource until an agreement is entered into (if an IA) or funds are received (if a

collection) and the apportionment authority is thereby funded.

The appropriation accounts for which the EPA receives reimbursable authority from

OMB are EPM, S&T, LUST UST, Superfund, IG , and OIL. Since reimbursable

agreements may involve any of the BOCs, authority will be issued in the appropriation

for which the object class and/or work being performed is appropriate. Because there is a

net zero impact on the EPA’s enacted appropriations, ceilings and floors, if any, do not

apply except in the case of reimbursable work years (FTEs).

Not all unfunded agency reimbursable authority and not all unobligated reimbursable

allowances expire at year end. If the reimbursing agency’s funding has not expired at

year end, RPIOs may request a reimbursable allowance in the new fiscal year to cover

any unobligated portion of their agreement(s).

For more on reimbursable IAs and the reimbursable process, see RMDS 2550C-04-P1,

Chapter 4, “Interagency Agreements: Requesting Reimbursable Authority.”

F. Fees and Fee Programs

OMB Circular A-25, which implements the Independent Offices Appropriations Act (IOAA)

(31 U.S.C. 9701), requires agencies to charge user fees for federal activities that provide

private parties with special benefits greater than those provided to the general public unless

certain exceptions apply. However, the EPA must have statutory authority to “retain and use”

fees and the IOAA does not provide the requisite authority. Otherwise, fees the EPA collects

must be deposited in the General Fund of the Treasury as miscellaneous receipts, as required

by 31 U.S.C. 3302 (b). Some statutes that authorize the EPA to collect fees are discussed in

Chapter 2.

Several programs at the EPA are authorized by statute to collect fees. Only if authorized in

the statute may collections that are received by the agency be retained and used. The period

of availability for obligation of fee revenue is typically specified in the statute as well. If not

authorized by a statute, the fees must be deposited as miscellaneous receipts to Treasury as

required by 31 U.S.C. 3302 (b), or as directed in a statute to a particular fund subject to

Congressional appropriations.

1. Pesticide Registration Improvement Extension Act

This 2012 act (PRIA 3, expiring on September 30, 2017) authorized two fees by

amending 1988’s FIFRA:

a. Pesticides Maintenance Fee — Section 4(i) of FIFRA authorizes the EPA to charge

annual maintenance fees for pesticide registrations. The fees are deposited into

Treasury’s Reregistration and Expedited Processing Fund and are available to offset

the costs of the reregistration and registration review programs, for expedited

processing of some pesticide applications, and to enhance information systems and

improve tracking of pesticide registrations. Fees the agency collects under this

authority may also be used to review and evaluate new inert ingredients. The fund is

available for the EPA’s use without fiscal year limitation. The amount of fee proceeds

the EPA may expend in a given fiscal year is based on the amount of appropriated

funds the agency expends for registrations and expedited processing. In FY 2015, the

EPA expects to collect approximately $27.8 million from this fee program.

b. Enhanced Registration Services Fee — Section 33 of FIFRA authorizes fees for

services related to registration of pesticides in the United States. This fee-for-service

provision sets deadlines by which the EPA must make decisions on applications. This

process has introduced new pesticides to the market more quickly. In FY 2015, the

EPA expects to collect approximately $11 million from this fee program.

Congress must authorize the EPA to obligate the PRIA fees the agency collects in its

annual appropriation act. Additionally, there is a PRIA provision governing whether the

agency may collect PRIA fees based on the amount of funds appropriated for certain

Office of Pesticide Programs functions in a fiscal year. In some fiscal years, Congress has

overridden this PRIA provision in annual appropriations acts. Whether the PRIA

provision is overridden in any given fiscal year will depend on the language of the

appropriation act.

2. Toxic Substances Control Act of 1976 (TSCA)TSCA authorized two major fees:

a. Premanufacturing Notice (PMN) Fee – This fee is collected for the review and

processing of new chemical PMNs submitted to the EPA by the chemical industry.

These fees are paid at the time of submission of the PMN for review by the EPA’s

Toxic Substances program. PMN fees contain a cap on the amount the agency may

charge for a PMN review. Fees collected for this activity are deposited in the U.S.

Treasury. The EPA estimates that $1.1 million will be deposited in FY 2015.

b. Lead Accreditation and Certification Fee — TSCA Title IV, Section 402(a)(3),

mandates the development of a schedule of fees to cover the costs of administering

and enforcing the standards and regulations for persons operating lead training

programs accredited under the 402/404 rule and for lead-based paint contractors

certified under this rule. The training programs ensure that lead paint abatement and

renovation professionals are properly trained and certified. Fees collected for this

activity are deposited in the U.S. Treasury. The EPA estimates that $16.0 million will

be deposited in FY 2015.

c. Additional fees and other changes

G. Special Accounts

Section 122(b)(3) of the CERCLA of 1980, 42 U.S.C. Section 9622(b), authorizes the EPA

to retain and use funds received through an agreement for the purposes of carrying out the

agreement. The EPA receives funds under CERCLA 122(b)(3) through payments from

potentially responsible parties (PRPs) to address past and/or future response costs at

Superfund sites. The EPA retains these funds in site-specific accounts called “special

accounts.” Through FY 2014, the EPA has collected over $4.5 billion from PRPs, earning

approximately $428.3 million in interest. In addition, the EPA has transferred over $26.8

million to the Superfund Trust Fund. The EPA has disbursed/obligated $3.0 billion, leaving

about $1.95 billion in about 1,000 special accounts to pay for further response actions. The

EPA’s policy is to use special account funds for site activities before using appropriated

resources so that appropriated funds are conserved for sites where no viable or liable PRPs

can be identified.

The amount available in special accounts does not represent the level of annual funding the

EPA would be able to use for many Superfund sites. The stage of site cleanup and the nature

of site contamination also factor into how quickly a project can proceed through the

investigation, design and construction process required to address contamination.

Special accounts are site-specific, interest-bearing sub-accounts within the Hazardous

Substance Superfund Trust Fund. The EPA establishes a special account only if there is

future work at a site and it expects to incur future costs. The use of a special account to fund

response actions is determined by the settlement agreement under which the funds were

received. Upon receipt of the funds, the agency categorizes special account receipts in three

different payment types for financial management and accounting purposes. They are:

• TR2, Non-Federal Special Accounts Unearned Revenue — Represents amounts received

under a non-federal cash-out settlement (principal only, excludes late payment interest).

This code pertains to collections related to non-federal settlement amounts for costs to be

incurred (work to be performed) in the future.

• TR2A, Federal Special Accounts Unearned Revenue — Represents amounts received

under a federal cash-out settlement (principal only, excludes late payment interest). This

code pertains to collections related to federal settlement amounts for costs to be incurred

(work to be performed) in the future.

• TR2B, Special Accounts Earned Revenue — Represents amounts for the past cost

collections, late payment interest collections from PRPs and interest revenue earned on

special account collections that have not been disbursed. This code pertains to collections

related to settlement amounts for costs previously incurred and includes collections on

future response cost (oversight) bills for work performed.

1. Special Accounts Processes

Each fiscal year, within the Superfund section of the apportionment, the EPA requests an

annual apportionment of reimbursable authority from the OMB for the estimated amount

of special account funds to be used. Once the OMB grants reimbursable authority, this

authority is housed in reserve and maintained and monitored by the OB at a national

level. Regions can request available special account funds for specific Superfund sites via

a reprogramming from the OB. Through standard CBOR reports, the OB monitors

available special account funds at the RPIO level. Requests that exceed the available

balance at the RPIO level are denied.

While the OB tracks special account available balances at the RPIO level, the CFC

monitors overall negative available account balances and negative fund code balances in

special accounts on a monthly basis. Regions should work with the CFC to resolve these

issues expeditiously, and provide status updates to the CFC on the progress of resolving

these issues as requested. It is the responsibility of the RPIO/regions to ensure that the

request for reimbursable authority does not exceed the amount of funds available by fund

type (e.g., TR2, TR2A and TR2B) in each special account and to resolve financial issues

related to overspending and negative balances, as appropriate. Making disbursements in

excess of an available cash balance could implicate the ADA. Close monitoring of the

available cash balance for the affected appropriation should be exercised.

2. State Cost Share Provisions for Superfund State Contracts

The CERCLA law authorizes the President to take action through the EPA’s Superfund

program whenever any hazardous substance, pollutant or contaminant is released or

substantial threat of such release into the environment may present an imminent and

substantial danger to the public health or welfare or the environment. CERCLA section

104, regulated through 40 CFR part 35 subpart O, requires a state to make specific

assurances, including provision for payment of state cost share, before the EPA can

obligate or expend congressionally appropriated funds for the remedial action. These

assurances are documented in a Superfund State Contract (SSC). The SSC or remedial

cooperative agreement also contains a site-specific statement of work, a project schedule

and cost share conditions that establish financial administrative responsibilities. Upon

receipt of the funds, the agency classifies SSC receipts for financial management and

accounting purposes. Its code is TR1, and the request and issuances processes are the

same as detailed in the special accounts section above.

The OB tracks SSC balances at the RPIO level and monitors negative available balances

in SSCs on a quarterly basis. It is the responsibility of the RPIO/regions to ensure that the

request for reimbursable authority does not exceed the amount of funds available in each

SSC and to expeditiously resolve financial issues related to overspending and negative

SSC balances, as appropriate. Agency officials should be careful about making

disbursements in excess of an appropriation cash balance, as this could implicate the

ADA. Officials should closely monitor available cash balances for the affected

appropriation.

Additional Information

RMDS Chapter 9 for State Cost Share Provisions for Superfund State Contracts:

http://intranet.epa.gov/ocfo/policies/direct/2550d-09-p1.pdf and

http://intranet.epa.gov/ocfo/policies/direct/2550d-09-p1-t1.pdf.

Chapter 6: EPA’s Budget and Financial Organization and Structure

Summary

The EPA’s budget is tightly controlled and tracked by Congress, which means that it is

appropriated and tracked in detail by:

• Appropriation — The EPA has nine types or “buckets” of funding. The EPA may not move

any funding from one appropriation to another without statutory authority.

• National Program — All of the EPA’s dollars are tracked according to their national

program (e.g., water, enforcement or air).

• Organization (national program manager [NPM] or region) — What organization

manages the funds?

• Program Project/Program Area — Congress expects the EPA to manage resources by the

program projects described in the EPA’s budget submissions, which list the major activities,

plans and performance targets for each program project.

o The appropriators requested that the EPA also track and report program areas that are

aggregations of some program projects and portions of others.

o Congress limits whether and how much the EPA may “reprogram” funds or move them

between different program projects within the same appropriation “bucket.”

o A program project can be funded from several appropriations and work in more than one

NPM (e.g., radiation protection includes funds from Environmental Programs and

Management [EPM], Science and Technology [S&T], and Superfund appropriations).

• Budget Object Class (BOC) — All federal dollars must be tracked according to how they

were used.

o EPA BOCs are 10 Personnel Compensation and Benefits (PC&B), 21 Travel, 28 Site

Travel, 36 Expenses, 37 Contracts, 38 Working Capital Fund (WCF), and 41 Grants.

o Within each BOC there are more detailed four-digit sub-object or financial object classes

(FOCs). FOCs must be used when funds are actually obligated.

• The EPA’s Five Strategic Goals — All agency budgets are also tracked to the specific

strategic goals outlined in the agency’s strategic plan.

In addition, the agency must also track additional details, such as information technology (IT)

spending using IT codes, Superfund site-specific spending using Superfund site and activity

codes. Although Congress appropriations language normally describes only totals and special

conditions for each of the nine major appropriations, Congress expects the EPA to adhere to the

program project and other details described in the EPA’s budgetary submissions.

Below is a more detailed description of EPA’s account code structure. Details can also be found

at http://intranet.epa.gov/ocfo/budget/structure.htm.

A. Account Code Structure

After appropriations becomes public law, the EPA must implement or enact this legislation

when it takes effect. Budget execution involves a great deal of structured coding, some of it

from the U.S. Treasury and the Office of Management and Budget (OMB), to conduct

automated financial accounting, which will provide prudent stewardship of and reporting on

the use of all funds. This coding, when entered in the six financial management system

(Compass) account fields, forms unique records that capture the detailed accounting

information required by the agency and for governmentwide standards and reporting. These

records drive the integrated budgeting and accounting features in Compass. This section

covers the account structure and coding at the EPA. (Please note, the EPA is currently

revising its account code structure.)

1. Compass “Roll-up” Functionality

The EPA implemented Compass in fiscal year (FY) 2011, which included a new function

called "roll-ups." These roll-ups streamline reference data and only require users to enter

the code for spending and not the entire reference string for the code. For example, when

using program results code (PRC) 202BD4 on a spending transaction, the user only needs

to enter the code 202BD4; the system will automatically assign the other roll-ups that

belong to the code, such as the program area, program project and NPM. It is important

that the system assigns the other roll-ups because those roll-ups are budgeted to; if not

assigned, the budget will not be reduced.

Each of these codes has a host of roll-up reference tables behind them in which the codes

are linked. Taking the example above, 202BD4, there is a program area roll-up reference

table, a program project roll-up reference table and an NPM roll-up reference table in

which the roll-ups for the code must exist before the code can be used. The roll-up

functionality is one of the most notable changes from the Integrated Financial

Management System and applies most to fund, organization, PRC, BOC and project

reference tables in Compass.

2. Six-Field Compass Account Code

Compass uses a six-field account code to track spending in the financial system. Added

together, the six fields have a maximum character length of 45-characters. The following

explanation is a description of each of the six fields that comprise the financial

management system account code:

a. Budget Fiscal Year (BFY) Field — The BFY field is processed by Compass as two,

four-character fields in the account code. There are four characters for the "beginning

budget fiscal year" and four characters for the "ending budget fiscal year." Single-

year and no-year funds will not have an ending budget fiscal year. For multi-year

funds the agency uses all eight characters to take advantage of Compass’s capability

to automatically carry over multi-year funding.

Data entered into these fields is validated against the fund table in Compass, which is

controlled and maintained by the Office of the Budget (OB).

Character Location and Use(s):

1 2 3 4 Beginning BFY

1 2 3 4 Ending BFY (multi-year funds only)

Example —

2012 Beginning BFY

2013 Ending BFY (only used for multi-year funds)

b. Fund Field — The fund (or appropriation) field is processed by Compass in a

maximum six-character string as the second of six-character fields. The entire code

must exist in Compass for the specified FY for it to be recognized and accepted as

valid for use on transactions. The first two characters of this field indicate

appropriations/accounts and sub-appropriations/sub-accounts.

Character Location and Use(s):

1 Appropriation/account (one character) (corresponds to a Treasury symbol)

2 Appropriation sub-appropriation/sub-account (one character)

Identifies Specific Portion of an Appropriation Account (e.g., reimbursable

authority):

3 4 Restricted use for receipt accounts or other OB-specified unique accounts

5 6 Reserved

Example —

1 T

2 R

Code = TR (Superfund reimbursable)

1 T

2 R

3 4 2B

Code = TR2B (Superfund special account)

Data entered into this field on transactions are validated against the fund table in

Compass. The Fund table is owned by the OB and maintained by the OB and the

relevant Finance Center.

c. Organization Field — The organization field is processed by Compass in a maximum

of up to a seven-character string as the third of six fields. The character and location

of the organization field follows the basic rules below.

Character Location and Use(s):

1 2 Allowance holder (AH) two-character code; exceptions are Superfund sites and

earmarks (no other uses permitted)

3 4 RC code/blank (if nothing to follow)

RC code/zero (if more to follow)

RC code/two-character

RC code/local option (e.g., branch)

RC code/numeric state code (for all state grants)

5 6 7 Add-on code (A/B/C/D)/two-character add-on number, Superfund activity

codes R/E/P/S/H (if alpha allowance)/local option two-character, or trackable items

(other than add-on) (X in character five); reimbursable identification code (X in

character two, characters six-seven map to reimbursable agreement); if none of the

above, local option three character; or

Example —

1 2 33

3 A

Code = 33A, which is an AH/RC code

1 2 0 1

3 1

Code = 011, which is an AH/State (Region 1 – Connecticut)

1 2 3 3

3 A

4 1

Code = 33A1, which is an AH/RC/Sub RC

Examples of the Two Exceptions — Superfund Sites and Earmarks

In Compass, the AH codes for Superfund sites and earmarks are not the two-digit AH

codes but are the full five-digit code for Superfund sites and the full seven-digit code

earmarks. The roll-ups mentioned above are included in the example for these org

codes. See examples below.

Example of Exception #1 — Superfund Site Remedial Organization Code for

Region 4

RPIO 27

AH 4A00R (notice this is longer than two digits)

4AD0R

Sub RC BLANK

CODE = 4AD0R

Example of Exception #2 — Earmark Code in Compass

RPIO 01

AH 0100AKN (notice this is longer than 2 digits)

RC BLANK

Sub RC BLANK

CODE= 0100AKN

d. AH Code — The AH code is typically the first two digits of the organization code as

above, but it must be noted that the organization field has changed significantly with

its migration into Compass. The roll-up functionality mentioned above largely

impacts how the organization field operates in Compass.

Below are the roll-up tables in Compass for organization. Each of the roll-up fields

must be defined on the roll-up table for the code to be successfully entered in

Compass.

RPIO Defines Resource Planning and Implementation Offices (RPIOs) for each

BFY

AH Defines AHs for each BFY

RC Defines RCs for each BFY

Sub RC Defines Sub RCs for each BFY

Note: We will build an organization code as we walk through each roll-up table.

e. Roll-Up Codes in Compass

i. Defining RPIO Roll-Up Codes in Compass — RPIO codes must be defined

individually in Compass. The RPIO code must be defined on its own table named

“RPIO for specific BFYs” for the organization codes to properly be used and set

up in Compass.

Example — RPIO Roll-Up Code 05

ii. Defining AH Roll-Up Codes in Compass — AH codes must also be defined

individually in Compass. The AH code must be defined on its own table named

“AH/Earmark/Site AH for specific BFYs” for organization codes to properly be

used and set up in Compass.

Example — RPIO Roll-Up Code 05

AH Roll-Up Code 05

iii. Defining RC Roll-Up Codes in Compass — RC codes must also be defined

individually in Compass. The RC code must be defined on its own table named

“RC for specific BFYs” for organization codes to properly be used and set up in

Compass.

Example — RPIO Roll-Up Code 05

AH Roll-Up Code 05

RC Roll-Up Code 05F

iv. Defining SubRC Roll-Up Codes in Compass — Sub RC Codes must also be

defined individually in Compass. The Sub RC Codes must be defined on its own

table named “Sub RC for specific BFYs” for organization codes to properly be

used and set up in Compass.

Example — RPIO Roll-Up Code 05

AH Roll-Up Code 05

RC Roll-Up Code 05F

Sub RC Roll-Up Code 05F0073

f. Setting up Organization Codes in Compass — Now that all the roll-ups are defined

for the code in Compass, the OB can set up the actual organization code in Compass

for spending and reprogramming.

Roll-Up Roll-Up Value

RPIO 05

AH 05

RC 05F

Sub RC 05F0073

Code 05F0073

The organization reference table in Compass is jointly maintained by the OB and OC,

who enter reimbursable organization codes into Compass.

The OB has a process for requesting organization codes in Compass. Organizations

must fill out a spreadsheet template and forward it to the OB for organization codes to

be entered in Compass. The spreadsheet template request is located in the Compass

User Resources Database (CURD), which is housed on the OB Database Portal.

COMPASS ACCOUNT CODE UTILIZATION

FIELD NAME/SIZE

CHARACTER LAYOUT / PRIMARY UTILIZATION

BFY FIELD (8) (2x4)

1 2 3 4 1 2 3 4

Beginning End

BFY (2-YEAR FUNDS ONLY)

Fund Field (6)

1 2 3 4 5 6 APPROP. SUB — RESTRICTED USE

RESERVED APPROP (e.g. Reimbursable)

Organization Field (7)

1 2 3 4 5 6 7

A.H. R.C./ Local Op.

A. Add-on Code

B. SF Activity Code

C. Trackable Items

D. Reimbursable I.D.

E. LOCAL OPTION

PROGRAM FIELD (9)

1 2 3 4 5 6 7 8 9

Program Results Goal Objective NPM Program / Agency

Local Code (PRC)

Project Activity Option (Spending Only)

SITE/PROJECT FIELD (8)

1 2 3 4 5 6 7 8

A. SF Region/Site SF Activity Operating Unit

B. ********* Working Capital Funds ********

C. ****Information Technology Code ****

D. **************Conferences***************

E. *** Local Option (to be determined) ***

COST/ORG FIELD (7)

1 2 3 4 5 6 7

A. SEMS (formerly CERCLIS) Serial Number

B. OPPT Extramural IT Classifications.

C. Other Local Option (to be determined)

Figure 6. Account code utilization.

g. Program Field: PRC Field — The Compass program field contains what the EPA

calls its PRC and is processed by Compass in a nine-character string.

The PRC table describes information pertaining to each PRC, such as the title,

goal/objective NPM, program project and activity code.

PRC Character Location and Use(s):

1 Goal — Comprises one character and represents the agency’s long-term strategic goals.

2 3 Objective — Comprises two characters and represents each objective under each goal.

Subobjectives will still be used for performance and planning and in BAS, which serves

as the primary agencywide database during formulation of the agency’s budget.

4 NPM — Comprises one character and identifies the NPM associated with resources

being used for a particular goal and objective.

5 6 Program/Project — Comprises two characters and defines what the agency does based

upon specific statutory authority (programs) or what significant tasks or problems the

agency is addressing (projects). The program projects current for a given FY are located

in the annual Advice of Allowance.

7 Activity — Comprises one character and represents how we accomplish our objectives in

general terms. These activities are somewhat generic across all government agencies (for

example: research and development, financial assistance, program implementation,

regulatory/policy development).

Agency Activity — As of FY 2012, the agency activity code went out of use. It is

represented by an X for FY 2012 and beyond. It is represented by XXs to maintain

position. The code was for spending actions, including fixed account numbers (all

characters of the PRC). Similar to the way the four-character finance object code used for

spending rolls up to the two-character BOC, the full PRC (up to nine characters if RPIO

activity is included) will roll up to the six-character PRC in the budget).

8 9 RPIO Activity — Comprises two characters for unique reporting needs.

The roll-up functionality has a significant role in how the PRC field operates in Compass.

Below is how the PRC field operates in conjunction with the roll-up functionality in

Compass.

Each of the roll-up fields MUST be defined on the roll-up table for the code to be

successfully entered in Compass.

Compass Tables Information to be found

NPM Defines the NPM for each BFY

Program Area Defines the Program Areas for each BFY

Program Project Defines the Program Project for each BFY

Program Type Defines the Program Type for each BFY

(Currently this field is reserved in Compass)

Note: You can see how a PRC code is built in the roll-up table below.

• Defining NPM Roll-Up Codes in Compass — NPM codes must be defined

individually in Compass. The NPM code must be defined on its own table named

“NPM for specific BFYs” for the PRC codes to properly be used and set up in

Compass.

Example — NPM Roll-Up Code B

• Defining Program Area Roll-Up Codes in Compass — Program area roll-up

codes must also be defined individually in Compass. The program area roll-up

code must be defined on its own table named “Program Area for specific BFYs”

for PRC codes to properly be used and set up in Compass.

Example — NPM Roll-Up Code B

Program Area Roll-Up Code WQP

• Defining Program Project Roll-Up Codes in Compass — Program project roll-up

codes must also be defined individually in Compass. The program project code

must be defined on its own table named “Program Project for specific BFYs” for

PRC codes to properly be used and set up in Compass.

Example — NPM Roll-Up Code B

Program Area Roll-Up Code WQP

Program Project Roll-Up Code D4

h. Setting up PRC Roll-Up Codes in Compass

Now that all the roll-ups are defined for the PRC code in Compass, the OB can set up

the actual PRC Code in Compass for spending and reprogramming.

Roll-Up Roll-Up Value

NPM B

Program Area WQP

Program Project D4

CODE 202BD4

Note: Objectives, subobjectives, agency activities and RPIO activities do not need to

be defined on their own roll-up table. These values are not budgeted to and therefore

do not need a roll-up table for definition.

The PRC reference tables in Compass are maintained by the OB.

For more information regarding specific PRCs, see the latest program/project

description book at the EPA intranet URL address,

http://intranet.epa.gov/ocfo/budget/architecture.htm.

i. Site/Project Field — Compass processes the site/project field in an eight-character

string as the fifth of six character fields. Project codes are managed in the project

reference table in Compass.

For those regions that have exhausted their initial supply of site IDs, the first position

will be “A” followed by one position for the region (with "0" representing Region

10). For example, A401 represents a new site ID for Region 4 after the initial supply

of site IDs has been exhausted.

All work performed under the Superfund, leaking underground storage tank (LUST),

oil and WCF appropriations will use the Site/Project field. If a specific Superfund and

oil Site/Project is identified, an IT code cannot be sited in the Site/Project field.

It is recommended that this field have multiple uses and structures based upon the

FUND code used in the transactions. The use of the Compass Project Cost

Accounting System (PCAS) module in conjunction with this field will enable the

BFY/Fund field to determine which structure is valid for that Fund code. The PCAS

offers three layers of structure:

• Agencywide code, which enables the project costs to be gathered regardless of

BFY/Fund combinations.

• Project, which is the basic level to gather obligations, expenditure or cost data.

• Subproject, which allows for a lower level of data structure linked to a specific

project.

Examples: Superfund positions enable the data gathering by site ID, activity code

and operable unit within the site. [Note: All eight characters must be entered for the

edit program to recognize the code as valid.]

Character Location and Use(s):

1 2 3 4 Superfund ID identifying region and the specific site or non-site cost

5 6 Superfund activity code

7 8 Operable unit within a specific site

(If no operable unit, enter 00)

j. WCF — Positions enable the gathering of fund data and costs by each service level

and charge customers of the fund a standard charge for each of the service levels

provided.

Character Location and Use(s):

1 Indicates whether code is a cost or revenue

2 3 Identifies cost pool

4 5 6 7 For revenue codes, denotes customer's AH and responsibility center codes

8 Future uses

k. IT Code — Used to track purchasing related to IT.

Character Location and Use(s):

[Note: For all characters except the first, use zero if N/A]

1 L for IT

2 3 Specific identifiers for major and significant project and/or system

4 Life cycle phase of major and significant project. If second and third

characters are not zero, then fourth character must be a P, D or M

5 6 7 Specific IT cost area for security and regional uses

8 Future uses

For more information on use of IT codes, read the OCFO policy on the agency’s

intranet at http://intranet.epa.gov/ocfo/policies/policy/pa05.htm and the annual

Advice of Allowance memorandum.

l. Conference Code — Positions enable the gathering of data by organization, AH and

conference reporting thresholds. [Note: All eight characters must be entered for the

edit program to recognize the code as valid.]

• Non-WCF Conference Reporting

1 M for conference reporting (including non-conference travel)

2 Specific identifiers for magnitude of conference costs. Second character

must be E, S, M, L or N

3 4 RPIO submitting EPA Form 5170 (Conference-Related Activities

Spending Request)

5 6 AH submitting EPA Form 5170 (Conference-Related Activities Spending

Request)

7 8 Conference number

• WCF Conference Reporting

1 2 3 C G S for conference reporting (including non-conference travel) [Note:

First three characters must be “CGS”]

4 Specific identifiers for magnitude of conference costs. Fourth character

must be E, S, M, L or N

5 6 AH submitting EPA Form 5170 (Conference-Related Activities Spending

Request)

7 8 Conference number

For more information on the use of conference codes, refer to the conference Web

page located on the agency’s intranet at

http://intranet.epa.gov/ocfo/management_integrity/conferences.htm.

m. Other Uses — While OB owns the account code and the project field, OFM manages

the field. Other offices planning to use this field for currently approved purposes

should contact the OFM. New uses of the project should be discussed with the OB

and OFM.

Character Location and Use(s):

1 2 3 4 5 6 7 8 Local Option

Data entered in the Site/Project field will be verified for validity by the project

reference table and the sub-project reference table in Compass. In each of the regional

offices, access will be granted to an Superfund finance person for updating new site

names and establishing codes.

This field can be a required entry within a particular Fund.

n. Cost/Org Field — Cost/org codes are created by offices who want to track only

spending for certain projects. Cost/org codes are housed and managed in the

organization reference table in Compass. Compass processes the cost/org field in a

seven-character string as the last of six character fields.

Examples: The Office of Land and Emergency Management proposed using this field

for a three-character activity sequence number called a "Superfund Enterprise

Management System (SEMS, formerly CERCLIS) Serial Number."

Office of Pollution Prevention and Toxics classifications were moved here from the

Project field when the IT classifications were begun. The field was to be used only for

extramural work.

Cost orgs also use the roll-up functionality in Compass. Below are the roll-up tables

used in Compass for the cost/org field. Cost/orgs only use the RPIO roll-ups; this

MUST be defined on the roll-up table for the code to be entered in Compass.

RPIO Defines RPIOs for each BFY

Note: The Office of the Chief Financial Officer will build a cost org code for each

roll-up table.

• Defining RPIO Roll-Up Cost Codes in Compass

RPIO codes must be defined individually in Compass. The RPIO code must be

defined on its own table named “RPIO for specific BFYs” for the cost org codes

to properly be used and set up in Compass.

Example — RPIO Roll-Up Code 20

• Setting up Cost Org Codes in Compass

Now that the RPIO roll-up is defined for the cost org code in Compass, the OB can

set up the actual cost org code in Compass for spending.

Roll-Up Roll-Up Value

RPIO 20

CODE T00005

The OB has a process for requesting cost org codes in Compass. Organizations must

fill out a spreadsheet template and forward it to the OB for cost org codes to be

entered in Compass. The spreadsheet template request is located in CURD, which is

housed on the OB Database Portal.

Data entered in this field is verified in the organization table in Compass. The

organization table is maintained by the OB and Cincinnati Finance Center for

reimbursable org codes.

B. Appropriation Number (Treasury Account Symbol)

The Treasury identifies each appropriation account using a Treasury account symbol. These

symbols or codes consist of seven or more alpha-numeric characters. For example:

6812/130108 EPA FY 2012/2013 EPM account

68-68X8153 EPA LUST Trust Fund account

68X0110 EPA Buildings and Facilities (B&F) account

The account symbols provide the following information:

• Department or Agency Code — The first two characters identify the agency (the EPA =

68) responsible for the account; the code is assigned by the Treasury.

• Period of Availability — The next 4 character(s) represent the period of availability of

the account for obligation.

○ One-year appropriations: A single digit (0 through 9) indicates the FY for which the

appropriation is available for obligation (e.g., 13 = FY 2013). Currently, the EPA

does not have one-year appropriations.

o Multiple-year appropriations: Two digits separated by a slash indicate the first and

last FY for which the appropriation is available for obligation (e.g., 12/13 = FY

2012/2013)

○ No-year appropriations: An "X" is used to designate an appropriation that is available

for an indefinite period of time.

• Fund Group: The last four digits identify the specific account by Treasury fund group

(e.g., 0108 = EPM).

C. Object Classes

Per OMB Circular A-11, Section 83, all federal dollars must be tracked according to how

they are used. Agencies use a system called “Object Classes” to code transactions in federal

financial systems according to how the money was issued. The EPA (and some other

agencies) has BOCs to budget for and distribute (allocate) funds, and it uses more detailed

FOCs to track the commitment, obligation and expenditure of funds.

EPA’s BOCs are 10 PC&B, 21 Travel, 28 Site Travel, 36 Expenses, 37 Contracts, 38 WCF,

and 41 Grants. EPA’s four-digit FOCs are coded on documents when funds are committed,

obligated and expended.

The object class codes and definitions are documented in Resource Management Directive

System (RMDS) Chapter 2590 and can be viewed online at

http://intranet.epa.gov/ocfo/policies/direct/2590objclass.htm. This contains more detailed

definitions, regulations and guidance, explanations of how the EPA manages object classes,

and definitions for each BOC and FOC used by the agency.

All of the agency's financial class codes (cross-walked to the OMB’s object class codes and

the EPA’s BOC codes) can be viewed in Compass by accessing the FOC code table and

observing the column labeled "Object Class".

D. EPA Appropriations

The EPA has nine major appropriations or funds. EPA may not move any funds between

appropriations without prior approval of Congress. There are three major types of

appropriations:

1. One-year appropriations are available only to meet a bona fide need of the FY for

which they were appropriated. Funds must be obligated during that FY. As of 2016, the

EPA does not have any one-year appropriations.

2. Multi-year appropriations are subject to the same bona fide need rule applicable to

annual appropriations, apart from the extended period of availability. The EPA typically

receives multi-year appropriations available for obligation for two FYs. Because of the

extended period of availability, multi-year appropriations may have unobligated balances

that "carry over" from one year to the next and are available for obligation following the

annual reapportionment by the OMB. The OMB and Congress consider these funds to be

appropriated for specified annual needs; they request additional reporting requirements

and subject carryover balances to additional scrutiny. All of EPA’s multi-year

appropriations have a two-year obligation deadline, with an additional seven years to

outlay funds (except for E-manifest, which has a three-year obligation deadline).

3. No-year appropriations are available for obligation to satisfy a need arising during the

year of and subsequent to the no-year appropriation. For an appropriation to be no-year, it

must be expressly stated as such in the appropriating language. No-year funds may be

obligated for needs arising in: 1) the year the no-year funds were appropriated and 2)

years subsequent to the year of the no-year appropriation. Prior year(s) obligations may

not be paid with future year no-year appropriations, unless expressly provided by law.

E. EPA Appropriation Accounts

Annual appropriations acts provide the funding for authorized programs. While certain

funding levels and limitations may be included in authorizing legislation, appropriations

legislation will generally control the disposition of an issue where the appropriations act

itself clearly demonstrates congressional intent to depart from funding levels or limitations in

the authorizing legislation. Nevertheless, the authorizing act and appropriations act should be

harmonized to the greatest extent possible.

The authorizing legislation and the appropriations go hand in hand to establish a mandate for

environmental action followed by the funds to carry out the mandate. Within the context of

appropriations as to time, purpose and amount, these periods define the time of availability,

and to a somewhat lesser degree, the purpose. A review of eight major EPA appropriations as

they fall within these periods of availability follows.

Multi-year Appropriations. The EPA’s multi-year appropriations are (all with a two-year

obligation deadline, except for E-manifest):

1. EPM Appropriation

The EPM appropriation encompasses a broad range of abatement, prevention and

compliance activities, as well as personnel compensation, benefits, travel and expenses

for agency programs with the exception of those funded by the S&T, Hazardous

Substance Superfund, LUST Trust Fund, Inland Oil Spill Programs (OIL), B&F,

Hazardous Waste Electronic Manifest System Fund, and the Office of the Inspector

General (IG) appropriation accounts. Abatement, prevention and compliance activities

include setting environmental standards, issuing permits, monitoring emissions and

ambient conditions, and providing technical and legal assistance toward enforcement,

compliance and oversight.

The agency’s EPM activities include oversight and assistance in the implementation of

environmental statutes. In addition to program costs, this account funds a large portion of

the administrative costs associated with the operating programs of the agency, including

support for executive direction, policy oversight, resources management, general office

and building services for program operations, and implementation of agency

environmental programs except those funded under other appropriation accounts. Funds

are used in headquarters, the 10 EPA regional offices and all non-research field

operations. EPM funds are not available to carry out the Comprehensive Environmental

Response, Compensation and Liability Act (CERCLA), with the exception of the

administration of the brownfields program.

In contrast, program-specific research, such as sample processing, is performed in

regional office laboratories or at the National Enforcement Information Center; it is

funded though the EPM and Superfund appropriations.

2. S&T Appropriation

The EPA S&T appropriation funds the scientific knowledge and tools necessary to

support decisions leading to improved protection of human health and the environment

and to advance the base of understanding of environmental sciences. Thus, the S&T

appropriation funds the EPA’s basic research program. The agency's efforts using S&T

funds are conducted through contracts, grants and cooperative agreements with

universities, industries, other private commercial firms, nonprofit organizations, state and

local government, and federal agencies, as well as through work performed at the EPA's

laboratories and various field stations and field offices. S&T funds are available for

programs that support training in research techniques such as fellowships.

The S&T appropriation funds activities such as developing and improving sampling and

analytical methods and instruments for measuring pollutants; determining the effects of

pollutants on human health, ecosystems and the general environment; researching the

processes that relate to pollution; evaluating technologies for preventing and controlling

pollution; and developing guidelines and research tools to improve risk assessments. The

S&T appropriation also provides operating expenses for most agency research facilities.

This includes categories such as personnel salary and benefits, laboratory supplies and

materials, operation and maintenance of laboratory facilities, equipment, IT support,

human resource development, travel, and printing. Beginning in FY 1996, this account

also funds hazardous substances research appropriated in the Superfund account and then

transferred to the S&T appropriation account. The appropriated Superfund funds are

available for obligation for only two years once transferred into the S&T account. The

agency’s financial coding structure ensures that both S&T sources of funds are tracked

separately to provide proper accounting.

3. Office of Inspector General (OIG) Appropriation

The OIG appropriation provides funding for the EPA audit and investigative functions

and program evaluations that promote economy, efficiency, and effectiveness, by

identifying and recommending corrective actions and opportunities for improvement of

management and program operations. The OIG also prevents and detects potential fraud,

waste and mismanagement.

The audit function provides contract audit, performance audit and financial audit services.

Contract audits provide professional judgments, findings and recommendations to agency

contracting officials on accounting and financial matters relative to negotiation, award,

administration, repricing and settlement of contracts. Performance audits review and

evaluate all facets of agency operations. Financial audits review and evaluate the agency’s

financial statements and provide an opinion on their validity and on the

financial health of the agency as a whole. Grant audits focus on the effectiveness of

individual projects, reasonableness of costs and adequacy of management systems. The

investigative function provides for the detection and prevention of improper and illegal

activities involving programs, personnel and operations.

In addition to program costs, this account funds PC&B, travel, and administrative costs

associated with the OIG program.

Historically, there are two fund sources for the budget authority in the OIG account:

• Direct OIG appropriations.

• Funds transferred from the Superfund appropriation (similar to the Superfund to S&T

transfer). The appropriated Superfund funds are available for obligation for only two

years once transferred into the OIG account. The agency’s financial coding structure

ensures that both OIG sources of funds are tracked separately to provide proper

accounting.

4. Hazardous Waste Electronic Manifest System Fund (E-Manifest)

The EPA FY 2014 Appropriation Act established a new three-year appropriation account

to provide funds to “carry out section 3024 of the Solid Waste Disposal Act (42 U.S.C.

6939g), including the development, operation, maintenance, and upgrading of the

hazardous waste electronic manifest system.”

No-year Appropriations. EPA no-year appropriations are available for obligation without FY

limitation. They remain available until expended, rescinded or otherwise withdrawn. The EPA’s

no-year appropriations are:

5. Hazardous Substance Superfund Trust Fund (Superfund) — The Superfund

appropriation is provided to carry out the legislative mandates of CERCLA as amended

by the Superfund Amendments and Reauthorization Act (SARA) by addressing

uncontrolled hazardous waste sites and the release of hazardous substances. The

legislation authorizes the EPA to 1) provide emergency response to hazardous waste

spills; 2) take emergency action at hazardous waste sites that pose an imminent hazard to

public health or environmentally sensitive ecosystems; 3) engage in long-term planning,

remedial design and construction to clean up hazardous waste sites where no financially

responsible party can be found; 4) take enforcement actions to require responsible private

parties to clean up hazardous waste sites; and 5) take enforcement actions to recover costs

where the Superfund has been used for cleanup.

In addition to program costs, this account funds PC&B, travel and administrative costs

associated with the agency’s administration and implementation of the Superfund

program. Program-specific research, such as sample processing, is performed in regional

office laboratories or at the National Enforcement Information Center and is funded

though the EPM and Superfund.

6. LUST Trust Fund

The LUST Trust Fund appropriation is provided to carry out the legislative mandates of

the SARA by conducting corrective action for releases from LUSTs containing petroleum

and other hazardous substances. The EPA implements the LUST Program primarily

through state cooperative agreements, which enable states to:

• Oversee corrective action conducted by underground storage tank (UST) owners and

operators.

• Conduct corrective action when UST owners or operators are unknown, unwilling or

unable to perform corrective action properly or where prompt action is necessary to

protect human health and the environment.

• Take enforcement actions against recalcitrant owners and operators.

• Conduct corrective action-related training and research (e.g., to promote efficient

cleanup technologies).

States and the EPA may recover LUST Trust Fund costs from liable owners and

operators.

The Energy Policy Act of 2005 authorized the use of funds contained in the LUST Trust

Fund for leak detection, prevention, related inspection and enforcement activities.

EPA also uses LUST Trust Funds for corrective action program implementation,

including oversight, training, research, enforcement and Indian country implementation.

In addition to program costs, this account funds PC&B, travel and administrative costs

associated with the agency’s administration and implementation of the LUST Program.

The Trust Fund is financed by a 0.1-cent tax on each gallon of motor fuel sold

nationwide. The U.S. Department of Treasury provides information on the current

balance in the LUST Trust Fund. Although the LUST Trust Fund has a balance, the EPA

may only obligate the amount provided through appropriation. For more information,

visit http://www.epa.gov/oust/ltffacts.htm.

7. B&F

Funds are appropriated to the EPA B&F account each year to cover the necessary major

repairs and improvements to existing installations that house the agency. The B&F

appropriation is the only appropriation that can be used for the construction, alteration,

repair, rehabilitation and renovation of EPA facilities if the cost of the project is $150,000

or greater. This appropriation also covers new construction projects when authorized. It is

not available to pay rent at facilities the EPA leases. Minor repairs and improvements to

existing installations are usually funded by the EPM and S&T appropriations as

authorized by the annual appropriations act.

8. OIL

The OIL appropriation is funded from the Oil Spill Liability Trust Fund (OSLTF). The

OLSTF provides funds to the EPA’s Oil Spill Response account each year. The EPA is

responsible for directing, monitoring and providing technical assistance for major inland

oil spill response activities. This involves setting oil prevention and response standards,

initiating enforcement actions for compliance with Oil Pollution Act and Spill Prevention

Control and Countermeasure requirements, and directing response actions when

appropriate. The EPA carries out research to improve response actions to oil spills,

including the use of remediation techniques such as dispersants and bioremediation.

Funding for specific oil spill cleanup actions is provided through the U.S. Coast Guard

from the OSLTF through reimbursable Pollution Removal Funding Agreements and other

interagency agreements.

In addition to program costs, this account funds PC&B, travel, and administrative costs

associated with the agency’s administration and implementation of the Inland Oil Spills

Program.

9. State and Tribal Assistance Grants (STAG)

The STAG appropriation includes three components: 1) infrastructure grants, including

State Revolving Funds (SRF); 2) categorical STAG grants; and 3) other specified grant

programs, such as Alaska Native Villages, Diesel Emissions Reduction Grant Program,

Brownfields Projects and Mexican Border.

Funding for the SRFs constitutes the largest part of the STAG account. These funds are

used to capitalize revolving loan funds in each state, which provide loans to

municipalities for major wastewater and drinking water infrastructure projects. The

Water Quality Act of 1987 reauthorized the “construction grants” program through 1990

and provided for its phase-out and replacement with an SRF program to be financed by

grants to the states.

There are two types of water infrastructure SRFs: clean water SRF and drinking water

SRF. The states loan these funds to municipalities for the infrastructure projects, who

then pay back their loan by making payments back into the state SRF account. The state

can then make more loans (hence the term "revolving") to other municipalities.

Categorical STAG (also referred to as continuing environmental program grants) provide

financial assistance to states and tribes in numerous environmental categories by

program. These grants help states and tribes develop the technical, managerial and

enforcement capacity to operate the environmental programs that monitor drinking water

systems, implement water quality standards, combat air pollution, promote the use of

safer pesticides, manage hazardous waste and ensure compliance with federal

environmental laws. In addition, categorical STAG funds are available in specified

amounts appropriated for certain grant programs identified in the statute, such as

brownfields response program grants and Exchange Network grants.

The Omnibus Rescissions and Appropriations Act of 1996 (P.L. 104-134) provided the

EPA permanent authority within the STAG account to award Performance Partnership

Grants (PPGs) with categorical STAG funds. PPGs permit states and tribes to combine

STAG "categorical grants” (i.e., air, water) into one or more grants, to be used for

addressing the unique priorities of each state or tribe. PPGs were created to reduce the

burden on and increase the flexibility for state and tribal governments that need to

manage and implement their environmental protection programs. At the same time, they

produce the results-oriented performance necessary to address the most pressing concerns

and achieve a clean environment.

F. Accounting

1. Accounts Receivable and Collections

All accounts receivables and collections are handled through the applicable EPA finance

center. EPA organizations are not allowed to independently bill and collect monies. EPA

organizations must provide billing information to their finance center, which will provide

the bill to the vendor and/or individual that owes monies to the EPA. Each finance center

is responsible to collect the debt for the first 90 days. If the debtor fails to enter into a

payment agreement or pay the debt at the 90-day mark, the debt is referred to Treasury

for collection. Once the money is collected by the EPA finance center, the money is

credited back to the applicable EPA organization or other designated place. Policies

related to accounts receivables, billing and collecting can be found at

http://intranet.epa.gov/ocfo/policies/direct/2540.htm.

2. Suspense Accounts

Suspense accounts are used by the EPA finance center when a money received does not

have adequate information to assign it to an EPA organization. These accounts are used

because the Treasury requires that EPA record the collection and payment of all monies

within three business days. After an item is placed in suspense, the EPA finance center

has 60 days to research and apply the correct accounting information to the payment or

collection. The OC monitors monthly the balance in EPA suspense accounts and requires

each EPA finance center to provide a reason for not clearing any balances greater than 30

days. For more information, see RMDS Chapter 2540-03-P1, “Fund Balance with

Treasury Management Standard Form 224 Reconciliation,” at

http://intranet.epa.gov/ocfo/policies/direct/2540/2540-03-p1_sf224_reconciliation.pdf.

G. Payroll Management and Tracking/PeoplePlus

The Department of the Interior’s Interior Business Center (IBC) provides payroll processing

and personnel record services to the EPA. This is part of the governmentwide human

resources line of business. Prior to the implementation of IBC’s payroll processing, the

Defense Finance and Accounting Service provided this service. The EPA uses the PeoplePlus

reporting system for time and attendance.

Since payroll is such a large expense at the EPA, AHs/fund control officers must monitor and

control it carefully. PC&B costs must be continually reviewed and projected for the entire

FY. Necessary steps must be taken to ensure that costs remain within all approved limits.

1. Payroll Accounting

Obligations for monthly payroll costs are generated by the biweekly submission of time

and attendance forms for all employees. After processing payroll for each pay period,

actual PC&B costs are posted and an accrual for the remainder of the month is calculated

based on the actual payroll data. PC&B actuals, plus the remaining accrued balance of the

month, are displayed in Compass under budget object class Code 10.

Each employee has one or more standard fixed account numbers to which all payroll

expenses for the employee are normally charged. The fixed account number(s)

corresponds to the program results code that supports employee work years and personnel

costs. It shows whether an employee is paid with management and support funds or from

environmental program funds. It is important that the employee is assigned a fixed

account number(s) that corresponds to the work the employee actually performs so that

expenditures for specific environmental programs or activities are accurately reported. As

each pay period ends, some or all of the employee's payroll expense can be charged to

account numbers other than their fixed account number, if appropriate. Consequently,

payroll accruals could be inaccurate if employees had any unusual payroll distributions to

other account codes during the previous pay period.

2. Split-Funding Payroll Costs

As noted above, program offices may charge an employee's payroll costs to more than

one account. This can be done through direct charging as needed or by an established

methodology. No documentation or approval is needed to direct charge. However, to use

a methodology, written documentation must be submitted to the appropriate finance

center at the beginning of each FY, which shows how the different percentages of the

appropriations benefiting are to be charged throughout the FY. Specific names of the

employees, their social security numbers and their fixed account numbers are not needed

in the documentation. Of course, only appropriations available for PC&B may be used in

split-funding payroll costs.

3. Calculating Full-Time Equivalent (FTE) Usage

An “FTE” or “work year” is the number of compensable hours that an employee working

full time would work in a given year. A work year normally has 2,080 compensable

hours. (8 hours × 5 days × 52 weeks = 2,080). However, the number of work days in a

year vary slightly based on how the calendar falls in any given year. Thus, in some years,

the number of hours can be 2,088 or 2,096 compensable hours. The OMB published the

official number of work hours for each year annually in OMB Circular A-11.

To calculate FTE usage, compute the total number of hours worked in an organization,

including holidays, leave, cooperative education and stay-in-school hours. Divide this

number of hours by the compensable hours in the FY to find the FTE usage to date.

Dividing this FTE usage by the FTE ceiling gives percent usage. This fraction should be

about the same as the fraction of the year that has passed. On March 31, for example, 50

percent of the FY has passed, so 50 percent of the FTE ceiling should be used. If FTE

usage is too high or low, the AH should discuss this with the small business ombudsman

for possible redistribution of FTE ceiling or other action as necessary.

Chapter 7: Budget Execution Rules and Guidance

Summary

Federal managers must be careful to follow all of the applicable rules before authorizing any

financial transactions. They must be careful to ensure that all actions are within the legal limits

and for the purposes for which the monies were provided. Below are some major budget

execution rules, followed by a more detailed discussion of some major concepts.

Overview of Major Spending and Charging Guidelines and Rules

Purpose, Amount, Conditions, Time Test

Congressional appropriation provides funds for a certain purpose and set amount, under

particular conditions, and with set deadlines.

• You may not spend monies without meeting all four conditions.

• The EPA tends to have “two-year” appropriations that expire on September 30 of the second

year after they are appropriated and “no-year” appropriations that remain available until

expended. Funds appropriated for the E-Manifest System are three-year funds.

a. Augmentation — Agencies may NOT use one appropriation to supplement another

(violates congressional intent on appropriation “purpose” and “limits”). Additionally,

agencies may not accept funds from any outside source (including other federal agencies)

without explicit statutory authority. Nor may the agency be in “constructive receipt” of

outside funds by effectively controlling how money is used — even if the monies are

never deposited in federal accounts.

b. Specific over General — Where Congress has provided the EPA with a specific

appropriation for a particular purpose, the EPA cannot use a more general appropriation

for that same purpose. General appropriations cannot be used to “cover the difference,”

even if the agency has already run out of money in the more specific appropriation.

c. Pick and Stick/Consistent Charging — If two appropriations can reasonably be

interpreted to be equally available for the same “purpose,” and neither is more specific

than the other, the agency may choose which to charge, but it must consistently charge

one. (Once the Agency “picks” which appropriation to charge, it must “stick” to using

that appropriation from then on.)

i. Ensuring Consistent Charging. Following the “Pick and Stick” principle, fund control

officers (FCOs) and managers should be consistent in charging across different types

of spending. The same logic should apply to how they charge grants, contracts,

payroll and travel. For example, if a person is charging some travel to a fee account,

is a portion of that person’s work time that day, or contract that he or she is using,

also being charged?

d. Necessary Expense — Spending is necessary if it meets three tests:

i. It will materially increase an employee’s (or organization’s) output.

ii. The employee would not be reasonably expected to furnish the expenditure as part of

their personal equipment.

iii. The expense is not prohibited by law.

e. Severable vs. Non-severable Services — Severable services can be separated into

components, each of which can be independently performed to meet a separate

government need. Non-severable services cannot be divided into components. (E.g., a

contract for recurring window-cleaning services can be cancelled halfway through with

no loss of value, but a contract to write a final report is almost worthless if stopped

halfway through. The former is severable; the latter is non-severable.) Severable services

must be charged to an appropriation that is available and will remain available

(unexpired) at the time services are rendered. Non-severable services, however, must be

charged only to an appropriation available at the time the agreement is signed, regardless

of when the services will be performed.

f. Bona Fide Needs Governing Charging to a Fiscal Year (FY) — Spending must be tied to

the program needs for that FY. An appropriation limited for a definite period may be

obligated only to meet a legitimate or bona fide need arising during that appropriation’s

period of availability. 31 U.S.C. 1502(a). Does not apply to no-year funds. 43 Comp.

Gen. 657, 661 (1964).

The EPA’s Office of General Counsel (OGC) Civil Rights and Finance Law Office

provides expertise on detailed interpretations at http://intranet.epa.gov/ogc/civil.htm.

A. Purpose, Time and Amount Explanations: Appropriation Law Concepts

For appropriated funds to be legally available for expenditure on an activity, three tests must

be met:

• Purpose

• Time

• Amount

1. Appropriations as to Purpose

The purpose statute, 31 U.S.C. 1301(a), provides that appropriated funds may be obligated

and expended only for the purpose(s) for which they were appropriated by Congress

unless the expenditure is otherwise provided by law. In some cases, Congress may specify

the precise purpose for which it has appropriated funds to the EPA; however, the bulk of

the funding is in the form of “lump sum” appropriations for general purposes, such as

“Environmental Programs and Management” (EPM) or “Research and Development”

(R&D), or to carry out a broad statute, such as the Comprehensive Environmental

Response Compensation Liability Act (CERCLA) or the Oil Pollution Act

(OPA).

The first step in interpreting an appropriations act is to examine the plain meaning of the

words in the law itself. If Congress has directly spoken to the precise question, then its

unambiguously expressed intent must be given effect. Committee reports or portions of

committee reports that are expressly incorporated into the appropriations act itself have

the force of law. Other indicators of congressional intent in legislative history are

examined only if the plain meaning of the statute is unclear.

Legislative history includes conference committee reports, appropriations committee

reports and floor debates. Conference committee reports have the greatest weight since

they reflect the views of congressional representatives from both houses and are usually

voted on and adopted by both houses when appropriations legislation is passed.

Appropriations committee reports are next in order of importance, followed by floor

debates. EPA and appropriations committees consider Congressional Budget

Justifications to be part of the legislative history.

The Supreme Court ruled in Tennessee Valley Authority v. Hill, 437 U.S. 153 (1978), that

directions to federal agencies contained solely in congressional committee reports are not

legally binding. However, an agency’s failure to adhere to congressional intent can have

adverse practical consequences for the agency‘s relationship with Congress. The agency,

as a matter of policy, will generally act in accordance with the views expressed in

conference reports, appropriations committee reports and other documents that reflect

legislative history.

Since it is not possible to specify every item for which appropriations will be expended

within the Appropriations Act, particularly if it is a lump sum appropriation, the spending

agency has reasonable discretion in determining how to carry out the objectives of the

appropriation. This concept is embodied in the “Necessary Expense” rule.

An expenditure must meet three tests to be justified as a necessary expense:

• The expenditure must bear a logical relationship to the appropriation being charged.

In other words, it must make a direct contribution to carrying out either a specific

appropriation or a statutorily authorized agency function for which more general

appropriations are available.

• The expenditure must not be prohibited by law.

• The expenditure must not be otherwise provided for; that is, it must not be an item

that falls within the scope of some other appropriation or statutory funding scheme.

Additionally, for an expenditure to be justified as meeting the purpose of a particular

appropriation, it is important to know whether an action is funding something from one

appropriation that was previously funded from a different appropriation. In 59 Comp.

Gen 518 (1980), the U.S. Government Accountability Office (GAO) noted:

“Where either of two appropriations may reasonably be construed as available for

expenditures not specifically mentioned under either appropriation, the determination of

the agency as to which of the two appropriations to use will not be questioned. However,

once the election has been made, the continued use of the appropriation selected to the

exclusion of any other for the same purpose is required.”

This concept has become known throughout the federal government as the “Pick and

Stick” rule. The agency may make an initial election as to which appropriation to use (the

pick), but once the decision has been made, the agency must stick to its choice unless it

informs Congress before the beginning of the FY that it will change charging practices.

Additionally, the agency may not, because of insufficient funds or other reasons, change

its election in a subsequent FY and use another appropriation unless Congress is first

informed of the agency’s planned change.

Violating 31 U.S.C. 1301(a) by expending an appropriation for an unauthorized purpose

does not necessarily violate the Antideficiency Act (ADA), 31 U.S.C. 1341. The ADA is

violated if a purpose violation cannot be corrected because sufficient unobligated funds

do not exist during the relevant FY in the correct appropriation account. Further, both the

GAO and Office of Legal Counsel (OLC) agree that an expenditure or obligation of

appropriated funds for a purpose precluded by an express prohibition in an appropriation

act violates the ADA, because no funds are available for that purpose. Contrary to the

GAO’s position, however, the OLC has advised the EPA that violating a prohibition on

expending appropriated funds that is not codified in an appropriation does not violate the

ADA.

Violations of appropriations laws are serious matters, which can undermine the agency‘s

working relationship with Congress. Responsible EPA employees may penalized with

administrative discipline for violating 31 U.S.C. 1301. A U.S. government officer or

employee convicted of knowingly and willfully violating the ADA may face a criminal

penalty of being fined no more than $5,000, imprisoned for no more than two years or

both.

2. Appropriations as to Time

The placing of time limits on the availability of appropriations is one of the primary

means of congressional control. By imposing a time limit, Congress reserves the

prerogative to periodically review a given program or agency's activities.

The life cycle of appropriations with fixed periods of availability consists of three

sequential phases: the unexpired phase, expired phase and cancelled phase. When an

appropriation is made available for a fixed period of time, the general rule is that the

period of availability relates to the authority to obligate funds from the appropriation. It

does not necessarily prohibit payments after the expiration date for obligations previously

incurred, unless the payment is otherwise expressly prohibited by statute. The availability

of appropriation balances to incur, adjust or pay obligations differs in each phase.

a. Unexpired Phase — During this phase, the appropriation may be used to incur new

obligations and to liquidate or pay properly incurred, existing obligations. Balances in

this phase do not expire and are not cancelled.

b. Expired Phase — The expired phase begins when the period to incur new obligations

against appropriations ends. For annual appropriations, this occurs at the end of the

FY for which the funds are appropriated. For multiyear appropriations, this occurs at

the end of the last FY for which the funds are appropriated.

“Upon expiration of a fixed appropriation, the obligated and unobligated balances

retain their fiscal year identity in an ‘expired account’ for that appropriation for an

additional five fiscal years. As a practical matter, agencies must maintain separate

obligated and unobligated balances within the expired account as part of their internal

financial management systems in order to insure compliance with the ADA.”

Principles of Federal Appropriations Law, p. 5-72.

The “expiration” period for the EPA’s fixed appropriations (i.e., EPM, Science and

Technology [S&T], Office of Inspector General [OIG]) is seven FYs from the

expiration of the obligational period as authorized in Pub. L. 106-377. During this

seven-year period, the potential for an ADA violation exists if identifiable obligations

chargeable to one of those seven years exceed the sum of the obligated balance for

that year plus the amount available for adjustment from the unobligated balance for

the same year. Should this happen, the excess can be liquidated only pursuant to a

supplemental or deficiency appropriation or other congressional action.

During the expired phase, no new obligations may be incurred against the

appropriations. Expired appropriation balances are available for the following:

i. Liquidation by payment or deobligation.

ii. Satisfaction of an unrecorded or under-recorded obligation properly chargeable to

the appropriation available for that particular year; they cannot be used to satisfy

an obligation chargeable to another appropriation or to any other year of the

seven-year period.

c. Cancelled Phase — At the end of the expired phase, all obligated and unobligated

balances must be cancelled, and the account is closed. Any remaining unexpended

balances, both obligated and unobligated, are cancelled and returned to the general

fund of the Treasury (294); they are thereafter no longer available for any purpose.

Collections authorized or required to be credited to a cancelled appropriation that are

received after the account is closed must be deposited in the Treasury as

miscellaneous receipts. At the end of the seven-year period, the account is closed.

All audit requirements, limitations on obligations and reporting requirements applicable

to an appropriation in the unexpired phase continue to apply in the expired phase. Under

31 U.S.C. 1552(a) and 1553(a), time-limited appropriations remain available to liquidate

obligations for five FYs after the period of availability for obligation (the unexpired

phase) ends. However, the EPA requested and received statutory authority for the expired

phase to last for seven years after the period for which the appropriation was available for

new obligations (P.L. 106-377). This statutory authority applies to multi-year

appropriations beginning in FY 2001.

3. Bona Fide Needs Rule

One of the fundamental principles of appropriations law, the "bona fide needs rule directs

that an FY appropriation may be obligated only to meet a legitimate or bona fide need

arising in, or in some cases arising prior to but continuing to exist in, the time period for

which the appropriation was made. The statutory basis for the rule is 31 U.S.C. 1502(a)

which provides that the balance of a fixed-term appropriation ‘is available only for

payment of expenses properly incurred during the period of availability or to complete

contracts properly made within that period’... ”

A good example of the bona fide needs rule is when ordering supplies at the end of an

FY. An order or contract for stock replacement is viewed as meeting a bona fide need of

the year in which the contract is made if it is intended to replace stock used in that year,

even though the replacement items will not be used until the following year. Stock in this

context refers to readily available, common-use, standard items. There are limits,

however, as GAO has questioned the validity from the bona fide needs perspective of

purchasing materials carried in stock for more than a year before the issuance for use (see

GAO Decision B-134277, Dec 18, 1957).

The application of the bona fide needs rule to service contracts may raise complicated

legal issues relating to whether the service is “severable” or “non-severable.” Severable

services are those which are continuing and recurring in nature — such as window

washing services — while non-severable services are those that are characterized as a

single undertaking — such as conducting a study and preparing a final report. Non-

severable services may be charged to the appropriation current at the time that the

contract was made, even though performance carries over into a subsequent FY.

Statutory and regulatory changes (Federal Acquisition Streamlining Act of 1994, Section

1073, and Federal Acquisition Regulation 37.106) now permit agencies to enter into a

contract, exercise an option or issue a delivery order that obligates annual (one-year)

appropriations to acquire severable services that begin in one FY and end in the next. The

contract, option period or delivery order may not exceed 12 months. The EPA OGC has

said that these provisions also apply to acquisitions funded with multi-year

appropriations, such as the two-year appropriations provided to the EPA. This means, for

example, that the EPA may obligate FY 2013/2014 funding to fund 12-months’ severable

services that begin in FY 2014 and end in FY 2015.

The concept of severable versus non-severable services does not apply to grants and

cooperative agreements. Principles of Federal Appropriations Law, pp. 10-42 and 10-43.

This is because the bona fide need for a financial assistance transaction (original awards,

supplemental and incremental funding) arises in the FY in which the EPA decides to

support the public purpose that will be furthered by providing financial assistance.

Payments may be made to recipients of EPA grants and cooperative agreements from

funds obligated in prior FYs provided the appropriation account has not been cancelled.

Under extremely rare circumstances, expired funds could be used for obligation after the

availability period for obligation has expired. In these situations, funds managers should

consult and carefully coordinate with legal counsel, since there are distinct and

complicated rules for each EPA appropriation and funding source. What might be legal in

one instance may not be in a similar but slightly different instance. Below are some

examples.

The replacement contract concept is discussed in detail on pp. 5-28 through 5-33 of the

Principles of Federal Appropriations Law. Replacement contract rules may apply when

the EPA terminates a contract because of the contractor’s default during the expired

phase for funds that remain obligated for the contract. In this situation, these expired

funds may be used to engage another contractor to complete the unfinished work. The

rule has the implicit premise that the original contract validly obligated then current

funds. The rule is also based on the notion that the default termination does not eliminate

the bona fide need of the FY in which the original contract was executed.

In accordance with 31 U.S.C. 1502, amounts from the appropriation available at the time

the original contract was entered would remain available to fund costs properly

chargeable to that appropriation. Accordingly, the replacement contract seeks only to

meet the agency’s preexisting and continuing need, relying on the budget authority

obligated by the original contract. For funds to remain available beyond expiration for a

replacement contract, four conditions must be met:

a. The program office or region must obtain an opinion from the OGC stating that a

replacement contract must be issued in lieu of the original contract.

b. A bona fide need for the work, supplies or services must have existed when the

original contract was executed, and it must continue to exist up to the award of the

replacement contract. If a terminated contract is found to have been improperly made

to fulfill a need of an FY other than the year against which the obligation was

recorded, it would also be improper to charge that same appropriation for obligations

incidental to a replacement contract.

c. The replacement contract must not exceed the scope of the original contract. If it

does, it is a new obligation and must be charged to funds currently available for

obligation at the time that the recipient enters into the replacement contract.

d. The replacement contract must be awarded within a reasonable time after termination

of the original contract. Excessive delay raises the presumption that the original

contract was not intended to meet a then existing bona fide need. The same result may

follow if there is unwarranted delay in terminating the original contract.

Similar rules apply in situations in which a financial assistance recipient is unable to

complete a grant performance or cooperative agreement:

• The bona fide need for the grant project must continue.

• The purpose of the grant from the government’s standpoint must remain the same.

• The revised grant must have the same scope.

Principles of Federal Appropriations Law p. 10-107.

However, the EPA does not need to terminate the financial assistance agreement for

default. The agency and the recipient may reach a mutual agreement for another recipient

to complete performance, such as when a principal investigator for a research grant

moves to a different educational institution, and the original recipient intends to cease

operations or simply does not want to continue to perform the agreement.

4. Appropriations as to Amount — Appropriations are limited to the dollars (or amount)

appropriated. Therefore, restrictions related to amount are the third major element in the

legal availability of appropriations. It is not enough to know what you can spend

appropriated funds on and when you can spend them; you must also know how much you

have available for a particular activity.

While certain funding levels and limitations may be included in authorizing legislation,

appropriations legislation will generally control the disposition of an issue where the

appropriations act itself clearly demonstrates congressional intent to depart from funding

levels or limitations in the authorizing legislation. Nonetheless, the authorizing act and

appropriations act should be harmonized to the greatest extent possible. The authorizing

legislation and the appropriations go hand in hand to establish a mandate for

environmental action followed by the funds to carry out the mandate.

a. The ADA — The ADA is one of the major laws in the statutory pattern by which

Congress exercises its constitutional control of the public purse. It has been termed

the cornerstone of congressional efforts to limit the executive branch’s expenditure of

appropriated funds.

Briefly, in its current form, the ADA prohibits:

• Obligation or expenditure in excess of appropriations.

• Obligation or expenditure in advance of appropriations unless authorized by law.

• Accepting voluntary services for the United States exceeding that authorized by

law.

• Obligation or expenditure in excess of apportionments or administrative divisions

of apportionments.

The ADA is described in detail in Chapter 2, Section B, including reporting violations

and both civil and criminal penalties for violation.

b. “Administrative” vs. “Programmatic” — The concept of costs being either

“administrative” or “programmatic” is a functional distinction based on purpose. In

FY 1994, to implement restructured appropriations and control costs as either

administrative or programmatic, the agency revised its budget object and finance sub-

object classification codes to reflect this philosophy. In FY 1995, Congress directed

the agency to review the current budget structure and restructure accounts. In FY

1996, the agency’s budget structure eliminated congressional caps on administrative

expenses.

In FY 2004, the EPA streamlined its budgetary and spending processes and

discontinued use of the “programmatic” vs. “administrative” distinction in its

Operating Plan and at the budget object class (BOC) code level. For financial

accounting purposes and to report spending to the Office of Management and Budget

(OMB), GAO, Congress, agency management, etc., the EPA continues to use

“administrative” or “programmatic” at the EPA sub-object code level, also known as

the financial object class (FOC) codes. The detailed nature of the FOCs is vital to

EPA operations. This financial information is used to support management decision-

making and to maximize resources to achieve program goals.

All agency personnel responsible for handling and reviewing budget and financial

information should ensure that BOCs and FOCs are correctly and consistently

applied. The EPA sub-object class codes and definitions are included in the Resource

Management Directive System (RMDS), Chapter 2590, and can be viewed online at

http://intranet.epa.gov/ocfo/policies/resource.htm. RMDS Chapter 2590 provides

additional information to help agency personnel ensure that BOCs and FOCs are used

appropriately.

c. Appropriations Charging — Split Funding with Multiple Appropriations

i. Procurements — The use of more than one appropriation on a single work

assignment, delivery order or project is known as split funding with multiple

appropriations. The EPA receives funding for contracts from several

appropriations and may fund a procurement from one or more of these

appropriations depending on the nature of the goods or services provided. The

agency requires that the Office of the Chief Financial Officer (OCFO) approve the

allocation methods when more than one appropriation is used as a funding source

on a procurement.

Split funding applies to all procurement transactions that use multiple

appropriations where costs are not directly allocable (and not just Superfund).

Funding allocation must be based on appropriation benefit, rather than which

account can “afford” the work. Stated another way, the appropriations cited on the

contract must benefit from the contractor’s work. The use of funds from one

appropriation because of the absence of funding in another violates basic

appropriations law.

The following procedures are necessary to ensure full agency compliance with

legal requirements for split-funded procurements:

• Methodology — The OCFO must approve the contracting officer

representative’s (COR’s) rationale for allocating costs among appropriations

so that voucher payment can be processed accurately. Approval should be

obtained before the contract/task order deliverable is awarded.

The COR must document the rationale for using multiple appropriations and

include an estimate of the costs to be charged to each appropriation, as well as

the method for distributing the costs to the benefitting appropriations. All

program offices contributing funds to the procurement must indicate on the

rationale their concurrence with the estimate. The COR’s split funding

documentation rationale must be sent to OCFO for approval and also

maintained in the overall contract file.

Costs must be allocated based on a formula derived from the estimated

benefits to each appropriation. If each task, work assignment or delivery order

within the multi-funded contract will be funded from a single appropriation,

OCFO approval is not required. Project officers (POs) are encouraged to

structure tasks in this manner. The methodology used for “split funding” of

indistinguishable support costs should be applied consistently throughout the

fiscal year and not adjusted as a matter of convenience or to balance the usage

of funds from available appropriations.

The COR responsible for the contract must include a copy of the approved

rationale for using multiple appropriations with the purchase request (PR)

submitted to the contracts office.

• Voucher Payment — Whenever a procurement has multiple account funding,

the COR must provide the Research Triangle Park Finance Center (RTPFC)

with the appropriations (and amounts) on the invoice approval so that

payment vouchers are charged correctly. The finance office will charge

contract vouchers to the appropriate account number and document control

number (DCN) as specified by the methodology.

For more information on funding procurements with multiple appropriations,

see the EPA’s Contracts Management Manual (dated April 2004), Chapter 7,

Section 7.4, “Accounting for Appropriations in Contracts” at

http://oamintra.epa.gov/node/245.

• Approving Invoices — CORs must use the Electronic Approval System,

EASYLITE. EASYLITE allows CORs and their alternates to approve

invoices online. EASYLITE takes the place of the hard copy invoice approval

form, EPA Form 2550-19, which CORs previously received in pink

envelopes. Unless an exception is approved by the RTPFC, all CORs must use

EASYLITE to approve invoices.

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OC/RTP receives the invoice for payment from the vendor. The OC/RTP

accounts payable technician scans the invoice into the Contract Payment

System (CPS). Once the data entry into the CPS is complete, EASYLITE

generates an email to the PO and contracting officer (CO) indicating that an

invoice is awaiting approval. EASYLITE is a Web-based program that allows

approval and payment of contract invoices. Approvals are updated from

EASYLITE to the CPS in real time, and payment information is transmitted

nightly from CPS to Compass. The PO approves the payment in EASYLITE.

EASYLITE reflects the contract, task order and invoice data; through a drop-

down menu, it shows the available lines of accounting for cost allocation. It is

up to the COR to allocate the invoice amount among the accounting lines and

to determine which DCN will be used for the particular invoice. When paying

invoices involving more than one appropriation, the COR must follow the

OC-approved split-funding methodology previously developed. EASYLITE

will not allow overpayment of invoices and provides only available lines of

accounting associated with a contract or task order.

ii. Grants/Cooperative Agreements — The EPA Office of Grants and Debarment

(OGD), with the assistance of opinions from the OGC, established its policy for

multiple appropriation (MA) grants in FY 2001. It states, “It is the EPA policy

generally to use only one appropriation as the funding source for an assistance

project. Where a project’s activities benefit more than one appropriation, the

agency should award separate grants for the activities falling within the scope of

each appropriation. However, a single MA grant may be awarded, with adequate

justification documented in the grant decision memorandum, and on an exception

basis, if all of a project’s activities are of a type that is fundable from all of the

supporting appropriations. Separate grants must be awarded if all of the

supporting appropriations are not legally available for all of the types of activities

to be performed. This is because of the procedural difficulties involved in

individually charging payments to the benefited appropriations. In awarding and

administering separate grants, the agency will work to minimize application,

accounting and reporting burdens on recipients.”

As part of the justification for an MA grant, the PO must include a description of

the methodology for charging payments in the decision memorandum that reflects

the proportional benefit to each appropriation. When developing their allocation

methodology, POs must use the guidelines issued by the Office of the Chief

Financial Officer (OCFO). A suggested sample allocation methodology

accompanying the decision memorandum could look like the following:

POs may contact their finance centers (FCs) or, where necessary, OGC or the

appropriate Office of Regional Counsel (ORC) if they need further guidance. The

Figure 7. Allocation methodology.

funding placed on the grant must be consistent with the allocation methodology.

The “Multiple Appropriations Awards Policy” can be found in its entirety at

http://intranet.epa.gov/OGD/course_library/m5_funding/4.5-INFO-FA.htm.

Although split-funded grants and cooperative agreements are not reviewed by the

OC, allocation methodologies are subject to audit, and the funding organization

must establish a rationale internally.

• Allocation of Support Costs — The EPA’s operating costs are usually charged

directly to an appropriation through its account code structure. For example, a

Superfund employee's pay would be charged to a Superfund appropriation

account number (the employee's fixed account number).

However, many support services may benefit activities that are funded from

more than one appropriation, but the amount of support benefiting each

appropriation cannot be directly measured. As a result, there might be no way

to track and report which increments of time worked or what portion of a

purchased item supports which appropriation's activities.

Allocating time worked or other support costs among appropriations is an

acceptable method of charging costs. Program offices, which allocate costs,

must have a measure of benefit for allocating costs to an appropriation (that is,

the ratio of costs from one appropriation to the total costs, where the ratio

represents the proportion of service provided to the various recipients of that

service).

The derived percentage(s) is multiplied against the total amount of support

costs (or total full-time equivalent personnel compensation and benefits costs

if allocating personnel costs) to be distributed. The calculated amounts are

then recorded against the respective appropriations. This plan must be adhered

to by all offices responsible for distributing support costs or needing to

allocate hours worked.

RMDS 2550D, Chapter 5, “Allocation of Personnel and Support Costs to the

Superfund Appropriation,” describes in further detail allocation

methodologies used to redistribute costs or layoff appropriations. Although

“Superfund” is specifically mentioned in the chapter title, the methodologies

described can be applied to any trust fund or appropriation. The methodology

used for “split funding” of indistinguishable support costs should be applied

consistently throughout the fiscal year and not adjusted as a matter of

convenience or to balance the usage of funds from available appropriations.

B. Tracking and Managing Funds

Users will click on the report of their choice and enter the appropriate selection criteria to

retrieve the data they requested. The Compass Data Warehouse (CDW) home page can be

accessed at http://ocfosystem1.epa.gov/neis/adw.welcome.

1. CDW and Concise Binary Object Representation (CBOR) Reports

a. Direct Access to the CDW — Direct access to the CDW Oracle database is available.

Users will need to provide their own reporting tool and must have an Oracle client set

up on their PC. Some reporting tools that are being used and known to work include

Lotus Approach, Cognos Impromptu, Business Objects and Microsoft Access, as well

as various Oracle reporting products. Any reporting tool capable of connecting to an

Oracle database or an open database connectivity data source should work.

b. Compass Business Objects Reports — In FY 2012, the OCFO discontinued its use of

the OCFO Reporting Business Intelligence Tool (ORBIT) and began using CBOR.

This Business Objects platform enables users to generate standard and ad hoc reports

to meet specific information needs (75 total reports). The CBOR reporting tool

represents a significant OCFO effort to bring financial information to day-to-day

decision-making across the agency.

An FCO’s signature on a document signifies that the FCO has personally reviewed the

document for accuracy, all accounting data is accurate and complete, the transaction has

been accepted in Compass, and the funds are available as to purpose, time, and amount. It

is the FCO’s responsibility to ensure that all of these actions have taken place before

forwarding the document to other agency officials. Other EPA officials rely on the FCO’s

signature to indicate that the funds will not be altered, revised or withdrawn prior to

obligation without advance notice or formal notification in writing.

This section will cover the essential items on funding documents that an FCO should review, and

common funding problems an FCO may encounter after committing the funds and how those

problems are resolved. Since an FCO’s realm of responsibility might vary depending on whether

they are located in HQ or the Regions, not all of these functions might actually be performed by

the FCO. However, in either location, the FCO is directly responsible for or subject to

coordinating with other personnel on the following activities:

2. Reviewing and Approving Funding Documents

A lack of attention to detail in properly reviewing a funding document could result in a

violation of the ADA, the Purpose Statute (31 U.S.C. 1301), or other appropriations laws.

Therefore, the FCO should ensure that the following information is correctly cited on the

document before committing the funds in Compass:

a. Correct Appropriation — Chapter 1, Section II, describes the different appropriations

used by the agency and their purpose. The FCO must ensure that the funds cited are

being used for the appropriate purpose. The FCO might also need to apply the "Pick

and Stick” rule to determine whether the document is funding something from one

appropriation that traditionally might have been funded from a different

appropriation. This rule was covered in Chapter 1, Section III.

b. Correct Account Number — See Chapter 4, Section I, for a description of the “Six-

Field Compass Account Code” and how to enter this information. FCOs must ensure

that the document cites the correct account number.

c. Correct Object Class Code — See Chapter 4, Section I, for a description. FCOs must

ensure that the document cites the correct sub-object class co