oversight

Improvements Are Needed Over Environmental Reviews of Public Housing and Recovery Act Funds in the Columbia Office

Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-06-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

OFFICE OF AUDIT
REGION 6
   Ge
FORT WORTH, TX




                  Office of Public Housing
                       Columbia, SC

       Public Housing Capital Fund and American
         Recovery and Reinvestment Act of 2009
                Environmental Reviews



2014-FW-0003                                 June 19, 2014
                                                        Issue Date: June 19, 2014

                                                        Audit Report Number: 2014-FW-0003




TO:            Eric A. Bickley
               Director of the Columbia Office of Public Housing, 4EPH

               //signed//
FROM:          Gerald R. Kirkland
               Regional Inspector General for Audit, Fort Worth Region, 6AGA


SUBJECT:       Improvements Are Needed Over Environmental Reviews of Public Housing and
               Recovery Act Funds in the Columbia Office


    Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General’s (OIG) final results of our review of the Columbia Office of Public Housing’s
oversight and performance of environmental reviews pertaining to the Public Housing Capital
Fund program.

    HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.

    The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.

   If you have any questions or comments about this report, please do not hesitate to call me at
(817) 978-9309.
                                          June 19, 2014

                                          Improvements Are Needed Over Environmental Reviews
                                          of Public Housing and Recovery Act Funds in the
                                          Columbia Office


Highlights
Audit Report 2014-FW-0003


 What We Audited and Why                   What We Found

 We audited the U.S. Department of       The Columbia Office did not follow environmental
 Housing and Urban Development’s         requirements at 24 CFR (Code of Federal Regulations)
 (HUD) Columbia, SC, Office of Public    Part 50 when it determined compliance with National
 Housing as part of a nationwide audit   Environmental Protection Act of 1969-related laws and
 of HUD’s oversight of environmental     authorities for the 41 public housing agencies in its
 reviews. We selected the Columbia       jurisdiction. Specifically, it did not properly evaluate
 Office based on our risk assessment.    environmental conditions or maintain required
 Our audit objectives were to determine  documentation. This condition occurred because the
 whether the Columbia Office ensured     Columbia Office did not have standard operating
 that it performed the required reviews  procedures and its management and staff were not
 and did not release funds until all     adequately trained to ensure environmental
 requirements were met and required      compliance. As a result, the Columbia Office may
 documents were submitted.               have increased the risk to the health and safety of
                                         public housing agency residents and the general public
                                         and may have failed to prevent or eliminate damage to
  What We Recommend
                                         the environment. Further, the Columbia Office
                                         approved 41 housing agencies to spend more than
Since the conditions and causes in this $76.4 million, including more than $35.8 million in
report are systemic, we will make        American Recovery and Reinvestment Act funds, on
recommendations for corrective actions projects that did not have a proper environmental
to HUD headquarters in an upcoming       review and were not adequately supported.
nationwide audit report. Therefore, this
report does not contain
recommendations.
                             TABLE OF CONTENTS

Background and Objectives                                                  3

Results of Audit
      Finding 1     The Columbia Office of Public Housing Did Not Follow
                    24 CFR Part 50 Requirements When It Performed
                    Environmental Reviews                                  4

Scope and Methodology                                                      12

Internal Controls                                                          14

Appendixes
A.    Auditee Comments and OIG’s Evaluation                                16
B.    Criteria                                                             19




                                             2
                      BACKGROUND AND OBJECTIVES

In January 1970, Congress passed the National Environmental Policy Act of 1969 (NEPA). The
objective of this legislation was to establish a national policy that would encourage productive and
enjoyable harmony between man and his environment and to promote efforts to prevent or eliminate
damage to the environment and biosphere and stimulate the health and welfare of man. To carry out
the policy set forth in the Act, Congress directed that it is the continuing responsibility of the
Federal Government to improve and coordinate Federal plans, functions, programs, and resources to
the end that the Nation may attain the widest range of beneficial uses of the environment without
degradation, risk to health or safety, or other undesirable and unintended consequences. Further,
Congress authorized and directed all agencies of the Federal Government to identify and develop
methods and procedures to ensure that the agencies complied with environmental policies,
regulations, and public laws of the United States.

To further the purpose and policy of NEPA, the President issued Executive Order 11514, Protection
and Enhancement of Environmental Quality, on March 5, 1970. Based on the executive order, the
heads of Federal agencies are required to continually monitor, evaluate, and control their agencies’
activities to protect and enhance the quality of the environment. In addition, Federal agencies are
required to review their agencies’ statutory authority, administrative regulations, policies, and
procedures, including those relating to loans, grants, contracts, leases, licenses, or permits, to
identify any deficiencies or inconsistencies that prohibit or limit full compliance with the purposes
and provisions of the Act.

The U.S. Department of Housing and Urban Development (HUD) responded to NEPA and
Executive Order 11514 by developing 24 CFR (Code of Federal Regulations) Part 50, Protection
and Enhancement of Environmental Quality. Regulations at 24 CFR Part 50 direct HUD to carry
out the policies of NEPA and other laws and authorities. This responsibility includes performing an
independent evaluation of the environmental issues, determining the scope and content of the
environmental compliance finding, and making the environmental determination.

Our audit objectives were to determine whether the Columbia Office ensured that it performed
the required reviews and did not release funds until all requirements were met and required
documents were submitted.




                                                  3
                                 RESULTS OF AUDIT


Finding 1: The Columbia Office of Public Housing Did Not Follow 24
CFR Part 50 Requirements When It Performed Environmental Reviews
The Columbia Office did not follow environmental requirements at 24 CFR Part 50 when it
determined compliance with NEPA-related laws and authorities for the 41 public housing
agencies in its jurisdiction. Specifically, it did not properly evaluate environmental conditions or
maintain required documentation. This condition occurred because the Columbia Office did not
have standard operating procedures and its management and staff were not adequately trained to
ensure environmental compliance. As a result, the Columbia Office may have increased the risk
to the health and safety of public housing agency residents and the general public and may have
failed to prevent or eliminate damage to the environment. Further, the Columbia Office approved
41 housing agencies to spend more than $76.4 million, including more than $35.8 million in
American Recovery and Reinvestment Act funds, on projects that did not have a proper
environmental review and were not adequately supported.


 The Columbia Office Did Not
 Follow 24 CFR Part 50
 Requirements

               For the 41 public housing agencies in its jurisdiction, the Columbia Office did not
               properly implement environmental review requirements to ensure compliance
               with NEPA. Regulations at 24 CFR Part 50 direct HUD to carry out the policies of
               NEPA and other laws and authorities. This responsibility includes performing an
               independent evaluation of the environmental issues, determining the scope and
               content of the environmental compliance finding, and making the environmental
               determination. Failure by HUD to adequately conduct 24 CFR Part 50
               environmental reviews may have increased the risk to the health and safety of
               public housing agency residents and the general public since HUD could not
               ensure that they were not exposed to an unnecessary risk of contamination,
               pollution, or other adverse environmental effects. The Columbia Office did not

                      Follow the environmental requirements when it performed environmental
                       reviews,
                      Properly evaluate environmental conditions with the required compliance
                       factors,
                      Maintain complete environmental records and supporting documentation,
                      Comply with internal control requirements,
                      Ensure that funds transferred to housing agencies’ operating accounts met
                       environmental requirements, or


                                                 4
                       Understand environmental requirements well enough to properly monitor
                        staff for compliance.

                The Columbia Office Did Not Follow Environmental Requirements When It
                Performed Environmental Reviews
                The Columbia Office did not perform the environmental reviews or address the
                compliance factors listed in Part A of the form HUD-41281 on an individual basis
                for each housing agency. Rather than performing an independent evaluation for
                each housing agency, the public housing revitalization specialist stated that he
                looked at each of the housing agencies’ annual plans individually and completed
                one master form HUD-4128 for the environmental reviews. The form was based
                on all housing agencies’ activities being exempt or categorically excluded. He
                then added each housing agency name to the master form and printed it as the
                record for each of the 41 housing agencies’ 2009 Recovery Act and 2011 and
                2012 Public Housing Capital Fund grants. He placed the forms into each housing
                agency’s file, along with the annual plans that he used to determine the level of
                review.

                However, failure to evaluate each housing agency’s projects or activities based on
                the environment surrounding that particular location can lead to inaccurate
                conclusions. For example, the City of Myrtle Beach is on the east coast of South
                Carolina and has a large mass of land zoned as a special flood zone area, which
                can have a direct impact on public housing projects. These projects, if located
                within the special zone, were required to meet the Federal requirements2
                regarding flood insurance. Conversely, the City of Greenville, SC, is located in
                the western region of the State, and the majority of its land mass is considered
                outside any flood zone requirements. Thus, flood insurance was not required for
                the majority of the land mass. However, because the Columbia Office did not
                make individual assessments that showed that the housing developments were
                either inside or outside the flood zones, it was unable to assure that potentially at
                risk units and tenants were protected from loss. Regulations at 24 CFR 50.11
                state that the HUD approving official must make an independent evaluation of the
                environmental issues and maintain copies of the environmental reviews and
                findings in the project files. The environmental information must be an accurate
                scientific analysis and concentrate on the issues that are truly significant to the
                project or activities in question related to that particular area.

                The Columbia Office Did Not Properly Evaluate Environmental Conditions With
                the Required Compliance Factors
                The Columbia Office did not properly evaluate compliance with the factors listed
                at 24 CFR 50.4. Rather, it marked all of the housing agencies’ forms HUD-4128
                compliance factors as “not applicable,” stating that an environmental assessment
                was not required because the Capital Fund grants satisfied the criteria. While an

1
    Environmental Assessment and Compliance Findings for the Related Laws
2
    24 CFR 50.4(b) and 55.20


                                                     5
                environmental assessment may not have been required if the projects were
                determined to be categorically excluded based on 24 CFR 50.20, the compliance
                factors listed in 24 CFR 50.4 must be evaluated. Following are examples of
                compliance factors that the Columbia Office did not evaluate:

                       Historic preservation – The Columbia Office did not evaluate historic
                        preservation impacts before activities were undertaken at any of the
                        housing agencies. The regulations require a HUD official to identify
                        historic properties in consultation with the State historic preservation
                        officer and in the case of South Carolina, in consultation with the Eastern
                        Band of Cherokee Indians and the Catawba Indian Nation, even if HUD
                        believes that no historic properties are present or that historic properties
                        may be present but the undertaking will have no adverse effect upon the
                        properties.3

                       Floodplain management and flood insurance – The Columbia Office did
                        not evaluate floodplain management or flood insurance requirements.4
                        The State of South Carolina has several flood zones, including special
                        flood hazard areas that have a 26 percent chance of flooding during a
                        standard 30-year home mortgage. Federal floodplain management
                        regulations and mandatory flood insurance purchase requirements apply to
                        special flood hazard areas. However, the Columbia Office did not ensure
                        compliance by correctly identifying on Federal Emergency Management
                        Agency maps where the developments were located and whether they
                        were located in a special flood hazard area.

                       Noise control – The Columbia Office did not evaluate compliance with
                        noise control requirements for major rehabilitation or conversion projects
                        to determine whether there was a need for noise reduction features.5 For
                        example, the Greenville Housing Authority converted a community center
                        into six apartments without considering potential noise impacts. Noise
                        sources within established thresholds requiring consideration included an
                        interstate 516 feet and a railroad 2,307 feet from the project. The
                        projected day-night noise level for the site was 70 decibels, which
                        exceeded the 65-decibel HUD standard requiring mitigation. However,
                        the Columbia Office did not determine whether there was a need for noise
                        reduction features.

                       Hazardous operations and toxic site hazards – The Columbia Office did
                        not evaluate for hazardous operations or toxic chemicals and radioactive
                        substances.6 The U.S. Environmental Protection Agency (EPA) identified

3
    24 CFR 50.4(a) and 36 CFR 800.4(d)(1)
4
    24 CFR 50.4(b) and 55.20
5
    24 CFR 50.4(k) and 24 CFR Part 51, Subpart B
6
    24 CFR 50.3(i)(1)


                                                   6
                        Greenville County as the only county in South Carolina rated as “zone 1”
                        for radon gas. A zone 1 rating means that there is a predicted average
                        indoor radon screening level greater than the EPA-recommended action
                        level for addressing radon exposure. However, the Columbia Office did
                        not evaluate any of the Greenville Housing Authority developments for
                        site contamination.

                       Air quality – The Columbia Office did not evaluate or record whether any
                        of the housing agencies had been properly inspected for the presence of
                        asbestos and if found, whether the appropriate notification, abatement, and
                        disposal measures had been implemented as required.7 Housing agency
                        rehabilitation projects included replacement of major systems (heating,
                        ventilation, and air conditioning), roofing, flooring, and windows, all of
                        which can contain asbestos materials. Therefore, the Columbia Office
                        should have evaluated the air quality and implemented the proper
                        procedures. Instead, it marked on the form HUD-4128 that housing
                        agencies were in compliance or conformance with the air quality plan and
                        provided no evidence of how compliance was determined.

                       Airport hazards or airport clear zones – The Columbia Office did not
                        evaluate or support that it evaluated airport hazards before the Greenville
                        Housing Authority performed work at its developments. One
                        development, Arcadia Hills, performed renovation activities that included
                        converting a community center into six apartments. Within the complex
                        of buildings that comprise the Arcadia Hills public housing project, there
                        appeared to be at least 140 residential buildings owned by the Authority
                        that were located within 2,500 feet of the end of the runway. Any major
                        rehabilitation activity required consideration of airport hazards by
                        evaluating the property location relative to the runway protection zone of
                        the Greenville Downtown Airport.8 However, no support was provided to
                        explain the evaluation and environmental determination.

                       Other NEPA-related laws and authorities cited in 24 CFR 50.4 – The
                        Columbia Office also did not evaluate compliance with environmental
                        justice, sole-source aquifers, wetland protection, endangered species, wild
                        and scenic rivers, coastal barrier resources, and farmland protection.
                        These other NEPA-related laws and authorities were marked on the form
                        as “not applicable” without evidence to validate the determinations.

                The Columbia Office Did Not Maintain Complete Environmental Records and
                Supporting Documentation
                The Columbia Office did not properly document its decision making for
                compliance with NEPA. The environmental review records for the housing
7
    24 CFR 50.4(h)
8
    24 CFR 50.4(k) and 24 CFR Part 51, Subpart D


                                                   7
agencies’ 2009 Recovery Act and 2011 and 2012 Capital Fund grants did not
include complete project descriptions. For example, they did not identify the
project names or locations. Instead they listed “2011 or 2012 capital fund
program formula funding" and "Greenville Housing Authority" or “Reference
Attached PHA [public housing agency] Listing” without providing the street, city,
county, or State information as requested on the form HUD-4128. Also, the
activities proposed for each development were not clearly described, and the
number of buildings, number of units, and age of structures were not listed. The
records also did not provide site plans, locational maps, or site photographs that
would support what activities comprised the projects, where the projects were
located, and when the activities would be performed.

The environmental review records contained form HUD-4128 as required;
however, the Columbia Office staff marked all of the housing agencies’ forms
HUD-4128 compliance factors as “not applicable” without supporting
documentation to validate the compliance determinations made. Examples of
valid source documentation include

      A properly marked Federal Emergency Management Agency map
       identifying the locations of housing agency properties,
      A documented finding sent to the State historic preservation officer or a
       programmatic agreement with the State historic preservation officer,
      An airport clear zone map that can be obtained by the local airport
       management, and
      A national wetlands inventory map found on the U.S. Fish and Wildlife
       Web site.

The Columbia Office Did Not Comply With Internal Control Requirements
The Columbia Office did not comply with internal control requirements set forth
in HUD’s Field Office Environmental Review Guidance, which required, at a
minimum, (1) a list of responsible entities that HUD determined would or would
not perform the environmental reviews on behalf of HUD, (2) a list of request for
release of fund certifications that had been received and the corresponding
clearance provided, (3) a list of environmental reviews conducted by the
Columbia Office, and (4) separate environmental files for each housing agency
within its jurisdiction. The Columbia Office’s tracking log was incomplete as it
was maintained for Capital Fund grants completed under 24 CFR Part 50 only and
did not contain a list of the project or grant number, the fund year, the engineer
who performed the review, any mitigation actions required, the date the review
was completed, the date it was signed, and the date the letter was sent to the
housing agency approving use of the funds. Further, the Columbia Office’s
Public Housing director and staff stated that the log did not contain much
information. Further, the Public Housing director stated that he was not sure
whether the log was current. The Columbia Office also did not maintain a list of
responsible entities that HUD determined would or would not perform the
environmental reviews on its behalf.

                                 8
                 The Columbia Office Did Not Ensure That Operating Costs Met Environmental
                 Requirements
                 The Columbia Office did not ensure that funds transferred to housing agency
                 operating accounts met environmental requirements because staff did not always
                 question the use of such funds. A staff member stated that if a small housing
                 agency annually transferred 100 percent of its capital funds into its operating
                 account, the Columbia Office would question the use of the funds. However, the
                 Columbia Office did not review transfers by large housing agencies into their
                 operating accounts to determine whether the funds were spent on activities
                 requiring environmental reviews. The staff member further stated that the
                 housing agencies did not provide a detailed description of the use of the funds that
                 they transferred to their operating accounts. The Greenville Housing Authority
                 executive director confirmed that the Authority had not been required by the
                 Columbia Office to provide details on how it used funds that it transferred to its
                 operating account. However, HUD’s Field Office Environmental Review
                 Guidance9 states that housing agencies should provide a description of operating
                 costs to HUD or the responsible entity to allow completion of the environmental
                 review.
                 Further, 24 CFR 990.116 provides that the environmental review procedures of
                 NEPA and the implementing regulations at 24 CFR Part 50 are applicable to the
                 operating fund program. In addition, the housing agencies’ annual contributions
                 contracts10 prohibit any costs incurred as part of the development or
                 modernization costs from being included in operating expenditures.
                 Responsibility for determining whether operating funds meet environmental
                 requirements is determined by the type and nature of the projects or activities for
                 which the costs were incurred and not on the characterization of funds, such as
                 capital or operating. Operating costs – such as maintenance, security, operation,
                 utilities, furnishings, equipment, supplies, staff training and recruitment, and other
                 incidental costs are categorically excluded not subject to 24 CFR 50.4 laws and
                 authorities. However, Public Housing must review the expenditures from the
                 operating account to ensure a proper level of environmental review was
                 performed for activities that were subject to review.

                 Columbia Office Management Did Not Understand Environmental Requirements
                 Well Enough to Properly Monitor Staff To Ensure Compliance
                 The Columbia Office’s management did not understand environmental
                 requirements well enough to ensure that staff properly performed the 24 CFR Part
                 50 environmental reviews for compliance with environmental requirements. The
                 Columbia Office management had sought and received guidance from the field
                 environmental officer. However, management still did not understand the
                 environmental regulations and processes because they are very complex.

9
     Section 5: Program Requirements – Capital Fund Program (Special Note)
10
     Form HUD-53012A


                                                      9
                   Therefore, management could not ensure staff properly performed the
                   environmental reviews. Further, the Columbia field environmental officer stated
                   that he monitored only HUD’s community planning and development programs
                   because he did not have authority over any other HUD programs. Executive
                   Order 11514 required Federal agencies to continually monitor, evaluate, and
                   control their agencies’ activities to protect and enhance the quality of the
                   environment.

     The Columbia Office Did Not
     Develop Standard Operating
     Procedures To Meet 24 CFR
     Part 50 Requirements


                   The Columbia Office did not develop its own in-house standard operating
                   procedures to ensure that it complied with 24 CFR Part 50 requirements. Instead,
                   according to the Columbia Office’s Public Housing director, the Columbia Office
                   relied on the policies and procedures in 24 CFR Parts 50 and 5811 and the 2009
                   PIH Field Office Environmental Review Guidance to guide them. However,
                   these criteria do not provide detailed steps to be taken to ensure compliance. The
                   requirements12 state that the environmental review is a process for complying
                   with NEPA and other laws and authorities and that HUD must comply with all
                   environmental requirements, guidelines, and statutory obligations.

     The Columbia Office Staff
     Was Not Adequately Trained
     To Perform Environmental
     Reviews


                   The Columbia Office’s public housing staff did not perform the environmental
                   reviews according to the requirements at 24 CFR Part 50. The director is required
                   to sign the form HUD-4128 as the HUD approving official; however, he had
                   received limited environmental training, which included only a webinar and some
                   guidance from the field environmental officer on what to do and what to look for.
                   The public housing revitalization specialist who performed the environmental
                   reviews stated that the only training that he had received was HUD webinar
                   training several years earlier and that he was not aware of any classroom training
                   provided by HUD. Regulations at 24 CFR 50.10 state that it is the responsibility
                   of all Assistant Secretaries, the General Counsel, and the HUD approving official
                   to ensure that the requirements are implemented; however, without adequate
11
      Regulations in Part 58 allow State and local governments to assume HUD’s responsibility for environmental
      reviews and include the decision making and other actions that would apply to HUD under NEPA and other
      provisions of law.
12
      24 CFR 50.2(a) and 50.4


                                                        10
             training for field office management and staff, HUD could not ensure that it
             complied with NEPA.

The 41 Housing Agencies
Expended More Than $76.4
Million Without Proper
Environmental Reviews

             As shown in table 1, the Columbia Office approved 41 housing agencies to spend
             more than $76.4 million, including more than $35.8 million in Recovery Act
             funds, on projects that did not have a proper environmental review and were not
             adequately supported. Since HUD failed to follow environmental review
             requirements, we are not recommending that the housing agencies repay the
             funds.

   Table 1: Expended funds
                      2009 Recovery              2011             2012
     Housing agency     Act funds            capital funds    capital funds       Total
    41 South Carolina
    housing agencies     $35,878,821           $21,721,457      $18,894,427    $76,494,705

Conclusion

             The Columbia Office did not properly perform and document environmental
             reviews for all 41 public housing agencies in its jurisdiction. Thus, it did not
             properly implement environmental review requirements. Because the
             environmental reviews did not comply with requirements, the Columbia Office
             may have increased the risk to the health and safety of public housing agency
             residents and the general public and may have failed to prevent or eliminate
             damage to the environment. Further, the housing agencies spent more than $76.4
             million, including more than $35.8 million in Recovery Act funds, on projects
             that did not have a proper environmental review and were not adequately
             supported.

             Columbia Office management was responsible for verifying that environmental
             reviews complied with requirements by conducting periodic monitoring and
             ensuring that environmental compliance training was provided to staff.

Recommendations

             Since these conditions appeared to have been systemic, we will make
             recommendations to HUD headquarters in a future report.




                                             11
                         SCOPE AND METHODOLOGY
We conducted our audit work between November 2012 and August 2013 in Columbia, SC, at the
HUD field office and in Greenville, SC, at the Greenville Housing Authority and the City of
Greenville. We also conducted audit work at our offices in Albuquerque, NM, and Houston, TX.
Our review covered the 2009 Recovery Act grant from March 18, 2009 to March 17, 2010 and
fiscal years 2011 and 2012 Capital Fund grants from October 1, 2010 to September 30, 2012.

To accomplish our objectives, we

   Reviewed applicable public laws and executive orders that direct the requirements of
    environmental compliance;
   Reviewed Federal regulations related to the environmental review process and HUD’s
    handbooks and guidance on environmental compliance;
   Reviewed various HUD job descriptions related to environmental oversight;
   Conducted interviews with staff from HUD’s Columbia field office, the Greensville Housing
    Authority, and the City of Greenville;
   Analyzed HUD’s field office’s, the Greenville Housing Authority’s, and the City of
    Greenville’s environmental review processes for compliance with environmental
    requirements;
   Analyzed environmental review records to determine whether environmental requirements
    were met;
   Compared the housing agencies’ original, revised, and final annual statements, as applicable,
    to determine the projects completed under the grants and any changes to the projects;
   Reviewed HUD’s Line of Credit Control System (LOCCS) grant budget, vouchers, and
    obligation and expenditures detail data. We verified the reliability of LOCCS data with other
    sources of information, such as contracts, annual plans, and environmental certifications.
   Compared the Columbia Office’s environmental tracking logs to the minimum internal
    control requirements set forth in HUD’s Field Office Environmental Review Guidance to
    ensure compliance; and
   Compared the housing agencies’ contracts to LOCCS details and the environmental records
    to ensure that funds were not obligated or expended before completion of the review.

We selected the Columbia Office based on our risk assessment, using information we obtained
related to funding levels, historic value, industry uses, and the environmental process used. We
selected the Greenville Housing Authority and the City of Greenville to gain an understanding of
their environmental review knowledge. In addition, we reviewed certain aspects of the
environmental review process for all 41 housing agencies within the Columbia Office’s
jurisdiction

We did not use or rely on computer-processed data to support our conclusions.




                                               12
We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective(s). We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.




                                               13
                              INTERNAL CONTROLS

Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

      Effectiveness and efficiency of operations,
      Reliability of financial reporting, and
      Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.


 Relevant Internal Controls

               We determined that the following internal controls were relevant to our audit
               objectives:

                     Controls to ensure that the Columbia Office properly implemented
                      mandated environmental review requirements, including

                          o Controls to ensure that HUD did not release funds and the housing
                            agencies did not obligate or expend funds before completion of the
                            environmental reviews by the Columbia Office,
                          o Controls to ensure that the Columbia Office complied with HUD’s
                            Field Office Environmental Review Guidance for maintaining
                            tracking logs and files,
                          o Controls to ensure that the Columbia Office monitored for
                            environmental compliance, and
                          o Controls to ensure that the Columbia Office received adequate
                            training on environmental compliance for Capital Fund grants.

               We assessed the relevant controls identified above.

               A deficiency in internal control exists when the design or operation of a control does
               not allow management or employees, in the normal course of performing their
               assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
               impairments to effectiveness or efficiency of operations, (2) misstatements in
               financial or performance information, or (3) violations of laws and regulations on a
               timely basis.


                                                 14
Significant Deficiency

            Based on our review, we believe that the following item is a significant deficiency:

                  The Columbia Office did not follow environmental requirements when it
                   performed environmental reviews for the public housing agencies within its
                   jurisdiction (finding).




                                             15
Appendix A

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation                              Auditee Comments

                                                                   U. S. Department of Housing and Urban
                                                                   Development

                                                                   South Carolina State Office
                                                                   Strom Thurmond Federal Building
                                                                   1835 Assembly Street
                                                                   Columbia, South Carolina 29201-2480


              June 9, 2014


             MEMORANDUM FOR: Gerald R. Kirkland, Regional Inspector General for Audit, 6AGA


             FROM: Eric Bickley, Director, Public Housing Program Center, 4EPH


             SUBJECT: Draft Report Comments
                      Environmental Review of Public Housing and Recovery Act Funds in
                      Columbia Office, South Carolina

             The Columbia Public Housing Program Center appreciates the opportunity to comment on the U.S.
             Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) draft report
             entitled Public Housing Capital Fund and American Recovery and Reinvestment Act of 2009
             Environmental Reviews. The Columbia Public Housing Program Center is committed to complying with
             all regulations and standards governing environmental reviews and improving internal controls to
             maintain compliance.

             The Columbia Public Housing Program Center's response to the OIG's specific finding is set forth below.
             Unless otherwise stated, this office accepts the OIG's finding and will take the necessary actions to
             ensure compliance.

             OIG Finding 1:

             The Columbia Office of Public Housing Did Not Follow 24 CFR Part 50 Requirements When It
             Performed Environmental Reviews

             Columbia Public Housing Program Center Comments:

             As a result of this finding, the Columbia Office of Public Housing, including the Director and his entire
Comment 1    professional staff, participated in a two day training session April 29-30, 2014, on Part 58 reviews. This
             training was presented by the Regional Environmental Officer and her staff. Also, an all-day training
             will be conducted for the Columbia Office of Public Housing on August 20, 2014, which will cover Part
             50 reviews. This training will also be conducted by the Regional Environmental Officer.

Comment 1    To further address the concerns of this finding, PIH established a committee that began meeting on April
             24, 2014, to develop national protocol to address both Part 50 and Part 58 environmental reviews for the
             Office of Public Housing. This effort is still ongoing.




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            Item of Nonconcurrence:
                        OIG Evaluation of Auditee Comments
            Columbia Office Management Did Not Monitor Its Staff To Ensure Compliance
Comment 2   While the office was not in compliance with 24 CFR Part 50, the statement as indicated above is not a
            factual and true statement. Management did, in fact, review, question and monitor staff on the
            environmental review process. It should also be noted that management sought and received individual
            guidance from the Field Office Environmental Officer on this process approximately 3 years prior, in an
            effort to gain a better understanding of the requirements.

Comment 2   However, in light of the complexity surrounding this topic, management’s knowledge and understanding
            of the full process and requirements necessary to ensure compliance was insufficient to provide the
            necessary level of review.

            We appreciate the Office of Inspector General’s interest in our programs. If you have any questions or
            need additional information, you may contact me at (803) 253-3238.




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                         OIG Evaluation of Auditee Comments

Comment 1   The Columbia Office stated as a result of our finding the Public Housing director
            and entire staff participated in a two day training session in April related to 24
            CFR part 58 reviews and would be attending training in August related to 24 CFR
            part 50 reviews. Further, according to the Columbia Office, PIH established a
            committee to develop national protocol to address both part 50 and part 58
            environmental reviews for the Office of Public Housing.

            We acknowledge that the Columbia Office and HUD are taking steps to address
            the deficiencies identified in the report, but we have not evaluated them and do
            not have an opinion on them at this time.

Comment 2   The Columbia Office stated that it had reviewed, questioned, and monitored staff,
            but that it did not understand the environmental regulations and processes well
            enough to ensure that the office complied with the requirements.

            We revised the report as appropriate.




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Appendix B
                                         CRITERIA

Criterion 1
The purpose of NEPA is to declare a national policy that will encourage productive and
enjoyable harmony between man and his environment. To carry out the policy set forth in this
Act, it is the continuing responsibility of the Federal Government to use all practicable means,
consistent with other essential considerations of national policy to improve and coordinate
Federal plans, functions, programs, and resources to the end that the Nation may attain the widest
range of beneficial uses of the environment without degradation, risk to health or safety, or other
undesirable and unintended consequences.

Criterion 2
Executive Order 11514, section 2(a), states that the heads of Federal agencies must “monitor,
evaluate, and control on a continuing basis their agencies’ activities so as to protect and enhance
the quality of the environment. Agencies shall develop programs and measures to protect and
enhance environmental quality and shall assess progress in meeting the specific objectives of
such activities.”

Criterion 3
Regulations at 24 CFR 50.2(a) state, “The definitions for most of the key terms or phrases
contained in this part appear in 40 CFR part 1508 and in the authorities cited in §50.4,” to
include the following definitions:

      Environmental review means a process for complying with NEPA (through an
       environmental assessment or environmental impact statement) or with the laws and
       authorities cited in section 50.4.
      HUD approving official means the HUD official authorized to make the approval
       decision for any proposed policy or project subject to this part.
      Project means an activity or a group of integrally related activities undertaken directly by
       HUD or proposed for HUD assistance or insurance.

Criterion 4
Regulations at 50.3(i)(1) state, “It is HUD policy that all property proposed for use in HUD
programs be free of hazardous materials, contamination, toxic chemicals and gasses, and
radioactive substances, where a hazard could affect the health and safety of occupants or conflict
with the intended utilization of the property.”




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Criterion 5
Regulations at 24 CFR 50.4 state, “HUD and/or applicants must comply, where applicable, with
all environmental requirements, guidelines and statutory obligations under the following
authorities and HUD standards:”

      Historic properties;
      Flood insurance, floodplain management, and wetland protection;
      Coastal areas protection and management;
      Water quality and sole-source aquifers;
      Endangered species;
      Wild and scenic rivers;
      Air quality;
      Solid waste management;
      Farmlands protection;
      Noise abatement and control;
      Explosive and flammable operations;
      Airport hazards (clear zones and accident potential zones); and
      Environmental justice.
Criterion 6
Regulations at 24 CFR 50.10(a) state, “It is the responsibility of all Assistant Secretaries, the
General Counsel, and the HUD approving official to assure that the requirements of this part are
implemented.”

Criterion 7
Regulations at 24 CFR 50.11(a) state that the HUD approving official must make an independent
evaluation of the environmental issues; take responsibility for the scope and content of the
compliance finding, environmental assessment, or environmental impact statement; and make the
environmental finding.

Criterion 8
Regulations at 24 CFR 50.11(b) state that copies of environmental reviews and findings must be
maintained in the project file.

Criterion 9
Regulations at 24 CFR 50.20(a) state that the following actions, activities, and programs are
categorically excluded from the NEPA requirements of this part. They are not excluded from
individual compliance requirements of other environmental statutes, executive orders, and HUD
standards cited in section 50.4, where appropriate. Form HUD-4128 must be used to document
compliance.

      Rehabilitation of structures when the following conditions are met:
          o In the case of residential buildings, the unit density is not changed more than 20
              percent,



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              o The project does not involves changes in land use (from nonresidential to
                residential or from residential to nonresidential), and
              o The estimated cost of rehabilitation is less than 75 percent of the total estimated
                cost of replacement after rehabilitation.

Criterion 10
Regulations at 24 CFR Part 51, Subpart B, state that the purpose of this subpart is to provide
policy on the use of structural and other noise attenuation measures where needed.

Criterion 11
Regulations at 24 CFR Part 51, Subpart D, state that the purpose of this subpart is to promote
compatible land uses around civil airports and military airfields by identifying suitable land uses
for runway clear zones at civil airports and clear zones and accident potential zones at military
airfields and by establishing them as standards for providing HUD assistance, subsidies, or
insurance.

Criterion 12
Regulations at 24 CFR 55.20, Subpart C, state the procedures for making determinations on
floodplain management, which contain eight steps, including public notices and an examination
of practicable alternatives.

Criterion 13
Regulations at 24 CFR 990.116 state that the environmental review procedures of the National
Environmental Policy Act of 1969 (42 U.S.C. (United States Code) 4332(2)(C)) and the
implementing regulations at 24 CFR Parts 50 and 58 are applicable to the Public Housing
Operating Fund program.

Criterion 14
Regulations at 36 CFR 800.4(d)(1) state, “No Historic Properties Affected – If the agency
official finds that either there are no historic properties present or there are historic properties
present but the undertaking will have no effect upon them as defined in §800.16(i), the agency
official shall provide documentation of this finding, as set forth in §800.11(d), to the
SHPO/THPO. 13 The agency official shall notify all consulting parties including Indian tribes
and Native Hawaiian organizations, and make the documentation available for public inspection
prior to approving the undertaking. If the SHPO/THPO, or the Council if it has entered the
section 106 process, does not object within 30 days of receipt of an adequately documented
finding, the agency official’s responsibilities under section 106 are fulfilled.”

Criterion 15
Office of Public and Indian Housing, Office of Field Operations, Field Office Environmental
Review Guidance, states that public housing agencies wishing to expend capital funds on
operating costs have been permitted to do so by reporting the amount of funds “transferred” to
operating costs on budget line item 1406 and drawing the funds down to the general ledger after

13
     State historic preservation officer/tribal historic preservation officer


                                                            21
budget approval. Office of Public Housing staff should be aware that some public housing
agencies are expending funds reported on budget line item 1406 on standard capital – not
operating – costs after they have been added to the general ledger. Amounts allocated by public
housing agencies to line 1406 should be only those used for true operating costs. The public
housing agencies should provide a description of operating costs to HUD or the responsible
entity to allow completion of the environmental review.

Criterion 16
Office of Public and Indian Housing, Office of Field Operations, Field Office Environmental
Review Guidance, states that at a minimum, the Office of Public Housing must maintain the
following:

      A list of responsible entities that HUD has determined will or will not perform the
       environmental review on behalf of HUD. This list will be an important document for
       determining which public housing agencies will need to submit the clearance documents.
      A list of request for release of fund certifications that have been received and for which
       clearance has been provided.
      A list of environmental reviews that have been conducted by the Office of Public
       Housing for each program requiring environmental clearance.
      Separate environmental clearance files for each public housing agency.




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