	Background

EPA provides financial assistance to a variety of recipients, including  states, tribes, and nongovernmental organizations, through assistance  agreements such as grants. EPA awards these grants noncompetitively to states  in amounts based on formulas prescribed by law to support water  infrastructure projects, among other things. Categorical grants. EPA generally awards these grants—which EPA  also refers to as continuing environmental program grants— noncompetitively, mostly to states and Indian tribes to operate  environmental programs that they are authorized by statute to  implement. EPA determines the amount  of funding each grantee receives based on agency-developed  formulas or program-specific factors. According to EPA data, in  fiscal year 2015, EPA awarded about $0.513 billion of $3.95 billion  (about 13 percent) of grant funds as discretionary grants. EPA also awarded $0.09 billion of $3.95 billion (about 2 percent) of grant  funds to special appropriations act projects for specific drinking water and  wastewater infrastructure projects in specific communities. Additionally, the environmental  results directive calls for EPA program offices to report on significant  grant results through reporting processes established by national  program managers, such as data submissions to EPA databases. EPA Monitors Written Performance Reports and Program-Specific Numeric Data to Ensure Grants Achieve Results

According to EPA policies and officials, after EPA approves grantee work  plans that identify agreed-upon environmental and other results for each  grant, grantees generally report information on their progress and grant  results to EPA in two ways: (1) submitting performance reports— generally written—that describe the grantees’ progress toward the  planned grant results in their work plans, such as using grant funds to  provide technical assistance to local officials, and (2) electronically  submitting program-specific data—generally numeric—on certain  program measures, such as the number of hazardous waste violations  issued, which EPA tracks in various program databases. Performance reports. Certain EPA Monitoring Practices Hinder EPA’s Ability to Efficiently Monitor Some Results and May Increase EPA’s and Grantees’ Administrative Burden

Based on our review of the three program offices that award the majority  of EPA grant funding, we found that certain EPA monitoring practices in  these offices hinder EPA’s ability to efficiently monitor some results and  may increase EPA’s and grantees’ administrative burden. Second, EPA collects certain  information from grantees twice, once in a written report and once in an  electronic database. OGD officials  told us that—depending on the availability of funds—they plan to develop  a web-based portal for grantees to submit documents, including their  performance reports, centrally as part of their new grants management  database. Our prior work and EPA analyses of  its business processes have shown that duplication of efforts can  increase administrative costs and reduce the funds available for other  priorities. By identifying grant programs where existing program-specific  data reporting requirements can meet EPA’s performance reporting  requirements for grants management purposes, the agency can help  reduce duplicative reporting for grantees in a manner consistent with  EPA’s ongoing streamlining efforts. Third, because grantees submit  performance reports in a written format, there are no built-in quality  controls to ensure these reports’ consistency with EPA’s directive. However, a 2014 analysis of EPA’s grants management  business processes found that EPA relied heavily on manual processes  and could incorporate several improvements into its new grants  management database system, including using electronic templates to  increase information consistency and reduce the administrative burden of  manual activities. By incorporating built-in data quality controls for  performance reports into its planned web-based portal, EPA could  improve these reports’ consistency with the environmental results  directive and potentially reduce project officers’ administrative burden in  performing manual reviews. Identify grant programs where existing program-specific data reporting  can meet EPA’s performance reporting requirements for grants  management purposes to reduce duplicative reporting by grantees. Incorporate built-in data quality controls for performance reports into  the planned web-based portal based on EPA’s environmental results  directive. Appendix I: Objectives, Scope, and Methodology

This report examines (1) how the Environmental Protection Agency (EPA)  awards grants, (2) the federal and EPA requirements and guidelines for  monitoring grant and program results, and (3) how EPA monitors its  grants to ensure that environmental and other program results are  achieved. To examine how EPA awards grants and the federal and EPA  requirements and guidelines for monitoring grant and program results, we  reviewed relevant federal laws, regulations, and EPA’s policies and  guidance for awarding and monitoring grants. To examine how EPA monitors its grants to ensure that environmental  and other program results are achieved, we reviewed EPA’s monitoring  processes for grants in the three program offices that award the majority  of EPA grant dollars. 2. 4.
Why GAO Did This Study

Grants comprised about half of EPA's budget in 2015, or about $4 billion. Through several grant programs, EPA headquarters and 10 regional offices award these grants to a variety of recipients, including state and local governments. EPA provides guidance through directives that seek to ensure the appropriate use of funds and achievement of environmental results or public health protection, among other purposes. GAO was asked to review how EPA monitors environmental and other grant results. This report examines (1) how EPA awards grants, (2) the federal and EPA requirements for monitoring grant and program results, and (3) how EPA monitors its grants to ensure that environmental and other program results are achieved. GAO analyzed relevant federal laws, regulations, and EPA guidance; reviewed processes for ensuring that environmental results are achieved for the three EPA program offices that award the majority of EPA grant dollars; and interviewed EPA officials and officials from eight state environmental agencies—selected based on the amount of environmental funding they receive from EPA.

What GAO Found

The Environmental Protection Agency (EPA) generally awards three different categories of grants: formula, categorical, and discretionary. According to EPA data, in fiscal year 2015, EPA awarded the majority of its grant funds— $2.25 billion of $3.95 billion (57 percent)—as formula grants, primarily to states to support water infrastructure based on funding formulas prescribed by law. EPA awarded $1.09 billion (about 28 percent) of its grant funds as categorical grants. These grants were generally awarded noncompetitively, mostly to states and Indian tribes to operate environmental programs. EPA determines the amount of funding each grantee receives based on agency formula or program factors. EPA awarded $0.513 billion (about 13 percent) in discretionary grants for specific activities, such as research. EPA also awarded $0.09 billion (2 percent) in grant funds to special appropriations act projects for specific drinking water and wastewater infrastructure projects in specific communities.
Multiple federal and agency requirements and guidelines apply to monitoring grant and grant program results. For example, under EPA regulations, grantees must submit performance reports to EPA at least annually. EPA policies and guidance, such as its environmental results directive, call for EPA program officials to review performance reports to determine if the grantee achieved the planned results and for program offices to report on significant grant results through other processes, such as submissions to EPA databases. EPA incorporates requirements related to grantee reporting frequency, content, and reporting processes into grant terms and conditions.
EPA monitors performance reports and program-specific data from grantees to ensure that grants achieve environmental and other program results. However, GAO found that certain practices may hinder EPA's ability to efficiently monitor some results and increase administrative burden. For example, EPA collects some information from grantees twice—once in a performance report and once in a database—because EPA uses the information for different purposes. GAO's prior work and EPA analyses have shown that duplication of efforts can increase administrative costs and reduce the funds available for other priorities. By identifying grant programs where existing data reporting can meet EPA's performance reporting requirements, the agency can help reduce duplicative reporting for grantees. Also, GAO's review of grantee performance reports found issues that may hinder EPA's ability to efficiently identify factors affecting grantee results. For example, because grantees submit performance reports in a written format, there are no built-in quality controls to ensure these reports' consistency with EPA's environmental results directive. Rather, EPA officials must perform a manual review. A 2014 analysis of EPA's grants management processes found that EPA relied heavily on manual processes and could incorporate improvements into its new grants management database system. EPA officials said they plan to develop a web-based portal for grantees to submit documents, such as performance reports. By incorporating built-in data quality controls, such as required fields, for performance reports into its planned web-based portal, EPA could improve these reports' consistency with the environmental results directive and reduce the administrative burden of performing manual reviews.

What GAO Recommends

GAO is making six recommendations, including that EPA (1) reduce duplicative reporting by identifying grant programs where existing data reporting can meet EPA's performance reporting requirements and (2) incorporate data quality controls for performance reports into its planned web-based portal. In response, EPA agreed with GAO's findings, conclusions, and recommendations.