U.S. ENVIRONMENTAL PROTECTION AGENCY 

OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

Audit Report 

EPA Needs Procedures to 

Address Delayed Earmark 

Projects 

 Report No. 10-P-0081 

 March 22, 2010 
 

 

 

 

Report Contributors: Kimberly Crilly 

 James Haller

 Randy Holthaus 

 Janet Kasper

 Madeline Mullen 

Abbreviations 

EPA U.S. Environmental Protection Agency 

FY Fiscal Year 

IFMS Integrated Financial Management System 

IGMS Integrated Grants Management System 

NEPA National Environmental Policy Act 

OCFO Office of the Chief Financial Officer 

OIG Office of Inspector General 

ORBIT Office of the Chief Financial Officer’s Reporting and Business Intelligence Tool 

OW Office of Water 

SAAP Special Appropriation Act Project 

Cover photo: Aeration tank at a large wastewater facility. (EPA OIG photo) 
 

 

 

 

 

U.S. Environmental Protection Agency 10-P-0081 

Office of Inspector General March 22, 2010 

At a Glance 

Catalyst for Improving the Environment 

Why We Did This Review 

We performed this audit to

quantify unused Special 

Appropriation Act Project 

(SAAP) funds and to determine

whether the U.S. Environmental 

Protection Agency (EPA) 

awarded funds and grantees used

the funds in a timely manner. 

This report corrects some 

information contained in a 

previously issued report 

(Report No. 10-P-0041). 

Background 

EPA has estimated that up to 

$1 trillion will be needed over 

the next 20 years to repair, 

replace, or upgrade aging

drinking water and wastewater 

facilities; accommodate a 

growing population; and meet 

new water quality standards. A 

congressional earmark is part of 

an appropriation designated by

Congress to be spent on a

particular project. Congress

appropriates SAAP grant funds

in the form of earmarks for water 

infrastructure projects.

Recipients generally must 

provide at least 45 percent of the

total cost of the project to qualify

for the grants. 

For further information, contact 

our Office of Congressional, 

Public Affairs and Management at 

(202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov.oig.reports/2010/ 

20100322-10-P-0081.pdf 

EPA Needs Procedures to Address Delayed 

Earmark Projects

 What We Found 

Some SAAP funds were still unobligated 5 years after Congress appropriated 

them. Frequently, earmark recipients either could not obtain the matching funds 

required to obtain the grants, or the projects were complex and required 

extensive planning. As of April 2009, there were 84 earmarks that Congress 

appropriated before Fiscal Year 2004 totaling over $28 million that still had 

funds that had not been obligated. 

Additionally, as of April 2009, there were 119 SAAP grants that EPA awarded 

prior to Fiscal Year 2004 that had total funds remaining of over $122 million. 

In many cases, funds were not completely spent because the recipient had to 

make changes to the work plan, or the recipient was required to comply with 

various State and local regulations, thereby delaying the project. 

EPA established the goal of completing SAAP projects within 5 years of grant 

award. However, EPA does not believe it has the authority to take action or 

require corrective action for delayed SAAP earmarks or grants. EPA has no 

defined process for its regions to contact sponsoring Members of Congress 

about reallocating unused SAAP funds. EPA needs a policy that specifies time 

limits and procedures for addressing earmarks that remain unobligated. It 

should also address steps to be taken when projects are delayed. Currently, 

unless Congress initiates a rescission, millions of dollars are available for 

projects that may never get started, while other projects that could improve the 

environment are not funded. 

What We Recommend 

We recommend that the Office of Water establish a national policy that creates 

a response framework for dealing with unobligated earmarks. The framework 

should include criteria for when to escalate the handling of unobligated 

earmarks. We also recommend that the policy address actions to be taken when 

projects are delayed, and include an exception reporting procedure to focus 

management attention on delayed projects. EPA agreed with our 

recommendations and agreed to draft policies and reporting procedures within 

6 months and finalize and implement those procedures within 1 year of our 

report being issued. These corrective actions, when implemented, should 

adequately address the findings. 
 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

OFFICE OF 

INSPECTOR GENERAL 

March 22, 2010 

MEMORANDUM 

SUBJECT:	 EPA Needs Procedures to Address Delayed Earmark Projects 

Report No. 10-P-0081 

FROM: Melissa M. Heist 

Assistant Inspector General for Audit 

TO: Peter Silva 

 Assistant Administrator 

 Office of Water 

This is a reissuance of our report on the U.S. Environmental Protection Agency’s (EPA’s) 

management of earmark projects. The original report was issued on December 8, 2009 (Report 

No.10-P-0041). This report corrects some of the information in the original report. As with the 

original report, the revised report contains findings that describe the problems the Office of 

Inspector General (OIG) has identified and corrective actions the OIG recommends. This report 

represents the opinion of the OIG and does not necessarily represent the final EPA position. 

Final determinations on matters in this report will be made by EPA managers in accordance with 

established audit resolution procedures. 

The estimated cost of this report – calculated by multiplying the project’s staff days by the 

applicable daily full cost billing rates in effect at the time – is $403,981. 

Action Required 

In accordance with EPA Manual 2750, we are closing this report on issuance in our tracking 

system. The agreed-to milestones for each recommendation are required to be tracked in the 

Management Audit Tracking System until the corrective actions are complete. While a formal 

response to the final report is not required, we request that you provide us with documentation of 

the policies and procedures that you prepare and issue in response to this report. We have no 

objections to the further release of this report to the public. This report will be available at 

http://www.epa.gov/oig. 

If you or your staff have any questions, please contact Janet Kasper, Director, Contracts and 

Assistance Agreement Audits, at 312-886-3059 or kasper.janet@epa.gov. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPA Needs Procedures to Address 10-P-0081 

Delayed Earmark Projects 

Table of Contents 

Chapters 

1 Introduction ........................................................................................................... 1 

Purpose .......................................................................................................... 1 

Background ................................................................................................... 1 

 Noteworthy Achievements.............................................................................. 1 

Scope and Methodology................................................................................. 2 

2 Some Earmarks Remain Unobligated 5 Years after Appropriation .................. 3 

SAAP Funds Remain Unobligated from Appropriations prior to FY 2004 ...... 3 

EPA Does Not Have a Policy for Taking Action on Unobligated Earmarks.... 4

 Recommendation ........................................................................................... 5
 

Agency Comments and OIG Evaluation ........................................................ 5 

3 Some SAAP Grants Not Spent in a Timely Manner............................................ 7 

Grant Funds Are Unspent 5 Years after Award.............................................. 7 

EPA Does Not Have a Policy to Reallocate Funds on Delayed Projects ....... 8 

 Recommendations ........................................................................................ 9 

Agency Comments and OIG Evaluation......................................................... 9 

4 SAAP Database Limitations ................................................................................. 10 

Status of Recommendations and Potential Monetary Benefits................................. 11 

Appendices 

A Details on Scope and Methodology..................................................................... 12 

B Unobligated Earmarks Reviewed......................................................................... 14 

C SAAP Grants with More than Half of Funds Remaining Reviewed .................. 16 

D Agency Response ................................................................................................. 18 

E Distribution ............................................................................................................ 20 
 

10-P-0081
 

Chapter 1

Introduction 

Purpose 

Water and wastewater infrastructure is one of the U.S. Environmental Protection 

Agency’s (EPA’s) top management challenges because drinking water and 

wastewater treatment systems are wearing out, and huge investments are needed 

to replace, repair, and construct facilities. When available infrastructure 

appropriations remain unused, water and wastewater infrastructure needs are not 

addressed. During this audit, our objective was to determine whether Special 

Appropriation Act Project (SAAP) funds were awarded and used in a timely 

manner. 

Background 

A congressional earmark is part of an appropriation designated by Congress to be 

spent on a particular project. Congress has typically appropriated SAAP grant 

funds in the form of earmarks each year to fund drinking water and wastewater 

infrastructure projects to benefit specific communities. SAAP funds have no time 

limit for when they can be spent. SAAP is shown in the Catalog of Federal 

Domestic Assistance as Congressionally Mandated Projects. Communities are 

required to provide matching funds for these federal grants. Recipients must 

generally provide 45 percent of the total cost of the project to qualify for the 

grants. The matching requirement can be waived for two reasons: if specific 

language in the Conference Report or Appropriations Act specifies a different 

matching requirement or if there are financial capability issues. 

EPA’s Office of Water (OW) issues annual SAAP guidance for prospective 

grantees. OW delegates the authority to regions to manage SAAP grants. EPA 

project officers work with congressionally designated entities, such as cities and 

towns, to help them develop and submit SAAP grant applications. EPA’s 

June 10, 1997, strategy document established the goal of completing SAAP 

projects within 5 years of the award date and closing out the grants within 7 years 

of award. 

Noteworthy Achievements 

Regions implemented some effective procedures to manage SAAP earmarks: 

•	 Region 4 oversees eight States and has more SAAP earmarks to manage 

than any other region. It awards grants on a first-come, first-served basis, 

based on geographical location within designated priority watersheds and 

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10-P-0081 

greatest benefit to public health. Region 4 has hosted annual training 

conferences for all designated SAAP earmark recipients to help them 

understand the environmental review requirements and the grants process. 

These conferences inform the recipients about how to complete grant 

applications and encourage them to start project planning. 

•	 Region 9 assigns the duties of managing SAAP grants to many project 

officers. To ensure that grants are awarded, managed, and monitored 

correctly, Region 9 developed a comprehensive set of pre-award and postaward guidelines that all of its project officers can follow. The guidelines 

can help to ensure that SAAP grants are handled consistently within the 

Region. For example, guidelines propose that project officers use 

reimbursement request checklists, review all earmark grant invoices, and 

approve payment requests. 

•	 For SAAP grants awarded from Fiscal Year (FY) 1992 through FY 2008, 

regions closed more than 90 percent of them within 7 years of the award 

date. 

Scope and Methodology 

We conducted this performance 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 objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

We conducted our audit work from November 2008 to September 2009. We 

focused on earmarks appropriated through 2006 that had funds remaining to be 

obligated as of April 2009, and SAAP grants EPA awarded prior to FY 2004 that 

still had funds remaining as of April 2009. We selected random samples of 22 

unawarded earmarks and 20 SAAP grants with more than 50 percent of funds 

remaining, as reflected in EPA systems as of February 2009. Nine regions were 

represented in our random sample. We interviewed regional staff about the 

selected earmarks and grants and reviewed supporting documentation. We also 

interviewed Headquarters staff from EPA’s OW and the Office of the Chief 

Financial Officer (OCFO). 

We quantified earmarks not obligated as of April 2009 using commitment data 

from the Integrated Financial Management System (IFMS), which was checked 

against the Integrated Grants Management System (IGMS) and the appropriations 

acts. We also quantified unliquidated obligations using data from the OCFO’s 

Reporting and Business Intelligence Tool (ORBIT), which pulls data from IFMS 

and IGMS. See Appendix A for further details on our scope and methodology. 

2
 
 

 

 

 

10-P-0081
 

Chapter 2

Some Earmarks Remain Unobligated 

5 Years after Appropriation 

As of April 2009, over $28 million in SAAP funds from congressional 

appropriations prior to FY 2004 were not obligated. Frequently, earmark 

recipients either could not provide the matching funds required for the grant, or 

the projects were complex and required extensive planning. SAAP funds have no 

time limit for when they can be spent, and regions rarely take steps to notify the 

sponsoring Member of Congress that designated recipients are not applying for or 

are unable to meet funding requirements. As a result, millions of dollars are 

appropriated for projects that may never get started. 

SAAP Funds Remain Unobligated from Appropriations prior to FY 2004 

As of April 2009, there were 84 SAAP earmarks with unobligated funds of 

$28,820,068 that were appropriated prior to FY 2004.1 The unobligated funds 

included: 

•	 Funds never awarded to the designated projects, 

•	 Funds remaining after a portion of the funds earmarked for a project were 

awarded, and 

•	 Funds deobligated from completed projects.2 

The following table shows unobligated earmarks through FY 2006. 

Table 2-1: Unobligated SAAP Funds 

Appropriation 

Year 

Number of 

Earmarks Never Awarded Partial Award 

Deobligated 

Funds 

Prior to FY 2004 84 $24,677,366 $3,249,108 $ 893,594 

2004 98 35,293,000 9,109,765 9,631 

2005 175 52,341,472 3,454,740 100 

2006 84 53,596,700 3,827,311 486,080 

Total 441 $165,908,538 $19,640,924 $1,389,405 

Source: IFMS commitments and Office of Inspector General (OIG) analysis. 

In half of the cases we reviewed (11 of 22), recipients were unable to obtain 

required matching funds or required more time to plan complex projects. For 

1

 Obligations represent amounts awarded to a recipient for a grant that may need to be paid in the future.
 

Unobligated funds are funds that have not been identified to a specific grant. 2

 At the end of grant, if there are obligated funds remaining, EPA deobligates the funds from the grant. However, 

the funds continue to be set aside in EPA’s accounting system for the community based on the original appropriation
 

language pending congressional direction to do otherwise. 

3
 
 

10-P-0081 

example, a Pennsylvania township with less than 2,000 residents could not obtain 

needed matching funds for its 2001 earmark of $1,935,700. A 2002 Delaware 

earmark recipient planned a high-profile wastewater project for its $1,940,000 

earmark. However, the recipient experienced a series of problems with its plans 

for spray irrigation, underground injection, and percolation. 

In other cases, grants were not awarded for a variety of reasons: 

•	 The designated recipient did not apply because the grant amount was 

small and there was staff turnover at the town. 

•	 There was a lack of required financial accounting procedures. 

•	 The original work plans changed. 

•	 Environmental requirements were difficult to meet. 

•	 The designated recipient was unaware of the requirement to provide 

matching funds for the grant. 

•	 A change in political leadership led to a change in the plan for the grant 

funds. 

See Appendix B for details of unobligated earmarks we reviewed. 

EPA Does Not Have a Policy for Taking Action on Unobligated 

Earmarks 

EPA does not have a policy that clearly identifies when regions should take 

actions on unobligated earmarked funds. Some designated recipients are not 

applying for the funds, and the funds could be considered for other purposes. 

While regions contact recipients several times a year to remind them that 

earmarked funds are available and assist recipients with the application process, 

they rarely take steps to contact the sponsoring Member of Congress. Interviews 

with EPA managers and staff indicated that they do not think they have the 

authority to make recommendations to Congress about the use of SAAP funds. 

According to OW personnel, because Congress specifically directs the amount 

and purpose of earmarked funds, EPA is prohibited from unilaterally taking any 

action that would change how the funds were intended to be used. SAAP funds 

cannot be allocated to another project unless Congress writes a rescission of funds 

into the law. 

Of the 22 unobligated earmarks we reviewed, EPA took steps to put the funds to 

better use in two cases. In one case, EPA was able to award the funds to another 

recipient through a technical correction to the appropriation report language that 

authorized the earmark. In the other case, after it became apparent that the 

designated recipient was not going to use the funds, the region coordinated with 

its Congressional Liaison office to find another project within the sponsoring 

district of the Member of Congress. According to EPA, Congress has not yet 

designated these funds for another project. 

4
 
 

10-P-0081 

Congress took action in 2006 and 2009 to rescind unobligated SAAP grants. The 

2006 Appropriations Act (Public Law 109-54) rescinded $80 million in funds 

from grants that were no longer available because the original project period 

expired. The rescission included SAAP funds that were appropriated in FY 2000 

or earlier and that had not been obligated on an approved grant by September 1, 

2006. Because the rescission included a deadline for grant applications, it 

encouraged designated recipients to finalize their project plans and apply for the 

SAAP funds. The 2009 Omnibus Appropriations Act (Public Law 111-8) 

included instructions that EPA rescind $10,000,000 from three sources: 

•	 Unobligated balances from the Title II Construction Grants program; 

•	 Unobligated prior-year balances from State categorical grant programs; 

and 

•	 Balances from special project grants appropriated in FY 2002 or earlier 

which have not been obligated on an approved grant as of July 1, 2009.3 

If Congress would include a rescission with deadlines and guidance in future 

appropriations so that earmark recipients understand from the outset that time 

limits exist for starting projects, they would be compelled to address more quickly 

those obstacles that impede starting projects or risk losing their funds. 

Millions of dollars are appropriated for projects that may never get started. 

Meanwhile, other projects that could improve the environment go unfunded. 

Over time, earmark purchasing power declines; the more time that elapses 

between appropriation and award, the less purchasing power those dollars have. 

EPA needs a policy outlining what actions EPA staff can take when communities 

are not able to start their projects in a timely manner. 

Recommendation 

We recommend that the Assistant Administrator for the Office of Water, in 

consultation with the Office of the Chief Financial Officer: 

2-1 Establish a national policy that creates a response framework for dealing 

with unobligated earmarks. The framework should include criteria for 

when to escalate the handling of unobligated earmarks. 

Agency Comments and OIG Evaluation 

EPA agreed that the issue of unobligated and unliquidated earmarked funds must 

be addressed. EPA noted that its ability to put unobligated earmarked funds to 

better use is limited by the appropriations language itself. EPA suggested a 

revision to our draft report recommendation to allow it some flexibility to deal 

3

 Of the unawarded earmarks identified in Table 2-1 on page 3, EPA rescinded three earmarks, valued at 

$1,017,730. 

5
 
10-P-0081
 

with workload and resource differences in the regions. For example, during our 

exit conference, the Director, Municipal Support Division of OW, stated that a 

region that has a large number of earmarks to manage – like Region 4 – might 

need to use a different approach to ensure that the earmarks get awarded than a 

region that receives fewer congressional earmarks to award. A region with a low 

number of earmarks, for example, could visit each recipient individually, while 

Region 4 would not be able to do that. We revised our draft report 

recommendation to address the Agency’s perspective. 

EPA concurred with the revision to Recommendation 2-1 and stated it will take 

steps within the next 12 months to address the problems we identified. In 

providing a corrective action plan and time frame for implementation, EPA has 

addressed the recommendation. We continue to believe that EPA needs to ensure 

that regions that receive many earmarks find ways to award them in a timely 

manner. Regions with fewer earmarks could assist other regions that have to 

manage many. We encourage EPA, in the response framework that it has agreed 

to develop, to consider various approaches or options to ensure that all regions 

award earmarks in a timely manner. 

6
 
 

 

10-P-0081
 

Chapter 3

Some SAAP Grants Not Spent in a Timely Manner 

As of April 2009, EPA awarded 119 SAAP grants prior to FY 2004 that had funds 

remaining on them. The funds remaining on those grants total over $122 million. 

EPA established the goal of completing SAAP projects within 5 years of grant 

award. However, regions rarely take steps to reallocate unused funds because 

managers and staff do not think they have the authority to do so, and EPA has no 

specific policy requiring them to do so. As a result, millions of dollars of grant 

funds are not being used because of project delays. 

Grant Funds Are Unspent 5 Years after Award 

The Office of Wastewater Management annually issues guidance for 

congressional earmarks appropriated for water infrastructure projects. The 

guidance provides the regions with information on technical changes, 

administrative requirements, and the names of the recipients and designated 

earmark amounts. The guidance references a June 1997 strategy document that 

established the goal of completing SAAP grants within 5 years of grant award. 

There were, as of April 2009, 119 SAAP grants that EPA awarded prior to 

FY 2004 that had funds remaining on them totaling $122,663,696. For 50 of 

those grants (42 percent), more than half of the funds still remained after 5 years.4 

Of the 20 such grants we reviewed having at least half of the funds remaining, the 

following factors contributed to the delays in the projects and therefore the lack of 

timely funds expenditure: 

•	 Changes to the original work plans. For example, EPA awarded a storm 

water grant of $1,645,400 on September 14, 2001, to a Florida 

community. The recipient had to change its project work plan following 

objections brought up during public meetings because the project involved 

diverting storm water into a low-income neighborhood. 

•	 Compliance with non-EPA regulatory requirements. For example, 

EPA awarded a $261,000 wastewater grant on July 10, 2001, to a 

Pennsylvania community. The recipient’s project was delayed in part due 

to discovery of archaeological Civil War artifacts during the 

environmental assessment. 

4

 As of April 2009, reported through ORBIT. 

7
 
 

 

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For 8 of the 20 grants we reviewed, no funds had been spent even though EPA 

awarded the grants more than 5 years ago. Recipient changes to the original work 

plan were a factor in delays for seven of the grants. For example: 

•	 EPA awarded a grant of $1,451,800 for a water reservoir on July 27, 2001, 

to a California community. The recipient needed to pursue additional 

funding and redesign the project after the environmental assessment took 

6 years. 

•	 EPA awarded a grant of $867,300 on September 30, 2003, to a New York 

community. The recipient expanded the scope of work for a wastewater 

treatment plant based on projected population growth after the State did 

not approve the original drinking water project. 

See Appendix C for details of SAAP grants with unspent funds that we reviewed. 

EPA Does Not Have a Policy to Reallocate Funds on Delayed Projects 

EPA lacks the control activities needed to provide reasonable assurance that 

SAAP grant funds will be spent in a timely manner. Control activities are 

policies, procedures, and other mechanisms that help ensure that program 

objectives are met.5 Although the goal to complete projects within 5 years of 

award date was established in the June 10, 1997, EPA strategy document, many 

grants have been delayed. Regions have no defined process for identifying 

delayed projects or taking corrective action. 

Regions recognize that communities need the funds for infrastructure projects, 

even though they may not be able to complete projects within set timeframes. 

Regions will rarely take steps to reallocate funds because managers and staff do 

not think they have the authority to do so. However, EPA guidance states that 

earmarks are to be managed like other grants. 

EPA has limited guidance on how to deal with delays in earmark grants. In 

FY 2007, EPA issued Grants Policy 07-01 to assist the regions with managing 

earmarks. It stated that EPA Senior Resource Officials should coordinate earmark 

grant problems with the Office of Congressional and Intergovernmental Relations 

and the OCFO. However, EPA managers and staff have not been given any 

guidance on what they can do to improve the timely execution of delayed 

projects. 

5

 Office of Management and Budget Circular A-123. 

8
 
 

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EPA has issued guidance to improve the timely expenditure of other grants. For 

example: 

•	 EPA added new timeliness language to the Terms and Conditions for 

FY 2009 Brownfields clean-up and assessment grants. If entities have not 

made sufficient progress on the project and started to spend funds within 

1.5 years, the grants may be terminated. The terms and conditions also 

define sufficient progress for grantees so they understand the requirements. 

•	 EPA instituted a Management Controls Policy for the Alaska Village Safe 

Water Program to define delayed projects and require corrective action 

plans. Stalled project reviews determine whether projects face unexpected 

obstacles that may cause significant delays. Then EPA begins to 

reallocate funding to other priority projects. 

Similar guidance is needed for SAAP earmarks. The guidance should address 

expected timeframes for completing SAAP projects, what action can be taken 

when projects do not meet the timeframes, and when projects should be elevated 

to management for specific attention. 

Millions of dollars in grant awards are not being used because of project delays. 

Earmark purchasing power declines over time; the longer the time lapse, the less 

those dollars are able to accomplish on the proposed projects. In addition, federal 

funds could remain obligated to a project that might never be completed, which 

reduces available federal funds for other needs. 

Recommendations 

We recommend that the Assistant Administrator for the Office of Water, in 

consultation with the Office of the Chief Financial Officer: 

3-1	 Establish a national policy that clearly identifies corrective actions for 

delayed projects. 

3-2	 Create an exception reporting procedure for delayed projects to focus 

management attention on such cases. 

Agency Comments and OIG Evaluation 

EPA agreed with Recommendations 3-1 and 3-2. EPA stated that it plans to draft 

the necessary policies and procedures to address the recommendations within 

6 months of the date of this audit report. EPA plans to finalize and implement 

those procedures within 12 months of the issuance of this report. The response 

addresses the recommendations and provides a timeframe for completing the 

actions. 

9
 
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Chapter 4

SAAP Database Limitations 

OW’s SAAP database is not a reliable source of information for the status of 

SAAP earmarks. As of December 1, 2008, the SAAP database contained 

incorrect status information for 11 percent of all unawarded earmarks (8 of 73) 

appropriated in FY 2003 and prior years. 

•	 Seven out of the 73 earmarks that were reported as unawarded in the 

SAAP database were awarded according to IGMS (2 of those grants were 

actually closed out). 

•	 One of 73 earmarks was recorded in the SAAP database but could not be 

found in IFMS, so its accuracy could not be confirmed. 

EPA Directive 2520, Administrative Control of Appropriated Funds, defines 

internal controls (in part) as a “Plan of organization, methods, and procedures 

adopted by management to ensure that . . . reliable data are obtained, maintained, 

and fairly disclosed in reports.” 

EPA’s use of the SAAP database as a management tool is not completely 

effective because of the potential for incorrect or missing information. As a 

result, OW cannot be assured that it is fully aware of the extent to which 

earmarked funding and projects are delayed. However, OW explained that the 

SAAP database is reliable for OW’s use in producing reports twice per year. OW 

personnel told us that they are aware of the SAAP database deficiencies, and they 

plan to improve the database if funding becomes available. 

10
 
 

 

 

 

 

 

 

 

 

10-P-0081 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed To 

Amount 

2-1 5 In consultation with the Office of the Chief Financial 

Officer, establish a national policy that creates a 

response framework for dealing with unobligated 

earmarks. The framework should include criteria 

for when to escalate the handling of unobligated 

earmarks. 

O Assistant Administrator 

for Water 

3/23/2011 

3-1 

3-2 

9 

9 

In consultation with the Office of the Chief Financial 

Officer, establish a national policy that clearly 

identifies corrective actions for delayed projects. 

In consultation with the Office of the Chief Financial 

Officer, create an exception reporting procedure for 

delayed projects to focus management attention on 

such cases. 

O 

O 

Assistant Administrator 

for Water 

Assistant Administrator 

for Water 

3/23/2011 

3/23/2011 

O = recommendation is open with agreed-to corrective actions pending 

C = recommendation is closed with all agreed-to actions completed 

U = recommendation is undecided with resolution efforts in progress 

11
 

1 
 

 

 

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Appendix A 

Details on Scope and Methodology 

To identify the appropriated funds that were not obligated, as identified in Chapter 2, we 

analyzed data from IFMS and IGMS. The data we obtained from IFMS was as of April 1, 2009. 

We also provided the information to EPA before issuing the report. 

We reviewed 22 unawarded SAAP earmarks totaling just over $15 million. The unobligated 

earmarks were identified using information from the SAAP database as of February 2009.6 The 

22 unawarded earmarks consisted of a nonstatistical random sample of 12 unobligated earmarks 

appropriated prior to FY 2004, and a second nonstatistical random sample of 10 unawarded 

earmarks appropriated during FYs 2004 through 2006. We selected grants appropriated prior to 

FY 2006 based on an estimate of 2 years to award grants. Since the sample was nonstatistical, 

the results cannot be projected to the universe of unawarded earmarks. 

Table A-1: Unobligated SAAP Funds Reviewed 

Appropriation Year 

Unawarded 

Grants Reviewed 

Unawarded Grant 

Amount Reviewed 

Prior to FY 2004 12 $10,641,200 

FY 2004 2 264,563 

FY 2005 4 1,241,200 

FY 2006 4 2,819,500 

Total 22 $14,966,463 

Source: SAAP database. 

We identified the universe of unused SAAP funds based on information from IGMS and IFMS 

using the ORBIT report tool. The report included data as of April 2009. 

For our sample selection of unused grant funds, we used data from IGMS and IFMS to identify 

grants that had been awarded prior to FY 2004 that were not completed as of February 23, 2009. 

The ORBIT report uses data from IFMS and IGMS. We selected a nonstatistical random sample 

of 20 SAAP grants awarded prior to FY 2004 with more than 50 percent of their funds 

remaining. We selected grants awarded prior to FY 2004 based on the EPA criteria that SAAP 

grant projects be completed within 5 years. Since the sample was nonstatistical, the results 

cannot be projected to the universe of unawarded earmarks 

The grants in our samples covered Regions 1, 2, 3, 4, 5, 6, 8, 9, and 10. For each of the grants in 

our samples, we interviewed regional staff and reviewed documents to determine: 

• Why sampled earmarks were not awarded, 

• What efforts the regions made to award the grants, 

6 Although the SAAP database contained errors (as we disclosed in Chapter 4), the reliability of the data was 

sufficient to select a sample to conduct our audit work. 

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• Why sampled grants awarded prior to FY 2004 were not fully spent, and 

• Whether unspent funds were still needed. 

For the unawarded earmarks, we also interviewed four grant recipients to learn why they did not 

apply for the grants. 

During our audit, we interviewed Headquarters and regional staff and reviewed EPA policies to 

determine what courses of action are available to EPA if SAAP recipients no longer need the 

funds. We also interviewed OW staff regarding the management of earmark grants. 

Our review of management controls was limited to identifying and assessing internal controls in 

place to track unawarded earmarks and funds remaining on SAAP grants awarded prior to 

FY 2004. We gained an understanding of internal controls through interviews with Headquarters 

and regional staff, a review of EPA policies, and an analysis of a sample of unawarded and 

unused SAAP funds. OIG performed audits of SAAP grants during FYs 2007 and 2008, and we 

reviewed them during our audit. 

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Appendix B 

Unobligated Earmarks Reviewed 7 

Earmark 

Sample 

Number 

Designated 

Earmark 

Region 

Designated 

Earmark 

Amount 

Appropriation 

Year Explanations Given by the Regions 

1 Region 1 $14,838 2004 The recipient did not apply because the grant 

amount was small and there was staff turnover at 

the town. 

This earmark was eventually awarded, during our 

audit, on June 23, 2009. 

2 Region 1 $1,146,900 2006 The designated recipient changed the work plan. 

3 Region 2 $485,000 2002 The designated recipient did not respond to the 

Region’s attempts to discuss the earmark. 

4 Region 2 $485,000 2002 The earmark was awarded May 9, 2006, and 

closed out July 11, 2006. Including it in the SAAP 

database as an unawarded earmark was in error. 

5 Region 2 $105, 800 2005 The designated recipient lacked the accounting 

system required to support the grant. 

6 Region 3 $1,933,700 2001 The designated recipient could not provide 

matching funds for the grant. 

Funds were de-obligated and then awarded to 

another recipient, during our audit, on March 10, 

2009. 

7 Region 3 $1,940,000 2002 The designated recipient changed the work plan. 

8 Region 3 $461,900 2005 The designated recipient could not provide 

matching funds for the grant. 

9 Region 3 $477,900 2006 The designated recipient had to coordinate 

additional funding from multiple sources. 

10 Region 4 $967,900 2001 The designated recipient did not apply for the grant 

until January 14, 2009, and it was awarded, during 

our audit, on April 3, 2009. 

11 Region 4 $970,000 2002 Multiple local governments had to work together on 

the project, which lengthened the planning process. 

The project included several appropriations, and 

was eventually awarded, during our audit, on 

July 1, 2009. 

12 Region 4 $563,800 2003 The designated recipient engaged in a lengthy 

planning process. 

7 We drew our sample on February 5, 2009, for the earmarks in the appendix. Subsequent to that date, and during 

our audit work, EPA awarded some of these earmarks. 

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Earmark 

Sample 

Number 

Designated 

Earmark 

Region 

Designated 

Earmark 

Amount 

Appropriation 

Year Explanations Given by the Regions 

13 Region 4 $867,300 2003 The designated recipient wanted to use an 

unapproved source, Federal Emergency 

Management Agency funds, as matching funds for 

the grant. 

No engineer was available. 

The designated recipient changed the work plan. 

14 Region 4 $650,500 2003 The Region had received the application and could 

not explain why it was not awarded. 

15 Region 4 $192,400 2005 The designated recipient changed the work plan. 

16 Region 4 $477,900 2006 The environmental assessment was approved in 

March 2008, and the recipient submitted its 

application on January 9, 2009. 

17 Region 4 $716,800 2006 The National Environmental Policy Act (NEPA) 

review is still ongoing. 

18 Region 5 $867,300 2003 The designated recipient wanted to use the funds 

to pay back a State revolving fund loan, which is 

against the SAAP grant requirements. 

19 Region 5 $482,100 2004 The NEPA review took a long time, but EPA 

awarded the balance of the grant on February 9, 

2009. 

20 Region 5 $481,100 2005 At the time of the appropriation, the designated 

recipient was unaware of the requirement to 

provide matching funds for the grant. 

There was a change in political leadership and 

subsequent change in the plan for the grant funds. 

21 Region 6 $433,700 2003 The designated recipient could not provide 

matching funds for the grant. 

The grant was awarded, during our audit, on 

February 20, 2009. 

22 Region 10 $477,000 2003 The approved project required a technical change 

to be written into the appropriations act. 

The City’s financial director was unavailable to start 

the project. 

The grant was awarded, during our audit, on 

February 6, 2009. 

Source: Agency databases and OIG analysis. 

15
 
 

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Appendix C 

SAAP Grants with More than 

Half of Funds Remaining Reviewed 

Grant # 

Award 

Date 

Grant 

Amount 

Percentage 

of Funds 

Remaining 8 Explanations Given by the Regions 

98281701 09/30/2003 $867,300 100 The recipient could not get State approval for the 

original project. 

The recipient changed its work plan, and it is now 

under construction. 

98280901 02/27/2003 $1,746,000 88 The recipient could not get State approval for the 

project. 

The recipient is trying to determine eligible costs. 

The recipient is trying to obtain matching funds from 

the State. 

The recipient has to meet federal fish and wildlife 

requirements. 

98284601 09/30/2003 $867,300 100 The recipient was trying to determine eligible costs 

associated with a completed project. 

42995901 07/10/2001 $261,000 98 The recipient had to meet other federal, State, or 

local regulatory requirements before proceeding with 

construction. 

Several local government entities disagreed about 

how the funds should be spent and what project 

should be funded. 

98355901 09/26/2001 $9,872,200 80 Several local government entities disagreed about 

how the funds should be spent and what project 

should be funded. 

98380301 07/02/2003 $1,746,000 100 The recipient had a shortage of people to start the 

project. 

97401300 09/29/2000 $2,619,550 67 Several local government entities disagreed about 

how the funds should be spent and what project 

should be funded. 

The recipient could not provide matching funds for 

the grant. 

97436201 09/14/2001 $1,645,400 80 The recipient had to meet other federal, State, or 

local regulatory requirements before proceeding with 

construction. 

The recipient changed the work plan. 

8

 These percentages are as of the date we selected our sample on February 23, 2009. 

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Grant # 

Award 

Date 

Grant 

Amount 

Percentage 

of Funds 

Remaining 8 Explanations Given by the Regions 

97444002 03/05/2003 $500,000 97 The recipient changed the work plan. 

The recipient’s plans were challenged by an 

environmental group. 

97465403 05/28/2003 $873,000 100 Several local government entities disagreed about 

how the funds should be spent and what project 

should be funded. 

The recipient had to meet other federal, State, or 

local regulatory requirements before proceeding with 

construction. 

There was a change in political leadership. 

97473503 03/05/2003 $970,000 77 The recipient had labor problems and obtained a new 

contract for the planned work. 

97603401 05/22/2002 $2,000,000 74 The recipient had to meet other federal, State, or 

local regulatory requirements before proceeding with 

construction. 

97630701 02/07/2003 $1,309,500 89 In addition to providing matching funds, the recipient 

had to obtain more funding for various aspects of the 

project. 

97607001 09/04/2003 $1,236,200 79 There was a change in political leadership. 

The NEPA review took a long time. 

97653701 09/24/2003 $2,000,000 100 The recipient had to meet other federal, State, or 

local regulatory requirements before proceeding with 

construction. 

98875401 02/07/2003 $679,000 100 The recipient is awaiting State approval for the 

project. 

The recipient changed the work plan. 

The recipient’s plans were challenged by an 

environmental group. 

The recipient has not submitted NEPA documents for 

approval. 

98992601 07/27/2001 $1,451,800 100 The recipient changed the work plan. 

The NEPA review took a long time. 

In addition to providing matching funds, the recipient 

had to obtain more funding for various aspects of the 

project. 

97926401 09/30/2002 $571,700 100 The recipient changed the work plan. 

The NEPA review took a long time. 

97925001 09/26/2002 $145,500 80 The recipient changed the work plan. 

97951001 08/25/2003 $970,000 74 The recipient had to meet local regulatory 

requirements before starting construction. 

Source: Agency databases and OIG analysis. 

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Appendix D 

Agency Response 

November 9, 2009 

MEMORANDUM 

SUBJECT:	 Draft Audit Report 

 EPA Needs Procedures to Address Delayed Earmark Projects 

 Project Number OA-FY09-0600 

FROM: Peter S. Silva 

 Assistant Administrator 

TO: Janet Kasper, Director 

Office of Inspector General 

Contracts and Assistance Agreement Audits 

Thank you for providing the opportunity to comment on the Office of Inspector General’s 

(OIG) Draft Audit Report: EPA Needs Procedures to Address Delayed Earmark Projects 

(9/18/2009). The draft report contains the following recommendations: 

1.	 “Establish a national policy that clearly identifies criteria for when EPA should take 

action to put unawarded earmarks to better use, and define a process for regions to 

follow.” 

2.	 “Establish a national policy that clearly defines corrective actions for delayed 

projects.” 

3.	 “Create an exception reporting procedure for delayed projects to focus management 

attention on such cases.” 

The Office of Water (OW) agrees that the issue of unobligated and unliquidated earmark 

funds must be addressed. We recommend rewording Recommendation 1 to be “Establish a 

national policy that creates a response framework for dealing with unawarded earmarks.” This 

will allow us some flexibility for dealing with Regional differences in workload, resources, and 

established relationships while settting out criteria for escalation of handling unawarded 

earmarks. This rewording appears reflective of the intent of the original draft recommendations. 

It is also in line with EPA authorities, as our ability to “put unawarded earmarks to better use” is 

limited by the appropriations language itself. With that modification, OW concurs with OIG 

recommendations. Staff from EPA’s OW, Office of the Chief Financial Officer (OCFO), and the 

Office of General Council (OGC) held a meeting on October 15, 2009 to determine the extent of 

EPA’s authority regarding unobligated and unliquidated funds, discuss policy options, and 

establish the necessary timeframe for the development and implementation of policies and 

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exception reporting procedures. OW believes that the recommended policies and reporting 

procedure can be drafted within 6 months from the issuance of the OIG’s final report, and 

finalized and implemented 6 months later. 

Should you have any questions regarding these comments, please contact Sheila Frace, 

Municipal Support Division Director at (202) 564-1153, or Matt King at (202) 564-2871. 

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Appendix E 

Distribution 

Office of the Administrator 

Assistant Administrator, Office of Water 

Assistant Administrator, Office of Administration and Resources Management 

Chief Financial Officer 

Regional Administrators (1-10) 

Agency Follow-up Official (the CFO) 

Agency Follow-up Coordinator 

General Counsel 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for Public Affairs 

Director, Office of Grants and Debarment, Office of Administration and Resources Management 

Director, Office of Budget, Office of the Chief Financial Officer 

Director, Office of Regional Operations 

Audit Follow-up Coordinator, Office of Water 

Audit Follow-up Coordinator, Office of the Chief Financial Officer 

Acting Inspector General 

20