EPA relies heavily on grants to carry out its environmental mission; over one half of its $7.6 billion budget for fiscal year 2000 was provided for grants. Grants are used (1) to financially support continuing environmental programs administered by state and local governments and (2) to fund other environmental projects. During fiscal year 1999, EPA awarded $1.8 billion for continuing environmental programs and $716 million for environmental projects—the subject of this report. Grants are funded by EPA’s headquarters offices, such as the Office of Research and Development and Office of Air and Radiation, and by EPA regional offices. The administration of these grants (from activities prior to the award though the closeout of completed or inactive grants) has been delegated to EPA’s Grants Administration Division, and 10 regional Grants Management Offices. EPA carries out its’ grant programs within the framework of the strategic goals and objectives contained in its strategic plan. The plan sets forth 10 goals with 41 objectives and 123 subobjectives that cover its major programs, such as those for clean air, clean water, and pesticides. For example, EPA’s clean air goal has 4 objectives and 14 subobjectives. One of the four objectives is “Attain National Ambient Air Quality Standards for Ozone and Particulate Matter.” This objective in turn has several subobjectives, including “National Ambient Air Quality Standards for Ozone.” Once potential grantees submit their grant applications, EPA officials review them. If the grant application is approved, the grantee is awarded the grant and funds are made available for the purposes specified in the grant. In connection with the grant award, EPA’s program office officials determine how the grant will support a particular strategic goal, objective, and subobjective. In fiscal year 1999, EPA began coding new grant awards by “program result codes,” which are aligned with goals, objectives, and subobjectives. Before 1999, EPA officials assigned “program element codes” to grant awards, which reflected the program and EPA office awarding the grant. EPA awards grants to organizations and individuals under regulations that establish uniform administrative requirements throughout the agency. The regulations cover a range of grant activities—from those prior to the award through the closeout of completed or inactive grants—and a variety of topics, such as grantee reporting requirements and allowable uses of grant funds. Particular regulations cover grants to institutions of higher education, hospitals, and nonprofit organizations (40 C.F.R. part 30), as well as assistance to state, local, and Indian tribal governments (40 C.F.R part 31). Other EPA regulations cover grants under specific programs, such as Superfund (40 C.F.R. part 35, subpart O), and specific types of assistance, such as fellowships (40 C.F.R. part 46). EPA regulations authorize the agency to deviate from certain regulations on a case-by-case basis. We previously reported that EPA used this deviation authority extensively to close out inactive grants without following certain closeout requirements. EPA awarded about 17,000 project grants totaling $2.8 billion in fiscal years 1996 through 1999. Project grant funds were concentrated in five categories—investigations, surveys or studies; research; Superfund site cleanup support; senior environmental employment program; and training, which accounted for $2.3 billion, or 80 percent of all funds. The grants were also concentrated by the type of recipient: nonprofit organizations, state or local governments, and colleges or universities received approximately 89 percent of the total project grant amount. In fiscal year 1996 through fiscal year 1999, project grants focused on (1) investigations, surveys, or studies; (2) research; (3) Superfund site cleanup support; (4) the senior environmental employment program; and (5) training. The remaining project grants were awarded in 37 other EPA areas, such as the Hardship Grants Program for Rural Communities and the Great Lakes National Program. (See app. I for the number and value of all project grants, fiscal years 1996 through 1999). As shown in figure 1, grants for investigations, surveys, and studies accounted for the single largest category—about 30 percent of all grant dollars awarded. A brief description of these categories follows. EPA awarded $851.8 million in grants for investigations, surveys, or studies for fiscal years 1996 through 1999. These grants were provided for a wide range of activities supporting investigations, surveys, studies, and special purpose assistance in the areas of air and water quality, hazardous waste, toxic substances, and pesticides. These grants are also used for evaluating economic or social consequences related to environmental strategies and for other efforts to support EPA environmental programs. Finally, the grants are used to identify, develop, or demonstrate pollution control techniques or to prevent, reduce, or eliminate pollution. The following examples illustrate the variety of activities funded by these grants: In February 1999, EPA awarded a $10,000 grant to Monitor International, a nonprofit organization located in Annapolis, Maryland, to develop a feasibility study and action plan for a science and education center in Indonesia. In August 1999, EPA awarded a $1.5 million grant to the West Virginia University Research Corporation, National Research Center for Coal and Energy. With the grant funds the center was to provide technical assistance, outreach, a library of databases, maintenance of a Web site, and publications on the design, implementation, and maintenance of alternative wastewater treatment and collection systems for small communities. EPA awarded research project grants totaling $690.9 million. Generally, these grants were to fund laboratory and other research into a variety of environmental problems, such as air pollution and its impact on asthma. For example, EPA awarded a $4.6 million grant to the University of New Orleans in September 1999 for research and development on technical solutions to waste management problems faced by the academic, industrial, and governmental communities. EPA awarded about $408.8 million in grants to states and other government entities and to nonprofit organizations to conduct cleanup activities at specific hazardous waste sites and to implement the requirements of the Superfund program. For example, in September 1999, EPA awarded a $1.5 million grant to the Wisconsin Department of Natural Resources to complete an investigation and study at a waste site in order to select a cleanup remedy for controlling the risks to human health and the environment. The Senior Environmental Employment program, for which EPA makes grants authorized by the Environmental Programs Assistance Act of 1984, accounted for approximately $199.1 million. Under this program, EPA awards cooperative agreements to organizations to enable individuals 55 or older to provide technical assistance to federal, state, or local environmental agencies for pollution prevention, abatement, and control projects. For example, in September 1999, EPA awarded a $1.3 million grant to the National Older Worker Career Center to provide general support to EPA’s staff within the Office of Pesticides Program. EPA awarded $108.3 million in training grants to government, educational, and nonprofit entities, which provide environmental related training in a variety of topics. For example, EPA awarded a $1.5 million grant in July 1999 to North Carolina State University to provide state-of-the-art training courses on the Clean Air Act Amendments. Nonprofit organizations, state or local governments or colleges and universities received most project grant dollars awarded by EPA in fiscal years 1996 through 1999, as table 1 shows. Nonprofit organizations received the largest portion of project grant dollars ($741.8 million, or 33 percent of the total), and the majority of these funds were provided to support investigations, the senior environmental employment program, and research. State or local governments received the next largest amount, with most of these funds provided for Superfund site cleanup support or for investigations. Colleges and universities also received a significant amount of project grant funds, the majority of which was for research. For-profit organizations, individuals, and other government entities, such as water district authorities, also received project grant funds. In October 1998, EPA began designating grant awards to indicate which Results Act goal, objective, and subobjective each grant supported. EPA intended to account for all new obligations by using a program results code (PRC) that aligned with the agency’s strategic goals, objectives, and subobjective. (Previously, EPA accounted for grant funds by using program element codes, which identified the program and EPA office that awarded the grant.) PRCs allows EPA to account for its grant award amounts by goal, objective, and subobjective. EPA project officers assign codes to the grant after deciding which grants to award. Approximately 82 percent of the $1.4 billion in project grants EPA awarded in fiscal years 1999 and 2000 that were assigned a PRC concentrated in 4 of EPA’s 10 goals: clean air, clean and safe water, waste management, and sound science. For 7 of the 100 grants we reviewed, the relationship between the activities funded by the grant and the goal(s), objective(s), and subobjective(s) that EPA identified was not clear. EPA officials explained that for six of these grants the definitions of the goals, objectives, and subobjectives were sufficiently broad to encompass the activities funded by the grants, and agreed that one grant had been designated the incorrect subobjective. The grant award process involves several steps before funds are provided to the grantee. EPA may solicit grant proposals from potential grantees, or grantees may submit unsolicited grant proposals to EPA. In either situation, the grant proposal details the grant’s purpose, amount, and time frame. EPA officials review the grant proposals and frequently discuss them with the submitting entity---a process that may result in modifications to the scope of activities, funding amount, or time period. Once EPA reaches a final decision to fund a grantee, it provides the grantee a commitment letter.