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 to recipients to meet local environmental priorities and national objectives established in federal law, regulations, or EPA policy. As we have previously reported, most federal grant-making agencies, including EPA, generally follow a life cycle comprising various stages—preaward (announcement and application), award, implementation, and closeout—for awarding grants, as seen in figure 1. The federal laws establishing EPA’s grant programs generally specify the types of activities that can be funded, objectives to be accomplished through the funding, and who is eligible to receive the funding. In addition to these statutory requirements, EPA has issued regulations governing its grants, which may impose additional requirements on recipients. EPA either notifies the public of the grant opportunity or notifies eligible state agencies about available grants, and applicants must submit applications to the agency for its review. In the preaward stage, EPA reviews applications to determine or verify which meet eligibility requirements and awards funding. EPA assigns project officers—who manage the technical and program-related aspects of the grants—and grant specialists—who manage the administrative aspects of grants—in program and regional offices to oversee the implementation stage of the grants. The implementation stage includes development of a grant work plan that outlines EPA and grantee agreed-upon goals, objectives, activities, and time frames for completion under the grant, such as developing certain water quality standards by the end of the year. It also includes payment processing, agency monitoring, and grantee reporting on the results of its individual grant as well as its contribution to program results. For example, results for an individual water quality grant might include the grantee using funds to develop water quality standards, whereas program results might include the grantee’s contribution to the number of water quality permits issued under the program as a whole. Grantees submit information on grant results to EPA through performance reports and progress reports, depending on the grant program. The closeout phase includes preparation of final reports, financial reconciliation, and any required accounting for property. EPA generally awards three types of grants: Formula grants. EPA awards these grants noncompetitively to states in amounts based on formulas prescribed by law to support water infrastructure projects, among other things. For example, grants from the Clean Water and Drinking Water State Revolving Funds can be used to support infrastructure, such as water treatment facility construction, and improvements to drinking water systems, such as pipelines or drinking water filtration plants. According to EPA data, in fiscal year 2015, EPA awarded about $2.25 billion of $3.95 billion (about 57 percent) of grant funds as formula grants, as shown in figure 2. 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. For example, under the Clean Water Act, states and tribes can establish and operate programs for the prevention and control of surface water and groundwater pollution. EPA determines the amount of funding each grantee receives based on agency-developed formulas or program-specific factors. In fiscal year 2015, EPA awarded about $1.09 billion of $3.95 billion (about 28 percent) of grant funds as categorical grants, according to EPA data. Discretionary grants. EPA awards these grants—competitively or noncompetitively—to eligible applicants for specific projects, with EPA program and regional offices selecting grantees and funding amounts for each grant. EPA primarily awards these grants to states, local governments, Indian tribes, nonprofit organizations, and universities for a variety of activities, such as environmental research, training, and environmental education programs. 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. Multiple federal and EPA requirements—established in laws and regulations—and EPA guidelines apply to monitoring the results of individual EPA grants and, more broadly, the results of EPA grant programs. The following requirements and guidelines form the basis of how EPA aligns individual grants to achieve the agency’s public health and environmental objectives: Federal laws: Authorizing statutes for certain EPA grant programs, most notably the Clean Water Act, require states—which receive grants from EPA to capitalize state clean water revolving funds—to report annually to EPA on how they have met the goals and objectives identified in their intended use plans for their revolving funds. EPA regulations: EPA regulations require grantees to submit performance reports to EPA as specified in their grant agreements at least annually and typically no more frequently than quarterly. Under EPA’s regulations, the grantee’s performance should be measured in a way that will help improve grant program outcomes, share lessons learned, and spread the adoption of promising practices. Additionally, under EPA’s regulations, the agency should provide grantees with clear performance goals, indicators, and milestones, and should establish reporting frequency and content that allow EPA to build evidence for program and performance decisions, among other things. Agency-wide policies and guidance: EPA policies, such as its environmental results directive, call for grant work plans and performance reports to link to the agency’s strategic plan and include outputs and outcomes. The environmental results directive, the Policy on Compliance, Review, and Monitoring, and related guidance also call for EPA program officials to review interim and final performance reports—or for certain programs, use a joint evaluation process—to determine if the grantee achieved the planned outputs and outcomes, and document the results of these reviews in EPA’s grants management databases. 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. Program-specific guidance: EPA program offices provide biennial guidance on each program’s priorities and key actions to accomplish health and environmental goals in EPA’s strategic plan. According to EPA officials, this guidance includes annual commitment measures, which guide implementation with EPA regions, states, tribes, and other partners. Many annual commitment measures include regional performance targets, which contribute to meeting EPA annual budget measures, and in turn, long-term strategic measures, according to EPA officials. EPA regional offices use these performance measures and targets to guide their negotiations with grantees on individual grant work plan outputs and outcomes. Grant-specific requirements: EPA incorporates requirements related to grantee reporting frequency, content, and reporting processes (i.e., written performance report, data submissions to an EPA database, or both) into individual grant terms and conditions as part of the final grant agreement. EPA and grantees also negotiate grant-specific outputs and outcomes, which grantees incorporate into their grant work plans. EPA monitors performance reports and program-specific data from grantees to ensure that grants achieve environmental and other program results, but certain practices hinder EPA’s ability to efficiently monitor some results. In addition, we identified a variety of monitoring issues that may hinder EPA’s ability to efficiently identify factors affecting grantee 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. According to an EPA official, the information streams from grantees differ in that the performance reports go to EPA project officers for the purpose of managing individual grants, whereas EPA program managers use the electronic data to monitor regional and program progress on EPA’s performance measures. Performance reports. At least annually, grantees are to submit performance reports to EPA as specified in their grant agreements. EPA policies include general guidelines about what performance reports should include, such as a comparison between planned and actual grant results, but allow the frequency, content, and format of performance reports to vary by program and grant. For more information on the performance reports we reviewed, see appendix II. According to EPA officials, EPA project officers monitor these reports to review grantee progress toward agreed-upon program results, such as providing outreach to communities about hazardous waste. Project officers conduct two types of routine grants monitoring: (1) baseline monitoring, which is the periodic review of grantee progress and compliance with a specific grant’s scope of work, terms and conditions, and regulatory requirements, and (2) advanced monitoring, which is an in- depth assessment of a grantee or a project’s progress, management, and expectations. EPA assigns a certain number of advanced monitoring reviews to each regional and program office annually. In 2015, OGD assigned program and regional offices to perform advanced monitoring for at least 10 percent of their active grantees, which program and regional offices select based on criteria such as the size of the grant and the experience level of the grantee, among others. EPA project officers document the results of their monitoring—for example, whether grantees have made sufficient progress and complied with grant terms and conditions—in EPA’s grants management databases at least annually. Based on their baseline monitoring review, EPA project officers may impose more frequent or intensive grant monitoring, such as advanced monitoring, to address any identified concerns.