[Congressional Record (Bound Edition), Volume 150 (2004), Part 15]
[Senate]
[Pages 20723-20729]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          GRANT DOLLARS AT EPA

  Mr. INHOFE. Mr. President, pursuant to my remarks of October 4 on the 
management of Federal grant dollars at the U.S. Environmental 
Protection Agency, I ask unanimous consent that the document entitled 
``Grants Management at the Environmental Protection Agency--A New 
Culture Required to Cure a History of Problems'' be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

        Grants Management at the Environmental Protection Agency


          a new culture required to cure a history of problems

       On March 3, 2004, the U.S. Senate Environment and Public 
     Works Committee held an oversight hearing into grants 
     management at the Environmental Protection Agency (EPA). 
     Testimony offered at the hearing referenced the need for a 
     cultural shift within EPA necessary for new and effective 
     grants management and oversight within EPA. These remarks are 
     compiled from testimony from that hearing and information 
     derived from subsequent oversight conducted by Environment 
     and Public Works Committee (EPW) Majority Staff following 
     that hearing.


                         epa grants management

       Each year, the EPA awards over half of its annual budget, 
     totaling over $4 billion, in grants. This amounts to between 
     seven to eight thousand grants or grant actions taken each 
     year. EPA awards both discretionary and non-discretionary 
     grants to recipients such as state, local, and tribal 
     governments, educational institutions, non-profit 
     organizations, foreign recipients, and individuals among 
     other types of recipients. The U.S. General Accounting Office 
     (GAO) completed a comprehensive report on EPA grant 
     management which it issued in August 2003, compiling ninety-
     three GAO and EPA Inspector General reports, 1,232 reviews of 
     records of awarded grants ending in fiscal year 2002, and 
     interviews with EPA grant officials. According to the GAO 
     report, the majority of EPA grant awards are non-
     discretionary grants awarded to government entities to fund 
     infrastructure and the implementation of federal and state 
     environmental programs. These grant funds are awarded 
     according to statutory or regulatory formulas to the 
     receiving governmental entities. The GAO reported that in 
     fiscal year 2002, the EPA awarded nearly $3.5 billion in non-
     discretionary grants. The remaining approximately $700 
     million in fiscal year 2002 was awarded in discretionary 
     grants in which EPA officials have the discretion to 
     determine the grant amounts and recipients. Primarily, EPA 
     awards discretionary grants to non-profit organizations, 
     universities, and governmental entities.
       EPA grants are awarded and managed both through EPA 
     headquarters and through the ten regional EPA offices. The 
     EPA Office of Administration and Resources Management's 
     Office of Grants and Debarment within agency headquarters 
     develops agency policy for grants management. Overall the 
     program offices within EPA headquarters and the regional 
     offices employ 109 grants specialists responsible for 
     financial oversight of grant awards and over 1,800 project 
     officers responsible for providing technical and programmatic 
     oversight of grant recipients and to monitor the progress of 
     individual grants.


                     epa grants management history

       The EPA Inspector General (OIG), the Office of Management 
     and Budget (OMB), and the GAO have consistently identified 
     deficiencies in EPA grant management in numerous audits and 
     reports. The EPA has consistently identified grants 
     management as either an agency or material weakness in recent 
     annual Federal Managers Financial Integrity Act reports. As 
     recently as September 2003, the OIG again recommended that 
     the EPA again reflect that grants management is a ``material 
     weakness.''
       In its August 2003 comprehensive report on grants 
     management, the GAO provided a condensed history of grants 
     management within the EPA. As described in the report, the 
     OIG first recommended in 1995 and subsequently provided 
     congressional testimony in July 1996 that EPA demonstrated a 
     significant weakness in grants management. This resulted in 
     EPA identifying grants management as a ``material weakness'' 
     in its 1996 Integrity Act report. In response, the EPA 
     instituted new policies for monitoring grant recipients, 
     providing grants training for project officers, and reviewing 
     grants management effectiveness. Although EPA reported in its 
     1999 Integrity Act report that weaknesses in grants 
     management had been corrected, the OIG again provided 
     congressional testimony in November 1999 where it disclosed 
     that OIG audits revealed management problems persisted 
     despite new EPA policies. The EPA continued to designate 
     grants management as an ``agency weakness'' in its 2000 
     Integrity Act report. In 2002, the OIG and the OMB 
     recommended that EPA designate grants management as a 
     ``material weakness'' within the agency. Additionally, in its 
     August 2003 report, the GAO stated that EPA continues to 
     encounter the problems in the following areas: (1.) selecting 
     the most qualified applicants, (2.) effectively overseeing 
     grantees, (3.) measuring

[[Page 20724]]

     the environmental results of grants, and (4.) effectively 
     managing grants staff and resources. The U.S. House of 
     Representatives Committee on Transportation and 
     Infrastructure Subcommittee on Water Resources and 
     Environment held a series of hearings in June 2003, October 
     2003, and July 2004 concerning the continued deficiencies in 
     EPA grants management based in large part on the GAO 
     findings.
       In the President's 2004 Budget submission, the OMB 
     identified four EPA grant programs in which it reported EPA 
     could not adequately measure the effectiveness of those 
     programs. Additionally, in the President's 2005 Budget 
     submission, the OMB evaluated a total of twenty EPA programs 
     including ten grant-based programs. Again, the OMB reported 
     that EPA exhibits weakness in measuring the effectiveness of 
     its grants programs.
       On March 3, 2004, the Senate Environment and Pubic Works 
     Committee held its first oversight hearing into grants 
     management at the EPA. With such a troubling history in EPA 
     grants management, the testimony offered at the hearing led 
     Chairman James Inhofe to characterize the previous 10 years 
     of grant management at EPA in the following manner:
       ``[F]or the last ten years, the story of grants management 
     is seemingly a revolving door of the EPA IG audits, GAO 
     reports, Congressional hearings, and new EPA policies in 
     response. Even with this constant cycle of criticism, 
     hearings, and new policies, the GAO reported later last year 
     that the EPA continues to demonstrate the same persistent 
     problems in grants management. These problems include a 
     general lack of oversight of the grantees, a lack of 
     oversight of the Agency personnel, a lack of any measurement 
     of environmental results, and a lack of competition in 
     awarding grants. It is imperative that Agency personnel are 
     accountable for monitoring grants--that measurable 
     environmental results are clearly demonstrated.''


                           new epa responses

       In September 2002, the EPA issued a new grant award 
     competition policy which focused on requiring competition in 
     grant awards over $75,000 with certain exceptions and created 
     the position of grant competition advocate to enforce the 
     policy and recommend changes. Additionally, the GAO reports 
     that in 1998, 1999, and in February 2002, the EPA has issued 
     oversight policies designed to increase grant baseline 
     monitoring, increase in-depth reviews, create annual 
     monitoring plans, and create a grantee compliance database.
       In April 2003, the EPA issued its first five-year grants 
     management plan. This plan incorporates the new grants 
     competition and oversight policies establishing the following 
     principal Objectives and Activities for grants management:
       Enhance the skills of EPA personnel involved in grants 
     management; promote competition in the award of grants; 
     leverage technology to improve program performance; 
     strengthen EPA oversight of grants; support identifying and 
     achieving environmental outcomes.


        senate environment and public works committee oversight

       At the March 3, 2004, Senate Environment and Public Works 
     Committee oversight hearing into grants management at the 
     EPA, Chairman Inhofe stated:
       ``I want to announce to all of you today that this 
     Committee is going to take this oversight responsibility 
     seriously in regards to grants management. . . . I am going 
     to make a personal commitment that it is going to change this 
     time. . . . We are going to have accountability and the 
     revolving door will stop.''
       The Committee heard testimony from the OIG, EPA Office of 
     Administration and Resources Management, GAO, and a 
     representative from Taxpayers for Common Sense. GAO and OIG 
     reiterated the much of the same themes that have 
     characterized their consistent criticisms of grant management 
     at the EPA. The GAO testified to: a lack of oversight of 
     grantees and EPA personnel, a lack of competition in 
     discretionary grants, and a lack of measurable environmental 
     outcomes.
       The OIG testified to: no link between funded projects and 
     EPA mission, no assessment of probability of success, no 
     determination of the reasonableness of the costs of the 
     grant, no measurable environmental outcomes, and no 
     deliverable in grant work-plans.
       A representative for Taxpayers for Common Sense echoed 
     similar criticisms offered by the OIG and GAO and, while 
     acknowledging EPA's new focus on improving grants management, 
     testified that EPA needs to improve: EPA personnel commitment 
     to competition in grants selection, grantee oversight, 
     ensuring grants are consistent with Agency goals, and EPA 
     staff accountability.
       The EPA focused its testimony on the new grants management 
     plan and accomplishments under that plan detailing its five 
     main goals and evidence of its initial success. The EPA 
     testified to: new certification of grants project officers, 
     increased competition especially among non-profit grantees, 
     deployment of a new Intergrated Contracts Management System 
     automating grants mangement monitoring, and increased minimal 
     monitoring standards for all grants.
       The hearing produced the following general findings: EPA 
     discretionary grants need a system that requires wide 
     competition for the available funds and sufficient notice of 
     the funding opportunities that may be available; EPA 
     discretionary and non-discretionary grants need to 
     demonstrate and quantify measurable environmental results; 
     and EPA administration and project officers need to ensure 
     that new policies to more closely monitor grants, ensure 
     measurable environmental results, and ensure wide 
     solicitation and competition among grants, among other goals, 
     and accomplished.
       In addition, the hearing produced the specific finding that 
     discretionary grants in particular are often the most 
     problematic due to limited oversight from the EPA. Testimony 
     offered by the GAO revealed that oversight through such 
     safeguards as the Single Audit Act to ensure that 
     discretionary grantee expenditures are allowable costs are 
     generally not applicable to discretionary grants given the 
     grant comparatively low dollar amounts. Responding to 
     questions from Chairman Inhofe, GAO representative John 
     Stephenson testified to the following:
       ``Senator Inhofe. Would [discretionary grants] be the most 
     difficult to monitor?
       Mr. Stephenson. I would think so. The non-discretionary 
     grants go by formula to the States based on the need. There 
     is a little more specificity in place as to how you oversee 
     that category of grants. So I would agree that the 
     discretionary grants are probably more problematic.''
       The OIG offered corresponding answers to similar questions 
     from Senator Inhofe testifying to the following:
       ``Senator Inhofe. You are testifying that the EPA 
     mismanagement of only discretionary grants costs the 
     taxpayers hundred of million of dollars each year?
       Ms. Heist. Of predominately discretionary funds, yes.
       Senator Inhofe. Why do you focus on discretionary 
     recipients in particular?
       Ms. Heist. In the past we found the most problem was with 
     discretionary grants. We found problems with, as has been 
     mentioned here today, competition. We found Agency managers 
     continued to use the same grantees year-after-year and there 
     has not been a lot of competition. Predominately, that is 
     where we found the problems, so we continue to focus in that 
     area.''
       In fact, the OIG supplemented her testimony with a March 1, 
     2004, audit of a discretionary grant recipient non-profit 
     organization that received a total of $4,714,638 in five 
     selected grants from 1996 to 2004. The OIG's audit concluded 
     with the following findings:
       ``Therefore, although EPA funds were awarded to a 501(c)(3) 
     organization, in actuality, a 501(c)(4) lobbying organization 
     performed the work and ultimately received the funds. This 
     arrangement clearly violates the Lobbying Disclosure Act 
     prohibition on a 501(c)(4) organization which engages in 
     lobbying from receiving Federal funds.
       In summary, the [Consumer Federation of America], a 
     501(c)(4) organization: (1) performed direct lobbying of 
     Congress, and (2) received Federal funds contrary to the 
     Lobbying Disclosure Act. Consequently, all of the costs 
     claimed and paid under the agreements are statutorily 
     unallowable.''
       The March 1, 2004 OIG audit subsequently concluded among 
     other findings, ``EPA recover all funds paid to the non-
     profit recipient'' and ``EPA suspend work under current 
     grants or cooperative agreements not covered by the audit and 
     make no new awards until the recipient can demonstrate that 
     its financial management practices and controls over Federal 
     funds comply with all regulatory requirements.''
       However, lack of oversight in grants to non-profit 
     organizations is not entirely new information. The GAO 
     reported in 2001 that EPA exhibited weaknesses specifically 
     in non-profit grantee oversight. In its April 2001 report 
     that GAO specifically evaluated EPA's oversight of non-profit 
     grantee costs. The GAO concluded, ``EPA's post-award grant 
     management policy provides minimal assurance that unallowable 
     costs for non-profit grantees will be identified.'' In its 
     August 2003 report, the GO again reported it found some of 
     the largest number of problems in discretionary grants to 
     non-profit organizations. In fact, the GAO reported that of 
     the grants it sampled for its report, EPA took some of the 
     most significant remedial actions to problems within the 
     individual grants against non-profit organizations.
       Testimony received during the hearing also confirmed that 
     EPA has continued to award discretionary grants to non-profit 
     and other recipients often without preparing solicitations 
     and without competition with other potential applicants. In 
     its August 2003 EPA grants report, the GAO reported the 
     following:
       ``The Federal Grant and Cooperative Agreement Act of 1977 
     encourages agencies to use competition in awarding grants. To 
     encourage competition, EPA issued a grants competition policy 
     in 1995. However, EPA's policy did not result in meaningful 
     competition throughout the agency, according to EPA 
     officials. Furthermore, EPA's own internal management reviews 
     and a 2001 Inspector General report found that EPA has

[[Page 20725]]

     not always encouraged competition. Finally, EPA has not 
     always engaged in widespread solicitation when it could be 
     beneficial to do so. Widespread solicitation would provide 
     greater assurance that EPA receives proposals from a variety 
     of eligible and highly qualified applicants who otherwise may 
     not have known about grant opportunities. According to a 2001 
     EPA Inspector General report, program officials indicated 
     that widespread solicitation was not necessary because `word 
     gets out' to eligible applicants. Applicants often sent their 
     proposals directly to these program officials, who funded 
     them using `uniquely qualified' as the justification for a 
     noncompetitive award. This procedure created the appearance 
     of preferential treatment by not offering the same 
     opportunities to all potential applicants. In addition, the 
     agency provided incomplete or inconsistent public information 
     on its grant programs in the Catalog of Federal Domestic 
     Assistance. Therefore, potential applicants may not have been 
     adequately informed of funding opportunities.''
       In fact, the OIG reported in May 2001 that the lack of 
     competition and lack of solicitation in discretionary grants 
     led to the appearance of preferential treatment in awarding 
     grants and an uncertainty that grants were being awarded to 
     the most meritorious and cost-effective projects:
       ``Without widespread solicitation [of available grants], 
     EPA is not only limiting potential applicants, but is also 
     creating the appearance of preferential treatment. 
     Furthermore, during our discussions with EPA program 
     officials we found implications of preferential treatment in 
     the selection of grantees.''
       During the hearing, EPA acknowledged neglecting competition 
     and giving the appearance of favoritism in awarding grants as 
     EPA responded to the following question asked by Senator 
     Jeffords:
       ``Mr. O'Connor. Senator Jeffords, with respect to the 
     competition as was noted, for years and years, our project 
     officers were accustomed to just selecting their grantee 
     which led to at least the appearance that we had favorites 
     and that we were not necessarily going out there sure that we 
     were getting the best value for the Government. That policy, 
     quite frankly, did not go over very well initially, with our 
     1,800 project officers because it does require quite a bit of 
     additional work. This was something that they had to adjust 
     to. Frankly, we set a goal of competing, I believe it was 30 
     percent of the covered grants in our first year. I was very 
     pleased with achieving the 75 percent. But that is one of a 
     number of major mindsets that we are trying to change, and 
     will change, over the next couple of years in how we manage 
     our grants.''
       Chairman Inhofe concluded the hearing with a closing 
     statement acknowledging that all the witnesses could agree 
     that discretionary grants oversight may be particularly 
     problematic. Upon the conclusion of the hearing, Chairman 
     Inhofe began a series of information requests to EPA. 
     Chairman Inhofe issued the first request at the close of the 
     March 2004 hearing. The request included a listing of all 
     discretionary grant recipients in fiscal year 2003, the 
     amount of the recipient, and the type of recipient for each 
     grant award. It also requested the amounts in grants those 
     recipients had received for the two previous fiscal years.


                          subsequent oversight

       Pursuant to Environment and Public Works Committee 
     oversight responsibility, Chairman Inhofe has submitted 
     subsequent information requests which have included 
     requesting project officer grant files on discretionary grant 
     recipients and interviews with the EPA project and approving 
     officers for discretionary grants. In each information 
     request, EPA has fully responded, making grant files and 
     personnel available.
       Additionally, one of the first accomplishments from the 
     Committee's oversight has been a change in availability of 
     information on grants on the EPA Web site. At the March 2004 
     hearing Chairman Inhofe required, ``What would be wrong with 
     putting all [grant awards] on a Web site where the public and 
     anyone interested would have access to them?''
       Later in the hearing, Chairman Inhofe reiterated his point 
     of transparency in grant awarding stating, ``I like the idea 
     of doing something, of opening the doors, and not just having 
     a Web site where you show the various competitions coming up, 
     but also where you show the grants that are issued. . . . I 
     look forward to that.''
       EPA has responded by reorganizing its Web site to provide a 
     direct link to the EPA grants from its homepage and 
     reorganized its Office of Grants and Debarment page to 
     clearly list links concerning EPA grants. However, most 
     importantly, EPA has created a new site of the most 
     comprehensive information ever provided on individual grants. 
     This new page contains information such as the awarding 
     office, total amount of the grant, purpose of the grant, and 
     awarding and monitoring personnel at EPA. This new page 
     allows users to search all awarded grants by description, 
     type of recipient, and by quarter or fiscal year all within 
     seven days of the grant award. Additionally, this page is 
     only an interim site as the EPA plans to develop a ``Grants 
     Datamart'' of new publicly accessible information through its 
     Web site by early 2005.
       Although more publicly available information on available 
     grants, new competition for those discretionary grants and 
     full disclosure of awarded grants are a promising beginning 
     to reform of EPA grants management, individual EPA program 
     offices must enforce these new policies with necessary 
     oversight of EPA personnel and EPA grantees. However, with 
     comparatively low individual dollar amounts, discretionary 
     grants to non-profit organizations in particular may receive 
     the least oversight compared to recipients of larger dollar 
     amount grants. As referenced in previous GAO reports and 
     corroborated in the OIG recent audit of a non-profit grant 
     recipient, discretionary grants to non-profit recipients have 
     exhibited some of the highest amount of problems and have 
     required the most significant remedial actions taken by the 
     EPA.


                     big business environmentalism

       In spring 2001, the Sacramento Bee began a series of 
     articles on the operations of the national environmental 
     groups and the current actions of the modern environmental 
     movement. Those articles began characterizing the today's 
     environmental groups in the following manner:
       ``[T]oday's groups prosper while the land does not. 
     Competition for money and members is keen. Litigation is 
     blood sport. Crisis, real or not, is a commodity. And slogans 
     and sound bites masquerade as scientific fact.''
       The series continued by identifying the twenty 
     environmental organizations reporting the largest resources, 
     each an Internal Revenue Service (IRS) registered non-profit 
     organization, and criticizing today's environmental movement 
     for its largesse. The series highlighted such issues and 
     arguments as: the salaries paid to environmental group 
     executives, the millions of dollars in assets, or billions in 
     some cases, of environmental groups, the unprecedented focus 
     on fundraising, the marketing and advertising on agenda-based 
     science, the increasingly litigious business of today's 
     environmental groups, and the subsidizing of environmental 
     groups with federal tax dollars.
       Continuing on the theme of environmental groups being 
     subsidized by federal taxpayers, that same publication 
     published an additional article in October 2001, specifically 
     highlighting the issue of federal tax dollars going to 
     environmental groups regularly engaged in lobbying and 
     litigating against the federal government, and how that, 
     according to federal audits, in some cases those tax dollars 
     have been misused. Interestingly, the article adds,
       ``Just how much public money flows to environmental groups 
     has never been calculated, partly because it springs from so 
     many sources. . . . But no government agency charts the total 
     spending, identifies trends, or assesses what taxpayers are 
     getting for their money.''
       The Washington Post published a series of articles 
     beginning May 2003 focusing on a particular non-profit 
     environmental group, The Nature Conservancy, branding the 
     organization ``Big Green'' for its status as the nation's 
     eighth largest non-profit with assets of $3 billion. The 
     series criticized The Nature Conservancy, a regular EPA 
     discretionary grant recipient, for its wide-ranging business 
     interests including drilling operations, product marketing 
     activities ranging from beef to neckties to a breakfast 
     cereal to toilet cleaners, and million-dollar land deals to 
     organization board members and supporters that has gained The 
     Nature Conservancy a U.S. Senate Finance Committee 
     investigation and subsequent audit by the IRS.
       Earlier this year, FrontPage Magazine published a similarly 
     critical article of environmental non-profit groups titled 
     ``Environmental Activism Is In Fact Big Business,'' reporting 
     that today's more than 3,000 environmental non-profit 
     organizations collect more than $8.5 billion annually and 
     that most individually collect more than $1 million each 
     year.
       Not all environmental organizations regularly receive EPA 
     grants or receive EPA grants at all. However, some 
     environmental groups receive millions of dollars in private 
     contributions each year and receive hundreds of thousands of 
     dollars in EPA grants each year as well. Additionally, those 
     same environmental groups are closely linked with affiliate 
     organizations which are politically involved or are closely 
     associated with other politically involved environmental 
     organizations.


              selected epa discretion non-profit grantees

       The following organizations are IRS registered 503(c)(3) 
     tax exempt non-profit entities that have regularly received 
     discretionary grant funding from the EPA. Each organization 
     has received varying amounts of EPA discretionary grants. 
     Each organization is also affiliated with an IRS registered 
     501(c)(4) or 527 political organization or is otherwise 
     involved in political activities. Unless otherwise specified, 
     the EPA reports that until it formally adopted its grants 
     competition policy in 2003, although it encouraged 
     competition, each grant was likely awarded without 
     solicitation or competition with other potential applicants.

[[Page 20726]]



                   Natural Resources Defense Council

       The Natural Resources Defense Council (NRDC) states that 
     its purpose is to ``safeguard the Earth: its people, its 
     plants and animals and the natural systems on which all life 
     depends.'' The NRDC is represented by three organizations. 
     These organizations are the NRDC, Inc., a 501(c)(3) 
     organization; the NRDC Action Fund, a 501(c)(4) organization; 
     and the Environmental Accountability Fund, a section 527 
     political organization.
       The NRDC is consistently critical of the Bush 
     Administration's environmental record and devotes a portion 
     of its own Web site to the ``Bush Record'' which it 
     characterizes in the following manner: ``This administration, 
     in catering to industries that put America's health and 
     natural heritage at risk, threatens to do more damage to our 
     environmental protections than any other in U.S. history.'' 
     In fact, this organization is particularly politically 
     involved with a history of spending millions of dollars in 
     previous election cycles. The NRDC is also involved in this 
     year's Presidential race joining with other organizations 
     airing television and radio advertisements against President 
     Bush. The NRDC's section 527 political organization, the 
     Environmental Accountability Fund, last reports to have 
     raised nearly $1 million in the 2004 election cycle, at the 
     time of this report. The NRDC 501(c)(3) organization is also 
     nationally politically involved joining earlier this year 
     with Moveon.org, another section 527 political organization, 
     running advertisements, such as one featured earlier this 
     year in the New York Times, accusing the Bush Administration 
     of weakening regulations on drinking water and air quality 
     while at the same time soliciting contributions for the NRDC 
     501(c)(3) affiliate.
       The NRDC, Inc. organization has reported consistent end of 
     the year annual net assets of over $70 million for the 
     previous three years, with over $80 million of end of the 
     year net assets reports in its tax filing of the year ending 
     2003. Additionally, the NRDC, Inc. reports receiving 
     increasing amounts of direct public contributions totaling 
     from $32.6 million in 1999 to over $55 million in 2003.
       The NRDC, Inc. organization also reports spending an 
     increasing amount on direct grassroots lobbying, from 
     $264,253 in its filing for the year ending 1999 to $861,524 
     in its filing for the year ending 2003 with a total of nearly 
     $1 million in total lobbying expenditures in 2002 alone. NRDC 
     Lobbying Disclosure Act Reports over the same 1999-2003 
     period disclose NRDC, Inc. made these expenditures lobbying 
     Congress and the Administration, including Department of 
     Energy, the Department of the Interior and the EPA.
       The NRDC, Inc. organization reported receiving over half a 
     million dollars annually in government grants in its IRS 
     filings for the reporting periods ending 1999 through 2003. 
     Specifically, the NRDC, Inc. organization reports it received 
     $850,903 in government grants in the period ending 1999, 
     $759,596 for 2000, $679,319 for 2001, $630,910 for 2002, and 
     $608,099 for 2003. The EPA reports that NRDC, Inc. 
     organization has received nearly $6.5 million in twenty-three 
     discretionary grants since 1993. EPA also reports that these 
     individual grants ranged in amounts from $7,500 to nearly $2 
     million during this period. The EPA acknowledges that likely 
     all these grants were awarded without competition with any 
     other applicant. The EPW Majority Staff requested interviews 
     of EPA approving and project officers for selected grants 
     over $200,000 each. The purposes for some grants to NRDC, 
     Inc., were wide ranging. For instance, EPA reported that some 
     of the stated purposes for grants awarded to NRDC, Inc., have 
     included development of energy efficient technologies, 
     strengthening the case for smart growth, a NRDC and Ad 
     Council clean water campaign, and promoting energy efficiency 
     in Russian buildings. In some instances, approving officers 
     and project officers for those grants have since retired from 
     the EPA. However, EPW Majority Staff interviewed EPA 
     approving and project officers for one ongoing grant awarded 
     by the Office of Air and Radiation beginning in January 2002 
     through December 2004 for a total of $1,198,993.00. The 
     grant's stated project title and description are as follows: 
     ``Development or Long-Term Adoption of Energy-Efficient 
     Products and Services, To work within the energy efficiency 
     and manufacturing community toward long term market 
     transformation of energy-efficient technologies and 
     practices.'' EPA officials stated that the grant was awarded 
     without solicitation or competition with other applicants, 
     and EPA awarded the grant pursuant to a proposal NRDC, Inc. 
     submitted to the EPA. One EPA official reported that although 
     this particular grant proposal was unsolicited, it was 
     subject to a peer review. However, upon further questioning 
     EPW Majority Staff learned that the peer review consisted of 
     the review of one other EPA official within the Climate 
     Protection Partnerships Division of the Office of Air and 
     Radiation. EPA officials reported that this grant received 
     some form of review from several levels within the Climate 
     Protection Division from review of the technical merits of 
     the proposal by the project officers through approval by the 
     division director. EPW Majority Staff interviewed the 
     approving officer and two project officers for this grant, 
     and all reported receiving EPA grant training and receiving 
     periodic recertification. Each interviewed personnel has been 
     employed with the EPA for various tenures from two years to 
     over twenty years. EPA project officers reported that 
     monitoring for this grant consists of periodic contact by the 
     project officer and the requirement of quarterly reports from 
     NRDC, Inc. on its progress on the grant. All EPA officials 
     interviewed were aware of NRDC's regular litigation against 
     the federal government, and some were otherwise aware of 
     NRDC's political activity and criticisms of the Bush 
     Administration's environmental policies.

                Children's Environmental Health Network

       The Children's Environmental Health Network (CEHN) 
     describes itself as a ``national multi-disciplinary 
     organization whose mission is to protect the fetus and the 
     child from environmental health hazards and promote a healthy 
     environment.'' CEHN has been a 501(c)(3) tax exempt 
     organization since 2001 and reported for the filing period 
     ending 2000,end of the year net assets of $25,324.00. 
     However, the CEHN also reports receiving a total of $545,626 
     in direct contributions in addition to $136,729.00 in 
     government grants.
       Since CEHN's beginnings in 2001, the EPA reports it has 
     awarded four grants to CEHN in amounts ranging from a $2,600 
     to an ongoing grant totaling $332,304.00 for the grant term 
     of August 2002 to July 2005. As of this report, EPA has 
     awarded nearly $400,000 in grants to the CEHN. All EPA 
     approving and project officers for each of these grants are 
     still employed at the EPA, the EPW Majority Staff requested 
     interviews with each official/EPA officials confirmed that 
     the agency awarded each grant without solicitation and 
     without competition with any other potential applicant.
       The first of the awards was a $10,000 grant awarded from 
     EPA Office of International Affairs to CEHN to distribute 
     information from the Global Forum for Action, a conference 
     sponsored by CEHN. EPA officials, however, disclosed that the 
     original proposal from CEHN requested $70,000 to pay for a 
     large part of the Global Form for Action conference that had 
     already concluded prior to CEHN's submission of its grant 
     proposal. EPA, however, agreed to provide $10,000 for 
     dissemination of information from the conference. The second 
     of the awards was a $43,615 grant awarded from EPA 
     headquarters for the purpose of developing a plan for the 
     expansion of the use of the Internet to increase information 
     regarding environmental health threats to children. EPA 
     officials monitored the grant by requiring quarterly progress 
     reports. The result of the grant was a report CEHN prepared 
     on its meetings with Internet providers and medical 
     associations. EPA officials, however, reported that a Web 
     site disseminating information on children's health has not 
     been developed subsequent to this report. Interestingly, 
     however, during this same period and thereafter, the CEHN has 
     published its own Children's Environmental Health Bush 
     Administration Report Card for 2001-2004. On April 5, 2004, 
     CEHN published its most recent report card on its own 
     Internet site which graded the Bush Administration's 
     environment record with an ``F'' on protecting children's 
     health citing sixteen areas where it claims the Bush 
     Administration is lacking in protecting children's health.
       The third grant to CEHN was awarded from EPA Region 3 in 
     the amount of $2,600 for the purpose of training two 
     Washington, D.C. highschool students to assist with 
     environmental education in a local elementary school 
     classroom. CEHN coordinated the training for these two 
     highschool students in a there-week course. Representatives 
     from the Sierra Club, Environmental Defense, the EPA, and 
     others made presentations to the students about a variety of 
     topics including ``lead poisoning, asthma, ozone depletion, 
     global warming, the workings of a power plant, and water 
     topics.'' Although the students toured a water treatment 
     facility in conjunction with the presentations, EPA officials 
     could not confirm that the students actually toured a power 
     plant. The grant reports CEHN submitted also did not include 
     a representative from the utility industry as a presenter, 
     and EPA officials also could not confirm that the students 
     received any information from industry representatives.
       Finally, the fourth grant EPA awarded to CEHN is the 
     largest. The EPA Office of Prevention of Pesticides and Toxic 
     Substances awarded the first installment of an ongoing grant 
     totaling $332,304.00 over the grant period August 2002 to 
     July 2005. The purpose of this grant is to increase available 
     scientific information on children's health to CEHN and other 
     non-governmental organizations. Like all other grants awarded 
     to CEHN, this grant was awarded through an unsolicited 
     proposal without competition with any other potential 
     applicants. Interestingly, the chairperson of the board of 
     directors for CEHN is the former EPA Assistant Administrator 
     for the Office of Pesticides and Toxic Substances during the 
     Clinton Administration from 1993 to 1999. EPA officials 
     involved in approving and monitoring this grant advised EPW 
     Majority Staff that although they personally did not work 
     closely with the former Assistant Administrator, they worked 
     for the Office of Pesticides and Toxic Substances during the 
     same period.

[[Page 20727]]



                      Environmental Defense, Inc.

       Environmental Defense describes itself as ``fighting to 
     protect human health, restore the oceans and ecosystems, and 
     curb global warming.'' Environmental Defense is represented 
     by two organizations: Environmental Defense, Inc., 501(c)(3) 
     organization, and the Environmental Defense Action fund, 
     Inc., a 501(c)(4) organization.
       Environmental Defense, Inc. reports consistently increasing 
     amounts of end of the year net assets from approximately $33 
     million in its tax filing for the period ending 1999 to over 
     $49 million for 2003. During that same period Environmental 
     Defense, Inc. has received increasing amounts of direct 
     public contributions, from $28.4 million in 1999 to nearly 
     $42 million in 2003. This organization also reports spending 
     varying amounts in direct and grassroots lobbying 
     expenditures for the same period, spending $528,804 for 1999, 
     $410,975 for 2000, $857,542 for 2001, $673,548 for 2002, and 
     $856,983 for 2003. Environmental Defense, Inc. reports making 
     those expenditures lobbying Congress and the Administration 
     agencies including the EPA.
       Environmental Defense, Inc. also reports receiving varying 
     amounts of annual government grants. It reported receiving 
     $752,645 for 1999, $505,170 for 2000, $575,673 for 2001, 
     $273,116 for 2002, and $341,338 for 2003. Environmental 
     Defense, Inc. has also received over $4.6 million from the 
     EPA in discretionary grants since 1993, many, if not all, 
     awarded without competition with other potential applicants.

                            The Tides Center

       The Tides Center describes its organization as ``working 
     with new and emerging charitable organizations who share our 
     mission of striving for positive social change.'' This 
     organization is represented or affiliated with two other 
     organizations: the Tides Foundation, a 501(c)(3) foundation, 
     and the Tsunami Fund, a 501(c)(4) organization.
       The Tides Center and Tides Foundation regularly grant funds 
     to what it designates as its projects. To receive funding, 
     The Tides Center's main requirement for becoming a new 
     project is that the ``project's work falls within the Tides 
     Mission of working toward progressive social change.'' Some 
     of the projects the Tides Center and Tides Foundation have 
     funded include other environmental organizations such as the 
     Environmental Working Group, the Natural Resources Defense 
     Council, and affiliates of the Sierra Club and Greenpeace.
       The Tides Center regularly reports annual end of the year 
     net assets increasing from $21.1 million in its tax filing 
     for the period ending 1999 to $33.8 million in 2003. During 
     this same period, the Tides Center reports increasing direct 
     public contributions from $38.7 million in its 1999 filing to 
     nearly $60 million in 2003. The Tides Center reports varying 
     amounts of legally allowable direct and grassroots lobbying 
     expenditures between $22,505 in its 1999 filing to $601,885 
     in its 2003 filing with a 2002 filing disclosing expenditures 
     of nearly $1 million.
       The Tides Center also regularly receives several millions 
     of dollars of government grants in increasing amounts each 
     year. The Tides Center reported receiving $1,626,906 for 
     1999, $1,582,370 for 2000, $2,145,499 for 2001, $3,481,484 
     for 2002, and $5,175,732 for 2003. Although the Tides Center 
     has received increasing amount of funding in grants, the U.S. 
     Department of Housing and Urban Development (HUD) Inspector 
     General audited the Tides Center as recently as September 
     2002 and recommended that HUD consider suspending grant 
     funding until the Tides Center and its project organization 
     partner in the audited grant develop and implement 
     appropriate management controls to ensure the Tides Center's 
     compliance with federal rules concerning allowable 
     expenditures for federal funding. The EPA reports that the 
     Tides Center and Tides Foundation have received nearly $2 
     million in federal grants from the EPA alone since 1993. EPW 
     Majority Staff interviewed EPA approving and project officers 
     in four grants EPA awarded to the Tides Center. In two of the 
     selected grants, EPA made the awards without solicitation or 
     competition with other applicants. In fact, the single 
     largest grant EPA has made to the Tides Center since 1993 was 
     awarded for a term of May 2002 to December 2003 for a total 
     of $477,275. The grant was awarded for the purpose of 
     encouraging public participation in the cleanup of hazardous 
     waste at federal facilities. Although the grant was awarded 
     without solicitation or competition, EPA confirmed the 
     project officer has made on-site visits to the grantee and 
     has requested an audit of funds to ensure EPA grant funding 
     is separated from other funds used by the Tides Center. In 
     another ongoing grant to the Tides Center totaling $75,000 
     for the purpose of developing a white paper on the markets 
     for environmental papers, EPA again confirmed this grant was 
     awarded subsequent to an unsolicited proposal and without 
     competition. In fact, in awarding funding to the Tides Center 
     in other grants based on unsolicited proposals, EPA has 
     simply recorded that the grantee has ``unique and superior 
     qualifications to perform the work.'' However, in each of 
     these previously described grants, EPA project officers 
     confirmed that prior to this particular grant oversight with 
     Tides Center, neither had any prior experience with the Tides 
     Center.
       In two of the other two selected grants, EPA made the 
     awards with competition with one award approved by the 
     awarding office's Assistant Administrator. The first of these 
     ongoing grants was for a total of $125,000 for a grant term 
     of September 2003 to August 2006, for the purpose of 
     ``strengthening the national network of brownfield 
     environmental justice and community groups, technical 
     assistance, training, research on schools sitting on 
     contaminated property, regional workshops, and history of 
     selected brownfields community efforts.'' The grant 
     application, however, states that the Tides Center will 
     ultimately apply for a total of $442,000 for this project. 
     The Tides Center's submitted proposal for the grant includes 
     conducting conferences, workshops, and producing fact sheets. 
     The EPA Office of Solid Waste and Emergency Response awarded 
     this grant following a review throughout the office with 
     final approval by the office Assistant Administrator. EPA 
     officials confirmed that the solicitation for this grant was 
     available for forty-five days on the agency Web site. EPA 
     received forty-four proposals and awarded twenty-one. 
     Finally, the fourth Tides Center ongoing grant in which EPW 
     Majority Staff interviewed EPA officials involved an awarded 
     amount totaling of $150,000 for a grant term of May 2004 to 
     May 2004, for the purpose of ``improving meaningful non-
     federal stakeholder involvement in decisions concerning clean 
     up of hazardous waste at federal facilities. In this grant, 
     EPA reports that it prepared a solicitation that was 
     available for sixty days on the agency Web site and in the 
     Federal Register. EPA received a total of twenty-three 
     proposals and awarded one. Proposals were evaluated by a 
     panel comprised of EPA personnel and two additional members 
     from the Army Corps of Engineers and the Department of 
     Energy.

                     Consumer Federation of America

       The Consumer Federation of America describes its purpose as 
     to ``work to advance pro-consumer policy on a variety of 
     issues before Congress, the White House, federal and state 
     regulatory agencies, state legislatures, and the courts.'' 
     The Consumer Federation of America (CEA) was formerly 
     represented by two organizations: the Consumer Federation of 
     America Foundation, a 501(c)(3) organization, and the 
     Consumer Federation of America, a 501(c)(4) organization. 
     According to the CFA, currently both organizations have now 
     merged into one 501(c)(3) organization following an EPA 
     Inspector General audit completed March 1, 2004 that was 
     referenced in testimony on EPA grants management before the 
     Environment and Public Works Committee on March 3, 2004.
       The CFA reported end of the year net assets of $609,745 for 
     its IRS filing for the period ending 2003. It also reports 
     receiving $184,110 in direct public contributions during that 
     same reporting period. CFA has regularly filed Lobbying 
     Disclosure Act reports disclosing lobbying expenditures 
     between $80,000 and $200,000 from lobbying Congress and a 
     variety of federal agencies. In fact, the EPA Inspector 
     General included in its audit of CFA that CFA had an 
     estimated total of $940,000 in direct lobbying costs from 
     1998 through 2002.
       The CFA Foundation has also been a regular recipient of 
     grant dollars from the EPA. Since 1993, the CFA or CFA 
     Foundation has received over $8 million alone from the EPA. 
     However, during the EPW Committee grants management oversight 
     hearing held March 3, 2004, the OIG testified to the 
     following:
       ``We have reported on EPA shortcomings in overseeing 
     assistance agreements for over ten years. A particularly 
     relevant example is a recent report in which we questioned 
     $4.7 million because the work was performed by an ineligible 
     lobbying organization. EPA awarded the cooperative agreements 
     to an associated organization but did not have any employees, 
     space, or overhead expenses. In addition, the ineligible 
     organization's financial management practices did not comply 
     with Federal regulations. The recipient did not adequately 
     identify and separate lobbying expenses in its accounting 
     records. As a result, lobbying costs may have been charged to 
     the Federal projects.''
       The OIG included its March 1, 2004 audit of the CFA with 
     its testimony which concluded with the following summary:
       ``In summary, the [CFA] Federation, a 501(c)(4) 
     organization: (1) performed direct lobbying of Congress, and 
     (2) received Federal funds contrary to the Lobbying 
     Disclosure Act. Consequently, all the costs claimed and paid 
     under the agreements are statutorily unallowable.''
       EPA has advised EPW Majority Staff that it continues to 
     work to resolve this issue with CFA and to develop a response 
     to the OIG audit. EPA has also disclosed that the agency 
     offices awarding the grants to CFA that were subject to the 
     audit did not prepare solicitations for the grants nor 
     subject the grants to competition with other potential 
     applicants.

                          World Wildlife Fund

       The World Wildlife Fund (WWF) describes its purpose as the 
     ``conservation of nature,''

[[Page 20728]]

     and describes its conservation work as focusing on three 
     issues: ``saving endangered species, protecting endangered 
     habitats, and addressing global threats such as toxic 
     pollution, over-fishing and climate change.'' The WWF 
     advocates for a wide variety of issues, such as opposing oil 
     and gas development in the Arctic National Wildlife Refuge, 
     strengthening the Endangered Species Act, advocating for 
     global warming legislation, and arguing that the Bush 
     Administration plans to eliminate millions of acres of 
     national forests for road building, logging, and mining 
     interests.
       The WWF is a 501(c)(3) tax exempt non-profit organization. 
     The WWF reports increasing end of the year net assets ranging 
     from $114 million for its tax filing in the period ending 
     1998 to $146 million for 2003. During this same period the 
     WWF reports receiving an increasing amount in direct public 
     contributions from $66.6 million for 1998 to $79 million for 
     2003. The WWF also reports lobbying expenditures each year 
     from 1998 to 2003 in amounts from $121,138 to $400,548. The 
     WWF reports making these expenditures lobbying Congress and 
     the Administration, including the Department of Interior, 
     U.S. Forest Service, and the EPA.
       The WWF is also a regular recipient of government grants 
     and reported receiving over $20 million in government grants 
     from 1998 to 2001. The WWF reported receiving government 
     grants of over $18 million in 2002 and over $16 million in 
     2003 alone. Since 1993, the WWF has received over $1.6 
     million in EPA discretionary grants including the most recent 
     ongoing EPA grant to the WWF for $100,000. The EPA Office of 
     Research and Development (ORD) awarded this grant to the WWF 
     beginning May 2002 for the purpose of providing technical 
     assistance to governmental departments of American Samoa to 
     assess the impacts of climate change on coral reef systems. 
     EPW Majority Staff interviewed EPA approving and project 
     officers for this grant. Although this grant was awarded 
     prior the EPA's discretionary grant competition, the ORD 
     prepared a solicitation for this grant that was available 
     from July 2001 to October 2001 on the EPA Web site and in the 
     Federal Register and Commerce Business Daily. The ORD 
     received twelve proposals that were evaluated by a panel 
     consisting of representatives from the EPA, the National 
     Oceanic and Atmospheric Administration, and Harvard 
     University. EPA awarded grants to five of the twelve 
     proposals. The WWF proposal begins with the foundation that 
     global warming due to anthropogenic effects is causing damage 
     to coral reefs among other detrimental effects. The EPA 
     reported that part of the monitoring requirements WWF is to 
     meet during the term of the grant is to submit periodic 
     reports. In each grant quarterly reports prepared by WWF, the 
     WWF reports working with local governmental departments 
     sampling and conducting studies gathering information on the 
     damage to coral reefs and associated species to ultimately 
     recommend means to protect American Samoa's corral reefs. EPA 
     officials anticipate the grant will conclude in 2005. EPW 
     Majority Staff also asked EPA officers responsible for 
     monitoring the grant whether grant management was 
     sufficiently described in their job description and whether 
     it is an area in which EPA measures their job performance. 
     Interestingly, one EPA officer responded that since being 
     assigned to ORD, both aspects were true. However, the same 
     EPA officer responded that in previous assignments neither 
     aspect was true.

                          Friends of the Earth

       Friends of the Earth states its mission as the following: 
     ``Friends of the Earth defends the world and champions a 
     healthy and just world.'' Friends of the Earth is a group 
     critical of the Bush Administration's environmental record, 
     suggesting that political contributors have solely determined 
     the environmental agenda of the Bush Administration.
       Friends of the Earth is represented by two organizations: 
     Friends of the Earth, a 501(c)(3) organization, and Friends 
     of the Earth Action, Inc., a 501(c)(4) organization.
       Friends of the Earth has consistently reported end of year 
     net assets between $1 million and $3 million in IRS filings 
     for periods ending in 1998 through 2003. Over the same 
     period, Friends of the Earth has reported receiving annual 
     direct public contributions from $3.5 million for 1999 to 
     $4.4 million for 2003. From 1999 to 2003, Friends of the 
     Earth also reported lobbying expenditures from $29,433 to 
     $111,849. Friends of the Earth annual lobbying reports 
     disclose these expenditures include lobbying Congress and the 
     Administration, including the EPA.
       Since 1999, Friends of the Earth has regularly reported it 
     has received no government grants; however, it has received 
     small federal grants from the EPA from 1993 to 1999 totaling 
     about $200,000. Like many other discretionary grants, EPA 
     acknowledges that these grants likely were awarded without a 
     public solicitation and without competition with other 
     potential applicants.

                       World Resources Institute

       The World Resources Institute describes itself as an 
     independent non-profit organization and describes its mission 
     is to ``move human society to live in way that protect 
     Earth's environment and its capacity to provide for the needs 
     and aspirations of current and future generations.'' The 
     World Resources Institute (WRI) is represented by two 
     501(c)(3) tax exempt non-profit organization, the WRI and the 
     World Resources Institute Fund.
       The WRI board of directors consists of thirty-two members 
     including representatives from fellow EPA grantee, the 
     Natural Resources Defense Council, and the League of 
     Conversation Voters. WRI describes its work as being, 
     ``concentrated on achieving progress toward four key goals: 
     protect Earth's living systems; increase access to 
     information; create sustainable enterprise and opportunity; 
     reverse global warming.''
       In IRS reporting periods from 1998 to 2003, the WRI 
     regularly reports end of the year net assets from $46 million 
     to $57 million. During this same period the WRI reported 
     receiving varying amounts of annual direct public 
     contributions, from $8.6 million for 1998, $14.3 million for 
     1999, $9.4 million for 2000, $15.7 million for 2001, $21.7 
     million for 2002, and $9.3 million for 2003. WRI has also 
     reported consistently receiving millions of dollars in 
     government grants each year. WRI reported receiving $3.2 
     million for 1998, $2.4 million for 1999, $2.9 for 2000, $2.3 
     for 2001, $3.4 for 2002, and $2.7 for 2003. The WRI is also a 
     regular recipient of EPA grants, totaling around $8,132,060 
     million awarded since 1993. All except $575,000 of the total 
     amount of grants awarded to WRI were awarded prior to the EPA 
     competition policy. Additionally, all of the $575,000 awarded 
     since 2003 has been awarded in amounts under the competition 
     policy threshold or were incremental amounts under already 
     awarded original grants. Unless the awarding office within 
     EPA for any of the grants within the $8.1 million instituted 
     its own competition policy, EPA acknowledges that all $8.1 
     million was likely awarded without solicitation and 
     competition with other potential recipients.

                      National Wildlife Federation

       The National Wildlife Federation describes itself as ``the 
     nation's largest and oldest protector of wildlife.'' The 
     National Wildlife Federation is involved in various 
     environmental issues and features a ``Take Action'' page on 
     its Web site advocating for national global warming 
     legislation and characterizing the Bush Administration as 
     ``ax[ing] protections for National Forest across the 
     country.''
       The National Wildlife Federation is represented by two 
     organizations: the National Wildlife Federation, a 501(c)(3) 
     organization, and the National Wildlife Action, a 501(c)(4) 
     organization.
       The National Wildlife Federation has reported varying 
     annual end of the year net assets from $33.8 million in its 
     IRS filings for the period ending 2000 to $6.7 million for 
     2003. During the same period, the National Wildlife 
     Federation reports receiving direct public contributions from 
     $34.7 million for 1999 to $37.9 million for 2003 with public 
     contributions over $40 million for 2001 and 2002. The 
     National Wildlife Federation also reports consistent lobbying 
     expenditures from $140,000 to $371,000 from 2000 through 
     2003.
       The National Wildlife Federation has also reported 
     regularly receiving government grants each year, with 
     $265,441 for 2000, $214,811 for 2001, $244,403 for 2002, and 
     $330,941 for 2003. EPA reports that it has awarded the 
     National Wildlife Federation approximately $600,000 since 
     1994 all of which was awarded in grants which individually 
     amounted to well under the EPA's new discretionary grant 
     competition policy threshold.


                             stappa-alapco

       STAPPA-ALAPCO is the combination of the State and 
     Territorial Air Pollution Program Administrators, a 501(c)(3) 
     organization, and the Association of Local Air Pollution 
     Control Officials, a 501(c)(6) trade association. STAPPA-
     ALAPCO describes itself as the ``two national associations 
     that represent air pollution control agencies in 54 states 
     and territories and over 165 major metropolitan areas across 
     the United States.''
       STAPPA-ALAPCO receives no direct public contributions, and 
     according to the EPA, it receives all of its funding from EPA 
     through government grants. STAPPA-ALAPCO created a 
     ``Secretariat'' in 1980 and that has been receiving funding 
     through Clean Air Act grants from the EPA Office of Air and 
     Radiation since that time. These grants are exempt from the 
     EPA competition policy because of an exemption for co-
     regulators.
       STAPPA-ALAPCO has drawn the past criticism of Chairman 
     Inhofe for its regular Congressional testimony supporting a 
     variety of new EPA rulemakings. In his opening statement in 
     an EPW Committee hearing in July 2002 concerning 
     environmental regulations affecting military readiness, 
     Inhofe stated:
       ``How many times has STAPPA-ALAPCO testified before 
     Congress, and how many times were they opposing the 
     streamlining of procedural paperwork. . . . These groups of 
     government bureaucrats invariably wind up testifying for 
     bigger government and opposing smaller government.
       ``To add insult to injury, not only are the salaries of 
     these individual government employees paid with our tax 
     dollars; quite often the groups themselves receive separate, 
     additional, appropriated dollars to pay for the

[[Page 20729]]

     groups themselves and the activities of these groups. As I 
     say, these activities almost invariably amount to lobbying 
     for bigger government and more expenditures of our tax 
     dollars with an emphasis not on better results but rather on 
     more procedures.''
       Pursuant to a resolution of member states, EPA calculates 
     the individual shares of each member state and sets aside 
     funds from Clean Air Act grant allocations for a state to 
     fund STAPPA-ALAPCO. This method of EPA directly funding 
     STAPPA-ALAPCO has drawn past criticism. For instance, 
     language in the conference report for the 2001 Department of 
     Veterans Affairs, Housing and Urban Development, and 
     Independent Agencies Appropriations Bill directed EPA to 
     withhold state and local grant funds at the national level to 
     pay for activities of programs only if such activities are 
     efforts that will benefit state and local air agencies, if 
     the activities are the responsibility of state and local air 
     agencies and if state and local air agencies have provided 
     their concurrence. A state is free to withdraw support from 
     STAPPA-ALAPCO. Additionally, a state is now also free to 
     support STAPPA-ALAPCO directly. In fact, not all states are 
     currently members of STAPPA-ALAPCO. In response to an EPW 
     Majority Staff request for the total amount of EPA grants 
     awarded to the STAPPA-ALAPCO Secretariat over the period 
     1988-2003, EPA responded with a list of five grants for a 
     total of $6,190,830.


                               conclusion

       The EPA awards over half of its annual budget each year in 
     grants. The GAO, OMB, and OIG have made various common 
     criticisms of EPA grants management, including a lack of 
     measurable environmental results, a lack of a measurable 
     probability of success from the grants, no evaluation of 
     reasonable costs in grants, and a general lack of oversight 
     of EPA personnel and grantees. Although much of EPA's grant 
     funding is provided in formula-based non-discretionary grants 
     to state and local governmental entities, several hundred 
     million dollars each year are awarded to discretionary 
     recipients. For several years, the GAO, OMB, and OIG have 
     criticized the management of these discretionary grants, in 
     particular citing that EPA has often awarded these grants 
     without widespread solicitation or competition with any other 
     potential applicants. The GAO has argued that EPA oversight 
     of discretionary grants has been particularly problematic 
     especially of non-profit recipients. The OIG has even argued 
     that this lack of competition in discretionary grants has 
     given the appearance of years of preferential treatment in 
     EPA discretionary grant awards. EPA has responded with new 
     competition and oversight policies and a five-year grants 
     management plan to cure the years of criticism of its overall 
     grants program. This preliminary report confirms some of 
     those criticisms in some individual discretionary grants and 
     highlights some promising practices within the EPA to better 
     manage and award discretionary grants.
       However, this report also reveals the problem that EPA has 
     consistently awarded discretionary grants to non-politically 
     involved groups. These grants have been awarded in large part 
     without solicitation or competition with other applicants and 
     may have received the least oversight from EPA. The example 
     of the OIG audit of the Consumer Federation of America may be 
     a discrete situation or may simply be one example of non-
     profit grant recipients taking advantage of past EPA grant 
     oversight to potentially use funds for unintended purposes. 
     In either case, however, EPA needs to be aware that it 
     regularly subsidizes non-profit organizations with 
     discretionary grant funding that are partisan or otherwise 
     politically active. Of all new reforms in EPA grants 
     management, reforms in discretionary grants can occur 
     immediately due to the fact they are just that--
     discretionary. EPA should include in its new culture of grant 
     management a careful scrutiny of all the activities of 
     discretionary grant applicants to absolutely ensure grant 
     awards are being used for their intended purposes. In 
     addition, and as important as ensuring allowable costs, the 
     Administration should ensure that it is not being undermined 
     by the other activities of its grants recipients and give 
     equally careful scrutiny to the wide spectrum of political 
     activity of some of its discretionary grant recipients before 
     making awards.

                          ____________________