EPA seeks to avoid ‘recipe for fraud’ on infrastructure spending

EPA creates new program to ensure $50 billion it received under bipartisan infrastructure package isn’t wasted or misused, says official overseeing how it’s done spent.

The Environmental Protection Agency’s Office of the Chief Financial Officer’s new program is an “agency-wide program integrity framework” that addresses risk management, internal controls and payment integrity , Zealan Hoover, senior adviser to administrator Michael Regan, told Bloomberg Law.

The effort could help allay concerns from the EPA’s internal watchdog about the agency’s ability to handle the unprecedented sums it has secured in the bipartisan infrastructure package. The $50 billion includes $15 billion for the lead service line replacement revolving fund, $11.7 billion for the state drinking water revolving fund, and $3.5 billion for cleaning up the Superfund site.

The agency is also expected to get about $20 billion more from the reinstatement of the Superfund tax, sending a total of $70 billion into agency coffers, Hoover said.

Photo courtesy of Zealan Hoover

But “trying to get money out too quickly is just a recipe for fraud,” Inspector General Sean O’Donnell told reporters in December.

“The agency tends to give money and not follow the money” in states and localities, he said. “I think a lot of frauds have already been missed.”

Staffing

Another safeguard to ensure that the funding is properly spent is that most of it goes through existing EPA programs, or those that are largely modeled after existing programs, such as the new clean school bus program from $5 billion, Hoover said.

“It’s an important distinction,” he said. “We have career staff with decades of experience running the program.”

The EPA is also working to double its corps of auditors, human resources staff, contractors, engineers and budget analysts across the country to implement and track spending, Hoover said. More than 100 EPA staff members are now primarily focused on infrastructure implementation, he said.

“It’s not that we’ve put together a team that does this, but we’ve got the whole agency on board to focus on this, and we’re making sure we have the right people in the right places,” said Hoover.

O’Donnell called on the EPA in December to improve its workforce capacity and capabilities to electronically manage its agency-wide grant portfolio.

Control panel started

The EPA has further created a Steering Committee comprised of all of its senior leaders, as well as “cross-functional teams with representatives from all of our offices,” to bring “a unique mindset to how we enforce the law, said Hoover.

This work may respond to a separate criticism that the Inspector General addressed to the agency.

In December, the watchdog said the Office of the Chief Financial Officer “continues to operate under an outdated silo-style risk management process, in which risks are assessed at the divisional level” without assessing whether those risks could affect the agency as a whole.

The first funding announcements are coming soon under the EPA’s Brownfields program, Hoover said. The agency has also requested applications for the clean school bus program and must submit an annual report by January 31 each year.

The EPA is also working on detailed guidelines for states on where and how to spend lead pipe replacement funding, according to Hoover. The Water Board is issuing guidelines on how to use the state’s revolving loan funds, but this year it will do so sooner than expected so states ‘can take them into account when planning their 2022 allocations,” he said.

“Reimbursable Loans”

Administration officials said about half of all revolving loan funds must be disbursed as “forgivable loans” or grants – a new development.

Many states said they had no plans to spend the money because they had not received instructions on where and how to spend the money.

Much of the infrastructure work will require federal permits — a process that business groups say will be slowed by the Biden administration’s plan to change national environmental permit rules.

Later this month, the White House will explain how the administration plans to integrate racial equity, climate change and labor concerns into how it distributes the money. It will also publish a guide for mayors and governors on how to apply for infrastructure funds.

Focus on the “big picture”

Hoover began his job as an EPA infrastructure supervisor in September. He described his role as making sure the agency “keeps tabs on the big picture” and coordinating with the White House implementation team and “supporting the administrator and the ‘deputy administrator when they convene the whole agency’.

He served as White House policy adviser under President Barack Obama and advised the chief of staff on climate change and energy. He also spent five years with the management consulting firm McKinsey & Co., where he worked on strategic planning and program implementation.

Hoover said the White House Implementation Task Force, led by former New Orleans Mayor Mitch Landrieu, is writing a “detailed inventory of each program’s needs,” working with agencies. federal authorities to move them quickly through the permit pipeline.

—With help from Courtney Rozen.