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Follow the money: Tracking federal grants

By Paul M. Weyrich
web posted November 15, 2004

Candidates for public office often promise, usually rather vaguely, how they will spend Federal taxpayers' money. Certainly, this past campaign was not exception. Now that the campaigning is over with, it's time for those citizens who truly care about our country and its fiscal health to start asking their Senators and Representatives what they are doing to assure our tax dollars are being spent properly.

This is a common sense idea and yet it is a radical suggestion. Too often politicians are quick to take credit for starting new programs. After the legislation is signed into law, they too often never exert any effort to ensure that the new programs are being implemented correctly. A lack of effective oversight by Congress and political appointees too often allows bureaucrats very wide largess.

Senator Jim Inhofe (R-OK), Chairman of the Environment and Public Works Committee, takes a different approach. He has been relentless in uncovering and exposing the deep-seated problems with the grant-making process at the Environmental Protection Agency (EPA). For years the lack of accountability in the grants management process at EPA has been the subject of critical reports within EPA and by oversight agencies, such as the Government Accountability Office (formerly known as General Accounting Office). New orders were unveiled in 2002 and 2003 to instill greater competition in - and stronger oversight and strategic management of -- the grants process. EPA grants are not pocket change: EPA's Grant Management Plan 2003-2008 says that over half of the agency's budget is parceled out in grants to "State, local, tribal, educational, and non-profit partners."

Non-discretionary grants, which are mandated by Congress to be given to entities that meet specific eligibility criteria, represented $3.5 billion in fiscal year 2002. Discretionary grants, those in which EPA officials have leeway in deciding who receives them, represented nearly $720 million in that fiscal year. The latter grants have been troublesome ones because EPA officials have enjoyed in the past a great of discretion. The Plan notes that EPA awards grants largely to "non-profit organizations, universities, and governmental entities."

The Plan called upon EPA to institute greater competition in awarding grants, stricter standards in the development of grant proposals, and stronger benchmarks to ensure greater oversight and accountability in tracking the progress of the grants. Technology would be used more effectively to monitor grants.

Even sincere efforts at government reform move slowly, particularly given the fact that personnel policies often are resistant to changes. Thus, it was not surprising that action as well as critical reports would be needed to ensure the plan's success. John B. Stephenson, Director of Natural Resources and the Environment at the Government Accountability Office, in a prepared statement presented before a March 3, 2004 hearing of the Environment and Public Works Committee, said the reforms had "mixed results" in part due to "insufficient management attention." Stephenson delivered a statement that provides an illuminating glimpse of how the old EPA system worked:

EPA's September 2002 competition policy should improve EPA's ability to select the most qualified applicants by requiring competition for more grants. However, effective implementation of the policy will require a major cultural shift for EPA managers and staff because the competitive process will require significant planning and take more time than awarding grants noncompetitively.

Stephenson's statement made clear that strong oversight from within EPA and by Congress was necessary to make sure the April 2003 five-year grants management policy with its "objectives, goals, and milestones for addressing grants management challenges" would be successfully implemented.

Testifying before the Environment and Public Works Committee, Stephenson told Inhofe that he thought the most troublesome grants to monitor were the so-called "discretionary" grants; non-discretionary grants have more precise formulas to follow in determining how they are distributed and to whom.

This exchange between Senator Inhofe and the EPA's Assistant Inspector General Melissa Heist is also revealing:

Senator Inhofe: "You are testifying that the EPA mismanagement of only discretionary grants costs the taxpayers hundreds [sic] of millions of dollars each year?"
Ms. Heist: "Of predominantly 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. Predominantly, that is where we found the problems, so we continue to focus in that area."

To his credit, Senator Inhofe truly believes that his mission in chairing the Committee is to provide oversight. He has worked with EPA Director Michael Leavitt to achieve greater accountability in grants management. EPA now posts the grants it awards on its website, a step undertaken at the urging of Senator Inhofe. Those that are awarded also can be searched by type of recipient.

There has been a relationship between the EPA and environmental groups that is very unusual. The details can be found in a report issued by the Committee Majority Staff in September called "Grants Management At The Environmental Protection Agency: A New Culture Required To Cure A History of Problems."

The Natural Resources Defense Council, Inc.(NRDC), a 501(c)(3) non-profit, has received nearly $6.5 million in discretionary grants from the EPA since 1993. The EPA concedes that all the discretionary grants awarded NRDC probably were awarded without competition. One EPA grant for $390,000 awarded to NRDC was for a report on energy-efficient buildings in Russia. At the same time, the NRDC is very involved in politics through its 501(c )(4) lobbying and 527 political organizations.

EPA's Office of Air and Radiation awarded a grant to NRDC totaling nearly $1.2 million to work with manufacturers on developing energy-efficient products. The report says the EPW staff discovered "the grant was awarded without solicitation of 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, apparently 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."

Contrast this essential giveaway to NRDC with the peer review process utilized in awarding a grant from the EPA Office of Research and Development to the World Wildlife Fund. The grant was advertised in newspapers and the EPA website. Twelve proposals were submitted. The peer review panel consisted of representatives from EPA, the National Oceanic and Atmospheric Administration, and Harvard University, not just one EPA official. Only five of the twelve proposals received grants.

The foundation of the Consumer Federation of America (CFA) received money to work on projects under the Clear Air Act. However, the EPA Office of Inspector General in a March 1, 2004 report made clear that part of the grant was funneled to the CFA lobbying organization. Should that be allowed? This is what the EPA Office of Inspector General determined in its March 1, 2004 audit report:

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 the costs claimed and paid under the agreements are statutorily unallowable.

The report notes that the World Resources Institute has received EPA grants amounting to over $8 million since 1993. "EPA acknowledges that all $8.1 million was likely awarded without solicitation and competition with other potential recipients," the report states.

Inhofe is troubled by the fact that many of the groups covered in the report are political groups rather than true policy organizations. Imagine the outcry if Christian Coalition received funding from Health & Human Services to administer a large grant, awarded without competition, and then some of the funds were shuffled from the educational arm to its lobbying organization and PAC. That would be a sure bet to make the front section of The Washington Post as soon as it was uncovered. These tricks with your tax dollars have been allowed to continue for years at EPA, yet the findings of Senator Inhofe and his Committee's majority staff draw nary a mention from the mainstream press. Fortunately, what the establishment journalists refuse to see -- or overlook -- is now beginning to be picked up by the conservative news networks. However, the word needs to spread further.

Many politicians will tell you that they are spending your money on programs that have nice, impressive-sounding names. Few politicians tell you what they are doing to rein in spending or to assure your tax dollars are being spent wisely and in the manner that Congress intended when it appropriated the money. Citizens must start demanding real results in cutting wasteful spending and programs. More than that, we need to have a thorough review of the Federal appropriations process.

Senator Sam Brownback (R-KS) and Rep. Todd Tiahrt (R-KS) have introduced bills that would establish a Commission on the Accountability and Review of Federal Agencies (CARFA) to oversee discretionary spending. The Commission would make recommendations regarding consolidation or elimination of Federal programs. Those recommendations would be submitted to Congress for a straight up-or-down vote.

"Consumer beware" is sound advice. "Citizen beware" is good advice when it comes to permitting Washington bureaucrats to spend your dollars as if they were play money. An aroused citizenry that demands greater accountability and oversight can make a real difference by demanding that public officials support real efforts to instill greater accountability and oversight to stop the Washington spending spree.

Paul M. Weyrich is Chairman and CEO of the Free Congress Foundation.

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