EPA to Greendoggle Grantees: ‘Take the Money and Run’

“Here’s a few billion from the taxpayers. We’ll iron out the details later.” 

Watchdog Protect the Public’s Trust (PPT) has obtained records that provide a look into possible cronyism and corner-cutting in the Environmental Protection Agency’s (EPA) mad dash to shovel taxpayer money out the door as the curtain fell on the Biden administration. The new records unearth a formerly unknown wrinkle in the process a former EPA official characterized as throwing “gold bars off the Titanic.”

In 2022, as part of the “Inflation Reduction Act,” the EPA was showered with $27 billion to make grants through the Greehhouse Gas Reduction Fund (GGRF), with the proviso that the appropriation would expire at the end of the federal government’s 2024 fiscal year, September 30, 2024. One segment of this program, the $14 billion National Clean Investment Fund (NCIF) was the subject of a recent PPT report, ‘These Numbers Don’t Make Sense’: The Shocking Weakness of EPA’s GGRF Award Process. 

These new documents show EPA officials apparently rushing haphazardly to try to commit the funds, fearing that a potential Trump administration would seek to reverse the spending. EPA came up with a plan to “finalize” award agreements in order to “obligate” funds ahead of the expiration date, apparently with the full expectation of revising those agreements afterward. An Office of GGRF slide show presentation for grantees proposed to incorporate “[f]inal T&C’s [Terms & Conditions]” and “[f]inal workplans / budgets” into the award agreements during the summer of 2024. Yet EPA candidly stated that the parties “need to accept that not all questions will be answered prior to [grant] award.” A subsequent slide in the presentation proposed a “timeline to resolve outstanding issues through December 31, 2024 after obligating funds.” [Emphasis added.] The timeline included provisions to “Revise Terms & Conditions” and “Revise Workplans / Budgets” well past the September 30, 2024 “expiration date.” But what’s a few billion in taxpayer money between friends? (The grantee organizations were full of Biden administration alumni and political allies.)

EPA commiserated with grantees over “the requirement to disburse funds into actual and allowable project costs is challenging  . . .”  Undeterred, the parties discussed using a third-party bank to hold the billions as “a financial agent of the Treasury,” albeit in interest generating accounts for the benefit of the grantees, and to be drawn down “as nonexchange capital contributions.” (The idea apparently originated with a grantee.) This would put the grants at a remove from a Trump administration, allow the grantees to recognize the full amount of the award on their balance sheets as restricted cash, and further leverage the taxpayer dollars, even though the money might not have been disbursed into “actual and allowable” project costs. EPA and the grantees seemed to believe the taxpayer funds should be working hard for the grantees. The resulting scheme is how the “gold bars” ended up in Citibank accounts.  

An email from the COO of one the largest grantees drafted to former Obama EPA Administrator Carol Browner and forwarded to EPA urged the agency not to impose any liens on grant funds to assure performance of the grant agreements. It also suggested that if the government were to exercise its right to terminate the agreement with the bank, the termination would “trigger immediate release of the accounts to the [grantees] with no further restriction.” 

The grantees were so confident in their relationship with EPA that they presented seven “pre-award dealbreakers” to which EPA apparently felt obliged to respond. 

In addition, at the very time EPA was considering re-negotiating the agreements after obligation, the agency seems to have skirted a direct question from a reporter about an estimated date for completion of contract negotiations. In response to a related series of questions from an E&E News reporter, the agency explained,

 

“While GGRF is an uniquely innovative and flexible program, the office has drawn from other established and new EPA programs in which non-profit intermediaries provide subawards, including the Environmental Justice Thriving Communities Grant Program and the Brownfields Revolving Loan Fund Grant Program.

 

This response raises even more questions about the design and EPA’s ability to properly oversee the program. At $15 million, the Brownfields Revolving Loan Fund Grant Program is less than one-thousandth the size of the GGRF, hardly a basis for comparison. The Environmental Justice Thriving Communities Grant Program was a new program with virtually no track record when the GGRF was created. According to media reports, some of the funds nominally for “environmental justice” ended up in the hands of highly questionable subawardees.

“At the end of the Biden administration, the EPA’s ethical sense had capsized and was taking on water” PPT Director Michael Chamberlain said. “We know the government doesn’t run in the rational way businesses must, but for the government to tell awardees, ‘Here’s the money, we’ll get back to you on the rules that go with it’ is mindboggling. Taking self-benefitting suggestions from the grantees pushes it into the realm of the absurd. And the public’s trust in government virtually evaporated during the Biden administration.” 

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