September 19, 2023. Last week, the Inspector General for the Environmental Protection Agency (EPA) appeared before the House of Representatives’ Subcommittee on Oversight and Investigations, Committee on Energy and Commerce to address his office’s planned work regarding the EPA’s Clean School Bus Program and its associated fraud risks. The Office of Inspector General is overseeing the $5 billion provided to the EPA for the program through the Infrastructure Investment Jobs Act (IIJA), which aims to replace existing school buses with clean and zero-admissions buses. According to the EPA, “school buses in the U.S. travel more than 4 billion miles each year, providing transportation to and from school for more than 25 million children every day … Most existing school buses emit pollutants, including nitrogen oxides and particulate matter in diesel exhaust.” Everyone is vulnerable to these pollutants, but children are especially so, due to their faster breathing rates and still-developing lungs, according to the IG’s statement. The plan was implemented in 2022 and will run through 2026 to provide grants and rebates to eligible recipients for replacing school buses. In awarding funds for clean school buses, the EPA may pay up to 100 percent of the costs for replacement of existing school buses with approved buses, as well as for charging or fueling infrastructure. The plan supports two different kinds of buses: zero-emission buses, which use electricity, and clean school buses, which run on propane, compressed natural gas, or electricity.
According to an EPA Congressional report, the EPA approved nearly $1 billion in rebates for 415 school districts to purchase 2,609 vehicles, which included 2,446 electric buses, 147 propane buses, and 16 compressed natural gas vehicles. For the rebate system, used in 2022, once a recipient provides a Payment Request Form with a copy of a purchase order, the EPA will issue the award to the recipient’s bank account to subsidize the purchase of zero-emission or clean school buses. For 2023, the EPA will distribute IIJA funds for the Clean School Bus Program via grants. Grants, unlike rebates, provide for additional controls over funds because money can be awarded on a reimbursable basis, after costs are incurred. Grant recipients are required to keep documentation of project progress and costs, and are subject to audit and improper payment testing, per federal requirements.
However, the Inspector General raised concerns about fraud, waste, and abuse at the hands of government contractors. He named four main avenues for fraud:
- The provision of funds to grantees or contractors
- The requirements for destroying replaced buses
- The increased risks presented by sub-programs
- Improper overlapping funding from multiple federal agencies
The first relates to increases in the risk that the funds be used improperly, such as short-term funding for an unrelated project or for unassociated loans. If using a third-party contractor, the risk of them illegally profiting from the system by not funding the school system correctly–or at all–increases. The second issue arises from the program’s requirement that buses manufactured in 2011 or later be scrapped, sold, or donated, and buses from 2010 or earlier be completely destroyed or scrapped. Fraud could easily occur if a recipient chooses to keep those buses to increase its fleet. The third risk revolves around the Clean School Bus Program’s two sub-programs. The School District Sub-Program serves school districts and tribal applicants. The Third-Party Sub-Program serves nonprofits and eligible contractors for school districts. This leaves grantees vulnerable to organizations that will not offer effective services and could be looking to take federal funding illegally. The fourth concern regards schools that receive funding from several different federal organizations, like the EPA, Department of Transportation, and Department of Energy. Schools in this position have the potential to fraudulently substitute or submit duplicate requests to multiple federal agencies for the same or very similar materials and associated labor.
The Inspector General stressed the importance of implementing safeguards against fraud, such as enhanced workplace planning for grants management staff, strengthened controls over grants, more effective monitoring of recipients, and accurate reporting of grant data. The most important factor in controlling fraud, though, is the diligence of grantees, most of whom are everyday employees within school networks. The EPA and other federal agencies rely on people who spot concerns or questionable behavior to blow the whistle and report them. Stopping fraud is everyone’s responsibility!
If you would like to report fraud by government contractors or grantees, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva was the Senior Counsel for Health Care Fraud. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Renée at [email protected] (tel.: 202-417-3664) or contact Eva Gunasekera at [email protected]. You can also go to Tycko & Zavareei LLP’s website for whistleblowers to learn more at www.fraudfighters.net.