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s	U.S. Environmental Protection Agency	2007-2-00039
£ %M \ Office of Inspector General	September 25,2007
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%; At a Glance
Why We Did This Review
The U.S. Environmental
Protection Agency (EPA)
Office of Inspector General
(OIG) conducted a review of
earmarked grants known as
Special Appropriation Act
Projects issued to local and
tribal Governments. The City
of Middletown, New York,
was selected for review.
Background
The City of Middletown
received an EPA Special
Appropriation Act Project
grant, XP98284701. The
purpose of the grant was to
provide Federal assistance of
$433,700 for the procurement
of equipment for the grantee's
drinking water treatment plant.
The City of Middletown was
required to provide local
matching funds equal to
49 percent of the EPA-
awarded funds.
Catalyst for Improving the Environment
Ineligible Federal Funds Drawn on
EPA Grant No. XP98284701 Awarded to the
City of Middletown, New York
What We Found
The City of Middletown (grantee) claimed costs that were incurred prior to the
timeframes provided for in Office of Management and Budget Circular A-87 and
the Special Appropriation Act Projects guidance. These guidelines indicate that
costs are eligible as of the beginning of the fiscal year when funds are
appropriated. The grant funds were appropriated in Fiscal Year 2003; therefore,
preaward costs incurred after October 1, 2002, were eligible for reimbursement.
However, the grantee incurred the entire $853,002 in total project costs prior to
October 1, 2002. Also, the grant conditions only approved preaward costs 90 days
prior to the grant award. The costs claimed by the grantee were incurred
approximately 15 months prior to the grant award date. As a result, all costs
claimed under the EPA grant are ineligible for Federal reimbursement and grants
funds of $433,700 must be repaid.
What We Recommend
We recommend that the EPA Region 2 Regional Administrator require the City of
Middletown to repay the $433,700 in Federal funds drawn.
For further information,
contact our Office of
Congressional and Public
Liaison at (202) 566-2391.
To view the full report,
click on the following link:
www.epa.aov/oia/reports/2007/
20070925-2007-2-00039.pdf

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