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Office of Inspector General
At a Glance
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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 Fallon, Nevada, was
selected for review.
Background
The City of Fallon received
two EPA Special
Appropriation Act grants.
Grant X98981901 provided
Federal assistance of
$1,073,900 for the study of
arsenic in drinking water and
for design of a treatment plant.
There was no match
requirement. Grant
XP97914901 provided Federal
assistance of $5,785,740 for
design and construction of a
drinking water treatment plant.
The City of Fallon was
required to provide local
matching funds equal to
45 percent of the EPA-
awarded funds under Grant
XP97914901.
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.qov/oiq/reports/2007/
20070926-2007-2-00040.pdf
Catalyst for Improving the Environment
Cost and Lobbying Disclosure Issues Under
EPA Grant Numbers X98981901 and XP97914901
Awarded to the City of Fallon, Nevada
What We Found
The City of Fallon (grantee) did not meet the Title 40 Code of Federal Regulations
Part 31 requirements for financial management systems. In particular, the grantee:
(1) claimed pre-award costs in excess of the eligible amount, and (2) did not
support matching costs claimed under EPA grants. As a result, EPA will need to
recover $350,916 under grant number XP97914901. The grantee also did not
disclose any lobbying activity to EPA even though the grantee contracted with
three lobbyists.
What We Recommend
We recommend that the Regional Administrator, EPA Region 9:
1.	Recover $350,916 under grant number XP97914901 consisting of:
a.	$311,607 in unallowable pre-award costs, and
b.	$39,309 in unsupported matching costs.
2.	Determine whether the grantee complied with Title 31, U.S. Code, Section
1352 in the lobbying disclosures made under grant numbers X98981901 and
XP97914901. For those instances where it is determined the grantee did not
disclose lobbying activity, the Region should refer the matter to the
Department of Justice for further action.

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