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*	U.S. Environmental Protection Agency	08-P-0121
| JD ^ Office of Inspector General	March 31 2008
At a Glance
Why We Did This Review
The U.S. Environmental
Protection Agency's (EPA's)
Office of the Chief Financial
Officer and some members of
Congress expressed concerns
related to unliquidated
balances in the U.S.-Mexico
Border Program (Border
Program). Our audit objective
was to answer the question:
Does EPA's U.S.-Mexico
Border Program have
adequate controls for
obligating and using water
infrastructure grant funds?
Background
EPA provided $626 million in
assistance agreements (grants)
for water infrastructure
improvements (both drinking
water and wastewater) along
the U.S.-Mexico border for
projects starting between
Fiscal Years 1997 and 2007.
EPA coordinates and works
with the Border Environment
Cooperation Commission and
the North American
Development Bank to ensure
border projects are designed
and constructed to achieve
environmental results.
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/2008/
20080331-08-P-0121.pdf
Catalyst for Improving the Environment
Improvements Needed to Ensure Grant Funds
for U.S.-Mexico Border Water Infrastructure
Program Are Spent More Timely
What We Found
From 2005 to 2007, EPA took actions to implement timeframes for Border
Program projects, reduce the scope of projects, and reduce unliquidated
obligations of projects. However, EPA needs to make additional changes to the
process it uses to manage the funds Congress appropriates for water
infrastructure improvements along the U.S.-Mexico Border. In Fiscal Years
2005 and 2006, EPA awarded $35.1 million to the North American
Development Bank to construct Border Program projects that could not be built
until they were planned and designed, which takes about 2 years. Since 1998,
the Bank has accumulated an unliquidated balance of $233 million because EPA
awarded grants to construct projects before design was complete. EPA
managers told us they provided grant funds in advance to ensure funds were
available to build projects once planning was completed. EPA staff also said
they felt pressured to obligate the money to avoid a reduction in program
funding. If this process continues, between $34 and $57 million of the funds
Congress appropriated for the program in Fiscal Years 2007 and 2008 will not
be needed until Fiscal Year 2010 or beyond.
Region 6 Border Program grant work plans did not include specific projects,
measures, milestones, or costs associated with projects. The work plan for EPA
Region 9's Fiscal Year 2006 grant included total cost of projects, but did not
include sufficient detail about how much the grant funded for the projects. EPA
requires that all grant work plans contain objectives, specific tasks, a schedule or
milestones, project measures, and detailed budgets. When EPA awards grants
with work plans that do not fulfill all requirements, there is an overall reduction
in accountability for the projects and funding.
What We Recommend
We recommend that EPA:
•	Require project planning and design be completed before awarding grant
funds for construction,
•	Develop a plan to fund other projects with the unobligated funds, and
•	Prepare work plans that contain required project information.
With one exception, EPA generally concurred with our recommendations.
However, EPA expressed reservations about being able to make changes to the
program without all stakeholders agreeing on how projects should be funded.

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