Recently, a fascinating audit report was released that highlights only a small sample of the waste, fraud, and abuse uncovered in the Environmental Protection Agency’s (EPA) handling of the State Revolving Fund under the Biden administration. This puts additional perspective on the agency throwing “gold bars off the Titanic” in the waning days of the previous president.
The audit’s findings of improper and unknown payments illustrate how weak documentation, poor oversight, and misclassification of transactions can rapidly erode program integrity and public trust.
Topline: The Environmental Protection Agency “did not follow standard operating procedures” for reviewing its spending and underestimated its improper payments in 2022 and 2023, according to Jan. 29 audit from the EPA inspector general.Key facts: Improper payments are those sent by the government for the wrong reason, the wrong amount or to the wrong person. Every year, federal programs review a sample of their payments to estimate how much was spent improperly.In 2022 and 2023, the EPA reviewed 751 payments from its two state revolving funds, which help states pay for clean drinking water and wastewater infrastructure. They determined that only 31 of the payments were improper.That was inaccurate, according to the latest audit.
The report finds that the EPA did not consistently identify, document, or report improper and “unknown” pay “ents in “its State Revolving Fund (SRF) annual reviews, resulting in significant underreporting of risk. The audit sampled 20 items and found significant issues with 19 of them.
The EPA did not appropriately identify unknown and improper payments or properly track them for reporting and resolution, which resulted in the Agency’s regions underreporting unknown and improper payments by approximately $54.4 million for fiscal year 2022 and $8.8 million for fiscal year 2023 for the transactions we reviewed. We reviewed 20 transactions selected from the 751 transactions the Agency sampled during its annual reviews and found errors in 19.During the EPA’s review of state revolving fund transactions, regional staff accepted unapproved or unsigned construction invoices and summary data rather than individual invoices to support payments made from the State Revolving Fund Program. According to the Payment Integrity Information Act, if an agencycannot determine whether a payment is proper or not because there is a lack of or insufficient information, the agency must treat that payment as improper.
A detailed review of the transactions showed that millions of dollars that were identified as proper were actually misclassified.
Even though the EPA correctly reported eight improper payments worth $226,326 for FY 2022, it did not properly report two improper payments worth $1.2 million that the Agency had identified as improper during its testing. All improper payments and resolution, whether discovered by the region, the state, or its auditors, must be reported in the PER and to EPA headquarters.
The Office of Inspector concluded that, without proper identification and tracking of improper and unknown payments, the EPA cannot reliably determine whether state loan programs are working as intended or whether SRF controls are operating effectively.
The report recommends that the Office of Water reevaluate its (laughably named) Payment Integrity Information Act risk assessment for the SRFs in light of the underreported amounts, revise and enforce transaction-testing guidance, and strengthen oversight to ensure that improper and unknown payments are tracked, resolved, and accurately reported to headquarters.
While the specific examples in this audit focus on a limited set of transactions, they point to broader systemic problems that were further expanded upon and deepened during the Biden administration, when lax controls and permissive management practices allowed these issues to grow rather than be corrected.
As an additional bonus, the competency of those implementing the program may have been impacted by Team Biden’s Diversity, Equity, and Inclusion hiring practices.
This audit should serve as a wake‑up call, not just about one program or one administration, but about a pattern of financial abuse that has flourished for decades under the banner of “environmenta” protection.” The State R” volving Fund findings are not outliers; they are a clear window into how billions in public money can be shuffled, misclassified, and effectively unaccounted for while agencies insist they are safeguarding the planet. When basic controls like signed invoices, clear documentation, and honest reporting are treated as optional, taxpayers are left funding a system that cannot even prove its own integrity.
For years, Americans have been told that ever‑expanding environmental spending is both urgent and unquestionable, even as oversight repeatedly exposes sloppy management, weak internal controls, and improper or “unknown” pay “ents th “t would never be tolerated in the private sector. This culture of casual stewardship—where missing paperwork and misreported millions are brushed off as technicalities—has allowed waste, fraud, and abuse to become baked into the machinery of environmental bureaucracies. Programs that should be tightly focused on clean water, real infrastructure, and measurable outcomes instead become vehicles for political agendas, patronage, and rushed grant‑making.
Sadly, all other programs designed to promote the well-being and protection of Americans likely face the same issues.
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