Takeaways from GGRF Oversight Hearing

On January 30, 2024, the U.S. House Committee on Energy and Commerce held a hearing with the Environmental Protection Agency (EPA) to examine various aspects of the Greenhouse Gas Reduction Fund (GGRF).

The hearing included some members of the House Committee voicing concerns about the large number of dollars in the program and the desire to see the dollars spent wisely.  Specific topics of discussion in the hearing included the process for selecting recipients, oversight of the program, fraud prevention, and measuring impact/success of the program.

The hearing provides insights for potential GGRF recipients on how their programs may be scrutinized and how to minimize risk and maximize impact. Below are four take-aways for potential GGRF recipients as they continue to develop their programs.

1. EPA outlined four lines of defense for providing oversight use of funds

• EPA is implementing a rigorous selection process. Members of the committee expressed concerns that some Clean Communities Investment Accelerator  and National Clean Investment Fund applicants are new organizations without established systems and processes to manage a large amount of federal funding. EPA stressed that its application process was robust and either considered an applicant’s past performance in the case of an existing organization, or the expertise of coalition members for new organizations. The committee members’ questions highlight the need for direct recipients to build internal capacity and capability quickly and set the conditions for a successful program.

• EPA will assign a career project officer to manage the grant. This person will be responsible for administering the grant’s terms and conditions, including financial and administrative reporting requirements.

• EPA’s GGRF program office will review the standard reporting and audits and conduct additional audits, as necessary. Grantees must be prepared to establish flexible processes to meet evolving audit and reporting requirements. Additionally, systems and processes must consider requirements to monitor and audit subrecipients and ensure the grantee can consolidate “bottom-up” data to comply with federal reporting requirements.

• Office of the Inspector General will conduct its own oversight and audits.

2. Compliance with Build America, Buy America will be a substantial focus of oversight

• Build America, Buy America (BABA) requires that all iron, steel, manufactured products, and construction materials used in federally funded projects for infrastructure must be produced in the United States. EPA will include BABA compliance as a part of its oversight and audit process. Grantees should consider what technical assistance they need, or their subrecipients need, to understand, adhere to, and report on these requirements.

3. Recipients and subrecipients should expect to be subject to congressional inquiries

• A recurring theme during the hearing was concern about EPA’s ability to monitor the program beyond the direct recipients. Recipients and subrecipients should both be prepared to respond to congressional inquiries during the period of performance on specific portions of their program.
  
  4. Oversight will be looking for evidence that the funding resulted in measurable reductions in greenhouse gas emissions

• Awardees can expect EPA to monitor the program's environmental outputs and outcomes (i.e., climate and air pollution benefits, equity and community benefits, market transformation benefits). This requirement makes it critical to have systems and expertise in place to validate greenhouse gas reduction and measure environmental, social, and economic impact once EPA begins to distribute funds.
  
  

In summary, recipients and sub-recipients under GGRF should expect that they are going to face robust oversight and audits and will be held to a very high standard, not only for their impact, but for their internal controls and ability to evidence their design and operating effectiveness. Guidehouse brings extensive experience working with high-profile, high-dollar financial programs subject to intense audit and oversight scrutiny. Guidehouse has more than 15 years of experience bringing a combination of agility with a tight wrapping of internal controls and good risk management practices to enable the programs to stay focused on the mission and minimize reputational risk, which can end up eroding program effectiveness.