PODCAST TRANSCRIPT: EPA OIG INVESTIGATIVE PRIORITIES

JENNIFER: Hello and welcome to this podcast by the EPA Office of Inspector General. My name is Jennifer Kaplan and I work within the OIG’s Office of Congressional and Public Affairs. I’m joined by Michael Sparks, who is a special agent in charge in the OIG’s Office of Investigations and also serves as our national director for infrastructure investigations. Thank you for talking with me, Michael.

MICHAEL: It’s a pleasure to be here, Jennifer.

JENNIFER: Inspector General Sean O’Donnell has designated 2024 the year of innovative fraud-fighting. For the first time, the OIG has issued a public document outlining four investigative priorities. I’m going to ask you to walk me through those.
But first, let’s take a minute to discuss the mission of the Office of Investigations. OIG special agents investigate allegations of fraud, waste, abuse, and misconduct that have an impact on programs and operations of the Environmental Protection Agency or the Chemical Safety Hazard Investigation Board. Is that accurate?

MICHAEL: That’s right, Jennifer. The allegations we investigate include, but are not limited to, potential financial fraud, employee integrity issues, cybercrime, laboratory fraud, theft of property or funds, and money laundering. We also work to safeguard the water sector from threats by cyber criminals, adversarial nation states, and terrorists. OIG special agents are part of a federal law enforcement team. We are authorized to make arrests, serve subpoenas, and carry firearms to successfully accomplish our jobs.

JENNIFER: The OIG is responsible for conducting oversight activities nationwide as well as in the U.S. territories. Can you say a little bit about our investigative approach?

MICHAEL: Sure. The Office of Investigations essentially conducts three types of enforcement: criminal, civil, and administrative. Our jurisdiction is vast, stretching from the U.S. protectorate of Saipan in the Pacific to Maine in the Northeast and from Alaska down to Puerto Rico. We focus our work on the greatest risks to American tax dollars and the security of the water sector as well as on the integrity of the EPA’s and Chemical Safety Board’s respective missions. 

JENNIFER: You mentioned civil and administrative enforcement in addition to criminal.

MICHAEL: Yes, some crimes violate civil, rather than criminal, laws. And sometimes an investigation reveals that an EPA or Chemical Safety Board employee circumvented agency regulations, rules, or policies but didn’t break any federal laws. Those are known as administrative violations.

JENNIFER: Thank you, Michael, for the helpful background. That brings us back to the OIG’s investigative priorities for 2024. What are they?

MICHAEL: We have four priority areas. They are Environmental Infrastructure, Grant Fraud, Program Fraud, and Laboratory Fraud.

JENNIFER: Okay, I want to dive into those one at a time. The American taxpayers have made an enormous investment in environmental infrastructure, which is heavily weighted to clean water initiatives, including those that support drinking water production and delivery, as well as the treatment of wastewater.

MICHAEL: Yes. The EPA is responsible for billions of dollars tagged for water improvement projects. Under various statutes, the Agency is providing low-cost loans and other financing options for work being done at local, state, regional, and national levels. Many of these activities involve a partnership between the EPA and state revolving funds – so we also work closely with state government agencies.

JENNIFER: How do the OIG’s investigations come into play?

MICHAEL: Projects of this financial scale leave the door wide open for potential fraud and public corruption. We’re looking for criminal and civil allegations related to water systems that have received EPA funding, as well as subrecipients and contractors who may engage in practices such as bid rigging, substituting building materials, and misrepresenting the quality of building materials. We’re also looking out for violations of Build America, Buy America restrictions on materials used in construction – specifically, obscuring the country of origin.

JENNIFER: Thank you. Investigative priority #2 is grant fraud. What’s that all about?

MICHAEL: Well, the EPA also oversees billions of dollars in grants that fund environmental research, cleanup technologies, land remediation, and climate change mitigation. Two laws passed over the last couple of years, the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, have entrusted an additional one hundred and two billion dollars to the EPA, significantly increasing the size and scope of these grant programs. A huge percentage of that money will go to only two or three nonprofit entities to help finance clean technology projects. Again, where there is money, there is a high risk of fraud, especially when funds are spread among numerous recipients and subrecipients over a short period of time. We can expect instances of bribery, public corruption, bid rigging, false claims, product substitution, and labor and materials over-charging.

JENNIFER: Wow, that’s a pretty specific list.

MICHAEL: Yes, as experienced fraud-fighters, we can anticipate and recognize typical schemes. The Office of Investigations also takes proactive data driven analysis and outreach measures to prevent fraud from happening. We have and will continue to offer fraud awareness briefings for EPA employees, grant recipients, tribal leaders, and contractors.

JENNIFER: What types of topics do those briefings cover, Michael?

MICHAEL: We share knowledge about how to recognize the signs of fraud, the process for reporting it, and protections for whistleblowers who report wrongdoing to the OIG.

JENNIFER: Great. Moving on, investigative priority number 3 is program fraud. What does that mean?

MICHAEL: OIG investigations have several key goals relating to EPA and Chemical Safety Board programs, operations, and policies. There is a lot of legal language governing our work in this area. But broadly speaking, to reiterate, we’re looking to prevent and detect fraud and abuse. We must ensure that programs and operations are administered economically, efficiently, and effectively.

To give a few examples of fraud indicators, there are sometimes signs that a program’s intended purpose is being undermined. We may find billing of unnecessary labor and materials or false certifications of Superfund site remediation. Program fraud also may include concealing hazardous environmental situations or outright avoiding obligations to conduct necessary cleanup activities under the EPA’s oversight. When designated dollars or execution of a program is diverted from its intended purpose, the ultimate beneficiaries lose out. In many cases, these beneficiaries live in underserved communities EPA and the OIG are charged with protecting.

JENNIFER: Michael, can you provide an example of program fraud rooted out by an OIG investigation?

MICHAEL: Sure. Many people will recognize the name of the Energy Star Program. It’s a public-private partnership that promotes the use of energy-efficient products and buildings. As part of that program, the EPA helps to oversee the certification of newly constructed homes as meeting certain energy efficiency standards. A company doing business as Skyetec, headquartered in Jacksonville, Florida, signed on with the EPA to conduct those new home inspections and report to the Agency all homes it certified as Energy Star.

JENNIFER: I think you’re going to tell me that Skyetec did not fulfill that responsibility.

MICHAEL: Correct. Unfortunately, an OIG investigation uncovered that Skyetec’s reviews over about eight years failed to include an essential pre-drywall inspection. Meanwhile, Skyetec knowingly and intentionally made false statements that it had, in fact, properly performed these thermal bypass inspections.

JENNIFER: So, homes certified by Skyetec as Energy Star actually may not have met Energy Star requirements? 

MICHAEL: Exactly, Jennifer. The thermal bypass inspection is important for verifying the presence and installation quality of insulation, alignment of air barriers, and the presence of prescribed framing and a proper overall seal. Skyetec wasn’t looking for any of those things.

JENNIFER: What happened after the OIG investigation?

MICHAEL: The company agreed to pay two point three five million dollars in civil penalties to resolve the allegations.

JENNIFER: Thank you, Michael. Just to be clear for our listeners, the agreement with the company contains a statement that the settlement is neither an admission of liability by SkyeTec nor a concession by the United States that its claims are not well-founded.

That brings us to the fourth and last investigative priority, laboratory fraud. Can you elaborate?

MICHAEL: Certainly, Jennifer. Laboratory fraud investigations are about misconduct involving EPA’s laboratory and related contractor work. Misconduct might take the form of laboratory personnel who tamper with test samples or falsify results relating to water quality, air quality, Superfund remediation measurements, and data sold to the EPA. Contractors and EPA laboratories can be motivated to intentionally misrepresent results for a variety of reasons, such as to earn contract incentives, avoid being shut down, increase their profits, deliver on a policy or political goal, or even to limit their operating costs.

JENNIFER: It’s frightening to realize that lab results published from studies about such important areas as environmental protection and public health can be based on fraud. How does the EPA fit into this picture?

MICHAEL: The EPA relies on legitimate scientific work conducted in laboratories to make decisions, monitor regulatory compliance, and carry out enforcement actions. By extension, the public depends on laboratory studies that, to a great extent, guide the EPA’s work contributing to human health and environmental protection. Fraud undermines all of those critical needs and wastes tax dollars that are invested into research programs funded through the EPA.

JENNIFER: Listeners may be wondering what happens after the OIG completes an investigation that uncovers wrongdoing.

MICHAEL: Right. Every case concludes with a report of investigation. If we’ve found criminal violations, we present our findings to the U.S. Department of Justice, which decides whether to pursue a prosecution. In the event of administrative violations, we send our report to officials at the EPA or the Chemical Safety Board to take appropriate action.

JENNIFER: In closing, Michael, how will the OIG’s Office of Investigations use its new set of investigative priorities?

MICHAEL: To recap, for 2024, the Office of Investigations has determined that Environmental Infrastructure, Grant Fraud, Program Fraud, and Laboratory Fraud pose the greatest risks to the EPA and CSB’s work and the public we all serve. To this end, we are already using our investigative priorities to focus our investigators and investigations nationwide on these areas with the expectation that we can mitigate negative impacts to the integrity of EPA programs and operations. The Office of Investigations is 100 percent committed to using data-driven and innovative approaches to fighting the fraud that threatens EPA and Chemical Safety Board work. We look forward to making great cases.   

JENNIFER: Special Agent in Charge Michael Sparks, thank you again for discussing the EPA OIG Office of Investigations’ 2024 investigative priorities with me. Listeners, thanks for tuning in. You can find this report, and other OIG work, on our website at www-DOT-epaoig-DOT-gov.
To report potential fraud, waste, and abuse to the EPA OIG, please call our hotline at 888-546-8740, send an email to OIG-DOT-hotline-AT-epa-DOT-gov, or submit a complaint form via our website.