Inspector General Report Cites Inefficiencies in EPA Clean School Bus Program

August 8, 2024

Carlie O'Brien, a school bus driver for School District 20 in Castlegar, British Columbia, charges an electric school bus. Photo courtesy of IC Bus.

A report published in late July by the U.S. Environmental Protection Agency Office of Inspector General found that the agency fell short when selecting recipients and providing oversight to verify requested funds for the $5 billion Clean School Bus Program.

“The EPA Needs to Improve Internal Controls for Selecting Recipients of Clean School Bus Program Funds,” is the second OIG report to be published since late December citing improvements the EPA needs to make to the program.

“EPA did not have sufficient internal controls in place to ensure that it selected recipients with eligible school buses,” the July 31 report states. “Additionally, the EPA did not provide oversight to verify that applicants requesting funds specifically for zero-emission school buses have school districts with suitable local conditions for these types of buses.”

The OIG report found that the EPA met all but one of the seven eligibility requirements to receive funding, that being ensuring that recipients’ existing and replacement buses meet eligibility requirements. Specifically, it states that the EPA did not require applicants to provide documentation to demonstrate the eligibility of their existing or replacement buses.

The other six requirements the EPA met were selecting eligible recipients; awarding half of the funds for electric school buses and the other half for propane school buses; considering the four criteria (lowest overall cost of bus replacement, local conditions, technologies that reduce emissions and cost parity with regard to technology) to make a programmatic decision regarding the funding pool; ensuring a broad geographic distribution of awards; ensuring that no state receives more than 10 percent of available funds in a fiscal year; and meeting goals of President Joe Biden’s Justice40 Initiative.

The Clean School Bus Program was created with the signing of the Bipartisan Infrastructure Law on Nov. 15, 2022. It provides $5 billion split evenly over five years for the replacement of zero- and low-emission school buses. As of June 2024, the EPA has released nearly $3 billion through 996 awards, amounting to about 8,500 school bus replacements, according to the Electric School Bus Initiative.

EPA also did not obtain all required documentation from applicants to receive funds for replacing older school buses. For example, EPA did not ask for vehicle titles and registrations for the buses being replaced during the 2022 rebate.

“The [a]gency, therefore, cannot at this time provide assurance that all the 2,394 clean and zero-emission school buses to be put into service as a result of the 2022 rebate competition will fully satisfy Clean School Bus Program requirements,” the report states, adding that the EPA did not correct the deficiency during the 2023 grant and rebate.

For the 2023 rebate, the EPA required applicants to submit only vehicle titles, not vehicle registrations. EPA also required model year, fuel type and gross vehicle weight rating for the subsequent 2023 competitive grant but did not require copies of vehicle titles, registrations or other supporting documentation.

Instead, the report stated that 2023 grant recipients were asked to self-certify that their existing school buses met agency requirements.

“If the EPA does not fully follow selection requirements and verify that replacement buses will operate as intended, the potential for fraud, waste and abuse increases,” the OIG concluded. “Additionally, the EPA did not provide oversight to ensure that selected recipients have school districts with the characteristics that are optimal for zero-emission school buses, such as a smaller geographic footprint and milder climate. The EPA, however, referred potential applicants to its federal partners, the Joint Office of Energy and Transportation and the National Renewable Energy Laboratory, for technical assistance.”

Additionally, the report added no oversight exists to ensure that suitable operating conditions for electric school buses exist within school districts that are applying for funds. Instead, the report stated that the EPA said that it is each applicant’s responsibility to assess the types of school buses that are suitable for its school district.

However, the report adds that the EPA did not require applicants to submit a suitability analysis or attestation as part of the CSBP applications. “Because it did not have this information, the EPA cannot provide assurance that all the 2,272 zero-emission school bus replacements funded via the 2022 rebate competition will be suitably and effectively operational in the 358 recipient school districts they will serve,” the report states. “It would be an inefficient use of IIJA money if some of the funded zero-emission school buses do not work well in the recipients’ school districts, as those funds could have otherwise been awarded to school districts with suitable conditions for zero-emission school buses.”

Recommendations

The OIG issued four recommendations to the assistant administrator for Air and Radiation to improve the CSBP program as stated in the report.

Issue guidance to Clean School Bus Program rebate and grant applicants on the types of documentation needed to support that their existing school buses are eligible for replacement and that replacement school buses will provide bus service for five years.
Require future rebate and grant applicants to provide sufficient documentation to support their applications, including documentation that their existing school buses are eligible for replacement and that replacement school buses will provide bus service for five years.
Update the standard operating procedures and trainings for application reviewers. The standard operating procedures and trainings should address confirming, before the EPA awards funds, the eligibility of applicants and their school buses, including that their existing school buses are eligible for replacement and that replacement school buses will provide bus service for five years.
Establish procedures to verify that, if an applicant is requesting program funds to replace existing school buses with zero-emission school buses, zero-emission school buses are suitable for the applicant’s school district.

According to the report the EPA agreed with the first recommendation and proposed a corrective action to update the program guidance by Nov. 30.

The agency agreed with the second recommendation but did not propose corrective actions that fully meet the intent of the recommendation, according to the OIG report.

“Instead of requiring applicants to provide sufficient documentation to support their applications, the Office of Air and Radiation said that they would instruct potential applicants about what materials to maintain, such as bus logs, to demonstrate school bus eligibility in the event of an EPA audit. According to the Agency, it would be burdensome to applicants to require them to provide bus logs, and reviewing bus logs as part of the EPA’s audits of recipients would yield more accurate results,” the report states, adding that the EPA plans to conduct audits on select, but not all recipients. “Without the submission and review of sufficient documentation, the EPA might award 14 funds to ineligible applicants. And, once awards are made, it would be difficult for the Agency to recover spent funds from recipients that are subsequently determined to not meet all eligibility requirements. Recommendation 2 is unresolved.”

The report stated that the EPA said it already completed the third recommendation. However, the OIG stated that the corresponding change did not fully meet the intent of the recommendation, thus the recommendation is unresolved.

The agency disagreed with the fourth recommendation.

“The Office of Air and Radiation stated that fleet owners are best positioned to know their unique needs, including routes and terrains,” the report states. “The Agency has developed a webpage for technical assistance and provided resources for conducting fleet and route analyses. While we agree that applicants have a responsibility to ensure that zero-emission school buses are suitable for their school districts, the Agency has an obligation to safeguard federal funds by instituting internal controls to ensure such suitability. Recommendation 4 is unresolved.”

The OIG report adds that EPA does not collect contractual agreements between contractors and school districts as they relate to the school bus replacement and providing service to that district for five years. The report states that the agency should determine what documentation is needed.