New Jersey Flunks Audit on Federal Stimulus Funds

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New Jersey Flunks Audit on Federal Stimulus Funds

Two-Thirds of Leaking Underground Storage Tank Clean Up Work Left Undone

Trenton — New Jersey greatly underperformed its commitments for using federal dollars to clean up leaking underground storage tanks, according to a new U.S. Environmental Protection Agency Office of Inspector General audit. Aggravating the failures, the state Department of Environmental Protection (DEP) blew off Buy American requirements for materials and shirked prevailing wage rules.

The June 4 audit report looked at federal stimulus funds given as a $4.8 million grant to New Jersey DEP for work assessing and cleaning petroleum leaks from underground storage tanks from 2009 to late 2012. It found that even though DEP revised promised objectives downward by 60% during this period, it still –

  • Failed to clean up two-thirds (65%) of the leaking tank sites it promised;
  • Brought none of the promised cost recovery actions against responsible parties; in the words of the audit, “Actual accomplishment was zero (100% not met);” and
  • Kept changing its work plan without any “formal process for modification” claiming that its work plan was a “fluid document” yet it failed to meet objectives added mid-stream.

“Underachieving with federal aid is a continuing New Jersey pattern,” stated New Jersey Public Employees for Environmental Responsibility (PEER) Director Bill Wolfe, pointing to missteps in Christie administration handling of federal Sandy recovery funds. “This audit underscores that without strict oversight federal investments in state efforts will fall short of meeting agreed-upon objectives.”

The audit recommended that the EPA Regional Office collect much of the funds back from DEP where it had been unable to account for expenditures or document compliance with federal rules. EPA Regional Administrator Judith Enck’s office, however, disagreed with most of the audit team’s findings and recommendations, including that EPA collect back money from DEP.

A major purpose of these federal Recovery Act funds was to stimulate job creation by financing “shovel-ready” projects that put people to work immediately. To further these ends, the federal funds were tied to Buy American requirements that all iron, steel and other manufactured goods be produced domestically. In addition, the stimulus effect was supposed to be heightened by jobs at prevailing wages under provisions of the Davis-Bacon Act. The audit found that DEP –

  • Lacked “adequate controls” for wage compliance and “did not conduct payroll verification” to determine if workers on these projects were actually paid prevailing wages; and
  • Did “not monitor for compliance with Buy American requirements,” although the audit ultimately concluded that the requirements may not have been applicable to DEP.

“In New Jersey, shovel-ready has a whole different meaning,” remarked Wolfe, noting that his organization has repeatedly pushed EPA to make sure federal funds are used as required. “As with Sandy recovery, the Christie administration acts as if federal conditions for aid are merely meddlesome suggestions.”


Look at the audit report

See New Jersey PEER calls for broader audits of post-Sandy funds

View PEER calls for greater EPA oversight

New Jersey PEER is a state chapter of a national alliance of state and federal agency resource professionals working to ensure environmental ethics and government accountability

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