Why It Matters
A new Government Accountability Office (GAO) report sheds light on the funding behind the Environmental Protection Agency (EPA), and how it has changed following recent legislation. After the Inflation Reduction Act (IRA) of 2022 provided approximately $41.5 billion in supplemental appropriations to EPA for grants and other investments to reduce air pollution and enhance national climate resilience, the agency has confronted a series of disruptions: staff departures, congressional rescissions, and litigation from grant recipients challenging terminations of their awards.
EPA obligated about $8.6 billion from fiscal years 2023 to 2026 for efforts to reduce air pollution, targeting everything from replacing heavy-duty vehicles with battery-electric or hydrogen fuel cell equivalents to deploying emissions-free equipment at U.S. ports and improving energy efficiency in commercial and public buildings. Whether those projects proceed as planned depends on whether the agency can maintain oversight of the remaining funds while managing severe operational constraints.
The Big Picture
In 2025, EPA terminated grants funded by $30 billion of IRA appropriations. Several grant recipients were challenging those terminations in court as of June.
That left roughly $11.5 billion in appropriations unaffected by the terminations and related litigation. Of that amount, the One Big Beautiful Bill Act (OBBBA) rescinded approximately $1.2 billion that EPA had not yet obligated. As of March, EPA was overseeing about $10.2 billion in appropriations it had obligated before OBBBA was enacted, and which are not affected by ongoing litigation. EPA had expended about $686 million of those obligated funds, with most of that spending directed toward grants to state governments to reduce air pollution.
State governments received the largest number of EPA grants from IRA appropriations. The agency awarded most of its IRA money through competitive grants, using its standard processes to choose winners. EPA followed its competition policy by providing notice to potential applicants of program goals, eligibility requirements, and evaluation criteria. Reviewers ranked the merit of eligible applicants using points-based scoring systems and made recommendations to agency selection officials, who made the final selection decisions.
EPA requires that grant recipients submit periodic performance reports. The agency also plans to conduct an additional level of oversight for all its IRA grants through an in-depth assessment at least once during their performance periods. That represents a significant expansion: EPA normally conducts that additional level of oversight for only 10 percent of its grants.
Another change for the agency: EPA has lost hundreds of staff due to early retirements since January 2025. EPA officials told GAO they are assessing the agency's resource needs in light of those reductions and are using contractor support to fill gaps where necessary. For reference, EPA's typical annual appropriations are about $9 billion per year, making the IRA funds a substantial addition to the agency's normal budget.
The Bottom Line
GAO conducted this review because Congress asked it to examine EPA's use of IRA appropriations, including any related staffing changes. The IRA itself includes a provision requiring GAO to support oversight of the distribution and use of IRA appropriations.
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