Greenwire - by Emily Yehle

The founder of the National Tribal Water Council claimed more than $80,000 in questionable costs to U.S. EPA, asking the agency to pay for a family cellphone plan and an arbitrary rental rate for her own trailer, according to a new audit from the agency's inspector general.

Most of Kathleen Hill's expenses were not questioned in the audit, which the agency requested because of concerns over management and cash draw practices. The former EPA employee received an $800,000 grant in 2006 to create and administer a national council that, among other purposes, facilitates communication on water issues between American Indian tribes.

Auditors found that while Hill succeeded in fulfilling the purpose of the grant, her financial management system did not meet federal standards. For example, she charged EPA for more than $60,000 in fringe benefits -- such as 401(k), life insurance and medical expenses -- that auditors determined were ineligible.

EPA, however, argues that the IG is holding her to "a higher standard than is necessary given that the fringe benefit payments were not excessive." In a response to the report, Hill also contends that as an individual grantee, she was not required to follow regulations for nonprofit and for-profit entities.

The audit also criticizes Hill for charging an "arbitrary monthly rate" on a trailer first owned by her daughter and then by Hill herself. Called less-than-arms'-length transactions, such charges are required to be based on an approved calculated cost, according to the report; IG auditors wrote that Hill did not provide the necessary support for the rent charged.

Hill also charged EPA $4,285 in cellphone costs for a family plan that included her husband and two children. Though her husband was an employee under the grant, her children were not, and the phones were used for both business and personal purposes. Hill charged either all monthly expenses or an "arbitrary amount," according to the report.

But auditors did not conclude what appears to have been EPA's main contention: that Hill failed to provide timely quarterly reports throughout the four-year grant. By the time the audit began, IG officials say she was up to date and the issue was not important.

Attempts to reach Hill through the council were unsuccessful. But in a 46-page response -- plus more the 70 attachments -- Hill accuses agency officials of attempting to "characterize the grantee as a dishonest and a fraudulent grantee" with false allegations.

One example Hill uses is the trailer: Officials from EPA's Grants and Interagency Agreements Management Division (GIAMD) accused her of not having an office before the audit. When the auditors visited, she wrote, "they took pictures that documented the existence of the grantee's office for the audit records."

"Ironically, one of the utility charges questioned by GIAMD was for water and sewer charges," Hill wrote. "The grantee has lived in two different rural residences since the inception of the grant -- and both residences rely on a well and septic system!"