The Environmental Protection Agency has ended a $461,000 grant to an environmental group headed by a former Bowie mayor and says the group misspent a little more than $11,000.

The agency, meanwhile, has moved ahead to fund a replacement for the troubled organization, which was created to work with local governments on issues affecting the health of Chesapeake Bay.

The cancellation of the grant follows an inspector general's report in March that found $277,000 in undocumented expenditures by the nonprofit Center for the Chesapeake Communities, founded in 1997 by former Bowie mayor Gary G. Allen and headquartered in Annapolis. The report criticized Allen for failing to establish procedures to track grant money and for hiring a friend's company as a subcontractor.

Auditors criticized the EPA for not using competitive bidding to award the grant, a step that "created an appearance of preferential treatment that compromises the integrity of the Chesapeake Bay Program."

In a written response to auditors last month, EPA regional Administrator W. Michael McCabe said the EPA was closing the grant and expected to "bring all functions to a close" no later than June 30.

Jon Capacasa, deputy director for the bay program, said the EPA agreed with the recommendation to shut down the grant, but needed time to do it effectively. "If the grant were terminated immediately, the public investment in some products and services would have been lost," Capacasa said.

The EPA has chosen Washington-based International City/County Management Association to develop a work proposal to assume the grant, which in part, helps fund support staff to another multi-state advisory body on the bay, the local government advisory committee.

A June letter to Allen from the EPA said the agency found $11,394 had been been spent in ways that reached beyond the grant's purposes. The agency told Allen that until the inspector general completes a final audit, nothing must be repaid.

The EPA questioned $9,894 Allen spent on a feasibility study to determine whether a such a group was necessary, and $1,500 used to pay for advice on how to apply for EPA grants.

Allen did not return telephone messages Thursday and yesterday seeking an interview but has previously called the inspector general's report "flawed and shallow." He has also said that he was suffering heart problems during most of the period covered by the review.

Allen created the Center for Chesapeake Communities after leading a study on whether such a nonprofit was needed to assist bay efforts. Before the study was completed, Allen founded the nonprofit with the help of Redman/Johnston Associates, of Easton, Md. and applied for and received the grant.

Allen's group received about $461,233 in federal money over two years.

Anthony Redman, of Redman/Johnston, did not return a message left yesterday at his office.

The EPA awards nearly $18 million annually to states and a wide range of nonprofits charged with guarding the bay's environmental health.