ytDSrX U.S. Environmental Protection Agency	14-R-0355
£	x> Office of Inspector General	September 15,2014
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At a Glance
Why We Did This Review
In 2005, Congress passed the
Energy Policy Act, of which
Title VII, Subtitle G,
established a program
commonly referred to as the
Diesel Emissions Reduction
Act (DERA) program. As part of
our oversight of the
U.S. Environmental Protection
Agency's (EPA's) awarding of
assistance agreements under
the American Recovery and
Reinvestment Act of 2009, we
issued six separate reports on
specific cooperative
agreements involving the
DERA program. The purpose
of this new report is to
summarize the findings in the
previous reports and identify
commonalities or overarching
issues.
EPA awarded $294 million in
Recovery Act funds under the
DERA program for
160 assistance agreements.
The reported results are from
our six previous reports,
representing approximately
$26 million in federal
expenditures.
This report addresses the
following EPA goal or
cross-agency strategy:
• Addressing climate change
and improving air quality.
Send all inquiries to our public
affairs office at (202) 566-2391
or visit www.epa.gov/oia.
The full report is at:
www.epa.gov/oig/reports/2014/
20140915-14-R-0355.pdf
Audits on EPA Recovery Act-Funded Diesel Emission
Reduction Act Assistance Agreements Reported
Programmatic and Management Challenges
EPA should consider the
issues identified in our
prior reports as it takes
actions directed by the
Office of Management and
Budget to assess risk
inherent in its programs.
What We Found
During the six previous audits on Recovery
Act cooperative agreements awarded for
DERA projects, we determined that:
•	Four of the six recipients did not meet all
objectives of grant awards.
•	Five of the six recipients did not have
financial management systems that
met federal requirements.
•	Four of the six recipients did not meet Recovery Act requirements.
As a result, we had questioned over 90 percent of the expenditures reviewed.
As part of the Office of Management and Budget's streamlining of federal
assistance agreement requirements, emphasis has now been placed on
agencies to assess recipient risk, and to focus on performance outcomes. The
EPA should consider the issues identified as it takes such streamlining actions.
The six previous audits included recommendations for corrective actions.
No new recommendations are included because the limited sample size of
previous Office of Inspector General reports may not be representative of the
entire population of EPA DERA awards. Examples of actions the EPA took to
address issues identified in the prior audit reports include the following:
•	In response to a recipient not requiring a subrecipient to scrap or
remanufacture old engines taken from repowered locomotives in
accordance with the cooperative agreement, action was taken to do so.
•	The EPA was able to provide confirmation that every vehicle reported as
retrofitted by a recipient under its cooperative agreement was completed.
•	A recipient was not operating repowered locomotives in the area defined
in the cooperative agreement, and the cooperative agreement was
amended to have the grantee deliver environmental and health benefits to
the required area.
The EPA's Office of Air and Radiation also made changes to DERA oversight to
reduce risk in the future, including revised methodologies for emissions
reporting, yearly project officer and grantee training, creation of technical
guidance related to DERA-specific assistance agreement management, and
continued baseline and advanced monitoring on the DERA program.

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