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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
13-R-0297
June 20, 2013
Why We Did This Review
Emissions from diesel exhaust
can lead to serious health
conditions like asthma and
allergies, and can worsen heart
and lung disease, especially in
vulnerable populations such as
children and the elderly. These
emissions can also damage
plants, animals, crops, and
water resources. Under the
authority of the American
Recovery and Reinvestment
Act of 2009, the U.S.
Environmental Protection
Agency awarded almost
$3 million to the Railroad
Research Foundation to reduce
diesel emissions by repowering
five locomotives in Baton
Rouge, Louisiana, an ozone
nonattainment area.
Our objective was to determine
whether the Railroad Research
Foundation used these funds to
fulfill its obligations under the
terms of the agreement and
applicable laws and
regulations.
This report addresses the
following EPA Goal or
Cross-Cutting Strategy:
 Taking action on climate
change and improving
air quality.
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.qov/oiq/reports/2013/
20130620-13-R-0297.pdf
Air Quality Objectives for the Baton Rouge Ozone
Nonattainment Area Not Met Under EPA Agreement
2A-96694301 Awarded to the Railroad Research Foundation
What We Found
The Railroad Research Foundation has not complied with the requirements of
cooperative agreement 2A-96694301. We identified the following noncompliance
issues:
	The five repowered locomotives were not operating in the Baton Rouge
area as originally proposed and expected by the EPA. As a result, the
inhabitants in the Baton Rouge ozone nonattainment area were not
receiving the benefits of the lower diesel emissions expected by the EPA
when it approved the project.
	Costs of $4,614 for various indirect activities under a service agreement
were not allowable under federal cost principles and the terms of the
agreement.
	Costs of $16,512 for the foundation's indirect costs were not supported
because the cooperative agreement did not authorize indirect costs for
the entire project period.
Recommendations and Responses
We recommend that the regional administrator for Region 6:
1.	Recover federal funds of $2,904,578 unless the foundation provides a
verifiable and enforceable remedy to reduce diesel emissions in the
Baton Rouge ozone nonattainment area, as required by the cooperative
agreement.
In the event that all federal funds are not recovered under the first
recommendation, we recommend that the regional administrator for Region 6:
2.	Recover the $4,614 claimed for unallowable other costs.
3.	Recover the excess indirect cost of $16,512, or consider funding the
foundation's indirect cost for the entire project period.
The foundation did not agree with the draft report's recommendation to repay all
federal funds, and proposed a possible remedy to achieve compliance with the
cooperative agreement. The foundation agreed with the unallowable salary cost
but disagreed with the questioned indirect costs. EPA Region 6 agreed with our
recommendations and will seek appropriate cost recoveries.

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