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U.S. Environmental Protection Agency	1hp"PI0^
Office of Inspector General
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At a Glance
Why We Did This Review
We performed this review to
evaluate the U.S. Environmental
Protection Agency's (EPA's)
assessment and collection of
vehicle emissions testing fees for
its Motor Vehicle and Engine
Compliance Program (MVECP).
Our objectives were to determine
whether EPA is recovering its
costs of administering the
MVECP, and whether EPA has
effective internal controls over the
assessment and collection of the
fees.
Background
EPA's MVECP ensures that
vehicles and engines comply with
emission standards. The
Independent Offices
Appropriation Act, with guidance
from Office of Management and
Budget Circular A-25, authorizes
federal agencies to charge fees for
the services they provide. The
Clean Air Act authorizes EPA to
establish fees to recover all
reasonable costs associated with
the MVECP. EPA's final rule of
May 2004 provides specific
requirements for assessing and
collecting the fees.
For further information,
contact our Office of
Congressional, Public Affairs and
Management at (202) 566-2391.
The full report is at:
www.epa.qov/oiq/reports/2011/
20110923-11-P-0701.pdf
Catalyst for Improving the Environment
EPA Should Update Its Fees Rule to Recover
More Motor Vehicle and Engine Compliance
Program Costs
What We Found
EPA is not recovering all reasonable costs of administering the MVECP. Our
analysis, using the Agency's cost estimate for fiscal year 2010, showed a
$6.5 million difference between estimated program costs of $24.9 million and
fee collections of $18.4 million. EPA's final rule of May 2004 establishes fees
under the authority of the Clean Air Act and the Independent Offices
Appropriation Act. The rule limits the annual fee increases to inflation
adjustments to EPA's labor costs. The rule does not allow fee increases to cover
EPA's increasing costs of additional facilities, equipment, and personnel needed
to address the growing MVECP activity. EPA has not conducted a formal cost
study since 2004 to determine its actual MVECP costs, and has not updated the
annual fee adjustment formula in the 2004 fees rule to recover more costs. By
not recovering all reasonable costs, the federal government did not collect funds
that otherwise could have been available to offset the federal budget deficit.
EPA is considering an update of the fees rule, which would provide additional
recurring annual revenue in future years.
EPA's internal controls over the assessment and collection of fees are generally
effective, except for minor exceptions related to segregation of duties, fee
refund approvals, untimely recording of collections, and correction of customer
errors. EPA corrected the exceptions when we pointed them out.
What We Recommend
We recommend that the Assistant Administrator for Air and Radiation update
the 2004 fees rule to increase the amount of MVECP costs it can recover, and
conduct biennial reviews of the MVECP fee collections and the full cost of
operating the program to determine whether EPA is recovering its costs. EPA
agreed with these recommendations but did not provide planned completion
dates. Therefore, we consider these recommendations unresolved with
resolution efforts in progress.
We recommend that the Assistant Administrator for Air and Radiation and the
Chief Financial Officer segregate certain fee collection functions to maintain a
proper segregation of duties. We recommend that the Chief Financial Officer
obtain approval of alternate payee names for fee refunds when alternate names
are needed. EPA agreed with these recommendations and has completed the
corrective actions.

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