- The Washington Times - Thursday, September 18, 2014

A part of the $800 billion stimulus package that President Obama pushed through Congress in 2009 was aimed at reducing diesel emissions and helping the environment, but a big chunk of it may have gone up in smoke, according to a new internal audit.

As much as $24 million — or 90 percent — of $26 million in grants reviewed by the Environmental Protection Agency’s inspector general may have been misspent, according to Sept. 15 report released by the agency watchdog that aggregated data from previous audits.

Only six projects out of the 160 so-called “Diesel Emission Reduction Act” stimulus projects awarded by the EPA were reviewed by the inspector general. The entire grant program cost taxpayers about $294 million, but the IG only looked at a $26 million share of it.

The grants reviewed included initiatives to rebuild or replace diesel-powered engines in machinery, locomotives and large trucks to make them more environmentally friendly.

But four of the six award recipients did not meet all objectives of the grant award, five of the six recipients did not have adequate financial-management systems in place, and four of the six did not meet the so-called recovery act’s intended requirements, the report found.

The groups and agencies receiving the money diverted much of the cash to purchasing things they weren’t authorized to and paying contractors more than they were supposed to receive, the internal watchdog said. Money was also lost because the grant recipients failed to keep track of how it was spent.


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“When it comes to wasting taxpayer dollars and stifling the economy, the EPA is an agency without equal,” said James M. Taylor, an environmental-policy expert at the Heartland Institute. “Very few of the EPA’s grants have any meaningful impact on the environment. The grants do, however, enable the EPA to wield more power.”

For turning its diesel-emission reduction stimulus grants into an ineffective boondoggle, the EPA has earned the Golden Hammer, a weekly distinction awarded by The Washington Times for examples of government fiscal abuse and mismanagement.

Besides wasting millions of tax dollars, many of the grant recipients were unable to indicate that their efforts did anything to improve air quality or lower diesel emissions, the report found.

An EPA spokesman said in an email that since the audits were performed, the agency’s “oversight procedures have been strengthened to reduce risk of issues in the future, and are protecting the taxpayers’ investment in projects which lead to reduced diesel emissions and better health for Americans.”

The IG’s report detailed the case of an Oregon nonprofit called Cascade Sierra Solutions, which received a $9 million grant to install components to reduce diesel exhaust from trucks made before 2007. Auditors determined that the group installed the equipment on new trucks instead, and, as a result, the older trucks failed emissions requirements.

Cascade Sierra Solutions closed its doors this spring after a court order to liquidate to pay back creditors. The scandal-plagued nonprofit received more than $60 million from various government agencies.

The EPA requested to be reimbursed, but repayment seems unlikely. According to Land Line, a business magazine for the trucking industry, “Cascade Sierra Solutions reportedly owes $19 million to 13 secured creditors.”

When asked specifically if there was any hope that taxpayers could retrieve the $9 million federal handout Cascade Sierra Solutions misspent, an EPA spokesman declined to answer.

“This is one of many things that should outrage all Americans about the EPA’s conduct, spending and regulatory practices,” said Myron Ebell, director of the Competitive Enterprise Institute’s Center for Energy and Environment.

In another case, the California Air Resources Board was given almost $8.8 million to buy new train engines, then scrap or remanufacture the engines being replaced.

Instead, the board allowed the railway company receiving the new engines to put the older, heavily polluting engines in other locomotives against the demands of the grant agreement.

A taxpayer-funded project managed by the Railroad Research Foundation was supposed to reduce emissions from trains traveling through Baton Rouge, La., a city that currently fails to meet federal ozone standards. Inspectors learned that trains retrofitted with more efficient engines were not being used in the Baton Rouge area, as promised by the grant recipients.

In yet another case, the Tennessee Department of Transportation so badly miscalculated its results that it was impossible for auditors to determine if there was any environmental benefit as a result of the $1.6 million grant the agency received.

The report did not make any major recommendations for change because “the limited sample size of the previous OIG reports may not be representative of the entire population of EPA Diesel Emission Reduction Act program awards,” Arthur Elkins Jr., EPA’s inspector general, wrote in a letter to top agency officials.


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