The chief watchdog for the Environmental Protection Agency has recommended that the agency recoup $9 million in grant funds given to an Oregon non-profit – the entirety of the award – citing uncompetitive procurement costs, shoddy financial management, and inadequate reporting of information to the federal government.

EPA awarded the $9 million grant as part of its SmartWay Clean Diesel Finance Program, established by the 2005 Diesel Emissions Reduction Act and expanded by the 2009 stimulus bill, to Cascade Sierra Solutions. CCS works with trucking companies to finance the purchases of more energy-efficient heavy-duty diesel trucks or retrofit existing ones to reduce their carbon emissions.

Due to the IG’s inability to assess whether the $9 million was disbursed according to the law’s requirements, the report recommends that EPA “recover these funds” and “consider suspension and debarment proceedings against CSS.”

“CSS is unable to support that all funds drawn under the [cooperative agreement] were used for expenditures that are allowable under and allocable to the CA,” the IG report states. “We are also unable to provide an opinion on the financial resources, related liabilities, revenue, expenses, and residual balances of the revolving fund.”

Under federal law, CSS must incur grant-related costs and be subsequently reimbursed. It is entitled to draw cash from its EPA award to cover pressing immediate needs, but the IG found that CSS’s cash draws exceeded its funding needs by more than $3.1 million.

What’s more, the report found that CSS did not adequately show that the expenses for which it drew cash advances were actually part of its cooperative agreement. The report offers this example:

Our review of CSS’ accounting system information and bank records showed that the $9 million in draws under the CA were recorded in and deposited to multiple general ledger and bank accounts that included funds from other grant programs. These grant programs were funded through other EPA and various state and local government agreements. For example, CSS initially deposited the $6.7 million of draws listed in table 2 above into a savings account and subsequently transferred 90 percent of these draws between two checking accounts. These three accounts included funding from other sources. These deposit transactions were also recorded in similar savings and checking general ledger accounts that included funding from other sources. Because the CA funding was recorded in and deposited to accounts that included funds from other sources, we were unable to reconcile the $6.7 million in draws with expenditures made under the CA.

CSS was also “unable to provide complete support for revolving loan program project costs and associated lessee payments,” according to the IG.

None of the IG’s findings are definitive evidence of a misuse of EPA funds. Rather, they show a lack of documentation and accounting procedures that has made it difficult to track how taxpayer money has been spent.

A spokesperson from CSS declined to comment on the matter, and referred Scribe to the company’s president, who was not available.

Read the full IG report here: