An Audit Report on the Texas Emissions Reduction Plan Program at the Commission on Environmental Quality
December 2010
Report Number 11-012
Overall Conclusion
The Commission on Environmental Quality (Commission) should strengthen its selection, monitoring, and enforcement of grants for the Texas Emissions Reduction Plan (TERP) program to ensure that it:
- Awards grants to eligible applicants that can achieve the most cost-effective emissions reductions.
- Holds grantees accountable for their compliance with program requirements and achieving projected emissions reductions.
- Recovers grant funds from non-compliant grantees.
Selecting the best applicants and strengthening grant monitoring could increase the number of grantees that comply with grant requirements. Improving compliance is important because the Commission has not been able to recover significant funds from grantees that do not comply with grant requirements. From December 2006 through July 2010, the Commission asserted that it identified a total of more than $62 million in grant funds from 593 grantees that failed to comply with the disposition and/or usage requirements in the grant agreements. Of that amount, the Commission reported that it had recovered approximately $1 million (1.6 percent) as of July 2010.
The Commission should strengthen its TERP program grantee selection process.
The Commission appropriately determined TERP program applicants' eligibility based on the information that the applicants provided; however, it should strengthen its review of that information. For example, the Commission should use information from the Texas Department of Motor Vehicles to identify the applicants whose vehicles may not be eligible for replacement under the TERP program. In addition, while the Commission conducts a limited number of site visits to verify applicant eligibility, it should focus those visits on applicants that its risk assessment indicates are most likely to be ineligible for TERP program grants.
The Commission should strengthen its monitoring of TERP program grantees.
The Commission should strengthen its processes for monitoring TERP program grantees to determine compliance with program requirements. For example, the Commission does not always verify that grantees destroy the old vehicles and equipment replaced with grant funds. Auditors identified 12 vehicles that grantees re-registered after claiming to have destroyed them. Old vehicles that remain in use negate the emissions reduction benefits of the new vehicles that grantees purchase.
The Commission also should use available information to identify the grantees with the highest risk of non-compliance with program requirements. Completing an adequate risk assessment would help the Commission to more efficiently use limited TERP program resources. For example, the Commission should routinely use data from the Texas Department of Motor Vehicles to review registration and title histories for old and grant-funded vehicles and equipment. This would help the Commission identify grantees with a higher risk of using vehicles outside of eligible counties. It also would help the Commission identify vehicles that may not be eligible for replacement because they are not in working condition or have not been owned by the applicant for the time period required by TERP program guidelines.
Many grantees reported usage of grant-funded vehicles and equipment that was significantly lower than the usage projected in the grant agreements. This is important because it undermines the credibility of the Commission's calculations for the cost-effectiveness of its grants and potentially inflates the TERP program benefits that the Commission reports to the Legislature.
Additionally, the Commission should minimize delays in its efforts to recover grant funds from non-compliant grantees. Taking more prompt action against grantees that have not complied with TERP program requirements could help the Commission recover additional funds and enable it to award other grants to reduce emissions in non-attainment areas.
The Commission should enhance the reliability of its TERP program database.
The Commission should better ensure that program data in its TERP program database is complete and accurate. Currently, inaccurate and incomplete information in that database limits the TERP program staff's ability to monitor grants. For example, 47 percent of the vehicle identification numbers (VINs) for on-road equipment funded by the TERP program and entered into the TERP program database were either an invalid length (not 17 characters) or did not follow the appropriate format. These errors prevented TERP program staff from being able to compare the VINs in the TERP program database with the VINs in the Texas Department of Motor Vehicles' database.
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