U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

Projected Emission Reductions 

Overstated and Buy American 

Requirements Not Met Under 

EPA Award to the Tennessee 

Department of Transportation 

Report No. 13-R-0321 July 19, 2013 

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about the EPA OIG. 
 

 

 

 

 

 

 

Report Contributors: Angela Bennett 

 Glen Chabotar 

 John Flynn 

Abbreviations 

CFR Code of Federal Regulations 

DERA Diesel Emissions Reduction Act 

EPA U.S. Environmental Protection Agency 

FAQs Frequently Asked Questions 

FFR Federal Financial Report 

FY Fiscal Year 

NOx Nitrogen Oxide 

OIG Office of Inspector General 

OMB Office of Management and Budget 

Recovery Act American Recovery and Reinvestment Act of 2009 

RFA Request for Applications 

TDOT Tennessee Department of Transportation 

TSE Truck Stop Electrification 

Cover photo: Truck stop electrification equipment at the North Forty Truck Stop in 

Holladay, Tennessee. (EPA OIG photo) 

Hotline 

To report fraud, waste, or abuse, contact us through one of the following methods: 

email: OIG_Hotline@epa.gov write: EPA Inspector General Hotline 

phone: 

fax: 

1-888-546-8740 

202-566-2599 

1200 Pennsylvania Avenue, NW 

Mailcode 2431T 

online: http://www.epa.gov/oig/hotline.htm Washington, DC 20460 
 

 

 

 

 

U.S. Environmental Protection Agency 13-R-0321 

July 19, 2013 Office of Inspector General 

At a Glance 

Why We Did This Review 

The U.S. Environmental 

Protection Agency (EPA), 

Office of Inspector General, 

reviewed the contracts 

awarded by the Tennessee 

Department of Transportation 

(TDOT) under Cooperative 

Agreement No. 95425709. 

The agreement, funded by the 

Diesel Emissions Reduction 

Act (DERA) under the 

American Recovery and 

Reinvestment Act of 2009 

(Recovery Act), provided for 

the installation of truck stop 

electrification (TSE) facilities. 

DERA provides funds for EPA 

programs to achieve significant 

reductions in diesel emissions. 

The purpose of the audit was to 

determine whether TDOT 

complied with procurement 

requirements, monitored 

contract performance, 

achieved the objectives of the 

cooperative agreement, and 

accurately reported the results 

to EPA. 

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.gov/oig/reports/2013/ 

20130719-13-R-0321.pdf 

Projected Emission Reductions Overstated and 

Buy American Requirements Not Met Under EPA Award 

to the Tennessee Department of Transportation 

What We Found 

TDOT followed most applicable laws, regulations, and terms and conditions of 

the cooperative agreement in the procurement and monitoring of contracts for the 

TSE facilities—with the exception of the Buy American requirements of the 

Recovery Act. TDOT did not determine whether trusses used in the construction 

of TSE facilities by one contractor qualify as substantial transformation as defined 

in 2 CFR §176.160. This occurred because subsequent to the contract awards, 

EPA incorrectly determined that the Buy American requirements did not apply to 

the project. Consequently, there is no assurance that all iron, steel, or 

manufactured goods incorporated into the project were manufactured or 

substantially transformed in the United States, as required by Section 1605 of the 

Recovery Act. 

TDOT complied with the cooperative agreement requirements and satisfied 

Region 4 requirements for projecting results. However, TDOT overstated its 

results. This occurred because TDOT utilized significantly overestimated usage 

assumptions in its projections rather than current usage. As a result, TDOT does 

not have reasonable assurance that the TSE project will achieve projected 

emissions reductions, and the expected environmental results and human health 

benefits. Quarterly reporting of diesel emissions reductions by the DERA 

program may also be overstated.

 Recommendations 

We recommend that EPA disallow and recover Recovery Act funds of 

$1,623,049, unless TDOT can certify that the project fully complied with Buy 

American requirements. For those items that TDOT cannot certify, EPA should 

follow applicable regulations to resolve the noncompliance. 

For TDOT’s potential overstatement of project results, we recommend that EPA 

review TDOT’s assumptions used to calculate projected results. If needed, EPA 

should work with TDOT to develop a more accurate projection of project results. 

EPA should also review any recalculated results, in accordance with agency 

policy, to determine whether TDOT achieved the objectives of the cooperative 

agreement. Further, EPA should adjust the DERA program reporting of TDOT 

project results to reflect any recalculated results. 

EPA and TDOT disagreed with recommendations pertaining to the Buy American 

requirements. EPA and TDOT agreed with the recommendation related to project 

results and are working to use post-project usage data to produce updated 

information. 
 

 

 

 

SUBJECT: Projected Emission Reductions Overstated and Buy American 

Requirements Not Met Under EPA Award to the Tennessee 

Department of Transportation 

Report No. 13-R-0321 

FROM: Arthur A. Elkins Jr. 

Stan Meiburg, Acting Regional Administrator 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

July 19, 2013 

MEMORANDUM 

TO: 

Region 4 

This is our report on the subject examination conducted by the Office of Inspector General of the 

U.S. Environmental Protection Agency. This report contains findings that describe problems the 

OIG has identified and corrective actions the OIG recommends. This report represents the opinion of the 

OIG and does not necessarily represent the final EPA position. In accordance with established 

audit-resolution procedures, EPA managers will make final determinations on matters in this report. 

We performed this examination as part of our responsibility under the American Recovery and 

Reinvestment Act of 2009. The purpose of our examination was to determine whether the Tennessee 

Department of Transportation followed all applicable laws, regulations, and terms and conditions of the 

cooperative agreement in the procurement and monitoring of truck stop electrification facility contracts; 

achieved the objectives of the cooperative agreement; and accurately reported the results to EPA. 

Action Required 

In accordance with EPA Manual 2750, Chapter 3, Section 6(f), you are required to provide us with your 

proposed management decision for resolution of the findings contained in this report before you 

formally complete resolution with the recipient. Your proposed management decision is due in 120 days, 

or on November 18, 2013. To expedite the resolution process, please email an electronic version of your 

proposed management decision to adachi.robert@epa.gov. 

Your response will be posted on the OIG’s public website, along with our memorandum commenting 

on your response. Your response should be provided as an Adobe PDF file that complies with the 

accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as amended. The final 

response should not contain data that you do not want released to the public. If your response contains 

such data, you should identify the data for redaction or removal. We have no objection to the further 

release of this report to the public. This report will be available at http://www.epa.gov/oig. 
 

If you or your staff have any questions about this report, please contact Richard Eyermann, acting 

assistant inspector general for the Office of Audit, at (202) 566-0565 or eyermann.richard@epa.gov; 

or Robert Adachi, product line director, at (415) 947-4537 or adachi.robert@epa.gov. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected Emission Reductions Overstated and 13-R-0321 

Buy American Requirements Not Met Under 

EPA Award to the Tennessee Department of Transportation 

Table of Contents 

Chapters 

1 Independent Attestation ................................................................................... 1 

2 Introduction ........................................................................................................ 5 

Purpose ....................................................................................................... 5
 

Background ................................................................................................. 5
 

3 Potential Noncompliance With Buy American Requirements ....................... 13 

Full Compliance Not Determined................................................................. 13 

EPA Determined That Buy American Requirements 

Were Not Applicable.............................................................................. 13 

The OIG Disagrees With the EPA’s Determination ..................................... 14 

Conclusion................................................................................................... 16 

Recommendations ...................................................................................... 17 

EPA and Recipient Comments .................................................................... 17 

The OIG Response ..................................................................................... 18 

4 Assumptions Significantly Overestimated Project Results............................ 21
 

Usage Assumptions Were Significantly Overestimated .............................. 21 

 Conclusion.... .............................................................................................. 24 

 Recommendations... ................................................................................... 24 

EPA and Recipient Comments .................................................................... 24 

The OIG Response ..................................................................................... 25 

Status of Recommendations and Potential Monetary Benefits.............................. 26 

Appendices 

A TDOT’s Comments on Draft Report.................................................................. 27 

B Agency’s Comments on Draft Report .............................................................. 35 

C Agency’s Comments on Position Papers ........................................................ 39
 

D Distribution ......................................................................................................... 43 
 

 

 

Chapter 1

Independent Attestation 

As part of the Office of Inspector General’s (OIG’s) oversight of cooperative 

agreement awards made by the U.S. Environmental Protection Agency (EPA), 

we examined the Tennessee Department of Transportation’s (TDOT’s) 

compliance with Cooperative Agreement No. 95425709 and applicable federal 

requirements. These requirements include: 

 The Code of Federal Regulations through 40 CFR Part 31, Uniform 

Administrative Requirements for Grants and Cooperative Agreements to 

State and Local Governments. 

	 Title 2 CFR Part 225, Cost Principles for State, Local, and Indian Tribal 

Governments (OMB Circular A-87). 

	 Title 2 CFR Part 176, Requirements for Implementing Sections 1512, 

1605, and 1606 of the American Recovery and Reinvestment Act of 2009 

for Financial Assistance Awards. 

	 The American Recovery and Reinvestment Act of 2009 (Recovery Act). 

By accepting funding provided through the cooperative agreement, TDOT is 

responsible for complying with these requirements. Our responsibility is to 

express an opinion on TDOT’s compliance. 

We conducted our examination in accordance with generally accepted 

government auditing standards issued by the Comptroller General of the United 

States. We also utilized the attestation standards established by the American 

Institute of Certified Public Accountants. We examined, on a test basis, evidence 

supporting management’s assertions and performed such other procedures as we 

considered necessary in the circumstances. We believe that our examination 

provides a reasonable basis for our opinion. 

We met with representatives from the EPA’s Region 4 Air, Pesticides, Toxics 

Management Division in Atlanta, Georgia; as well as with representatives from 

the agency’s Office of Transportation and Air Quality, Diesel Emissions 

Reduction Act (DERA) Grants Office at EPA headquarters in Washington, D.C. 

We gathered information on criteria relevant to the cooperative agreement. We 

also obtained an understanding of the proposed agreement and gathered 

information concerning TDOT’s performance. Specifically, we reviewed EPA’s 

request for applications (RFA) and TDOT’s proposal and work plan. We also 

reviewed applicable federal requirements including 2 CFR Parts 176 and 225, 

40 CFR Part 31, and the Recovery Act. 

13-R-0321 1 
 

 

On January 24, 2012, we made a site visit to TDOT’s office in Nashville, 

Tennessee, to conduct interviews and obtain documentation to address our 

objectives. 

To determine if TDOT followed all applicable laws, regulations, and terms and 

conditions of the cooperative agreement in the procurement of contracts for 

truck stop electrification (TSE) facilities, we: 

	 Conducted interviews with TDOT to gain an understanding of the 

procurement policies and procedures used to award grant contracts for the 

construction of TSE facilities. 

	 Obtained documentation and analyzed all proposals received in response 

to TDOT’s RFA to determine whether TDOT followed its selection 

criteria and process for awarding the contracts. 

To determine if TDOT monitored the performance of the grant contracts to ensure 

compliance with all applicable regulations, statutes, and terms and conditions that 

flowed down from the cooperative agreement, including Recovery Act 

requirements, we: 

	 Conducted interviews with TDOT to gain an understanding of the process 

used to monitor contract performance. 

	 Obtained and reviewed copies of reports and documents used to monitor 

and evaluate contract performance during construction of the facilities and 

throughout the contract period (i.e., progress, monitoring, monthly and 

quarterly usage, etc.). 

	 Reviewed grant contracts to determine the nature of the work to be 

performed. 

 Identified and analyzed change orders for necessity and scope. 

 Reviewed grant contracts for compliance with the Recovery Act’s Buy 

American provisions, as well as the reporting requirements of the Davis 

Bacon Act and the Recovery Act. 

To determine if TDOT achieved the objectives of the cooperative agreement and 

accurately reported results to EPA, we: 

 Identified the objectives of the cooperative agreement, including any 

considerations for air quality. 

 Conducted interviews with TDOT to identify how progress under the 

cooperative agreement is measured and communicated to EPA. 

 Obtained and reviewed copies of information that TDOT maintained to 

track progress and any reports provided to EPA. 

	 Conducted interviews with EPA project officers to discuss their role in 

TDOT’s contract-selection process and their review of contract documents 

to ensure compliance with the requirements of the cooperative agreement. 

13-R-0321 2 
 

 

	 Conducted interviews with EPA project officers to identify how TDOT 

communicates progress under the cooperative agreement and whether the 

EPA reviews and verifies progress. 

 Obtained copies of information provided by TDOT and reviews made by 

the EPA’s project officers. 

 Verified that work required under the cooperative agreement has been 

accomplished through a review of selected work products. 

 Conducted site visits to verify contractors constructed all planned facilities 

and that the facilities are in operation and properly maintained. 

 Reviewed usage reports for each of the four completed TSE facilities. 

We conducted site visits at the four TSE facilities from January 25–26, 2012, and 

performed the following steps: 

 Validated the number of TSE units installed.
 

 Observed and noted the condition of TSE equipment. 

 Inspected units for evidence of compliance with the Recovery Act’s
 

Buy American requirements. 

 Observed and noted use of the equipment. 

 Documented observations with photographs. 

We also reviewed project costs and TDOT’s drawdown of EPA funds. 

Specifically, we performed the following steps: 

	 Obtained, reviewed, and reconciled TDOT’s most recent Federal Financial 

Report (FFR) for the period ending December 31, 2011. 

	 Discussed the FFR preparation with TDOT to ensure the FFR was 

prepared in accordance with applicable laws, regulations, and terms and 

conditions of the cooperative agreement. 

	 Selected and reviewed a judgmental sample of 14 out of 33 contractor 

invoices. The sample represented $1,220,355 of $1,485,024 total contract 

costs. We reviewed supporting invoices, payment documents, and 

associated accounting system entries to determine whether the 

expenditures were allocable and allowable under 40 CFR Part 31, the 

cooperative agreement, and Recovery Act Section 1604. 

	 Reviewed all invoices related to TDOT’s outreach program, which totaled 

$135,992. We reviewed supporting invoices, payment documents, and 

associated accounting system entries to determine whether the 

expenditures were allocable and allowable under 40 CFR Part 30, the 

cooperative agreement, and Recovery Act Section 1604. 

	 Reviewed TDOT’s drawdown procedures, obtained a drawdown history, 

and selected a judgmental sample of one drawdown for testing. We 

reviewed supporting documentation to determine if the drawdown was 

reasonable and properly supported. 

13-R-0321 3 
 

 

 

We conducted our audit work between January 2012, and January 2013. Our 

examination disclosed material noncompliance with 2 CFR §176.60, Section 1605 

of the Recovery Act, and Section 23 of the cooperative agreement pertaining to 

Buy American requirements. Chapter 3 of this report includes a discussion of the 

noncompliance. In addition, TDOT did not fully comply with Programmatic 

Condition 4 of the cooperative agreement pertaining to the reporting of actual 

project results. Chapter 4 of this report includes a discussion of the 

noncompliance related to TDOT’s potential overstatement of project results in its 

final report. 

As a result, unless TDOT can establish that the project met Buy American 

requirements, we recommend that EPA disallow and recover Recovery Act funds. 

For the potentially overstated project results, we recommend that EPA review the 

assumptions used by TDOT to calculate projected results, assist TDOT with any 

recalculations, and adjust the DERA program reporting of TDOT results to reflect 

recalculated results. 

In our opinion, TDOT has not complied with the requirements of 2 CFR §176.60, 

Section 1605 of the Recovery Act for the cooperative agreement period ending 

November 30, 2011. 

Robert K. Adachi 

Director for Forensic Audits 

13-R-0321 4 
 

 

 

Chapter 2

Introduction 

Purpose

The EPA OIG conducted this review to determine whether TDOT complied 

with the requirements, and terms and conditions of Cooperative Agreement 

No. 95425709, and all related laws and regulations. 

Our objectives were to determine whether TDOT: 

	 Followed all applicable laws, regulations, and terms and conditions of 

the cooperative agreement in the procurement of contracts for TSE 

facilities. 

	 Monitored the performance of the contracts to ensure compliance with 

all applicable laws, regulations, and terms and conditions that flowed 

down from the cooperative agreement, including related Recovery Act 

requirements. 

	 Achieved the objectives of the cooperative agreement and accurately 

reported them to EPA. 

Background 

Congress signed the DERA into law in August 2005, under Title VII, Subtitle G 

of the Energy Policy Act of 2005, and authorized up to $200 million per year 

from fiscal year (FY) 2007 through FY 2011 ($1 billion total) for EPA to fund 

programs to achieve significant reductions in diesel emissions. Congress 

appropriated a total of $169.2 million for EPA under the DERA for FYs 2008 

through 2010. Congress appropriated an additional $300 million to EPA in 

FY 2009 for DERA grants under the Recovery Act. 

Health Affects Related to Diesel Emissions 

Diesel emissions account for 6.3 million tons of nitrogen oxide (NOx) and 

305,000 tons of particulate matter in the national mobile emissions inventory 

(2004).1

 The emissions are from a variety of on-road and non-road vehicles, such 

as those used for freight, ports, transit, construction, agriculture and energy 

production. 

According to EPA, reducing emissions from diesel engines is one of the most 

important air-quality challenges facing the United States. These emissions 

1

 Data obtained from EPA’s RFA No. EPA-ARRA-OAR-OTAQ-09-06, the ARRA Recovery and Reinvestment Act 

Funding for the National Clean Diesel Funding Assistance Program, issued in 2009. 

13-R-0321 5 
 

 

 

contribute to serious public health problems, including asthma, lung cancer, and 

various other cardiac and respiratory diseases. These problems result in thousands 

of premature deaths, millions of lost workdays, and numerous other negative 

health and economic outcomes every year. 

Requirements for Addressing Environmental Results 

EPA Order 5700.7, Environmental Results under Assistance Agreements, 

establishes the agency’s policy for addressing environmental results under EPA 

assistance agreements, including grants and cooperative agreements. Program 

offices must review recipient performance reports to determine whether the 

recipient achieved the outputs and outcomes contained in the work plan. 

TDOT’s Cooperative Agreement 

The EPA awarded Cooperative Agreement No. 95425709 to TDOT on 

June 26, 2009. The agreement provided $2 million of Recovery Act funds for the 

installation of a network of TSE facilities (175-200 electrified parking spaces) at 

select interstate highway truck stops. The objective of the project was to reduce 

long-term idling of Class 8 trucks. The expected results of the project included 

air-pollution reductions and fuel conservation. The initial grant budget and project 

period was from June 1, 2009, to September 30, 2010. At the request of TDOT, 

EPA extended the project period through November 30, 2011. 

TDOT Grant Contract Awards 

TDOT’s work plan proposed to solicit grant applications from truck-stop owners 

wanting to receive grant funding to install TSE equipment. TDOT’s first and 

second RFAs were open only to truck-stop owners. For the first RFA published in 

July 2009, TDOT received two proposals. TDOT made awards to the two truckstop owners. However, due to concerns about the upfront costs of providing 

electric power to the TSE facilities, one truck-stop owner decided not to proceed 

with the project. For the second RFA published in October 2009, TDOT received 

no project proposals. 

In an attempt to allocate the remaining cooperative agreement funds, TDOT 

submitted a request to EPA on April 14, 2010, for an amendment to the work plan 

to allow for a third RFA that would be open to truck-stop owners and TSE 

technology vendors. On June 18, 2010, EPA approved TDOT’s request to issue 

the third RFA to owners and vendors. TDOT received nine applications from TSE 

vendor companies in response to the third RFA. TDOT received no responses 

from truck-stop owners. TDOT made five funding recommendations through the 

third RFA. However, because of a series of events, TDOT later cancelled two of 

the five awards. 

13-R-0321 6 
 

 

 

 

TDOT completed four awards. One award went to a truck stop in the first RFA, 

and three awards went to TSE technology vendors in the third RFA. Three of the 

four completed TSE facilities are in operation. Mountain Plaza Truck Stop was 

operational for approximately 3 months after placing its facilities into operation, 

but closed in September 2011 due to bankruptcy and subsequent foreclosure. The 

following images are from the four completed TSE facilities located at these truck 

stops: Mountain Plaza, Pilot Flying J, Super Truck & Travel Plaza, and North 

Forty. 

Mountain Plaza Truck Stop (EnviroDock—30 Spaces) 

Period of operation: May–July 2011. 

Above and right: Boarded-up and non-operable TSE facilities. 

(EPA OIG photos)
 

13-R-0321 7 
 

 

 

Pilot Flying J 

(Convoy Solutions-IdleAire—33 Spaces) 

Placed into operation: October 2011. 

Above: TSE parking spaces. 

Below: Close-up of a window unit. 

(EPA OIG photos) 

13-R-0321 8 
 

 

 

Super Truck & Travel Plaza (Shorepower—24 Spaces) 

Placed into operation: October 2011. 

Above: TSE electrical plug-in station. 

Below: View of parking spaces. 

(EPA OIG photos) 

13-R-0321 9 
 

 

 

North Forty Truck Stop 
 

(Jr Enterprises-AirDock—30 Spaces)
 

Placed into operation: October 2011. 

Above: TSE parking spaces. 

Below: Close-up of a window unit. 

(EPA OIG photos) 

13-R-0321 10 
 

 

 

 

Buy American Requirements 

Title 2 CFR §176.60 and Section 1605 of the Recovery Act prohibit the use of 

Recovery Act funds for a project unless all of the iron, steel, and manufactured 

goods used in the project are produced in the United States. Section 1605 also 

requires that this prohibition be consistent with U.S. obligations under 

international agreements, and provides for a waiver under three circumstances: 

(1) Iron, steel, or relevant manufactured goods are not produced in the United 

States in sufficient and reasonably available quantities and of a 

satisfactory quality. 

(2) Inclusion of iron, steel, or manufactured goods produced in the United 

States would increase the overall project costs by more than 25 percent. 

(3) Applying the domestic preference would be inconsistent with public 

interest. 

Title 2 CFR §176.140(a)(1) defines a manufactured good as a good that is brought 

to the construction site for incorporation and has been processed into a specific 

form and shape, or combined with raw materials to create a material that has 

different properties than the properties of the individual raw materials. There is no 

requirement with regard to the origin of components in manufactured goods, as 

long as the manufacture of the goods occurs in the United States.2 In the case of a 

manufactured good that consists in whole or in part of materials from another 

country, a domestically manufactured good is one that has been substantially 

transformed in the United States into a new and different manufactured good 

distinct from the materials from which it was transformed.3 

To assist recipients of Recovery Act funds, the EPA developed several guidance 

documents and Internet-based training modules explaining the concept of 

substantial transformation and the types of documentation needed to support a 

substantial transformation determination. Key documents include: 

• Determining Whether “Substantial Transformation” of Components Into a 

“Manufactured Good” Has Occurred in the U.S.: Analysis, Roles, and 

Responsibilities, October 22, 2009 (Determining Substantial 

Transformation) 

• Buy American Provisions of ARRA Section 1605 Questions and Answers— 

Part 1, revised September 22, 2009 (Buy American Q&A Part 1) 

• Buy American Provisions of ARRA Section 1605 Questions and Answerers— 

Part 2, November 16, 2009 (Buy American Q&A Part 2) 

2

 Title 2 CFR §176.70(a)(2)(ii) and Title 2 CFR §176.160(a), “Domestic iron, steel, and/or manufactured good.” 3

 Title 2 CFR §176.160(a), “Domestic iron, steel, and/or manufactured good.” 

13-R-0321 11 
 

 

 

These guidance documents provide: 

• An explanation of substantial transformation. 

• A matrix of questions for determining whether substantial transformation 

has occurred in the United States. . 

• The requirements for the type of documentation needed to support 

substantial transformation. 

• The need to retain the documentation to support compliance with 

Section 1605 of the Recovery Act 

The EPA also included the Buy American requirements in TDOT’s cooperative 

agreement. Section 23 of the cooperative agreement states that none of the funds 

made available under the Recovery Act may be used for a project for the 

construction, alteration, maintenance, or repair of a public building or public 

work; unless all of the iron, steel, and manufactured goods used in the project are 

produced in the United States. TDOT in turn included the same requirement in all 

four of the completed grant contract awards. 

13-R-0321 12 
 

 

Chapter 3

Potential Noncompliance With 

Buy American Requirements 

TDOT followed applicable laws, regulations, and terms and conditions of the 

cooperative agreement in the procurement and monitoring of contracts for TSE 

facilities, except for the Buy American requirements. While TDOT obtained Buy 

American certifications from three of the four grant contract awardees, TDOT did 

not determine whether trusses used in the construction of TSE facilities by one 

contractor qualified as substantial transformation as defined in 2 CFR §176.160. 

This occurred because subsequent to the contract awards, EPA incorrectly 

determined that the requirements did not apply to the project. Consequently, there 

was no assurance that all iron, steel, or manufactured goods incorporated into the 

project were manufactured or substantially transformed in the United States, as 

required by Section 1605 of the Recovery Act. Unless TDOT can demonstrate (or 

certify) compliance with Buy American requirements for the project, or obtain an 

EPA waiver, TDOT’s project to install a network of TSE facilities at selected 

interstate truck stops is not eligible for Recovery Act funds. 

Full Compliance Not Determined 

Although TDOT began raising questions to EPA about the applicability of the 

Buy American provisions before issuing its third RFA, all grant contracts awarded 

by TDOT included Buy American requirements. TDOT initially obtained 

certifications indicating compliance with the requirement for two of the four grant 

contract awards. TDOT also received written documentation in a memorandum 

from a third grant contract awardee contending that there was “substantial 

transformation” within the meaning of the Buy American requirements of the 

trusses used in the construction of the TSE facilities. However, the approval of the 

substantial transformation issue became a moot point based on EPA’s subsequent 

determination of the non-applicability of Buy American provisions. To the OIG’s 

knowledge, the substantial transformation claim was never reviewed and 

approved by TDOT. In 2013, TDOT obtained a certification from the fourth grant 

contract awardee. 

EPA Determined That Buy American Requirements 

Were Not Applicable 

Although EPA included Buy American requirements in the cooperative 

agreement, EPA subsequently determined that the requirements did not apply 

13-R-0321 13 
 

 

 

to the project. EPA stated that the project was not a public work conducted by 

TDOT. Rather, EPA believed TDOT subgranted the project to private entities and 

the requirements did not apply. 

EPA based its decision on a prior determination by the DERA program. The prior 

determination found in Section 23 of the cooperative agreement, Required Use of 

American Iron, Steel, and Manufactured Goods, stated: 

For the purposes of this Buy American term and condition (as applied to 

diesel emissions reduction projects conducted pursuant to DERA), EPA 

has determined that this term and condition applies to projects involving 

the construction, alteration, maintenance or repair of Truck Stop 

Electrification (TSE) facilities and projects for the construction, alteration, 

maintenance or repair of heavy generators (such as those used in public 

energy production) which are considered to be public works when a 

governmental entity is conducting the project. 

Per EPA, the work plan established that TDOT’s role was to develop and 

facilitate a grant competition and oversee the selection of subgrantees that would 

move forward with developing TSE parking spaces best suited for their respective 

locations and clientele. Therefore, the subgrantees would be conducting the 

project. TDOT was required to maintain primary responsibility for ensuring 

successful completion of the approved project. TDOT was also required to 

monitor performance of the subrecipients and ensure compliance with applicable 

laws, regulations, and terms and conditions that flow down in the subaward. 

The OIG Disagrees With the EPA’s Determination 

The OIG does not agree with the EPA’s determination regarding the applicability 

of Buy American requirements. To the contrary, the OIG concluded that TDOT 

contracted rather than subgranted the procurement and installation of the TSE 

facilities. In doing so, TDOT conducted the project, and per the DERA program 

determination, Buy American requirements would apply. 

We agree with EPA that the initial work plan addressed the selection of 

subgrantees (or truck-stop partners). However, as discussed in the Background 

section of this report, due to a lack of response from the truck-stop community, 

TDOT stated it received EPA approval to revise the work plan to open the 

competition to TSE technology vendors. This resulted in TDOT’s procurement of 

equipment and installation of the equipment directly from three TSE technology 

vendors. The OIG concluded that these relationships, as well as the relationship 

with the one truck stop awardee, are indicative of a contract (or vendor) 

relationship rather than a subgrant relationship as asserted by EPA. 

13-R-0321 14 
 

 

 

TDOT’s Policy Statement 22 pertaining to subrecipient contract monitoring 4 

identifies a vendor as: 

a dealer, distributor, merchant, or other seller providing goods or services 

that are required for the conduct of a Federal program. These goods or 

services may be for an organization’s own use or for the use of 

beneficiaries of the Federal program. 

Further, the policy refers to the use of characteristics identified in OMB Circular 

A-133, Section 210, Subparts (b) and (c) to distinguish a subrecipient from a 

vendor. 

Table 1 presents OMB Circular A-133, Section 210 characteristics for 

determining whether a subrecipient or vendor relationship exits. 5 

Table 1: Characteristics of a subrecipient versus a vendor 

A subrecipient organization: A vendor organization: 

Determines who is eligible to receive what 

federal financial assistance. 

Provides goods and services within normal 

business operations. 

Has its performance measured against 

whether the objectives of the federal 

program are met. 

Provides similar goods or services to many 

different purchasers. 

Has responsibility for programmatic 

decision-making. 

Operates in a competitive environment. 

Has responsibility for adherence to 

applicable federal program compliance 

requirements. 

Provides goods or services that are 

ancillary to the operation of the federal 

program. 

Uses federal funds to carry out a program 

of the organization, as compared to 

providing goods or services for a program 

of the pass-through entity. 

Is not subject to compliance requirements 

of the federal program. 

Source: OMB Circular A-133 and the EPA OIG. 

The OIG conducted an analysis of TDOT’s four grant contract awards using 

OMB’s relationship characteristics. With one exception, we concluded that the 

relationships for the four awards are indicative of the characteristics of a vendor; 

not a subrecipient. In summary, TDOT’s awardees did not: 

 Determine who is eligible to receive federal funds. 

 Have their performance measured against the objectives of the program. 

 Have responsibility for making program decisions. 

 Use federal funds to carry out a program of their organization. 

4

 State of Tennessee, Department of Finance and Administration Policy 22, Subrecipient Contract Monitoring
 

(Revised 7/1/04).

5

 Per OMB Circular A-133, it is not expected that all of the characteristics will be present and judgment should be
 

used in determining whether an entity is a subrecipient or a vendor. 

13-R-0321 15 
 

 

 

However, TDOT did require the awardees to comply with applicable Recovery 

Act requirements identified in the cooperative agreement. This requirement is a 

characteristic indicative of a subrecipient rather than a vendor. 

In addition to the characteristic analysis, the OIG reviewed information from 

TDOT regarding the relationship with its grant contract awardees. The OIG 

learned that: 

	 TDOT reviewed OMB Circular A-133 and believed that a vendor 

relationship would best describe their awardees. However, TDOT noted 

that the cooperative agreement refers to subgrants, subawards, and 

subrecipients. 

	 TDOT considered the grantees to be vendors and did not include them in 

the state’s subrecipient monitoring program (required for subrecipients by 

Policy Statement 22). However, TDOT stated that it had been 

conscientious in trying to address the administrative and programmatic 

requirements established by the cooperative agreement. TDOT indicated it 

would have done the same regardless of whether the grantees were 

characterized as vendors or subrecipients. TDOT noted that the only 

practical difference is that the projects did not have to be included in the 

subrecipient monitoring program. 

	 The TDOT office that set up the Recovery Act 1512 reporting also set up 

the projects as subrecipients. As a result, most of the office’s 

communications referred to the grantees as subrecipients rather than 

vendors. 

Conclusion 

The OIG’s review and analysis support TDOT making contract awards rather than 

subgrants to the Mountain Plaza Truck Stop and to the three TSE technology 

vendors. TDOT also maintained primary responsibility for ensuring successful 

completion of the project and for monitoring the grant contract awards to ensure 

full compliance with laws, regulations, and terms and conditions of the 

cooperative agreement. Because of EPA’s determination of non-applicability of 

Buy American requirements, TDOT halted its efforts to determine compliance 

with the requirements. As a result, there is no assurance TDOT complied with 

Recovery Act requirements. 

13-R-0321 16 
 

 

 

 

Recommendations 

We recommend that the Region 4 Regional Administrator: 

1.	 Disallow and recover Recovery Act funds of $1,623,049, unless TDOT 

can certify that the project complied with Buy American requirements in 

the Recovery Act, as required by the EPA cooperative agreement with 

TDOT. 

2.	 For the iron, steel, and manufactured goods for which TDOT cannot 

certify compliance, employ the procedures set forth in 2 CFR §176.130 

to resolve the noncompliance. In the event that Region 4 decides to retain 

foreign iron, steel, and manufactured goods in the project under 2 CFR 

§176.130 (c)(3), Region 4 should reduce the amount of the award by the 

cost of the steel, iron, or manufactured goods that are used in the project.6 

EPA and Recipient Comments 

The OIG received comments on the draft report from TDOT and Region 4. 

Region 4 also provided supplemental documentation as support for its comments. 

The supplemental documentation is not included in the report but is available 

upon request. 

TDOT disagreed with our conclusion and recommendations and responded with 

several points. First, TDOT stated that Section 1605 of the Recovery Act and 

2 CFR Part 176 provide that the federal agency issuing the grant shall determine 

whether the Buy American provisions are applicable to a project. Second, TDOT 

made the case that the purchase and installation of TSE equipment at privately 

owned truck stops was not a public work under any recognizable definition of the 

term. Third, TDOT made the case that the agency did not conduct the project. 

TDOT noted that it requested and received direction from EPA on whether Buy 

American provisions applied to the project. Per TDOT, EPA clearly told TDOT 

that the provisions did not apply. Further, TDOT said it followed EPA’s direction 

and did not require two of the project grantees to certify Buy American 

compliance. TDOT also included comments regarding “public works projects” 

and OMB’s Frequently Asked Questions (FAQs) on the Recovery Act website. 

Specifically, TDOT cited that “If the facility is/will be privately owned, then the 

ARRA Buy American provision will not apply to it, because it will not be a public 

building or pubic work.” TDOT also cited two other examples from other 

agencies’ guidance, where Buy American provisions did not apply. TDOT’s 

complete written response regarding this discussion is in appendix A. 

6

 Since the budget or project period of the Cooperative Agreement expired November 30, 2011, enforcement or 

termination in accordance with the agency’s grant management regulation would not be an option for consideration. 

13-R-0321 17 
 

 

Region 4 responded that TDOT has information that demonstrates Buy American 

compliance for all of its grantees. The region provided a Buy American 

certification, dated February 28, 2013, for JR Enterprises South, LLC. Region 4 

also noted that Convoy Solutions had previously provided written documentation 

in a memorandum to TDOT contending that there was “substantial 

transformation” within the meaning of the Buy American requirements of the 

trusses used in construction of the TSE facilities. The region further stated that 

approval of the substantial transformation claim by Convoy Solutions became a 

moot point following EPA’s determination that Buy American provisions did not 

apply to the project. The region stated that it is likely that TDOT would have 

supported the substantial transformation request. EPA’s complete written 

response regarding this discussion is in appendix B. 

Region 4 also disagreed with our conclusion and recommendations, and stands by 

its original decision that Buy American provisions do not apply. Region 4 

continues to maintain that TDOT’s subgrantees conducted the project. Region 4 

cited TDOT’s work plan for the cooperative agreement, saying the work plan 

established up front that TDOT’s role was to develop and facilitate a grant 

competition and oversee selection of subgrantees that would develop TSE parking 

spaces best suited to their respective locations and clientele. Further, the region 

stated the project does not meet the definition of a “public building and public 

work” listed in 2 CFR §176.140, because TDOT did not retain ownership of the 

TSE parking spaces. Region 4 stated that pursuant to OMB’s Recovery Act 

website, the lack of ownership of the property and equipment negates the 

applicability of Buy American provisions. EPA’s complete written response 

regarding this discussion is in appendix C. 

The OIG Response 

The OIG agrees with the Region 4 comments regarding TDOT’s grant award and 

the work plan. However, the OIG does not agree with the conclusion that the 

subgrantees conducted the project. The OIG maintains that TDOT conducted the 

project and contracted for the purchase and installation of the TSE facilities. 

First, the OIG does not agree with Region 4 concerning TDOT making 

subawards. As for the statement: “We agree with EPA that the initial work plan 

addressed the selection of subgrantees (or truck-stop partners),” on page 14 of this 

report, the OIG is only acknowledging that we are in agreement with what the 

work plan states. As discussed in our draft report, the awardees did not meet the 

characteristics of a subgrantee. In addition, TDOT did not consider the awardees 

to be subgrantees and did not include them in the state’s subrecipient monitoring 

program. OMB Circular A-133 (e) states: “Methods to ensure compliance for 

Federal awards made to for-profit subrecipients may include pre-award audits, 

monitoring during the contract, and post-award audits.” Based on the OIG’s 

discussion with TDOT and its external auditors, TDOT did not conduct these 

items because TDOT did not consider the awards to be subgrants. 

13-R-0321 18 
 

 

Further, the OIG disagrees with TDOT’s opinion that the truck stop and TSE 

vendors made programmatic decisions regarding the program (OMB Circular 

A-187 refers to “program” as the “Federal” program). As such, TDOT made all 

programmatic decisions. The truck stop and TSE vendors merely fulfilled their 

obligations under the grant contracts. Additionally, the truck stop and TSE 

vendors did not use federal funds to carry out a program of the organization. 

OMB Circular A-187 uses “organization” to refer to the entity (i.e., truck stop and 

TSE vendors in this instance). TDOT carried out the project under a state 

program. The truck stop and TSE vendors did not have or carry out their own 

programs. In addition, TDOT’s performance was measured against the objectives 

of the federal program, not the truck stop and TSE vendors. TDOT measured the 

truck stop and TSE vendors’ performance against TDOT’s grant contract 

requirements. 

Second, the OIG disagrees with the Region 4 and TDOT comments regarding the 

project not being a public work. The OIG believes the project is a public work 

infrastructure project conducted by TDOT. Public works are a broad category of 

infrastructure projects financed and constructed by the government for 

recreational, employment, and health and safety uses in the greater community. 

Public works are often interchangeable with the term public infrastructures. Per 

EPA, the term infrastructure refers to the substructure or underlying foundation or 

network used for providing goods and services; especially the basic installations 

and facilities on which the continuance and growth of a community, state, etc., 

depend. 

Congress enacted the Recovery Act to invest in transportation, environmental 

protections, and other infrastructure that will provide long-term economic 

benefits. Based on the definition above, public works are defined by “funding” 

and “community use,” not “ownership.” EPA determined that TSE facilities are 

infrastructure projects under the Recovery Act. The EPA’s DERA program 

determination regarding the applicability of the Buy American provision stated 

that TSE facilities are considered to be public works when a governmental entity 

is conducting the project. EPA’s determination does not address ownership as the 

criteria for making the Buy American determination, as discussed in the OMB 

example cited by Region 4 and TDOT, and the other two examples cited by 

TDOT. Rather, EPA based its determination on who is conducting the project. 

The OIG contends the project is a public works project. Therefore, TDOT, as 

recipient of the funds, is responsible for conducting the project. Or, alternatively, 

one might argue that because TDOT was the responsible entity for conducting the 

project, the project fits the category of public works. This argument is consistent 

with the DERA program determination cited on page 14 of this report. 

13-R-0321 19 
 

 

 

 

In conclusion, the OIG acknowledges receipt of the recent Buy American 

certification from JR Enterprises South, LLC. We will revise the report to reflect 

the additional certification. With regards to the Convoy Solution substantial 

transformation request, the OIG obtained the request from TDOT during the 

course of our review. However, the OIG did not consider the request since TDOT 

had not reviewed and accepted the request. Upon TDOT’s acceptance, the OIG 

will review the request, along with the basis for TDOT’s acceptance. 

13-R-0321 20 
 

 

 

 

Chapter 4

Assumptions Significantly 

Overestimated Project Results 

TDOT complied with the cooperative agreement requirements and satisfied 

Region 4 requirements for determining project results. However, TDOT 

overstated its results. This occurred because TDOT utilized significantly 

overestimated usage assumptions in its projections rather than using actual usage 

data. As a result, TDOT does not have reasonable assurance that the TSE project 

will achieve its projected emissions reductions. The project may not achieve 

expected environmental results and human health benefits. Further, the DERA 

program results may be overstated. 

Usage Assumptions Were Significantly Overestimated 

TDOT utilized assumptions that were significantly overestimated based on project 

usage data available at the time of the TSE project final report. The assumptions 

include: 

 The use of estimated hours rather than actual hours of operation. 

 The use of installed facilities rather than operable facilities. 

TDOT initially proposed the installation of a network of 175-200 electrified 

parking spaces. For 200 spaces, TDOT projected reductions in air pollution 

including 60.32 tons per year of NOx; 1.72 tons per year of particulate matter; 

and 3,552 tons per year of carbon dioxide. TDOT also projected a savings of 

approximately 350,000 gallons of diesel fuel per year. TDOT calculated the 

reductions, as encouraged by EPA’s grant solicitation, using the diesel emissions 

quantifier. The calculations required TDOT to make assumptions regarding the 

use of the facilities. TDOT assumed truck drivers would use the facilities for 

8 hours per day for an average of 250 days per year. TDOT used the National 

Deployment Strategy for Truck Stop Electrification,7

 published in 2006, and the 

federal Hours of Service Regulations 8

 as the basis for these assumptions. 

Per the TSE project final report, dated February 28, 2012, TDOT installed 117 

spaces rather than the 175-200 spaces proposed. While the TSE project final 

report discussed the various reasons for not installing the proposed 175-200 

spaces, TDOT initially did not revise its projected results to reflect the actual 

7 Study conducted by the Texas Transportation Institute under a grant funded by EPA.
 8

 U.S. Department of Transportation, Federal Motor Carrier Safety Administration, Sleeper Berth Provision, 

requiring at least 8 consecutive hours in the sleeper berth.
 

13-R-0321 21 
 

 

spaces installed. Programmatic Condition 4 of the cooperative agreement states 

that the final project report will include a summary of the project or activity, 

actual results (outputs and outcomes), and costs. The condition also says the final 

report will include actual emissions benefit calculations. 

TDOT used EPA’s DERA Program Final Report Template, Part 1, December 

2010, to prepare the final report. The template provides a narrative discussion of 

actual project results and examples of how to quantify results. These results may 

include, but are not limited to: emission reductions, cost effectiveness, diesel fuel 

saved, health benefits achieved, and documented improved ambient air quality. 

At EPA’s request, TDOT later updated projected results in the final report using 

the actual spaces installed. However, TDOT’s update included the same 

assumptions used to calculate the initial reductions proposed for the 175-200 

spaces. With the requested updates, EPA accepted the final report on 

March 19, 2012. 

While EPA asked TDOT to update its assumptions based on actual units installed, 

EPA did not ask TDOT to update its usage assumption based on actual usage. As 

such, TDOT’s updated results continue to represent estimated rather than actual 

results. TDOT’s reporting is not consistent with the DERA program final report 

template that discusses actual results. Because TDOT did not consider actual 

usage, the projected results for the project are potentially overstated—including 

annual and lifetime emission reductions, capital and total project cost 

effectiveness, and gallons of diesel fuel saved. 

Use of Estimated Hours Rather Than Actual Hours of Operation 

TDOT’s initial assumptions estimated 8 hours per day of idling. Usage data at the 

time of the TSE project final report was significantly lower than the estimated 

8 hours per day. Table 2 shows actual usage through December 2011 at only 

3.7 percent of planned usage. 

Table 2: Summary of actual versus projected TSE facility usage * 

TSE Vendor 

Reporting 

Months for 

2011 

No. of 

spaces 

installed 

TSE 

hours 

used 

Planned 

usage 

(8 hrs/day) 

Percent 

of 

planned 

usage 

Mountain Plaza 

Truck Stop May–July 30 514 15,120 3.4 

North Forty Truck Stop 

(JR Enterprises) Oct.–Dec. 30 52 15,120 0.3 

Super Truck & Travel 

Plaza (Shorepower) Oct.–Dec. 24 0 12,096 0.0 

Pilot Flying J 

(Convoy Solutions) 

Totals 

Oct.–Dec. 33 

117 

1,625 

2,191 

16,632

58,968 

9.8 

3.7 

Source: EPA OIG.
 

(*) Usage calculated at 8 hours/day x 21 days/month (based on TDOT) x no. of spaces installed.
 

13-R-0321 22 
 

 

 

The following factors contributed to the lower usage: (1) Mountain Plaza Truck 

Stop closed after approximately 3 months of operation; (2) three facilities were 

not completed and placed into operation until October 2011; and (3) truck drivers 

were using TSE facilities at lower-than-projected levels. According to the 

TSE project final report, there are several other factors contributing to lower-thanprojected levels of use, including the fact that many major companies will not pay 

for their drivers to use the units, and that drivers remain skeptical of the 

equipment despite relatively low prices. 

TDOT believes that the project partners have a great deal of work to do to 

persuade truck drivers to use the facilities. Further, TDOT said that in the absence 

of a serious outreach effort or a significant spike in diesel fuel prices, TSE 

equipment usage is likely to remain low. 

In August 2012, TDOT communicated to the OIG that usage data collected for the 

first two quarters of 2012 indicate TSE vendors that have implemented proactive 

outreach efforts are achieving the best results. TDOT continues to encourage 

marketing of the TSE facilities. In addition, as noted in the TSE project final 

report, TDOT has employed billboard advertising and targeted magazine and 

website advertising to help make truck drivers aware of TSE facilities available in 

Tennessee. TDOT will also continue to work with TSE vendors and truck-stop 

owners to raise awareness and encourage truck drivers to increase their use of 

TSE facilities. 

However, unless TDOT can demonstrate a significant increase in usage of TSE 

facilities, project results will remain significantly overstated. TDOT could achieve 

a more accurate projection of results based on actual usage or a more realistic 

assumption for anticipated usage, rather than the 8 hours per day currently used. 

Use of Installed Rather Than Operable Facilities 

The 117 installed spaces 

used in the projected results 

calculation of the TSE 

project final report 

included 30 TSE units 

installed at the Mountain 

Plaza Truck Stop. The 

truck stop closed due to 

bankruptcy and subsequent 

foreclosure approximately 

3 months after the TSE 

facilities were placed into 

operation. The truck stop 

has remained closed and Boarded up Mountain PlazaTruck Stop. 

(EPA OIG Photo) 

13-R-0321 23 
 

 

the TSE facilities have been nonoperational since September 2011. However, 

TDOT is optimistic about the reopening of the former truck stop and the 

utilization of TSE units installed at the site. Per TDOT, a new owner purchased 

the truck stop in 2012. The new owner views the TSE units as business assets and 

intends to put the units back into operation. Renovations of the property have 

begun, and the new owner plans to reopen the truck stop. Until this actually 

occurs, TDOT has no assurance that the truck stop will reopen or that the new 

owner will operate the TSE facilities. 

Conclusion 

Unless TDOT can demonstrate a significant increase in usage of TSE facilities, 

EPA does not have reasonable assurance that the project will achieve projected 

emissions reductions, or expected environmental results and human health 

benefits. A recalculation of results using actual usage data would more accurately 

project results and reflect a more realistic assumption for anticipated usage. 

Recommendations 

We recommend that the Region 4 Regional Administrator: 

3.	 Review the assumptions used by TDOT to calculate projected results to 

determine if the assumptions are valid, consistent with the DERA program 

guidance, and representative of project usage. If needed, work with TDOT 

to develop a more accurate projection of project results based on actual 

usage and a more realistic assumption of anticipated usage. 

4.	 Review any recalculated results of the project in accordance with EPA 

Order 5700.7 and Programmatic Condition 4 to determine whether TDOT 

achieved the objectives of the cooperative agreement. 

5.	 Adjust the DERA program reporting of TDOT project results to reflect 

recalculated results. 

EPA and Recipient Comments 

The EPA concluded that the overall objectives of the cooperative agreement have 

been met. This includes installing and operating a network of 117 electrified 

parking spaces across Tennessee, with some level of demonstrated emission 

reductions and fuel savings based on the limited TSE usage data available to 

TDOT at the time the final project report was prepared and submitted to the EPA. 

The EPA has already taken steps in conjunction with TDOT to address the 

concerns raised in the draft report. EPA is working with TDOT to rerun the diesel 

emissions quantifier. Post-project TSE usage data will be utilized to produce 

13-R-0321 24 
 

 

 

updated emissions-reduction information, which will be incorporated as an 

addendum to this project. 

TDOT stated its willingness to work with EPA staff to modify the estimates of 

project results based on actual usage or a revised assumption of anticipated usage. 

However, TDOT offered the following comments that are relevant to the 

finding and the cause of the finding. 

In regards to using estimated hours of use rather than actual hours of operation, 

TDOT stated that it is notable that there was very limited usage data at the end of 

the project period, which ended November 30, 2011. The TSE project final report 

was due in February 2012. TDOT did not have a more accurate method for 

forecasting the hours of use of the project’s TSE equipment; therefore, 

assumptions from TDOT’s grant application were used to prepare the final report. 

TDOT believed that it was clear in its proposal that the estimate considered the 

potential for reducing emissions. The estimates for emissions were calculated, as 

directed by EPA’s grant solicitation, using the diesel emissions quantifier. TDOT 

assumed one truck per parking space for each of the proposed electrified parking 

spaces (e.g., 100 parking spaces provides the opportunity to reduce emissions 

from 100 trucks per day times an estimated 250 days per year). TDOT believed 

this to be a reasonable estimate of the potential emissions that could be reduced 

through TSE. 

TDOT understands the OIG’s concern about the accuracy of calculating emissions 

benefits based on the use of installed facilities rather than operable facilities. 

For the purposes of the TSE project final report, however, TDOT believed that 

including installed TSE spaces in the calculations of potential emissions 

reductions was reasonable. As recommended by the OIG, TDOT is willing to 

work with EPA staff to modify the estimates of project results based on actual 

usage or a revised assumption of anticipated usage. 

The OIG Response 

The OIG acknowledges comments from Region 4 and TDOT, and understands the 

basis for the calculations. However, the OIG continues to maintain that unless 

TDOT can demonstrate a significant increase in usage of TSE facilities, project 

results will remain significantly overstated. The OIG commends TDOT’s 

willingness to work with EPA staff to modify the estimates on actual usage or 

revise the assumptions concerning anticipated usage. The OIG also commends 

Region 4 and the efforts the region has already taken to address the issue, and we 

look forward to the receipt and evaluation of updated emission information. 

13-R-0321 25 
 

 

 

 

 

 

 

 

 

 

 

 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Planned 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Completion 

Date 

Claimed 

Amount 

Agreed-To 

Amount 

1 17 Disallow and recover Recovery Act funds of 

$1,623,049, unless TDOT can certify that the 

project complied with Buy American requirements 

in the Recovery Act, as required by the EPA 

cooperative agreement with TDOT. 

U Region 4 

Regional Administrator 

$1,623 

2 17 For the iron, steel, and manufactured goods for 

which TDOT cannot certify compliance, employ the 

procedures set forth in 2 CFR §176.130 to resolve 

the noncompliance. In the event that Region 4 

decides to retain foreign iron, steel, and 

manufactured goods in the project under 2 CFR 

§176.130 (c)(3), Region 4 should reduce the 

amount of the award by the cost of the steel, iron, 

or manufactured goods that are used in the project. 

U Region 4 

Regional Administrator 

3 24 Review the assumptions used by TDOT to 

calculate projected results to determine if the 

assumptions are valid, consistent with the DERA 

program guidance, and representative of project 

usage. If needed, work with TDOT to develop a 

more accurate projection of project results based 

on actual usage and a more realistic assumption of 

anticipated usage. 

U Region 4 

Regional Administrator 

4 24 Review any recalculated results of the project in 

accordance with EPA Order 5700.7 and 

Programmatic Condition 4 to determine whether 

TDOT achieved the objectives of the cooperative 

U Region 4 

Regional Administrator 

agreement. 

5 24 Adjust the DERA program reporting of TDOT 

project results to reflect recalculated results. 

U Region 4 

Regional Administrator 

1	 O = Recommendation is open with agreed-to corrective actions pending. 

C = Recommendation is closed with all agreed-to actions completed. 

U = Recommendation is unresolved with resolution efforts in progress. 

13-R-0321 26 
 

 

 

 

Appendix A 

TDOT’s Comments on Draft Report 

STATE OF TENNESSEE 

DEPARTMENT OF TRANSPORTATION 

JOHN C. SCHROER 

COMMISSIONER 

LONG RANGE PLANNING DIVISION 

SUITE 900, JAMES K. POLK BUILDING 

505 DEADERICK STREET 

NASHVILLE, TENNESSEE 37243-1402 

(615) 741-3421 

 BILL HASLAM 

 GOVERNOR 

March 11, 2013 

Ms. Angela Bennett 

EPA Office of Inspector General 

61 Forsyth St., SW (Mail Code 12T26) 

Atlanta, GA 30303 

RE: Comments on Draft Attestation Report 

Examination of Costs and Compliance for Cooperative Agreement No. 95425709 

Awarded to the Tennessee Department of Transportation 

Dear Ms. Bennett: 

The Tennessee Department of Transportation (TDOT) values the opportunity to review and comment on the 

draft report prepared by EPA's Office of Inspector General (OIG) on the audit of TDOT Cooperative 

Agreement 95425709. TDOT’s comments on each major recommendation are presented below. 

TDOT's application for this ARRA Diesel Emissions Reduction Grant directly addressed EPA Region 4's first 

priority of developing a Regional Green Corridors Program focusing on idle reductions for trucking along 

interstate corridors. The agency’s proposal for this economic stimulus grant also addressed another grant 

criterion, which was to assist those most affected by the current economic conditions, in this case truck owners 

and drivers and truck stop owners. 

Truck stop electrification (TSE) technology saves fuel and reduces harmful diesel emissions. It saves money 

for drivers who use the technology by allowing them to cut off their engines and use a more environmentally 

sound way to heat and cool their trucks while they rest. TSE demonstrates tremendous potential for significant 

reductions in pollutant and noise emissions at low operational cost to the driver. TSE installations also offer 

long-term economic benefits by providing a continuing source of revenue to truck stops while reducing truck 

owners’ operational costs. 

13-R-0321 27 
 

 

 

Regarding the OIG draft report, TDOT was surprised and deeply disappointed at the arbitrary and capricious 

nature of the OIG recommendations. Further, TDOT is mystified by OIG’s recommendation that the grantee 

(i.e., TDOT) be severely punished for what is essentially an internal disagreement between EPA and OIG on 

the applicability of Buy American provisions. 

Before responding to the details of the draft report, TDOT would like to emphasize several points. 

First, the statutory language of ARRA anticipated many questions that would likely arise regarding the 

technical details of Buy American compliance. Section 1605 of the American Recovery and Reinvestment Act 

of 2009 (ARRA) and 2 CFR Part 176 provide that the federal agency issuing the grant shall determine whether 

the Buy American provisions are applicable to a project. EPA determined that Buy American did not apply to 

this project. 

OIG Response 1: The OIG does not agree that Section 1605 of the Recovery Act and 2 CFR 

Part 176 give federal agencies the authority to determine whether Buy American provisions 

are applicable to the project. Rather, the provisions give federal agencies the authority to 

allow the recipient to use foreign iron, steel, or manufactured goods in the project without 

regard to the restrictions of Section 1605 of the Recovery Act, when one of three exceptions 

apply (i.e., nonavailability, unreasonable cost, or inconsistent with public interest). EPA did 

not base its determination on these exceptions. 

Second, in TDOT’s comments on OIG’s draft position paper in August 2012, the agency made the case that 

the purchase and installation of truck stop electrification equipment at privately owned truck stops was not a 

public work under any recognizable definition of the term. 

Third, TDOT also made the case that the agency did not conduct the project. 

OIG Response 2: The OIG disagrees with TDOT and believes the project is a public work 

(infrastructure project) conducted by TDOT. Public works are a broad category of 

infrastructure projects financed and constructed by the government for recreational, 

employment, and health and safety uses in the greater community. Public works are often 

interchangeable with the term public infrastructures. Per EPA, the term infrastructure refers to 

the substructure or underlying foundation or network used for providing goods and services; 

especially the basic installations and facilities on which the continuance and growth of a 

community, state, etc., depend. EPA determined TSE facilities to be infrastructure projects 

under the Recovery Act. 

Congress enacted the Recovery Act to invest in transportation, environmental protections, and 

other infrastructure that will provide long-term economic benefits. Based on the definition 

above, public works are defined by “funding” and “community use,” not “ownership.” The 

OIG contends the project is a public works project. Therefore, TDOT, as recipient of the 

funds, is responsible for conducting the project. Or, alternatively, one might argue that 

because TDOT was the responsible entity for conducting the project, the project fits the 

category of public works. This argument is consistent with the DERA program determination 

cited on page 14 of this report. 

13-R-0321 28 
 

 

 

 

TDOT requested and received direction from EPA on whether Buy American provisions applied to the project. 

EPA told us clearly that Buy American did not apply to the project. TDOT, in good faith, followed EPA’s 

direction and did not require two of the project grantees to certify Buy American compliance. As a result, OIG 

now recommends that the appropriate response from EPA is to punish the ARRA project sponsor (i.e., TDOT) 

for following that direction. 

OIG’s report acknowledges twice that the “cause” of the alleged noncompliance was EPA’s determination that 

Buy American did not apply. In the “At a Glance” section at the front of the report, OIG states that TDOT did 

not obtain Buy American certifications from all of its Grant Contract awardees. This phrase could be easily 

misunderstood because TDOT did obtain Buy American certifications from two grantees. The OIG went on to 

say that this “occurred because EPA incorrectly determined, subsequent to the contract awards, that the 

requirements did not apply to the project.” 

OIG’s conclusion that TDOT should be punished is both harsh and unjust. 

Further, OIG also says that the opening of the competition to TSE technology vendors “resulted in TDOT’s 

procurement of equipment and installation of the equipment directly from three TSE technology vendors.” 

This simply is not accurate. TDOT reimbursed the technology companies after those companies obtained and 

installed the technology at interstate truck stops. TDOT supervised the companies’ processes to procure the 

equipment and hire contractors to install it on the truck stop property. TDOT did not procure the equipment for 

these grantees and does not own the equipment. 

After considering all of the above, OIG leaped to the draconian conclusion that TDOT should have ignored 

EPA’s direction that Buy American did not apply and substitute TDOT’s judgment that Buy American did 

apply. This unfair and punitive judgment stands even though TDOT complied with the determination of Buy 

American applicability as provided by Section 1605 of ARRA. Despite the obvious uncertainty regarding this 

issue and EPA’s internal disagreement over the determination that EPA made, the OIG decided to recommend 

the most severe remedy (i.e., that EPA should disallow and recover the ARRA funds involved). 

OIG Response 3: The OIG acknowledges that TDOT, in good faith, followed EPA’s 

direction regarding the applicability of Buy American requirements. However, as discussed in 

the report, the OIG maintains that EPA incorrectly made this determination. The 

determination regarding the applicability of Buy American should have been made according 

to the exceptions noted in 2 CFR § 176.70. Region 4 did not base its determination on the 

exceptions. Further, the OIG’s conclusions and recommendations are consistent with Section 

1605 of the Recovery Act and 2 CFR Part 176. 

OIG Recommendation 1 - ARRA DERA Tennessee DOT Cooperative Agreement No. 

95425709 

In Chapter 3 of the draft report, OIG comments that “TDOT followed applicable laws, regulations, and terms 

and conditions of the cooperative agreement in the procurement and monitoring of contracts for the TSE 

facilities with the exception of the Recovery Act Buy American requirements.” The report then recommends 

that “EPA disallow and recover applicable Recovery Act funds unless TDOT can certify that the project fully 

complied with Buy American requirements.” 

TDOT strongly objects to the audit report’s recommendation regarding Buy American compliance and 

strongly believes the OIG recommendation is arbitrary, capricious, unfair and unjustified. On August 3, 2012, 

13-R-0321 29 
 

 

 

TDOT made many of the points below in responding to the OIG’s draft Position Papers. Although the OIG did 

not respond to those points in the draft report, TDOT believes the following points are still relevant. 

OIG Response 4: The OIG acknowledges TDOT’s comments. The OIG did evaluate 

TDOT’s response to the position papers and incorporated changes into the draft report as 

deemed necessary. It is not the OIG’s practice to attach and include specific responses to 

position papers in the draft report. The OIG issues position papers primarily to provide an 

opportunity for the auditee to review the findings and recommendations prior to issuing the 

official draft report and to comment on any factual inaccuracies. 

Definition of a Public Work 

The report states that TDOT "did not provide assurance that all iron, steel, or manufactured goods incorporated 

into the project were manufactured in the United States, as required by the Recovery Act." The finding 

language focuses on the definition of a "public work" and implies that all Recovery Act infrastructure projects, 

regardless of project details, must comply with the Buy American requirements. Section 1605 of the American 

Recovery and Reinvestment Act of 2009 (ARRA) and 2 CFR Part 176 provide that the federal agency issuing 

the grant shall determine whether the Buy American provisions are applicable to a project. 

OIG Response 5: See OIG Response 1 and 2. 

TDOT has reviewed several guidance documents, including one from the Office of Management 

and Budget (OMB) on the subject of Buy American applicability. Those documents clearly 

indicate only public works projects are subject to Buy American. For example, OMB's Frequently 

Asked Questions (FAQs) on the American Recovery and Reinvestment Act (ARRA) of 2009 

responded to Question 7 (General Recovery Act FAQ) about whether the Buy American provision 

under Section 1605 of ARRA applies to construction undertaken by a university with ARRA 

funds. The OMB response included the following sentence: "If the facility is/will be privately 

owned, then the ARRA Buy American provision will not apply to it, because it will not be a 

"public building or public work." www.whitehouse.gov/omb/recovery_faqs/ 

Similarly, the National Institute of Standards and Technology (NIST) provided supplemental guidance on that 

agency's ARRA grants. This document on page 3 states that governmental entities receiving ARRA funds for 

construction of a public building or public work must comply with the ARRA Buy American requirements. 

The next sentence in the guidance is directly relevant. The italicized words are included on the NIST web 

page. "However, if the facility being constructed ... under the NIST construction grant is or will be privatelyowned, it is not considered to be a public building or a public work and the Buy American requirements do 

not apply." www.nist.gov/recovery/upload/FINAL-NCG-SBAG.pdf 

The U.S. Department of Energy (DOE) maintains a Frequently Asked Questions website regarding the 

American Recovery and Reinvestment Act. The website contains the following question and answer. 

Q: Does Buy American apply to private projects, or private contractors on public projects? 

A: No, and yes, respectively. The Buy American requirements apply to all Recovery Act funds used for a 

project for the construction, alteration, maintenance, or repair of a public building or public work. The 

question, therefore, is whether the project is for a public building or public work, not who is performing 

the work. Generally speaking, if a government entity owns or leases the building or work, it is a public 

13-R-0321 30 
 

 

 

building or work that would be subject to the Buy American provision. However, title is not the only 

factor (it is not dispositive). Determinations of what is a public building or public work must be made on 

a case-by-case basis by the grantee and the Recovery Act award official (the Contracting Officer). 

http://www1.eere.energy.gov/recovery/buy_american_faq.html#q6 

OIG Response 6: The OIG does not consider the examples included above to be applicable 

to the situation in question. The OMB’s FAQs example relates to a seemingly unique scenario 

involving a state college or university. The remaining two examples simply represent the 

opinions of other agencies—not the EPA. The agency made its own determination as set forth 

in the cooperative agreement. This determination focuses on who is conducting the 

project—not ownership. See OIG Response 2 for additional information related to this issue. 

Cause of Noncompliance - EPA Informed TDOT that Buy American Did Not Apply 

For the TDOT ARRA grant, EPA Region 4 confirmed in writing to TDOT that Buy American requirements 

did not apply to this truck stop electrification project. This was based on EPA's determination that the project 

was not a public work. In fact, the final OIG report refers twice to EPA's determination that Buy American 

requirements did not apply to the TDOT project as the cause of the alleged noncompliance. Although the OIG 

position paper cites EPA's determination as the cause, OIG unreasonably recommends that EPA's Region 4 

Regional Administrator disallow and recover Recovery Act funds. 

OIG believes EPA erred in this determination because OIG does not agree with EPA’s conclusion that the 

project was not a public work conducted by TDOT. Instead, OIG finds that TDOT conducted the project based 

on OIG's interpretation of the definition of public work in Title 2 CFR 176.140. That rule defines public 

building and public work as "a public building or public work of a governmental entity (the United States; ... 

State and local governments; ....).These buildings and works may include, without limitation, bridges, dams, 

plants, highways, parkways, streets, subways, tunnels, sewers, mains, power lines, pumping stations, heavy 

generators, railways, airports, terminals, docks, piers, wharves, ways, lighthouses, buoys, jetties, breakwaters, 

levees and canals, and the construction ... of such buildings and works." 

TDOT cannot understand how a good faith reading of this definition supports the OIG conclusion that the 

purchase and installation of truck stop electrification (TSE) technology at privately owned truck stops is a 

"public work." Public works are publicly owned. The ARRA funding was used by private entities to purchase 

and install TSE equipment at privately owned truck stops. In one case, the equipment was purchased and 

owned by a truck stop (the TDOT grantee). In the three other projects, the equipment is owned by a TSE 

technology company (TDOT’s grantee) and installed on a privately owned truck stop through a formal 

agreement between the TSE technology company and the truck stop. In all cases, the equipment was 

purchased by and is owned by a private sector company. 

OIG Response 7: The definition of public works includes no reference to ownership, rather it 

discusses projects of a governmental entity. Additionally, the list of items presented is not 

intended to be complete. See OIG Response 2 for additional OIG comments on public works. 

13-R-0321 31 
 

 

 

 

 

TDOT Did Not Conduct the Project 

OIG has concluded that “TDOT contracted rather than subgranted the procurement and installation of the 

TSE facilities. In doing so, TDOT conducted the project and, as such, per DERA program determination, 

Buy American requirements would apply.” Further, OIG finds that by opening the grant competition to 

TSE technology vendors, this “resulted in TDOT’s procurement of equipment and installation of the 

equipment directly from three TSE technology vendors.” 

TDOT strongly disagrees with the OIG conclusion. As noted in the OIG audit report, TDOT’s role was to 

develop and facilitate a grant competition and to oversee the selection of grantees who would be 

conducting the project. Further, TDOT’s role was to ensure successful completion of the selected projects, 

monitor performance of grantees and ensure compliance with applicable laws, regulations, and terms and 

conditions that flow down from the EPA grant award. 

The purchase and installation of truck stop electrification (TSE) equipment at four Tennessee truck stops 

was carried out by the successful applicants that responded to TDOT's request for grant applications. Those 

grantees ordered and received TSE equipment, published bid requests and managed the procurement 

process for selecting construction and electric contractors, supervised construction and paid invoices for 

equipment and installation costs. Three of the grantees identified candidate truck stops for installing TSE 

technology and negotiated agreements with the host truck stops. This was done in all three cases without 

TDOT’s involvement or participation. The conclusion that TDOT conducted the project directly contradicts 

the facts. 

TDOT did provide oversight and monitoring of this ARRA project and TDOT staff worked diligently with 

partner companies to ensure that state and federal requirements were met. However, TDOT understands 

that this monitoring was required by ARRA and necessary to ensure that procurement and financial 

procedures and requirements were satisfied. In any case, that oversight does not mean that TDOT 

conducted the project. That conclusion simply cannot be supported by an objective evaluation of how the 

project was implemented. 

OIG holds that TDOT conducted the project and therefore Buy American requirements applied. As a result, 

the final report recommends that EPA ignore the fact that TDOT was following written guidance from EPA - 

the federal agency that awarded the grant. Further, OIG recommends that EPA punish the state for following 

the guidance established by the granting agency. This suggests that the appropriate EPA action is to punish 

the ARRA grantee for a policy disagreement within EPA. This reasoning is arbitrary, capricious, unfair and 

unjustified. 

If the OIG’s recommendation is accepted, to protect their respective institutions, potential EPA grantees should 

be very wary in accepting an EPA grant because the grant could be a great risk to the grant applicant 

institution. Grantees should not feel comfortable in following written directions from EPA as the federal 

agency issuing the grant. They cannot be confident that following the guidance of the granting federal agency 

will protect the grantee from punitive actions if the OIG subsequently determines that a requirement was not 

met. If this reasoning is followed, all grantees will be forced to obtain necessary direction from EPA’s Office 

of the Inspector General. 

OIG Response 8: The OIG largely agrees with TDOT’s discussion regarding implementation 

of the project. However, the OIG does not agree that the individual grantees conducted the 

project. The OIG maintains that TDOT, as the recipient of the grant funds, conducted the 

project. TDOT in turn contracted with the grantees to purchase and install TSE facilities. See 

OIG Response 2 for additional information related to this issue. 

13-R-0321 32 
 

 

 

 

OIG Report Recommendation 2 -ARRA DERA Tennessee DOT Cooperative Agreement No. 95425709 

In Chapter 4 of the draft report, OIG comments that “TDOT complied with the cooperative agreement 

requirements and satisfied Region 4 requirements for determining project results. However, TDOT overstated 

its results. This occurred because TDOT utilized significantly overestimated usage assumptions in its 

projections rather than using actual usage data.” 

OIG further states that, “While EPA asked TDOT to update its assumptions based on actual units installed, 

EPA did not ask TDOT to update its usage assumption based on actual usage. As such, TDOT’s updated 

results continue to represent estimated rather than actual results. TDOT’s reporting is not consistent with the 

DERA program final report template that discusses actual results.” 

The second recommendation in the draft audit report states that "TDOT potentially overstated project results 

and the project may not achieve expected environmental and human health benefits." The OIG recommends 

that EPA Region 4 review the assumptions used by TDOT to calculate projected results and, if needed, to work 

with TDOT to develop a more accurate projection of project results based on actual results and/or a more 

realistic assumption for anticipated usage. 

TDOT is certainly willing to work with EPA to review TDOT’s projected results and to make any 

necessary adjustments to those projections, as directed by Region 4. TDOT offers the following 

comments, however, which are relevant to the finding and the cause of the finding. 

OIG states that TDOT's estimated environmental results "utilized assumptions that are significantly 

overestimated based on project usage data at the time of the Final Report. These assumptions include the 

following: 

 the use of estimated hours rather than actual hours of operation; and 

 the use of installed facilities rather than operable facilities." 

In regard to the use of estimated hours of use rather than actual hours of operation, it is notable that there was 

very limited usage data at the end of the project period, which ended November 30, 2011. The Final Report 

was due in February 2012. TDOT did not have a more accurate method for forecasting the hours of use of the 

project TSE equipment and, therefore, used the assumptions from TDOT’s grant application in preparing the 

Final Report. 

The usage and emissions estimates used in TDOT's grant application were based largely on a study conducted 

by the Texas Transportation Institute (TTl), National Deployment Strategy for Truck Stop Electrification, 

published in 2006 and funded by a grant through the U.S. EPA Office of Transportation and Air Quality (as 

referenced in the grant proposal). According to the TTl study, truck drivers idle their engines from six to 10 

hours per day on extended trips. A typical long-haul truck is on the road for an estimated 250 to 300 days per 

year, resulting in average annual idling between 1,500 to 3,000 hours per truck. 

TDOT proposed to equip 175 - 200 parking spaces with truck stop electrification technology and provided 

emission estimates for both 175 and 200 TSE-equipped spaces. TDOT chose to use a more conservative 

estimate in both scenarios. Since federal Hours of Service (HOS) regulations allowed truck drivers to claim 

eight hours of off-duty rest time in sleeper berths, TDOT used eight hours of rest on an average of 250 days 

per year in calculating the baseline data. This is equivalent to a potential 2,000 hours of idle time reduced 

annually, which was less than EPA’s Diesel Emissions Quantifier's default assumption of 2,400 hours idle time 

per truck. 

13-R-0321 33 
If you have any questions, please feel free to contact me at 615-741-6832 or at alan.jones@tn.gov. 

 

 

 

 

We believe it was clear in our proposal that this estimate considered the potential for reducing emissions. 

Emissions estimates were calculated, as directed by EPA's grant solicitation, using the Diesel Emissions 

Quantifier. We assumed one truck per parking space for each of the proposed electrified parking spaces (e.g., 

100 parking spaces provides the opportunity to reduce emissions from 100 trucks per day x an estimated 250 

days per year). We believe this is a reasonable estimate of the potential emissions that could be reduced 

through truck stop electrification. 

As noted in the OIG draft report, upon EPA's request, TDOT updated expected project results in its Final 

Report using the actual number of TSE spaces installed and the same assumptions used to calculate the initial 

estimated outcomes under the Cooperative Agreement. EPA accepted TDOT’s final report on March 19, 2012. 

As TDOT noted in the final report, actual emission reductions will depend on the idling emission rate of 

heavy-duty truck engines and the hours of truck idling that are avoided through truckers' use of the TSE 

equipment. 

TDOT understands OIG's concern about the accuracy of calculating emissions benefits based on the use of 

installed facilities rather than operable facilities. For the purposes of the Final Report, however, we believe that 

including installed TSE spaces in the calculations of potential emissions reductions was reasonable. 

As recommended by the OIG, TDOT is willing to work with EPA staff to modify the estimates of 

project results based on actual usage or a revised assumption of anticipated usage. 

OIG Response 9: The OIG acknowledges TDOT’s comments and understands the basis for 

the calculations. However, the OIG continues to maintain that unless TDOT can demonstrate 

a significant increase in usage of TSE facilities, project results will remain significantly 

overstated. The OIG commends TDOT’s willingness to work with EPA staff to modify the 

estimates based on actual usage or a revised assumption of anticipated usage. 

Sincerely, 

Alan D. Jones 

Manager, Policy Office 

Long Range Planning Division 

cc: Brian Carroll 

Chris Christianson 

Tanisha Hall 

Mel Marcella 

Toks Omishakin 

John Reinbold 

Linda Tidwell 

13-R-0321 34 
 

 

Appendix B 

Agency’s Comments on Draft Report 

This is in response to your January 24, 2013, email providing an opportunity to comment on the 

draft Office of Inspector General report and requesting feedback on concurrence or nonconcurrence with the findings and proposed recommendations from the OIG’s audit of the 

Tennessee Department of Transportation’s American Recovery and Reinvestment Act (Recovery 

Act) Diesel Emissions Reduction Act (DERA) Project Grant, EPA Grant No. 2A-95425709. The 

U.S. Environmental Protection Agency, Region 4, has reviewed the draft report and compared 

the findings and recommendations to the information available in the project file and 

supplemental information provided by the grantee. Based on this information, we offer the 

following response on the draft report which concluded that: (1) TDOT did not ensure 

compliance with the Buy American requirements stipulated in the Recovery Act for its EPA 

DERA truck stop electrification (TSE) cooperative agreement; and (2) TDOT potentially 

overstated project results and the project may not achieve expected environmental and human 

health benefits. 

Response to Finding 1: 

1.	 The EPA provided a written determination to the TDOT that the Buy American 

provisions do not apply to its truck stop electrification project. While we continue to 

believe that this is an accurate determination, we contacted TDOT to see if it had any 

additional information that would factually address the concerns raised in the draft report 

13-R-0321 35 
 

 

 

   

regarding Buy American compliance. At this point, we would conclude that, independent 

of the agency determination of nonapplicability of Buy American to this project, TDOT 

has information to demonstrate Buy American compliance for all of its grantees. 

Mr. Alan Jones of TDOT confirmed to EPA staff that the grantee which had not provided 

a Buy American certification during the project period, JR Enterprises South, LLC, has 

since provided a certification of its Buy American compliance applicable to this project, 

which is provided as an attachment. The only other grantee noted in the OIG report 

whose Buy American compliance status was mentioned involved the entity Convoy 

Solutions. Convoy Solutions had previously provided written documentation in a 

memorandum to TDOT contending that there was a “substantial transformation” within 

the meaning of the Buy American requirements of the trusses used in construction of the 

TSE facilities. Convoy Solutions utilized “sold for scrap” recycled trusses that were 

retrofitted/altered to include the addition of new equipment. The approval of Convoy 

Solutions’ substantial transformation claim became a moot point following the EPA’s 

determination that Buy American did not apply to this project; however, it is likely that 

TDOT would have supported Convoy Solutions’ substantial transformation request. In 

addition, the majority of the costs for this project were either exempt from the Buy 

American requirements or were American made products. For the Convoy Solutions 

project, the total reimbursed costs for the project was $473,250 (invoices attached), of 

which $452,000 was paid to purchase services or exempt items, or to purchase American 

made products. 

OIG Response 1: The OIG acknowledges receipt of the recent Buy American 

certification from JR Enterprises South, LLC. We will revise the report to reflect the 

additional certification. In regards to the Convoy Solution substantial transformation 

request, the OIG obtained the request from TDOT during the course of our review. 

However, the OIG did not consider the request since TDOT had not reviewed and 

accepted the request. Upon TDOT’s acceptance, the OIG will review the request, 

along with the basis for TDOT’s acceptance. 

2. The EPA continues to have concerns about finding number 1 as detailed in our August 6, 

2012, response to OIG’s July 19, 2012, Position Papers. (See attached.) 

OIG Response 2: See OIG comments in the August 6, 2012, response to the OIG’s 

July 19, 2012, position papers (appendix C). 

Response to Finding 2: 

1.	 The EPA concluded that the overall objectives of the cooperative agreement have been 

met. This includes the installation and operation of a network of 117 electrified parking 

spaces across Tennessee with some level of demonstrated emission reductions and fuel 

savings based on the limited TSE usage data available to TDOT at the time that the final 

project report was prepared and submitted to the EPA. The EPA has already taken steps 

13-R-0321 36 
 

 

in conjunction with TDOT as outlined in our August 6 memorandum (attached) to 

address the concerns raised in the draft report. EPA is working with TDOT to rerun the 

diesel emissions quantifier. Post project TSE usage data will be utilized to produce 

updated emission reduction information, which will be incorporated as an addendum to 

this project. 

OIG Response 3: The OIG acknowledges comments from Region 4 and commends 

the efforts already taken to address the issue. The OIG looks forward to the receipt 

and evaluation of updated emission information. 

Additional comments: 

1.	 On page 12 of the draft report, a conclusion is made that the Mountain Plaza Truck Stop 

grant award was a contract. It is our position that such a conclusion is inconsistent with 

the facts established for this project. The nature of the agreement between the TDOT and 

Mountain Plaza was to carry out a public purpose as part of TDOT’s mission; 

specifically, a reduction in diesel emissions resulting from the installation of electrified 

parking spaces at the truck stop. The nature of this agreement is consistent with that of a 

subaward and acknowledged by the OIG on page 10 of the report which states, “We 

agree with EPA that the initial work plan addressed selection of subgrantees (or truck 

stop partners).” For example, Mountain Plaza Truck Stop conducted an open competition 

soliciting the installation of TSE equipment at its location, and it then selected the TSE 

vendor to complete the TSE work for the project. This demonstrates the independent 

nature of this entity operating as a subawardee as opposed to a TDOT contractor. 

OIG Response 4: The OIG does not agree with Region 4’s assertion that TDOT made 

subawards. As for the statement on page 13 of this report, the OIG is only 

acknowledging that we are in agreement with what the work plan states. As for TDOT 

calling its grant contract awardees, subgrantees, this is just one example of very 

confusing terminology used by TDOT throughout the project. As discussed in our 

draft report, the awardees did not meet the characteristics of a subgrantee. In addition, 

TDOT did not consider the awardees to be subgrantees and did not include them in the 

state’s subrecipient monitoring program. OMB Circular A-133 (e) states: “Methods to 

ensure compliance for Federal awards made to for-profit subrecipients may include 

pre-award audits, monitoring during the contract, and post-award audits.” Based on 

the OIG’s discussion with TDOT and its external auditors, TDOT did not conduct 

these items because TDOT did not consider the awards to be subgrants. 

2.	 It is not clear from the statement on the bottom of page 6, referencing TDOT’s third 

round request for applications “open to truck stop owners and TSE technology vendors”, 

that there is an understanding of the requirement that in order to be eligible for this grant 

competition, a TSE technology vendor must provide evidence of its partnership with a 

truck stop as demonstrated by a letter of commitment from the truck stop, not that a TSE 

vendor could qualify to carry out the electrification grant project on its own. The object 

13-R-0321 37 
 

 

of the partnership was to carry out a public purpose of improving air quality through the 

reduction of diesel emissions rather than to procure goods or services for the direct 

benefit of TDOT, further demonstrating a contract was not present in this case. 

OIG Response 5: The OIG understands the truck stop and the TSE vendor 

“partnership” concept. The paragraph was included in the background section to point 

out that TDOT opened the RFA process to include vendor applicants. 

3.	 The conclusion on page 13 of the report, which addresses the on-going relationship 

between TDOT and the grantee TSE vendors, does not appear to address the direct 

feedback provided by TDOT about its role in the project activities by each grantee. (See 

item 4 in EPA’s August 6 memorandum highlighting the on-going relationship between 

TDOT and the TSE vendor grantees.) TDOT indicated that the grantees did have 

responsibility for programmatic decision-making, used the federal funds to carry out a 

program of the organization (in this case the “TSE vendor/Truck Stop partnership”), and 

had its performance measured against the objectives of the program. The OIG conclusion 

acknowledges that the grantees were required to comply with the applicable Recovery 

Act requirements established in the cooperative agreement, but then does not appear to 

take these facts exhibiting the characteristics that are not indicative of a contract for 

goods and services into consideration in the findings. 

OIG Response 6: For the OIG response to the comment made regarding page 13 of 

the draft report, see the OIG comments in the August 6, 2012, response to the OIG’s 

July 19, 2012, position papers, Item 4 (appendix C). 

The OIG disagrees with TDOT that the truck stop and TSE vendors made 

programmatic decisions regarding the program (OMB Circular A-187 refers to 

“program” as the “Federal” program). As such, TDOT made all programmatic 

decisions. The truck stop and TSE vendors merely fulfilled their obligations under the 

grant contracts. Additionally, the truck stop and TSE vendors did not use federal funds 

to carry out a program of the organization. OMB Circular A-187 uses “organization” 

to refer to an entity (i.e., the truck stop and TSE vendors in this instance). TDOT 

carried out the project under a state program. The truck stop and TSE vendors did not 

carry out their own programs. In addition, TDOT’s performance was measured against 

the objectives of the federal program, not the truck stop and TSE vendors. TDOT 

measured the truck stop and TSE vendors’ performance against TDOT’s grant 

contract requirements. 

Thank you for the opportunity to provide comments on this draft report. If you have any 

questions on this response, please do not hesitate to contact Mr. Stuart Perry of my staff at 404-

562-8980 or via email at perry.stuart@epa.gov 

Attachments (3) 

13-R-0321 38 
 

 

Appendix C 

Agency’s Comments on Position Papers 

The purpose of this memorandum is to respond to the July 19, 2012, position papers provided by 

the Office of Inspector General developed following your audit of the Tennessee Department of 

Transportation’s (TDOT) ARRA DERA Project Grant, EPA Grant No. 2A-95425709. We have 

reviewed the position papers issued by your office and compared your findings to the 

information available in the project file and supplemental information provided by the grantee. 

Based on this information we offer the following response to your findings which concluded 

that: (1) TDOT did not ensure compliance with the Buy American requirements stipulated in the 

Recovery Act for its EPA Diesel Emissions Reduction Act truck stop electrification (TSE) 

project grant; and (2) TDOT potentially overstated project results and the project may not 

achieve expected environmental and human health benefits: 

1.	 Regarding Finding 1, we do not agree with the finding and do not concur with your 

recommendation to disallow and recover any Recovery Act grant funds for this project 

grant. Further, pursuant to Agency responsibilities under Section 1605 of the Recovery 

Act, EPA has stated in writing that the Buy American provisions do not apply to this 

truck stop electrification project grant, and stand-by that decision as the facts in this case 

do not factually support the finding noted above. The following information is provided 

as factual information to support our position. 

2.	 The TDOT project grant was awarded for the purpose of providing funding to support the 

installation of a network of electrified parking spaces at selected interstate highway truck 

13-R-0321 39 
 

 

 

stops in Tennessee. The work plan for this cooperative agreement established up front 

that TDOT’s role was to develop and facilitate a grant competition and oversee the 

selection of sub-grantees who would be selected to move forward with developing TSE 

parking spaces that best suit their location and clientele. 

OIG Response 1: The OIG agrees with the comments regarding the grant award and 

the work plan. However, the OIG does not agree with Region 4’s conclusion that the 

subgrantees would be conducting the project. The OIG maintains that TDOT 

conducted the project by contracting for the purchase and installation of TSE 

facilities. 

3. As stated in the terms and conditions of this project grant, TDOT was required to 

maintain primary responsibility for ensuring successful completion of the EPA-approved 

project and to monitor the performance of the sub-recipient(s) and ensure that they 

comply with all applicable regulations, statutes, and terms and conditions which flow 

down in the sub-award. TDOT was required to ensure that sub-recipients are aware of 

requirements imposed upon them by Federal statutes and regulations. TDOT was also 

required to ensure that any sub-award(s) comply with the standards in Section 210(a)-(d) 

of OMB Circular A-133 and will not be used to acquire commercial goods or services for 

the recipient (TDOT). Therefore, it is clear that TDOT was required to take an active role 

in the performance of this project and were critical to the success of this project. 

OIG Response 2: The OIG agrees with TDOT’s requirements under the cooperative 

agreement. Hence, TDOT—which maintained primary responsibility for ensuring 

successful completion of the project and for monitoring the subrecipients to ensure 

full compliance with regulations, statutes, terms and conditions—did in fact “conduct” 

the project or work at some level. 

The OIG notes that Region 4 incorrectly cited OMB Circular A-187. OMB Circular 

A-133 is the correct citation. As discussed in the draft report, the OIG used Section 

210 (a)-(d) of OMB Circular A-133 to show that TDOT’s awards are indicative of a 

vendor contractor and not a subgrantee. 

4.	 Based on discussions with TDOT, each of the sub-recipients who were awarded funds 

for “developing TSE parking spaces that best suit their location and clientele” meet the 

criteria noted in Section 210(b) of Circular A-133 regarding sub-recipients. In our 

discussions with TDOT they stated that the grantees: conducted all procurement actions 

for services (e.g., electrical, concrete work, etc.); supervised all construction on the sites; 

the grantees were responsible for taking pictures of the work being done and providing 

site pictures to TDOT; were responsible for submittal of all invoices for equipment 

purchased, for site preparation work completed, etc.; and were responsible for providing 

periodic reports regarding the project to TDOT. 

13-R-0321 40 
 

 

TDOT indicated that they only traveled to the sites periodically to observe the progress of 

the projects, and only provided help to the grantees on certain activities as requested (e.g., 

preparing for solicitation of competitive bids for work to be performed on-site), but they 

did not do the work for them and did not issue the solicitations, etc.. In addition, the 

TDOT sub-recipients were also responsible for determining compliance with the DavisBacon wage rate determinations including submission of copies of payrolls by all 

subcontractors and were responsible for submitting monthly online wage reports to 

TDOT. The sub-recipient roles being performed by each of the TDOT grantees (and also 

required by the “TDOT Grant Contract” signed by each of the sub-recipients) provide 

clear evidence that TDOT was in an active oversight role as compared to one where 

TDOT was actually conducting the project which would meet the criteria of public 

works. 

OIG Response 3: The OIG disagrees and continues to maintain that TDOT, as the 

recipient of the grant award, conducted the project. 

5.	 In order to meet the obvious intent associated with meeting the definition of “Public 

building and public work” listed in 2 CFR Section 176.140, one would need to consider 

what the purpose of the TDOT awards were for, targeted to “companies with truck stops 

in Tennessee and/or TSE companies working in partnership with a Tennessee truck stop” 

(language pulled from TDOT TSE Request for Applications (RFA)). If TDOT were 

“conducting the project”, the normal mode would be for TDOT to put out an RFA that 

included very detailed bid specifications, performance bond requirements, etc. and would 

establish a principal purpose of acquiring property or services for direct agency benefit or 

use (on behalf of the welfare of the citizens of Tennessee) as part of an acquisition 

(procurement action). In that case, TDOT would retain ownership of the public work, 

which in this case did not occur. Ownership of the TSE parking spaces is vested with the 

grantees. Pursuant to OMB’s Recovery Act web-site, the lack of ownership of the 

property and equipment negates the applicability of the Buy American provision. See 

http://www.whitehouse.gov/omb/recovery_faqs#g7 (General Recovery Act FAQ – 

Question 7), which provides “if the facility is/will be privately-owned, then the ARRA 

Buy America provision will not apply to it, because it will not be a ‘public building or 

public work.’’’ 

OIG Response 4: The EPA’s DERA program determination regarding Section 23 

states that projects “... are considered to be public works when a governmental entity 

is conducting the project.” The determination does not address ownership as the 

criteria for making the Buy American determination. 

The OIG does not consider the OMB’s FAQs example included above to be 

applicable to the situation in question. The example relates to a seemingly unique 

scenario involving a state college or university. 

6.	 Further, in an assistance mode, as defined by the Federal Grant and Cooperative 

13-R-0321 41 
 

 

 

Agreement Act of 1977 and highlighted in EPA’s “Policy for distinguishing Between 

Assistance and Acquisition” (GPI-94-04), TDOT’s purpose would need to be one of 

transferring something of value (e.g., money) to an eligible entity to accomplish a public 

purpose of support or stimulation authorized by statute. TDOT’s role in this case is 

clearly one of “assistance” and not acquisition (procurement), and therefore does not 

meet the obvious intent associated with being “a public building of, and a public work of, 

a government entity”. 

OIG Response 5: See OIG Response 4. 

7.	 Regarding Finding 2, we do not agree with the finding based on our discussions with 

TDOT and the information that they had at the time of reporting. However, we have had 

discussions with TDOT regarding the recommendations included in Finding 2, and offer 

the following comments: 

a.	 We believe the overall objectives of the cooperative agreement have been met 

including the installation and operation of a network of 117 electrified parking 

spaces across Tennessee with some level of demonstrated emission reductions and 

fuel savings based on limited usage data provided to TDOT from the truck stops 

in Tennessee. It is expected that over time the usage of the TSE equipment will 

increase as people become more familiar with the benefits of using the equipment 

and the availability of the TSE equipment. 

b.	 The assumptions used by TDOT to calculate and report out on emissions 

reductions and estimated reductions in fuel usage using the diesel emissions 

quantifier were based on 2000 hours of usage instead of the default setting of 

2400 hours. This lower usage estimation was in an effort to utilize a more 

conservative approach to reporting given that they did not have any reliable 

information to predict actual usage (very little to no usage data was available to 

them at the time of the report). 

c.	 Whereas it is understandable that it will likely take some time to maximize usage 

of the electrified parking spaces across Tennessee, TDOT indicated they are 

willing to develop an addendum to their report which provides project results 

based on actual usage data that they now have for the most recent quarter. The 

quarterly data will be used to extrapolate a project usage estimate for an entire 

year which will be plugged into the diesel emission quantifier to generate 

estimated emissions reduction information. This addendum report will be added 

to the EPA grant file and provided to your office. 

OIG Response 6: The OIG acknowledges comments from Region 4 and commends 

the efforts already taken to address the issue. The OIG looks forward to the receipt 

and evaluation of updated emission information. 

13-R-0321 42 
 

 

 

Appendix D 

Distribution 

Regional Administrator, Region 4 

Agency Follow-Up Official (the CFO) 

Agency Follow-Up Coordinator 

Director, Grants and Interagency Agreements Management Division, 

Office of Administrator and Resources Management 

Deputy Regional Administrator, Region 4 

Office of External Affairs, Region 4 

Director, Air, Pesticides, and Toxic Management Division, Region 4 

Chief, Indoor Environments and Grants Section, Region 4 

Audit Follow-Up Coordinator, Region 4 

Manager, Policy Office Long Range Planning Division, 

Tennessee Department of Transportation 

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