PORT OF SEATTLE 
MEMORANDUM 
DATE:    August 11, 2015 
TO:      Audit Committee 
FROM:    Joyce Kirangi, Internal Audit Director 
SUBJECT:  ScRAPS 2 Audit Termination Memo  Project Deemed Low Risk 
Included in the 2015 Audit Committee Annual Work Plan was a limited operational audit of
the ScRAPS 2 Program  Clean Air Truck Replacement Program. The audit objective was to
assess management controls to ensure accountability over program funds and compliance in
achieving the desired program outcomes.  After conducting our planning and assessing the
risks of this program, we have decided to terminate the audit. We did not identify any 
significant risks, and further audit testing would add no value. 
Background 
The Scrappage and Replacements for Air in Puget Sound (ScRAPS) program provides financial
incentives for current drayage truck owners to scrap their old trucks and replace them with
newer trucks.  The program is part of the federal government's efforts to reduce air
pollution. The Environmental Protection Agency (EPA) diesel truck emission standards came
into effect in 2001 for the 2007 model year. The newer truck engines generate significantly
less emissions. However, those requirements did  not affect the older engine models.
Accordingly, various programs have been established and funded to remove the old trucks 
from the road. The current ScRAPS program is the second such program that the Port has
undertaken as part of the Northwest Ports Clean Air Strategy.  Similar truck replacement 
programs are common among other ports, and have been in place for over a decade. 
The first Port ScRAPS program was primarily funded by the Port but included a grant from the
Washington State Department of Ecology, and ran from November 2009 to January 2011. That 
program  replaced  280 trucks with  pre-1994  engine models. Drayage trucks (transport
containers over a short distance) with pre-1994 engine models have been prevented from
accessing Port property since January 1, 2011. 
The second Port program, ScRAPS 2, currently has three grants (see table below), and a
number of incentive programs with differing requirements based on the funding source.
Additional grant funding is in progress. The ScRAPS program is managed by the Puget Sound
Clean Air Agency, a regional government agency that works in partnership with the Port. 
ScRAPS 2 Funding Sources, as of May 2015 
Program  Program   Replacement   "Buy    Incentive    Grant     Port Cost 
Availability  Engine        America"   Amount       Amount 
**** 
CMAQ*   160 trucks   2007 or newer   Yes     $20,000     $3,535,000  $667,000 
Ecology** 20 trucks    2007 or newer   Yes      $20,000      $ 500,000  $ 25,000 
DERA***   40 trucks    2010 or newer   No      $30,000 max   $1,200,000  $408,000 
* CMAQ is a Congestion Mitigation and Air Quality grant from the US Dept. of Transportation (USDOT).

**Ecology is a grant from WA Dept. of Ecology. 
***DERA is a Diesel Emissions Reduction Act grant from the US Environmental Protection Agency (EPA). 
****"Buy America" is a federal law requiring USDOT grant funds be used for trucks made from US steel and assembled in America. 
The Northwest Ports Clean Air Strategy requires 100% of drayage trucks to have 2007 or newer
engines by January 1, 2018. Model year 2007 or newer engines are 10 times cleaner than 1994 
- 2006 truck engines for particle matter emissions. 
There are about 1,000 frequent truck callers at the Port terminals. Approximately 350 trucks
will receive incentives under the ScRAPS 2 Program, if fully funded. The subsidy/incentive to
a trucker is only a portion of the total replacement cost of a newer truck. 
Audit Scope and Methodology 
We reviewed ScRAPS 2 Program  Clean Air Truck Replacement documentation and
administrative processes.  We researched similar programs at other major ports, as well as
the federal and state regulatory environment. We subsequently assessed the program's risks. 
Moss-Adams, an independent auditor for the Port's financial statements, performed an audit
of the program as part of their 2014 Single Audit of federal grants. Their program audit had
not been anticipated when the 2015 Internal Audit work plan was developed. Moss-Adams 
reported that internal controls for the CMAQ grant program were effective and that their
substantive tests found no exceptions. The other ScRAPS grants (e.g., DERA and Ecology) were 
not part of the Moss-Adams review,  but the grants  share  the same administrative
management controls with the CMAQ program. Thus, the control for the other ScRAPS grants 
are assumed to be effective although not specifically reviewed by Moss-Adams. 
We reviewed the work performed by Moss-Adams and determined that their work was
sufficient and adequate. We concur with their conclusion and assessed the program as low
risk. Based on our planning efforts combined with the work by Moss-Adams, further internal
audit work would add no value. 







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