Bureaucracy holding up DOE renewables cash – GAO

www.environmental-finance.com
12 March 2010

The US Department of Energy (DOE) is encountering numerous obstacles to releasing funds for clean energy projects from last year's economic stimulus package, including federally mandated environmental reviews and monthly reporting requirements. As of 28 February, the DOE had committed $25.7 billion or 70% of the $36.7 billion provided by the American Recovery and Reinvestment Act of 2009, but has only spent $2.5 billion or 7% of the funds, according to a report by the Government Accountability Office (GAO). "It appears that it's bureaucratic delays that have hampered spending and to no one's surprise it appears that much of that delay could be pointed back to us and the decisions made in Congress," said Lisa Murkowski (R-Alaska).

For example, the DOE has only committed and spent 1% of the $3.97 billion provided to its loan guarantee programme by the Recovery Act to support renewable energy and electricity transmission projects. The loan guarantee and other DOE programmes have stalled largely because they could have significant environmental impacts that trigger extensive reviews under the National Environmental Protection Act (NEPA), according to the GAO report.

"DOE has SWAT teams on it now and they are working tirelessly to get those reviews done and they've established a pretty aggressive agenda for when they want to do that, but it is a concern moving forward," said Michele Nellenbach, director of the natural resources committee for the National Governors' Association.

Another major concern is a DOE requirement that states file monthly reports on energy and weatherisation programmes, which is problematic because they are reducing staff and hours because of budget issues, she said. But the monthly reporting helps the DOE focus on assisting potentially high-risk projects, said Matt Rogers, the DOE's senior advisor overseeing economic stimulus investments. "The challenge is without that data.., we end up having to search around and find those areas in most need," he said. "It gives us the kind of managerial data that frankly any business has."

A major obstacle has been the Davis-Bacon Act of 1931, which requires that workers on federally funded projects receive proper wages and benefits. Its provisions were applied by the Recovery Act for the first time to the weatherisation assistance programme, which forced many states to wait for wage determinations from the Department of Labor.

"I would encourage Congress to think about our experiences with Davis-Bacon before they apply that requirement to new programmes because it has been an impediment to getting dollars spent quickly," said Malcolm Woolf, director of the Maryland Energy Administrator and vice-chair for the National Association of State Energy Officials.

Some Recovery Act programmes have been successful in funding clean energy projects. The DOE and Treasury Department allocated $2.3 billion in clean energy manufacturing tax credits to 183 projects, an investment that will be matched by up to $5.4 billion in private sector funding. But Rogers said he was disappointed by the agency's inability to fund all the "terrific" projects that applied. "We could have easily done double that," he said, adding that the administration is asking Congress to provide another $5 billion.