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Bureaucracy Stalls Energy Department’s Spending of Recovery Act Funds

dept-of-energyThe Department of Energy has spent only 7 percent of the $36.7 billion it received under the Recovery Act to fund renewable energy and efficiency projects, GovExec reported today.

Last week, the Senate Energy and Natural Resources Committee heard witnesses say that while 70 percent of the funds have been obligated, bureaucracy is stalling spending. Patricia Dalton, managing director of natural resources and environment at the Government Accountability Office, said spending had been most delayed by requirements associated with the 1931 Davis-Bacon Act and the 1969 National Environmental Policy Act. Davis-Bacon requires contractors and subcontractors to pay workers locally prevailing wages on construction projects, and the National Environmental Policy Act requires agencies to consider environmental consequences before approving projects.

For example, the Department of Energy’s Weatherization Assistance Program, which previously had been exempt from Davis-Bacon, became subject to the requirements under the Recovery Act. That meant the Department of Labor had to determine the prevailing wage rates for weatherization activities in each county in the nation.

To prevent this requirement from affecting program starts, Energy and Labor in 2009 issued a joint memo authorizing work under the program as long as recipients paid workers Labor’s prevailing wage rates for residential construction and agreed to compensate them for the difference later, if Labor established a higher rate for weatherization activities. However, many states refused to spend the money until Labor determined the county-by-county wage rates for weatherization activities.

“Many states did not proceed with awarding grants out of fear of future liability,” said Michele Nellenbach, director of the Natural Resources Committee for the National Governors Association. “States were concerned they would have to later divert funds from one project to retroactively pay workers on another project that were unintentionally paid less than the prevailing wage, or would have to take money away from workers who were paid more than the contractually mandated prevailing wage.”

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