Energy Impacted Area Development Assistance Program's Designation Criteria

EMD-81-103: Published: Jun 26, 1981. Publicly Released: Jun 26, 1981.

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GAO reviewed the designation criteria for the Energy Impacted Area Development Program which was established under the Powerplant and Industrial Fuel Use Act of 1978. The objective of the program is to help areas impacted by coal or uranium production, processing, or transportation. Funded through the Department of Energy (DOE) and administered by the Farmers Home Administration, the program provides grants for both development of growth management and housing plans and the development and acquisition of sites for housing and public facilities. Congress was very explicit in setting this program apart from other economic development programs and in directing that its funds only be used for energy-related impacts.

The GAO analysis indicates that both the broadness of the program's designation criteria and an error in them as published have resulted in areas qualifying for the program and receiving funds even though they might not be adversely affected by energy development. Of the 96 areas designated as impacted by DOE, GAO believes that 23 might not have been adversely affected; 16 because of the error, 7 because, even though they had an 8-percent employment increase, they might not have had a significant population increase. The President has recommended a rescission of $52 million of the program's fiscal year (FY) 1981 funds and no additional funds for the program in FY 1982. Congress has adopted the rescission for 1981, and debate is underway on FY 1982 appropriations. However, the fact that the future of the program is unclear does not mean that actions should not be taken to ensure that program assistance goes only to those areas adversely impacted by energy development. Improving the regulations and reconsidering designation approvals could make a difference in how the remaining FY 1981 funds are spent and in any future funds which might be appropriated for this or a similar program.

Recommendations for Executive Action

  1. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Secretary of Energy, in cooperation with the Secretary of Agriculture, should reassess the appropriateness of the designation criteria implementing P.L. 95-620 to ensure that only areas adversely impacted by energy development are eligible for federal assistance. This would include a reassessment of the regulations determining whether a substantial increase in housing or public facilities and services has been required by the increase in eligible employment. Particular attention should be given to the appropriateness of the Proxy Criterion as a measure of substantial increase in housing or public facilities and services required as a result of the increase in employment.

    Agency Affected: Department of Agriculture

  2. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Secretary of Energy, in cooperation with the Secretary of Agriculture, should reassess the appropriateness of the designation criteria implementing P.L. 95-620 to ensure that only areas adversely impacted by energy development are eligible for federal assistance. This would include a reassessment of the regulations determining whether a substantial increase in housing or public facilities and services has been required by the increase in eligible employment. Particular attention should be given to the appropriateness of the Proxy Criterion as a measure of substantial increase in housing or public facilities and services required as a result of the increase in employment.

    Agency Affected: Department of Energy

  3. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Secretaries of Agriculture and Energy, respectively, should, after agreement is reached by them on regulations which would more effectively direct funds to energy impacted areas, should: (1) publish revised regulations in the Federal Register; and (2) reconsider the designation approvals made under the provisions of the regulations dated June 19, 1979, and rescind those which do not comply with the revised regulations.

    Agency Affected: Department of Agriculture

  4. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Secretaries of Agriculture and Energy, respectively, should, after agreement is reached by them on regulations which would more effectively direct funds to energy impacted areas, should: (1) publish revised regulations in the Federal Register; and (2) reconsider the designation approvals made under the provisions of the regulations dated June 19, 1979, and rescind those which do not comply with the revised regulations.

    Agency Affected: Department of Energy

 

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