Energy Impacted Area Development Assistance Program's Designation Criteria

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

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