Energy Management

The Atomic Energy Commission and its successor agencies--the Energy Research and Development Administration and the Energy Department (DOE)--acquired a large property inventory nationwide. Most of this property was acquired decades ago for the Manhattan Project and subsequent nuclear weapons development. The Commission was authorized to compensate communities for the loss of tax revenues when such properties were removed from the local tax rolls. Such compensation is termed "payment in lieu of taxes" because federally owned property is not subject to state and local taxation. The Commission was also authorized to make payments in excess of the taxes if a community experienced "special burdens" as a result of these activities. In response to congressional concerns that some communities hosting DOE facilities are receiving compensation while others are not, this report (1) identifies which communities have received payments and how the amounts were determined, (2) assesses whether a 1987 revision of DOE's payment policy was consistent with the Atomic Energy Act of 1946, and (3) examines the potential effect of DOE's 1983 changes to the payment policy.

GAO found that: (1) 13 of the 16 approved communities have received payments that were calculated under a policy established by the Atomic Energy Commission, while payments to the remaining 3 have been calculated under a 1987 DOE policy that established an additional eligibility requirement; (2) none of the 7 communities that had applied for special burdens payments had been approved by the end of 1993; (3) although the 1987 DOE policy imposed more stringent requirements than generally had been applied to earlier applicants, it was consistent with the Atomic Energy Act of 1954; (4) the Atomic Energy Act of 1954 provides DOE with broad discretion in deciding whether to make payments for eligible property and in setting the terms and conditions applicable to any payments; (5) the 1993 DOE policy revision eliminated the 1987 eligibility requirement; (6) if all eligible communities receive payments, the 1993 policy change will increase annual costs from about $2.7 million to an estimated $10 million; (7) DOE is considering a major change in its policy on valuing property that could increase annual costs to about $20 million; and (8) although the recent policy initiatives are within DOE discretion, the initiatives are a major departure from the earlier payment policy and significantly increase payments at a time when the government is seeking ways to reduce its expenditures.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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