Report: Stimulus Weatherization Program Bogged Down by Red Tape

Feb.17, 2010— -- A $5 billion federal weatherization program intended to save energy and create jobs has done little of either, according to a new report obtained by ABC News on the one-year anniversary of President Obama's American Reinvestment and Recovery Act.

Only 9,100 homes had been weatherized nationwide as of Dec. 31, according to the new report by the Government Accountability Office, to be released Thursday.

The Department of Energy, which runs the program, said it actually weatherized more than 22,000 homes last year with Recovery Act funds. Either way, it's a far cry from the 593,000 that the government plans to complete during the course of the Recovery Act, which runs through March 2012.

What's the Hold Up?

The problem is red tape, according to the GAO. Local governments and contractors have to jump through several hoops before getting full funding.

For example, the Recovery Act included so-called Davis-Bacon requirements for all weatherization grants. Davis-Bacon is a Depression-era law meant to ensure equitable pay for workers on federally funded projects. Under that law, the grants may only go to projects that pay a "prevailing wage" on par with private-sector employers.

The Department of Labor spent most of the past year trying to determine the prevailing wage for weatherization work, a determination that had to be made for each of the more than 3,000 counties in the United States, according to the GAO report.

Secondly, many homes have to go through a National Historic Preservation Trust review before work can begin. The report quoted Michigan state officials as saying that 90 percent of the homes to be weatherized must go through that review process, but the state only has two employees in its historic preservation office.

But the pace of weatherization is starting to pick up because the Davis-Bacon issues have now "largely been resolved," according to the Department of Energy.

"The states received wage determinations for every county in the U.S. before Labor Day and worked through the process of updating their systems and their wage rates throughout the fall," the Department of Energy said in a written statement.

"The agency is on a path to reach its target of weatherizing 20,000-30,000 homes a month."

Using the Money

About $522 million Recovery Act dollars have been spent so far on weatherization, or about 10 percent of the $5 billion set aside for the program, the Department of Energy said.

But Energy Department officials pointed out that the department weatherization program that pre-dates the Recovery Act and is not subject to Davis-Bacon requirements. Including that program, the Department financed the weatherization of about 124,000 homes in 2009.

"The Department continues to take proactive steps to accelerate the program schedule and ensure the success of the program," the Energy Department statement read. "For instance, we have developed a national agreement on Historic Preservation, which affects many older homes in America. The standardized template is helping to simplify the states' interactions with Historic Preservation Offices."

President Obama and Vice President Joe Biden have repeatedly touted the weatherization program as an example of a stimulus project that will create jobs and move the country toward a new energy future.

"If you allocate money to weatherize homes, the homeowner gets the benefit of lower energy bills. You right away put people back to work, many of whom in the construction industry and in the housing industry are out of work right now. They are immediately put to work doing something," Obama said at an event in Elkhart, Ind., last year. "There are billions of dollars in this plan allocated for moving us towards a new energy future."

A year ago, the administration said the money would put 87,000 Americans to work through partnerships with the Department of Energy and state and local governments.

In his jobs proposal late last year, the president proposed giving an additional $10 billion for weatherization projects, create new incentives for consumers who invest in energy efficient retrofits in their homes and expand existing incentives for businesses that invest in energy efficiency and create clean-energy manufacturing jobs.

Funding Availability Not the Problem

But Obama administration officials also acknowledged at that time that moving beyond the constraints will determine how fast these weatherization projects can be implemented.

"These are projects that have very high rates of return," Obama's economic adviser Larry Summers said in an interview in December. "They would pay off purely as economic problems, even if there was no energy independence issue, even if there was no environmental issue. So the constraint is not going to be lack of federal budget, the constraint is simply going to be how rapidly these projects can be implemented."