Oregon Sues to Block Federal Cap That Could Gut State-Run Energy Programs

Oregon Attorney General Dan Rayfield joined a 20-member coalition of attorneys general in a lawsuit seeking to shut down the U.S. Department of Energy’s (DOE) plan to impose a new funding cap on vital state-run energy programs.

Oregon Joins Lawsuit Opposing Funding Cap On State-Run Energy Programs

The new DOE policy would limit reimbursement for key administrative and staffing costs that have long been covered by these federal energy programs, effectively preventing states from using critical federal funds for vital state-run energy programs.

Attorney General Rayfield said, “Oregonians count on these programs to keep our homes energy-efficient, our air clean, and our bills manageable.”

By stripping away the resources the state needs to keep the work going – and the people and expertise behind it, Oregon’s ability to meet the state’s energy needs is compromised midstream.

Existing federal law has required agencies like DOE to negotiate agreements with states for decades to set fair reimbursement rates for federally funded, state-run programs, including basic administrative or staffing costs.

These “indirect” or so-called “fringe” costs have never been subject to a cap.

DOE announced a new policy on May 8, ignoring this longstanding practice, and capping indirect and employee benefit costs at 10 percent of a project’s total budget, regardless of previously negotiated rates.

Of the approximately $786,000 received in federal funding by Oregon through the State Energy Program to support local clean energy, almost half went to essential operating costs, including staff benefits and the basic overhead needed to run programs.

The balance went to on-the-ground energy projects. If these federal dollars are cut, the state’s ability to keep staff, maintain programs, and deliver energy savings for Oregonians will be compromised.

In a lawsuit filed in the U.S. District Court of Eugene, Oregon, on Friday, the coalition argues that by capping specific funding for these programs, DOE jeopardizes the states’ ability to maintain them, and is asking the court to vacate this unlawful cap and restore the legally required reimbursement rates for these key energy programs.

The plaintiffs say the new DOE policy:

• Violates federal regulations that require agencies to honor negotiated indirect cost rates between states and the federal government.
• Mirrors similar caps that every federal court ruling to date has recently struck down.
• Contradicts the rulings that the merits of such blanket limits are unlawful, unjustified, and disruptive to essential public programs.

The lawsuit asks the court to vacate DOE’s new policy and bar implementation of any unlawful reimbursement caps.