The U.S. Government Accountability Office said Tuesday the Department of Energy should provide better documentation of how it manages the payments in lieu of taxes (PILT) program for communities around nuclear facilities.
The Energy Department handed out $23 million in PILT revenue to communities near a dozen nuclear laboratory and cleanup sites in fiscal 2017. Of that, 70% went to communities around the Hanford Site in Washington state and the Savannah River Site in South Carolina. Payments to localities in eight other states combined amounted to only 5% of the total, according to a GAO report.
Over 2 million acres of land are held by the federal government for nuclear weapons development, environmental remediation, and energy research. Those holdings are not subject to local property taxes that would otherwise fund roads, schools, and assorted programs. The Atomic Energy Act authorizes discretionary payments to qualifying host communities to help offset lost property tax revenue.
Size matters in the calculation. Hanford and Savannah River respectively have roughly 180,000 and 200,000 acres eligible for the government compensation. Although the Idaho National Laboratory property covers about 570,000 acres, only 5% of the land is eligible for PILT because it was previously on local tax rolls when bought by DOE..
The idea is to provide “financial assistance to these communities” while not giving them a windfall for hosting a federal facility, the GAO said. Counties and other localities typically calculate potential taxation of a given property based on factors such as assessed value and tax rate, the congressional watchdog noted.
The PILT program grew from roughly $9.5 million in 1994 to $23 million in 2017. Payments increased from a total of over $19 million in 2012 to over $23 million by 2017 in real terms. Much of the growth is attributed to a rise in local land value due to agriculture.
The GAO said the Energy Department needs clearer criteria to determine how the payments are divided between recipient communities. The congressional watchdog last visited the program in 1994 and the Energy Department has tweaked the program over time in an effort to reduce inequalities.
In this report, the GAO recommended DOE’s chief financial officer maintain documentation used in decision-making, review community PILT invoices for accuracy, and draft guidance on how communities should calculate payment requests.
A report that accompanied a 2018 budget bill directed the GAO to review Energy Department PILT policy. The inquiry was sought by Rep. Mike Simpson (R-Idaho), who has frequently questioned seeming disparities in how DOE distributes the payments.
The Energy Department said communities near most of its nuclear sites do not receive PILT money because they are ineligible or have not applied. The Waste Isolation Pilot Plant in New Mexico is an example of an ineligible site because the property near Carlsbad was already federal land.
The Energy Department has set up a working group to study implementing the GAO recommendations and report to agency leadership by the end of March.
The localities that received PILT money for fiscal 2017 are neighbors to Hanford; the Idaho National Laboratory; the Los Alamos National Laboratory in New Mexico; the Pantex Plant in Texas; the Argonne National Laboratory in Illinois; the Fernald Site and the Portsmouth Site, both in Ohio; the Bettis Atomic Power Laboratory in Pennsylvania; the Knolls Atomic Power Laboratory and the Brookhaven National Laboratory, both in New York; the Oak Ridge Site in Tennessee; and Savannah River in South Carolina.
Data included in the report shows the top five PILT recipient counties are clustered around either Hanford or Savannah River. In Washington state near Hanford, Benton County received almost $7.2 million in 2017; Franklin County almost $1 million; and Grant County $1.6 million. In South Carolina near SRS, Barnwell County received $4.8 million in 2017 and Aiken County $1.6 million.
