Michigan Joins Lawsuit Against U.S. Department of Energy Over Policy Directive
Michigan has joined a group of states in filing a lawsuit against the U.S. Department of Energy regarding a recent policy directive issued in May. The directive in question pertains to the federal funding provided to states to support their energy efficiency programs.
Typically, federal agencies reimburse states for various indirect costs associated with these programs, such as staff salaries and office supplies. The rates for these reimbursements are usually determined through negotiations between the states and the federal government.
However, the new policy flash from the Energy Department introduces a cap on these reimbursement rates, limiting them to 10% instead of the previous 15%. According to the department, this change aims to strike a balance between funding assistance programs and upholding federal stewardship obligations.
The states involved in the lawsuit argue that this change could jeopardize essential programs. They claim that the new percentage cap violates existing federal regulations by imposing restrictions on allowable fringe costs and not respecting negotiated rates.
The lawsuit states, “The Policy Flash does not explain its substantial change from current practice, which awards indirect costs at the negotiated rate and fringe according to settled accounting principles.”
While the Energy Department maintains that the policy change only applies to new or conditional awards, the lawsuit contends that the department did not fulfill all necessary requirements for altering the process in those cases. Indirect cost rates are supposed to be established at the beginning of the award process, according to the legal complaint.
