Congress Turns Up the Heat on DOE & EPA Grants/Loans

With billions in funding funneled through the Infrastructure Investment and Jobs Act and Inflation Reduction Act, questions are now being raised about how these funds are being spent and managed.

 From expanded loan and grant programs to targeted environmental justice initiatives, there's a lot to unpack. We’ll also talk about the consequences of this increased oversight for grant and loan recipients and the steps companies can take to prepare for heightened evaluation. 

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Congress Puts DOE & EPA Grants/Loans Under the Microscope

About the authors
Kristina M. Moore
Veronica Renzi
Stephen J. Snyder

Transcript

Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape.

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Hello and welcome to Womble Perspectives. Today, we'll be looking at the significant Congressional scrutiny around spending by the Department of Energy and the Environmental Protection Agency. With billions in funding funneled through the Infrastructure Investment and Jobs Act and Inflation Reduction Act, questions are now being raised about how these funds are being spent and managed.

From expanded loan and grant programs to targeted environmental justice initiatives, there's a lot to unpack. We’ll also talk about the consequences of this increased oversight for grant and loan recipients and the steps companies can take to prepare for heightened evaluation. 

First, let's start with some background. Over the last couple of years, federal funding for energy and environmental initiatives has skyrocketed, thanks to the passage of the Infrastructure Investment and Jobs Act and the Inflation Reduction Act under the Biden Administration."  

Together, these acts have allocated an additional $200 billion to the DOE and EPA to address everything from renewable energy technologies to environmental justice programs. This funding opened the door for new grant and loan opportunities, but with this scale of money often comes a magnifying glass. Enter Congress's expanded oversight efforts.

We’re seeing agencies face closer scrutiny regarding how these funds are being distributed, whether projects meet their objectives, and if they're adhering to standards. And the broader implications? That’s what Congress is diving into right now.

So, what exactly does this Congressional scrutiny entail? The Republican-controlled House has set its sights on reviewing spending under the two Acts previously mentioned. High on their agenda are the loans and grants issued during the final days of the Biden Administration.

The House Energy and Commerce Committee, for instance, has prioritized oversight over both the DOE's and EPA's management of these funds. This includes examining projects tied to foreign jurisdictions, especially facilities linked to China or geopolitically sensitive entities like the Chinese Communist Party.

To back up these efforts, a hearing titled ‘Examining The Biden Administration’s Energy and Environment Spending Push’ was recently held by the Oversight and Investigations Subcommittee. According to Subcommittee Chair Gary Palmer, spending large sums in a short timeframe opens up a 'tremendous risk' for potential waste, fraud, or abuse.

Beyond Congressional oversight, the Trump Administration and related federal agencies are launching their own investigations. One key development came from the EPA when Administrator Lee Zeldin requested an Inspector General probe into the $20 billion Greenhouse Gas Reduction Fund. If any fraud or abuse is uncovered, already-obligated funds could potentially be canceled.

Additionally, watchdogs like the Government Accountability Office and the Inspector Generals of the EPA and DOE have flagged rapid funding disbursement as a major risk factor. Coupled with concurrent investigations from both the FBI and Justice Department, it’s clear that federal agencies are tightening their grip on fund management.

For companies that have benefited from grants or loans, this environment underlines why stringent compliance measures are critical.

Now let's talk about what this means for companies that have received DOE or EPA loans and grants. With the heightened focus on oversight and transparency, these organizations face increased risks of scrutiny.

For one, recipients will likely need to demonstrate, in no uncertain terms, how taxpayer dollars were spent responsibly. Secondly, the processes involved in these investigations can be both factual and political, requiring careful navigation.

If you're a grant or loan recipient, now is the time to evaluate your compliance processes. Working with experienced legal counsel to review documentation, contracts, and spending reports can make all the difference should inquiries arise.

So, how can organizations be proactive in this climate of heightened oversight? To ensure compliance, organizations should regularly conduct internal audits to verify that funds are being spent in accordance with the established terms and conditions. Transparency is equally important, which means maintaining detailed records of how funds are allocated and spent, including contracts, receipts, and any necessary compliance documentation. In cases where a Congressional inquiry or Office of Inspector Generals investigation is expected, it is crucial to engage experienced legal counsel who can provide guidance and help manage responses effectively. Additionally, staying informed by monitoring Congressional hearings and updates from the EPA, DOE, and other relevant agencies is essential for anticipating potential challenges and staying prepared.

Preparation will be key in navigating this challenging environment while retaining trust from both regulators and the public.

Thank you for listening to Womble Perspectives. If you want to learn more about the topics discussed in this episode, please visit The Show Notes, where you can find links to related resources mentioned today. The Show Notes also have more information about our attorneys who provided today's insights, including ways to reach out to them.

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