Transcript The American Recovery and Reinvestment Act

Energy Efficiency, Design, Construction,
LEED & Green Projects:
The Stimulus Does It All
Tuesday, March 31, 2009
12:00 PM EDT
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Presenters
Patrick Miller
Associate, Baker & Daniels
Andrew Wheeler
Senior Vice President, B&D Consulting
[email protected]
312.212.6514
[email protected]
202.312.7424
Construction and Real Property Liability
Group; Energy, Environment and Climate
Change Legal Group
Energy & Climate Change Consulting Group
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How Will ARRA Work?
 $787 billion, 250+ programs and many different ways Washington
and the states will spend the money.
 Cabinet Agencies which we will cover today include the
Departments of Energy, Agriculture, Defense, Interior, Labor,
Housing & Urban Development and the Environmental Protection
Agency.
 Non-cabinet-level Government Entities receiving funding include
NASA, Small Business Administration and the National Science
Foundation.
 The Recovery Package is now a public law. It moves into the
complicated implementation phase.
– Rulemaking process and RFP process
– Getting the funding out in certain time frames
– Oversight & Accountability
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Green Buildings In General
 Utilization of best practices to:
– Maximize efficiency in design, construction, operation
and maintenance
– Minimize waste and cost
– Capture “free” inputs from the natural environment
 Third party verification of construction quality and asset value
 Improved “product”:
– Energy and water savings
– Indoor environmental quality
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Green Certifications and Standards
 For buildings:
─ Governmental
─ LEED
─ Green Globes
 For products:
─ EnergyStar
─ Green Seal
─ Greenguard
─ GreenSpec
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ARRA Green Building Projects
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NIST
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Bureau of Reclamation: Modernizing Facilities
–

$115 million including funding for energy efficient retrofits of existing facilities.
National Park Service: Construction
–

$180 million including funding for energy efficient retrofits of existing facilities.
Fish and Wildlife Services: Construction
–

$4.5 billion from the GSA's Federal Buildings Fund to convert GSA facilities to High-Performance Green
Buildings
Bureau of Land Management: Construction
–

$1 billion for DOI is directed for water and related resources projects.
GSA: Conversion to High Performance Green Buildings
–

$360 million for maintenance and renovation of NIST facilities and laboratories using green technologies that
maximize energy and water savings. $180 million is for the competitive construction grant program for
research science buildings including FY2008 and FY2009 competitions.
$589 million including funding for energy efficient retrofits of existing facilities.
Forest Service: Capital Construction and Maintenance
–
$650 million including consideration of alternative energy technologies.
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ARRA Green Building Projects
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DOD: Military Construction
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
DOD: Military Construction
–

–
Army: $3.9 million for necessary maintenance including energy savings upgrade
Air Force: $16.4 million
VA: Medical Facilities
–

Army: $34.5 million for construction and improvements to family housing to provide jobs, increase quality of
life and employ energy efficiency through advanced construction techniques.
Air Force: $80.1 million
DOD: Military Family Housing Operating Expenses
–
–

$120 million for the Energy Conservation and Investment Program.
DOD: Military Family Housing Construction
–

Navy & Marine Corps: $100 million for energy conservation and alternative energy projects.
DOD: Energy Conservation and Investment
–

$4.24 billion for Facilities Sustainment, Restoration and Modernization for U.S. and U.S. territories' facilities.
A portion of these funds shall be used to invest in energy efficiency projects and to repair and modernize
DOD facilities, including Defense Health program.
Of the $1 billion appropriated, funds will be used for non-recurring maintenance and energy projects. The
Senate report describes energy projects as follows: wind turbine systems, rooftop photovoltaic systems, and
water conservation measures.
VA: National Cemetery Administration
–
$50 million for monument and memorial repairs including energy projects.
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ARRA Green Building Projects

HUD: Public Housing Capital Fund
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
HUD: HOME Investments Partnership Program
–

$4.6 billion for construction, operation and maintenance for previously-authorized projects including $25
million for the Corps regulatory program.
Department of Education
–

$250 million for energy retrofits and green investments to project owners of HUD Section 8 housing.
Army Corps of Engineers
–

$510 million, of which $255 million is by formula. The amounts distributed by formula shall be used for
construction, retrofits and rehabilitations including energy efficiency retrofits.
HUD: Assisted Housing
–

$2.25 billion of which up to 20% may be used for investments in energy efficiency and green building
technology. Funds are available until Sept. 30, 2011.
HUD: Native American Housing Block Grants
–

$4 billion ($3 billion by formula, $1 billion by competition) for investments including leveraging private sector
funding or financing for renovations and energy conservation retrofit investments.
Of the $53 billion, there are references to using recognized green buildings ratings systems.
USDA: Assisted Housing Stability and Green Retrofit Investments
–
$2.25 billion, $2 billion will provide full-year payments to landlords participating in the Section 8 ProjectBased program and $250 million will support a program to upgrade HUD sponsored low-income housing to
increase energy efficiency, including new insulation, windows and furnaces
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Green Projects: Risk Categories
 Scope of Work
 Certification Expectations
 Product Expectations
 Performance Expectations
 Cost Savings Expectations
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Green Projects: Risk Allocation Options
 Silence
– Advantages: None
– Disadvantages: Countless
 Teaming + Waiver of Certification/Product/Performance/Cost
Saving Guarantees
– Advantage: Protects design/construction team and supply chain
– Disadvantage: May reduce impact of innovation and technology
 Stipulated Penalty Clauses
– Advantage: Allows front-end negotiation of the issues
– Disadvantage: May restrict ability to innovate
 Incentives (e.g. shared cost savings)
– Advantage: Motivates team
– Disadvantage: May reduce quality of base scope
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Green Design and Construction Contracts
 There are many Green specification options, but no form
general conditions
 AIA: 2007 B101 requires architect to consider “environmentally
responsible design alternatives” and discuss them with the
owner; 2007 A201 does not address green certification or
product risks
 AIA B214 does not address consequences of failure to achieve
LEED certification
 AGC, ConsensusDOCS, EJCDC do not address Green issues
or LEED Certification
 DBIA – Sustainable Project Goals Exhibit
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ARRA Weatherization Assistance Program

$5 billion administered through DOE’s Office of Energy Efficiency and
Renwable Energy
–
Includes a provision that expands the eligibility of low-income households for weatherization
assistance and increases the maximum funding assistance level per household.
–
Supports weatherization of homes, including adding more insulation, sealing leaks and
modernizing heating and air conditioning equipment, which will pay for itself many times over.
–
Allows an average investment of up to $6,500 per home in energy efficiency upgrades and
will be available for families making up to 200% of the federal poverty level – or about
$44,000 a year for a family of four.
–
March 12: Vice President Joe Biden and Energy Secretary Chu announced Indiana will
receive–$131,847,383 for the Weatherization Assistance Program.
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Current Federal Energy Efficiency Tax Credits

Business Deduction for Energy-Efficient Commercial Buildings
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Builder Tax Credit for Energy-Efficient Homes
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
Home builders are eligible for a $2,000 tax credit for a new energy efficient home that
achieves 50% energy savings for heating and cooling. The credit equals $1,000 for realizing
30% energy savings.
Homeowners’ Credit for Efficiency Improvements
–

A tax deduction of up to $1.80 per square foot is available to owners or designers of new or
existing commercial buildings that save at least 50% of the heating and cooling energy.
Homeowners are eligible for a tax credit of up to $500 for insulation, replacement windows,
water heaters and heating and cooling equipment.
Homeowner Energy-Efficiency Tax Credit for Existing Homes
–
Increases the value of the energy efficient existing homes credit to 30 percent for 2009 and
2010, modifies the standards for qualifying property, and sets the per-dwelling maximum for
this period at $1500 per taxpayer
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Department of Energy

Transportation Electrification
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Alternative Fueled Vehicles Pilot Grant Program
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$483 million to the Department of Energy, which can also be applied to brownfields cleanup.
Energy Efficiency and Renewable Energy Program
–

$2 billion in grants for the manufacturing of advanced batteries and components, including advanced lithiumion batteries, hybrid electrical systems, component manufacturers and software designers.
Non-Defense Environmental Cleanup
–

$300 million in grants through the Clean Cities program to state and local governments, metropolitan
transportation authorities and others for encouraging the use of plug-in electric-drive vehicles or other
emerging electric vehicle technologies.
Advanced Batteries
–

$400 million to states, local governments and metropolitan transportation authorities for qualified electric
transportation projects that reduce emissions, including: truck stop electrification, airport ground support
equipment and cargo-handling equipment.
$2.5 billion for applied research, development, demonstration and deployment activities to include: $800
million for projects related to biomass and $400 million for geothermal. The balance of the money is for solar,
wind, hydrogen, water power, and energy efficiency demonstrations for industrial and commercial practices.
Innovative Technology Loan Guarantee Program
–
$6 billion to pay for the costs of guarantees made under this section for renewable technologies and
transmission technologies. This includes renewable energy systems such as incremental hydropower;
electric power transmission systems; and leading-edge biofuels projects at the pilot or demonstration scale.
This should support $60 billion of loans.
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Department of Energy (continued)

Energy Efficiency and Conservation Block Grants
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Smart Grid
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$800 million in competitive grants for the Clean Coal Power Initiative Round 3.
Fossil Energy Research and Development
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$4.5 billion to modernize the electric grid including demand-response equipment, security and reliability
enhancements, energy storage research, development, demonstration and deployment, and to facilitate
recovery from disruptions from the energy supply.
Clean Coal
–

$3.2 billion of which $2.8 billion is to states through the existing formula in EISA Title V subtitle V. The
remaining $400 million shall be rewarded on a competitive basis as determined by the Secretary. Types of
projects include energy audits, implementing building codes, and government building on-site projects that
generate electricity from renewable sources
$1 billion for fossil energy, coal technologies, carbon capture, coal mining technologies, oil and gas, oil and
gas reservoirs, complex weld technology testing, and methane hydrate R&D programs
Advanced Research Projects Agency
–
$400 million to support high-risk, high-payoff research to accelerate the innovation cycle for both traditional
and alternative energy sources and energy efficiency. This funding is for research and construction of
laboratory facilities.
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Department of Transportation
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Competitive Grants for Transportation
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Grants-in-Aid for Airports
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$6.9 billion divided up into formula grants for urbanized areas, rural areas, and growing state and highdensity areas. Within this funding, $100 million is provided for discretionary grants to public transit agencies
to reduce energy consumption or greenhouse gas emissions.
Fixed Guideway Infrastructure Investment
–

$9.3 billion: $1.3 billion to Amtrak and the remaining $8 billion is provided for the development of intercity
and high speed passenger rail. The Secretary has flexibility in allocating resources between the programs to
advance the goal of deploying intercity high speed rail systems in the US. Grants will be distributed under
the Intercity Passenger Rail Grants to States and the High Speed Corridors grant program.
Transit Capital Assistance
–

$27.5 billion in funds distributed by formula. Set asides are also provided for environmentally-friendly
transportation enhancements.
Capital Assistance for High Speed Rail and Intercity Passenger Rail Service
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$1.1 billion to be used by the FAA to provide discretionary airport grants to repair and improve critical
infrastructure at airports. These investments will serve to provide important safety and capacity benefits.
Highway Infrastructure Investment
–

$1.5 billion for competitive grants to projects across all surface transportation modes that will have a
significant impact on the nation, a metropolitan area or a region. Awards will range from $20 to $300 million.
$750 million distributed through an existing authorized formula for capital projects to modernize or improve
existing fixed guideway systems, including purchase and rehabilitation of rolling stock, track, equipment and
facilities.
Capital Investment Grants (New Starts Program)
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$750 million in discretionary grants to be competitively awarded.
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Environmental Protection Agency

Clean Water State Revolving Fund
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Drinking Water State Revolving Fund
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$600 million to the EPA’s Hazardous Substance Superfund program to address uncontrolled releases from
hazardous and toxic waste sites that threaten human health and the environment.
Brownfields Cleanup
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$300 million for diesel emission reductions grants to states.
Superfund
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$2 billion for Drinking Water State Revolving Fund grants. Priority funds are designated for projects ready to
proceed to construction within 12 months of enactment. Eligible projects must facilitate compliance with national
drinking water regulations or otherwise advance health protection objectives under the Safe Water Drinking Act.
Projects to replace aging infrastructure are eligible if necessary to maintain compliance or advance the Act’s
public health goals.
Diesel Emissions Reduction
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$4 billion for Clean Water State Revolving Fund grants. Priority funds are designated for projects ready to
proceed to construction within 12 months of enactment. This is for nonpoint source, watershed protection or
restoration, estuary projects and traditional municipal wastewater treatment programs.
$100 million to states and tribal authorities for remediation of brownfields sites. Four types of competitive grants
are eligible: brownfields assessment, cleanup, revolving loan fund, and environmental job training. The 20% costsharing requirement is waived.
Leaking Underground Storage Program
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$200 million in grants for cleanup activities with no cost-sharing requirement.
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ARRA Compliance – General
 Basic Strategy: Oversight and Transparency
 Basic Goals: Accountability, Risk Mitigation, Minimize Fraud and
Abuse
 Specific Provisions Largely Undefined
 Implementation:
– Federal: Agency and Department Heads
• OMB Memo M-09-10 (February 18, 2009)
• Example: DOE Inspector General: Memo OAS-RA-09-01
– State and Local: Executive Offices
• Section 1511 Certification
» Question: Does “False Claims Act” Liability Apply?
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ARRA Compliance – Specific Provisions
 Buy America
 Hire America
 Davis Bacon Act – Prevailing Construction Wage
 Fixed Price Contracts
 Competitive Contracting Procedures
 State and Local Whistleblower Protection
 “Executive Agencies” may not enter into “Federal Contracts”
without complying with federal procurement laws and the Federal
Acquisition Regulations
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ARRA Compliance – Hire America
 Companies receiving TARP funds cannot hire foreign workers
 Does not apply to overall ARRA projects
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ARRA Compliance – Buy America
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Applies to All Iron, Steel and “Manufactured Products” used in ARRA public building
and works projects
Terms appear to borrow from Buy American Act (1933 – Federal Procurement) and
Buy America Statute (1964 – FTA Grants for State and Local projects)
BUT: Terms are not defined
Exemptions:
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Penalties?
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If requirement is “inconsistent with the public interest”
If the products are not produced “in sufficient and reasonably available quantities” in U.S.
If use of U.S. products increases cost of overall project by 25%
False Claims Act Liability
Contract and Legal Remedies: Invalid Bid, Void Contract, Contract Termination, Fraud
Basic Recommendation:
–
–
Broad Certifications and RFP’s require compliance and trigger liability
Therefore: Without express exemption for the project - - All building products should be
American-made (entire supply chain)
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ARRA Compliance – Risk Allocation Strategies

Current Practice:
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Broad Certifications
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Indemnification
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•
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E.g. Does the Buy American requirement subject state and local contractors who sign broad
certifications to federal False Claims Act liability?
Future Efforts:
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Agency passes risk to contractor
Contractor passes risk to subcontractor
Subcontractor passes risk to suppliers
Vague Penalties
•
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Federal Agency and Department Heads
State and Local Executives
Inspectors General, States and Local Officials will develop compliance best practices and
RFP’s (i.e. contract provisions) with specific requirements
Minimum Recommendations:
–
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Where Possible: Clarify broad and vague certifications before issuing or responding to
RFP’s
Expressly incorporate ARRA funding and compliance elements into indemnification
provisions in contracts
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Washington This Week

Energy Efficiency Markup
– The full Senate Energy and Natural Resources Committee will mark up
legislation updating appliance standards and industrial energy efficiency
– Part of larger, comprehensive Energy reform
– Energy efficiency is the “low-hanging fruit”
– President Obama is making a significant push for energy efficiency

House Cap-and-Trade Legislation
– Released this week, sponsored by Reps. Waxman (CA) and Markey (MA)

ARRA Oversight Hearing
– The Senate Homeland Security and Governmental Affairs Committee is looking
into how well ARRA funds are being spent
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Questions?
Patrick Miller
Associate, Baker & Daniels
Andrew Wheeler
Senior Vice President, B&D Consulting
[email protected]
312.212.6514
[email protected]
202.312.7424
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