opportunities and compliance obligations under the federal stimulus package

Opportunities and Compliance Opportunities and Compliance Obligations under the Federal Obligations under the Federal

Stimulus PackageStimulus Package

Andrew RatzkinAndrew Ratzkin General Counsel, Burns and Roe GroupGeneral Counsel, Burns and Roe Group

The Business of Being GreenThe Business of Being Green City Bar Center for CLE City Bar Center for CLE September 29, 2009September 29, 2009

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Overview of EnergyOverview of Energy--Related Provisions of Related Provisions of Stimulus PackageStimulus Package• American Recovery and Reinvestment Act of 2009

(ARRA) signed into law February 17, 2009.• Significant but not “DREAM in 3” by itself.• Relation to:

• Budget priorities• Energy bills (Waxman-Markey, ACELA) (renewables (inc. RPS),

energy efficiency, transmission/smart grid, CCS)• Climate/GHGs (Cap & Trade) (Waxman-Markey)

• Energy provisions of ARRA focus primarily on renewables, efficiency and transmission and distribution.

• Fossil spending ($3.4B) focused on decarbonization (CCS, EOR, etc.).

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Overview of EnergyOverview of Energy--Related Provisions of Related Provisions of Stimulus PackageStimulus Package

• One of the largest spending bills ever: $787B (est.) in spending and tax cuts.

• Approx. $63B relating to energy ($43B spending, $20B tax cuts).

• Approx. $45B to DOE including loan guars and borrowing auth., $6.3B of which flows down to States as grants.

• Most of ARRA funds allocated to DOE relate to renewables, energy efficiency, “smart grid” and electric transmission.

• Approx. $10B relating to energy efficiency and climate change administered by other federal agencies, primarily DOD and GSA (>$4B each).

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Overview of Major EnergyOverview of Major Energy--Related Spending Related Spending Provisions of Stimulus PackageProvisions of Stimulus Package• “Smart Grid” – $4.5B• Electric Transmission – $3.25B each to WAPA and BPA (borrowing authority—

avail. until 9/30/12)• Renewable Energy and Transmission Loan Guars – $6B* to underwrite $60B

in loans under the Innovative Technologies Loan Guarantee Program (inc. biomass, hydrogen, wind, solar, hydro, advanced coal, CCS, pollution control)

• State Energy Grants – $6.3B (energy efficiency and conservation (formula) block grants, State energy programs)

• Energy Efficiency Improvements in Federal Buildings – $4.5B (GSA)• Qualified School Construction Bonds – $22B (DoEd) (not energy specific)• Low-Income Weatherization – $5B• DOD Energy Efficiency Projects – $>4B (SecDef expenditure plan reported to

Cong. 3/19). See www.defenselink.mil/recovery/.• Public Transit Energy Efficiency – $100M • Transportation Electrification - $400M DOE grants• R&D Relating to Energy Efficiency, Renewables and Climate Change - $3.4B to

DOE Fossil Energy R&D Program; $2.5B for DOE energy efficiency and renewable research, development, demo and deployment activities (inc. $800M for biomass and $400M for geothermal); $1.6B for DOE Office of Science.

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Overview of EnergyOverview of Energy--Related Provisions of Related Provisions of Stimulus PackageStimulus Package——DOE Funds from ARRADOE Funds from ARRA

Energy Efficiency & Renewable Energy $16.8BWeatherization - $5.0BState Energy Program - $3.1BAdvanced Batteries Mfg - $2.0BEnergy Efficiency & Renewable Energy - $6.7B

Environmental Management (EM) $6.0BSmart Grid & related programs $4.5BFossil Energy R&D $3.4BScience $1.6BARPA-E $0.4B____________________________________________________________DOE Total (excluding loan programs) $32.7BInnovative/Comm’ly Avail. Technology Loan Guars $6.0B*DOE Power Admin Borrowing Authority $6.5B(WAPA & BPA: $3.25B each)

*$6B was originally appropriated to underwrite up to $60B in loans for Renewable Energy and T&D projects (inc. biomass, hydrogen, wind, solar, hydro, advanced coal, CCS, pollution control). Subsequently, $2B was re-appropriated to support cash-for-clunkers; the original amount may be restored.

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EnergyEnergy--Related Tax Provisions of Stimulus Related Tax Provisions of Stimulus Package: $20B (est.) over 10 yrsPackage: $20B (est.) over 10 yrs

• PTC and ITC: PTC in-service date extended for 3 yrs (2013; wind 2012) for most renewables; marine, hydro 2 yrs. May elect ITC in lieu of PTC.

• Treas. Dept. Grant Program: In recognition of current earnings environment, receipt of grants allowed in lieu of claiming PTC or ITC for projects in service by or commenced in 2009 or 2010.

• Modification of Energy Tax Credits: Eliminates basis reduction for purposes of computing energy credit under IRC § 48.

• Clean Renewable Energy Bonds: Addl $1.6B above current levels authorized to finance renewables projects for govtl bodies, pub. power providers, electric cooperatives.

• Qualified Energy Conservation Bonds: Addl $2.4 6B authorized.• Advanced Energy ITC: New 30% ITC for facilities mfg advanced energy

property (renewables, energy storage, energy conservation, efficient T&D, CCS, plug-in vehicles). Treas/DOE cert. required.

• Tax Credits for Nonbusiness Energy Property (inc. energy efficiency improvements to existing homes). 30% credit through 2010.

• Tax Credits for Alternate Fuel Pumps.• Tax Credits for Electric Vehicles.

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Spending to DateSpending to Date

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New York Stimulus FundingNew York Stimulus Funding

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New York Stimulus FundingNew York Stimulus Funding

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New York Stimulus ProgramNew York Stimulus Program

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New York Stimulus ProgramNew York Stimulus Program

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New York Stimulus ProgramNew York Stimulus Program

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Other StatesOther States

• Funding decisions and processes vary by State.• Common requirements established by federal

funding sources (such as enhanced project information reporting).

• Common concerns about meeting deadlines and spending fast enough: contract management depth, developing RFPs, etc.

• (Even federal government concerns about own staffing; plans to rehire contract officers out of retirement.)

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Other StatesOther States

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Common Denominators in Funding CategoriesCommon Denominators in Funding Categories

• Jobs and support of economic recovery• Progress toward energy independence• Progress toward decarbonization• Note: Programs and guidelines in development

and policy goals are broad.• A project potentially may have eligibility under

more than one program (program descriptions frequently overlap): e.g., direct federal, State block grants and SEP, tax incentives, financial instruments (CREBs, loan guarantees, etc.).

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Funding Example: SEP Block GrantsFunding Example: SEP Block Grants

The goals established for the State Energy Program (SEP) ($3.1B) are:

1. Increase energy efficiency to reduce energy costs and consumption for consumers, businesses and government.

2. Reduce reliance on imported energy. 3. Improve the reliability of electricity and fuel

supply and the delivery of energy services. 4. Reduce the impacts of energy production

and use on the environment.

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Funding Example: SEP Block GrantsFunding Example: SEP Block Grants

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SEP Block Grant Example: New York StateSEP Block Grant Example: New York State

• Recovery and Reinvestment Cabinet established.• http://recovery.ny.gov/• States had until May 12 to apply for SEP grants.• Each State’s ARRA funds administration differs• SEP administration in NY delegated to NYSERDA• http://www.nyserda.org/Economicrecovery/sep.asp• Process:

• NYSERDA decision on application• Governor, Mayor or other chief executive must certify review,

vetting and appropriate use of taxpayer funds. ARRA § 1511.• Projects to be certified by Governor subject to review by

Recovery Cabinet• Positioning and sponsors

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New York Stimulus ProgramNew York Stimulus Program

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New York Stimulus ProgramNew York Stimulus Program——NYSERDANYSERDA

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New York Stimulus ProgramNew York Stimulus Program——NYSERDANYSERDA

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New York Stimulus ProgramNew York Stimulus Program——NYSERDANYSERDA

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New York Stimulus ProgramNew York Stimulus Program

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New York Stimulus ProgramNew York Stimulus Program

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The Stimulus Package and Energy ProjectsThe Stimulus Package and Energy Projects

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The Stimulus Package and Energy ProjectsThe Stimulus Package and Energy Projects

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The Stimulus Package and Energy ProjectsThe Stimulus Package and Energy Projects

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Oversight and ComplianceOversight and Compliance

• Because of transparency goals, enhanced information and requirements for all recipients (contracts, grants, cooperative agreement, loan guarantees, tax incentives).

• DOE announcement of comprehensive reorganization of grant and loan guarantee award process; at same time DOE has announced enhanced oversight and reaffirmed due diligence measures on all loan guarantee issuances.

• For contractors, FAR plus.• Agencies required to publish contract pre-solicitation and award

notices beyond FAR Part 5 requirements. https://www.fbo.gov• For contracting, fixed price preferred per FAR Part 16, though

OMB recognizes per FAR 9.103 that selection based solely on price can produce a false economy.

• Reporting requirements have been developed as new standard FAR clause (52.204-11) as per ARRA § 1512.

• Recipient information will be published on government websites.

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Recipient Reporting RequirementsRecipient Reporting RequirementsPer ARRA § 1512, each recipient required to report information, including the following:• Total amount of recovery funds received from

Agency.• Amount of recovery funds obligated and expended.• Detailed list of all projects or activities for which

recovery funds were obligated or expended, including:• Name of project/activity• Description of project/activity• Evaluation of completion status• Estimate of number of jobs created and retained• For State/local infrastructure investments, the purpose, total

cost and rationale for the funding, contact person for concerns

• Detailed information on subcontracts/subgrants.

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Recipient Reporting RequirementsRecipient Reporting Requirements

• In addition, all prime contractors and first-tier subcontractors must report the name and total compensation of each of its five most highly compensated officers if, in the preceding fiscal year, 80% or more of its gross revenue had a federal source (contracts, subcontracts, grants, subgrants, cooperative agreements) and such federal-source revenue exceeded $25,000,000. Interim FAR clause 52.204-11.

• See 74 Fed. Reg. 14639 (Mar. 31, 2009)• Recovery Accountability and Transparency Board

oversight

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Recipient Reporting RequirementsRecipient Reporting Requirements

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Whistleblower ProtectionsWhistleblower Protections

The McCaskill Amendment, ARRA § 1553, protectsdisclosures:• Made by employees of non-federal recipients of

“covered funds”• That the employee reasonably believes is evidence of

• Gross mismanagement of a contract or grant relating to covered funds;

• A gross waste of covered funds;• A substantial and specific danger to public health or safety

related to the use of covered funds;• An abuse of authority related to the use of covered funds; or• A violation of law, rule or regulation related to an agency

contract or grant related to covered funds.

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Whistleblower ProtectionsWhistleblower Protections

Such a disclosure need not be formal, and is protectedif made, including during the “ordinary course of theemployee’s duties”, to:

• The Recovery Accountability and Transparency Board• An Inspector General• The Comptroller General• A member of Congress• A State or Federal regulatory or law enforcement agency• A person with supervisory authority over the employee (or

such other person working for the employer who has authority to investigated, discover or terminate misconduct)

• A court or grand jury, or

• The head of a federal agency or their representatives

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Additional ResourcesAdditional Resources

Overviews of ARRA• American Recovery and Reinvestment Act of 2009, official text:

• http://frwebgate.access.gpo.gov/cgi- bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.pdf

• National Conference of State Legislatures’ summary:• http://74.125.47.132/search?q=cache:x75TrJzEWXcJ:www.ncsl.org/statefed/2009econom

icstimulus.htm+stimulus+ARRA+summary&cd=7&hl=en&ct=clnk&gl=us• Associated General Contractors’ summary:

• http://www.agc.org/cs/rebuild_americas_future• Detailed OMB guidance:

• http://www.recovery.gov/?q=node/317• Training materials:

• http://www.whitehouse.gov/recovery/WebinarTrainingMaterials/• Recipient Reporting Information:

• http://www.recovery.gov/?q=content/recipient-reporting• http://www.federalreporting.gov

• Tracking spending by state:• http://www.recovery.com/Spending_by_State_Group_Seven.aspx#3

• DOE ARRA programs: http://www.energy.gov/recovery/• DOD ARRA programs: http://www.defenselink.mil/recovery/

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Additional ResourcesAdditional Resources

Application Process• Registration and applications for ARRA funding programs:

http://www.grants.gov.• Central Contractor Registration: http://www.ccr.gov.• Loan guarantee program: www.lgprogram.energy.gov/apply.html;

opportunity and funding allocation notices published at: GovLoans.gov.

• Link to State ARRA websites: http://www.recovery.gov/?q=content/state-recovery-page

• State-by-State breakdown of DOE grant funding of state-level energy programs and weatherization assistance. http://www.energy.gov/recovery/documents/DOE_Formula_Block_Grant_ Allocation_03302009.xls

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The Stimulus Package and Energy ProjectsThe Stimulus Package and Energy Projects

About Burns and RoeBurns and Roe is a comprehensive engineering, procurement, construction, operations and maintenance company providing services to private and governmental clients worldwide, primarily in the power and energy sectors. The firm's professional services extend from project inception to operations and maintenance.

For more information, see www.roe.com.

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The Stimulus Package and Energy ProjectsThe Stimulus Package and Energy Projects

Contact:Andrew RatzkinBurns and Roe Group, Inc.201-265-2000aratzkin@roe.com