Environmental and Sustainability Stimulus: An Overview of the American Recovery and Reinvestment Act of 2009 Provisions That Are Applicable to the Environmental Sector

On February 17, 2009, President Barack H. Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA). This issue summarizes the provisions of the ARRA’s stimulus expenditures and other stimulus measures relating to environmental and sustainability programs, specifically in the areas of water infrastructure, green transportation, environmental remediation, and urban renewal.

Water Infrastructure Funding in the ARRA

A recent study estimates that for every $1 million spent on water efficiency in the United States, 10 trillion gallons of water could be conserved, approximately 220,000 jobs created, and $2.8 million added to the nation’s economic output. With these numbers potentially in mind, Congress approved $13.5 billion for projects in water-infrastructure construction and improvements as part of the ARRA. One of the largest segments of that money, $4 billion, is designated for grants to help communities upgrade wastewater-treatment systems. An additional $2 billion is allocated to capitalization grants for safe drinking-water infrastructure. The remaining $7.5 billion will be administered by the U.S. Department of Agriculture, the U.S. Department of the Interior — specifically the Bureau of Reclamation, the U.S. Department of State, and the U.S. Army Corps of Engineers. Portions of this funding may be used for the repair and enhancement of U.S. urban and rural waterways. This allocation for water-related activities provides exciting opportunities for collaboration between national, state, and local governments as well as private corporations and public interest organizations. For detailed information, please see Foley’s Legal News “Water Infrastructure Funding in the ARRA” available at:
http://www.foley.com/publications/pub_detail.aspx?pubid=5844.

Green Transportation Funding in the ARRA

States, local governments, transit agencies, and Amtrak are poised to spend more than $19 billion in federal money for green public transportation investing and funding under the ARRA. Of the $19.5 billion allocated to green transportation, the largest portion, $8 billion, will go to the advancement of high-speed, intercity rail service, while the second-largest amount, $6.9 billion, will be earmarked to purchase buses and equipment needed to increase public transportation and improve intermodal and transit facilities.

Another $750 million will be allocated for the rail modernization and repair program, while the same amount will be spent on light rail and bus rapid transit projects nearly ready for, or already under, construction. Furthermore, $1.5 billion will be given to the U.S. Department of Transportation for supplemental discretionary grants, which will go to financing interstate and bridge maintenance and repair, freight and passenger rail, and intermodal ports. The program for federal diesel emission reduction grants to states and local governments also received $300 million. Finally, Amtrak also will receive $1.3 billion to improve its intercity passenger rail service. For many of these financing mechanisms the recipients must obligate the funds to specific projects within 180 days or less; however, at least a portion of the funding is directed to projects that may generate long-term growth instead of short-term stimulus. Therefore, it is important to understand the specifics of each green transportation program provided under the ARRA. For more information regarding this topic, please see Foley’s Legal News “Green Transportation Funding in the ARRA” available at:
http://www.foley.com/publications/pub_detail.aspx?pubid=5845.

Environmental Remediation Funding in the ARRA

The ARRA includes an additional $100 million for the U.S. Environmental Protection Agency (EPA) Superfund brownfields program under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for the evaluation and remediation of previously contaminated brownfield properties. These funds may prove critical as more facilities nationwide are being shut down in this period of economic uncertainty. Although a relatively minor amount compared to other programs, the additional $100 million will certainly increase the percentage of funding applications approved by the EPA, which stood at only 37 percent in 2008.

Similarly, only $200 million was provided to the Leaking Underground Storage Tank Trust Fund program; however, this money will allow the EPA to increase enforcement and cleanup operations at an additional 1,600 sites nationwide. The EPA also will receive an additional $600 million for the remediation of hazardous waste sites under CERCLA, commonly known as Superfund remedial program. With a much larger price tag, but with only minor effects on most companies, is the $6 billion in funding the U.S. Department of Energy is receiving to remediate radioactive contamination at multiple nuclear waste sites. Finally, slightly more than $1 billion has been allocated to federal land projects that include specific references to environmental remediation programs such as the rehabilitation of abandoned mines and oil fields and ready-to-go habitat restoration, research, and maintenance activities. This amount contains $125 million for the Bureau of Land Management, $650 million for the U.S. Forest Service, and $230 million for the National Oceanic and Atmospheric Administration.

Urban Redevelopment Funding in the ARRA

Combined with increased funding for brownfield redevelopment, the ARRA provides multiple mechanisms for urban infill projects, which reuse land and resources and decrease transportation costs. New Market Tax Credits are a potent redevelopment funding tool and create jobs by stimulating private investment in low-income urban and rural communities, whereby investors receive a tax credit for investing in qualified community development entities. The ARRA raises the yearly cap on such credits from $3.5 billion to $5 billion for the 2008 and 2009 allocations. It is estimated that every $1 of federal tax revenue foregone under the program generates more than $14 for investment in projects in low-income communities. Similarly, $250 million was allocated between the Economic Development Administration’s American Recovery Program and the Community Development Financial Institutions Fund for economic development in distressed urban areas. The ARRA also allows for the expansion of small-issue industrial development bonds for “creation of intangible property” in the next two years. Industrial development bonds are tax-exempt bonds usually used by a state or local government to finance manufacturing or production of “tangible personal property.” Local governments in areas affected by significant poverty, home-foreclosure rates, or unemployment also are eligible to issue $25 billion in Recovery Zone Bonds, which will be allocated to the states in proportion to their 2008 job-loss statistics. Finally, urban workers will benefit from the $500 million allocated to prepare workers for careers in energy efficiency and renewable energy.

In the previous Foley alert below, we discussed the ARRA’s provisions related to the energy sector:
http://www.foley.com/publications/pub_detail.aspx?pubid=5723

Additional Links

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

U.S. House of Representatives Committee on Appropriations press release:
http://appropriations.house.gov/pdf/PressSummary02-13-09.pdf

Legal News is part of our ongoing commitment to providing legal insight to our environmental clients and our colleagues.

Please contact your Foley Environmental attorney if you have any questions about these topics or want additional information regarding environmental matters. Authors and editors:

Bruce A. Keyes
Milwaukee, Wisconsin
414.297.5815
[email protected]

Robert P. vom Eigen
Washington, D.C.
202.672.5367
[email protected]

Benjamin P. Sykes
Milwaukee, Wisconsin
414.319.7333
[email protected]