Green Building Law Blog : Green Building Lawyer & Attorney : Shari Shapiro: Calliope Communications, LLC

In April 2010, the Department of Defense (“DOD”) issued a memorandum (“memo”) that altered the structure of the defense budgeting cycle, beginning with fiscal year (“FY”) 2012 budget. These changes were ostensibly made to offer more stability to the budgeting process, which prior to the memo involved a more complicated two-year budgeting process where major funding changes were supposed to be made in even-numbered years and smaller adjustments were supposed to occur in odd-numbered years. However, as then Deputy Secretary of Defense Willy Lynn stated, “everyone involved just ignored that second year.” 

The new rules replaced the two-year cycle with single-year budgets, which were intended to more accurately reflect current defense needs and budgeting realities caused by the economic slowdown. A second requirement of the memo, however, could have the unintended consequence of hindering DoD green building projects.

The memo requires that the Pentagon’s annual Program/Budget Reviews, or Future Years Defense Program (“FYDP”), to focus on a five-year period each cycle. Readers may recall my earlier post on the recently enacted National Defense Authorization Act (“NDAA”), which among other things, prohibits the DoD from using appropriated funds to achieve LEED platinum or gold certification unless the Secretary of Defense can certify that the LEED project in question will result in no additional costs to the DoD, or if a cost-benefit analysis reveals that the project will produce a financial payback.

A potential concern to proponents of DoD green construction projects could be the imposition of a five-year “horizon” to determine the financial benefits of energy improvements or sustainable design features. While the NDAA does not specify a time window to be used in conducting cost-benefit analyses, defense officials may be discouraged (under Congressional opposition to seeking LEED gold or platinum certification) from proposing green projects that will have a payback period beyond the five-year FYDP cycle.

• Email This
• Print
• Trackbacks
• Share Link

The United States is at a precipice with respect to public motivators for the green economy. Essentially, the carrot of public incentives or investment and the stick of potential mandatory regulation of carbon emissions are slated for elimination at the same time. 

Although we cannot know what this two part challenge to the green economy will do, it will certainly change its trajectory for the foreseeable future. 

First, of course, are the proposed revisions to the 2011 budget.  With respect to green building, slated for cuts are most programs that promote green building or which invest Federal dollars in green buildings directly:

• $3 billion of EPA funding overall
• $1.6 billion (nearly 20%) of the Federal Building Fund at the General Services Administration (GSA)
• $786 million (over 35%) of the Energy Efficiency and Renewable Energy (EERE) office at the Department of Energy (DOE)
• $250 million in funds for the Department of Housing and Urban Development (HUD) HOPE VI program, which leverages private sector dollars to transform existing blighted public housing into vibrant and livable communities.
• $10 million for the Energy Star program at the Environmental Protection Agency (EPA).

With respect to renewable energy, the proposed Republican budget bill slates for reduction or elimination over $900 million in investment. Among the programs slated for cuts or elimination is the Department of Energy Loan Guarantee Program for clean energy start up companies, established during the George W. Bush administration.  According to Forbes, DOE officials have said that eliminating this program would do away with 20,000 jobs, along with the benefits for the environment.

In addition to the direct cuts, at least four different proposals are pending (potentially up for a vote this week) restricting or eliminating EPA's ability to regulate greenhouse gases.  If the EPA is restricted in its ability to regulate greenhouse gases, one of the most potent motivators for investment in reducing carbon emissions through renewable energy, green buildings and other carbon reduction techniques will be eliminated.  

 The question will become not whether renewable energy and green building can compete without government subsidy, but rather whether renewable energy and green buildings can compete in the face of continuing subsidy to competing technologies like coal, oil, etc. 

According to the Center for American Progress, the proposed Republican budget will make few changes with respect to the $40 billion+ Government support of these technologies through tax incentives and other mechanisms. Fox News was unable to get a commitment from House Budget Committee Chairman Paul Ryan (R-WI) that tax breaks for oil and gas companies would be eliminated:

WALLACE: A lot of Democrats that are already saying, even before they’ve seen your budget, that you do all of this balancing of the budget on the spending side, and unlike the President’s debt commission, you don’t do it on the revenue side. Do you eliminate tax breaks? Do you bring in new revenue by eliminating, for instance, tax breaks for oil companies?

RYAN: We don’t have a tax problem. The problem with our deficit is not because Americans are taxed too little. The problem with our deficit is because Washington spends too much money. … So we’re not going to down the path of raising taxes on people. […]

WALLACE: But for instance, you will not eliminate tax breaks for Big Oil and Gas?

RYAN: Those are the kinds of details that we’ll come out later with, that the Ways and Means Committee will work on. We’re not going to go into the little details of which tax expenditure goes and which tax expenditure stays.

 [You can watch this portion of the interview on You Tube]

The next few weeks will be historic ones with respect to America's green future.  For better, worse or otherwise, these are interesting times which will mean changes for everyone in the green sector in the United States. 

• Email This
• Print
• Trackbacks
• Share Link