Background  

On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the “Stimulus Bill” or “Act”), which included an additional $16.8 billion appropriation to the Department of Energy (DOE) for “Energy Efficiency and Renewable Energy” programs. Of this $16.8 billion, $3.1 billion was allocated to DOE’s State Energy Program (SEP), a program created by Congress in 1996 to promote conservation of energy and reduce the rate of growth in energy demand by providing federal funding to the states. This $3.1 billion in federal spending is in addition to those SEP funds already provided to the states through the regular federal appropriations process. Thus, states potentially have access to an unprecedented amount of federal monies to carry out their energy programs, with the expectation that these monies be spent in a manner “that maximizes job creation and economic benefit.”  

Private companies that work in the energy sector have a unique opportunity to tap into these federal funds if they position themselves to take advantage of the “program activities” that must be proposed by the states on or before May 12, 2009. The discussion below provides a brief overview of the program’s deadlines and requirements, as well as additional compliance elements that may apply to recipients of the stimulus funding.  

Details of the Funding Opportunity  

On March 12, 2009, DOE issued a Financial Assistance Funding Opportunity Announcement (FOA), seeking applications from the states requesting SEP funds appropriated under the Act.1 The states’ initial response to the FOA is due on or before March 23, 2009, and final applications are due on or before May 12, 2009. Funds will be awarded under the Act in the form of Formula Grants with 36-month periods of performance. Awards will be made giving “preference to activities that can be started and completed expeditiously” and that promote job creation and economic recovery. States must commit all funds to be spent within 18 months of the date of award.  

In their final applications due on May 12, states must provide DOE with a list of “program activities” they intend to conduct over the next year using stimulus funds, as well as budget information and milestones for each activity. States may propose to use stimulus funds to create new programs, expand existing programs, or both. Although the program is still governed by the regulations set forth at 10 C.F.R. Part 420, as well as the additional requirements set forth in the Act, DOE is encouraging states to structure their program activities “broadly and inclusively” to afford states with maximum flexibility in making funding decisions. In order to receive funds, states also must submit a written assurance from their governor pursuant to § 410 of the Act assuring DOE that certain conditions of funding will be met.  

Subcontracts and Grants

Under the SEP Entities that wish to be considered for subcontract and grant opportunities under their states’ SEP will have to work with the state’s governor’s office to determine whether their state is applying for these funds and what program activities the state is considering proposing. Moreover, both states and subrecipients that expect to receive SEP stimulus funding should be prepared to comply with certain unique provisions contained in the Stimulus Bill, including:  

  • Detailed reporting requirements on the use of stimulus funds, including the segregation of stimulus funding from other sources of funding in order to meet the Act’s accountability and transparency requirements.  
  • Compliance with the Buy American provisions, requiring that certain projects use only iron, steel, and manufactured goods that have been produced in the United States.  
  • Compliance with Department of Labor Wage Rate Requirements for construction projects.  
  • Compliance with the Inspector General provisions, requiring government access to any records relating to transactions involving stimulus funds, including the right to interview employees regarding these transactions.  
  • Compliance with additional whistleblower protections and guidelines.  

States that move quickly in complying with the Act’s requirements for stimulus funding will have an unprecedented opportunity to expand their State Energy Programs and stimulate their waning local economies though an influx of federal dollars into private hands. Private companies engaged in renewable energy and energy efficiency projects may be well positioned to obtain State support for their projects using these federal monies.