Summary: The Reed Smith Public Policy & Infrastructure Practice continues to monitor progress in both houses of Congress on the economic stimulus legislation known as the "American Recovery and Reinvestment Act of 2009" ("the Act"). Recent legislative activity on the Act since our prior update includes (1) the introduction of a separate version on this legislation in the Senate, similar to the version introduced earlier in the House of Representatives; and (2) votes occurring on the committee level in each house of Congress. Both the House and Senate are shortly expected to send their versions of the Act to their respective floors for a vote. How quickly this happens is dependent in large part on the efforts of congressional Democrats and the Obama administration to secure bipartisan support for this legislation. Once each house of Congress has held its final vote, the two differing versions of this bill must be reconciled so that one final version can be sent to the President's desk for signature. Congressional Democrats have indicated they are seeking to have this occur no later than Friday, Feb. 13, 2009. We will continue to monitor and provide updates as warranted.  

Elements of the Senate Version of the "American Recovery and Reinvestment Act of 2009":

As noted above, the Senate version of the Act (Senate Bill Number: S.1) is similar to the version working its way through the House of Representatives (House Bill Number: H.R. 1), including the same overall $825 billion price tag. A discussion of some of the key spending and tax provisions of the Senate version of the Act, including those areas in common with the House version and those that differ, are noted below.  

Spending Provisions

  • Protections against Waste and Fraud. The document prepared by the Senate Appropriations Committee notes that the Senate version of the Act contains many of the same spending protections established in the House, namely: (1) distribution of funds wherever possible through existing formulas and programs; (2) expedited obligation of funds to "shovel-ready" projects; (3) creation of a Recovery Act Accountability and Transparency Board to oversee spending; and (4) creation of a website that provides information about recovery spending, including grants, contracts and all oversight activities. In addition, both the House and Senate bills contain no directed spending to specific projects, i.e., no "earmarks."
  • Highway and Bridge Spending. The Senate version provides $27 billion for highway and bridge construction projects. The House version of the Act provides $30 billion.
  • Mass Transit. The Senate provides $8.4 billion for mass transit needs, including new commuter and light rail mass transit systems, modernization of existing mass transit systems, and purchasing buses and improving intermodal and transit facilities. The House version of the Act provides $9 billion.
  • Public Schools. $16 billion for renovation and modernization of public schools, from kindergarten to college, including technology and energy-efficiency upgrades. The House version of the Act provides $20 billion.
  • Wastewater. $6.4 billion for loans to help communities upgrade wastewater treatment facilities. The House version of the Act provides $6 billion.
  • Renewable Energy. $10 billion for new electricity transmission and grid improvements to link renewable energy sources, including wind and solar, to consumers. The House version of this Act provides $11 billion.
  • Advanced Batteries. $2 billion to fund programs authorized to support the U.S. manufacture of advanced vehicle batteries and battery systems under the Energy Independence and Security Act of 2007 ("EISA"). (42 U.S.C. 17012, et al.)  

Taxation Provisions

  • Payroll Tax Credit. A refundable tax credit of up to $500 for working individuals and $1,000 for working families, with caps of $75,000 for individuals and $150,000 for those filing jointly. The House version of the Act includes a similar provision.
  • Increase of the Net Operating Loss Carryback Period. For businesses, an increase in the net operating loss carryback period that allows businesses to use their losses in 2008 and 2009 to offset profits from five previous years, instead of the two allowed under current law. The House version of the Act includes a similar provision.
  • Extension and Modification of the New Market Tax Credit (NMTC) Program. The Senate would authorize an additional $3 billion in funding for this program, which promotes investment in low income communities by a qualified community development entity ("CDE"). The funding would increase the allowable amount of equity investments by $1.5 billion (to $5 billion for each year) for calendar years 2008 and 2009. The House has no similar provision.
  • Extension of the Renewable Electricity Tax Credit for Certain Types of Renewable Energy. This includes a long-term extension and modification of the renewable energy production tax credit, which provides an income tax credit from wind, closed-loop biomass, open-loop biomass, geothermal energy, solar energy, small irrigation power, municipal solid waste, qualified hydropower production, and marine and hydrokinectic renewable energy. The Senate would extend for three years (generally, through 2013; through 2012 for wind facilities) the period during which qualified facilities producing electricity from wind, closed-loop biomass, geothermal energy, municipal solid waste, and qualified hydropower may be placed in service for purposes of the credit. It does not change the placed-in-service date for solar facilities: to be qualified for the tax credit, a solar facility must have been placed in service after Oct. 22, 2004, and before Jan. 1, 2006. The House version of the Act includes a similar renewable electricity provision.
  • More Money for Tax Incentives for Energy Production and Conservation. On the whole, the Senate version of the Act contains $31 billion in total for tax incentives for energy production and conservation - about $11 billion more than the House version.