Up to $2.3 billion in MTCs will be allocated to support total capital investments of almost $7.7 billion in new renewable and advanced energy manufacturing projects. Last week the Departments of Energy (DOE) and Treasury issued guidance and opened the applications window for the MTC credit.  The DOE press release and related documents can be accessed here:  http://www.energy.gov/recovery/48C.htm

The Department of Treasury last week issued guidance on the implementation of the MTC program.  Notice 2009-72 provides important information concerning eligibility prerequisites, application procedures and deadlines, and allocation criteria for the MTC credit.  Notice 2009-72 can be accessed at: http://www.energy.gov/recovery/documents/Federal_Notice_48C.pdf

The 30% MTC manufacturing credit differs from the 30% investment tax credit (ITC) for renewable generation projects.  First, the maximum amount of MTC credits available to all taxpayers, on a nationwide basis, has been capped by Congress at $2.3 billion.  Unlike the regular ITC, awards of the MTC credit will be made under a “competitive” application process for determining the allocation and award of the credits.  Treasury’s cash grant in lieu of tax credit program (also enacted as part of ARRA) will not available to the MTC credit.  General tax credit restrictions will apply to the MTC credit.  For example, the eligibility restrictions with respect to tax-exempt investors, and limitations on individual investors’ ability to claim the ITC (such as the passive activity loss and at-risk rules), will apply to the MTC credit

MTC credits will be allocated and awarded to individual projects based on a multi-stage process involving separate applications to the Internal Revenue Service (IRS) and the DOE.  First, the DOE must “recommend” each project for “certification” to the IRS.  The DOE then will evaluate MTC credit applications based on criteria outlined below, and will assign a priority “ranking” to each project according to its merit evaluation.  The IRS, in turn, will award MTC credits based on the priority “rankings” assigned by the DOE. The project receiving the highest ranking (that is, first) will be allocated the full amount of credit requested before any credit is allocated to a lower-ranked project.  The amount of credit allocated to a project reduces the amount of credit available to lower-ranked projects.  The same process will apply to the second and lower-ranked projects until the amount available for allocation is exhausted.  DOE will recommend and rank projects only to the extent necessary to exhaust the amount available for allocation.  Applicants will receive tax credits based on the expected commercial viability of their project and the ranking of their project relative to other projects. Rankings will be based on: expected job creation, reduction of air pollutants and greenhouse gas emissions, technological innovation, and ability to have the project up and running quickly.  Technology, geographic and project size diversity, and regional economic development will also be considered when rating projects.
             
A qualifying manufacturing facility eligible for the MTC credit is defined as a project that “re-equips, expands or establishes” a manufacturing facility for the production of the following types of green technology:

• property used to produce energy from renewable resources (such as the sun, wind and geothermal sources);
• fuel cells, microturbines, or an energy storage systems for use with certain electric vehicles;
• electric grids to support the storage or transmission of intermittent sources of renewable energy;
• property designed to capture and sequester carbon dioxide;
• property designed to refine or blend renewable fuels or to produce energy conservation technologies (including energy-conserving lighting technologies and smart grid technologies);
• certain electric vehicles and certain related components; and
• other property designed to curb emissions, as supplemented to this list by Treasury.

A number of critical deadlines apply to the MTC credit application process.  The application period opened August 14, 2009.  Very brief “preliminary” applications are due to DOE by September 16, 2009, followed by a more extensive “final” applications being due to DOE and IRS on October 16, 2009.  If a final application for DOE recommendation is received on or before October 16, 2009, DOE will determine the feasibility of the project and (for projects determined to be feasible) provide the DOE recommendation to the IRS by December 16, 2009.  By January 15, 2010, IRS will certify or reject applications, and notify the certified projects with the approved amount of their tax credit. Accepted applicants will be required to enter into a tax credit agreement with the IRS, and will have one year from the date of the acceptance letter to start the project and provide documentation to the IRS that the certification requirements will be satisfied.  After receiving an official certification from the IRS, applicants will have three years to place the project in service.

Credits will be allocated until the program funding ($2.3 billion) is exhausted.  Subsequent allocation periods will depend on remaining funds. If MTC credits are not fully subscribed up to the $2.3 billion ceiling in this initial allocation round, the IRS intends to conduct another allocation round in 2010-2011, and will issue additional guidance with respect to such subsequent round.

CONTACT

Howard Cooper
202.274.2878

Philip H. Spector
212.704.6004

By receiving payments for property under section 1603, applicants are electing to forego tax credits under Code sections 45 and 48 with respect to such property for the taxable year in which the payment is made or any subsequent taxable year.  Applicants must agree to the terms and conditions applicable to the section 1603 program.  The guidance establishes the procedures for applying for payments under the section 1603 program and is intended to clarify the eligibility requirements under the program.

>> Click here to read the full article.

CONTACT

Howard Cooper
202.274.2878

Philip H. Spector
212.704.6004

Applicability

The FAR interim rules apply to Recovery Act acquisitions only.  They do not apply to Recovery Act grants provided by federal agencies to state and local governments and other entities.  Recovery Act grants are governed by another set of federal regulations issued on April 3, 2009 by the Office of Management and Budget (“OMB”).  The specific agency’s grant regulations apply to Recovery Act grants as well, but only to the extent the agency’s regulations do not conflict with the OMB regulations.  While OMB’s Recovery Act grant regulations are similar to the FAR interim rules governing acquisitions, this notice addresses acquisitions only. 

International Agreements

With the adoption of the interim rules, the FAR now implements the Recovery Act’s Buy American requirement.  The FAR provides that no Recovery Act funds may be used on a project for the construction, alteration, maintenance or repair of a public building or public work unless all of the iron, steel and other manufactured goods used as construction material in the project are produced or manufactured in the United States. The FAR also implements the international agreements exception to the Recovery Act’s Buy American restriction. Two of the new FAR clauses afford national (i.e., non-discriminatory) treatment to products from countries which are signatories to trade agreements with the United States.  This includes signatories to the WTO Government Procurement Agreement (“GPA”), i.e., many European countries, Japan and South Korea among others, and countries with which the United States has entered into a free trade agreement (“FTA”), such as Mexico, Canada, Australia, Morocco, Israel, Singapore, and countries that are a party to the Central American Free Trade Agreement.  Products from certain least developed countries accorded special treatment under the WTO, and mentioned in the Recovery Act’s legislative history, are also provided national treatment under the FAR interim rules.  Products from Caribbean Basin Countries, which are accorded national treatment under the Trade Agreements Act, are not accorded national treatment for Recovery Act projects.  In addition, Brazil, India and China are not parties to any qualifying trade agreement with the United States.  End products from those countries will not be accorded national treatment either.

National treatment will be accorded to products of WTO GPA, FTA and certain least developed countries—i.e. “Recovery Act designated countries”—only if the estimated value of the contract is equal to or exceeds the amount set forth in the applicable trade agreement that triggers the national treatment obligation.  These triggers are based on Special Drawing Rights, which are a form of international currency created by the International Monetary Fund, and are adjusted periodically.  For many agreements, such as the WTO GPA, the threshold amount required to trigger national treatment currently is $7.443 million.  For some of the FTAs, such as NAFTA, the contract currently must be valued at or above $8,817,449 million to be accorded national treatment.  It is important to note, however, that the threshold amount can vary further based on the trade agreement at issue and the particular agency that is awarding the contract.

Public Building or Public Work

The interim FAR provisions clarify a number of issues arising out of the use of broad language in the Recovery Act.  For example, the FAR rules explain that the Buy American restriction applies to a building or work either under the authority of, or with funds of, a Federal agency.  The building or work must serve the general public, and it is of no significance whether the Federal agency will actually hold title in the building or work.  The Recovery Act’s Buy American restriction will not apply to buildings or works outside the United States.

Manufactured Goods

It appears that almost all manufactured items used on Recovery Act projects are subject to the Buy American requirement.  While the term “manufactured goods” is not explicitly defined in either the Recovery Act or the interim FAR rules, the FAR explains that manufactured construction material is either raw material that has been processed into a specific form and shape or combined with other raw material to create an item that has different properties than those of the individual raw materials.  “Construction material” is defined as an article, material or supply brought to the construction site by the contractor or subcontractor for incorporation into the building or work.  This includes items brought to the site preassembled from articles, materials or supplies.  As to qualifying an item as a U.S. item, i.e., the country of origin rule, the FAR simply explains that domestic construction material is either unmanufactured construction material mined or produced in the United States or a construction material manufactured in the United States.  Foreign construction material is any material that is not domestic.

Further, it is now clear that there is no requirement with regard to the country of origin for components or subcomponents as long as the manufacture occurs in the United States.  Consequently, manufactured construction material can contain foreign components from say, Brazil, China and India, and still qualify as U.S. manufactured construction material as long as it is produced in the United States and otherwise meets the FAR’s definition of domestic construction material.

A different approach to country of origin is used for products from WTO GPA, FTA or least developed countries.  To qualify as construction material originating from one of these countries, the material must be wholly the growth, product or manufacture of that country, or in the case of construction material that consists in whole or in part of materials from another foreign country, has been substantially transformed in the WTO GPA, FTA, or least developed country into a new and different construction material distinct from the materials from which it was transformed.  Thus, for foreign construction material, the substantial transformation test applies.  Foreign construction material can contain components and subcomponents from various other foreign countries, including Brazil, China and India, but the substantial transformation test must be met.

Iron and Steel

Special rules apply to iron and steel used in construction contracts funded with Recovery Act money.  Under the interim FAR rules, steel is an alloy that includes at least 50 percent iron, between .02 and 2 percent carbon, and may include other elements.  Production in the United States of the iron or steel used as construction material requires that all manufacturing processes must take place in the United States, except metallurgical processes involving refinement of steel additives.  This requirement does not apply to steel or iron used as components or subcomponents of other manufactured construction material.

Waivers

The FAR interim rules also set forth procedures for pre-award and post award determinations concerning the inapplicability of the Buy American requirement in regard to a particular construction material.  Generally, requests for such determinations should be submitted in time to allow the agency to make a determination before the deadline for the submission of offers.  Where a request for a waiver is made post award, the selected offeror must explain why it could not have reasonably foreseen the need for such a determination and could not have requested it before contract award.

Grounds for a waiver include a showing that the cost of certain domestic construction material is unreasonable.  Consistent with the Recovery Act, if use of domestic manufactured construction material would increase the overall offered price of the contract by more than 25 percent, the cost of the domestic manufactured construction material is deemed unreasonable. The FAR now provides some insight concerning the information and supporting data that must be included in an offeror’s request for a waiver based on unreasonable cost.  Where an exception based on unreasonable cost is granted, offers including foreign construction material will be evaluated by adding 25 percent to the offered price for comparison with offers with no foreign construction materials.  If two or more offers are equal in price, award will be made to the offeror whose offer does not include foreign construction material.  Offerors are permitted to submit alternate proposals, one containing domestic materials only and the other containing foreign materials.           

The interim FAR rules reflect the other Recovery Act exceptions to the Buy American requirement by simply stating that if a particular construction material is not mined, produced or manufactured in the United States in sufficient and reasonably available commercial quantities of a satisfactory quality, foreign construction materials may be used.  Where the agency determines that application of the Buy American requirement to a particular construction material would be inconsistent with the public interest, it may waive the requirement and foreign materials may be used.  Like the statute, the FAR interim rules provide no guidance on what is needed to show that construction material is unavailable in sufficient quantity and quality or that the use of domestic material is inconsistent with the public interest.

Noncompliance

Unless the agency determines that an exception to the Recovery Act’s Buy American restriction applies, use of foreign construction material constitutes a violation of the Recovery Act.  Under the new FAR provisions, penalties for noncompliance with the Recovery Act’s Buy American requirement include removal and replacement of foreign material, termination for default, reduction in contract price and government-wide debarment or suspension.  If the noncompliance appears to be fraudulent, the matter will be referred to appropriate agency officials for consideration as to whether the Government should pursue a criminal investigation and/or a civil action against the contractor, such as is available under the False Claims Act, which carries severe penalties and fines.

Contact:

C. Jonathan Benner
202.274.2880

Charles A. Hunnicutt
202.274.2957

G. Brent Connor
202.274.2801

Paul J. McGarr
202.274.2977

The President’s Memorandum provided in part that executive branch officials may not consider the views of federally registered lobbyists about particular projects, applications, or applicants for Recovery Act funds unless those views are presented in writing. The OMB Interim Guidance sheds light on several ambiguities in the Memorandum about the scope of this prohibition.

The OMB guidance makes clear that the prohibition on oral communication with federally registered lobbyists only applies to discussions of particular projects, applications, or applicants for funding. The guidance defines a “particular project” as “a discrete and identifiable transaction, or set of transactions . . . in which specific parties have expressed an interest.”

The prohibition on oral communication does not apply to the following types of communications:

• General Question Contacts:  This includes: requests for meetings; requests on the status of an action; inquiries about how to apply for funding, application deadlines, and to which agencies or officials applications or questions should be directed; and requests for information about program requirements and agency practices under the Recovery Act;

• Widely Attended Meetings:  A gathering is widely attended if it is expected that a large number of persons will attend and that persons with a diversity of views or interests will be present; for example, if it is open to members throughout the interested industry or profession or if those in attendance represent a range of persons interested in a given matter. See 5 C.F.R. § 2635.204(g)(2);

• General Policy Contacts:  Examples of general policy issues include discussions supporting funding of certain general populations, categories of projects, or broad geographical areas; and

• Grant Administration Communications:  Once a grant is in administration, registered lobbyists may have oral communications with federal officials and other employees concerning the particular grant.

The OMB has also made clear that the prohibition on oral communication only applies to federally registered lobbyists. An employee who is not listed on his or her employer’s report submitted under the Lobbying Disclosure Act may communicate orally with federal officials and employees regarding particular projects, applications, or applicants.

As the OMB Interim Guidance notes, the President’s March 20 Memorandum instructed OMB to review its implementation and to forward any recommendations or modifications within 60 days.  Thus, these rules and protocols may be adjusted and further clarified in the near future.

The OMB’s guidance is available here.

Read the FAQ’s attached to the OMB D.

Division A

Recovery Act Funding Types and Projects

There are two general types of Recovery Act funding: contracts for federal procurement of goods or services (contracts), and grants, cooperative agreements and loans for projects that meet the basic requirements for funding (awards). Awards may be made through states that receive Recovery Act funding or directly from a federal funding agency.

The basic Recovery Act project requirements for awards are:

• Deliver results that serve the funding agency’s program requirements;
• Achieve economic stimulus by creating or retaining jobs;
• Achieve long term benefits in technology, health, quality of life, transportation, environmental protection, education and energy independence;
• Meet the accountability and transparency requirements of the Act.

 Where the Recovery Act Controls Are

Funding agencies, like the Department of Energy, will develop their specific funding requirements for each Funding Opportunity Announcement (FOA), but the Office of Management and Budget (OMB) will have overall control of the content, both to maintain uniformity throughout the Recovery Act process and to impose the Administration’s policies. OMB’s first Guidance for Recovery Act funding was issued on February 18. Its second Updated Guidance was issued April 3. The Updated Guidance includes a list of information that successful funding recipients must regularly report to the funding agency and the public. That list also effectively sets the baseline of award requirements for all funding agencies. A copy of that list is attached.

Recovery Act Status: Department of Energy

The Recovery Act provides approximately $40 Billion for Department of Energy non-loan projects. The loan piece is larger. The prescribed funding projects include energy efficiency and conservation, renewables, weatherization assistance, state energy programs, transmission, reliability, and fossil energy research.

DOE has begun to advertise for Recovery Act funding applications by listing announcements of FOAs on the federal website (See, e.g., NETL). DOE will issue FOAs for smart grid, transmission, energy efficiency, renewables, and carbon capture and sequestration projects. The application process will be competitive. While the Administration has said it wants to include a wide variety of funding recipients, DOE is likely to start by issuing awards to companies showing established skill, experience and strength in the particular type of project.

Potential Recovery Act Executive Compensation Limitations

The heated controversy about executive compensation for officials of AIG and other financial institutions manifests a volatile political issue, raising the question whether executive compensation limitations could cross over to Recovery Act recipients. With one narrow exception, that currently appears unlikely.

As the congressional legislation now stands, the only Recovery Act reference to limitations on executive compensation appears in a provision that amends the 2008 Economic Stabilization Act, from which TARP was developed. There is no Recovery Act provision imposing executive compensation limitations on entities receiving Recovery Act funding. Congress could have included such limitations, particularly as the issue of executive compensation was hot enough to require an amendment to TARP funding; but it did not.

There are other indications that energy companies receiving Recovery Act funding will not be subject to executive compensation limitations. In its April 3 Updated Guidance, OMB included a requirement for disclosure (but not limitation) of the compensation for the top 5 officials of a recipient, but only if the entity receives at least 80% of its annual gross income in federal awards and received at least $25 million in awards in the year. Since that category of dependents on federal funding would eliminate most or all electrical utilities, the risk that any would be required to disclose executive compensation is remote.

One possible caveat: Risk management, particularly under the Recovery Act accountability and transparency provisions, may suggest that all functions and personnel, as well as funds and accounting, should be organized in a separate corporate entity. If, for that reason or for other business reasons, a Recovery Act funding recipient is organized as a free-standing, separate corporate entity, and if that entity has officers and employees, the OMB executive compensation disclosure requirement, issued in its April 3 Updated Guidance, may require that that entity disclose the executive compensation of its own top five officers.

There is also a strong policy argument against imposing any executive compensation conditions on utilities whose rates are regulated by state commissions or FERC, as those companies continually submit their executive compensation expenses to regulatory review. A further level of review is unnecessary and arguably an intrusion into the regulatory process.

All this is not to say there cannot be a later rule on executive compensation of Recovery Act recipients from DOE; but it currently appears unlikely, considering the provisions of the legislation, OMB’s pronouncements and the structure of utility regulation.

Other Recovery Act Limitations

Two other limitations in the Recovery Act are worth noting.

The Buy American provision applies to construction materials for public buildings and public works, i.e. iron, steel and manufactured goods. If an application includes such construction, the Buy American limitations, as recently elaborated by OMB, will apply.

Davis-Bacon wage rate levels will apply to all laborers and mechanics who work for contractors or sub-contractors on Recovery Act funded projects.

Division B

Tax Incentives for Energy in the Recovery Act

In addition to providing various grants and other incentives, the Recovery Act also extends and enhances a number of tax benefits relating to renewable energy. It extends the placed-in-service date for the production tax credit (PTC) for three years – for wind facilities through December 31, 2012, and for certain other types of qualified facilities (Qualified Facilities) through December 31, 2013. It also allows owners of Qualified Facilities to elect to claim an investment tax credit (ITC) in lieu of the PTC and owners of Qualified Facilities and of certain other types of facilities (including solar facilities) to receive a grant from the Treasury Department in lieu of claiming either the PTC or the ITC.

The Recovery Act also provides other tax benefits:

• For 2009 and 2010, the Act increases the 30 percent alternative refueling property credit for businesses (capped at $30,000) to 50 percent (capped at $50,000). Hydrogen refueling pumps remain at a 30 percent credit percentage; however, the cap for hydrogen refueling pumps is increased to $200,000. In addition, the Act increases the 30 percent alternative refueling property credit for individuals (capped at $1,000) to 50 percent (capped at $2,000).
• The Act also establishes a new 30 percent ITC for facilities engaged in the manufacture of advanced energy property.
• The Act extends through facilities placed in service in 2009 (2010 in the case of certain longer-lived and transportation property) a provision temporarily allowing businesses to recover the costs of capital expenditures made in 2009 faster than the ordinary depreciation schedule would allow by permitting these businesses to immediately write-off 50 percent of the certain property. 

Below is the Office of Management and Budget Updated Implementing Guidance for the American Recovery and Reinvestment Act of April 3, 2009 Funding Recipients’ Reporting Requirements

SUPPLEMENTARY INFORMATION:

I. BACKGROUND

A. Section 1512(c) of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5, hereafter referred to as “the Recovery Act” or “the Act”) requires, as a condition of receipt of funds, quarterly reporting on the use of funds. The data elements proposed for reporting the information described in Section 1512(c) were published in the Federal Register on April 1, 2009 [74 FR 14824]. An entity that receives assistance funding under the Recovery Act must report information including, but not limited to,

i. The total amount of recovery funds received from that agency;

ii. The amount of recovery funds received that were expended or obligated to projects or activities; and

iii. A detailed list of all projects or activities for which recovery funds were expended or obligated, including—

1. The name of the project or activity;

2. A description of the project or activity;

3. An evaluation of the completion status of the project or activity;

4. An estimate of the number of jobs created and the number of jobs retained by the project or activity; and

5. For infrastructure investments made by State and local governments, the purpose, total cost, and rationale of the agency for funding the infrastructure investment with funds made available under this Act, and name of the person to contact at the agency if there are concerns with the infrastructure investment.

iv. Detailed information on any subcontracts or sub-grants awarded by the recipient to include the data elements required to comply with the Federal Funding Accountability and Transparency Act of 2006, as amended (Public Law 109-282, hereafter referred to as “the Transparency Act”), allowing aggregate reporting on awards below $25,000 or to individuals, as prescribed by the Director of the Office of Management and Budget. The Transparency Act identifies specific data elements that the website (USAspending.gov) must include for each federal award and authorizes OMB to specify additional elements for other relevant information. A 2008 amendment to the Transparency Act called the “Government Funding Transparency Act of 2008” (Public Law 110-252) added a requirement to collect compensation information on certain chief executive officers (CEOs) of the recipient and sub-recipient entity. An entity that receives assistance funding under the Recovery Act must report information required under the Transparency Act including, but not limited to,

1. The name of the entity receiving the award;

2. The amount of the award;

3. The transaction type;

4. The funding agency;

5. The Catalog of Federal Domestic Assistance number;

6. The program source;

7. The location of the entity receiving the award, including four data elements for the city, State, Congressional district, and country;

8. The location of the primary place of performance under the award, including four data elements for the City, State, Congressional district, and country;

9. A unique identifier of the entity receiving the award;

10. A unique identifier of the parent entity of the recipient, should the recipient be owned by another entity; and

11. The name and total compensation of the five most highly compensated officers of the company if it received (1) 80% or more of its annual gross revenues in Federal awards; and (2) $25M or more in annual gross revenue from Federal awards.

B. Section 1512(h) of the Recovery Act requires recipients of Recovery Act funds, including those receiving funds directly from the Federal government to register in the Central Contractor Registration (CCR) database at www.ccr.gov. Because recipients must report information on their first-tier contract and awards, the proposed guidance also would establish a requirement for sub-recipient registration in the CCR as a way to help ensure consistent reporting of data about each entity and thereby make the data more useful to the public. Without the requirement, multiple recipients doing business with the same entity may use different variations of the entity’s name, address, or parent organization when they each report on their awards to the entity. It should be noted that in order to register in CCR, a valid Data Universal Numbering System (DUNS) Number is required.

C. Section 1605 of the Recovery Act requires that projects, funded by the Recovery Act, for the construction, alteration, maintenance, or repair of a public building or public work use American iron, steel, and manufactured goods in the project unless one of the specified exemptions applies. The Act provides that this requirement be applied in a manner consistent with U.S. obligations under international agreements. Definitions of “manufactured good,” “public building and public work,” and other terms as they pertain to the Buy American guidance in 2 CFR part 176 are found in 176.140 and 176.160.

D. Section 1606 of the Recovery Act requires the payment of Davis-Bacon Act (40 USC 31) wage rates to “laborers and mechanics employed by contractors and subcontractors on projects funded directly by or assisted in whole or in part by and through the Federal Government” pursuant to the proposed Recovery Act.

E. To maximize the transparency and accountability of funds authorized under the Recovery Act as required by Congress and in accordance with 2 CFR 215, sub-part ___. 21 “Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and other Non-Profit Organizations” and OMB Circular A-102 Common Rules provisions, recipients agree to maintain records that identify adequately the source and application of Recovery Act funds. Guidance and an award term are provided in part 176 to help ensure that recipients understand their responsibilities with respect to tracking, accounting and reporting transactions during the award and in preparing audit documentation and reports in accordance with OMB Circular A-133, if applicable.

The Memorandum is scheduled for publication in the Federal Register tomorrow.

Summary

Encapsulating the more detailed memorandum of the Office of Management and Budget issued in mid-February, the Memorandum lists four goals of merit-based determinations for Stimulus funding.  The project must:

• Deliver programmatic results.
• Optimize economic activity and jobs in relation to the amount of funding.
• Achieve long term benefits in technology, science, health, infrastructure, environmental protection, and economic activity.
• Satisfy the Act’s transparency and accountability objectives.

To meet and protect these goals, the Memorandum issues the following orders:

1. Each department and agency must develop merit-based selection criteria for Recovery Act funding.  No communication may “supersede or supplant” any Recovery Act consideration by the department or agency.
2. Departments and agencies shall not approve projects for, or in relation to the prohibited objects listed in section 1604A of the Act, specifically: any casino or gambling establishment, aquarium, zoo, golf course or swimming pool.
3. Lobbyists registered under the Lobbying Disclosure Act:
   1. May not participate in any oral communication with a department or agency official concerning any particular project or application;
   2. May, however, communicate in writing concerning a project or application;
   3. May participate in oral communications with department or agency officials concerning general Recovery Act policy issues.
4. Any department or agency official orally discussing general Recovery Act issues with a lobbyist must document the conversation and post the report on the internet within 3 business days.
5. All lobbyists’ written communications shall be posted on the internet within 3 business days.
6. The Memorandum does not apply to the tax-related provisions of the Act.
7. OMB shall report to the President in 60 days any recommendations to modify or revise the Memorandum.

The term “department or agency official” is not defined.  It may apply only to federal personnel who are authorized to make material decisions on an application or project, thus leaving unrestricted lobbyist participation in discussions with staff on project, application, reporting, procedural and administrative requirements.  Clarity on this may be provided by OMB announcements.  Whether the severe restriction on lobbyists in the Memorandum will be moderated by OMB or a subsequent Presidential Memorandum is difficult to predict.

The sanctions for violating the lobbyist restrictions are not identified at this time.

The Memorandum does not purport to restrict participation in oral communications with officials by individuals not registered as lobbyists.

If you have any questions concerning this matter or are interested in receiving a copy of the Memorandum, please contact a member of the team listed above.

Yesterday, the Department of Labor issued the long anticipated model COBRA notices, election forms and ancillary documents that may be used in implementing the new COBRA subsidy rules.  The packages include the following disclosures:

• summary of the new law’s premium reduction provisions;
• form to request the premium reduction;
• form for plans or issuers who permit qualified beneficiaries to switch coverage options to use to satisfy the new law’s requirement to give notice of this option;
• form for an individual to use to satisfy ARRA’s requirement to notify the plan or issuer that the individual is eligible for other group health plan coverage or Medicare; and
• COBRA election forms and information.

Below are links to and brief descriptions of each of four sets of model forms for qualified beneficiaries after experiencing a qualifying event at some time on or after September 1, 2008:

General Notice

Long Version – is for individuals who have not yet received a COBRA notice.

Abbreviated Version – is for individuals who have received a COBRA notice, elected COBRA and are still covered.

Notice in Connection with Extended Election Periods – is for individuals who have received a COBRA notice, and either (a) elected and discontinued coverage, or (b) not elected coverage.

Alternative Notice – The alternative notice is required to be sent by issuers that offer group health insurance coverage that is subject to continuation coverage requirements imposed by state law.

Affected employers may use the model notices and election forms or customize their own forms.  Even if the model forms are used, there are decisions to be made in selecting the appropriate forms, inserting variables for each affected qualified beneficiary and reprogramming HRIS and other systems to administer the new COBRA subsidy rules.  In any case, the special notice and election forms must be finalized and issued by April 18, 2009.

If you have any questions relating to implementation of the new COBRA subsidy requirements, please contact a member of the Troutman Sanders Compensation and Employee Benefits Practice Group.

Four factors intensify the compliance risks and challenges that attend receipt of any ARRA funds:

1. The appropriated money will provide the greater stimulus the faster it gets out and into American commerce.
2. Many of the programs receiving ARRA funding are not designed for the appropriated amount of those funds, or there are no programs for the funding purposes.
3. As a consequence of factors 1 and 2, the standards, rules and requirements for many of the funding programs will be evolving as the funds are distributed and used.
4. The Administration’s policy and the text of the statute impose an unprecedented level of accountability and transparency, not merely for detecting failures, but for “preventing” fraud, waste and abuse.

There are, however, actions ARRA recipients can take to manage this liability risk.

• Recognize the reality of the ARRA’s conflicting goals;
• Segregate all ARRA functions, funds and accounting;
• Create secure, supportive records;
• Assign, empower and equip a specific compliance officer;
• Maintain constant contact with the funding agency and Congress.

>> CLICK TO READ DETAILS OF THE RISK AND MANAGEMENT TOOLS…

CONTACT
Stuart F. Pierson
Practice Group Leader

Internal Revenue Service

FAQs for Employers

New IRS Form 941

New IRS Form 941 Instructions

Department of Labor

COBRA Continuation Health Coverage FAQs for Employers

COBRA Continuation Health Coverage FAQs for Employees

Job Loss Poster

The deadline for compliance with this new legislation is fast approaching.  A special notice must be issued and election forms designed by April 18, 2009. 

If you have any questions relating to implementation of the new COBRA subsidy requirements, please contact a member of the Troutman Sanders Compensation and Employee Benefits Practice Group.

Contact:

Jonathan A. Kenter

Billions of dollars have been appropriated for projects involving construction, repair and rehabilitation of schools, healthcare facilities, government buildings and public housing.  ARRA also emphasizes the “greening” of facilities benefiting from government stimulus as well as a commitment to future projects focused on renewable energy.  Additionally, the new legislation appropriates billions toward infrastructure improvement, including substantial funding for the improvement of highways, bridges, electrical grid, control of flood and storm damage, water and waste water management.

Businesses, investors and governmental entities will need to adapt to the new economic environment by structuring their real estate transactions to take full advantage of the benefits created by ARRA.

Highlighted Spending Provisions Related to Real Estate, Construction and Development

• $2 billion in funding of emergency assistance for the redevelopment of abandoned and foreclosed homes.
• $4 billion in funding the Public Housing Capital Fund to carry out capital and management activities for public housing agencies.
• $2.25 billion in funding capital investments in low-income housing tax credit projects.
• $250 million for grants or loans for energy retrofit and green investments to owners receiving HUD project-based assistance.
• $1 billion in funding for construction and improvements of long-term care facilities for veterans and improvements at VA national cemeteries.
• $1 billion in funding of the Community Development Block Grant program for community and economic development projects.
• $27.5 billion in funding for highway and bridge construction, rehabilitation, repair and restoration.
• $5.5 billion to fund the Federal Buildings Fund for construction, acquisition, repair and alterations of federal buildings, United States courthouses and border stations. 

Highlighted Tax Incentives Related to Real Estate, Construction and Development

• Recovery Zone Bonds: creates a new tax category of tax credit bonds for investment in economic recovery zones with significant poverty, unemployment or home foreclosures.
• Qualified School Construction Bonds: creates a new tax category of tax credit bonds for construction, rehabilitation or repair of public school facilities or for the acquisition of land on which a public school facility will be constructed.

Troutman Sanders Uniquely Positioned to Serve Clients

While this alert summarizes certain highlighted sections of the new legislation, the text of ARRA leaves open a number of questions which likely will be addressed, at least in part, by additional regulations and other legislative guidance.

Troutman Sanders offers its private and public clients an experienced real estate team able to assist with these questions and the real estate opportunities that will be created by ARRA through a multi-disciplinary legal practice with expertise in project development and finance, public finance, energy, transportation, construction, government contracts, regulatory and government law, environmental and natural resources, zoning and land use, legislative, tax, lending and structured finance, mergers & acquisitions and business ventures, healthcare, telecommunications and technology. 

In addition, Troutman Sanders Strategies, our full-service government relations group, is uniquely positioned in Washington D.C. and numerous other states and municipalities to advocate our clients’ public policy issues, including providing our clients access to ARRA funding decision makers, through a broad array of contacts at the federal, state and local levels in order to build better partnerships among governments and businesses.

CONTACT

Sonia K. Bain
212.704.6471

Miles M. Borden
212.704.6161

Anthony D. Greene
212.704.6194