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Green Infrastructure Funding Poses Challenges for Municipalities

Client Advisory

October 5, 2009

On October 1, 2009, New York Governor David Paterson announced $43 million in grants to municipalities for “Green Infrastructure” projects in New York State through the American Recovery and Reinvestment Act (“ARRA”).[1] The grants were awarded to 58 different projects throughout New York State and are intended to support cost-cutting solutions for progressive water conservation measures, energy efficiency technologies and clean water infrastructure. They range from the restoration of hundreds of acres of wetlands to reduce stormwater runoff, to the capture of waste heat to produce electricity, the development of biomass fuel and the advancement of innovative heat and power systems. The projects cleared for funding are expected to expand “green sector” job opportunities across the State and foster “green” municipal works and entrepreneurship.

Municipalities selected for funding now face stringent review deadlines imposed by ARRA or funding will be forfeited. Municipalities are generally prohibited from committing federal funds for infrastructure projects until environmental determinations have been completed under the federal National Environmental Policy Act (“NEPA”), the New York State Environmental Quality Review Act (“SEQRA”) and other laws. Complying with these legal requirements frequently requires time consuming environmental analyses, although the statutes offer opportunities for abbreviated review or exemptions under certain conditions. Because ARRA requires that funding for green infrastructure be committed by February 2010, timely compliance with NEPA, SEQRA and other environmental clearance obligations is an essential step to project funding and implementation.[2]

ARRA also requires special documentation of the “business case” on which a project or project component was judged to qualify toward meeting ARRA’s goal “to address green infrastructure, water or energy efficiency improvements or other environmentally innovative activities.” EPA has indicated that a short explanatory memorandum may be sufficient documentation. However, grant recipients may wish to include more robust documentation of economic benefits since the “business case” is likely to be an important factor in the public’s judgment of whether taxpayer money has been spent wisely.

Because states will be required to report “no less than weekly” on the uses of funds provided by ARRA, funding recipients will need to devote resources to compiling, evaluating and updating project reports on a real-time basis to show that that the project is in compliance with any conditions imposed on the funding, such as Davis Bacon, “Buy-American,” or environmental mitigation requirements. 

Municipalities who are designated to receive ARRA funds may wish to consider conducting a “pre-audit” of ARRA project documentation to ensure compliance with regulatory requirements. This pre-audit should be conducted by an experienced independent party to take a second look at whether compliance documentation is sufficient. We suggest that this pre-audit be conducted prior to any funding agreement and/or before the certification that “the infrastructure investment has received full review and vetting required by law.”

CL&M has considerable experience completing federal and state environmental reviews and environmental permitting, particularly with regard to “fast-track” projects. We assist our agency clients in vetting proposed projects to ensure they are able to meet environmental review requirements within expedited timeframes like those imposed by ARRA. We also work closely with environmental consultants, engineers and economists who we are able to engage to meet the needs of the agencies receiving ARRA funding and to complete analyses of historic resources, economic benefits, hazardous substances and other issues necessary for ARRA, NEPA and SEQRA clearance. We are experienced in helping clients complete complex environmental review records and in defending challenges to those records in both state and federal courts. 


Questions regarding this advisory should be addressed to Victor J. Gallo (212-238-8771, gallo@clm.com) or Christine A. Fazio (212-238-8754, fazio@clm.com).


Endnotes


[1] The information in this Client Advisory is based, in part, on a press release from Governor Paterson’s office that is available at http://www.state.ny.us/governor/press/press_1001091.html.

[2] In order to meet the requirements of ARRA, state agencies have set January 1, 2010 as the goal for executing all construction contracts.



Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2017 Carter Ledyard & Milburn LLP.
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