[Senate Report 110-60]
[From the U.S. Government Publishing Office]
Calendar No. 131
110th Congress Report
SENATE
1st Session 110-60
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PUBLIC BUILDINGS COST REDUCTION ACT OF 2007
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May 3, 2007.--Ordered to be printed
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Mrs. Boxer, from the Committee on Environment and Public Works,
submitted the following
R E P O R T
[To accompany S. 992]
[Including cost estimate of the Congressional Budget Office]
The Committee on Environment and Public Works, to which was
referred a bill (S. 992) to achieve emission reductions and
cost savings through accelerated use of cost-effective lighting
technologies in public buildings, and for other purposes,
having considered the same, reports favorably thereon with
amendments and recommends that the bill, as amended, do pass.
GENERAL STATEMENT AND BACKGROUND
This bill accelerates the implementation of cost-effective
lighting and energy-saving technologies and practices in
federal and local public buildings. These improvements are
expected to reduce the costs to taxpayers of operating these
buildings, and to reduce the air emissions from the combustion
of fossil fuels often used to generate the heat or electricity
used by these buildings.
Specifically, the bill accelerates the retrofit of lighting
in buildings owned or leased, subject to certain lease terms,
by the General Services Administration (GSA). In addition, the
bill authorizes the U.S. Environmental Protection Agency (U.S.
EPA) to establish a new competitive grant program for the
retrofit of public buildings owned by local units of
government, subject to cost-share requirements.
The Senate Committee on Environment and Public Works has
jurisdiction under Senate Rule XXV over ``public buildings and
improved grounds of the United States generally,'' including
GSA buildings. The GSA owns and leases over 340 million square
feet of space in more than 8,900 buildings, located in every
state. The GSA calls itself the ``largest public real estate
organization'' in the country.
Related Executive Orders and Statutes
The bill seeks to accelerate the implementation of new
requirements for federal building performance. On January 24,
2007, President Bush signed a new Executive Order that calls
for an increase in energy efficiency and use of renewable fuels
throughout the federal government, Executive Order (E.O.)
13423. With respect to federal buildings, the President has set
as a goal that agencies should reduce the amount of energy used
per square foot of building space in 2003 by 3 percent annually
or 30 percent by 2015.
Executive Order 13423 amends Executive Order 13123, which
was issued by President Clinton in June 1999. E.O. 13123
required each federal agency to reduce energy consumption per
gross square foot at existing facilities by 30 percent by 2005
and by 35 percent by 2010, relative to a 1985 baseline.
The Energy Policy Act of 2005 (EPAct 05), Public Law No.
109-58, 109 Stat. 594 et seq., extended the energy reduction
goals outlined in Executive Order 13123 for existing federal
buildings by mandating that agencies use a new baseline of 2003
energy consumption and achieve additional reductions per gross
square foot of 2 percent each year beginning in 2006 and ending
with a 20 percent reduction by the year 2015.
In the case of new building construction and major
renovation, E.O. 13423 sets as a goal that agencies meet the
Guiding Principles for Federal Leadership in High Performance
and Sustainable Buildings, which include a target energy use of
30 percent below the average building performance for new
buildings and a target of 20 percent below the average for
renovations. By 2015, the goal is for 15 percent of each
agency's building inventory to meet these Guiding Principles,
which a number of federal agencies agreed to in early 2006.
The Executive Order provides in section 10(c) that it is
not intended to be legally enforceable. The Committee concluded
that it would be helpful to expedite some of the energy-
efficiency goals in the Order and to embody in statute a
requirement for their adoption.
SECTION-BY-SECTION ANALYSIS
Section 1. Short title
This section provides that the title may be cited as the
`Public Buildings Cost Reduction Act of 2007'.
Section 2. Cost-effective technology acceleration program
Subsection 2(a) requires the Administrator of General
Services to establish a program to accelerate the use of more
cost-effective technologies and practices at GSA facilities.
The program is required to ensure centralized oversight and
responsibility for coordination of relevant government
agencies' accelerated adoption of cost-effective technologies
and practices, to provide technical assistance and operational
guidance, and to track progress of agencies and departments
under the program. The provision of technical assistance and
guidance should include training of the building managers to
enable them to meet the cost reduction through energy
efficiency requirements and goals of this legislation.
Effective training of building managers in cost reduction
through energy savings could potentially pay for itself many
times over. This program has several phases, established in
subsections 2(b) and 2(c).
Subsection 2(b) provides that within 90 days after the date
of enactment of this Act, the Administrator is directed to
conduct a review of the current use and availability to GSA
building managers of cost-effective, highly energy-efficient
lighting technologies that are available for use in GSA
facilities.
As part of the program established under subsection 2(b),
not later than 180 days after the date of enactment of this
Act, the Administrator is directed to establish a cost-
effective lighting technology acceleration program to achieve
maximum feasible replacement of existing lighting technologies
with more cost-effective and energy-efficient lighting
technologies in each GSA facility using available
appropriations.
To implement the program established under subsection 2(b),
the Administrator is required to establish a timetable
including milestones for specific activities needed to replace
existing lighting technologies with more cost-effective
lighting technologies, to the maximum extent feasible
(including at the maximum rate feasible), at each GSA facility.
The goal of the timetable is to complete, using available
appropriations, maximum feasible replacement of existing
lighting technologies with more cost-effective lighting
technologies by not later than the date that is 5 years after
the date of enactment of this Act.
Subsection 2(c) directs the Administrator to ensure, not
later than 180 days after the date of enactment of this Act and
annually thereafter, that a manager responsible and accountable
for accelerating the use of cost-effective technologies and
practices is designated for each GSA facility.
In addition, subsection 2(c) directs the Administrator to
develop and submit annually to Congress a plan that identifies
the specific activities needed to achieve a 20-percent
reduction in operational costs (from 2003 cost levels) through
the application of energy-saving cost-effective technologies
and practices by not later than 5 years from the date of
enactment of the Act. The plan must also estimate the funds
needed to achieve the 20-percent cost reduction and describe
the status of the implementation of energy-efficient cost-
effective technologies at GSA facilities. This plan must be
implemented to the maximum extent feasible and at the fastest
rate feasible, using available funds, by not later than 5 years
after enactment of the Act.
Use of project bundling can combine multiple actions into a
single project, and can effectively allow the combination of
cost-effective technologies that may have short payback periods
with other energy conservation measures that may have longer
than five-year payback periods, to achieve greater overall
total savings and energy use reductions. Nothing in this
legislation, including the five-year payback provision (section
2(c)(2)(G)), is intended to limit or otherwise affect current
authorities.
Section 3. Environmental Protection Agency demonstration grant program
for local governments
Under this section, the Administrator of the Environmental
Protection Agency (EPA) is directed to establish a
demonstration program under which the Administrator shall
provide competitive grants to assist local governments to
deploy cost-effective energy-efficient technologies and
practices at local government buildings.
No grant awarded under this section shall exceed $1 million
and the Federal cost share is 40 percent. The bill provides for
cost share waivers for economically distressed communities,
which are identified through the Administrator's adoption, in
guidelines published in advance, of specific objective economic
criteria for such waivers. The program is authorized to receive
$20 million per year for each of fiscal years 2007 through
2012, and sunsets on September 30, 2012.
Section 4. Definitions
This section establishes definitions of terms in the bill.
LEGISLATIVE HISTORY
S. 992 was introduced on March 27, 2007, and referred to
the Committee on Environment and Public Works.
HEARINGS
On March 28, 2007, the Committee on Environment and Public
Works held a hearing on Reducing Government Building
Operational Costs through Innovation and Efficiency:
Legislative Solutions. Specific testimony was taken on S. 992.
Witnesses included: David Winstead, Commissioner, Public
Buildings Service, U.S. General Services Administration; Kateri
Callahan, President of the Alliance to Save Energy; and Melanie
Townshend, Project Executive, Gilbane Building Company,
Associated General Contractors of America.
ROLLCALL VOTES
The Committee on Environment and Public Works met to
consider S. 992 on March 29, 2007. The committee voted
favorably by voice vote to adopt Warner Amendment 1, which
added certain coordination, technical assistance, and success
tracking requirements to the program required by section 2(a),
and by voice vote to adopt Warner Amendment 2, as modified,
which authorized reduction or waiver of the local cost share
requirement for communities determined, pursuant to published
objective guidelines, to be economically distressed. The
committee agreed to report S. 992 by voice vote.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
Summary: S. 992 would authorize the Environmental
Protection Agency (EPA) to provide $120 million in grants over
the 2007-2012 period to local governments for programs to
reduce energy use in government buildings. In addition, the
legislation would direct the General Services Administration
(GSA), using existing appropriations, to increase the use of
energy-efficient lighting throughout federal buildings. The
legislation also would require various reports to the Congress
regarding the grant program and energy efficiency in government
facilities.
CBO estimates that implementing S. 992 would cost $10
million in 2008 and $85 million over the 2008-2012 period,
assuming appropriation of the authorized amounts. Enacting S.
992 could affect direct spending by changing the use of
existing funds, but CBO estimates it would likely have no
significant effect on direct spending. However, if agencies
entered into Energy Savings Performance Contracts (ESPCs) with
a substantially greater value than anticipated under current
law to increase the use of energy-efficient lighting in federal
buildings, the bill could result in additional direct spending
in the near term, and could lead to savings of future
appropriated funds over the long term. Enacting the bill would
not affect revenues.
S. 992 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would benefit local governments that participate in the
demonstration program authorized in the bill. That program
would provide $100 million over 5 years for competitive grants
to assist local governments in reducing energy use in public
buildings.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 992 is shown in the following table. The
cost of this legislation falls within budget function 300
(natural resources and the environment).
------------------------------------------------------------------------
By fiscal year, in millions of
dollars--
---------------------------------------
2008 2009 2010 2011 2012
------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Authorization Level............. 20 20 20 20 20
Estimated Outlays............... 10 16 19 20 20
------------------------------------------------------------------------
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted before the end of fiscal year 2007, that
the amounts authorized by the bill will be appropriated for
each year beginning in 2008, and that spending will follow
historical patterns for current and similar programs.
Spending subject to appropriation
EPA Grant Program. Section 3 would authorize the
appropriation of $20 million annually, through 2012, for an EPA
program of matching grants up to $1 million annually for local
governments to reduce energy consumption by their facilities.
The program would terminate on September 30, 2012. Assuming
appropriation of the authorized amounts, beginning in 2008, CBO
estimates that implementing this provision would cost $85
million over the 2008-2012 period.
GSA Lighting Technology Program. Section 2 would require
GSA, using available appropriations, to retrofit or replace
existing lighting technology in its buildings with more energy-
efficient lighting technology within five years. This would
build upon certain sections of Executive Order 13423--
Strengthening Federal Environmental, Energy, and Transportation
Management. That order set goals in many areas, including
energy efficiency, renewable energy, and sustainable buildings.
Based on information from GSA, CBO estimates that implementing
this provision would increase the priority of replacing
existing lighting technologies, but not significantly increase
costs over the 2008-2012 period.
Other Provisions. The legislation would require GSA to
establish a program to accelerate the use of cost-effective
technologies and practices in federal buildings. The
legislation also would require an annual and final report to
the Congress on the matching grant program, as well as reports,
plans, and recommendations within six months by GSA on energy
efficiency and energy usage by federal buildings. Based on
information from EPA and GSA and the cost of similar
activities, CBO estimates that those provisions would cost less
than $500,000 annually over the 2008-2012 period, subject to
the availability of appropriated funds.
Direct spending
The bill's direction to GSA to increase energy-efficient
lighting in federal buildings--using existing appropriations--
could affect direct spending by changing the government's up-
front commitments in Energy Savings Performance Contracts. CBO
estimates, however, that S. 992 is unlikely to result in a
significant change in the overall costs of such ESPCs.
The instructions for implementing Executive Order 13423--
Strengthening Federal Environmental, Energy, and Transportation
Management (which sets various environmental goals for federal
energy usage)--recommends the use of ESPCs and other financial
instruments (e.g., enhanced-use leasing) to reach the goals of
the order. ESPCs enable federal agencies to enter into long-
term contracts with an energy savings company (ESCO) for the
acquisition of energy-efficient equipment, such as new windows,
lighting, and heating, ventilation, and air-conditioning
systems. Using such equipment can reduce the energy costs for a
facility, and the savings from reduced utility payments can be
used to pay the contractor for the equipment over time. Because
the government does not pay for the equipment at the time it is
acquired, the ESCO borrows money from a nonfederal lender to
finance the acquisition and installation of the equipment. When
an agency enters into an ESPC, the government commits to paying
for the full cost of the equipment as well as the financing
costs for the project. Since the ESCO faces higher borrowing
costs than the U.S. Treasury, total interest payments for the
equipment acquisition will be higher than if the government
financed the acquisition of the equipment directly with
appropriated funds.
The obligation to make payments for the equipment and the
financing costs is incurred when the government signs the ESPC.
Under current law, agencies can use ESPCs to acquire new
energy-efficient equipment, without an up-front appropriation
for the full amount of the purchase price. (Such contracts
generally require payments over an extended period--up to 25
years.) Thus, consistent with government accounting principles,
CBO believes that the budget should reflect that commitment as
new obligations at the time that an ESPC is signed and that the
authority to enter into these contracts without budget
authority for the full amount of the purchase price constitutes
direct spending.
Since 1988, the Department of Energy (DOE) estimates that
agencies have entered into ESPCs valued over $2.6 billion. Of
that amount, GSA has agreed to ESPC contracts valued at $500
million, primarily for large energy projects, including
heating, ventilation, and air conditioning, boiler and chiller
improvements, and lighting improvements. If GSA used existing
appropriated funds for financing instruments like ESPCs for the
replacement of more energy-efficient lighting technology, the
bill could result in additional direct spending. However, based
on information from GSA, DOE, and the Office of Management and
Budget, CBO expects that under the bill, the specific ESPCs
that GSA chooses to execute may increase the priority of
replacing existing lighting technology, but that any such
changes are not likely to significantly change the overall cost
of ESPCs.
Intergovernmental and private-sector impact: S. 992
contains no intergovernmental or private-sector mandates as
defined in UMRA and would benefit local governments that
participate in the demonstration program authorized in the
bill. That program would provide $100 million over five years
for competitive grants to assist local governments in reducing
energy use in public buildings.
Estimate prepared by: Federal Costs: Matthew Pickford and
Susanne S. Mehlman; Impact on State, Local, and Tribal
Governments: Theresa Gullo; Impact on the Private Sector: Craig
Cammarata.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.