Stimulus Funding and Manufacturing Facilities: Is Your Facility Prepared?
Posted: January 19th, 2012Authors: Bill S. Roy R.
What is the “Stimulus Package?”
The “American Recovery and Reinvestment Act of 2009” (Act) that was passed by Congress on January 6, 2009 is more often referred to as the Stimulus Package. The Act makes “supplemental appropriations for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, and state and local fiscal stabilization for the fiscal year ending September 30, 2009…” Two key purposes of the Act include investments to increase economic efficiency and investments in transportation, environmental protection, and other infrastructure to provide long term economic benefits.
Much of the anticipated investment has the potential to directly or indirectly impact domestic manufacturing operations in a positive manner. Facilities that are prepared to initiate changes that could result from demand increases or capital projects funded with stimulus money will be in the best position to reap the benefits of the Act.
Where has funding been appropriated under the Act?
Division A of the Act identifies the specific monetary appropriations and where the appropriations have been allocated. Examples of the governmental departments that will receive funding include: the Department of Agriculture; Department of Commerce; Department of Defense, Army Corps of Engineers (energy and water development); Department of Transportation, General Services Administration; and the Department of Housing and Urban Development to name a few. The common threads in funding for each of these areas are “construction” and “capital improvements.”
How can the stimulus funding impact the operation of my facility?
In general, stimulus money authorized by the Act could impact the operations of many facilities either directly or indirectly. A significant portion of the appropriations relate to infrastructure projects (e.g., housing, port construction, etc.) or transportation (e.g., rail construction, rehabilitation of rolling stock, highway construction, etc.). Facilities that produce building-related products could be impacted by an increase in demand of the building products that they produce (e.g., lumber, concrete products, bricks, paint, roofing and siding, cabinets, carpet, etc.). Facilities that produce construction-related products could be affected in the same manner (e.g., cement, asphalt, aggregate, structural steel, fabricated steel products, pipe, etc.). Certain specialty producers could also be impacted (e.g., railcar maintenance facilities, rail wheel and axle producers, steel mills that produce rails, locomotive producers, etc.). Finally, secondary impacts may be experienced by facilities that manufacture construction equipment (e.g., cranes, heavy construction vehicles, transport equipment, etc.).
The expected impacts relate primarily to increases in demand from each type of facility that could occur within a relatively narrow window of time. In certain instances, facilities may not have the capacity or the equipment to meet demand needs in the short- to mid-term time frame. Such facilities may need to modify their facilities to meet demand, or may need to add capital equipment to produce new product. Capital funding that is associated with grant money may have deadlines associated with it. In some instances, those deadlines may not be amenable with the time that is required to procure environmental permits that may be required for the installation of equipment and/or completion of plant modifications.
Why does my facility need to be prepared from an environmental perspective?
As most companies have learned from past expansions and modifications, air quality permits typically require the longest lead time for environmental considerations. For a facility to benefit from increased demand, it may require “physical changes or changes in the method of operation;” key words under both New Source Review (NSR) air permitting programs: Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR). As most facility managers know, any construction permit required under major NSR (or minor NSR) is needed prior to beginning actual construction. If a permit is required under PSD or NNSR, the time required from initiation of the application to the issuance of the permit could be as much as 12 months or longer. While not as extreme, a permit required under a state minor NSR permit program could take up to 6 months or more to obtain. The importance of considering environmental permitting requirements such as NSR and being prepared for them will be critical, since timing could play a large part in a facility’s ability to benefit from stimulus-related demand.
What can I do to prepare my facility?
There are several steps that companies can take now to 1) evaluate whether stimulus money could impact their facility and 2) ascertain whether their facility could accommodate the impact. For Number 1, facility environmental managers should communicate with corporate and facility planners and forecasters to determine if there are any plans or forecasts that predict any stimulus impacts. Such plans could include capital projects that are funded by stimulus money or facility modifications, production forecasts, or other facility changes that are based, directly or indirectly, on the stimulus package. For Number 2, the environmental manager should evaluate whether any facility changes that are associated with the stimulus package can be accommodated under the existing facility operating permit. Such an evaluation would include a determination of whether any changes anticipated would include modifications, as defined by state and Federal air quality regulations.
My facility is prepared, so now what?
Air quality construction permits are defined as “pre-construction” which means that facilities cannot begin actual construction until any requisite air permits are in hand. Timelines for permit issuance can vary from state to state. However, major modifications at existing major facilities can take a year or more to permit. The relatively new fine particulate matter (PM2.5) NNSR regulations can complicate matters as well due to a shortage of PM2.5 emission offsets.
In other words, time is not on your side. For changes that require construction permits, the permitting process should be initiated as soon as possible. Developing a permit strategy and sharing that strategy with the state regulatory authority will help expedite the permit process overall. Also, the development of an administratively complete and technically accurate permit application will help to ensure a shorter state review period. Communication with state economic development stakeholders can also help ensure an expedited review period. Facilities should also consider alternative permitting strategies, such as plantwide applicability limits (PALs). Where applicable, PALs tend to significantly enhance a facility’s operational flexibility and, in many cases, can enable a facility to accommodate a wide range of facility changes based on changes in demand or the need to initiate modifications in a timely manner.
What is ALL4 seeing with respect to the stimulus funding?
ALL4 is involved with projects relating to stimulus funding from numerous sides including: new source permitting (i.e., PSD/NNSR and minor NSR); strategic planning; grant application development; and Greenfield project development. Based on these activities, ALL4 has made the following observations for consideration relative to stimulus funding and future growth plans and related activities at your manufacturing facility:
1. Stimulus Money loves “Shovel Ready” projects – There are many companies and projects out there vying for stimulus money. The gatekeepers of the stimulus money are looking for great, and timely, “success stories.” All things being equal, the closer your project is to being shovel ready (and that means having any necessary environmental permits to begin construction…), the increased likelihood your project has of receiving funding.
2. Projects that result in “Job Creation” surge to the front in Stimulus Money consideration – While projects that result in “job retention” are looked on favorably, those that result in “job creation” get the top billing. If your project will result in additional jobs, especially jobs in the jurisdiction that is controlling the funding, stimulus money may be available.
3. Stimulus Money is being spread and controlled at many different levels – The scope of the stimulus package is broad and, as a result, many different government agencies now have increased budgets. For example, ALL4 has found possible funding sources for environmental projects, alternative fuel projects, and Greenfield construction projects. Moral of the story: if your company is ready to spend money, there may be stimulus money available.
4. Stimulus Money isn’t for all companies – In light of the negative press or increased scrutiny that has fallen on those companies that have received government bailout or stimulus money, some companies have elected to stay away from any stimulus money. Remember, stimulus money gatekeepers want to advertise their successes; therefore, if you elect to go after stimulus money, please make sure that your company recognizes that your project will be in the limelight. Another thing – make sure that you acquire all the necessary environmental permits along the way!
5. Governmental Environmental Agencies are understaffed – The downturn of the economy and reduced state operating budgets are impacting the ability for the environmental agencies to remain fully staffed. Consequently, the workload for current staff members is increasing and the timeline for environmental agency review and issuance of environmental permits is being extended. This increased timeline must be considered in the overall project timeline.