The Inflation Reduction Act (the “IRA”), signed into law on August 16, 2022, appropriates nearly $27 billion to provide financial assistance to certain entities in their efforts to reduce greenhouse gases. This “Greenhouse Gas Reduction Fund” (the “Fund”) is available to a wide range of recipients and prioritizes funding for projects in low-income and disadvantaged communities. However, the IRA leaves many aspects of the Fund undefined and tasks the Administrator of the Environmental Protection Agency (the “EPA”) with filling out the details of the program. The EPA is currently soliciting comments for insight into how best to design and implement the Fund to award grants to eligible parties.
What You Need to Know:
- The Inflation Reduction Act (“IRA”) appropriated $27 billion dollars for the Greenhouse Gas Fund to award to eligible recipients.
- The IRA makes the United States Environmental Protection Agency (the “EPA”) responsible for designing and implementing key provisions of the program, and the EPA is currently seeking public input.
- Now through December 5, 2022, members of the public can submit their comments online.
- The EPA will also host a “listening session” on November 9, 2022, from 7-9 p.m. EST to provide a forum for public comment. You can register for the session here.
The Fund designates three pools of funding, each of which will remain available until September 30, 2024:
- $7 billion is set aside to provide grants to States, municipalities, Tribal governments, and “eligible recipients” to, in turn, provide financial and technical assistance to enable “low-income and disadvantaged communities” to deploy or benefit from zero-emission technologies, such as installation of solar panels, or other greenhouse gas emission reduction activities.
- Nearly $12 billion is appropriated for grants to eligible recipients for the purpose of providing financial and technical assistance to “qualified projects.”
- Finally, $8 billion is appropriated for grants to eligible recipients for qualified projects that specifically benefit low-income and disadvantaged communities.
Entities that are interested in participating in the Fund program should consider providing comments on the eligibility criteria for prospective Fund recipients. Under the IRA, an “eligible recipient” is a nonprofit organization that (a) is designed to leverage private capital or provide other forms of financing for rapid deployment of low- and zero-emission products, technologies, and services, (b) does not take deposits other than deposits from repayments and other revenue received from financial assistance under this Greenhouse Gas Reduction Fund; (c) is funded by public or charitable contributions; and (d) invests in or finances projects alone or in conjunction with other investors. The EPA will need to clarify who satisfies the four prongs of this definition and the comment period allows the public to have input into which entities are included in the definition of “eligible recipients.”
The statutory definition of what constitutes a “qualified project” is similarly in need of clarification. Under the IRA, a “qualified project” is any project, activity, or technology that reduces or avoids greenhouse gas emissions and other forms of air pollution by combining public funds and private investments, or assists communities in their efforts to reduce or avoid air pollution. This definition is vague and broad, so potential participants in the Fund should consider providing input into how the Fund can effectively and efficiently define and finance these greenhouse gas reduction projects.
Stakeholders and members of the public will also have an opportunity to help the EPA address the environmental justice goal of the Fund, because the IRA did not define “low-income and disadvantaged communities.” The term “disadvantaged community” mirrors a concerted effort of the Biden Administration to direct greater federal investment towards communities that have historically been marginalized and overburdened by pollution and underinvestment in housing, transportation, water and wastewater infrastructure, and healthcare. As part of this executive effort, the Chair of the Council on Environmental Quality, within the Executive Office of the President, has published an interactive map identifying disadvantaged communities, called the Climate and Economic Justice Screening Tool, which can be found here.
Beyond clarifying these key terms within the IRA itself, potential recipients of grants from the Fund can utilize the comment period to seek clarification and provide input into Fund design and implementation, such as how to apply for and receive funding, and what oversight, monitoring, documentation, continuing obligations, or other conditions will be placed on the use of the grant funds.
To provide input on the design and implementation of the Fund, submit your comments to the EPA online through December 5, 2022, here. The EPA will also host a “listening session” on November 9, 2022, from 7-9 p.m. EST to provide a forum for public comment. You can register for the session here.
