The American Recovery and Reinvestment Act of 2009 is One of the Most Significant Economic Recovery Bills Passed Since the Great Depression

The following includes a summary of the key provisions of the American Recovery and Reinvestment Act of 2009, which contains a package of spending provisions and tax incentives with an estimated cost of $787 billion.  While the implementation processes have not yet been fully developed, the stimulus bill clearly demonstrates the priorities of the U.S. Congress and the Obama administration with respect to dealing with the financial and economic crisis currently facing the United States as well as the rest of the world.  Several industry sectors in the American economy will benefit from the stimulus bill and the below blogs discuss some of those key areas.

Note:  You can view a comprehensive chart as well.

As expected, the United States Congress passed and the president signed into law, sweeping economic recovery legislation that expands existing, and establishes new, tax incentive programs to promote clean technology, renewable energy and green jobs.  The legislation also provides businesses tax relief in certain areas.

Read the entire alert on tax relief to promote clean technology and renewable energy.

The American Recovery and Reinvestment Act of 2009 includes few provisions that will have an impact on private equity and venture capital funds.  One provision that could affect private equity funds and their portfolio companies is a tax provision that will permit companies to restructure their outstanding troubled debt and defer the tax consequences thereof for five years.  The provision will allow companies to more easily deleverage their balance sheets, and thus should be considered by private equity funds and their portfolio companies which have outstanding debt.

Read the entire article on debt restructuring tax relief.

The American Recovery and Reinvestment Act of 2009 (ARRA) provides involuntarily terminated individuals (and their qualifying dependents) who experience COBRA qualifying events between September 1, 2008 and December 31, 2009 with a 65 percent subsidy on their COBRA premiums.  On March 31, the Treasury Department issued eagerly awaited guidance on the definition of "involuntary termination" for this purpose.

Read the entire alert on involuntary termination guidance for COBRA subsidy.

Some Notices Must Be Given By April 18, 2009

On March 19, 2009, the U.S. Department of Labor issued four new model COBRA notices to implement the COBRA subsidy provisions of the American Recovery and Reinvestment Act of 2009.  These notices must be provided by employers who sponsor group health plans to individuals who become eligible for COBRA between September 1, 2008 and December 31, 2009.  At least one of the notices must be provided by April 18, 2009 (see below).  The notices may be used by any public or private employer that is subject to COBRA (whether through ERISA, the Internal Revenue Code or the Public Health Service Act).

Read the entire alert on COBRA Notices for Subsidy.

President Obama set out his priorities regarding his vision of a clean energy future. In a press release prior to meetings with "clean energy entrepreneurs and leaders of the research community" the president stated that it was time to make investments in cutting-edge research that will establish the foundation for America's future economic prosperity. The press release included the follwoing:

FACT SHEET: INVESTING IN OUR CLEAN ENERGY FUTURE

Today, President Obama will meet with clean energy entrepreneurs and leaders of the research community to discuss his strategy for building a clean energy economy and creating the industries and jobs of the future.

The American Recovery and Reinvestment Act (ARRA) and his FY10 budget dramatically increase investment in cutting-edge research, the development and deployment of clean energy technologies, and incentives for private sector research and development (R&D).  These investments will establish the foundation for America’s future economic prosperity, reduce our dependence on foreign oil, and help combat climate change.

The ARRA includes $39 billion in energy investments at the Department of Energy and $20 billion in tax incentives for clean energy, including:

• The creation of an advanced research agency for energy, modeled after the Defense Advanced Research Projects Agency which developed the Internet.
• Support for Energy Frontier Research Centers, which could lead to breakthroughs in energy storage, super-efficient engines, and solar cells as cheap as paint.
• Supporting U.S. manufacturing of advanced batteries needed for plug-in hybrids, renewable energy backup, and other applications.
• $1.2 billon for research infrastructure for the Department of Energy’s national labs, which is being announced by Secretary of Energy Steven Chu today at Brookhaven National Laboratory. 

The  president’s 10-year budget also proposes almost $75 billion to make the Research and Experimentation Tax Credit permanent, stimulating private-sector investment in R&D and keeping the U.S. economy at the cutting-edge of 21st century technologies:

• Studies have shown that every dollar of tax benefit stimulates as much as an additional dollar of private R&D spending in the short term and two dollars in the long term.  Every one dollar of R&D adds two dollars of benefit to our economy and society as a whole.
• Two-thirds of benefits of the credit are attributable to salaries of U.S. workers performing U.S.-based research, and the credit stimulates R&D spending by more than 11,000 small, medium and large firms.
• The credit has been extended 13 times with some extensions lasting just six months, and has also been allowed to lapse for almost a year - undermining its effectiveness because companies can't count on it. 

Several of the technologies in the program today will be on display, highlighting the importance of R&D investment in building a clean energy economy, including:

• Orion Energy "Apollo Light Pipe:" The Apollo Light Pipe collects and focuses sunlight, bringing natural light indoors without consuming electricity and replacing traditional lighting for large portions of the day.  Coca-Cola and Sysco have installed this system, saving enough energy to power over 500 homes for a year.
• Solyndra Solar Panel: Solyndra is the first recipient of the DOE Loan Guarantee recovery program, announced last week.  Their solar panel is a unique cylindrical design that maximizes direct sunlight and absorption. 

The program will highlight success stories from R&D investments in the lab to job creation. Paul Holland, the vice chairman of the board and lead investor for Serious Materials, will introduce the president and share the story of Serious Materials, the leading energy-saving building materials company in the U.S.

• Serious Materials has four plants in California, Colorado, Pennsylvania, and plans to reopen the old Republic Windows plant in Chicago this Spring.
• Earlier this month, Serious Materials re-opened a previously shuttered plant in Pennsylvania, and is hiring back over 100 union workers in the next couple of months.
• Serious Materials’ products exceed current Energy Star standards by up to 400 percent and can reduce heating and cooling energy costs by up to 50 percent.  Five percent of U.S. energy use is lapsed through inefficient window glass.

The American Recovery and Reinvestment Act (ARRA) is being scrutinized on every level, and the overall assessment is that the bill is good for green.  From production tax credits to grants, weatherization to infrastructure investment, money is there to be received but you have to work quickly, and through the proper processes, to receive the funding.  Watch for tight timelines and meet the dates!

Some programs are being implemented by the Department of Energy.  On Thursday Energy Secretary,  Steven Chu, announced he intends to streamline the process by which the Energy Department distributes funding, with the goal of dispersing 70 percent of its funds from the ARRA by the end of 2010.  He is naming Matt Rogers as a senior adviser to implement the new department reforms which include rolling out appraisals of applications for loan guarantees, rather than waiting for the application deadline to evaluate them.  He said that the loan application forms will be simplified and the department will speed up loan underwriting by using outside partners.  The Treasury Department is also tasked with crafting regulations to implement the stimulus funding.

Specifically for Indiana, you should know the process for the:

Indiana Brownfields Program - Contact a Petroleum Remediation Grant consultant in your region.  A potential project list will be compiled by March 4, 2009. Right now the list is focused on petroleum contaminated sites, however the program may be able to open site consideration to hazardous substances as well.

Indiana State Revolving Fund - Drinking Water and Wastewater programs.  The Indiana Finance Authority (IFA) will be provided approximately $94 million to fund wastewater infrastructure projects and about $26 million to fund Drinking Water infrastructure projects.  The IFA created the SRF Loan Program Recovery Loan and Grant Program.  All standard SRF Loan Program requirements apply. Fixed rate loans (20- year terms) and grants are available.  Make sure that your community has completed a Preliminary Engineering Report and have it filed with the SRF Loan Program by March 13, 2009.

As always think about where the remainder of the financing is going to come from.  For instance, if you are applying for the 30 percent Department of Energy grant for eligible wind, biomass, geothermal and solar plants, make sure that you have a plan in place to fund the remaining 70 percent.  Start talking with your investment and private equity team to craft the entire package.

Employers take heed!  On February 17th, President Obama signed his economic stimulus package into law.  The American Recovery and Reinvestment Act of 2009, commonly known as the stimulus bill, contains a number of provisions of importance to employers.  If your business will receive funds under the Troubled Asset Relief Program (TARP), or any other stimulus program, it is critical that you are aware of these provisions.

Read more about the impact to employers.

Last week, the IRS issued Publication 15-T, regarding the new withholding tables designed to accelerate the benefit of the "Making Work Pay" tax credit passed under the American Recovery and Reinvestment Act of 2009, effective February 17, 2009.  The Publication formalized the IRS position that the new withholding tables are to apply to pensions in addition to wages.  Governmental plans should be aware of the impact of the new tables on two separate groups: (1) employees receiving wages under the plan's payroll, and (2) retirees and/or their beneficiaries receiving monthly benefit payments from the plan.  The IRS asks that the new tables be implemented as soon as possible but no later than April 1, 2009.

For more information about Publication 15-T, please contact Mary Beth Braitman, Terry A.M. Mumford, Albert Lee, Katrina Clingerman, Lisa Erb Harrison or your Ice Miller LLP employee benefits attorney.

The American Recovery and Reinvestment Act of 2009 (Act), signed by President Obama on February 17, 2009, contains important changes to group health plan continuation coverage requirements that take effect immediately.

The Act applies to COBRA, PHSA and state-mandated continuation coverage, and, therefore, covers both private and governmental employers, as well as small employers in states with mandated COBRA-like coverage.  We have used the term "COBRA" to refer to all of these types of continuation coverage.

Read more about the impact to COBRA.

The Obama administration's rural agenda includes a safety net for family farmers and a program to connect rural America through affordable broadband coverage.  Both of these programs will receive support through the stimulus package with $4.8 billion allocated to the Department of Agriculture for farming aid and rural development projects through the use of grants, loans and guarantees for broadband infrastructure programs and rural water, waste water and water disposal programs.

Read more about the impact on agriculture and rural development.

The stimulus bill is welcomed news for the public housing sector.  The funds will be allocated between several different housing initiatives including $4 billion to be used for capital and management activities for public housing agencies, $2 billion for neighborhood stabilization programs, and $1.5 billion for homeless prevention efforts.

Read more about the impact on public housing.

As the nation focuses its attention on a struggling financial sector, there is still work to be done to improve our national security.  Approximately $2.8 billion will fund a variety of programs through the Department of Homeland Security including border protection, aviation security, bridge construction and repair as well as railroad and port security assistance.

Read more about the impact on homeland security.

Before the ink could dry on the stimulus package, many political pundits were calling transportation and infrastructure one of the big winners.  The amount allocated for transportation infrastructure investment is $64.1 billion, according to the House Committee on Transportation and Infrastructure.  Most of these funds go toward highway and bridge construction projects, mass transit such as public transportation and high-speed rail projects as well as aviation programs.

Read more about the impact on transportation.

"Green" projects and programs may be another way the federal government is hoping to pull the struggling economy out of the red.  The bill provides for billions of dollars of tax relief for qualifying energy and climate change projects through changes in the renewable energy tax credits, the Department of Treasury renewable energy grant program and energy and transmissions appropriations.

Read more about the impact on renewable energy and green projects.

Companies who are the beneficiaries of funds from the stimulus package should take note.  New whistleblower provisions and employment-related provisions touching on immigration law are included in the bill.  In addition, there are compensation restrictions in place for executives of public companies receiving Troubled Asset Relief Program (TARP) funds.

Read more about the impact on employment.

The stimulus bill intends to provide federal assistance to states for health insurance coverage through Medicaid for children and those in danger of losing their coverage.  Other big recipients include the National Institute of Health, the Department of Health and Human Services and the health information technology exchange programs.

Read more about the impact on health and life science.
 

A number of important business tax relief provisions are contained in the stimulus package including a five-year carryback of 2008 net operating losses for qualified small businesses.  The legislation also expands volume for the New Markets Tax Credits program.

Read more about the impact on corporate tax.

The stimulus bill modifies several federal tax laws affecting tax-exempt bonds including creating a two percent safe harbor and creating a new type of tax-credit bond called Build America Bonds.  Recovery zone economic development bonds and manufacturing bonds and a number of other bond provisions are outlined in the stimulus bill.

Read more about the impact on municipal finance.

President Obama has made education a key component of the stimulus package.  More than $43 billion has been allocated to the Department of Education and an additional $9.9 billion in tax credit bonds for the land acquisition for, or construction, rehabilitation or repair of public school facilities.

Read more about the impact on education.