FEDERAL ENERGY MANAGEMENT
Additionally, some Recovery Act funding targeted more generally for energy efficiency activities, although not specifically appropriated to carry out EISA high-performance federal building requirements, can nevertheless be used for this purpose.
EISA requires us to report to Congress on the implementation of its high-performance federal building requirements by October 31, 2009. To provide you with information on implementing agencies' progress in carrying out key EISA high-performance federal building requirements, this report addresses (1) what the implementing agencies -- DOE, GSA, OMB, and EPA -- are doing to carry out their responsibilities under EISA, which direct and assist federal agencies in meeting key EISA high-performance federal building requirements; (2) how implementing agencies are planning to use Recovery Act funds to meet key EISA high-performance federal building requirements; and (3) what challenges implementing and other agencies may face as they take steps to meet EISA high-performance federal building requirements. During the course of our review, we also identified energy management practices that can help agencies meet EISA high-performance federal building requirements, which we discuss in the third section of this report.
To identify the steps implementing agencies are taking, which direct and assist agencies in meeting key EISA high-performance federal building requirements, we first reviewed EISA Title IV, Subtitle C -- High-Performance Federal Building requirements. We then identified DOE, GSA, OMB, and EPA as implementing agencies because EISA either assigns implementation responsibilities to them, such as developing regulations or guidance, or they have assumed some such responsibilities. To identify those EISA requirements that we designated as key, we met with implementing agency officials and stakeholder organizations -- industry and advocacy groups such as the Building Owners and Managers Association and the Alliance to Save Energy -- and identified which provisions contained specific requirements for the implementing agencies that were applicable during the time frame covered by our review. We met with officials from DOE's Federal Energy Management Program, GSA's Office of Federal High-Performance Green Buildings, EPA's ENERGY STAR Program and Office of Water, and OMB's Energy and GSA Branches and reviewed agency-provided documentation, including draft and final regulations and guidance, and draft energy and water data. We also attended a meeting of the Interagency Sustainability Working Group in February 2009 to learn more about the government's efforts to implement EISA high-performance federal building requirements. Additionally, we assessed the reliability of the draft energy intensity and energy and water management data we reviewed and determined that the data were sufficiently reliable for our purposes. To determine how implementing agencies are planning to use Recovery Act funds to implement key EISA high-performance federal building requirements, we reviewed DOE's, GSA's, and EPA's plans to use such funds. OMB did not receive any Recovery Act funding. To determine what challenges implementing and other agencies may face as they take steps to meet EISA high-performance federal building requirements, we met with officials from the previously identified agencies and from DOD and VA (whose real property portfolios together account for 63 percent of federal building energy use), as well as stakeholder organizations with expertise in this area, and reviewed relevant documentation provided by these sources, such as reports on high-performance federal buildings and energy conservation measures, and contained in our prior reports. We selected these stakeholder organizations because of several factors, including agency recommendations and documentation, the organizations' varied areas of expertise, and the organizations' involvement in developing or helping to implement EISA requirements. Appendix I contains a more detailed discussion of our objectives, scope, and methodology.
We conducted this performance audit from December 2008 through October 2009 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
GSA Is Preparing for Upcoming Leasing Requirements and Has Established an Office to Coordinate High-Performance Federal Building Activities Required under EISA
GSA anticipates incorporating ENERGY STAR leasing requirements contained in Section 435 into its federal leases by late October 2009, according to GSA officials. Effective in December 2010, Section 435 prohibits federal agencies from entering into a contract to lease building space that, with certain exceptions, has not earned an ENERGY STAR label within the most recent year. Because GSA acts as the leasing agent for most federal agencies, the agency's action will help enable federal agencies using GSA leases to comply with EISA's leasing requirement, according to the Acting Director of GSA's Office of Federal High-Performance Green Buildings.
GSA established the Office of Federal High-Performance Green Buildings in March of 2008, as required by Section 436, primarily to promote and coordinate high-performance building information and activities throughout the federal government. According to GSA officials, among other activities required by Section 436, GSA's Office of Federal High-Performance Green Buildings identified and recommended to DOE a certification system for federal buildings in April 2008, anticipates establishing a senior-level interagency Federal Green Building Advisory Committee and holding its first meeting by November 2009, and plans to issue a report for Congress fully outlining the agency's activities related to the implementation of EISA high-performance federal building requirements in December 2009. With regard to GSA's identification of a green building certification system for federal agencies, as mentioned previously, DOE officials said they anticipate issuing draft regulations for agencies in early 2010 to assist agencies in choosing a green building certification system. However, as also mentioned previously, EISA does not require this certification system to ensure agencies meet all EISA high-performance federal building requirements. The Acting Director of GSA's Office of Federal High-Performance Green Buildings said that GSA anticipates issuing additional guidance to supplement DOE's regulations to ensure that agencies will also meet federal energy and water requirements, including EISA high-performance federal building requirements. He added that a certification system's value is its independent, third-party review and verification process.
As required by Section 439, GSA established a program to accelerate the use of more cost-effective technologies in GSA facilities in May 2009, according to the Acting Director of GSA's Office of Federal High-Performance Green Buildings. This program includes identifying cost-effective lighting technologies for use in GSA buildings, as well as opportunities to use geothermal heat pump technology. For example, GSA is working with DOE's Oak Ridge National Laboratory to assist in the development, management, and performance of a geothermal technology acceleration program.
OMB Is Collecting Information and Assessing Agencies' Progress in Meeting Energy Efficiency Goals
As previously outlined, Section 431 requires agencies to reduce energy consumption (measured as energy intensity) in their federal buildings. OMB officials said they continue to collect and incorporate energy intensity information into agencies' energy management scorecards, as they have done since the scorecard's inception in January 2006. OMB uses these scorecards to assess federal agencies' status and progress in meeting federal energy management goals. Additionally, since January 2009, OMB officials said they have been analyzing and incorporating information on energy and water management activities into the scorecard's progress milestone semiannually, as required by Section 432. As required by Section 434, OMB has also reported collecting information on agencies' processes for reviewing decisions on large capital energy investments, such as heating and cooling systems. OMB provided a report on agencies' progress to Congress in July 2009, as Section 434 also requires.
EISA ENERGY STAR Leasing Requirements May Be Difficult for Federal Agencies to Meet in Certain Situations
Agency officials we spoke with provided differing assessments of the impact of Section 435's leasing requirements, which will take effect on December 19, 2010. For example, a DOD leasing official noted that DOD leases a large amount of space both domestically and internationally and that implementing EISA's leasing requirements will be particularly difficult in certain circumstances. Furthermore, DOD stated that while this section provides a number of exceptions to leasing space in an ENERGY STAR rated building, agencies must still ensure the landlords carry out energy efficiency and conservation measures for any new government lease executed under one of the exceptions. DOD officials stated that these additional requirements would also be onerous to implement. Conversely, an official with EPA's ENERGY STAR program and a representative with the Building Owners and Managers Association said that the exceptions to Section 435 appear to greatly limit the impact of the requirement. The Acting Director for GSA's Office of Federal High-Performance Green Buildings said he does not anticipate that Section 435's leasing requirements will be particularly onerous to meet initially, particularly in major metropolitan areas, which have a robust market for commercial office space. However, in commenting on a draft of this report, GSA acknowledged that there is a potential cost consequence of the EISA ENERGY STAR leasing requirement, since it inherently limits competition to the top 25 percent of buildings in energy efficiency.
Despite differing assessments about the impact of this provision, DOD, GSA, and VA officials agreed that in some circumstances it may be difficult for agencies to meet Section 435's ENERGY STAR leasing requirements. Specifically, these officials told us that if an agency leases a relatively small percentage of a building's total space and the building does not already have an ENERGY STAR label, the agency may have difficulty persuading the landlord to make the improvements needed to achieve certification. For example, DOD leases space in approximately 2,945 different locations to house its recruiting centers. These centers are typically retail space within strip malls that may have many other tenants. In such locations, it will be difficult to lease ENERGY STAR-rated space or to require landlords to make energy efficiency and conservation improvements to the entire strip mall, according to a DOD leasing official. In commenting on a draft of this report, DOD added it is also concerned about the impact this requirement will have on leased housing for its recruiters. DOD commented that the agency faces difficulties finding housing for its recruiters in small markets and this requirement will add to that difficulty. VA officials also noted that VA leases space for health clinics in locations convenient to its patients and, in some cases, would face similar challenges in meeting this requirement. Furthermore, the DOD official expressed concern that while Section 435, as written, appears to apply to leased space in typical commercial buildings in the United States, it also appears to contain no explicit exclusion that recognizes the different circumstances encountered when leasing in foreign locations. According to the official, it would not be possible for DOD to lease ENERGY STAR-rated space in the buildings and facilities it leases in locations such as Afghanistan and Iraq. Moreover, requiring landlords to implement substantial energy efficiency and conservation improvements in these locations would be very difficult and impractical, according to the official.
Long-Term Funding and Budgeting Issues Pose Overarching Challenges for Agencies in Meeting All EISA High-Performance Federal Building Requirements in the Future
Although Recovery Act funds provide resources to help some agencies implement energy savings projects and meet EISA high-performance federal building requirements in the near future, long-term funding and capital budgeting issues will pose implementation challenges in later years, according to agency officials and stakeholder organizations. For example, to meet energy intensity requirements alone, DOE estimated that from fiscal year 2009 through fiscal year 2015, the federal government as a whole would need to invest approximately $1.4 billion annually in energy-related projects. Such investments compete with other priorities for agency funding, as agency officials and we have noted in previous reports. Already, budget constraints and limited funding have contributed to agencies' increased reliance on energy savings performance contracts and other alternative financing mechanisms to implement energy efficiency projects. However, officials with DOD and EPA, as well as our previous work, have indicated that such contracts can be very difficult and time consuming to establish and cannot be used to fully meet agencies' capital needs. Furthermore, we have previously reported that although these contracts allow agencies to avoid up-front project costs, they pose management challenges and are typically more expensive in the long term than up-front funding.