Cost estimate for an amendment in the nature of a substitute to S. 1460 (FLO17512), provided to CBO on July 18, 2017
CBO estimates that enacting the legislation would increase net direct spending by $614 million over the 2018-2021 period. Under requirements established in section 3207 of the Concurrent Resolution on the Budget for Fiscal Year 2016, which specifies an alternative method for determining budgetary effects in the Senate, CBO estimates that the legislation would reduce spending by $16 million.
The legislation would amend current law and authorize appropriations for a broad range of activities administered primarily by the Department of Energy (DOE) and the Department of the Interior. It would expand and extend federal agencies’ authority to use energy savings performance contracts (ESPCs) and utility energy service contracts (UESCs)—specific types of long-term contracts—to invest in energy conservation measures and services. The bill also would permit the Bureau of Land Management (BLM) to spend, without further Congressional action, proceeds from sales of certain federal lands; rescind unobligated funds that were provided for loan guarantees under Title 17 that were originally designated as an emergency requirement; and authorize certain land transfers and conveyances.
Enacting the amendment to S. 1460 would increase direct spending; therefore, pay-as-you go procedures apply. Enacting the legislation would not affect revenues. Many of its provisions would affect federal spending that is subject to appropriation; however, CBO has not completed an estimate of those costs, except for the provisions related to ESPCs and UESCs.
The estimated amount of direct spending under the legislation depends on the budgetary treatment of federal commitments made through ESPCs and UESCs, which CBO expects would increase under the bill. In CBO’s view, commitments under those contracts are a form of direct spending because agencies are authorized to enter into them without funds appropriated in advance to cover the full costs. Incorporating the spending for those contracts, CBO estimates that enacting the legislation would increase net direct spending by $614 million over the 2018-2027 period (see Table 1). That amount comprises:
- Increased outlays of $630 million for expanding and extending federal agencies’ authority to use ESPCs and UESCs for energy-related investments;
- Decreased outlays of $15 million from permanently reauthorizing the Federal Land Transaction Facilitation Act and allowing certain agencies to spend, without further appropriation, a portion of the proceeds from the sale of certain lands administered by BLM (net spending would decline because the spending of the proceeds would lag the receipt of those amounts by a few years);
- Decreased outlays of $9 million from rescinding unobligated balances provided for loan guarantees under Title 17; and
- Increased net outlays of $8 million from conveying federally owned portions of Oregon and California Railroad grant lands in Oregon to local Indian tribes.
However, for purposes of determining budget-related points of order for legislation considered by the Senate, section 3207 of the Concurrent Resolution on the Budget for Fiscal Year 2016 specifies how CBO should prepare estimates of the budgetary effects related to ESPCs or UESCs. Specifically, that resolution requires CBO to estimate, on a net-present-value basis, the lifetime net cost or savings attributable to projects financed by such contracts and to record that amount as an upfront change in spending subject to appropriation. Under that requirement and because the spending for those contracts would not be considered direct spending, CBO estimates that enacting the legislation would reduce net direct spending by $16 million over the 2018-2027 period (see the memorandum to Table 1). Using those procedures CBO estimates that increasing the authority to use ESPCs and UESCs would reduce spending subject to appropriation by $40 million over the 2017-2027 period on a net-present-value basis.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. CBO estimates that the net changes in outlays that are subject to those pay-as-you-go procedures under the substitute amendment to S. 1460 would total $623 million over the 2017-2027 period (see Table 2). That amount includes CBO’s estimate of increased direct spending related to ESPCs and UESCs following the agency’s usual methods because section 3207 of the Concurrent Resolution on the Budget for Fiscal Year 2016 does not apply to pay-as-you-go estimates. That estimate also excludes reductions in spending from rescinding funds that were provided for loan guarantees under Title 17 because the Statutory Pay-As-You-Go Act requires that estimates of budgetary effects exclude costs or savings related to funding designated as an emergency requirement.
Enacting the legislation would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2028.
The legislation would impose intergovernmental and private-sector mandates, as defined in the Unfunded Mandates Reform Act (UMRA). The amendment would require public and private entities regulated by the Federal Energy Regulatory Commission (FERC), such as electric utilities, to pay fees in some circumstances. The legislation would impose an additional intergovernmental mandate by requiring state and tribal governments to certify to DOE whether they have updated residential and commercial building codes to meet the latest standards developed by building efficiency organizations. Based on information from DOE about the fees that FERC would charge and the costs of certification requirements, CBO estimates that the aggregate cost of complying with the intergovernmental mandates would fall below the annual threshold established in UMRA ($78 million in 2017, adjusted annually for inflation). The bill would provide federal funding to state and tribal agencies to help cover these costs and to fund an array of other voluntary activities.
The legislation also would impose private-sector mandates on electric transmission organizations, traders of oil contracts, and manufacturers of consumer products and equipment. The cost of most of the mandates on private entities would be small. However, because the mandate on manufacturers of consumer products would depend on the nature and scope of future energy efficiency standards set by DOE, CBO cannot determine whether the aggregate cost of complying with private-sector mandates in the bill would exceed the annual threshold established in UMRA ($156 million in 2017, adjusted annually for inflation).