Falmouth Owes 3.5 M Plus 2% On Wind Turbine II

The American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law by Congress on February 17, 2009, with the goals of preserving and creating jobs, promoting economic recovery, and investing in transportation, environmental protection.

The bill appropriated $4 billion to the Clean Water State Revolving Fund (CWSRF) and stated that “to the extent there are sufficient eligible project applications, not less than 20 percent of the funds appropriated herein for the Revolving Funds shall be for projects to address green infrastructure, water or energy efficiency improvements or other environmentally innovative activities”.

Falmouth received $4.865 million from the Massachusetts Water Pollution Abatement Trust, now known as the Massachusetts Clean Water Trust, for Wind II. Those dollars went to Falmouth as part of the American Recovery and Reinvestment Act of 2009 with the principal and interest forgiven as long as the project continued to be “energy efficient.”

The $4.865 million in American Recovery and Reinvestment Act funds is designated as a percentage of stimulus funds for wastewater treatment facilities such as the Falmouth site. The turbines were shut down in June of 2017. The money should be returned.

As of April 2013, Outside legal counsel has advised the Massachusetts Department of Environmental Protection that Wind II is subject to specific provisions of ARRA and applicable federal regulations and guidelines ("Federal Law') in addition to the terms and conditions of the Project Regulatory Agreement ("PRA") and the Loan Agreement associated with the funding of Wind II.

Under Federal Law and the PRA and Loan Agreement, the Town must maintain Wind II as an "energy efficiency" project, as described in EPA guidelines dated March 2, 2009, in order to benefit from the financial subsidy provided by the Trust under ARRA and the Trust's Clean Water State Revolving Fund program.

Under federal regulations governing the Trust's ARRA grant at 40 CRF Part 31.30(d) (1), if the Town chooses to change the scope or objectives for Wind II in any significant manner, the Town will have to request the Trust's prior written approval.

If the change would result in Wind II being used in a manner that is not consistent with an "energy efficiency" project (for example either ceasing operations or curtailing them to the extent that Wind II operates for only a very limited period of time each day), the Trust will not be able to approve the request and the Town will not be allowed to utilize the ARRA funds with principal forgiveness.

Federal regulations at 40 CFR 31.30(1)(3) states that a grantee, such as the Trust, "will not approve any budget or project revision which is inconsistent with the purpose or terms and conditions of the Federal grant to the grantee."

Thus, the Trust's disapproval of such a change is compelled by Federal Law.
In the event that the project ceases to function as an energy-efficient project, the Trust will amend Schedule C to reinstate the Town's obligation to pay principal and interest on the Loan and take such other actions as it deems necessary or appropriate to ensure compliance with Federal Law, the PRA, and the Loan Agreement.

As of August 9, 2017, at the Executive Committee Meeting Massachusetts Clean Water Trust notified the Town of Falmouth the Board’s decision to convert the loan that financed the Wind II turbine into a zero-percent loan and give the town credit for principal during the time that Wind II was operating as an energy-efficient project, with the remaining balance paid through 2029.

The Executive Committee Meeting of the Massachusetts Clean Water Trust erred extending the loan with no interest. The funds are regulated by federal regulations.

According to federal regulations and the Massachusetts Department of Environmental Protection project regulatory agreement the balance of the $4.865 million in American Recovery and Reinvestment Act funds should be returned to Massachusetts Clean Water State Revolving Fund for other Green Energy projects as Falmouth Wind II has not been an energy-efficient project since shut down by the courts in June of 2017.

The actual amount due is 3.5 million plus 2 percent interest.