The likelihood that some American Recovery and Reinvestment Act (ARRA) green building projects would fail should not come as a surprise to Green Building Law Update readers. Back in February 2009, I wrote about the the difficulties of administering the stimulus funds at state, county and municipal levels. In January 2010, I highlighted initial problems with the Illinois weatherization program, which was being funded by Department of Energy ARRA funds.
But the rampant problems with the Illinois weatherization program have not improved.
The Department of Energy Office of Inspector General recently published a follow up report on the Illinois weatherization program. The report focuses on 15 homes that were audited. The conclusions of the report speak for themselves:
Poor Workmanship: At 12 of the homes, CEDA inspectors found substandard work that could have, in some cases, resulted in significant property damage or injury to the homeowners. In one home, 11 of the 14 items that the contractor should have installed or repaired to improve energy efficiency failed inspection. In another instance, while accompanying inspectors, we found that a contractor had not corrected, as required by the home’s work order, improperly installed kitchen exhaust ductwork, a potential fire hazard. Although CEDA and certain State officials disagreed that the ductwork problem posed a fire hazard, State building code officials we consulted confirmed the concern. Further, we observed a furnace intake vent pipe that had been improperly installed and found that five of the six tune-ups to heating systems had not been properly performed, allowing the heating systems to either improperly fire or emit carbon monoxide at higher than acceptable levels. Further, CEDA’s own inspectors cited contractors for improper insulation of attics, band joists, and walls. In all, 8 of the 10 contractors that had weatherized homes included in our evaluation were cited for poor workmanship.
Inadequate Initial Assessments: At eight of the homes, CEDA inspectors found that assessors from within its organization had either called for inappropriate measures or had overlooked key weatherization measures needed to make the homes more energy efficient. In one home, for example, an inspection report noted that an assessor had inappropriately called for attic insulation when sizeable leaks in the roof would have reduced the effectiveness of the insulation. In addition, we found homes where inspectors cited assessors for failing to identify an open sump pump, leaking water lines, and a skylight that had not been properly insulated. CEDA acknowledged that, due to hiring nearly 60 new field personnel who were needed for the increased level of weatherization work funded by the Recovery Act, it had experienced "an inevitable level of inadequate assessments that were not corrected or were incompletely reviewed before the jobs were assigned to contractors."
Erroneous Billing: At 10 of the 15 homes we visited, CEDA inspectors found that contractors had billed a total of about $3,300 for labor and materials that had not been installed. For example, a contractor had installed a 125,000 BTU boiler, but had billed CEDA for a 200,000 BTU boiler costing an estimated $1,000 more. Additionally, a contractor had installed one carbon monoxide detector, but had billed CEDA for 3; another contractor had installed 12 light bulbs, but had billed CEDA for 20; and, yet another had failed to install a gas shut-off valve, but had billed for the work. In addition, a contractor had billed for almost four times the amount of drywall actually installed. Billing issues appeared to be pervasive, since 7 of the 10 contractors in our sample were cited by CEDA for erroneous invoicing.
Keep in mind that the DOE and Illinois were already on notice that the program was suffering from severe deficiencies back in January 2010.
I have absolutely no doubt that this report will be picked up in the press and by politicians in order to cite a failure of the stimulus program. I have no doubt that Illinois is not the only state that is failing to properly administer the DOE weatherization program. I have no doubt that other green building stimulus programs are also facing similar issues.
But as I look at this from a legal standpoint, I see an enormous wave of green building litigation. I see homeowners filing lawsuits against contractors, engineers, and architects. And I am advising my clients to be very careful as they proceed with ARRA projects.
This could get very messy.