Grants Power Up EV Adoption, but Compliance Requirements Remain

March 13, 2024

Thanks to the 2021 Bipartisan Infrastructure Law, billions of dollars of government funding are available for electric vehicle (EV) charging projects as part of an effort to supercharge EV adoption in the United States. Two programs allocate a combined $7.5 billion to build up a network of public EV chargers across the country: the $5 billion National Electric Vehicle Infrastructure (NEVI) Formula Program and a $2.5 billion discretionary grant program.

In brief, the NEVI Formula Program provides $1 billion of funding per year for five years to the states to deploy EV charging infrastructure and establish an interconnected charging network, with 80% of a project’s cost covered by the grant and 20% by the private sector recipient. The discretionary grant program is intended to encourage public EV charging infrastructure development in rural and underserved locations, with funds distributed by the US Department of Transportation on an ad hoc basis.

Because funds only just started rolling out in 2023, the vast majority is still available to potential applicants. But this money does not come without strings. Grant awardees must satisfy a range of compliance obligations. The federal government takes compliance obligations seriously, and noncompliance poses the risk of penalties, including civil or criminal liability under the False Claims Act (FCA), claims of breach of grant conditions or subaward terms, and termination of an agreement for cause, with the genuine prospect of suspension or debarment from future government awards for noncompliant conduct.

Here, we summarize some of the primary compliance considerations and potential liabilities when seeking federal grants for the development of EV charging projects.

Federal Compliance Obligations

Grant recipients must comply with several federal laws and regulations, including a wage and hour regime known as the Contract Work Hours and Safety Standards Act and adherence to conflict of interest requirements so as not to unfairly compete in other procurements.

Recipients must also comply with a notable prohibition on use of certain telecom and video surveillance services or equipment from specified companies as part of the US government’s efforts to curb national security and intellectual property threats. Because of the ban, grant awardees must inventory their supply chain to determine if their information technology systems have components from prohibited companies.

The Buy American Act also imposes some potentially challenging compliance obligations, specifically regarding the requirements for grantees to use components and materials that come from approved sources. This is an area where project developers can easily get tripped up, since tracking components from one country to the next is not always straightforward. The government has ramped up criminal prosecutions in this area, targeting companies that knowingly procure materials from jurisdictions not on the approved list.

Other compliance obligations to be aware of include the following:

  • Equal opportunity employment: This requires recipients to take affirmative action to include people from protected classes.
  • Davis-Bacon Act: This wage and hour regime has reporting obligations under the US Department of Labor that can be burdensome and prone to error.
  • Byrd Anti-Lobbying Act: This law prohibits the use of federal funds in lobbying efforts and requires those who receive federal grants to ensure money is directed appropriately.

Applicants should note some obligations must be met at the time an application is submitted while others are required further down the project timeline.

Civil False Claims Act Liability

Federal grants such as those under the NEVI Formula Program and other discretionary programs carry a risk of potential FCA liability. The billions of federal dollars being pumped into the EV industry through these programs will attract the attention of the US Department of Justice and whistleblowers. Knowingly false certifications of compliance with grant conditions can give rise to FCA liability and result in an award of treble damages, statutory penalties, liability for the whistleblower attorney fees, and potential suspension and debarment actions.

The principal bases for FCA liability include making a false claim to the government, making or using a false statement material to a false claim, and conspiring to violate the FCA.

Keep Compliance in Mind

Given the stakes and consequences of not adhering to compliance obligations, applicants should take steps to understand the grant eligibility and performance requirements and monitor compliance regarding the expenditure of grant funds. Analyzing the benefits of federal grants and the myriad related compliance obligations, in conjunction with internal and external government contracts and compliance personnel ahead of time, will enable sound decision-making with respect to the pursuit of government grants and mitigate the prospect of compliance headaches and associated government contracting risks.

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