Important News Update Concerning Executive Order 14057

Members of the NFDA Board of Directors (Kendall, Peck, and Owens-Test) and a sustainability expert (Pierce with Easterly), met with key GSA leasing officials on February 3 to dialogue about the new sustainability EO and industry concerns.  These GSA officials are working with the President’s Council on Environmental Quality in the drafting of implementation guidance that is due to be published by April 7.   GSA made a brief presentation and raised their own concerns, principally about how the requirement for leases greater than 25,000 square feet be restricted to only zero-emission buildings from 2030 onward, might limit competition, raise lease costs, and impair the viability of small lessors seeking to do business with the government. 

NFDA representatives made a number of observations, among them:

  1. That in the interests of sustainability, and to prevent a great deal of new ground-up construction, the government needs to implement the EO in a fashion that does not render properties currently leased to the government as irrevocably obsolete, but rather provide a path for these buildings to be modernized/retrofitted with equipment and features that will enable them to comply with the EO. 
  2. That the move from traditional lease to “green lease” or net-zero emissions, if not done incrementally and strategically, may pose excessive financial and logistical concerns for secondary markets and/or small lessors.
  3. That the government needs to recognize that infrastructure (including electrical generation by renewable sources) is not uniformly present throughout the US to enable this 2030 goal to be met categorically, and phased implementation ought to be seriously considered.
  4. That this would be a propitious time (coincident with implementation of the EO) for the government to consider lease structure and utility costs in order to avoid split incentives on future building upgrades.

NFDA also learned at this meeting that two additional guidance documents have already been promulgated relating to EO 14057.  One of these, OMB Directive M-22-06, provides that “Agencies must ensure all new construction and modernization projects greater than 25,000 gross square feet entering the design phase in fiscal year 2022 and beyond are designed to be net-zero emissions by 2030, and where feasible, net-zero water and waste buildings.”  This, we were given to understand, applies to leases involving new, ground-up construction, as well as to leases where the lessor will modernize the building as a consequence of the lease award.  

NFDA is providing below links to Executive Order 14057; the Federal Sustainability Plan; OMB Directive M-22-06; and a White House Fact Sheet on the Executive Order. 

These foregoing materials are difficult to summarize. NFDA suggests that members review these primary documents themselves to ensure capture of the critical information they contain.

Ron Kendall
Executive Chairman, National Federal Development Association
Executive Vice President
Easterly Government Properties
2001 K Street NW  - Suite 775 North
Washington, DC [email protected]