**FACILITIES DIVISION**

**Policy Guidance Memorandum**

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  **DATE: September 9, 2002**

  **SUBJECT: Payment of Building Permit and Other Construction-Related
  Fees to State and Local Governments on ARS Construction Projects**

  **NUMBER: PGM‑02‑006**
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  **EFFECTIVE DATE: Immediately Until Replaced or Superseded**

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**[Purpose]{.underline}**

> This Policy Guidance Memorandum provides information and guidance
> regarding payment of building permit and other construction-related
> fees to State and local Governments on Agricultural Research Service
> (ARS) construction projects.

**[Background]{.underline}**

> In 1989, Public Law 100‑678, now codified in 40 U.S.C. Section 619,
> required Federal agencies constructing or altering buildings to: (a)
> comply with nationally recognized codes to the maximum extent
> feasible; (b) give consideration to the requirements of State and
> local zoning and related laws; (c) consult with State and local
> officials when preparing Federal construction plans and projects to
> allow these officials the opportunity to review and inspect
> construction plans and work; and (d) give due consideration to any
> recommendations these officials make regarding construction.
>
> To comply with the law, ARS has required our architect‑ engineering
> (A-E) firms to coordinate all designs with State/local code officials
> early in the process and offer them an opportunity to review the
> project. In some cases, the State/local authorities have indicated
> they do not review Federal projects, but in many cases they do
> indicate a desire to review the project for conformance with local
> laws and codes. This service is frequently provided for a fee, often
> in the tens of thousands of dollars on our larger projects. Often
> these review services are required before the local jurisdiction will
> provide utility service or issue an occupancy permit. When approached
> by State/local officials regarding payment for these services, it has
> been ARS\' position, that in conformance with 40 U.S.C. Section 619,
> the Federal Government is not required or permitted to pay for these
> services. Occasionally, the local jurisdiction accepts this response
> and either provides the service at no cost or declines further
> participation. Frequently, the local jurisdiction takes issue with our
> interpretation of 40 U.S.C. Section 619 and insists on payment
> withholding occupancy permits, utility connections, or road access as
> leverage. ARS is then forced to find alterative means of paying for
> the permit and review fees, often resulting in delays to the design
> and construction process.
>
> In October 2000, ARS requested the Office of General Counsel (OGC) to
> address the issue whether it is permissible for ARS to pay State/local
> permit fees in light of the language contained in 40 U.S.C. Section
> 619, and whether there are any other restrictions on the payment of
> usual and customary fees imposed by State/1ocal jurisdictions on
> building and renovation projects.

**[OGC Findings and Recommendations]{.underline}**

> In July 2002, OGC issued its legal opinion of the requirements of 40
> U.S.C. Section 619, as they relate to the legality of ARS paying for
> building permits and other construction-related fees to State and
> local Governments, on ARS construction projects.
>
> OGC has determined that 40 U.S.C. Section 619 does not require ARS to
> pay State and local Government for construction-related tasks they
> perform (including reviewing plans, carrying out onsite inspections,
> issuing building permits, and making recommendations). However, ARS
> may pay the State or local Government an amount (which does not
> constitute a tax, the legal incidence of which falls on the United
> States) that represents the fair and reasonable value to ARS of the
> task performed by the State or local Government, if ARS determines
> that it received a benefit from the task performed by the State or
> local Government.
>
> OGC recommends that at the time ARS, or an A-E contractor on its
> behalf, offers a State or local Government the option of reviewing an
> ARS construction project, ARS inform the State or local Government
> that ARS is offering it the option of reviewing the project pursuant
> to its obligation, under
>
> 40 U.S.C. Section 619, to \"consult with\" State or local officials
> and that ARS is not requesting any review or inspection, or the
> performance of any related task, by the State or local Government. ARS
> should inform the State or local Government that, if it undertakes any
> review, inspection, or other task related to the construction project
> without first receiving a specific request from ARS, it does so on its
> own initiative and that, pursuant to the terms of 40 U.S.C. Section
> 619(f), ARS and its contractors \"shall not be required to pay any
> amount for any action\" undertaken by the State or local Government to
> perform a review, inspection, or similar task.
>
> ARS should inform the State or local Government that ARS, at its
> discretion, may determine, after the State or local Government has
> performed a task on its own initiative, that the task was beneficial
> to ARS and that, if ARS makes such a determination, ARS then may pay
> the State or local Government an amount representing the reasonable
> value of the task to ARS. However, the State or local Government
> should assume that, if ARS has not requested specifically that it
> perform a review, inspection, or other task, the State or local
> Government will bear all costs of performing the task.

**[Point of Contact]{.underline}**

> For further information, please contact the Facilities Engineering
> Branch on 301-504-1193.

/s/ PATRICK G. BARRY

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PATRICK G. BARRY

Director

Facilities Division