The U.S. Department of the Treasury and the Internal Revenue Service (IRS) released final rules today on prevailing wage and registered apprenticeship (PWA) requirements under the Inflation Reduction Act. As part of the Biden-Harris Administration's Investing in America agenda, these rules aim to build a skilled workforce for the clean energy economy while ensuring that jobs in this sector are well-paying.
Since the Inflation Reduction Act's passage in 2022, investments in clean energy projects have been projected to create over 270,000 jobs. Studies suggest that more than 1.5 million additional jobs will be generated over the next decade due to this legislation.
"President Biden’s Inflation Reduction Act has driven an investment boom while ensuring that workers building the clean energy economy benefit from good pay and new opportunities to get ahead," said Secretary of the Treasury Janet L. Yellen. "Treasury’s final rules ensure we have skilled workers ready to take advantage of the jobs being created by these historic investments."
Acting Secretary of Labor Julie Su emphasized, "This rule will ensure these tax breaks are providing real, tangible benefits to workers in communities across the country. From fair wages to training opportunities for workers, this administration is doing everything we can to make sure working people share in the prosperity of a clean energy future."
Secretary of Energy Jennifer Granholm stated, "From Oregon to Maine, a clean energy manufacturing boom is happening across the nation and President Biden’s industrial strategy ensures America’s workers reap the benefits – good paying jobs, future facing careers, and the pride of making goods stamped ‘Made in the U.S.A.’"
John Podesta, Senior Advisor to the President for International Climate Policy, added: "Meeting strong labor standards and building partnerships with unions will now be the norm for clean energy projects. Today’s final rules give clarity and certainty to developers and their employees that clean energy jobs will be good jobs."
The final rules were developed in collaboration with the Department of Labor (DOL). They provide guidelines on PWA requirements necessary for claiming increased credits on certain clean energy tax incentives if prevailing wages are paid and registered apprentices hired.
Examples cited include agreements between construction unions and utility providers in Wisconsin for future solar, wind, and battery storage projects using union laborers. In Oregon's Wheatridge Renewable Energy Facility project—co-owned by Portland General Electric and NextEra Energy—about 2,000 members from Local 112 International Brotherhood of Electrical Workers have already been employed.
To assist with public awareness regarding job creation through planned clean energy projects nationwide, DOL launched an interactive map estimating worker benefits tied to compliance with PWA requirements.
Enforcement remains a priority for IRS concerning taxpayer obligations under PWA rules linked with increased credits. The IRS plans significant resource allocation towards promoting compliance alongside releasing a new fact sheet detailing PWA requirements.
A Memorandum of Understanding (MOU) between DOL and IRS is anticipated by year-end aiming at joint educational outreach efforts plus sharing credible noncompliance information received by DOL with IRS.
Developers are encouraged towards project labor agreements facilitating compliance ease regarding PWA requirements—a subject elaborated upon via co-authored blog post by Deputy Secretary Wally Adeyemo & Acting Secretary Julie Su emphasizing their importance as strategic tools.
Effective since January 2023 after considering over 300 public comments; detailed aspects covered within finalized regulations include:
- Prevailing wage rate determinations aligned per Davis-Bacon Act.
- Incentivizing contemporaneous compliance practices.
- Strong recordkeeping mandates.
- Penalty exemptions where qualifying project labor agreements exist.
- Clarifying defined apprentice request/response criteria plus good faith effort exceptions applicability.
Further details about today's announcement including related resources can be accessed through respective agency websites/blog posts provided herein:
Treasury & Dept.of Labor Blog Post on Project Labor Agreements
White House Fact Sheet
IRS Overview
IRS Press Release
IRS Fact Sheet
IRS FAQs
Dept.of Labor Interactive Map - Good Clean Energy Jobs Powered by IRA
Dept.of Labor Prevailing Wage & IRA Overview
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