Washington, D.C. – Today, U.S. Senator Bob Casey (D-PA) sent a letter to U.S. Department of the Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Daniel Werfel urging the Biden Administration to correct the Department of the Treasury’s guidance on an Inflation Reduction Act (IRA) program that would undercut American manufacturers and workers. The Senators are calling on the Treasury to reexamine their guidance for the IRA’s Domestic Content Bonus Credit to ensure that steel and iron in solar electricity generation projects are produced in the United States. Correcting current guidance will ensure that the IRA meets the intention of Senator Casey’s provision: to champion American products and American workers and not to unwittingly benefit China and other countries.
“Correcting this error in the Guidance will help ensure that the steel and iron in solar electricity generation projects is produced in the United States. It also ensures that the IRA does not unwittingly benefit China and other countries that have a history of dumping their excess steel capacity in the U.S. market, to the detriment of U.S. workers and industry,” the Senators wrote.
In the letter to Secretary Yellen and Commissioner Werfel, the Senators outlined specific concerns with the placement of structural steel components of photovoltaic trackers, which are mounting structures, in the Manufactured Product Category instead of the Steel and Iron category. As reported in The Wall Street Journal, the guidance currently in place “would let firms use steel from abroad and still qualify for the 10 percent” bonus tax credit.
Senator Casey has consistently fought for new federal initiatives to support economic revitalization and workforce development for Pennsylvania energy communities and workers. In 2021, Casey worked to pass the Infrastructure Investment and Jobs Act to bring billions of dollars to Pennsylvania to build out clean energy infrastructure, improve roads and bridges, expand high-speed internet access, and more, all while creating good-paying jobs. Passed in 2022, the Inflation Reduction Act also made major investments in new energy manufacturing, including solar panels, wind turbines, and clean battery systems. Casey fought to include strict domestic content standards to ensure projects use 100 percent American-made steel and iron.
Notably, this is not the first time Senator Casey has called on the Treasury Department to put out guidance prioritizing American workers and manufacturing. In March, Casey urged the Treasury Department to swiftly implement guidance for clean energy tax credits in the IRA that incentivize companies to use American steel, iron, and manufactured goods when building new energy projects. Following his advocacy, the Treasury Department issued guidance regarding these tax credits.
In June, Senator Casey delivered a rousing speech to union workers and business leaders in Pittsburgh to outline his vision for the United States to take control of its economic future by investing in American workers and manufacturing, as well as stopping investments in national security sectors from going to countries of concern, including China. In July, the Senate overwhelmingly passed Senator Casey’s legislation to screen American investments in foreign countries of concern, like China, by a vote of 91-6. Building on Casey’s efforts, the Biden Administration issued an executive order addressing the issue weeks later.
Last month, Casey announced the launch of the two hydrogen hubs, funded by the Infrastructure Investment and Jobs Act: the Mid-Atlantic Clean Hydrogen Hub (MACH2), based in Southeastern Pennsylvania, and the Appalachian Regional Clean Hydrogen Hub (ARCH2) serving Pennsylvania, West Virginia, Ohio, and Kentucky. These hubs will bring jobs, economic growth, and energy innovation to the Mid-Atlantic and the Appalachian Basin. Additionally, Casey announced The Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization (Energy Communities IWG) Rapid Response Team. This team will assist Pennsylvania organizations, businesses, and local governments in coordinating federal resources they need to position the Commonwealth as a national leader in next-generation energy and train workers.
The letter was also signed by U.S. Senators John Fetterman (D-PA), Tammy Baldwin (D-WI), Sherrod Brown (D-OH), and Tina Smith (D-MN).
The full text of the letter is below and the signed PDF can be found here.
Dear Secretary Yellen and Commissioner Werfel:
We are writing in response to Domestic Content Bonus Credit Guidance (“Guidance”) published by the Department of the Treasury and the Internal Revenue Service describing rules for implementing the domestic content bonus credit requirements for solar and other renewable energy electricity generation projects under the Inflation Reduction Act (IRA). Specifically, we are writing to request that you address a provision of the Guidance which we believe is contrary to Congressional intent.
In enacting the renewable energy credits of the IRA, Congress sought to incentivize the development of the U.S. renewable energy sector. With the domestic content bonus credit, the intention of Congress was more specifically to incentivize the development of U.S. clean energy supply chains. Toward that end, Congress provided a domestic content bonus credit for projects that meet two requirements:
- that all the steel or iron in a project must be produced in the United States (herein, the “steel or iron requirement”), and
- that an increasing percentage of the manufactured products in a project must be produced in the United States (herein, the “manufactured product requirement”).
In the Guidance, Treasury and IRS apply the steel or iron requirement to components that are structural in function. In general, we believe this decision is in line with Congressional intent.
However, the Guidance departs from this principal in the table included in the “safe harbor” provisions, where Treasury and IRS include in the manufactured products category components that are clearly structural in nature.
We are specifically concerned with the categorization of “photovoltaic tracker” as a manufactured product. A photovoltaic tracker is merely a mounting structure that has the capability to follow, or “track,” the position of the sun, as described in the Department of Energy’s supply chain report on solar photovoltaics in response to Executive Order 14017. The steel structural components of tracking systems, including torque tubes, foundations, and rails, therefore, must be included in the “steel and iron” category, as they are in fixed-tilt ground-mount systems. Torque tubes, while not appearing in fixed-tilt systems, are structural in nature, in that they bear the load of the solar panels, to which they are attached via rails and purlins. The fact that they rotate does not change their structural nature. We do believe that the non-structural components of tracking systems, including bearings, drive train components, and shock absorbers, are properly categorized as manufactured products.
Recognizing the structural nature of tracking systems with this Guidance has great importance, because mounting structures are where the steel and iron in a solar project are concentrated. To include tracking systems in the manufactured products category has the effect of removing as much as 50 percent of the steel and iron used in a project from the “steel and iron” category, where it would be required to be of U.S. origin.
Instead, categorization of tracking systems as manufactured products would permit many of the structural steel components of new solar projects in the U.S. to be imported from China and other countries, so long as the overall project met the percentage domestic content requirement. This was certainly not Congress’s intent.
To avoid this result, we ask that the Guidance, specifically the safe harbor table, be amended to distinguish between the structural steel components and the other components of tracking systems. This can be done by including in the Steel/Iron category, and excluding from the Manufactured Product category, “steel or iron in module rails, support columns, torque tubes, and any other elements that are structural in function.” This change would be consistent overall with the Guidance, which, as we have noted, states, “The Steel or Iron Requirement applies to Applicable Project Components that are construction materials made primarily of steel or iron and are structural in function.”
Correcting this error in the Guidance will help ensure that the steel and iron in solar electricity generation projects is produced in the United States. It also ensures that the IRA does not unwittingly benefit China and other countries that have a history of dumping their excess steel capacity in the U.S. market, to the detriment of U.S. workers and industry.
Thank you for your attention to this important matter.