Associated Builders and Contractors (ABC) has heavily criticized the U.S. Treasury Department’s Internal Revenue Service (IRS) final rule that requires private developers to follow project labor agreement, prevailing wage and apprenticeship policies when building clean energy projects funded by more than $270 billion in tax credits via the Inflation Reduction Act.
“Government-mandated project labor agreements (PLAs) box out almost 90% of the U.S. construction workforce that does not belong to a union––an especially irresponsible decision when the construction industry faces a labor shortage of more than half a million people,” stated Ben Brubeck, ABC vice president of regulatory, labor and state affairs.
In comments filed last October on the proposed rule, ABC—along with a coalition of industry stakeholders—called on the IRS to provide further clarity and withdraw anti-competitive aspects of the proposal that would increase costs, reduce competition and delay construction of clean energy projects.
“Unfortunately, many concerning provisions of the proposed rule flagged by industry and clean energy advocates during the comment period were not appropriately addressed in the final rule, which increases risk and uncertainty for contractors seeking tax credits and contractors delivering these important projects,” said Brubeck. “Coupled with construction materials inflation of more than 40% since February 2020 and a labor shortage, this Biden administration’s latest regulation means clean energy projects are much more expensive, and many of those projects will be mothballed or cancelled.”
According to the final rule, developers must certify their contractors pay all construction workers prevailing wages and benefits determined by the U.S. Department of Labor in accordance with the federal Davis-Bacon Act. Developers must also ensure contractors utilize apprentices enrolled in government-registered apprenticeship programs for 15% of all construction labor hours performed on a project, among other requirements. Project developers that satisfy both of these new provisions are eligible for a 500% increase in various clean energy construction project tax credits compared to baseline tax credits offered to developers under prior regulations.
The final rule is effective 60 days after it is published in the federal register on June 25.
For more information, visit https://www.abc.org.
