October 25, 2023 - WASHINGTON, DC—On Tuesday, U.S. Representatives John Garamendi (D-CA) and Morgan McGarvey (D-KY) led other Democratic members of congress from steel manufacturing districts in calling on U.S. Secretary of the Treasury Janet Yellen to require that renewable energy producers claiming federal tax credits use American-made steel products.

Representative John Garamendi (D-CA)

Under the Inflation Reduction Act of 2022 (Public Law 117-169), renewable energy producers can claim more generous federal tax credits if they build their wind, solar, or renewable energy projects with American-made steel. Every Republican in Congress voted against this 2022 law. However, in May 2023, the U.S. Department of the Treasury and the Internal Revenue Service published industry guidance incorrectly allowing renewable energy producers to use some foreign-made steel projects and still claim the more generous federal tax credit.

“Congressional Democrats and President Biden could not have been clearer: federal tax credits for renewable energy should support American-made steel, not cheap imports. After decades of failed promises, we are finally building the clean energy economy of the future with American expertise. Supporting domestic manufacturers and skilled steelworkers will create thousands of good-paying, union jobs that can never be outsourced and keep the United States competitive in the 21^st century. Hardworking Americans are ready, willing and able to do the job. My Democratic colleagues and I look forward to Secretary Yellen correcting this mistake to support our domestic steelworkers like those I am honored to represent in Pittsburg, California, as well as those in Brandenburg, Kentucky at the first new steel mill built in the United States in decades,” said Garamendi (D-CA).

“We’re making things in America again,” said Rep. McGarvey. “This letter sends a clear message that the Inflation Reduction Act must be implemented as Congress intended: to spur domestic manufacturing, to create good-paying jobs at home, and to help promote economic growth that serves our workers and protects our environment. Gone are the days of shipping American jobs overseas. American steel and iron are here to stay. I’m proud to join in this effort to create opportunity for our steelworkers and support American industry.”

A senior member of the House Committee on Transportation and Infrastructure, Garamendi has long championed a “Make It In America” agenda in Congress to bring back good-paying manufacturing jobs and help rebuild the middle class by ensuring that federal taxpayer dollars and tax incentives support American workers.

Cosigners: U.S. Representatives Frank Mrvan (D-IN), Donald G. Davis (D-NC), Christopher R. Deluzio (D-PA), Betty McCollum (D-MN), Terri A. Sewell (D-AL), Nikki Budzinski (D-IL), Ruben Gallego (D-AZ), Daniel T. Kildee (D-MI), Marcy Kaptur (D-OH).

Support: American Iron and Steel Institute; United Steelworkers (USW); Coalition For A Prosperous America; Alliance For American Manufacturing; Committee on Pipe and Tube Imports (CPTI); Steel Manufacturers Association

Electronic Copy of Letter:Click Here

Full Text of Letter:

Dear Secretary Yellen and Commissioner Werfel:

As Members of Congress representing steel manufacturing districts, we are concerned that your guidance published on May 12, 2023, for the domestic content requirement for bonus tax credits under the Inflation Reduction Act (Public Law 117-169) falls short of the President’s stated policy and Congressional intent in key respects. Specifically, we are concerned that your guidance would allow energy developers to claim the bonus tax credit for foreign-made steel projects originally meant for domestically produced iron and steel.

This 2022 law invests $370 billion to build a new, clean energy economy powered by American innovation, workers, and advanced manufacturing. Congressional intent in passing this historic law and the President’s public statements regarding its implementation could not have been clearer: This federal investment in our clean energy future is meant to drive innovation, economic growth, and job creation here in the United States.

However, we are concerned that loopholes in the initial guidance may allow overseas manufacturers to indirectly access bonus credits to which they are not entitled under the plain letter of the law, undercutting an American manufacturing base already hollowed out after decades of unfair competition from cheaply made imports often produced under lower labor and environmental standards. Perhaps the most glaring example is the guidance’s misclassification of certain iron and steel products as “manufactured products,” which are not subject to the domestic iron and steel requirement under the law. This would allow these products to be made from imported steel and still count towards the bonus tax credit. Left uncorrected, this will undermine domestic manufacturers and American workers making or planning to make structural steel, tube, and other critical steel products for the wind and solar markets.

While the guidance correctly treats wind towers as iron and steel products subject to the domestic manufacturing requirement, it inexplicably treats monopile foundations for offshore wind installations as “manufactured products” that are not. There is no meaningful difference between a wind tower and a monopile. Both are made overwhelmingly from steel plate that has been fabricated into a tube to provide structural support. Monopiles would qualify as primarily iron or steel products under any existing definition in other domestic content provisions under federal law with similar iron and steel requirements.

In response to the Inflation Reduction Act, both foreign and domestic manufacturers have started investing in new facilities across the United States to produce the iron and steel needed to build the new, clean energy economy. For example, steel for monopiles is now available from domestic producers like Nucor Corporation, which recently invested nearly $2 billion in a new plate mill in Brandenburg, KY. Any effort to exempt, categorically, iron and steel products from the domestic manufacturing requirement for the bonus tax credit under the law is deeply misguided. The bonus tax credit is designed to incentivize new manufacturing in the United States, not simply to subsidize existing production. If an energy developer is either unwilling or unable to obtain a domestically produced steel product like an offshore wind monopile, then they are not entitled to claim the bonus tax credit but can claim the base credit for solar and wind facilities.

We likewise urge you to ensure that other important steel products are covered by the requirement for domestically produced iron and steel to claim the bonus tax credit under the Inflation Reduction Act.  For example, domestic supply chains for renewable energy rely on sufficient production of products like steel torque tubes used in solar arrays. However, your guidance appears to exempt torque tubes from the domestically produced iron and steel requirement for the bonus tax credit, even though they are made entirely of steel. Finally, the guidance’s apparent blanket exception for steel fasteners is both unnecessary and inappropriate. Many steel fasteners are large, sophisticated products vital to the structural integrity of infrastructure and construction projects. Any final guidance or subsequent regulations implementing the Inflation Reduction Act must ensure that filers claiming the bonus tax credit for these steel products meet the domestic production requirement under the law. Allowing energy developers to claim the bonus tax credit for high-value products like monopiles, torque tubes, and steel fasteners produced from imported steel seriously undermines the President’s stated policy and Congressional intent.

As you continue working to implement the Inflation Reduction Act, we ask that you correct these loopholes in the May 2023 guidance and any forthcoming proposed regulations on the domestic content requirements. Anything less would undermine the 2022 law and miss this historic opportunity to revitalize American manufacturing by building the clean energy economy of tomorrow. We look forward to reviewing the final guidance and proposed regulations to fully implement the 2022 law. Thank you for your leadership and consideration.
Source: Representative John Garamendi