Backlash: Senate Proposals To Tighten 'Buy American' Requirements For Renewable Projects, Limit EPA's Greenhouse Gas Regulatory Authority

Author:Mr Brandon Barnes, Gregory K. Lawrence and Holly A. Roth
Profession:McDermott Will & Emery

Recent Senate legislative proposals may make clean energy grant money contingent on restrictions to purchase domestic goods and labor, and could place a moratorium on the EPA's authority to regulate greenhouse gases through the Clean Air Act.

The Senate has seen action this week on two key proposals in the areas of clean energy and climate change.

American Renewable Energy Jobs Act

On March 2, 2010, U.S. Senators Charles E. Schumer (D-NY), Bob Casey (D-PA), Sherrod Brown (D-OH) and Jon Tester (D-MT) requested that stimulus spending on a renewable energy program stop until rules are in place to ensure that the grantees of federal funding for these projects spend that money on domestic construction materials. The senators opined that some three-quarters of the $2 billion spent on wind energy through the stimulus went to foreign companies. "A critical Recovery Act priority is investment in the domestic renewable and clean energy industry, not investment in foreign manufacturers," the senators wrote in a letter to Treasury Secretary Timothy Geithner. The letter requested a moratorium on the distribution of section 1603 grant funding and award of any further grants until an amendment to the stimulus package passes. Section 1603 of the Recovery Act allocates 30 percent cash grants for energy property in lieu of federal tax credits.

The following day, the senators introduced legislation, called the American Renewable Energy Jobs Act, requiring that stimulus funds be given only to those clean energy projects that rely on materials manufactured in the United States and/or create a majority of jobs in the country. The bill would amend the American Recovery and Reinvestment Act, which released $800 billion designed to jumpstart the U.S. economy. The new amendment would require the U.S. Departments of Energy and the Treasury to award stimulus grant funds only to clean energy projects that create or preserve jobs in the United States.

"Buy American" legislation intended to benefit the U.S. economy and employment through the use of U.S. government funds has been in place for decades with respect to U.S. government contracts. Because it is largely impossible for high technology or complex manufactured goods to be made exclusively in the United States, the Recovery Act's original limitation on construction projects was expanded to permit the acquisition of steel and manufactured goods from the United States' trading partners—which do not currently include China. The...

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