The Inflation Reduction Act of 2022 (IRA), Pub. L. No. 117–169, represents the most significant legislation to invest in clean energy and climate change in U.S. history. The IRA will drive investment and economic growth, create new opportunities for workers by supporting prevailing wage jobs and Registered Apprenticeship programs (RAPs) in the energy industry. SMACNA fully supports the IRA, particularly the prevailing wage and apprenticeship (PWA) requirements. SMACNA provides these comments in support of the IRS and Treasury Department’s Proposed Rule, “Increased Credit or Deduction Amounts for Satisfying Certain Prevailing Wage and Registered Apprenticeship Requirements,” 88 Fed. Reg. 60018 (Aug. 30, 2023) (hereafter “PWA Proposed Rule”).
SMACNA and its members believe that the PWA Proposed Rule should be revised and clarified to prevent low-wage and unscrupulous contractors from avoiding or eroding the IRA’s PWA standards, which were explicitly designed to raise employee’s wages and increase the supply of skilled workers. In the areas of prevailing wage and registered apprenticeship programs, SMACNA believes that the IRS and Treasury should carefully consider these recommendations to ensure that the PWA Final Rule effectuates the intent of the IRA, including:
- Creating a separate standard for taxpayers who are signatory to a PLA;
- Given the history of cheating and PWA violations on non-PLA projects, significantly increasing the oversight and non-compliance penalties for non-PLA projects;
- Mandating robust recordkeeping requirements for non-PLA projects, including the filing of certain documents with the DOL; and
- Creating flexible and common-sense ratio requirements for PLA projects.
SMACNA also is concerned that violations of the IRA’s PWA standards will go undetected – thereby frustrating the intent of the IRA – in the absence of a PLA or alternative enforcement mechanisms that are designed to prevent those who refuse to sign PLAs from avoiding or eroding the IRA’s PWA standards. In addition, it is SMACNA’s belief that incentivizing and creating separate compliance standards for taxpayers who are signatory to PLAs will effectuate the intent of the IRA, and significant penalties will encourage compliance with the law. Those unwilling to sign PLAs will be subject to increased oversight, documentation, and penalties because history has taught that, in the absence of a PLA, PWA violations are pervasive and difficult to detect.