June 21st, 2024

On June 18th, 2024, the Treasury Department and Internal Revenue Service (IRS) issued a Press Release announcing the issuance of a Final Rule to implement key provisions of the Inflation Reduction Act (IRA) so the jobs created in the clean energy economy are good-paying, high-quality jobs. Treasury conducted consultation on the Notice of Proposed Rulemaking (NPRM) for the Prevailing Wage and Apprenticeship requirements on September 25, 2023. Based on this consultation, and pursuant to Executive Orders 13175 and 14112, Treasury has adopted two Tribal special rules to address circumstances where a Tribal government is an employer and where Tribal lands are subject to different prevailing wage rates. To learn more about what was discussed during this Tribal consultation, as well as Treasury’s reasoning for adopting the two Tribal special rules, please view Treasury’s Tribal consultation response summary.

The Final Rule establishes regulations regarding the increased credit amounts or the increased deduction amount available for taxpayers satisfying prevailing wage and registered apprenticeship (PWA) requirements established by the IRA. These are intended to increase pay for people working on IRA clean energy projects, most of which are in counties with below-average median household incomes.

The IRA’s PWA requirements apply to many of the new and expanded tax credits for deployment of wind, solar, nuclear, hydrogen, and other clean energy technologies. If the PWA requirements are met, the tax credit amount is increased fivefold. This provides a significant financial incentive for employers to pay good wages and hire registered apprentices for construction, alteration, and repair work on clean energy projects by enhancing the value of the credit.

Treasury and IRS is encouraging developers to consider entering Project Labor Agreements (PLAs) to help comply with the PWA requirements. PLAs are a type of pre-hire collective bargaining agreement unique to the construction industry, which are negotiated between one or more construction unions and one or more construction employers to establish the terms and conditions for employment on a specific construction project. PLAs can help developers deliver projects on time and on budget. Additionally, the Final Rule regulations do not require non-union employees to join a union or to pay union dues. Non-members may choose not to pay union dues an instead pay agency fees that cover only the share of dues used directly for representation, such as collective bargaining or grievance procedures. Further, the Final Rule regulations do not require any taxpayer to sign a PLA.

The Treasury and IRS Final Rule regulations can be viewed by clicking here and is scheduled to be published in the Federal Register on June 25th, 2024.

Please contact Melanie Plucinski, Tribal Infrastructure Policy Analyst, at mplucinski@usetinc.org if you have any questions. 

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Established in 1969, the United South and Eastern Tribes, Inc. (USET) is a non-profit, inter-Tribal organization serving thirty-three (33) federally recognized Tribal Nations from the Northeastern Woodlands to the Everglades and across the Gulf of Mexico. USET is dedicated to enhancing the development of Tribal Nations, improving the capabilities of Tribal governments, and improving the quality of life for Indian people through a variety of technical and supportive programmatic services.

Established in 2014, the USET Sovereignty Protection Fund (USET SPF) is a non-profit, inter-Tribal organization advocating on behalf of thirty-three (33) federally recognized Tribal Nations from the Northeastern Woodlands to the Everglades and across the Gulf of Mexico. USET SPF is dedicated to promoting, protecting, and advancing the inherent sovereign rights and authorities of Tribal Nations and in assisting its membership in dealing effectively with public policy issues.