Industry Responds to Inflation Reduction Act


On Tuesday (Aug. 16), President Joe Biden was joined by Senate Majority Leader Chuck Schumer (D-New York), Senator Joe Manchin (D-West Virginia) and Representatives Jim Clyburn (D-South Carolina) and Kathy Castor (D-Florida) for the signing of the Inflation Reduction Act.

Prior to arriving at the president’s desk, the legislation narrowly passed the U.S. Senate in a vote of 51-50 (with no Republican votes) at the beginning of the month and by a 220-207 margin in the House of Representatives last week.

Also known as H.R. 5376, the new legislation provides for reconciliation of the Federal Budget pursuant to the Fiscal Year 2022 Budget Resolution. In addition, the law addresses climate change, health care, taxation and the Federal deficit through direct appropriations, new programs, modifications to existing programs and changes to the tax code.

“With this law, the American people won and the special interests lost,” Biden said in remarks before he signed the bill.

According to reports, the $437 billion spending package is expected to raise $737 billion in revenue over the next decade. The outlined spending includes $369 billion for climate and energy policies, $64 billion to extend a policy under the Affordable Care Act and a 15% corporate minimum tax aimed at companies earning more than $1 billion per year.

In an analysis of the legislation by the Labor Energy Partnership, a joint project of the Energy Futures Initiative and the AFL-CIO, officials claim that the Inflation Reduction Act could add 1.5 million jobs and $250 billion to the economy by 2030, all while decreasing overall energy consumption.

The bill “tackles climate change while also taking a common sense approach to our energy needs rather than setting unrealistic goals for an abrupt energy transition," said Terry O’Sullivan, General President of the Laborers' International Union of North America, in a statement.

“The legislation invests in efficiency and innovation for all fuel types—from hydrogen, nuclear, renewables, fossil fuels to energy storage, and with inclusion of Davis-Bacon and apprenticeship language which is important in ensuring that the jobs created are good union jobs.”

While some construction groups are in favor of the new legislation, others have strongly opposed it.

Industry Response to H.R. 5376

Prior to the official signing of the bill, the Associated General Contractors of America (AGC) announced its opposition to the Inflation Reduction Act. Although the Association recognizes that many of the provisions from the original Build Back Better Act had been dropped, AGC members still share concerns over the remaining provisions and their impact on the industry.

In a news release, the AGC listed the following as significant concerns:

  • Tying construction labor mandates for qualified apprenticeships to tax incentives for renewable energy and energy efficiency projects. The legislation would require apprentices to perform 15% of the total project hours by 2024 to be eligible for the full tax credit;
  • New challenges for construction firms to fight climate change by placing the Environmental Protection Agency (EPA) at the center of environmental project declarations and low-embodied carbon labeling;
  • Funding for environmental review implementation that could end up funding additional red tape, administrative costs and potential legal fees for project sponsors attempting to do large highway projects;
  • Incentivizing the purchases of electric vehicles without creating a mechanism for them to pay into the highway trust fund; and
  • Writing a nearly $80 billion check to the Internal Revenue Service to boost “enforcement” (increase audits and reviews of taxpayer returns), while shortchanging customer service.

Similarly, the Associated Builders and Contractors (ABC) released statements prior to the legislation signing that were also unfavorable of the passing.

“While the Democrats’ reconciliation proposal has undergone changes over the recent days, the package unfortunately would still impose anti-growth tax policies that fail to address the rate of inflation, supply chain snarls and workforce shortages disrupting the economy and construction industry,” said Kristen Swearingen, ABC Vice President of Legislative and Political Affairs.

“Most critically, this bill penalizes employers that believe in fair and open competition and pay wages based on experience, quality and market rates, and also limits opportunities for the millions of construction workers who choose not to join a union,” Swearingen added.

“Though the bill provides $250 billion in incentives for clean energy projects, 83% of the value of these credits lies in projects ABC members will be largely prevented or discouraged from participating in due to these labor restrictions.”

After the bill passed the U.S. House, Swearingen issued an additional statement, promising that ABC would continue to work to ensure all qualified contractors are able to work on these new energy projects.

ABC was also reported to have sent a letter to the House highlighting the failures in the reconciliation package, urging lawmakers to oppose the bill because its tax hikes and restrictive labor policies “would be devastating for the construction industry and the recovery needed to restore our economy.”

In the same thread, National Association of Chemical Distributors (NACD) President and CEO Eric R. Byer issued a related statement, highlighting major concerns over the legislation. Most notably, the NACD believes that the package will only worsen inflation, ongoing supply chain issues, rising interest rates and the struggling labor market.

“The tax increases in the bill will lead to higher costs for chemical producers and distributors. Higher prices for chemicals will flow through nearly every other sector of the economy, leading to more job losses and increased inflation,” wrote Byer.

“Based on an analysis prepared for NACD, these price increases will result in reduced chemical sales. The lower sales volumes will ultimately lead to reduced jobs as distributors need fewer truck drivers, clerks, and warehouse staff. “

Not all construction-affiliated associations were against the new legislation, however. Unlike others in the industry, the American Institute of Architects applauded the Congressional passing of the Inflation Reduction Act.

In a press release, AIA touted the legislation’s success to its focus on building code provsions, climate tax incentives and affordable housing.

"I am proud of the work AIA has done to get Congress to include language addressing our legislative priorities," said AIA EVP/Chief Executive Officer Lakisha Ann Woods, CAE. “AIA’s sustained commitment to advocating for legislation addressing greenhouse gas emissions from the built environment as well as resilient and affordable communities is evident throughout this bill. Though the climate crisis still requires our unrelenting attention, this legislation is a step in the right direction.”

All of AIA’s provisions included in the Inflation Reduction Act can be found here.


Tagged categories: American Institute of Architects (AIA); Associated Builders and Contractors Inc. (ABC); Associated General Contractors (AGC); Commercial contractors; Contractors; General contractors; Good Technical Practice; Government; Industrial Contractors; NA; National Association of Chemical Distributors; North America; President Biden; Program/Project Management; Project Management

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