West Virginia Democratic Sen. Joe Manchin, chairman of the Senate Energy and Natural Resources Committee, criticized the Treasury Department on Monday for trying to circumvent the “clear purpose” of the inflation-reduction law’s language that requires domestic content in electric vehicles. battery components.

In previous remarks on April 20, Manchin described the language concept as follows: “Electric vehicle tax breaks for cars, I personally believe we didn’t need any. But that being said, I said if we’re going to do it, let’s get something for it. And the switch to electric [vehicles] when we were dependent on a foreign supply chain, mostly China – it doesn’t make any sense. We put it together and said it would come in at $3,750 if you arranged and secured the processing and did the processing in North America or FTA countries. And another $3,750 would be to manufacture the battery in North America.”

End of run in production

After reviewing the new rulemaking, Senator Manchin now believes the Treasury Department is not making a good faith effort to interpret the law as written.

“Unfortunately, the Treasury Department appears to have seriously misinterpreted the plain language and clear purpose of the critical minerals and battery components requirements in subsection (e),” Manchin said Monday written comments. “Either that, or the Treasury Department thinks it has a better approach than the one enacted by Congress and uses its subsection (e)(3) rulemaking authority to substitute its approach for the one enacted by Congress. But the Ministry of Finance has no such power.”

Manchin goes on to point out that “Congress rewrote Section 30D to support reliable critical supply chains for the production of minerals and batteries needed to meet the growing demand for electric vehicles,” one of the stated goals of President Joe Biden himself, who in July 2021 promised to mount a “whole-of-government approach” to achieve this particular goal. In submitting these written comments, Senator Manchin is essentially accusing Treasury officials of ignoring the President’s commitment and pursuing their own, separate agenda.

Three key deviations

Manchin specifically describes three key ways in which the Treasury’s proposed rulemaking departs from or conflicts with the clear language in the IRA:

• First, Manchin notes that the proposed rule contains a “50% value-added test” to help regulators determine whether the critical minerals requirement in revised section 30D has been met. But the senator says, “This new test is not found in section 30D(e) or anywhere else in the law. It is purely the work of the Ministry of Finance. This new, unauthorized and illegal test defeats the purpose of the statutory test.”
• Second, Manchin notes that in crafting his IRA-specific rules, he incorporated the “constituent materials” test that is contained in the Infrastructure Investment and Jobs Act of 2021, but for an entirely different purpose. Noting that “Congress legislates with knowledge of its prior laws,” Manchin condemns the Treasury Department’s attempt to use that test contained in another statute for another purpose as an improper effort to circumvent the clear intent of the IRA.
• Third, Manchin objects to the Treasury Department’s attempt to push its own reinterpretation of the meaning of “free trade agreement country” in a way that would essentially allow regulators to ignore the clear traditional definition.

“Although the term ‘free trade agreement’ is not defined in the statute, it has a well-established meaning, Manchin says. A ‘free trade agreement’ is an agreement between two or more countries, each of which removes tariffs and other restrictions on ‘substantially all’ trade between parties, not just to grow here or grow there.”

The senator points out that the Treasury Department already included Japan as a country with a free trade agreement in its proposed rulemaking, even though no such agreement currently exists between it and the United States. The Treasury’s new definition would also allow it to add countries in the future based on its own internal judgment and nothing else.

Bottom Line

As reported in his office on Monday Press ReleaseSenator Manchin has repeatedly voiced his displeasure with the Biden administration’s regulatory implementation of the IRA since he made the fateful decision to be the deciding vote to pass the bill last August. By relinquishing the massive leverage he had until then to influence US energy policy, Manchin jeopardized his political future as he faces re-election in heavily Republican West Virginia in 2024.

If Congress were still engaged in a real budget process, Manchin could still exert real influence by threatening to withhold funds through the appropriations process, but Congress has consistently abdicated its authority in this area for nearly 20 years.

And so, while this latest round of sound and fury coming out of Manchin’s office is news, whether it will end up having any real impact on the process seems highly questionable.