Senators Introduce Bill To Halt Treasury Cash-Grant Payments

Sens. Charles E. Schumer, D-N.Y.; Bob Casey, D-Pa.; Sherrod Brown, D-Ohio; and Jon Tester, D-Mont., are urging the Obama administration to suspend a renewable energy cash-grant program indefinitely until the law can be fixed so that funds only flow to projects that will create jobs in the U.S.Â

In a letter to Treasury Secretary Tim Geithner, the senators pushed for a moratorium on all payouts from the American Recovery and Reinvestment Act's (ARRA) Section 1603 program that gives developers a 30% cash grant in lieu of federal tax credits.

The senators are asking that the program be suspended until Congress considers new legislation that they introduced. The new proposal would require that aid flow only to clean energy projects that rely on materials manufactured in the U.S. and create the bulk of their jobs here at home, rather than overseas.Â

The senators cite a study by the Investigative Reporting Workshop – a project of the School of Communication at American University – that says that since September 2009, 79% of the $2 billion in grants issued by Section 1603 have gone to foreign wind companies.

The American Wind Energy Association (AWEA) states that the report is inaccurate and provides a rebuttal on its Web site.

If approved, the legislation would stop payments to projects such as a proposed 648 MW, $1.5 billion Texas wind farm, which is a joint venture comprised of China's Shenyang Power Group, Texas company Cielo Wind Power and the U.S. Renewable Energy Group.Â

AWEA denounced the proposed legislation, arguing that the proposal would torpedo the job creation efforts of ARRA.

‘At a time when the construction unemployment rate is nearly 25% and the manufacturing unemployment rate is 13%, this proposal would cost 50,000 American workers their jobs,’ say Denise Bode, CEO of AWEA.

The new legislation would make the Cielo project, and others like it that do not have a substantial job impact in the U.S., ineligible for stimulus dollars.

Under the ‘Buy American’ provision contained in ARRA, government projects financed in part by the stimulus must, with few exceptions, rely on iron, steel and manufactured goods produced in the U.S.

The provision does not impose a similar requirement on private projects, such as the proposed wind farm in West Texas, that seek stimulus grants. The proposal announced by the four senators would apply the ‘Buy America’ standard to all renewable energy projects, no matter public or private, that seek stimulus funds. The proposal also would ensure that grant money is distributed only to renewable energy projects that preserve and create jobs in the U.S.

Schumer has been trying to block the project from receiving any stimulus aid. In November, he sent a letter to U.S. Energy Secretary Steven Chu, demanding that the project receive no stimulus dollars unless it relied on U.S.-built products rather than the Chinese turbines.Â

According to AWEA, the U.S. does not have the capability to produce 100% of its wind turbine components domestically. However, more than half of the value of the wind turbines used in U.S. wind projects is domestically produced, and that percentage is increasing every year as more turbine makers add U.S. manufacturing capability, according to AWEA. Â

SOURCES: Office of Sen. Charles E. Schumer, American Wind Energy Association

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