Does "Buy America" Apply to Tax Incentives for Wind Farms?

When President Obama signed the American Recovery and Reinvestment Act in 2009, the legislation contained a Buy America provision. This section 1605 of the ARRA requires that all of the iron and steel and “manufactured goods” used in ARRA-funded projects for construction, alteration, maintenance or repair of “a public building or public work” be “produced in the United States.”

As the ARRA programs have been implemented, many renewable energy developers have wondered how the Buy America provision will affect their projects, since a majority of renewable energy manufacturing happens overseas. The U.S. Treasury has clarified that for those interested in the section 1603 cash grant in lieu of tax credits, the Buy America provisions do not apply. (See item 32 in this U.S. Department of Treasury's FAQ document.)

However, there are other incentives to which this requirement does apply—so it is important to consult with a qualified financial and tax advisor for any ARRA funded project. In order to help recipients of funding through the U.S. Dept. of Energy has provided guidance documents and assistance on this topic. Those resources can be found at The Buy American Provision web page of the Office of Energy Efficiency and Renewable Energy (EERE).

Additionally, guidance and instructions for applying for the section 1603 cash grant are available at the U.S. Department of Treasury. For additional legal analysis of the Buy America provision of ARRA and its impact on renewable energy development, visit the following web resources:

K & L Gates LLP
Hunton & Williams LLP