State AGs Could Play Key Role in Clean Energy Transition

The Inflation Reduction Act (IRA) could put the U.S. on the path to becoming the world’s “premier energy supplier,” according to a new report from Credit Suisse. “The solar manufacturing tax credits make U.S.-made modules among the cheapest globally and could turn the U.S. from an importer of solar modules and wind turbines to an exporter,” say the authors.

The IRA allocates $369 billion for tax credits, financing and grants, but Credit Suisse estimates that factors including the uncapped nature of credits and incentives, subsidized lending and private-sector investment stimulated by the IRA could bring $1.7 trillion to the power and manufacturing sectors over the next 10 years.

Unleashing this much economic power brings considerable potential for disruption, confusion and abuse along with a historic opportunity. While they may not be front of mind in every conversation regarding the energy transition, state attorneys general (AGs) will play essential roles in achieving a transition that benefits communities and workers as well as the private sector.

A new report from experts at the New York University and Harvard law schools, A Role for State Attorneys General in a Just Transition, examines what a “just transition” to a clean energy economy might encompass and how AGs can facilitate it.

“It’s important to acknowledge how labor and the environment are interrelated in this space,” says Bethany Davis Noll, executive director of the State Energy and Environmental Impact Center at NYU School of Law, an author of the report.

Her co-author is Terri Gerstein, director of the State and Local Enforcement Project at the Harvard Labor and Worklife Program. Both have past experience in the office of the New York AG, Gerstein as labor bureau chief and Davis Noll as assistant solicitor general.

The report is a response to a pivotal moment when an equitable, high-road approach to community and family-sustaining jobs could be developed, says Gerstein. “What should the transition look like — how should it affect workers, how should it affect fenceline communities and communities of color?”

Independent and Nimble

Gerstein and Davis Noll draw on multiple sources to outline the components of a “just transition.” They include jobs that offer living wages, decent benefits, safe working conditions and other workplace attributes that often require worker advocacy or collective bargaining to achieve.

Support for communities that have depended on fossil fuel jobs is another aspect of a just transition. This can involve reinvestment and reclamation as well as relief to affected workers. Community members who have not worked in polluting industries but whose lives have been seriously impacted by them should also benefit from the transition, with access to the jobs and opportunities that it creates.

These goals are attainable within the framework of the IRA (as well as previous federal relief and infrastructure funding). A 2021 Executive Order placing climate action at the center of U.S. policies includes the creation of a Justice40 initiative to ensure federal climate investments benefit disadvantaged communities.

But there are many opportunities for projects made possible by federal climate funds to wander outside the lines, and AGs are uniquely positioned to safeguard against this.

AGs are unusual government actors, says Gerstein, with the ability to enforce laws in wide-ranging areas such as labor, environment, human rights and anti-discrimination. In most states, they are elected separately. “They can act somewhat independently and they’re nimble; it’s in their DNA to try to be strategic.”
In addition to enforcing labor laws, AGs have power to act against private-sector firms that cause pollution or environmental damage in communities. They advise state agencies in regard to implementing laws and programs.

The NYU/Harvard report also includes examples of instances where groups of AGs have advocated for stronger federal guidelines during notice and comment periods or challenged federal rules that undermined worker protections or environmental protection.

In recent years, California AG Rob Bonta has sued Uber and Lyft for misclassifying employees as independent contractors, created materials informing workers of their rights and defended a state law defining independent contractor status.

"Whether it be supporting workers during the transition, standing up for workers' rights in the clean energy sector, or enforcing heat standards and other workplace safety laws, state attorneys general are on the front lines enforcing the law and driving the nation forward,” says Bonta. “As we make the transition to clean energy, we must do so in a way that prioritizes worker safety, fair pay, equitable opportunity and public health.”

Recently, a group of 12 AGs led by Massachusetts AG Maura Healy submitted comments in response to a request from the Internal Revenue Service and the Treasury Department for public input regarding implementation of the IRA.

“The IRA has enormous potential to make a real difference in our states by creating good, green jobs, reducing greenhouse gas emissions, saving our families money, and promoting the critical transition to a clean energy economy,” said Healey in remarks accompanying the submission. “We must ensure it is implemented in a way that ensures all our communities are at the table and benefiting from this historic legislation. We are committed to working with the federal government to fulfill the IRA’s promise.”

Good for Workers, Good for Business

The IRA includes extra credits for employers who pay prevailing wages or who employ specified numbers of registered apprentices. Some in the private sector have pushed back against such requirements, arguing that they raise project costs and interfere with competition for contracts.

The notion that paying prevailing wages will harm profits is contradicted by research and experience, says Davis Noll. “The premise that paying prevailing wage will hurt profit is not correct.” Her report cites numerous case histories and studies that find prevailing wage laws do not increase contracting costs — but they do make recruiting, training and retaining workers easier.

There is an aspect of “competition” that AGs can address, however. “There are a lot of law-abiding businesses that really struggle to compete with bottom feeders who violate the laws,” says Gerstein, who served for a period as deputy commissioner of the New York State Department of Labor. “There's a lot of room for leaders and enforcers who think of themselves wanting to be business friendly to understand that this includes a lawful, fair playing field.”

In the same vein, some manufacturers may be drawn to parts of the country where labor laws and worker protections are weaker, increasing the importance of enforcing the protections that do exist.

Davis Noll also points to the enforcement challenges that lie ahead because the bulk of IRA funds will be paid out by the government as tax credits claimed in IRS filings, documents that are not in the public record. (In their comments, Healey and her colleagues have urged the IRS to require “robust documentation” from those who claim credits.)

Empowerment

One of the aims of the report was to give those in both environmental and labor sectors a view of the ways that AG functions sit at the crossroads of their shared interests, says Davis Noll. “We wanted them to have the opportunity to think about this set of issues that might not be on their radar, a different way of framing what strategic enforcement looks like.”

The mix of energy transition needs, plans, opportunities and obstacles differs from state to state. There’s not one area that could work as a first focus for every AG.

“The place to start is talking to the affected communities and the affected workers,” says Davis Noll. “It’s not just communication, it’s listening; a lot of these recommendations are about empowerment and the AGs have an amazing set of tools that they can use in to do that work.”

Gerstein characterizes this as a sort “landscape review,” involving conversations with worker organizations, unions, employers and energy experts. It would also include a review of laws around labor agreements and prevailing wages, or other statutes that might come into play as the IRA is implemented. “The landscape review also includes what is happening in your state in terms of what renewable energy projects are being done,” she says.

“This is an opportunity to right a historic wrong,” says Davis Noll. “It’s an opportunity to think about the environmental side and the worker side, because if you do that you build a better economy for everybody — that’s what the research shows.”