Manchin grills Granholm over 'budget busting' electric vehicle rules

Sen. Joe Manchin accused the Biden administration Thursday of "liberalizing" Congress' efforts to stimulate sales of electric vehicles — and warned Energy Secretary Jennifer Granholm that the president's approach could send money and jobs to China.

It was the West Virginia Democrat's latest attack on the administration's handling of the sweeping climate bill that Manchin helped write.

Manchin, who chairs the Senate Energy and Natural Resources Committee, told Granholm at a hearing that President Joe Biden's implementation of the Inflation Reduction Act could "bust the budget" and go far beyond the spending forecast that Congress relied on last year.

He specifically accused the administration of loosening Congress' mandate that electric vehicles must be made with domestically produced parts and minerals to receive $7,500 tax incentives. As a result, he said, many more EVs with foreign-sourced parts will claim the tax break, and jobs will go overseas.

Manchin told Granholm he had not believed that Congress needed to include the EV tax credit in Democrats' climate law at all. But "if we're going to do it, let's get something for it," he said, referring to the law's incentives for automakers to move their supply chains to the United States or its trading partners.

"If they don't have to come, they're going to take it somewhere else cheaper and easier to get," Manchin said. He added, "[It] could probably be China coming through the back doors."

Granholm denied that would happen, saying the administration is likely to include China in a list of "foreign entities of concern" whose vehicle parts and components would not be allowed to qualify for the tax credit.

The Treasury Department is expected to decide later this year which countries to place on the list.

Manchin also took particular aim at the Biden administration's classification of certain foils, powders and other components as processing under Treasury's guidance. By classifying the powders as “critical minerals,” rather than “battery components,” the Treasury has avoided placing even more severe restrictions on vehicles eligible for the tax credit.

Granholm said the Energy Department had advised Treasury on issues relating to energy definitions, including for the EV tax credit. But she said DOE applied the "exact" definition for processing that Congress has used in the bipartisan infrastructure law passed in 2021.

"They didn't want to go back and re-do what Congress had just passed," she added.

But Manchin responded that the IRA has specific language on the issue, and that DOE should not have turned to the earlier infrastructure bill.

"Y'all broke the law by advising, referring back to the bipartisan infrastructure bill. It had nothing to do [with it]. This is the IRA we passed," said Manchin, who has threatened to sue the administration over its implementation of the tax credit.

"I think there is a difference of opinion among the lawyers about what the actual definition [is]," Granholm replied.

"Depends on who's paying the lawyers," Manchin quipped.

Manchin has also targeted EPA's new proposed tailpipe emissions rules, which the Biden administration says will drive a dramatic increase in EV sales in the next nine years. Manchin said in a statement this week that the proposed rules were a “Trojan horse" whose timelines would increase the United States' reliance on minerals and technologies controlled by China, and he said that he would support Congress overturning them.

House Republicans introduced legislation Wednesday that would raise the federal debt limit in conjunction with a series of policy changes — including cutting the IRA's green energy tax credits.