U.S. Department of Energy Releases Proposed Interpretive Guidance on Foreign Entity of Concern for Public Comment

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Proposed Guidance Interprets Statutory Terms That Limit the Participation of FEOCs in the Domestic Battery Supply Chain and Support Growth of Domestic Battery Materials Processing and Manufacturing

WASHINGTON, D.C.— This week, the U.S. Department of Energy (DOE) released a notice of its proposed guidance and a request for public comment on its proposed interpretation of the statutory definition of “foreign entity of concern” (FEOC) in the Bipartisan Infrastructure Law (BIL), which is designed to limit the participation of FEOCs within domestic battery supply chains, particularly within government-supported programs, and bolster the growth of domestic and friend-shored battery materials processing and manufacturing.

Plug-in EV sales have tripled since President Biden took office. However, the U.S. still depends on foreign sources for many of the processed versions of critical minerals needed to produce EV batteries. Since coming into office ushering in the historic legislation of the BIL and the Inflation Reduction Act (IRA), the Biden-Harris Administration has taken swift action to secure a reliable and sustainable battery supply chain [sourced predominately in America and allied trading partners]. DOE’s Battery Materials Processing and Manufacturing grant program authorized by section 40207 of BIL and the IRA 30D Clean Vehicle tax credit impose limits when an entity’s battery supply chain includes foreign entities of concern.

The BIL provides that, among other criteria, a foreign entity is defined as a “foreign entity of concern” if it is “owned by, controlled by, or subject to the jurisdiction or direction of a government of a foreign country that is a covered nation.” In this guidance, DOE proposes to clarify the term “foreign entity of concern” by providing interpretations of the following key terms: “government of a foreign country;” “foreign entity;” “subject to the jurisdiction;” and “owned by, controlled by, or subject to the direction.”

This DOE proposed interpretative guidance relates to the BIL 40207 Battery Materials Processing and Battery Manufacturing and Recycling Grants, which have a statutory requirement to prioritize projects with non-FEOC based supply chains. It is also relevant to the Treasury Department and the Internal Revenue Service’s implementation of amendments made by the IRA to the section 30D Clean Vehicle Credit, for which statutory FEOC restrictions begin in January of 2024.

DOE worked with the Department of the Treasury and the Internal Revenue Service to ensure that this interpretation supports implementation of the section 30D Clean Vehicle Credit. In developing this proposed interpretive guidance, DOE conducted many industry stakeholder meetings and communicated across the federal government.

The 30-day public comment period will begin upon publication in the Federal Register. Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at www.regulations.gov. Follow the instructions for submitting comments for RIN 1901-ZA02.

Comments submitted can be public or confidential. Do not submit to www.regulations.gov information claimed as confidential business information (CBI). Comments submitted through www.regulations.gov cannot be claimed as CBI. Comments received through the website will waive any CBI claims for the information submitted.

For information on submitting CBI, see the Confidential Business Information section. Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at www.regulations.gov. Follow the instructions for submitting comments for RIN 1901-ZA02. Email Contact: FEOCguidance@hq.doe.gov.

Courtesy of the U.S. DOE.