The Internal Revenue Service has issued final regulations implementing the Advanced Manufacturing Production Credit, Section 45X under the Inflation Reduction Act (IRA). Formally published on October 28, 2024, the final rules provide guidance on the new production tax credit (PTC) that will “expand America’s clean energy manufacturing base, create good-paying jobs, strengthen the nation’s energy security, and build the reliable and responsible supply chains needed to meet U.S. climate goals,” according to the Biden Administration.
The Section 45X PTC provides a tax credit for the U.S. production and sale through December 31, 2032, of eligible components such as solar and wind energy components, inverters, qualifying battery components and 50 applicable critical minerals. The final regulation defines qualifying production activities and eligible components, confirms credit amounts for those components, defines other key terms, finalizes safeguards to prevent fraud, waste, and abuse, and lays out the specific recordkeeping and reporting requirements.
The final regulation is effective December 27, 2024.
U.S. Urges EU to Extend Trade Truce
The Biden Administration is urging the European Union to prolong its trade truce regarding the Section 232 tariffs dispute. On October 22, 2024, a representative from the Office of the U.S. Trade Representative (USTR) announced that the U.S. is seeking more time from the EU beyond the initial 15-month extension to negotiate a comprehensive agreement on steel and aluminum trade.
In 2021, the U.S. and EU reached an agreement that resolved the Section 232 steel and aluminum dispute. This deal established a tariff-rate quota (TRQ) system, enabling the EU to export approximately 3.3 million metric tons of steel and 384,000 metric tons of aluminum to the U.S. without tariffs, while also lifting EU retaliatory tariffs on various U.S. products, including wine, whiskey, and spirits. Additionally, both parties committed to commencing discussions on a longer-term global arrangement to tackle overcapacity and promote decarbonization in the steel and aluminum industries.
In December 2023, an extension was granted until March 2025 for the EU, while the U.S. deadline was set for December 2025. The USTR is now requesting the EU to align its deadline with that of the U.S., pushing for an extension until December 2025.
FTC Appeals Ruling on Non-Compete Ban
The Federal Trade Commission (FTC) has officially filed an appeal against a recent Court decision that struck down the new rule banning most non-compete agreements. On October 18, 2024, the FTC filed the appeal to the United States District Court for the Northern District of Texas, challenging the Court’s August 20 ruling blocking the rule. The final regulation, published by the FTC on May 7, 2024, would have banned most existing and new non-compete, non-disclosure, and non-solicitation agreements for employees in the U.S.
In the case, Ryan LLC v. FTC, Judge Ada Brown of the Northern District ruled that the FTC had “exceeded its statutory authority” and ruled that the agency doesn’t possess the power to issue “substantive rules” concerning competition. Furthermore, she asserted that even if the FTC did have such authority, it failed to justify the ban sufficiently, labeling the action as “arbitrary and capricious.” Now, the FTC faces the challenge of convincing the Court that these conclusions are incorrect. The rule had been scheduled to go into effect on Sept. 4. With this appeal, the matter moves to the U.S. Court of Appeals for the Fifth Circuit, and it’s anticipated that it could take nearly eight months for the Court to render a decision.
Updates to the Advanced Vehicles Manufacturing Program Under Review
A proposed rule by the Department of Energy (DOE) to implement updates to the Advanced Technology Vehicles Manufacturing Incentive Program (ATVM) is under final review by the White House. The notice of proposed rulemaking (NPRM) which will include changes to the interim final rule establishing regulations to administer the ATVM was sent to the White House Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) on October 21, 2024, the last step before being officially published.
The Infrastructure Investment and Jobs Act (IIJA) of 2021 and the Inflation Reduction Act (IRA) of 2022 included provisions amending the administration of the ATVM. The IIJA expanded the definition of “advanced technology vehicle” to include ultra efficient, medium-duty and heavy-duty vehicles, as well as trains, maritime vessels, aircraft and hyperloop technology that meet specified efficiency and emissions standards.
Additionally, the IRA appropriated $3 billion for the program, available through September 30, 2028, providing direct loans to support the manufacture of eligible light-duty vehicles and qualifying components through the building of new facilities of the expansion, reequipping or modernization of existing facilities to manufacture eligible advanced technology vehicles and components.
The NPRM is expected to be officially released in December 2024.