US Releases Foreign Entity Rules
[ABS News
Service/06.05.2024]
The Energy Department has
published their interpretation of the statutory definition of “foreign entity
of concern” (FEOC) in the Infrastructure Investment and Jobs Act, also known as
the Bipartisan Infrastructure Law (BIL), which applies to multiple programs
related to the battery supply chain.
In this final interpretive
rule, DOE responds to public comments, clarifying 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 statutory definition
provides that, among other criteria, a foreign entity is a FEOC 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 final interpretive
rule, DOE responds to public comments, clarifying 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.”
DOE is issuing the final
guidance regarding which foreign entities qualify as FEOCs, under BIL 40207(a)(5)(C),
as a result of being “owned by, controlled by, or subject to the jurisdiction
or direction of a government of a foreign country that is a covered nation.”
DOE interprets that an
entity is “owned by, controlled by, or subject to the direction” of another entity
(including the government of a foreign country that is a if:
(I) 25 percent or more of
the entity’s board seats, voting rights, or equity interest, with each metric
evaluated independently, are cumulatively held by that other entity, whether
directly or indirectly via one or more intermediate entities; or
(ii) With respect to the
critical minerals, battery components, or battery materials of a given battery,
the entity has entered into a licensing arrangement or other contract with
another entity (a contractor) that entitles that other entity to exercise
effective control over the extraction, processing, recycling, manufacturing, or
assembly (collectively, “production”) of the critical minerals, battery components,
or battery materials that would be attributed to the entity.