Washington, DC - Senator Joe Manchin, Chairman of the U.S. Senate Energy and Natural Resources Committee, has requested a legal opinion from the U.S. Government Accountability Office (GAO) regarding the guidance issued by the U.S. Department of the Treasury for implementing section 30D of the Inflation Reduction Act. In a letter to the GAO, Senator Manchin expressed concerns about the Treasury Department's recent guidance on the Clean Vehicle Tax Credit, specifically its impact on American taxpayers and the country's reliance on foreign nations for battery and vehicle component supply chains.

According to Senator Manchin, the Treasury's guidance "pursues the Administration's own unenacted policy preferences" rather than carrying out the purposes of section 30D as adopted by Congress. He highlighted three major concerns with the proposal:

Firstly, the guidance cuts the critical minerals requirements in half by inventing and applying a new "50% of value added test" that is not found in the law. This loosens the limits set by Congress and increases the ease with which foreign entities can take advantage of the tax credit.

Secondly, it waters down the battery component requirements by shifting the value of battery component manufacturing from the battery requirement to the critical mineral processing requirement. This is done through the application of a new notion of "constituent materials" that is not specified in section 30D, effectively reallocating the manufacturing requirements.

Thirdly, the guidance flouts the requirement that critical minerals must be extracted or processed in the United States or in countries with which the United States has a free trade agreement in effect. The Treasury Department's proposal includes Japan, which does not have a free trade agreement with the United States, as a country that qualifies. This treatment of critical minerals extracted or processed in Japan would apply even if the proposed rule is never finalized.

Senator Manchin also raised concerns about the suspension of statutory prohibitions that would allow electric vehicles containing critical minerals or battery components sourced from foreign entities of concern to qualify for the tax credit, despite the clear language of the law.

In his letter, Senator Manchin argued that treating the Treasury's regulations as a final rule would enable Congress to review and disapprove a rule that does not accurately reflect the intent of Congress in enacting the underlying statutory scheme. He emphasized the importance of Congress reclaiming its lawmaking power and power of the purse.

The full letter from Senator Manchin to the GAO can be found on his official website.

Senator Manchin's request for a legal opinion from the GAO highlights his concerns about the Treasury Department's guidance on the Clean Vehicle Tax Credit. By seeking clarity on whether the guidance is subject to review under the Congressional Review Act, Senator Manchin is taking steps to ensure that Congress can exercise its oversight responsibilities and make informed decisions regarding the implementation of the tax credit.

To find out more, go to this link: https://www.energy.senate.gov/2023/12/manchin-requests-gao-legal-opinion-on-administration-s-ability-to-issue-temporary-irs-guidance-that-violates-the-inflation-reduction-act