Inflation Reduction Act of 2022

In what appears to be a response to manufacturer complaints regarding “black box” Inflation Reduction Act (IRA) drug price negotiations, the US administration issued a statement on January 29, 2025, stating it planned to consider “opportunities to bring greater transparency” to the negotiation process. Manufacturers assert that greater transparency requires the Centers for Medicare and Medicaid Services (CMS) to adopt a more formulaic approach to price negotiations, where each statutory negotiation factor is assigned a weighted value that CMS must use when negotiating prices.

Partner Carl Valenstein and associates Casey Weaver and Katelyn Hilferty co-authored a Law360 Expert Analysis article discussing recent US tariffs on the solar industry and their impacts on solar energy companies.

Partner Pam Wu authored an article for Reuters discussing the growing integration of hydrogen and fuel cell technologies in various industries, as part of their decarbonization efforts.

The US Department of Treasury and the IRS on May 16 released Notice 2024-41, which provides a new elective safe harbor that taxpayers may use to qualify for the domestic content bonus credit amount under Sections 45, 45Y, 48, and 48E of the Internal Revenue Code. Released over one year following earlier guidance, the Notice is likely to provide more certainty for taxpayers seeking to qualify for the domestic content bonus credit amount with respect to certain solar and onshore wind projects. The Notice, however, is unlikely to provide similar results for standalone battery electric storage systems projects or other nonsolar or wind projects.

As the hydrogen industry continues to develop and evolve, many industries, including the manufacturing, transportation, construction, industrial, and retail industries have transitioned parts of their operations to incorporate hydrogen and fuel cell technologies.

In the run-up of what will be a pivotal election year in the United States and in other global jurisdictions, Morgan Lewis lawyers provide a high-level overview of some major trends and regulatory and legislative developments that are on the horizon.

In a Bloomberg Law Insight, partners Casey August, Jane Accomando, and Levi McAllister examined developments on carbon emission reduction and reporting that will likely shape how US companies approach sustainability goals in 2024 and beyond.

Morgan Lewis’s 2023 Automotive Hour webinar series explored the impact of these and other developments on manufacturers, suppliers, and lenders and shared how the industry can adapt to these trends to take advantage of what lies ahead.

The Internal Revenue Service (IRS) and the US Department of the Treasury (Treasury) recently published proposed regulations (Proposed Regulations) setting forth rules applicable to the credit for the production of clean hydrogen and the election to treat clean hydrogen production facilities as energy property under Sections 45V and 48(a)(15) of the Internal Revenue Code (Code) enacted under the Inflation Reduction Act of 2022 (IRA).

The Internal Revenue Service’s proposed Section 45X regulations, released on December 15, provide US-based manufacturers with much-anticipated guidance for a credit that has been available since the beginning of 2023.

The US Internal Revenue Service (IRS) and US Department of the Treasury (Treasury) released proposed regulations on November 17, 2023 addressing the investment tax credit (ITC) for renewable energy and energy storage facilities, expanding upon and clarifying prior guidance on applying the ITC following the enactment of the Inflation Reduction Act of 2022 (IRA).

Beyond the recent, precedent-rewriting National Labor Relations Board decisions that have been making headlines, the Biden administration has been furthering its pro-labor agenda through other rulemaking efforts, from the US Department of Labor’s proposed rules updating Occupation Safety and Health Administration onsite inspection guidelines, to the US Department of the Treasury and Internal Revenue Service’s proposed regulations for obtaining clean industry tax credits subject to new requirements that in part encourage collective bargaining agreements.

The Inflation Reduction Act of 2022 opened up many energy credit opportunities for tax-exempt organizations. The Internal Revenue Service (IRS) and US Treasury Department released on June 14, 2023 proposed regulations on the direct payment regime, which guidance should help organizations evaluate whether to engage in clean energy projects.

On June 14, 2023, the Internal Revenue Service and US Department of the Treasury released temporary regulations and proposed regulations (collectively, the Transferability Guidance) relating to the transfer of certain clean technology industry federal income tax credits pursuant to Section 6418 of the Internal Revenue Code of 1986, as amended, which was enacted under the Inflation Reduction Act of 2022.

The Internal Revenue Service and US Department of the Treasury released Notice 2023-38 on May 12, which establishes rules for testing an applicable “green” energy facility’s eligibility for a bonus federal income tax credit amount (or “adder”) attributable to the steel, iron, or manufactured product that is a component of such facility being produced in the United States as enacted under the Inflation Reduction Act of 2022.

The Inflation Reduction Act of 2022 opened up many energy credit opportunities for tax-exempt organizations. Further guidance on the credit regime is anticipated in the coming months, which should help organizations determine the benefits of clean energy projects.

Recent action by the Biden administration has made clear once more that advancing equity, environmental justice, and civil rights is a key component of the environmental agenda that it seeks to address through a “whole of government” approach.

Partner Pamela Wu wrote a Law360 Expert Analysis article on efforts to promote the development of hydrogen fuel cell technologies and expand hydrogen infrastructure to encourage the adoption of the resource for use in transportation—a sector targeted by the Biden administration for carbon emissions cuts.

The highly anticipated guidance for determining a “green” energy facility’s eligibility for the potentially valuable tax credit increase largely aligns with industry expectations, including by providing certainty on energy community qualification through IRS-published lists of eligible locations.

The US Department of Treasury issued its long-awaited proposed guidance on March 31, 2023 to implement the critical mineral and battery component watershed requirements of the Inflation Reduction Act (IRA), which significantly revised the tax credit incentive mechanism of the Internal Revenue Code (Code) that relates to electric vehicles (EVs). Since the IRA’s enactment, the critical mineral and battery component requirements have generated tremendous interest and comment from virtually all segments of the automotive, mining, and component manufacturing industries.

Energy storage: the technology that will cash the checks written by the renewable energy industry. Energy storage can transform intermittent clean energy—primarily derived from wind and solar—into a reliable source of 24/7 generation. As a result, energy storage has seen tremendous policy support from the public sector, including through federal investment tax credits in the United States, as well as a large influx of capital from private investors seeking environmental, social, and governance (ESG) focused investments.

Pamela Wu wrote a Law360 Expert Analysis article on new federal funding opportunities for carbon capture projects at coal or natural gas generation facilities and non-generation industrial facilities. The article details the types of projects eligible for funds from the US Department of Energy and encourages companies to note future funding opportunities.

Partners Pamela Wu and Levi McAllister wrote an article for Reuters about some of the US commercial and legal issues associated with the widespread deployment of electric vehicles and hydrogen fuel cell vehicles, both seen as key to cutting carbon emissions from the transportation sector. The article covers the need for more public electric vehicle charging stations and the importance of developing a connective hydrogen infrastructure.

The US Department of Energy (DOE) recently issued two funding opportunities for the development of carbon capture large-scale pilot projects and integrated carbon capture and storage projects at coal or natural gas generation facilities and at industrial facilities that are not purposed for electric generation.

Electrification efforts of the US transportation sector are strong and growing. More than 800,000 fully electric vehicles (EVs) were sold in the United States in 2022, nearly 6% of all vehicles sold. In comparison, 3.2% of all vehicles sold in 2021 were fully EVs. Since 2011, there has been a 4,700% increase in sales in just 11 years. By every metric, there is a consistent pattern of an upward trajectory of EV growth in both the US and global markets.

The Internal Revenue Service (IRS), the Treasury Department (Treasury), and the Department of Energy (DOE) released Notice 2023-18 (Notice) on February 13, detailing the procedures through which the IRS and DOE will award a first round of allocations of tax credits under Section 48C of the Internal Revenue Code of 1986, as amended (Code), for certain green technology industry equipment manufacturing and recycling facilities and other greenhouse gas emission reduction projects. The Notice responds to the recent refresh of Section 48C credits under the Inflation Reduction Act of 2022 (IRA).

Partner Levi McAllister wrote an article for Automotive World discussing issues facing participants in the growing US electric vehicle (EV) market. These include the need for more public charging stations, new avenues to source battery materials, and the important role vehicle-to-grid (V2G) capabilities play in EV adoption.

The solar power industry seems to be caught in the crosshairs of competing legislative agendas. The US Inflation Reduction Act (IRA) created incentives to increase solar capacity via tax credits. The Uyghur Forced Labor Prevention Act (UFLPA) creates a rebuttable presumption that any goods that were mined, produced, or manufactured, wholly or in part, in the Xinjiang Uyghur Autonomous Region (XUAR) were made with forced labor, and bars their importation into the United States. More than 90% of the world's ingots and wafers (made from polysilicon) are produced in China, and 80% of solar panels going into both residential and commercial projects in the United States come from abroad. The push for more solar capacity is potentially hindered by supply chain–based trade restrictions, resulting in competing agendas.

While no one has a crystal ball for what 2023 will hold for the energy industry, the seemingly widespread support for green technology and clean energy is expected to carry through this year. In our industry outlook, “The Trends—and Traps—That Will Shape 2023,” we highlight some of the major green energy tax credit trends.

Partner Levi McAllister wrote a Law360 Expert Analysis article about recent guidance from the US Internal Revenue Service (IRS) and US Department of the Treasury regarding Inflation Reduction Act (IRA) tax credit eligibility for electric vehicles (EVs). Levi discusses recent IRA clarification around how the tax credits from the IRA can be used by EV manufacturers, EV battery and battery component manufacturers, and consumers.

Many people spent the last week of 2022 celebrating holidays or seeking travel adventures both far and near. However, a select group of personnel at the US Internal Revenue Service (IRS) and Department of the Treasury opted for a different path. On December 29, the IRS and Treasury issued a number of documents providing information and clarification on issues concerning tax credit eligibility for purchases of clean vehicles beginning in January 2023.

Partners Ryan Lighty and Kirstin Gibbs wrote an article for Reuters discussing signs that the nuclear industry is poised for growth and investment in the coming years. The article notes provisions in the Inflation Reduction Act of 2022 and growing interest in environmental, social, and governance considerations by investors as some of the factors that could drive investment toward nuclear power plants.

Partners Pamela Wu and Kirstin Gibbs authored a Law360 Expert Analysis column outlining considerations for developers and investors evaluating clean hydrogen projects, e.g., the potential to qualify for new funding and tax benefits.

The Internal Revenue Service (IRS) published Notice 2022-61 (the Notice) in the November 30 Federal Register to provide guidance on the key prevailing wage and apprenticeship labor standards (W&A Requirements) generally required to obtain the full expected credit amount for tax credits enacted, expanded, or extended under the Inflation Reduction Act of 2022 (IRA). The W&A Requirements must be satisfied with respect to the construction of qualified facilities, properties, projects, or equipment (collectively, facilities) and, to varying extents, the alteration and repair of facilities.

A recent challenge to the constitutionality of the federal excise tax on domestic crude oil exported from the United States proved successful in the US Court of Appeals for the Fifth Circuit. While the US Department of Justice will seek to defend the tax in other circuits, the ruling could lead to a competitive advantage for domestic crude oil exporters located within the Fifth Circuit’s jurisdiction.

The energy industry and market participants have provided a variety of comments on what role the Commodity Futures Trading Commission (CFTC) should play in the voluntary carbon markets, in response to a June 2022 request for information on how the CFTC can help enhance the integrity and transparency of the voluntary carbon markets and what aspects of the voluntary carbon markets are susceptible to fraud and manipulation.

Partner Casey August wrote an article for the American College of Investment Counsel highlighting select green technology tax credit provisions in the Inflation Reduction Act of 2022. The piece also touches on the potential market impacts and investment opportunities from said provisions.

US Environmental Protection Agency Administrator Michael Regan announced on September 24 that the agency is establishing a new national office focused on advancing environmental justice and civil rights.

Partners Levi McAllister and Sheila Armstrong and Senior Director Timothy Lynch wrote an article for Law360 covering key considerations for companies and individuals looking to use federal funding meant to encourage the adoption of electric vehicles. The article addresses access to charging infrastructure, ownership and operation of chargers, commercial agreements, vehicle-to-grid capacity, and the Inflation Reduction Act of 2022.

The US government took important steps this year to promote a growing hydrogen economy. On August 16, 2022, shortly after the US Department of Energy (DOE) announced a game-changing program to fund $8 billion for the development of regional hydrogen hubs in accordance with the provisions of the Infrastructure Investment and Jobs Act, President Joseph Biden signed the Inflation Reduction Act (IRA) into law, funding approximately $369 billion in new renewable and green energy projects across the country.

Since President Biden took office, companies have invested nearly $85 billion in the manufacturing of electric vehicles (EVs), batteries, and EV chargers in the United States. This is triple the investment made in domestic EV manufacturing in 2020 and more the 28 times the investment in batteries from two years ago, and the sale of EVs in the United States has tripled in the same period. The Biden-Harris administration is crediting the increase in the development and adoption of EV to an aggressive and holistic funding strategy driven by the White House.

The new Inflation Reduction Act includes a $27 billion Greenhouse Gas Reduction Fund that will support competitive grants to national and local “green banks,” which will use the money to invest in projects and innovations intended to reduce or avoid greenhouse gas emissions and other forms of air pollution. While the fund will provide plenty of opportunity to those “green banks,” program applicants should be wary of potential pitfalls that could spark False Claims Act liability.

The Inflation Reduction Act of 2022, signed by US President Joseph Biden on August 16, 2022, includes a new alternative minimum tax for corporations with profits of more than $1 billion.

The Inflation Reduction Act of 2022 reflects a significant step toward meeting the United States’ greenhouse gas emission reduction targets from the Paris Convention and recognizes the indispensable role that nuclear power must play to achieve that commitment. The act contains several key provisions that bolster a broad spectrum of new and existing activities in the nuclear industry.

The Inflation Reduction Act of 2022, which US President Joseph Biden signed into law August 16, will dramatically affect a range of climate change, healthcare, prescription drug pricing, and tax matters. With an investment of more than $400 billion in spending, the act is expected to bring in more than $700 billion in revenue.

The Inflation Reduction Act of 2022 proposes significant changes and expansions to the existing federal income tax benefits for renewable energy, fuel production, and other green technologies.

Utility Dive covered a recent Morgan Lewis webinar focusing on nuclear regulatory updates.

Partners Levi McAllister and Katie Hilferty and associate Casey Weaver were quoted in Automotive Dive, providing insights on key issues facing the automotive industry as President-elect Trump prepares to take office, including tariffs, trade agreements, and vehicle emissions standards.

Partners Jane Accomando, Neeraj Arora, Dan Skees, Mark Lazaroff, Alex Polonsky, and Andrew Gray and associate Arjun Ramadevanahalli co-authored a Law360 Expert Analysis exploring the critical issues at the nexus of artificial intelligence (AI) and energy use in the United States.

Partner Laura Neumeister Wright spoke with Law360 about transactional trends in the energy industry from the first half of 2024. Laura discussed the increasing popularity around the Inflation Reduction Act’s transferability provisions and how they have become a leading driver of renewable energy project finance and development.

Partner Casey August spoke with Tax Notes for an article about the final prevailing wage and apprenticeship rules promulgated by the Department of the Treasury and IRS as part of the energy tax provisions of the Inflation Reduction Act.

Tax Notes covered remarks made by partner Casey August on a panel at the recent Texas Federal Income Tax Institute conference, where he discussed the importance of guidance from the federal government on clean energy tax credits. Such clarity, Casey said, “is existential for projects.”

Facilities Dive quoted partner Paul Gordon discussing the effect of final rules from the US Department of the Treasury pertaining to the sale of clean energy tax credits, also known as tax-credit transfers. Paul said that, in the near term, the tax-credit transfer market is likely to skew toward larger deals.

E&E News quoted partner Casey August in an article about the Biden administration’s finalized tax rules on direct pay, which allow nonprofits to be paid 30% of the value of a low-carbon energy project they build and operate.

Partners Casey August, Douglas Hastings, Kenneth Kulak, and Mark Lazaroff, and associates Andreas Andrews and Jared Sanders co-authored a Law360 Expert Analysis discussing the US Department of the Treasury and the Internal Revenue Service’s proposed regulations for the clean hydrogen tax credits under Sections 45V and 48 of the Internal Revenue Code, as enacted by the Inflation Reduction Act.

Partner Casey August and associate M. Jared Sanders co-authored an Expert Analysis for Law360 discussing the Internal Revenue Service and US Treasury Department’s proposed regulations regarding the advanced manufacturing production credit under Section 45X of the Internal Revenue Code, enacted as part of the Inflation Reduction Act of 2022.

Partner Casey August was quoted by Law360 in an article discussing how recently proposed rules regarding investment tax credits in the Inflation Reduction Act could impact producers of renewable natural gas, a refined form of biogas used for transportation fuel. As the article notes, the proposed rules have caused confusion in the biogas industry.

Partners Casey August, Russell Bruch, and Laura Neumeister Wright co-authored an article for the 2024 Project Finance International (PFI) Yearbook about the Inflation Reduction Act’s prevailing wage and apprenticeship (PWA) requirements for renewable energy and energy storage projects.

Partner Casey August is quoted by E&E News discussing potential hurdles to participation in a Biden administration tax program through which the US Treasury Department will pay 30% of the cost of clean energy projects developed and owned by nonprofits. While addressing proposed regulations from the Treasury Department that restrict financial partnerships with other organizations, Casey noted that nonprofits such as pension funds do not usually own substantial physical property on which they can construct projects.

Partner Levi McAllister spoke with Automotive News about the process for transferring tax credits for new and used electric vehicles at the point of sale.

Partner Casey August spoke with Law360 for an article about the US Department of the Treasury’s proposed clean energy tax credit rules. Casey discussed the proposal’s exclusion of partnerships and S corporations from the definition of applicable entities that can choose a direct payment of credits. Excluding partnerships and S corporations from using the direct payment option puts at risk common deal structures such as public-private partnerships, Casey said.

Partner Casey August is featured in a Bloomberg Law article on recently proposed rules by the US Department of the Treasury and Internal Revenue Service on direct pay that restricts partnerships from making the election for direct pay on behalf of the partners.

Partner Levi McAllister is quoted in an E&E News article exploring lingering questions about tax breaks for electric vehicles after issuance by the US Internal Revenue Service of new tax rules. Levi noted that criticism of the rules raises questions of a potential legal challenge and the longevity of the tax breaks.

Partner Levi McAllister spoke with NPR for a story about new US Department of Treasury guidance on which electric vehicles qualify for a tax credit under the Inflation Reduction Act, based on where the battery minerals and components were sourced. The article notes that Senator Joe Manchin, author of the sourcing language, is frustrated with how the Biden administration is carrying out the bill’s requirements.

Partner Levi McAllister is quoted in an Insider article about changes to electric vehicle tax credits set forth in the Inflation Reduction Act. The changes are expected to reduce the number of electric vehicles eligible for a full $7,500 tax credit. However, the exact effect will not be known until April 18 when the US Internal Revenue Service releases its list of eligible models.

Partner Christina Renner spoke to IFLR about the EU Foreign Subsidy Regulation (FSR) and how its implementation intersects with the US Inflation Reduction Act of 2022 (IRA).

Partner Levi McAllister spoke with Law360 about the Inflation Reduction Act of 2022’s tax credit requirements for electric vehicle manufacturers, which require battery materials to be sourced and ultimately assembled in the United States or a select group of countries.

S&P Global Market Intelligence quoted partner Pamela Wu about the funds earmarked by the Inflation Reduction Act of 2022 for manufacturers of electrolyzer and fuel cell equipment. 

Partner Duke McCall was featured in a Q&A with The National Law Journal about the significance of the US Environmental Protection Agency’s (EPA’s) new Office of Environmental Justice and External Civil Rights and how it may affect new permitting requests.

Partner Kirstin Gibbs spoke with Reuters Events Renewables about how the Inflation Reduction Act of 2022 (IRA) is the latest tool by the Biden-Harris administration to support the growing hydrogen industry.

Partner Ryan Lighty was featured in an S&P Global Commodity Insights Platts Nucleonics Week article that detailed federal efforts to incentivize high-assay low-enriched uranium production with $700 million earmarked in the Inflation Reduction Act of 2022.

A CNBC.com article cited a LawFlash by partners Paul Gordon and Ryan Lighty and associates Jared Sanders, Scott Clausen, and Wendy Simon-Pearson about what the Inflation Reduction Act of 2022 (IRA) could do for the nuclear industry.

Partner Levi McAllister spoke with Law360 about the Inflation Reduction Act, which earmarks funds to encourage the purchase and development of clean vehicle technology. Levi commented on how this proposed legislation is another tool the Biden-Harris administration is deploying to meet its electric vehicle goals.