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W. Andrew Jack

Andrew Jack has a diverse corporate and securities practice with clients principally in the energy, industrial manufacturing, technology and sports and entertainment industries. He regularly represents corporations, board committees, and other forms of enterprises in mergers and acquisitions, strategic alliances, financing activities, securities law compliance, corporate governance counseling, and executive compensation arrangements. Mr. Jack also co-chairs the firm's Energy Industry Group.

On September 22, the Commerce Department published a final rule implementing the national security-related restrictions and obligations on recipients of incentive funds under the CHIPS and Science Act of 2022 (the “CHIPS Act”).  The final rule clarifies in some respects, and substantially expands in other respects, the definition of “foreign entity of concern” that appeared in Commerce’s proposed rule, issued in March. 

When Commerce issued its proposed rule, the Treasury Department cross-referenced Commerce’s definition of “foreign entity of concern” in Treasury’s concurrently proposed regulations for the CHIPS Act’s tax credit under section 48D of the Internal Revenue Code.  We commented at the time that if Treasury were to adopt that same definition for the section 30D electric vehicle (EV) credit under the Inflation Reduction Act (the “IRA”), there could be a significant reduction in the number of vehicles eligible for such credits relative to market expectations.  Treasury issued proposed regulations for other aspects of the 30D credit one week after the CHIPS Act guidance, but did not include an interpretation of the term “foreign entity of concern,” and to date has yet to do so (though it has signaled an intent to do so later this year).Continue Reading Commerce Final Rule Heightens Uncertainty as to How Treasury Will Interpret “Foreign Entity of Concern” for EV Credits Under Section 30D of the Inflation Reduction Act

Last week, the California Legislature passed two bills comprising the core of a landmark “Climate Accountability Package.”  Together, the two bills will impose extensive new climate-related disclosure obligations on thousands of U.S. public and private companies with operations in California.  Senate Bill 253 (SB 253) would require companies with greater than $1 billion in annual revenues to file annual reports publicly disclosing their Scope 1, 2 and 3 greenhouse gas (GHG) emissions.  Senate Bill 261 (SB 261) would require companies with greater than $500 million in annual revenues to prepare biennial reports disclosing climate-related financial risk and describing measures adopted to mitigate and adapt to that risk.

Yesterday afternoon during an appearance at Climate Week NYC, Governor Newsom told the audience emphatically, “of course I will sign those bills.”  When he does, many more companies will be required to improve the accuracy, completeness and rigor of their GHG reporting and climate risk disclosures. Because of the complexity of GHG reporting, we have focused the remainder of this post on SB 253.  Please see our separate post on SB 261 here.Continue Reading California Legislature Passes Landmark Climate Disclosure Laws: Spotlight on SB 253

Last week, the California Legislature passed two bills as part of the state’s landmark “Climate Accountability Package.”  If signed by Governor Newsom as anticipated, the two laws—Senate Bill 253 (SB 253) and Senate Bill 261 (SB 261)—will usher in significant climate-related disclosure requirements for thousands of U.S. public and private companies that do business in California.

SB 253 and SB 261 mark the most extensive emissions- and climate-disclosure laws enacted in the United States to date.  SB 253 requires companies with greater than $1 billion in annual revenues to file annual reports publicly disclosing their direct, indirect, and supply chain greenhouse gas (GHG) emissions, verified by an independent and experienced third-party provider.  SB 261 requires companies with $500 million in annual revenues to prepare biennial reports disclosing climate-related financial risk and measures they have adopted to reduce and adapt to that risk, with the first report due by January 1, 2026.

This post focuses on SB 261’s climate-related financial risk disclosure requirements. You can find our post on SB 253’s GHG emissions reporting requirements here.Continue Reading California Legislature Passes Landmark Climate Disclosure Laws: Spotlight on SB 261

On August 16, 2022—one year ago today—President Biden signed the Inflation Reduction Act (“IRA”), the most significant clean energy and climate law in U.S. history.  As we described in a series last summer, the IRA created durable tax credits and other fiscal programs to revitalize domestic manufacturing and incentivize clean energy solutions in nearly every sector of the economy. The IRA’s one year anniversary is a key opportunity to take stock of what the law has propelled and what is expected around the corner.Continue Reading The First Year of the Inflation Reduction Act

On 26 June 2023, the International Sustainability Standards Board (the “ISSB”) issued its inaugural International Financial Reporting Standards (“IFRS”) Sustainability Disclosure Standards (the “Standards”), heralding progress in the development of a global baseline of sustainability-linked disclosures. The Standards build on the concepts that underpin the IFRS Accounting Standards, which are required in more than 140 jurisdictions, but notably not in the United States for domestic issuers subject to regulation by the Securities and Exchange Commission (“SEC”), which must apply US Generally Accepted Accounting Principles (“US GAAP”).  Despite broad investor appetite for  transparent, uniform and comparable disclosure rules, the scope of required sustainability disclosure and timing for adoption of the SEC’s pending climate disclosure rule remains unresolved.Continue Reading ISSB Issues Inaugural Global Sustainability Disclosure Standards

Today, the Department of the Treasury and IRS made available for public inspection proposed regulations on the new clean vehicle credit under the Inflation Reduction Act of 2022, as codified in section 30D of the Internal Revenue Code.  These proposed regulations will be published in the Federal Register on April 17, 2023, and the due date for comments will be 60 days after the publication (or Friday, June 16, 2023).Continue Reading Much-Anticipated Proposed Regulations on the 30D EV Tax Credit Have Finally Arrived—but Leave a Key Question Unresolved

Background

Later this week the Department of the Treasury is expected to release guidance on the Inflation Reduction Act (IRA)’s EV tax credit under section 30D of the Internal Revenue Code.  Highly consequential for the guidance and practical availability of the credit will be how Treasury interprets the term “foreign entity of concern.”  This is because Section 30D(d)(7) excludes from credit eligibility vehicles that are:

  • placed in service after December 31, 2024, with respect to which any of the applicable critical minerals contained in the battery of such vehicle . . . were extracted, processed, or recycled by a foreign entity of concern; or
  • placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle . . . were manufactured or assembled by a foreign entity of concern.

Meanwhile, last week, Treasury and the Commerce Department released proposed regulations (here and here, respectively) that interpret “foreign entity of concern” for purposes of various incentive programs under the CHIPS & Science Act (CHIPS Act).  Because the IRA’s definition of “foreign entity of concern” mirrors the CHIPS Act’s definition of “foreign entity of concern” interpreted by Commerce, and because Treasury cross-referenced Commerce’s interpretation of “foreign entity of concern” in Treasury’s CHIPS Act guidance, it is reasonable to wonder whether Treasury will adopt the same interpretation of “foreign entity of concern” for purposes of the EV credit exclusion in section 30D(d)(7). 

If it does, there could be a dramatic diminution of vehicles eligible for the EV credits.  Under Treasury’s proposed CHIPS Act regulations, a foreign entity of concern would include, inter alia, (i) any entity organized under the laws of China or having its principal place of business in China, and (ii) any entity organized outside of China 25% or more of whose voting interests are owned by the Chinese government (as in the case of foreign subsidiaries of Chinese state-owned entities (SOEs)).  If that interpretation is used for purposes of section 30D, absent a nearly impossibly fast elimination of Chinese critical minerals and battery components from the EV supply chain, the number of vehicles eligible for the 30D EV credit will sharply decrease in 2024 and will be practically eliminated in 2025. 

EV manufacturers and suppliers may wish to flag this concern to Treasury.Continue Reading Will Treasury Adopt the Same Interpretation of “Foreign Entity of Concern” for both the Section 48D Credit under the CHIPS Act and the Section 30D Credit under the Inflation Reduction Act?

Notice 2023-9, “Section 45W Commercial Clean Vehicles and Incremental Cost for 2023”

Concurrent with the white paper and Notice 2023-1, discussed in a separate blog, on December 29, 2022, the IRS released Notice 2023-9, which provides a safe harbor for determining the incremental cost of qualified commercial clean vehicles for the section 45W credit.Continue Reading Treasury and the IRS provide a safe harbor for determining the incremental cost of a clean vehicle for the commercial clean vehicle credit

On December 29, 2022, Treasury released a white paper indicating the anticipated direction of proposed guidance on the critical mineral and battery component requirements for the new clean vehicle credit under section 30D. The guidance will be critical to automakers and consumers seeking to qualify for tax credits available for purchase of EVs under the Inflation Reduction Act.
Continue Reading Treasury and the IRS provide its first set of proposed guidance and a white paper on the clean vehicle credit

The Greenhouse Gas Protocol (“GHG Protocol” or “Protocol”)—a leading standard setter for measuring and managing corporate greenhouse gas emissions, borne of a partnership between World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD)—has opened stakeholder surveys concerning the revision of its Corporate Accounting and Reporting Standard, Guidance on Scope 2 Emissions, and the Scope 3 Standard and Scope 3 Calculation Guidance.Continue Reading Corporate Carbon Counting Under Scrutiny—Comments Requested on Pending Updates to the Greenhouse Gas Protocol