[House Report 118-595]
[From the U.S. Government Publishing Office]


 118th Congress    }                                     {    Report
                         HOUSE OF REPRESENTATIVES
  2nd Session      }                                     {    118-595

======================================================================

 
  PROVIDING FOR CONGRESSIONAL DISAPPROVAL UNDER CHAPTER 8 OF TITLE 5, 
  UNITED STATES CODE, OF THE RULE SUBMITTED BY THE DEPARTMENT OF THE 
  TREASURY RELATING TO ``CLEAN VEHICLE CREDITS UNDER SECTIONS 25E AND 
  30D; TRANSFER OF CREDITS; CRITICAL MINERALS AND BATTERY COMPONENTS; 
                     FOREIGN ENTITIES OF CONCERN''

                                _______
                                

 July 18, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

     Mr. Smith of Missouri, from the Committee on Ways and Means, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                      [To accompany H.J. Res. 148]

    The Committee on Ways and Means, to whom was referred the 
joint resolution (H.J. Res. 148) providing for congressional 
disapproval under chapter 8 of title 5, United States Code, of 
the rule submitted by the Department of the Treasury relating 
to ``Clean Vehicle Credits Under Sections 25E and 30D; Transfer 
of Credits; Critical Minerals and Battery Components; Foreign 
Entities of Concern'', having considered the same, reports 
favorably thereon without amendment and recommends that the 
joint resolution do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................2
          A. Purpose and Summary.................................     2
          B. Background and Need for Legislation.................     2
          C. Legislative History.................................     4
          D. Legislative History.................................     4
 II. EXPLANATION OF THE RESOLUTION....................................4
          A. Joint Resolution of Disapproval (secs. 30D and 25E 
              of the Internal Revenue Code and secs. 801-808 of 
              title 5 of the United States Code).................     4
              1. The clean vehicle credit (sec. 30D).............     4
              2. Previously-owned clean vehicles (sec. 25E)......     8
              3. Clean vehicle regulations.......................    10
              4. The Congressional Review Act....................    10
III. VOTE OF THE COMMITTEE...........................................11
 IV. BUDGET EFFECTS OF THE RESOLUTION................................12
          A. Committee Estimate of Budgetary Effects.............    12
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................    12
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    12
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......12
          A. Committee Oversight Findings and Recommendations....    12
          B. Statement of General Performance Goals and 
              Objectives.........................................    12
          C. Applicability of House Rule XXI, Clause 5(b)........    12
          D. Information Relating to Unfunded Mandates...........    13
          E. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    13
          F. Duplication of Federal Programs.....................    13
 VI. CHANGES IN EXISTING LAW MADE BY THE RESOLUTION, AS REPORTED.....13
VII. DISSENTING VIEWS................................................14

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The purpose of H.J. Res. 148 is to provide for 
Congressional disapproval of the rule submitted by the 
Department of the Treasury relating to ``Clean Vehicle Credits 
Under Sections 25E and 30D; Transfer of Credits; Critical 
Minerals and Battery Components; Foreign Entities of Concern.''
    Under H.J. Res. 148, the Biden Administration's China 
favorable electric vehicle (EV) regulations from the Inflation 
Reduction Act (IRA) would be voided, including the new rules 
promulgated in the final regulations as well as previously 
proposed regulations that have been addressed by the 
legislation marked-up in the Ways and Means Committee.
    If the Joint Resolution is approved by both houses of 
Congress and signed by the President the rule at issue cannot 
go into effect or continue in effect and the Administration 
would have to re-write regulations in a substantially different 
manner.

                 B. Background and Need for Legislation

    The Inflation Reduction Act created generous new tax 
subsidies for the manufacturing and purchase of EVs at an 
enormous cost to taxpayers.
    Bipartisan lawmakers have called on the Biden 
Administration to craft implementing regulations that prevent 
those subsidies from going to foreign entities of concern 
(FEOC), like those with ties to China or other adversaries, as 
originally called for in the IRA.
    In April and December of 2023, the Treasury Department 
issued proposed regulations for the IRA EV Credits. Pushed by 
radical environmentalists and some EV producers, the Biden 
Administration wrote lenient FEOC rules for the IRA EV tax 
provisions which allow American tax dollars to flow to China.
    Under the IRA, EVs are ineligible for a tax subsidy if they 
contain battery components or critical minerals sourced from an 
FEOC. This follows a similar restriction on semiconductor 
grants included in the Creating Helpful Incentives to Produce 
Semiconductors (CHIPS) and Science Act signed by President 
Biden.
    In September 2023, the Commerce Department issued rules 
under the CHIPS Act that defined an FEOC as follows: 25 percent 
or more of the entity's voting interest, or board seats, or 
equity interest is held directly or indirectly by the 
government of a country of concern (China, Russia, North Korea, 
or Iran) or its officials, or by any person that is a citizen, 
national, or resident of such country.
    In December 2023, Treasury issued similar FEOC rules for 
the EV tax subsidies but opted to make their version more 
China-favorable than the Commerce Department rule. Treasury 
excluded ``any person that is a citizen, national, or 
resident''--so an entity owned by a wealthy foreign national 
could benefit from the EV subsidies as long as his or her ties 
to the Chinese Communist Party or other hostile government were 
unofficial.
    Treasury also defined ``battery component'' very favorably 
to Chinese manufacturers, who can produce all materials and 
parts upstream of the battery component and still remain 
eligible to benefit from the EV tax subsidies.
    The IRA requires that critical minerals in electric vehicle 
batteries be sourced domestically or from a Free Trade 
Agreement (FTA) partner to receive half of the $7,500 tax 
credit. ``Free Trade Agreement'' is a well understood term that 
refers to comprehensive trade agreements such as the U.S.-
Mexico-Canada Agreement (USMCA), the U.S.-Australia FTA, the 
U.S.-Chile FTA, and others that Congress has approved. Finding 
their own law requirements too constraining, and unwilling to 
allow for critical mineral production here in the U.S., the 
Biden administration in these regulations is usurping Congress 
by pretending a ``Critical Minerals Agreement'' with Japan was 
an FTA to qualify under the IRA. Unlike FTAs approved by 
Congress, Critical Mineral Agreements are superficial executive 
agreements that do not substantively enhance trade with the 
partner country or reduce U.S. dependency on China for critical 
minerals.
    On May 6, 2024, the Biden Treasury Department finalized the 
full EV regulation package with an additional rule that is 
supposed to honor the language of the law by making EVs 
ineligible for a tax subsidy if they contain battery components 
or critical minerals sourced from an FEOC, including the 
Chinese Communist Party (CCP). Unfortunately, as crafted, the 
rule will allow certain EV and battery component inputs 
directly sourced from the CCP to skirt this restriction and 
still be eligible to receive U.S. taxpayer funded subsidies 
from the IRA.
    The final IRA EV rule claims that if an input (e.g. battery 
or critical mineral used in EVs) is currently hard to trace, it 
is considered ``non-traceable'' and is not subject to the FEOC 
restriction. Specifically, the Biden Administration classified 
graphite as ``non-traceable,'' despite North American graphite 
producers asserting that tracing graphite is highly feasible, 
reliable, and effective. Graphite makes up a significant chunk 
of the minerals in an electric car's battery, but its supply 
chain is heavily dominated by China.
    Some of the loopholes created in the regulations can be 
addressed by legislation, like the Ways and Means Committee did 
in April 2024 by passing legislation to reverse the Biden 
Administration's rule, with the End Chinese Dominance of 
Electric Vehicles in America Act and the Stop Executive 
Overreach on Trade Agreements Act. Some of the regulatory 
overreach was not authorized in the legislation and conflicts 
with what is plainly written in law--that any input sourced 
from an FEOC would make a vehicle ineligible for the subsidy. 
This Joint Resolution of Disapproval is needed to protect 
Congressional authority and prevent these regulations from 
continuing to be in effect.

                         C. Legislative History


Background

    H.J. Res. 148 was introduced on May 16, 2024, and was 
referred to the Committee on Ways and Means.

Committee Hearings

    On April 19, 2023, the Committee held a Hearing on the U.S. 
Tax Code Subsidizing Green Corporate Handouts and the Chinese 
Communist Party.
    On April 11, 2024, the Committee held a Hearing on 
Expanding on the Success of the 2017 Tax Relief to Help 
Hardworking Americans.

Committee Action

    The Committee on Ways and Means marked up H.J. Res. 148, 
the joint resolution providing for Congressional disapproval 
under chapter 8 of title 5, United States Code, of the rule 
submitted by the Department of the Treasury relating to ``Clean 
Vehicle Credits Under Sections 25E and 30D; Transfer of 
Credits; Critical Minerals and Battery Components; Foreign 
Entities of Concern,'' on July 9, 2024, and ordered the 
resolution favorably reported (with a quorum being present).

                         D. Legislative History

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearings were used to develop and consider H.J. Res. 148:
    On April 19, 2023, the Committee held a Hearing on the U.S. 
Tax Code Subsidizing Green Corporate Handouts and the Chinese 
Communist Party.
    On April 11, 2024, the Committee held a Hearing on 
Expanding on the Success of the 2017 Tax Relief to Help 
Hardworking Americans.

                   II. EXPLANATION OF THE RESOLUTION


 A. Joint Resolution of Disapproval (Secs. 30D and 25E of the Internal 
  Revenue Code and Secs. 801-808 of Title 5 of the United States Code)


                              PRESENT LAW

1. The clean vehicle credit (sec. 30D)

            In general
    Present law allows a credit for each new clean vehicle 
placed in service (the ``CV credit''). A new clean vehicle is a 
motor vehicle the original use of which commences with the 
taxpayer, is acquired for use or lease by the taxpayer and not 
for resale, is made by a qualified manufacturer,\1\ has a gross 
vehicle weight rating of less than 14,000 pounds, is treated as 
a motor vehicle for purposes of title II of the Clean Air Act, 
and is propelled to a significant extent by an electric motor 
drawing electricity from a battery (1) with at least seven 
kilowatt-hours of capacity and (2) which is capable of being 
recharged from an external source of electricity.\2\ A new 
clean vehicle must have final assembly occur within North 
America.\3\ The person who sells the vehicle must provide a 
report to the taxpayer and Secretary of the Treasury (the 
``Secretary'') that includes the name and taxpayer 
identification number of the taxpayer, the vehicle 
identification number of the vehicle, the battery capacity of 
the vehicle, verification that original use of the vehicle 
commences with the taxpayer, and the maximum credit allowable 
to the taxpayer with respect to the vehicle.\4\
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    \1\A qualified manufacturer must be a manufacturer as defined in 
regulations prescribed by the Administrator of the Environmental 
Protection Agency for purposes of the administration of title II of the 
Clean Air Act (42 U.S.C. sec. 7521 et seq.) and must provide periodic 
written reports to the Secretary which include vehicle identification 
numbers. Sec. 30D(d)(3). Unless otherwise stated, all section 
references are to the Internal Revenue Code of 1986, as amended.
    \2\Sec. 30D(d)(1).
    \3\Sec. 30D(d)(1)(G).
    \4\Sec. 30D(d)(1)(H).
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    New qualified fuel cell motor vehicles which have final 
assembly within North America and for which sellers provide a 
report, as described above, are new clean vehicles for purposes 
of the credit.\5\ A new qualified fuel cell motor vehicle is a 
motor vehicle propelled by power derived from one or more cells 
which convert chemical energy directly into electricity by 
combining oxygen with hydrogen fuel stored on board the vehicle 
and which has received certain emissions-standard 
certification.\6\
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    \5\Sec. 30D(d)(6).
    \6\As defined in section 30B(b)(3).
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    A vehicle with any applicable critical minerals in the 
battery that are extracted, processed, or recycled by a foreign 
entity of concern that are placed in service after December 31, 
2024, or a vehicle with any components contained in the battery 
of the vehicle that are manufactured or assembled by a foreign 
entity of concern that are placed in service after December 31, 
2023 does not qualify for the credit.\7\
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    \7\Sec. 30D(d)(7). Treasury and the U.S. Department of Energy have 
released final regulations on excluded entities for the clean vehicle 
credit and foreign entities of concern. See Notice of Final Rulemaking, 
89 Fed. Reg. 33706, May 6, 2024, and Notice of Final Rulemaking, 89 
Fed. Reg. 37079, May 6, 2024, respectively.
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    A foreign entity of concern\8\ is a foreign entity that is 
(1) designated as a foreign terrorist organization by the 
Secretary of State; (2) included on the list of specially 
designated nationals and blocked persons maintained by the 
Office of Foreign Assets Control of the Department of the 
Treasury (``SDN list''); (3) owned by, controlled by, or 
subject to the jurisdiction or direction of the government of a 
covered nation;\9\ (4) alleged by the Attorney General to have 
been involved in activities for which a conviction was obtained 
under certain laws;\10\ or (5) determined by the Secretary of 
Energy, in consultation with the Secretary of Defense and the 
Director of National Intelligence, to be engaged in 
unauthorized conduct that is detrimental to the national 
security or foreign policy of the United States.
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    \8\As defined in 42 U.S.C. sec. 18741(a)(5).
    \9\10 U.S.C. sec. 4872(d). Covered nation means the Democratic 
People's Republic of North Korea, the People's Republic of China, the 
Russian Federation, and the Islamic Republic of Iran.
    \10\42 U.S.C. sec. 18741(a)(5)(D).
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            CV credit amount
    A new clean vehicle is eligible for a maximum credit of up 
to $7,500 if certain requirements are met. One $3,750 amount is 
allowed if a critical minerals requirement for the battery is 
met.\11\ Another $3,750 amount is allowed if a battery 
components requirement is met.\12\
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    \11\Sec. 30D(b)(2).
    \12\Sec. 30D(b)(3).
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                Critical minerals requirement
    To satisfy the critical minerals requirement, a new clean 
vehicle's battery (from which the electric motor draws 
electricity) must have a percentage of the value of applicable 
critical minerals\13\ that were (1) extracted or processed in 
the United States or a country that has a free trade 
agreement\14\ with the United States or (2) recycled in North 
America, which is equal to or greater than an applicable 
percentage.\15\
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    \13\Critical minerals as defined in sec. 45X(c)(6).
    \14\Treasury has released final regulations on the clean vehicle 
credit which include interpreting the term free trade agreement. See 
Notice of Final Rulemaking, 89 Fed. Reg. 37079, May 6, 2024.
    \15\Sec. 30D(e)(1)(A).
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    For this purpose, the applicable percentage is 40 percent 
for a vehicle placed in service before January 1, 2024. The 
applicable percentage is 50 percent for a vehicle placed in 
service during calendar year 2024, 60 percent for 2025, 70 
percent for 2026, and 80 percent after 2026.\16\
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    \16\Sec. 30D(e)(1)(B).
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                Battery components requirement
    To satisfy the battery components requirement, a new clean 
vehicle's battery (from which the electric motor draws 
electricity) must have a percentage of the value of components 
that were manufactured or assembled in North America equal to 
or greater than an applicable percentage.\17\
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    \17\Sec. 30D(e)(2)(A).
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    For this purpose the applicable percentage is 50 percent 
for a vehicle placed in service before January 1, 2024. The 
applicable percentage is 60 percent for a vehicle placed in 
service during calendar year 2024 or 2025, 70 percent for 2026, 
80 percent for 2027, 90 percent for 2028, and 100 percent after 
2028.\18\
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    \18\Sec. 30D(e)(2)(B).
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                Vehicle price and AGI limitations
    The manufacturer's suggested retail price (``MSRP'') of a 
new clean vehicle purchased by the taxpayer may not exceed 
certain limitations. That is, the credit amount is $0 if the 
MSRP for the vehicle exceeds the applicable limitation. This 
limitation is $80,000 in the case of a van, sport utility 
vehicle, or pickup truck, and $55,000 in the case of any other 
vehicle. The Secretary is directed to release regulations or 
guidance to characterize vehicles into the appropriate category 
by applying rules similar to those employed by the 
Environmental Protection Agency (``EPA'') and the Department of 
Energy to determine vehicle class and size.\19\
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    \19\Sec. 30D(f)(11). Treasury has released final regulations on the 
clean vehicle credit which include the determination of vehicle 
classifications. See Notice of Final Rulemaking, 89 Fed. Reg. 37079, 
May 6, 2024.
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    Additionally, no credit is allowed if the taxpayer's income 
exceeds $300,000 in the case of a joint return or surviving 
spouse, $225,000 in the case of a head of household, or 
$150,000 in the case of any other taxpayer.\20\ For purposes of 
this limitation, the taxpayer's income is the lesser of 
modified adjusted gross income (``AGI'') of the current taxable 
year or modified AGI of the preceding taxable year.\21\
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    \20\Sec. 30D(f)(10).
    \21\``Modified AGI'' is AGI increased by any amount excluded from 
gross income under section 911, 931, or 933. Sec. 30D(f)(10)(C).
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            Transfer of credit
    A taxpayer who has purchased or leased a vehicle may elect 
to transfer the credit to an eligible entity, subject to 
regulations or guidance the Secretary deems necessary.\22\ The 
eligible entity is then treated as the taxpayer with respect to 
the credit.\23\ The Secretary is directed to establish a 
program to provide advance payments of these credit amounts to 
eligible entities.\24\ An election to transfer the credit must 
be made on or before the date of vehicle purchase.\25\
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    \22\Treasury has released final regulations on the transfer of 
clean vehicle credits. See Notice of Final Rulemaking, 89 Fed. Reg. 
37079, May 6, 2024.
    \23\Sec. 30D(g)(1).
    \24\Sec. 30D(g)(7).
    \25\Sec. 30D(g)(3).
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    An eligible entity is a dealer\26\ which meets the 
following requirements: First, the dealer must be registered 
with the Secretary. Second, prior to the election of transfer, 
the dealer must disclose information to the buyer on the MSRP 
price of the vehicle, value of the credit or other incentives 
available, and the amount provided by the dealer as a condition 
of an election to transfer. Third, the dealer must pay the 
taxpayer for the amount of the credit allowable.\27\ Finally, 
the dealer must ensure that the availability or use of any 
other available manufacturer or dealer incentive does not limit 
the ability of the taxpayer to make an election and that the 
election will not limit the value or use of any such 
incentive.\28\ The Secretary may revoke the registration of 
dealers that fail to comply with these requirements.\29\
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    \26\A dealer is a person licensed by a State, territory of the 
United States, Indian tribal government, or Alaska Native Corporation 
to engage in the sale of vehicles. Sec. 30D(g)(8).
    \27\The payment may be in cash or in the form of a partial down 
payment for the purchase of the vehicle.
    \28\Sec. 30D(g)(2).
    \29\Sec. 30D(g)(4).
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    The payment made by dealers to buyers in connection with a 
credit transfer election is not includable in the gross income 
of the taxpayer and is not deductible to the dealer.\30\
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    \30\Sec. 30D(g)(5).
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    If a taxpayer that does not meet the AGI requirements for 
the credit elects to transfer a credit and receives a payment 
in connection with such credit transfer, the tax liability of 
such taxpayer is increased by the amount of such payment.\31\
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    \31\Sec. 30D(g)(10).
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            Other rules
    A vehicle that is predominantly used outside the United 
States does not qualify for the credit.\32\ A vehicle must meet 
certain emissions and safety standards in order to qualify for 
the credit.\33\
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    \32\Sec. 30D(f)(4).
    \33\Sec. 30D(f)(7).
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    The basis of any qualified vehicle is reduced by the amount 
of the credit.\34\ The portion of the credit attributable to 
vehicles of a character subject to an allowance for 
depreciation is treated as part of the general business credit; 
the nonbusiness portion of the credit is allowable to the 
extent of the excess of the regular tax and the alternative 
minimum tax (reduced by certain other credits) for the taxable 
year.\35\
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    \34\Sec. 30D(f)(1).
    \35\Sec. 30D(c).
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    Only one credit is allowed for each vehicle and a taxpayer 
must include the vehicle identification number of the vehicle 
on a tax return to claim the credit.\36\
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    \36\Sec. 30D(f)(8) and (9).
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            Expiration
    No credit is allowed for any vehicle placed in service 
after December 31, 2032.\37\
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    \37\Sec. 30D(h).
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2. Previously-owned clean vehicles (sec. 25E)

            In general
    Present law allows a credit for previously-owned clean 
vehicle placed in service by a qualified buyer (the 
``previously-owned CV credit''). A previously-owned clean 
vehicle is a motor vehicle with a model year at least two years 
earlier than the calendar year in which the taxpayer acquires 
the vehicle, the original use of which commences with a person 
other than the taxpayer, which has a gross vehicle weight 
rating of less than 14,000 pounds,\38\ and which is acquired by 
the taxpayer in a qualified sale.
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    \38\Sec. 25E(c)(1).
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    A qualified sale is a sale by a dealer\39\ that is the 
first transfer since the date of enactment of section 25E 
(August 16, 2022)\40\ to a qualified buyer other than the 
person with whom the original use of such vehicle 
commenced.\41\ A qualified sale does not include a transfer to 
a qualified buyer made after the vehicle has been used and 
owned by a person other than the person with whom the original 
use of such vehicle commenced, even if such use and ownership 
was not by a qualified buyer.
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    \39\A dealer is a person licensed by a State, territory of the 
United States, Indian tribal government, or Alaska Native Corporation 
to engage in the sale of vehicles. Sec. 30D(g)(8).
    \40\The date of enactment of Pub. L. No. 117-169.
    \41\Sec. 25E(c)(2).
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    Additionally, a previously-owned clean vehicle must be an 
electric vehicle or a fuel cell vehicle that satisfies certain 
criteria. Specifically, a previously-owned clean vehicle must 
also either (1) be propelled to a significant extent by an 
electric motor drawing electricity from a battery (a) with at 
least seven kilowatt-hours of capacity and (b) which is capable 
of being recharged from an external source of electricity, made 
by a qualified manufacturer, treated as a motor vehicle for 
purposes of title II of the Clean Air Act, and with respect to 
which the person who sells the vehicle provide a report to the 
taxpayer and Secretary that includes the name and taxpayer 
identification number of the taxpayer, the vehicle 
identification number of the vehicle, the battery capacity of 
the vehicle, and the maximum credit allowable to the taxpayer 
with respect to the vehicle;\42\ or (2) be propelled by power 
derived from one or more cells which convert chemical energy 
directly into electricity by combining oxygen with hydrogen 
fuel stored on board the vehicle and which has received certain 
emissions-standard certification.\43\
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    \42\Sec. 25E(c)(1)(D)(i).
    \43\Sec. 25E(c)(1)(D)(ii). Fuel cell vehicles must satisfy the 
requirements of section 30B(b)(3)(A) and (B).
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    A qualified buyer is an individual who purchases a vehicle 
for use and not resale, who cannot be claimed as a dependent, 
and during the three-year period prior to such purchase, has 
not made any purchases for which a previously-owned CV credit 
was claimed.
            Previously-owned CV credit amount
    The amount of the credit is the lesser of (1) $4,000 or (2) 
30 percent of the sale price of the vehicle.\44\
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    \44\Sec. 25E(a).
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    The sale price of a previously-owned clean vehicle 
purchased by the taxpayer may not exceed $25,000.\45\ That is, 
the credit amount is $0 if the sale price for the vehicle 
exceeds this amount.
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    \45\Sec. 25E(c)(2)(B).
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    Additionally, no credit is allowed if the taxpayer's income 
exceeds $150,000 in the case of a joint return or surviving 
spouse, $112,500 in the case of a head of household, or $75,000 
in the case of any other taxpayer.\46\ For purposes of this 
limitation, the taxpayer's income is the lesser of modified AGI 
of the current taxable year or modified AGI of the preceding 
taxable year.\47\
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    \46\Sec. 25E(b).
    \47\Modified AGI is AGI increased by any amount excluded from gross 
income under section 911, 931, or 933. Sec. 25E(b)(3).
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            Other rules
    In general, the credit is available to the vehicle owner, 
including the lessor of a vehicle subject to lease. A vehicle 
must be used predominantly in the United States to qualify for 
the credit and the basis of any qualified vehicle is reduced by 
the amount of the credit.\48\ A vehicle must meet certain 
emissions and safety standards in order to qualify for the 
credit.\49\
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    \48\Secs. 25E(e) and 30D(f)(1) and (4).
    \49\Secs. 25E(e) and 30D(f)(7).
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    Only one credit is allowed for each vehicle and a taxpayer 
must include the vehicle identification number of the vehicle 
on a tax return to claim the credit.\50\
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    \50\Sec. 25E(d).
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            Transfer of credit
    A taxpayer may elect to transfer the credit to an eligible 
entity under rules similar to those for the transfer of the 
clean vehicle credit.\51\ Those rules are explained in the 
description of the CV credit above.
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    \51\Sec. 25E(f).
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            Expiration
    No credit is allowed for any vehicle placed in service 
after December 31, 2032.\52\
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    \52\Sec. 25E(g).
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3. Clean vehicle regulations

    The Department of the Treasury has released final 
regulations related to the CV credit (sec. 30D) and the 
previously-owned CV credit (sec. 25E) (``clean vehicle 
regulations'').\53\
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    \53\89 Fed. Reg. 37706, May 6, 2024.
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    The clean vehicle regulations clarify definitions with 
respect to the clean vehicle credits, including the meaning of 
the terms battery components, final assembly, and free trade 
agreement. The regulations also include rules the Secretary has 
deemed necessary for recordkeeping and information reporting in 
order to administer the critical mineral and battery component 
requirements of the clean vehicle credit, as required by 
statute.\54\ Additionally, the regulations provide guidance for 
the transfer of credit amounts from taxpayers that acquire 
qualifying clean vehicles to dealers that are eligible 
entities. Finally, the regulations provide guidance for how 
dealers can become eligible entities and receive advance 
payments of clean vehicle credits and rules for recapture of 
the credits.
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    \54\Sec. 30D(e)(3).
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4. The Congressional Review Act

    Under the Congressional Review Act (the ``CRA''),\55\ 
Congress may overturn certain Federal agency actions by passing 
a joint resolution of disapproval. Under a CRA joint resolution 
of disapproval, if a disapproved rule has not yet gone into 
effect, the rule will not take effect;\56\ if a disapproved 
rule has already gone into effect, the rule shall be treated as 
though it had never taken effect.\57\ Rules that do not take 
effect or do not continue due to a CRA joint resolution of 
disapproval may not be reissued in substantially the same form, 
and new rules that are substantially the same as disapproved 
rules may not be issued absent a change in law.\58\
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    \55\5 U.S.C. secs. 801-808.
    \56\5 U.S.C. sec. 801(b)(1).
    \57\5 U.S.C. sec. 801(f).
    \58\5 U.S.C. sec. 801(b)(2).
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                           REASONS FOR CHANGE

    The Committee believes that Treasury's final clean vehicle 
regulations are in conflict with both the language of the 
statute and the Congressional intent of the provision. In 
particular, the Committee is concerned that the transition 
relief provided for certain ``impracticable-to-trace'' battery 
materials may allow battery materials extracted, processed, or 
recycled by a foreign entity of concern to be present in 
credit-eligible clean vehicles that are placed in service after 
December 31, 2024. For this reason, the Committee disapproves 
of the rule to ensure that the final rule is treated as if it 
never went into effect and that it cannot be reissued in 
substantially the same form.

                        EXPLANATION OF PROVISION

    H.J. Res. 148 is a joint resolution disapproving of the 
rule submitted by the Department of the Treasury relating to 
``Clean Vehicle Credits Under Sections 25E and 30D; Transfer of 
Credits; Critical Minerals and Battery Components; Foreign 
Entities of Concern.'' Under the CRA, the clean vehicle 
regulations go out of effect immediately and are treated as 
though they had never taken effect.

                             EFFECTIVE DATE

    The joint resolution is effective on date of enactment.

                       III. VOTE OF THE COMMITTEE

    Pursuant to clause 3(b) of rule XIII of the Rules of the 
House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.J. Res. 148, a joint resolution disapproving 
of the rule submitted by the Department of the Treasury 
relating to ``Clean Vehicle Credits Under Sections 25E and 30D; 
Transfer of Credits; Critical Minerals and Battery Components; 
Foreign Entities of Concern,'' on July 9, 2024.
    The joint resolution, H.J. Res. 148, was ordered favorably 
reported to the House of Representatives by a recorded vote 
(with a quorum being present).
    In compliance with the Rules of the House of 
Representatives, the following statement is made concerning the 
vote of the Committee on Ways and Means during the markup 
consideration of H.J. Res. 148, Disapproving the rule submitted 
by the Department of the Treasury related to ``Clean Vehicle 
Credits Under Sections 25E and 30D; Transfer of Credits; 
Critical Minerals and Battery Components; Foreign Entities of 
Concern'' on July 9, 2024.
    H.J. Res. 148 was ordered favorably reported to the House 
of Representatives as amended by a roll call vote of 25 yeas to 
14 nays (with a quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
           Representative              Yea     Nay    Present       Representative       Yea     Nay    Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO).....................      X   ......  .........  Mr. Neal.............  ......      X   .........
Mr. Buchanan.......................      X   ......  .........  Mr. Doggett..........  ......      X   .........
Mr. Smith (NE).....................      X   ......  .........  Mr. Thompson.........  ......      X   .........
Mr. Kelly..........................      X   ......  .........  Mr. Larson...........  ......      X   .........
Mr. Schweikert.....................      X   ......  .........  Mr. Blumenauer.......  ......      X   .........
Mr. LaHood.........................      X   ......  .........  Mr. Pascrell.........  ......      X   .........
Dr. Wenstrup.......................      X   ......  .........  Mr. Davis............  ......  ......  .........
Mr. Arrington......................      X   ......  .........  Ms. Sanchez..........  ......  ......  .........
Dr. Ferguson.......................      X   ......  .........  Ms. Sewell...........  ......      X   .........
Mr. Estes..........................      X   ......  .........  Ms. DelBene..........  ......      X   .........
Mr. Smucker........................      X   ......  .........  Ms. Chu..............  ......      X   .........
Mr. Hern...........................      X   ......  .........  Ms. Moore............  ......  ......  .........
Ms. Miller.........................      X   ......  .........  Mr. Kildee...........  ......      X   .........
Dr. Murphy.........................      X   ......  .........  Mr. Beyer............  ......      X   .........
Mr. Kustoff........................      X   ......  .........  Mr. Evans............  ......  ......  .........
Mr. Fitzpatrick....................      X   ......  .........  Mr. Schneider........  ......      X   .........
Mr. Steube.........................      X   ......  .........  Mr. Panetta..........  ......      X   .........
Ms. Tenney.........................      X   ......  .........  Mr. Gomez............  ......      X   .........
Mrs. Fischbach.....................      X   ......  .........
Mr. Moore..........................      X   ......  .........
Mrs. Steel.........................      X   ......  .........
Ms. Van Duyne......................      X   ......  .........
Mr. Feenstra.......................      X   ......  .........
Ms. Malliotakis....................      X   ......  .........
Mr. Carey..........................      X   ......  .........
----------------------------------------------------------------------------------------------------------------

                  IV. BUDGET EFFECTS OF THE RESOLUTION


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the resolution, H.J. 
Res 148 as reported.
    An estimate of the effect of the joint resolution on 
Federal fiscal year budget receipts is presently unavailable.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
resolution involves no new or increased budget authority.
    The Committee has requested but not received from the 
Director of the Congressional Budget Office, a statement as to 
whether this resolution contains an increase of decrease in 
revenues or tax expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    The Committee has requested but not received from the 
Director of the Congressional Budget Office a statement as to 
whether this bill contains any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives, the Committee made findings and 
recommendations that are reflected in this report.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
resolution does not authorize funding, so no statement of 
general performance goals and objectives is required.

            C. Applicability of House Rule XXI, Clause 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the resolution, and states that the 
resolution does not provide such a Federal income tax rate 
increase.

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the resolution does not 
contain Federal mandates on the private sector. The Committee 
has determined that the resolution does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

  E. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the resolution, and states that the resolution does not contain 
any congressional earmarks, limited tax benefits, or limited 
tariff benefits within the meaning of the rule.

                   F. Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
resolution neither establishes nor reauthorizes: (1) a program 
of the Federal Government known to be duplicative of another 
Federal program; (2) a program included in any report from the 
Government Accountability Office to Congress pursuant to 
section 21 of Public Law 111-139; or (3) a program related to a 
program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

    VI. CHANGES IN EXISTING LAW MADE BY THE RESOLUTION, AS REPORTED

    As reported by the Committee, H.J. Res 148 makes no changes 
in existing law.

                         VII. DISSENTING VIEWS

    The Inflation Reduction Act of 2022 (IRA) aimed to 
incentivize lower and middle-income Americans' purchase and use 
of new clean vehicles, promote resilient supply chains and 
domestic manufacturing, strengthen supply chains with trusted 
trading partners, and significantly reduce carbon emissions.
    Section 30D of the Code, as amended by the IRA, generally 
provides taxpayers a credit of up to $7,500 for the purchase of 
a new clean vehicle that meets certain requirements relating to 
critical minerals and battery components. A vehicle with a 
battery containing any applicable critical materials extracted, 
processed, or recycled by a foreign entity of concern (FEOC) 
does not qualify for the credit. Nor does any vehicle placed in 
service after December 31, 2023, if any of its battery 
components were manufactured or assembled by a FEOC.
    Section 25E, as added by the IRA, generally provides 
individual taxpayers a credit of the lesser of $4,000 or 30 
percent of the sales price of a previously-used clean vehicle 
placed in service after 2022. Section 25E incorporates many of 
the Section 30D rules by reference, including rules on eligible 
vehicles, qualified manufacturers and registered dealers, 
credit transfers, recapture, and registration and reporting.
    Under the Congressional Review Act, the joint resolution 
provides for congressional disapproval of the final IRS and 
Treasury regulations implementing the section 30D clean vehicle 
credit and section 25E previously-owned clean vehicle credit. 
These final regulations cover all aspects of guidance on these 
credits, including basic definitions, vehicle eligibility, 
battery content requirements, and the option to transfer the 
credit to a dealer; the resolution of disapproval would create 
significant legal uncertainty with respect to both the 30D 
clean vehicle credit and 25E previously-owned clean vehicle 
credit. The joint resolution of disapproval would harm 
consumers and auto dealers by introducing confusion and 
uncertainty, would prevent the IRS from providing the necessary 
safeguards to combat fraud and abuse, and would undermine the 
law's national security and supply chain resilience goals.
    Republicans argue that the final regulations do not comport 
with the legislative intent of the IRA, which was to facilitate 
the development of the U.S. clean vehicle industry. Instead, 
they claim that the regulations favor Chinese manufacturers and 
allow them to participate in the U.S. supply chain. If, as the 
joint resolution requires, we were to repeal the implementing 
regulations, manufacturers will lack the legal certainty to 
make clear which vehicles and customers qualify for the credit. 
Without the rule's temporary safe harbors for calculating 
qualifying critical mineral content and the treatment of 
graphite, or the rules for administering and allocating FEOC 
compliant minerals to batteries and averaging calculations of 
qualification percentages, certifying compliance is highly 
impractical, if not impossible. As a result, manufacturers will 
likely disregard section 30D and fail to take the necessary 
steps to adjust their supply chains to comply, knowing that 
such efforts will be futile. The result of Republicans' blanket 
repeal of these regulations will be, paradoxically, that 
China's electric vehicle production will expand and take U.S. 
market share.
    The United States must strengthen domestic manufacturing, 
support American auto workers, and produce more electric 
vehicles in America without reliance on Chinese inputs. 
Achieving these goals requires the United States to take 
commonsense steps, like transition rules that allow American 
manufacturers to strengthen and domesticate their supply 
chains. Data demonstrate that the Administration struck a 
reasonable balance in the promulgation of the FEOC rules, 
balancing build-out of our clean vehicles market, shoring up 
the domestic supply chain, and ensuring administrability for 
the IRS and feasibility of compliance for taxpayers. The final 
regulations give manufacturers the roadmap they need to create 
American jobs, make more electric vehicles in the United 
States, and ensure that the U.S. is prepared to meet the 
challenges of the changing world of auto manufacturing in the 
21st century.
    As recently as July 11th, the Biden Administration 
announced a $1.7 billion investment to convert 11 shuttered 
auto plants to the production of 1 million electric vehicles 
annually. This investment will retain 15,000 existing American 
jobs and create 3,000 new positions. We proudly support the 
Biden Administration's investments in the electric vehicle 
sector, and are disappointed that our Republican colleagues 
would attempt to disrupt this burgeoning domestic market, and 
the jobs it creates, to the benefit of our Chinese competitors.
                                                   Richard E. Neal.
                                ------                                

    Thanks to the Inflation Reduction Act that President Biden 
signed into law two years ago, we kickstarted a clean 
manufacturing boom that has resulted in the creation of over 
270,000 high-quality jobs across the U.S. and put us well on 
our way towards averting the worst effects of climate change.
    The guiding philosophy of the IRA was to bring home as many 
clean manufacturing jobs as possible and at the same time 
ensure that prices for critical goods like electric vehicles 
remained low enough for the everyday American to afford.
    Treasury's guidance implementing the electric vehicle tax 
credits in the IRA that is at issue here strikes the right 
balance between accelerating the electrification of our 
passenger vehicle fleet, while also making sure that American 
workers and manufacturers lead the global transition to EVs.
    Under President Biden's watch, EV sales have more than 
quadrupled, with over 4.5 million EVs currently on the roads. 
At that pace of acceleration, EVs are on track to make up half 
of new car sales by 2026, which is leading to a meaningful 
decline in our annual emissions and will make our economy far 
less vulnerable to global energy shocks.
    As the EV market dramatically has expanded, the domestic EV 
supply chain has grown along with it.
    The IRA turbocharged manufacturing and assembly of electric 
vehicles, battery fabrication, and mining and processing of 
critical minerals here at home. Over the last two years, nearly 
$100 billion in private-sector investment has been announced 
across the U.S. electric vehicle and battery supply chains.
    As of January 2024, 663 facilities throughout the battery 
supply chain are in various stages of development across the 
U.S., and production is expected to grow 28 times over by 2032 
from 2021 levels.
    The investments encouraged by the IRA are projected to 
create over 800,000 new, green jobs across the nation.
    If the bill before us today passes, all this incredible 
progress will immediately be put at risk.
    The main impact of this measure would be to pull the rug 
out from American auto manufacturers and halt the onshoring of 
EV manufacturing and its immense supply chain and associated 
jobs into the U.S.
    Supporters of this bill claim that Treasury's regulations 
overly favor Chinese manufacturers.
    Thanks to decades of massive investments by their 
government, China has developed the capabilities to manufacture 
inexpensive EVs at a large scale, and it currently has a near 
complete stranglehold over every aspect of the EV supply chain.
    Treasury's implementing regulations of the IRA recognize 
this reality and provide the right balance of incentives, safe 
harbor provisions, and restrictions to begin what will likely 
be a years long effort to onshore every component of this key 
industry.
    If this measure passes, we will stop this process and 
inadvertently cement Chinese dominance over the EV market for 
decades and cost the U.S. thousands of manufacturing jobs.
    By putting the EV tax credit out of reach of U.S. auto 
manufacturers in the name of immediately scrubbing all Chinese 
content out of our supply chains, without access to domestic 
tax incentives, U.S. manufacturers will simply get buried under 
a tidal wave of heavily government-subsidized, inexpensive 
Chinese EVs.
    Furthermore, in a novel and unwise approach, this bill uses 
the Congressional Review Act to nullify Treasury's regulations 
implementing the EV tax credit, which would be the first time 
the CRA has ever been used to throw out a tax regulation.
    Any new regulation would have to comply with the CRA's 
requirement that a new rule cannot be issued in ``substantially 
the same form.''
    Given that the IRA granted a narrow band of regulatory 
authority to Treasury to implement the law, it is unclear how 
the administration could ever implement the tax credit.
    This is likely to make the credit permanently inoperable.
    If enacted, this bill would materially slow the EV 
transition and set us back on meeting our climate goals, 
without doing much, if anything, to encourage additional 
domestic manufacturing.
    I urge my colleagues to oppose this shortsighted bill.
    Thank you.
                                                         Don Beyer.

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