Manchin Says Treasury Acting Contrary to IRA Statute in Critical Minerals Regs
Sen. Joe Manchin, chairman of the Energy and Natural Resources Committee, told the Treasury Department that its approach to measuring the value of critical minerals in electric vehicle batteries "seriously misconstrued the plain language and clear purpose of the critical minerals and battery component requirements" in the Inflation Reduction Act, and defeats Congress's goal of using consumer tax credits to reduce dependence on foreign supply chains for EV batteries.
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The West Virginia Democrat's 11-page comment, made public June 12, complains that the administration is interpreting the condition that a certain percentage of critical minerals for the battery be "extracted or processed" to mean that either extraction or processing will qualify, as long as half of the cost of getting the ore out of the ground to a form where it's ready to be made into a battery component is done either in the U.S. or in a free-trade-agreement partner. He said this cuts in half the percentage requirement in the law. By 2024, half of the critical minerals are supposed to be domestic or from an FTA partner.
Manchin is angry about each part of this interpretation -- the 50% value-added portion, the interpretation that "or" means either activity qualifies, and what a free trade partner is.
"Although 'free trade agreement' is not defined in the statute, it has a well-established meaning. A 'free trade agreement' is an agreement between two or more countries in which each removes tariff and other restrictions on 'substantially all' trade between the parties, not a mineral here or a mineral there," he wrote.
He said the addition of the Japanese critical minerals agreement to the Japan mini-deal does not count.
Manchin also criticized where Treasury drew the line between critical minerals and battery components. Earlier comments to Treasury disagreed on where battery components begin (see 2211080014) -- at the cell level, at the anode and cathode level, back to spraying of foils that go into cathodes and anodes, or including mixing of materials, coating, drying, slitting, calendaring, electrolyte filling, degassing, and aging.
Manchin argues that part of the processing that belongs in the battery manufacturing test -- which is limited to Canada, Mexico and the U.S. -- is in the critical minerals side.
The administration says the end point of critical minerals processing is when "no further chemical, physical or thermal processes are needed to create the final product that is then used in battery component manufacturing."
Manchin says the list of critical minerals in Section 45X(c)(6) of the Internal Revenue Code is very precise in describing chemical form and minimum purity level, and so the critical minerals line should end there. He also pointed out that in the law, it says "electrode active materials" are listed under battery components, where the Treasury definition would put them under critical minerals.
He said a narrower definition of battery components discourages "investment in battery component production capacity, perpetuating our dependence on foreign supply chains, and awarding costly tax credits to subsidize production of electric vehicle battery components outside of North America."
He closed his comments by writing: "My comment is simple: Follow the law."