Restrictions on clean electricity production credit

(a) Termination of credit Section 45Y is amended by striking subsection (d) and by adding at the end the following new subsection: (h) Termination of credit (1) In general Except as provided in paragraphs (2) and (3), no credit shall be allowed under this section for any qualified facility— (A) the construction of which begins after the date which is 60 days after the date of the enactment of this subsection, or (B) which is placed in service after December 31, 2028. (2) Advanced nuclear facilities In the case of any qualified facility that is an advanced nuclear facility (as defined in section 45J(d)(2))— (A) paragraph (1) shall not apply, and (B) no credit shall be allowed under this section for any such facility the construction of which begins after December 31, 2028. (3) Expansion of nuclear facilities In the case of any nuclear facility the reactor design for which is approved by the Nuclear Regulatory Commission— (A) paragraph (1) shall not apply, and (B) no credit shall be allowed under this section for any such facility the expansion of which begins after December 31, 2028.. (b) Restrictions relating to prohibited foreign entities Section 45Y is amended— (1) in subsection (b)(1), by adding at the end the following new subparagraph: (E) Material assistance from prohibited foreign entities The term qualified facility shall not include any facility for which construction begins after December 31, 2025 if the construction of such facility includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52))., and (2) in subsection (g), by adding at the end the following new paragraph: (13) Restrictions relating to prohibited foreign entities (A) In general No credit determined under subsection (a) shall be allowed under section 38 for any taxable year beginning after the date of enactment of this paragraph if the taxpayer is a specified foreign entity (as defined in section 7701(a)(51)(B)). (B) Other prohibited foreign entities No credit determined under subsection (a) shall be allowed under section 38 for any taxable year beginning after the date which is 2 years after the date of enactment of this paragraph if— (i) the taxpayer is a foreign-influenced entity (as defined in section 7701(a)(51)(D)), or (ii) during such taxable year, the taxpayer— (I) makes a payment of dividends, interest, compensation for services, rentals or royalties, guarantees or any other fixed, determinable, annual, or periodic amount to a prohibited foreign entity (as defined in section 7701(a)(51)) in an amount which is equal to or greater than 5 percent of the total of such payments made by such taxpayer during such taxable year which are related to the production of electricity, or (II) makes payments described in subclause (I) to more than 1 prohibited foreign entity (as so defined) in an amount which, in the aggregate, is equal to or greater than 15 percent of the total of such payments made by such taxpayer during such taxable year which are related to the production of electricity.. (c) Definitions relating to prohibited foreign entities Section 7701(a) is amended by adding at the end the following new paragraphs: (51) Prohibited foreign entity (A) In general The term prohibited foreign entity means a specified foreign entity or a foreign-influenced entity. (B) Specified foreign entity For purposes of subparagraph (A), the term specified foreign entity means— (i) a foreign entity of concern described in subparagraph (A), (B), (D), or (E) of section 9901(8) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116–283; 15 U.S.C. 4651), (ii) an entity identified as a Chinese military company operating in the United States in accordance with section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116–283; 10 U.S.C. 113 note), (iii) an entity included on a list required by clause (i), (ii), (iv), or (v) of section 2(d)(2)(B) of Public Law 117–78 (135 Stat. 1527), (iv) an entity specified under section 154(b) of the National Defense Authorization Act for Fiscal Year 2024 (Public Law 118–31; 10 U.S.C. note prec. 4651), or (v) a foreign-controlled entity. (C) Foreign-controlled entity For purposes of subparagraph (B), the term foreign-controlled entity means— (i) the government of a covered nation (as defined in section 4872(f)(2) of title 10, United States Code), (ii) a person who is a citizen, national, or resident of a covered nation, provided that such person is not an individual who is a citizen or lawful permanent resident of the United States, (iii) an entity or a qualified business unit (as defined in section 989(a)) incorporated or organized under the laws of, or having its principal place of business in, a covered nation, or (iv) an entity (including subsidiary entities) controlled (as determined under subparagraph (F)) by an entity described in clause (i), (ii), or (iii). (D) Foreign-influenced entity For purposes of subparagraph (A), the term foreign-influenced entity means an entity— (i) with respect to which, during the taxable year— (I) a specified foreign entity has the direct or indirect authority to appoint a covered officer of such entity, (II) a single specified foreign entity owns at least 10 percent of such entity, (III) one or more specified foreign entities own in the aggregate at least 25 percent of such entity, or (IV) at least 25 percent of the debt of such entity is held in the aggregate by one or more specified foreign entities, or (ii) which, during the previous taxable year— (I) makes a payment of dividends, interest, compensation for services, rentals or royalties, guarantees or any other fixed, determinable, annual, or periodic amount to a specified foreign entity in an amount which is equal to or greater than 10 percent of the total of such payments made by such entity during such taxable year, or (II) makes payments described in subclause (I) to more than 1 specified foreign entity in an amount which, in the aggregate, is equal to or greater than 25 percent of the total of such payments made by such entity during such taxable year. Clause (ii) shall not apply unless such entity makes such payments knowingly (or has reason to know). (E) Covered officer For purposes of this paragraph, the term covered officer means, with respect to an entity— (i) a member of the board of directors, board of supervisors, or equivalent governing body, (ii) an executive-level officer, including the president, chief executive officer, chief operating officer, chief financial officer, general counsel, or senior vice president, or (iii) an individual having powers or responsibilities similar to those of officers or members described in clause (i) or (ii). (F) Determination of control For purposes of subparagraph (C)(iv), the term control means— (i) in the case of a corporation, ownership (by vote or value) of more than 50 percent of the stock in such corporation, (ii) in the case of a partnership, ownership of more than 50 percent of the profits interests or capital interests in such partnership, or (iii) in any other case, ownership of more than 50 percent of the beneficial interests in the entity. (G) Determination of ownership For purposes of this section, section 318 (other than subsection (a)(3) thereof) shall apply for purposes of determining ownership of stock in a corporation. Similar principles shall apply for purposes of determining ownership of interests in any other entity. (H) Regulations and guidance The Secretary may prescribe such regulations and guidance as may be necessary or appropriate to carry out the provisions of this paragraph. (52) Material assistance from a prohibited foreign entity (A) In general The term material assistance from a prohibited foreign entity means, with respect to any property— (i) any component, subcomponent, or applicable critical mineral (as defined in section 45X(c)(6)) included in such property that is extracted, processed, recycled, manufactured, or assembled by a prohibited foreign entity, or (ii) any design of such property which is based on any copyright or patent held by a prohibited foreign entity or any know-how or trade secret provided by a prohibited foreign entity. (B) Exclusion (i) In general The term material assistance from a prohibited foreign entity shall not include any assembly part or constituent material, provided that such part or material is not acquired directly from a prohibited foreign entity. (ii) Assembly part For purposes of this subparagraph, the term assembly part means a subcomponent or collection of subcomponents which is— (I) not uniquely designed for use in the construction of a qualified facility described in section 45Y or 48E or an eligible component described in section 45X, and (II) not exclusively or predominantly produced by prohibited foreign entities. (iii) Constituent material For purposes of this subparagraph, the term constituent material means any material which is— (I) not uniquely formulated for use in a qualified facility described in section 45Y or 48E or an eligible component described in section 45X, and (II) not exclusively or predominantly produced, processed, or extracted by prohibited foreign entities. (iv) Regulations and guidance The Secretary may prescribe such regulations and guidance as may be necessary or appropriate to carry out the provisions of this paragraph.. (d) Denial of credit for expenditures for certain wind and solar leasing arrangements Section 45Y, as amended by subsection (a), is amended by inserting after subsection (c) the following new subsection: (d) Denial of credit for expenditures for wind and solar leasing arrangements No credit shall be allowed under this section for any investment during the taxable year with respect to property described in paragraph (1), (2), or (4) of section 25D(d) if— (1) the taxpayer rents or leases such property to a third party during such taxable year, and (2) the lessee would qualify for a credit under section 25D with respect to such property if the lessee owned such property.. (e) Effective dates (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act. (2) Termination of credit The amendment made by subsection (a) shall apply to facilities for which construction begins after the date that is 60 days after the date of enactment of this Act.