Proposed Rule2024-07644
Section 45V Credit for Production of Clean Hydrogen; Section 48(a)(15) Election To Treat Clean Hydrogen Production Facilities as Energy Property
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Published
April 11, 2024
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
On December 26, 2023, the Department of the Treasury (Treasury Department) and the IRS issued a notice of proposed rulemaking (NPRM) relating to the credit for production of clean hydrogen and the election to treat clean hydrogen production facilities as energy property, as established and amended by the Inflation Reduction Act of 2022, respectively. The NPRM referred to the collection of information associated with the process for taxpayers to request an emissions value from the Department of Energy (DOE) to petition the Secretary of the Treasury or her delegate (Secretary) for a provisional emissions rate (PER). This document invites comments on the information collection related to that process.
Full Text
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<title>Federal Register, Volume 89 Issue 71 (Thursday, April 11, 2024)</title>
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[Federal Register Volume 89, Number 71 (Thursday, April 11, 2024)]
[Proposed Rules]
[Pages 25551-25553]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-07644]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-117631-23]
RIN 1545-BQ97
Section 45V Credit for Production of Clean Hydrogen; Section
48(a)(15) Election To Treat Clean Hydrogen Production Facilities as
Energy Property
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Supplemental notice of proposed rulemaking.
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SUMMARY: On December 26, 2023, the Department of the Treasury (Treasury
Department) and the IRS issued a notice of proposed rulemaking (NPRM)
relating to the credit for production of clean hydrogen and the
election to treat clean hydrogen production facilities as energy
property, as established and amended by the Inflation Reduction Act of
2022, respectively. The NPRM referred to the collection of information
associated with the process for taxpayers to request an emissions value
from the Department of Energy (DOE) to petition the Secretary of the
Treasury or her delegate (Secretary) for a provisional emissions rate
(PER). This document invites comments on the information collection
related to that process.
DATES: Written comments must be received by May 13, 2024.
ADDRESSES: Written comments to OIRA for the proposed information
collection should be submitted within 30 days of this document's
publication at <a href="https://www.reginfo.gov/public/do/PRAMain">https://www.reginfo.gov/public/do/PRAMain</a>.
Find this particular information collection by selecting
``Currently under 30-day Review--Open for Public Comments'' or by using
the search function.
A copy of the information collection request is available through
the docket on the internet at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
In addition to the submission of comments to <a href="https://www.reginfo.gov">https://www.reginfo.gov</a> as indicated above, a copy of all comments submitted to
OIRA may also be submitted to the DOE at
<a href="/cdn-cgi/l/email-protection#46727310232b2f35352f292835142337332335320623236822292368212930"><span class="__cf_email__" data-cfemail="c5f1f093a0a8acb6b6acaaabb697a0b4b0a0b6b185a0a0eba1aaa0eba2aab3">[email protected]</span></a>, with the subject line ``SNPRM
Comment''.
FOR FURTHER INFORMATION CONTACT: For questions concerning this
document, the Office of Chief Counsel (Passthroughs and Special
Industries) at (202) 317-6853 (not a toll-free number). For questions
concerning the submission of comments regarding the emissions value
request process, Karen Dandridge at (202) 586-3388 or by email
(preferred) at <a href="/cdn-cgi/l/email-protection#cffbfa99aaa2a6bcbca6a0a1bc9daabebaaabcbb8faaaae1aba0aae1a8a0b9"><span class="__cf_email__" data-cfemail="d8eced8ebdb5b1ababb1b7b6ab8abda9adbdabac98bdbdf6bcb7bdf6bfb7ae">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Background
Section 13204 of Public Law 117-169, 136 Stat. 1818 (August 16,
2022), commonly known as the Inflation Reduction Act of 2022 (IRA),
added new sections 45V and 48(a)(15) of the Internal Revenue Code
(Code) to provide a credit for the production of, and investment in,
clean hydrogen. On December 26, 2023, the Treasury Department and the
IRS published in the Federal Register proposed regulations to amend the
Income Tax Regulations (26 CFR part 1) under sections 45V and
48(a)(15). 88 FR 89220.
The NPRM references the DOE's process for applicants to request an
emissions value from the DOE that could then be used to file a petition
with the Secretary for determination of a PER as detailed in proposed
Sec. 1.45V-4. The petition to the Secretary will be made by attaching
a copy of the letter from the DOE stating the emissions value to Form
7210, Clean Hydrogen Production Credit or Form 3468, Investment
Credit.\1\ This document contains supplemental information relating to
the PER petition process for applicants that request an emissions value
from the DOE and invites comments on the DOE's emissions value request
process.
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\1\ The PER petition filed with the Secretary is performed by
attaching the emissions value obtained from the DOE to the filing of
Form 7210 or Form 3468. The burden is included within the Forms 7210
and 3468 and their respective instructions. Forms 7210 and 3468 are,
and will be, approved by OMB, in accordance with 5 CFR 1320.10,
under the following OMB Control Numbers: 1545-0074 for individual
filers, 1545-0123 for business filers, 1545-0047 for tax-exempt
organization filers, and 1545-NEW for trust and estate filers of
Form 7210 and 1545-0155 for trust and estate filers of Form 3468.
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The public comment period for the NPRM closed on February 26, 2024,
and a public hearing was held on March 24, 25, and 26, 2024. The public
comments received are being considered. This document opens a 30-day
period for comments on the DOE's emissions value request process.
Comments received in response to this document must pertain to that
process. Comments outside the scope of this document will not be
considered.
Explanation of Provisions
This document supplements the guidance provided in the NPRM to
specify the DOE's emissions value request process.
I. DOE Emissions Value Request Process
The Treasury Department and the IRS proposed that, to obtain an
emissions value from the DOE based on the DOE's analytical assessment
of the lifecycle greenhouse gas (GHG) emissions associated with a
hydrogen production facility's production pathway, in addition to
meeting the requirements set forth in the NPRM, an applicant must first
complete a front-end engineering and design (FEED) study or similar
indicia of project maturity, as determined by the DOE, and then request
an emissions value from the DOE. The term ``emissions value'' means the
DOE's analytical assessment of the lifecycle GHG emissions rate of a
hydrogen production facility's hydrogen production process.\2\
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\2\ DOE's evaluation of lifecycle greenhouse gas emissions
corresponds with how the term is defined in 26 U.S.C. 45V(c)(1).
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A. FEED Study
The NPRM provided that applicants may only request an emissions
value after having completed a FEED study or similar indicia of project
maturity, as determined by the DOE, such as project specification and
cost estimate sufficient to inform a final investment decision. The DOE
has determined that, at this time, a FEED study completed based on an
Association for Advanced Cost Engineering Class 3 Cost Estimate is
necessary to sufficiently indicate commercial project maturity for
robust emissions analysis. The Treasury Department and the IRS continue
to seek comments on whether alternative appropriate pathways to
demonstrating project readiness exist. Comments received in response to
the NPRM and this document will be considered and these requirements
may be revised accordingly.
B. Emissions Value Request Application
In order to request an emissions value from the DOE for a given
hydrogen facility, applicants must submit the following information to
the DOE: (1) specific sections of the FEED study, as described in the
DOE's emissions value request process instructions (Instructions); and
(2) a completed Emissions Value Request Form, as described in the
Instructions. Additionally, the Emissions Value Request Application may
contain any additional information that may be beneficial to the DOE in
completing a lifecycle GHG analysis of the hydrogen production pathway
for which the applicant is requesting an emissions value. Such
additional information would be optional, and the applicant's
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Emissions Value Request Application would be considered complete
regardless of whether any additional information is provided.
In order to file an Emissions Value Request Application, applicants
would first be required to send an email to the DOE at
<a href="/cdn-cgi/l/email-protection#192d2c4f7c74706a6a7076776a4b7c686c7c6a6d597c7c377d767c377e766f"><span class="__cf_email__" data-cfemail="c3f7f695a6aeaab0b0aaacadb091a6b2b6a6b0b783a6a6eda7aca6eda4acb5">[email protected]</span></a>, stating their intent to submit an
Emissions Value Request Application and the name of the applicant's
organization. The DOE would then send the applicant an email with a
link to a secure folder to which the applicant would upload the
Emissions Value Request Application.
Additional information about the emissions value request process
will be available at: <a href="https://www.reginfo.gov">https://www.reginfo.gov</a>.
II. Request for Comments
Comments are requested on the DOE's Emissions Value Request
Application process, including (1) whether additional procedures should
be implemented to effectuate the Emissions Value Request Application
process; (2) information to be collected and whether additional
information should be considered by the DOE in evaluating an Emissions
Value Request Application; and (3) any other aspects of the emissions
value request process.
Once approved by the Office of Management and Budget (OMB) under
the DOE OMB Control Number 1910-NEW, notice will be given in the
Federal Register that the emissions value request process is open.
Special Analyses
I. Regulatory Planning and Review
Pursuant to the Memorandum of Agreement, Review of Treasury
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory
actions issued by the IRS are not subject to the requirements of
section 6 of Executive Order 12866, as amended. Therefore, a regulatory
impact assessment is not required.
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (PRA)
generally requires that a Federal agency obtain the approval of OMB
before collecting information from the public, whether such collection
of information is mandatory, voluntary, or required to obtain or retain
a benefit. A Federal agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless the
collection of information displays a valid control number.
The collection of information described in this document would
include reporting and third-party disclosure requirements. This
collection is necessary for certain hydrogen producers to obtain an
emissions value which they may use to claim the section 45V credit, or
the section 48 credit with respect to a specified clean hydrogen
production facility. This information would generally be used by the
DOE to assist applicants in obtaining their emissions values and may be
provided to the IRS for tax compliance purposes.
This document addresses a collection of information related to
submitting an Emissions Value Request Application and supporting
documentation to the DOE to enable the DOE to provide an analytical
assessment of the lifecycle GHG emissions of the applicant's facility's
hydrogen production process. Prior to the opening of the emissions
value request process, the DOE will publish on its website Instructions
for submitting an Emissions Value Request Application and other
application material at the following URL: <a href="https://www.energy.gov/eere/emissions-value-request-process">https://www.energy.gov/eere/emissions-value-request-process</a>.\3\
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\3\ This link will not be live until the emissions value request
process is available.
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The Emissions Value Request Application will require that
applicants provide specific sections of a FEED Study based on an AACE
Class 3 Cost Estimate and other detailed hydrogen production and
emissions information as described in this document. The information
submitted with Emissions Value Request Applications would allow the DOE
to prepare its analytical assessments of the hydrogen production
pathways for which applicants are requesting emissions values, which
are necessary for hydrogen producers whose hydrogen production pathways
are not included in the 45VH2-GREET model \4\ to petition the Secretary
for a PER and which support DOE in updating the 45VH2-GREET model to
include new hydrogen production pathways.\5\ To assist with the
collection of information, the DOE will provide administration services
for the emissions value request process. Among other things, the DOE
will utilize Kiteworks file sharing system to receive and review
Emissions Value Request Applications and to provide Response Letters to
applicants. The DOE may provide information received or developed by
the DOE to the IRS. These collection requirements will be submitted to
OMB under 1910-NEW for review and approval in accordance with 5 CFR
1320.11. The likely respondents are businesses, individuals, and tax-
exempt organizations.
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\4\ Available at: <a href="https://www.energy.gov/eere/greet">https://www.energy.gov/eere/greet</a>.
\5\ 26 U.S.C. 45V(c)(1). Other examples of Federal lifecycle
greenhouse gas emissions analysis include: DOE's Interagency
Statement announcing modifications to GREET to assess Sustainable
Aviation Fuel lifecycle GHG emissions (available at: <a href="https://www.energy.gov/articles/interagency-statement-agencies-participating-sustainable-aviation-fuels-lifecycle-analysis">https://www.energy.gov/articles/interagency-statement-agencies-participating-sustainable-aviation-fuels-lifecycle-analysis</a>), and
the Environmental Protection Agency's Model Comparison Technical
Document, EPA-420-R-23-017 (available at: <a href="https://www.epa.gov/renewable-fuel-standard-program/final-renewable-fuels-standards-rule-2023-2024-and-2025">https://www.epa.gov/renewable-fuel-standard-program/final-renewable-fuels-standards-rule-2023-2024-and-2025</a>). Additionally, updating the 45VH2-GREET
model with new hydrogen production pathways will reduce the burden
on hydrogen producers by allowing them to rely on 45VH2-GREET
instead of submitting Emissions Value Request Applications to the
DOE.
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A summary of paperwork burden estimates for the emissions value
request process is as follows:
Estimated number of respondents: 100.
Estimated burden per response: 40.
Estimated frequency of response: 1.
Estimated total burden hours: 4,000.
Comments are requested on the collection requirements for the DOE's
Emissions Value Request Application process. Written comments for the
proposed information collection should be submitted through <a href="https://www.reginfo.gov/public/do/PRAMain">https://www.reginfo.gov/public/do/PRAMain</a>. Comments must contain the OMB
Control Number of the information collection request. They must also
contain the docket number of the request, [REG-117631-23]. Find this
particular information collection by selecting ``Currently under
Review--Open for Public Comments'' then by using the search function.
Comments on the collection of information should be received by May 13,
2024. Comments are specifically requested concerning:
1. Whether the proposed collection of information is necessary for
the proper performance of the functions of the DOE, including whether
the information will have practical utility.
2. The accuracy of the estimated burden associated with the
proposed collection of information.
3. How the quality, utility, and clarity of the information to be
collected may be enhanced.
4. How the burden of complying with the proposed collection of
information may be minimized, including through the application of
automated collection techniques or other forms of information
technology.
5. Estimates of capital costs and costs of operation, maintenance,
and purchase of services to provide the requested information.
Once approved by OMB under the DOE OMB Control Number 1910-NEW,
notice will be given in the Federal Register that the emissions value
request process is open.
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III. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the
Administrative Procedures Act (5 U.S.C. 551 et seq.) and that are
likely to have a significant economic impact on a substantial number of
small entities. See the NPRM for the initial regulatory flexibility
analysis.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a final rule that includes any
Federal mandate that may result in expenditures in any one year by a
State, local, or Tribal government, in the aggregate, or by the private
sector, of $100 million (updated annually for inflation). This document
does not include any Federal mandate that may result in expenditures by
State, local, or Tribal governments, or by the private sector in excess
of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism) prohibits an agency from
publishing any rule that has federalism implications if the rule either
imposes substantial, direct compliance costs on State and local
governments, and is not required by statute, or preempts State law,
unless the agency meets the consultation and funding requirements of
section 6 of the Executive order. This document does not have
federalism implications and does not impose substantial direct
compliance costs on State and local governments or preempt State law
within the meaning of the Executive order.
Drafting Information
The principal author of this document is the Office of the
Associate Chief Counsel (Passthroughs and Special Industries). However,
other personnel from the Treasury Department, the DOE, and the IRS
participated in the development of the document.
Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2024-07644 Filed 4-10-24; 8:45 am]
BILLING CODE 4830-01-P
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