Manchin threatens to sue US Treasury over EV tax credit rules

By David Shepardson

WASHINGTON (Reuters) -Senate Energy Committee Chair Joe Manchin said on Wednesday he may go to court after the U.S. Treasury releases guidance later this week on battery sourcing guidance for electric vehicle tax credits.

“If it goes off the rails” and violates the intent of the climate legislation approved in August, “I will do whatever I can – if that means going to court and I can do it, I’d do it,” said Manchin, a Democrat.

Manchin said he is most concerned about how Treasury will classify processing and manufacturing in determining eligibility for $7,500 EV tax credits. Manchin, who has often pushed fossil fuel industry interests in Congress, says he is trying to move the EV battery supply chain from China. His political opponents say he doesn’t like the EV industry.

“Manufacturing is meant to bring manufacturing back to the United States. It’s not basically allowing everyone to put all the parts and build everything you can for that battery somewhere else and then send it here for assembly,” Manchin told reporters.

Reuters reported earlier the Treasury battery sourcing rules for electric vehicle tax credits, due out by Friday, will result in fewer vehicles qualifying for full or partial credits.

The EV rules are part of a $430 billion bill passed by Democrats in August to cut climate emissions and reduce drug costs, dubbed the Inflation Reduction Act.

The Treasury declined to comment on Manchin’s remarks.

“We have a strong and productive relationship with Senator Manchin,” the White House told Reuters in a statement, adding the administration was proud of the bill and the “shared goals it achieves.”

Under the new rules, 50% of the value of battery components must to be produced or assembled in North America for EV buyers to qualify for $3,750 of the credit, and 40% of the value of critical minerals must be sourced from the United States or a country with which it has a free trade agreement to qualify for another $3,750 credit.

Those quotas rise by 10 percentage points annually.

China dominates the global supply chains of products like EV batteries and solar panels.

Manchin hammered the Biden administration, which he hamstrung in legislative negotiations last year, in a Wall Street Journal opinion piece Wednesday, accusing it of thwarting the bill’s original intent.

“Instead of implementing the law as intended, unelected ideologues, bureaucrats and appointees seem determined to violate and subvert the law to advance a partisan agenda that ignores both energy and fiscal security … The administration is attempting at every turn to implement the bill it wanted, not the bill Congress actually passed.”

Manchin also urged Biden “to sit down with fiscally minded Republicans and Democrats to negotiate common-sense reforms to out-of-control fiscal policy.”

The White House has no immediate comment.