Section 45V Credit for Production of Clean Hydrogen; Section 48(a)(15) Election To Treat Clean Hydrogen Production Facilities as Energy Property, 25551-25553 [2024-07644]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[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 [www.gpo.gov]
[FR Doc No: 2024-07644]



[[Page 25551]]

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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 https://www.reginfo.gov/public/do/PRAMain.
    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 https://www.regulations.gov.
    In addition to the submission of comments to https://www.reginfo.gov as indicated above, a copy of all comments submitted to 
OIRA may also be submitted to the DOE at 
[email protected], 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 [email protected].

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 
[email protected], 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: https://www.reginfo.gov.

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: https://www.energy.gov/eere/emissions-value-request-process.\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: https://www.energy.gov/eere/greet.
    \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: https://www.energy.gov/articles/interagency-statement-agencies-participating-sustainable-aviation-fuels-lifecycle-analysis), and 
the Environmental Protection Agency's Model Comparison Technical 
Document, EPA-420-R-23-017 (available at: https://www.epa.gov/renewable-fuel-standard-program/final-renewable-fuels-standards-rule-2023-2024-and-2025). 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 https://www.reginfo.gov/public/do/PRAMain. 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