Highlights
- The U.S. Department of Energy (DOE) published a direct final rule (DFR), expanding eligibility under the Advanced Technology Vehicles Manufacturing Incentive Program (ATVM) regulations to include ultra efficient, medium-duty and heavy-duty vehicles, as well as trains, maritime vessels, aircraft and hyperloop technology that meet specified efficiency and emissions standards.
- The DFR focuses only on adding the new categories established in recent legislation. The DOE expects to undertake a separate rulemaking to implement further improvements to the ATVM program through public input and feedback, as well as update ATVM program guidance and application materials to reflect these regulatory changes.
- The DOE's DFR will go into effect on July 15, 2024.
The U.S. Department of Energy (DOE) published a direct final rule (DFR) on April 29, 2024, to amend and align the Advanced Technology Vehicles Manufacturing Incentive Program (ATVM) implementing regulations1 with its authorizing statute.2 ATVM provides grants and loans to applicants for the costs of reequipping, expanding or establishing manufacturing facilities in the United States to produce qualified advanced technology vehicles or qualifying components.
Overview of Expanded Categories
Various legislation, including the Infrastructure Investment and Jobs Act, expanded the eligibility criteria for advanced technology vehicles (ATVs), which will be reflected in the ATVM regulations3 when the rule goes into effect on July 15, 2024. The rule distinguishes between on-road and nonroad ATVs by adding the following categories of eligible vehicles:
- On-road ATVs will now include the following:
- Ultra efficient vehicles (fully closed passenger vehicles that achieve at least 75 miles per gallon or equivalent while operating) or light-duty vehicles that meet 1) the Bin 5 Tier II emission standard or lower as set by the U.S. Environmental Protection Agency (EPA) under Section 202(i) of the Clean Air Act (or applicable new emissions standards)4 and 2) at least 125 percent of the harmonic production weighted average combined fuel economy, for vehicles with substantially similar attributes in model year 2005.
- Medium-duty or heavy-duty vehicles that exceed 125 percent of the greenhouse gas emissions and fuel efficiency standards established by the EPA's final rule titled "Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles—Phase 2."5
- Nonroad ATVs will now include trains and locomotives, maritime vessels, aircraft and hyperloop technology that emit, under any possible operational mode or condition, low or zero exhaust emissions of greenhouse gases.
As was previously required for ATVM applicants, on-road ATV applicants will be required to certify compliance with the revised emission standards. Similarly, nonroad ATV applicants will be required to demonstrate compliance with the above emissions standards.
Considerations and Next Steps
The DFR will go into effect July 15, 2024, unless adverse comment is received by May 29, 2024. The DOE also notes that the DFR covers only the new categories of ATVs and intends to undertake a separate rulemaking to implement additional program improvements through notice and public comment. The full release of the DFR is available to view online.
This expansion will help provide financing to more cutting-edge transportation solutions from electrified aircraft and trains to maritime vessels. As it develops more experience with loan applications for nonroad technologies, the DOE indicated it will consider providing additional guidance or rulemaking.
The Inflation Reduction Act (IRA) included the statutory language enabling this expansion and appropriated $3 billion of credit subsidy appropriations under the IRA. Holland & Knight led in advocating for the expanded eligibility on behalf of numerous clients and currently represents approximately 20-30 percent of the DOE Loan Programs Office's (LPO) project pipeline at each stage of the process, from application to successful project execution. The firm will continue to monitor developments and keep clients apprised of important LPO legal, regulatory and policy changes.
Footnotes
1. 10 CFR 611.
2. 42 U.S.C. 17013
3. 10 CFR 611.
4. 42 U.S.C. 7521(i).
5. 81 FR 73478.
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