Energy Transition Archives | �鶹ֱ�� & Lardner LLP

President Trump Issues Section 232 Proclamation to Establish a Reliable Domestic Supply Chain for Critical Minerals: What You Need to Know Now

Tue, 20 Jan 2026 16:55:39 +0000

Key Takeaways:

The administration has elevated critical minerals to a national security issue, launching trade negotiations and regulatory actions under Section 232, with tariffs still on the table.
Rebuilding U.S. mining and processing capacity is a central policy goal, aimed at reducing foreign dependence and stabilizing volatile mineral markets.
Companies should expect increased oversight and potential trade or pricing measures as negotiations proceed and federal supply-chain monitoring intensifies.

On January 14, 2026, following an investigation by the U.S. Secretary of Commerce (“Secretary”) under section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 1862) (“Section 232”), into the effects of imports of processed critical minerals and their derivative products (“Critical Minerals”) on the national security of the United States. After concurring with the Secretary’s determination that the quantities and circumstances of current Critical Minerals imports “threaten to impair the national security of the United States,” the President has authorized actions to be taken to adjust the imports of Critical Minerals to address the identified threat.

Overview of the Federal Action

The President has officially concurred with findings that the United States lacks a secure and reliable supply chain for Critical Minerals. In making this determination, Section 232 directs the Secretary and the President to consider factors related to national defense (including required domestic production needed for defense requirements, capacity of domestic industry to meet such production needs, and availability of supplies and raw materials) as well as factors related to the national economy (including impacts of foreign competition, and displacement of U.S. products by “excessive imports”).

Consequently, the administration has initiated the following:

Negotiations with Trading Partners and Potential Trade Restrictions: The U.S. Trade Representative and the Secretary are directed to negotiate with foreign nations to adjust imports and mitigate security vulnerabilities. If negotiations are unsuccessful within 180 days, the administration may implement further measures, including tariffs or minimum import prices (price floors) for specific minerals.
Additional Regulatory or Deregulatory Actions: The Secretary, U.S. Trade Representative, and the Secretary of Homeland Security are directed to effectuate the proclamation through the issuance, amendment, or temporary suspension of their respective regulations, rules, and guidance.
Supply Chain Monitoring: The Secretary will continue to monitor import levels and review their impact on national security to determine if further executive action is required.
No Tariffs—Yet: Unlike several other recent Section 232 investigations, the President did not (at this time) impose tariffs.

Key Minerals Identified

The Secretary determined that Critical Minerals underpin critical military and economic applications, and found that Critical Minerals are essential to each of the 16 critical infrastructure sectors identified by of April 30, 2024 (Critical Infrastructure Security and Resilience), including:

Chemical Sector: lithium, fluorite, and bromine;

Communications Sector: gallium, germanium, indium, and yttrium;

Energy Sector: cobalt, nickel, uranium, praseodymium, and terbium.

Why This Matters to Companies with U.S. Mining and Processing Operations

This federal shift is highly relevant to companies mining for Critical Minerals in the U.S. for several key reasons:

Focus on Domestic Capacity: The proclamation explicitly identifies the decline in domestic production and the offshoring of facilities as a strategic weakness. The federal government now views “sufficient domestic mining and processing” as imperative to reducing reliance on foreign actors.
Addressing Price Volatility: The Secretary found that extreme price volatility in mineral markets has historically hindered private sector investment and led to the closure of domestic facilities. The administration’s intent to consider “price floors” is a direct attempt to ensure the long-term viability of domestic mining and processing.
Bridging the Processing Gap: The proclamation highlights a critical vulnerability—even when minerals are mined domestically, they are often exported for refining due to a lack of domestic processing capacity. For example, while the U.S. is a major producer of rare earth oxides, it remains nearly 100% reliant on imported rare earth permanent magnets. This indicates a federal push to not only mine but also process materials within the U.S.
Alignment with Related Administration Trade Initiatives: Under the United States-Japan Framework For Securing the Supply of Critical Minerals and Rare Earths through Mining and Processing, signed October 28, 2025, the United States and Japan jointly committed to work together on investments in critical minerals mapping, mining, recycling, and to arrange for mutually complementary stockpiling. Japan has also announced investment commitments in the United States for critical minerals development, includes a $350 million investment in a lithium-iron-phosphate production facility in the United States. The proclamation potentially provides additional support for these commitments.

Next Steps

If action is taken by the President, Section 232 requires the President to provide a report to Congress within 30 days of the proclamation, explaining the President’s decision to take action under the statute. Moreover, the administration is required to provide an update on the status of trade negotiations within 180 days. We will continue to monitor these negotiations and any potential regulatory changes or guidance issued by the Department of Commerce or Homeland Security that may affect your operations or trade status.

About �鶹ֱ��’s Energy & Infrastructure Sector

�鶹ֱ��’s cross-disciplinary Energy & Infrastructure team of more than 200 attorneys regularly represents clients in the traditional and renewable power, oil & gas, nuclear, and infrastructure and energy transition industries. �鶹ֱ�� offers comprehensive legal services for energy and infrastructure companies and projects to guide clients through every phase—from development and site control to investment, commercial contracting and financing. �鶹ֱ�� can also assist companies involved in mining, processing, and disposal to navigate the various state and federal regulations, international agreements, and national security considerations.

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The New Frontier: Financing Storage-Only and Co-Located Projects

christina.reilly@829llc.com — Tue, 21 Oct 2025 14:00:39 +0000

Battery storage is quickly becoming a major player in the clean energy transition. There are two main project types: storage-only projects and co-located projects. Storage-only projects are stand-alone battery systems that store electricity from the grid when it’s cheap or abundant, then deliver it during times of high demand. Co-located projects combine a renewable energy source with batteries at the same site, allowing them to store extra power and sell it later at better prices.

Both models face regulatory hurdles. In many areas, rules for how storage participates in electricity markets are still evolving. For example, FERC’s Order No. 841 requires grid operators to let storage access wholesale markets, but implementation details vary by region[1]. Co-located projects may qualify for ITC credits under the Inflation Reduction Act, but developers must meet specific requirements to receive these benefits[2]. Because of this regulatory complexity, lenders often prefer projects in more tried-and-true markets, such as solar and wind.

A major challenge for storage-only projects is merchant risk; in other words, the uncertainty of relying on shifting market prices for most of their revenue as the catalyst to sell energy. To reduce this risk, developers may seek long-term contracts or diversify income through services like capacity support and frequency regulation[3]. Co-located projects can lower merchant risk because they combine steady renewable generation sales with battery services, leading to more predictable income streams.

From the lender’s point of view, financing depends on confidence in the project’s revenue model, compliance with regulations, and proven technology performance. Stand-alone storage often faces more scrutiny and might require higher developer equity. Co-located projects may seem more attractive due to their combined revenue sources, but they also require careful operations to maximize both generation and storage potential. As policies and markets mature, lenders are expected to grow more comfortable with both models, especially those backed by stable contracts and clear regulatory approval[4].

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Constellation and Meta PPA: Tech AI and Clean Energy Goals Preserve Existing Nuclear Generation

Mon, 30 Jun 2025 14:38:38 +0000

On June 3, 2025, Constellation and Meta announced a 20-year virtual power purchase agreement (the “PPA”) for the output from the nuclear reactor at Constellation’s Clinton Clean Energy Center. This partnership exemplifies the strong tech industry interest in supporting existing nuclear generation to address increased load from data centers and meet clean energy goals.

1. What is the Clinton Clean Energy Center?

The Clinton Clean Energy Center’s singular nuclear reactor was , and had originally been set for closure in 2017. In their , Constellation indicated that the Clinton Clean Energy Center was able to remain operational through 2027 by relying on the Zero Emissions Credit program established under the Illinois Future Energy Jobs Act. The PPA will now allow Constellation to not only keep the Clinton Clean Energy Center online for another 20 years, but also to add an additional 30MW of incremental capacity and preserve local jobs. In parallel with these efforts to maintain the Clinton Clean Energy Center, Constellation is considering seeking Nuclear Regulatory Commission approval of construction permits for new small modular reactors to be located at the Clinton, Illinois site. For more information on small modular reactors, see our article on the Tennessee Valley Authority’s recent application.

News of the Meta PPA comes after Constellation’s that it had entered into a similar 20-year PPA with Microsoft for the Crane Clean Energy Center which involves restarting Three Mile Island Unit 1. Unit 1 shut down in 2019 due to economic reasons; once reactivated with modernized infrastructure, it will provide 835MW of energy. from the plant as part of its goal to offset power used by its data centers, which are responsible for powering AI and cloud computing.

2. Why is Meta Interested?

In , Meta indicated AI growth was a key driver for their interest in nuclear generation beyond just this individual deal, in addition to clean energy goals, noting “[a]s we look toward our future energy needs in advancing AI, we recognize the immense value of nuclear power in providing reliable, firm electricity, and the role nuclear projects can have in supporting local economies and strengthening America’s energy leadership.” Underscoring this goal, in December of 2024, “to identify nuclear energy developers to help us meet our AI innovation and sustainability objectives”, with the target of adding 1-4GW of new nuclear generation capacity in the early 2030s.

3. What is in the PPA?

Through the PPA, Meta will purchase the clean energy attributes from the 1,092MW Clinton Clean Energy Center (rather than purchasing the energy itself to power data centers directly) to support Meta’s “.” While price/MWh has not been disclosed, both and ’s announcements estimated a contribution of $13.5 million in annual tax revenue to be generated, along with the preservation of 1,100 local jobs. Because this is a merchant plant agreement with a private entity, the parties are not required to obtain certain regulatory approvals that might otherwise apply. The PPA term will begin in 2027.

4. Are Other Companies doing Similar Deals?

Other companies are engaging in similar agreements to the PPA signed by Constellation and Meta. For instance, to supply 1,920MW of nuclear energy to Amazon Web Services data centers across Pennsylvania. This energy will be generated from a power plant located in Susquehanna, PA, and will support AI and other cloud-based systems. Additionally, Talen and Amazon plan to explore the construction of new small modular reactors and increase the nuclear plant’s energy output through uprates. It is expected that full volume will be achieved by 2032, but the contract is set to run through 2042 with an option to extend its duration. The agreement will support 900 existing power plant employees and create new construction job opportunities.

This PPA and others like it demonstrate that tech companies view preservation of existing nuclear generation as an important element of their ongoing AI growth strategy and clean energy goals. Please reach out to any of the authors here or another member of your �鶹ֱ�� team if you have any questions about these topics.

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IRS Releases Proposed Regulations for Section 45X Advanced Manufacturing Credit

ppicciotta@foley.com — Wed, 27 Dec 2023 21:53:16 +0000

Earlier this month, the Internal Revenue Service (“IRS”) and Department of the Treasury released proposed regulations (the “Proposed Regulations”) relating to the advanced manufacturing tax credit under Section 45X of the Internal Revenue Code (“45X Credits”). The Proposed Regulations clarify various definitions for key terms under Section 45X of the Code, including the definition of the phrase “produced by the taxpayer” (Section 1.45X-1), supply additional detail regarding the rules relating to sales to unrelated persons, sales to related persons, and the related person election set forth in Section 45X(a)(3)(B) of the Code (Section 1.45X-2), and provide definitions with respect to all eligible components and critical minerals, as well as the credit amount for each and the required phase-out percentages (Sections 1.45X-3 and 1.45X-4).

Taxpayers may generally rely on the proposed regulations at least until final regulations are promulgated. Written or electronic comments to the Proposed Regulations must be received by February 13, 2024 in advance of a public hearing scheduled for the morning of February 22, 2024.

Section 45X of the Code provides a manufacturing production tax credit to taxpayers that produce and sell during the taxable year to an unrelated person, certain components for renewable energy and battery storage projects, including PV cells and other solar energy components, wind components, and storage components. The tax credit rate varies depending on the eligible component. The credit phases out beginning in 2030. 45X Credits may be claimed by the taxpayer that produces eligible components, or it may be sold to another taxpayer pursuant to Section 6418 of the Code. Further, pursuant to Section 6417 of the Code, the taxpayer may also claim direct payments in lieu of the tax credits, for a five-year period.

The Proposed Regulations should provide helpful guidance for taxpayers claiming 45X Credits and should help clarify applicable requirements for taxpayers interested in selling or claiming direct payment for the credit. Select specific provisions of the Proposed Regulations are described in more detail below.

Section 1.45X-1: General Rules

As mentioned above, Section 1.45X-1 of the Proposed Regulations provides various definitions for terms used throughout Section 45X of the Code, including the following key terms:
- “Produced by the taxpayer” means a process conducted by the taxpayer that substantially transforms constituent elements, materials, or subcomponents into a complete and distinct eligible component that is functionally different from that which would result from mere assembly or superficial modification of the elements, materials or subcomponents. This does not include partial transformation that does not result in a substantial transformation, mere assembly of two or more constituent elements, materials, or subcomponents, or superficial modification of the final eligible component.
- “Eligible taxpayer” means the taxpayer directly performing the production activities that bring about a substantial transformation resulting in the eligible component, and must sell such eligible component to an unrelated person. There are special rules concerning contract manufacturing agreements allowing the parties to such agreement to determine the party that may claim the 45X Credit. However, the contract manufacturing agreement must be entered into before production of the eligible component is completed and must not be for off-the-shelf property.

The Proposed Regulations clarify that production of an eligible component may begin before December 31, 2022, but must be completed, and the sale of such eligible component must occur after December 31, 2022, to be eligible for 45X Credits.

While Section 45X(d)(2) of the Code established that eligible components must be produced in the United States or a possession of the United States to be eligible for 45X Credits, the Proposed Regulations clarify that this requirement does not apply to constituent elements, materials and subcomponents used in the production of eligible components.

The Proposed Regulations explain that a taxpayer may claim 45X Credits for each eligible component produced and sold to an unrelated person, including any eligible component the same taxpayer produces that was used as a constituent element, material or subcomponent and integrated, incorporated or assembled into another complete and distinct eligible component.
- As an example, X produces electrode active materials (EAMs) that are incorporated into battery cells produced by X once complete. In the following taxable year, X incorporates such battery cells into battery modules that are then incorporated into electric vehicles. X then sells the electric vehicles to Z, an unrelated person, in 2024. X can claim the 45X Credits in 2024 for the EAMs, the battery cells, and the battery modules.

Section 1.45X-2: Sales to Unrelated and Related Persons

Section 45X(a)(1)(B) of the Code establishes, to be eligible for 45X Credits, eligible components must be sold by the taxpayer to an unrelated person. The Proposed Regulations clarify that a taxpayer is treated as selling an eligible component to an unrelated person if such component is sold to an unrelated person by a person who is a related person with respect to the taxpayer.
- As an example, the Proposed Regulations outline a situation where X and Y are related, and X sells solar modules to Y. If Y then sells such solar modules to Z, X may claim the 45X Credit in the taxable year in which the solar modules were sold to Z.
Section 45X(a)(3) of the Code provides an option for the taxpayer to elect to treat such a sale of components to a related person as a sale to an unrelated person. The Proposed Regulations provide rules for making the election and clarify that the election must be made annually for each trade or business. Further, in the event of such an election, the Proposed Regulations provide that the Secretary of Treasury may require such information or registration as deemed necessary to prevent duplication, fraud, improper or excessive credit amounts.

The Proposed Regulations provide that if a taxpayer produces and then sells an eligible component to a related person who then integrations, incorporates or assembles such eligible component into another complete and distinct eligible component that is subsequently sold to an unrelated person, such taxpayer may claim the 45X Credit for the taxable year in which the related person’s sale to the unrelated person occurs.
- Using the same facts as the example above, assume X instead sells photovoltaic wafers to Y, who then incorporates the photovoltaic wafers into solar modules and sells such modules to Z. X may claim the 45X Credit for the sale of photovoltaic wafers in the taxable year in which the sale to an unrelated party, Z, is made.

Section 1.45X-3 and 4: Eligible Components and Applicable Critical Minerals

The Proposed Regulations largely reiterate the information already contained in Section 45X with respect to eligible components and applicable critical minerals.
However, the Proposed Regulations provide an answer as to how to calculate the eligible costs for purposes of calculating the 10% credit for critical minerals and electrode active materials. Generally, capitalized costs under Section 263A are included in the calculation, however, any costs related to the extraction or acquisition of raw materials would not be included. The IRS has invited comments regarding a workable solution to include the cost relating to the extraction or acquisition of raw materials in the calculation.

�鶹ֱ�� & Lardner will continue to monitor these developments, including any changes between the Proposed Regulations and adopted final regulations.

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IRS Opens Tax Credit Transfer Portal

ppicciotta@foley.com — Tue, 26 Dec 2023 15:59:11 +0000

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IRS Releases Proposed Tax Regulations for Clean Hydrogen

ppicciotta@foley.com — Fri, 22 Dec 2023 17:47:53 +0000

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The Rapid Acceleration of Energy Convergence

christina.reilly@829llc.com — Wed, 29 Mar 2023 05:00:00 +0000

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NY PSC Again Modifies Utility Procurement Requirements to Support ‘Ambitious’ Energy Storage Roadmap

christina.reilly@829llc.com — Mon, 20 Mar 2023 05:00:00 +0000

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