In the space of one week, two seismic policy shifts have reshaped the procurement landscape for energy infrastructure. Treasury released its first actionable FEOC guidance — and the Supreme Court struck down the administration's tariff regime, triggering an immediate replacement. Here's what it means for your projects.

Treasury Releases FEOC Guidance

On February 13, Treasury and the IRS released proposed guidance on the Foreign Entity of Concern rules under the One Big Beautiful Bill Act, establishing how developers and manufacturers determine whether a project or component relies on "material assistance" from entities tied to China, Russia, Iran, or North Korea.

The stakes are high: projects receiving material assistance from a prohibited foreign entity (PFE) above the applicable threshold lose eligibility for the Section 45X advanced manufacturing credit, Section 48E clean electricity ITC, and Section 45Y clean electricity PTC. For BESS and solar, sourcing decisions now directly affect tax credit eligibility.

What the guidance establishes

Notice 2026-15 introduces interim safe harbor rules for calculating the Material Assistance Cost Ratio (MACR) — the compliance metric that determines whether a facility or component exceeds the allowable proportion of PFE-sourced content. The MACR is calculated by subtracting PFE-attributed equipment costs from total direct equipment costs, then dividing by total direct costs. Steel and iron components used for racking and mounting are excluded from the calculation.

The thresholds are tiered by technology and year, with requirements tightening annually:

• Solar energy components sold in 2026: eligible component MACR cannot be less than 50%, increasing 10% per year through 2029, then to 85% after 2029.
• Qualified facilities (solar, wind, other) beginning construction in 2026: facility MACR threshold of 40%.
• Energy storage facilities beginning construction in 2026: threshold of 55%.
• Battery components sold in 2026: threshold of 60%, increasing 5% per year through 2029.
• Wind energy components sold in 2026: threshold of 85%, rising to 90% in 2027.

The safe harbors reference existing domestic content tables from 2023–2025 guidance (Notices 2024-41 and 2025-08), allowing taxpayers to use previously assigned cost percentages. Manufacturers generally only need to evaluate costs from direct suppliers — not the entire upstream supply chain — though the guidance leaves the definition of "prohibited foreign entity" itself to forthcoming proposed regulations.

Errors in MACR calculations are subject to a six-year assessment window, creating potential complications for project indemnity and insurance. Any license agreement entered into with a specified foreign entity after July 4, 2026, will trigger "foreign-influenced entity" classification if other requirements are met.

Supreme Court Strikes Down IEEPA Tariffs — Administration Responds Within Hours

On February 20, the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize the President to impose tariffs — invalidating the "Liberation Day" reciprocal tariffs and all country-specific IEEPA duties that had been in effect since 2025.

The response was immediate. Events have unfolded rapidly over six days:

What changed

All IEEPA-based tariffs — including reciprocal tariffs of 10%–50% on nearly all trading partners and country-specific duties on China, Canada, Mexico, and dozens of other countries — have been eliminated and replaced by a flat global tariff under Section 122. The proclamation set the rate at 10%; Trump has announced 15%, though the formal implementing status of the increase remains unclear as of this writing. The tariff expires after 150 days (around July 24) unless Congress extends it.

Section 122's legality is already being challenged. The statute requires a finding of "fundamental international payments problems" — a precondition trade experts argue hasn't been met. The Section 122 authority has never been used before.

Refund eligibility for IEEPA duties already paid — estimated at $130–$200 billion — remains unresolved. The Supreme Court's opinion was silent on the refund process. The administration has signaled it won't issue refunds voluntarily. The Court of International Trade will handle refund disputes, but the timeline could stretch months or years.

What This Means for Your Projects

FEOC compliance

The MACR thresholds are now defined and the clock is running. If you're pursuing tax credits on any project beginning construction in 2026 or later, you need to map your supply chain against these thresholds now — not when final regulations arrive. Tax equity will underwrite to the current guidance. GRID's Approved Vendor List process is built for exactly this: tracing component origins and evaluating supplier compliance against FEOC requirements.

Tariff exposure

Don't let the headlines fool you. The Supreme Court ruling did not reduce tariff costs for energy infrastructure procurement. The 50% Section 232 duties on steel and aluminum — the cost drivers for transformers, switchgear, and T&D equipment — are untouched. The 15% Section 122 tariff is temporary by law, but the administration is already building replacement authority through expedited Section 301 investigations, with results expected within 2–3 months. The tariff environment for energy infrastructure equipment is not getting simpler.

Meanwhile, lead times remain stretched and demand continues to surge from both data centers and renewable energy deployment. The combination of tariff uncertainty, tightening FEOC requirements, and constrained supply creates a window where locking in pricing and capacity commitments offers meaningful protection against further disruption.