FEOC Rules Leave $500 Billion in OBBBA Tax Incentives in Limbo as Treasury Delays Guidance

December 28, 2025 — More than $500 billion in tax incentives under the One Big Beautiful Bill Act remain effectively inaccessible to many companies as the Treasury Department continues to delay final guidance on Foreign Entity of Concern (FEOC) restrictions, leaving major energy and manufacturing projects in regulatory limbo.

The OBBBA provides substantial tax credits for clean energy production, electric vehicle manufacturing, battery production, and other green technology investments. However, companies with any ownership, supply chain, or technology relationships with FEOCs—broadly defined to include entities controlled by or subject to the jurisdiction of "covered nations"—are ineligible for the credits.

The problem: Treasury has not definitively specified what constitutes "control" for FEOC purposes, how far down the supply chain the restrictions extend, or what level of ownership triggers ineligibility. The ambiguity has forced companies to make billion-dollar investment decisions without knowing whether they'll qualify for credits that can represent 30% to 50% of project costs.

A major battery manufacturer, speaking on condition of anonymity, said it has paused a $2.5 billion facility expansion pending FEOC guidance. The company's concern: a 15% ownership stake by a Singapore-based entity that may have indirect ties to a covered nation. Under one interpretation of the statute, the entire project could be ineligible for credits; under another, only the portion attributable to the FEOC relationship would be disqualified.

The uncertainty extends beyond direct ownership. Companies are struggling to determine whether suppliers of critical components—from rare earth minerals to semiconductor chips—could trigger FEOC status. A solar panel manufacturer reported spending over $1 million on legal and compliance work to map its supply chain, only to find that Treasury's guidance remains too vague to provide certainty.

Industry groups estimate that projects representing over $200 billion in planned investment are currently on hold, with developers unable to secure financing without clarity on tax credit eligibility. The American Clean Power Association and the Solar Energy Industries Association have both called for expedited guidance, warning that delays could push projects into 2026 or later, potentially missing critical deployment timelines.

The Treasury has issued some preliminary guidance, including a safe harbor for certain ownership structures, but tax practitioners say the rules remain insufficient for complex multinational operations. The department has indicated that final regulations are forthcoming but has not provided a specific timeline.

For companies that have already broken ground on projects, the risk is particularly acute: retroactive application of strict FEOC rules could render completed facilities ineligible for credits, turning expected tax benefits into significant liabilities.

This article will be updated when Treasury publishes final FEOC regulations under OBBBA.