953 
‘‘(ii) an entity identified as a Chinese 
military company operating in the United 
States in accordance with section 1260H 
of the William M. (Mac) Thornberry Na-
tional Defense Authorization Act for Fiscal 
Year 2021 (Public Law 116–283; 10 
U.S.C. 113 note), 
‘‘(iii) an entity included on a list re-
quired by clause (i), (ii), (iv), or (v) of sec-
tion 2(d)(2)(B) of Public Law 117–78 
(135 Stat. 1527), 
‘‘(iv) an entity specified under section 
154(b) of the National Defense Authoriza-
tion Act for Fiscal Year 2024 (Public Law 
118–31; 10 U.S.C. note prec. 4651), or 
‘‘(v) a foreign-controlled entity. 
‘‘(C) FOREIGN-CONTROLLED ENTITY.—For 
purposes of subparagraph (B), the term ‘for-
eign-controlled entity’ means— 
‘‘(i) the government of a covered na-
tion (as defined in section 4872(f)(2) of 
title 10, United States Code), 
‘‘(ii) a person who is a citizen, na-
tional, or resident of a covered nation, pro-
vided that such person is not an individual 
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954 
who is a citizen or lawful permanent resi-
dent of the United States, 
‘‘(iii) an entity or a qualified business 
unit (as defined in section 989(a)) incor-
porated or organized under the laws of, or 
having its principal place of business in, a 
covered nation, or 
‘‘(iv) an entity (including subsidiary 
entities) controlled (as determined under 
subparagraph (F)) by an entity described 
in clause (i), (ii), or (iii). 
‘‘(D) FOREIGN-INFLUENCED ENTITY.—For 
purposes of subparagraph (A), the term ‘for-
eign-influenced entity’ means an entity— 
‘‘(i) with respect to which, during the 
taxable year— 
‘‘(I) a specified foreign entity has 
the direct or indirect authority to ap-
point a covered officer of such entity, 
‘‘(II) a single specified foreign 
entity owns at least 10 percent of 
such entity, 
‘‘(III) one or more specified for-
eign entities own in the aggregate at 
least 25 percent of such entity, or 
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955 
‘‘(IV) at least 25 percent of the 
debt of such entity is held in the ag-
gregate by one or more specified for-
eign entities, or 
‘‘(ii) which, during the previous tax-
able year— 
‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a specified 
foreign entity in an amount which is 
equal to or greater than 10 percent of 
the total of such payments made by 
such entity during such taxable year, 
or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 speci-
fied foreign entity in an amount 
which, in the aggregate, is equal to or 
greater than 25 percent of the total of 
such payments made by such entity 
during such taxable year. 
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956 
Clause (ii) shall not apply unless such enti-
ty makes such payments knowingly (or has 
reason to know). 
‘‘(E) COVERED OFFICER.—For purposes of 
this paragraph, the term ‘covered officer’ 
means, with respect to an entity— 
‘‘(i) a member of the board of direc-
tors, board of supervisors, or equivalent 
governing body, 
‘‘(ii) an executive-level officer, includ-
ing the president, chief executive officer, 
chief operating officer, chief financial offi-
cer, general counsel, or senior vice presi-
dent, or 
‘‘(iii) an individual having powers or 
responsibilities similar to those of officers 
or members described in clause (i) or (ii). 
‘‘(F) DETERMINATION OF CONTROL.—For 
purposes of subparagraph (C)(iv), the term 
‘control’ means— 
‘‘(i) in the case of a corporation, own-
ership (by vote or value) of more than 50 
percent of the stock in such corporation, 
‘‘(ii) in the case of a partnership, 
ownership of more than 50 percent of the 
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957 
profits interests or capital interests in such 
partnership, or 
‘‘(iii) in any other case, ownership of 
more than 50 percent of the beneficial in-
terests in the entity. 
‘‘(G) DETERMINATION OF OWNERSHIP.— 
For purposes of this section, section 318 (relat-
ing to constructive ownership of stock) shall 
apply for purposes of determining ownership of 
stock in a corporation. Similar principles shall 
apply for purposes of determining ownership of 
interests in any other entity. 
‘‘(H) REGULATIONS AND GUIDANCE.—The 
Secretary may prescribe such regulations and 
guidance as may be necessary or appropriate to 
carry out the provisions of this paragraph. 
‘‘(52) MATERIAL ASSISTANCE FROM A PROHIB-
ITED FOREIGN ENTITY.— 
‘‘(A) IN
GENERAL.—The term ‘material 
assistance from a prohibited foreign entity’ 
means, with respect to any property— 
‘‘(i) any component, subcomponent, or 
applicable critical mineral (as defined in 
section 45X(c)(6)) included in such prop-
erty that is extracted, processed, recycled, 
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958 
manufactured, or assembled by a prohib-
ited foreign entity, and 
‘‘(ii) any design of such property 
which is based on any copyright or patent 
held by a prohibited foreign entity or any 
know-how or trade secret provided by a 
prohibited foreign entity. 
‘‘(B) EXCLUSION.— 
‘‘(i) IN GENERAL.—The term ‘mate-
rial assistance from a prohibited foreign 
entity’ shall not include any assembly part 
or constituent material, provided that such 
part or material is not acquired directly 
from a prohibited foreign entity. 
‘‘(ii) ASSEMBLY PART.—For purposes 
of this subparagraph, the term ‘assembly 
part’ means a subcomponent or collection 
of subcomponents which is— 
‘‘(I) not uniquely designed for 
use in the construction of a qualified 
facility described in section 45Y or 
48E or an eligible component de-
scribed in section 45X, and 
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959 
‘‘(II) not exclusively or predomi-
nantly produced by prohibited foreign 
entities. 
‘‘(iii) CONSTITUENT MATERIAL.—For 
purposes of this subparagraph, the term 
‘constituent material’ means any material 
which is— 
‘‘(I) not uniquely formulated for 
use in a qualified facility described in 
section 45Y or 48E or an eligible 
component described in section 45X, 
and 
‘‘(II) not exclusively or predomi-
nantly produced, processed, or ex-
tracted by prohibited foreign entities. 
‘‘(iv) 
REGULATIONS
AND
GUID-
ANCE.—The Secretary may prescribe such 
regulations and guidance as may be nec-
essary or appropriate to carry out the pro-
visions of this paragraph.’’. 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of enactment of this Act. 
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960 
(2) 
OTHER
PROVISIONS.—The 
amendment 
made by subsection (c) shall apply to facilities for 
which construction begins after the date that is 2 
years after the date of enactment of this Act. 
SEC. 112009. PHASE-OUT AND RESTRICTIONS ON CLEAN 
ELECTRICITY INVESTMENT CREDIT. 
(a) PHASE-OUT.—Section 48E(e) is amended— 
(1) in paragraph (1), in the matter preceding 
subparagraph (A), by striking ‘‘the construction of 
which begins during a calendar year described in 
paragraph (2)’’ and inserting ‘‘which is placed in 
service after December 31, 2028,’’, and 
(2) by striking paragraphs (2) and (3) and in-
serting the following: 
‘‘(2) PHASE-OUT PERCENTAGE.—The phase-out 
percentage under this paragraph is equal to— 
‘‘(A) for any qualified investment with re-
spect to any qualified facility or energy storage 
technology placed in service during calendar 
year 2029, 80 percent, 
‘‘(B) for any qualified investment with re-
spect to any qualified facility or energy storage 
technology placed in service during calendar 
year 2030, 60 percent, 
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961 
‘‘(C) for any qualified investment with re-
spect to any qualified facility or energy storage 
technology placed in service during calendar 
year 2031, 40 percent, and 
‘‘(D) for any qualified investment with re-
spect to any qualified facility or energy storage 
technology placed in service after December 31, 
2031, 0 percent.’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.— 
(1) IN GENERAL.—Section 48E is amended— 
(A) in subsection (b)(3), by adding at the 
end the following new subparagraph: 
‘‘(D) MATERIAL ASSISTANCE FROM PRO-
HIBITED FOREIGN ENTITIES.—The term ‘quali-
fied facility’ shall not include any facility the 
construction of which begins after the date that 
is one year after the date of the enactment of 
this subparagraph if the construction of such 
facility includes any material assistance from a 
prohibited foreign entity (as defined in section 
7701(a)(52)).’’, and 
(B) in subsection (c), by adding at the end 
the following new paragraph: 
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962 
‘‘(3) MATERIAL ASSISTANCE FROM PROHIBITED 
FOREIGN ENTITIES.—The term ‘energy storage tech-
nology’ shall not include any property the construc-
tion of which begins after the date that is one year 
after the date of the enactment of this paragraph if 
the construction of such property includes any mate-
rial assistance from a prohibited foreign entity (as 
defined in section 7701(a)(52)).’’. 
(2) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.—Section 48E(d) is amended by 
adding at the end the following new paragraph: 
‘‘(6) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if— 
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963 
‘‘(i) the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)), or 
‘‘(ii) during such taxable year, the 
taxpayer— 
‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a prohib-
ited foreign entity (as defined in sec-
tion 7701(a)(51)) in an amount which 
is equal to or greater than 5 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of electricity or storage of energy, 
or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 pro-
hibited foreign entity (as so defined) 
in an amount which, in the aggregate, 
is equal to or greater than 15 percent 
of the total of such payments made by 
such taxpayer during such taxable 
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964 
year which are related to the produc-
tion of electricity or storage of en-
ergy.’’. 
(3) RECAPTURE.—Section 50(a) is amended— 
(A) 
by 
redesignating 
paragraphs 
(4) 
through (6) as paragraphs (5) through (7), re-
spectively, 
(B) by inserting after paragraph (3) the 
following new paragraph: 
‘‘(4) PAYMENTS TO PROHIBITED FOREIGN EN-
TITIES.— 
‘‘(A) IN GENERAL.—If there is an applica-
ble payment made by a specified taxpayer be-
fore the close of the 10-year period beginning 
on the date such taxpayer placed in service in-
vestment credit property which is eligible for 
the clean electricity investment credit under 
section 48E(a), then the tax under this chapter 
for the taxable year in which such applicable 
payment occurs shall be increased by 100 per-
cent of the aggregate decrease in the credits al-
lowed under section 38 for all prior taxable 
years which would have resulted solely from re-
ducing to zero any credit determined under sec-
tion 46 which is attributable to the clean elec-
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