On Feb. 12, 2026, Treasury released heavily anticipated guidance related to foreign entity of concern (FEOC) rules for energy tax credit projects. More specifically, Notice 2026-15 provides taxpayers with assistance in determining if a qualified facility, energy storage technology, or applicable component received material assistance from a prohibited foreign entity.
Background on foreign entity of concern (FEOC)
In July 2025, the One, Big, Beautiful Bill (OBBB) transformed several energy tax credits, including the Section 45Y clean electricity production credit, the Section 48E clean electricity investment credit, and the Section 45X advanced manufacturing production credit. While early terminations of wind and solar incentives were the immediate focal point, Congress introduced new FEOC rules designed to deny tax credits to project owners and taxpayers that are deemed to have been assisted or controlled by prohibited foreign actors.
The FEOC rules are dense in nature, and as a result, interested parties have eagerly awaited guidance from Treasury to answer many open questions. Although Notice 2026-15 doesn’t delve deep into every intricate detail of FEOC, it does provide preliminary solutions to questions regarding the material assistance aspect of the foreign entity restrictions. More specifically, the Notice outlines the material assistance cost ratio (MACR) for Sections 45Y, 48E, and 45X and describes how taxpayers may use certain interim safe harbors authorized by the OBBB.
Material assistance guidance
To set the stage, it’s important to understand the parallels that inherently exist between FEOC and the domestic content bonus credit. Both regimes are data-intensive, documentation-heavy, and heavily dependent on supply chain transparency. In fact, for the past few years, parties to energy tax credits have struggled in many aspects when it comes to computing and compiling documentation for domestic content bonus credit analysis. Upon enactment of OBBB, FEOC was immediately expected to follow a similar difficult path. However, even though the underlying FEOC MACR can be data-intensive, Notice 2026-15’s safe harbors are designed to help taxpayers bridge practical challenges in identifying relevant components and obtaining cost and origin information. The three new safe harbors are described as follows.
1. Identification safe harbor: What items must be analyzed?
This safe harbor provided in Notice 2026-15 can be used as a starting point when determining which manufactured products and manufactured product components within a project’s bill of materials must be analyzed under the FEOC rules. Under this approach, parties can rely on previously issued domestic content safe harbors to identify relevant manufactured products and manufactured product components for certain technologies. These existing table-based frameworks were originally referenced in notices provided between 2023 and 2025 (Notice 2023-38, Notice 2024-41, and Notice 2025-08). While this safe harbor is helpful in aiding the material and component classifications for solar, wind, battery and hydroelectric facilities, other facilities not specifically mentioned in the previous notices receive no additional help from such rules.
2. Cost percentage safe harbor: How to and can we quantify MACR costs without full vendor/supplier cost information?
This safe harbor allows taxpayers that use the identification safe harbor to also use assigned cost percentages from applicable domestic content guidance mentioned above. These tables will allow taxpayers to determine percentage inputs needed to compute MACR without actual vendor/supplier cost data. As such, through this method, taxpayers will essentially be required to gather only data on the source of materials and components and won’t be on the hook for cost information that’s more difficult to gather. Most project owners familiar with domestic content analysis over the past few years can attest to the reluctance of granular detail available from vendors and suppliers. This safe harbor is meant to ease the process.
3. Certification safe harbor: Can vendors/suppliers make representations or certifications as to their materials/components?
Vendor/supplier certifications of FEOC compliance are specifically codified through the statutory language. However, taxpayers were left wondering about the dynamics of such a process. This safe harbor clarifies how taxpayers may rely on vendor/supplier certifications to establish that their materials and components weren’t produced by prohibited foreign entities. The notice exemplifies use cases of such certifications and notes that certifications must include the supplier’s employer identification number, be signed under penalties of perjury, and be retained for at least six years. Additionally, the certification must state that the property wasn’t produced or manufactured by a prohibited foreign entity and that the vendor/supplier isn’t aware of any prior supplier up the chain is a prohibited foreign entity. Finally, certifications are required to be attached to the taxpayer’s respective tax return.
While this safe harbor will certainly ease the analysis required of FEOC, important caution should be taken by all parties, including both developers and manufacturers. Certifications can reduce the friction of requesting sensitive data, but they must be adequately supported. Project owners remain responsible for substantiating credit eligibility, and unsupported or inaccurate certifications could jeopardize credits claimed. On the other hand, vendors and suppliers should be very careful and should fully vet their sourcing and supporting documentation before issuing certifications intended to be relied on for MACR compliance. Vendors and suppliers must take this task seriously and be aware of the rules and possible implications of incorrect certification.
Other key considerations for foreign entity of concern (FEOC) material assistance
The notice also describes other helpful guidance in relation to the MACR, including a de minimis safe harbor related to components of the same type at the same type of qualified facility. Additionally, cost averaging rules are available to track constituent materials under Section 45X. While the notice describes various other pieces of information pertinent to taxpayers and their respective FEOC material assistance analyses, some questions remain left open. For example, many interested parties are still looking for Treasury guidance that further describes the “effective control” aspect of FEOC, how to fully ascertain whether a taxpayer is itself a prohibited foreign entity, anti-abuse provisions, and more. It’s expected that guidance covering these points and other issues will be forthcoming.
What developers and owners should do now
Notice 2026-15 is a welcomed chapter in the evolving FEOC space. FEOC considerations will influence procurement strategy, contract negotiations, and project timelines. This can start with early identification of applicable manufactured products and manufactured product components. This also includes early vendor outreach, and introduction of requirements to meet FEOC in project contract documents. Taxpayers will also want to decide which, if any, safe harbor pathway is realistic per their specific project fact pattern. Finally, it’ll be key to keep an eye on additional guidance and safe harbor tables as they develop. Developers and owners that address FEOC early — and build it into their project plans — will be better positioned to protect their energy credit claims. Notice 2026-15 also allows a comment period, so affected parties may even consider submitting comments by the required March 30, 2026, date if key issues affect your pipeline.
