The Equipment Leasing & Financing Association pubished its December Washington Update in three areas.

Hill Wields Gavel

Last week House of Representatives Republican Steering Committee announced that Congressman French Hill, who represents the 2nd district of Arkansas will Chair the House Financial Services Committee in the 119th Congress.

Congressman Hill started his professional career by founding and serving as CEO of Delta Trust & Banking Corporation. He later went on to be a public servant, serving as Assistant Secretary of Treasury for Corporate Finance, then Executive Secretary to the President’s Economic Policy Council, then as staffer for former Senator John Tower (R-TX) before serving as staff on the U.S. Senate Committee on Banking, Housing, & Urban Affairs, and finally serving in United States House of Representatives.

Of particular note for ELFA, Congressman Hill is well known to ELFA, speaking at Capitol Connections in 2023, and sponsoring legislation supported by ELFA to roll back significant portions of Section 1071. With a Republican in the White House and Congressman Hill at the helm of this important Committee, the opportunity is ripe for significant changes to Section 1071 including the potential for full repeal.

Favorable Final Rule from Treasury Regarding ITC and Energy Credit

On December 4th, the equipment leasing and finance industry scored a significant win on the regulatory level with the Internal Revenue Services' (IRS) final rule dealing with energy credit. After much deliberation and assessment of the comment letters, the IRS with support from the U.S. Treasury Department and Department of Energy, issued a final rule. specifying what investments in energy property are eligible for the energy credit with the hopes of bolstering economic growth through increased investment in energy, transportation and communications moving forward.

It is important to highlight that the final rule acknowledges the developers and operators of energy properties to use sale-leaseback or lease-passthrough structures when seeking the Section 48 credit. The final regulation does not prohibit the application of general principles, including those in Section 50(d), though specific applications of sale-leaseback or lease-passthrough rules are not covered.

The IRS rule goes on to state that the Section 48 credit is available for interconnection costs related to qualified interconnection property if the purchaser incurs these costs during the purchase. Any amount paid or incurred for interconnection costs is considered part of the construction or erection costs of the property. In a sale-leaseback transaction, the original use of the energy property starts when the buyer-lessor begins using the property, and in a pass-through lease, it starts as if the lessee had purchased the property.

Right-to-Repair Prevails in NDAA

Due to a collective effort from ELFA and other in the manufacturing industry, harmful provisions regarding right-to-repair were stripped from the U.S. Senate’s FY25 National Defense Authorization Act (NDAA) as well as the House of Representatives’ version of the bill. The House version contained an amendment to require a report on repairability, while the Senate version contained language that was highly problematic for several industries.

The Senate provision contained an amendment from Sen. Elizabeth Warren (D-MA), which would have required contractors of any good or service “provide the Department of Defense fair and reasonable access to all the repair materials, including parts, tools, and information, used by the manufacturer or provider or their authorized partners to diagnose, maintain, or repair the good or service.” The Senate FY25 NDAA amendment also contained language that would have the Department of Defense receive parts at “lowest available” cost or, if needed, at a cost “determined to be fair and reasonable by the Government.”

The Senate provision from Senator Warren would have forced manufacturers and contractors to share manufacturing specifications and other IP protected materials under the guise of repair while forcing parts to be distributed at the dealers' cost.