Debate on the Republicans’ megabill focused largely on taxes and Medicaid, but the legislation includes a roster of contentious energy and environment provisions.
With no party having secured a filibuster-proof majority in the Senate since the Obama administration, leaders have turned to the budget reconciliation process to pass bills related to fiscal matters. And those bills have come to include a multitude of issues.
But the budget reconciliation process is limited, with the parliamentarian often ruling that some provisions don’t qualify to pass by simple majority. And the GOP’s tight margins in both chambers have forced leaders to seek consensus. Lobbying has also been intense.
Here’s how it shakes out:
Winners
Oil and gas
President Donald Trump and congressional Republicans regained power after a campaign focused on “American energy dominance” and “drill, baby, drill.” The megabill delivers on those promises.
The legislation would mandate onshore and offshore oil and gas lease sales. The bill also looks to secure production in the Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska.
Even though Republicans did not move to scrap the methane fee from the Democrats’ Inflation Reduction Act, they delayed it by a decade. They also changed the tax deduction for intangible drilling costs to let companies get the benefits more quickly.
“This historic legislation will help usher in a new era of energy dominance by unlocking opportunities for investment, opening lease sales and expanding access to oil and natural gas development,” American Petroleum Institute CEO Mike Sommers said.
Biofuels and hydrogen, both Republican favorites, emerged as winners too. Tax incentives for biofuels were extended two years to 2029, with language to encourage domestic production, while the clean hydrogen tax credit stayed intact.
Alaska
Not only is the bill setting up Alaska to get more oil and gas drilling, which leaders lobbied for, it also seeks to direct more revenues to the state.
The megabill would give Alaska 70 percent of the revenues from Cook Inlet and NPR-A drilling starting in fiscal 2034. From ANWR development, Alaska would get 50 percent of revenues starting immediately and 70 percent starting in 2034, according to a summary.
The legislation includes billions for new icebreakers and $300 million to make Juneau the home port of a cutter that’s soon to come online.
Coal
The budget reconciliation package includes language to encourage coal leasing and make more tracts available. The bill would also reduce the royalty rate from 12.5 percent to 7 percent through 2034.
It’s unclear how much interest companies have in mining more federally owned coal. Interest has been limited even with Republicans moving to undo Democratic restrictions.
The legislation also included a credit to encourage the mining of steelmaking coal, which is often exported. Democrats and environmental groups have complained that the pro-coal credit comes as Republicans move to roll back incentives for renewable energy sources.
Losers
Renewable energy
A group of Senate Republicans succeeded in eliminating a new tax on wind and solar projects. They also made Inflation Reduction Act credit rollbacks more lenient.
Still, the megabill would begin winding down solar and wind incentives next year. Projects after that would have to be plugged into the grid by the end of 2027.
The bill, as expected, targets Inflation Reduction Act incentives for electric vehicle purchases. Republicans moved to eliminate those quickly.
The package would claw back EPA and Department of Energy grant funding, including for renewables. It would provide $1 billion for DOE loans for power sources favored by the administration.
In one win for renewables, the legislation would share revenues from renewable projects with states and counties that host them. The idea is to make renewables more attractive for local governments.
Permitting reform
Republicans always knew they couldn’t do much on permitting through budget reconciliation. Still, they tried to ease approvals for pipelines, natural gas export terminals and other projects.
But the parliamentarian ruled against language that would have exempted companies that paid a fee from certain litigation under the National Environmental Policy Act.
She also ruled against language that would have made natural gas export proposals in the national interest as long as developers paid a fee. Pipeline provisions similarly fell off.
What did survive was a provision requiring faster NEPA permitting to companies that pay a fee. Democrats have called all the fee proposals “pay-to-play” schemes.
“REINS Act” boosters
Conservatives, including Senate Energy and Natural Resources Chair Mike Lee (R-Utah), were hoping the budget reconciliation package was their chance to enact major rule-busting legislation based on the “Regulations from the Executive in Need of Scrutiny Act,” which would require Congress to approve major rules.
But even though they tried to craft language that would clear the parliamentarian, the conservatives’ language did not pass muster.
The parliamentarian also ruled against language that would help fund agency reorganization efforts. It was meant to complement the president’s work to reshape the federal government.
