Tucked inside the One Big Beautiful Bill Act is $1 billion to help the fossil fuel industry, but that provision has created friction and questions within the GOP, with one lawmaker calling it “government-directed industrialization.”
The provision, a single line in the Senate Banking Committee portion, appropriates $1 billion in Defense Production Act funding. The Cold War-era law has been invoked by both Presidents Donald Trump and Joe Biden to boost domestic industries in the name of national defense. It’s unclear who inserted the provision.
The funding, which wasn’t in the original House bill, prompted some senators to raise questions privately about how exactly the Trump administration intended to spend the money.
Several Republicans interviewed recently, including Environment and Public Works Chair Shelley Moore Capito (R-W.Va.) and Cynthia Lummis (R-Wyo.) said they were still in the dark about the provision.
“There are so many issues in that bill of which I have no clarity and no knowledge,” Lummis said. “There was stuff in there that I didn’t even know about. So I can’t pick out little things and give you an answer, which is terrifying. But that’s the truth.”
Ahead of the bill’s passage, one of the loudest objectors was Sen. John Kennedy (R-La.), who later introduced an amendment to strike the funding from the legislation. It failed 42-58, with several Democrats joining Republicans to kill it.
Now, the White House says the money will be used to “accelerate the domestic production of fossil fuels, support strategically important coal mining operations, and reinforce the reliability and resilience of our electric grid,” according to a senior White House official.
That’s in part because financing has become a problem for certain fossil fuel projects, even those that are permitted and otherwise viable, the official told POLITICO’s E&E News in an email.
“This disconnect between federal authorization and private capital deployment is becoming a systemic obstacle to energy development,” said the official, who was granted anonymity to discuss the matter candidly. “The Administration is taking this issue seriously.”
The administration’s quest to “rebuild energy dominance” could also include “expanding access to federal loan programs, and identifying reforms to de-risk investment in fossil energy and critical mineral projects.”
The Trump administration has favored fossil fuels over renewable energy, arguing the former is more reliable for its “energy dominance” agenda. However, some fossil fuel industries, like natural gas, are struggling to keep up with demand due to a shortage of turbines.
A Republican aide familiar with the closed-door Senate talks, granted anonymity to speak candidly, said senators asked questions about whether the DPA would provide grants or loans. There was also some discussion about extending the life of coal plants or reopening coal or gas plants that had been shuttered.
A second person familiar with the plans said the administration intends to use the funding for transformers, switch gear shortages, rare earth stockpiles and other unexpected needs. The person noted a billion dollars won’t go very far.
Room for concern
Granting the president such broad authorities left some Republicans with reservations, even after administration officials briefed senators last month in closed-door meetings.
Sen. John Hoeven (R-N.D.) said White House officials enumerated about five different categories that they intended to use, but that prompted disagreement about whether they provided enough specificity.
It certainly was not enough for Kennedy, who tried to strike the funding at the last minute.
He declared on the Senate floor that the Trump administration was basically just copying the follies of the Biden administration, which used the law to accelerate critical mineral production and clean energy technologies.
“I raised fresh hell” at the time, he said. “And now we’re about to do it again. A billion dollars.”
He argued “government-directed industrialization” wrongly picks winners and losers in the private sector: “This business gets the money but you, Ms. Businesswoman, you can’t have the money … It’s immoral. It’s unfair to the people who don’t get the money.”
Kennedy stressed that although he had complete faith in Energy Secretary Chris Wright and Interior Secretary Doug Burgum, the law would allow them to decide “in their unfettered discretion who’s going to get this money in the private sector.”
Still, when asked this week if he has gotten clarity from the administration about its plans for the money, he said simply, “No.”
Senate Banking Chair Tim Scott (R-S.C.) opposed the amendment out of concern over the country’s reliance on China for critical minerals.
“The United States of America — the city on the hill — remains dependent on foreign powers for our necessary resources. We are not self-reliant in areas that matter the most to the American people.”
Asked if he had raised concerns about the funding, House Financial Services Chair French Hill (R-Ark.) said only: “We’re looking forward to working with both the Senate and the administration on how that should be targeted and used effectively.”
During the last Trump administration, the coal and nuclear industries spent years urging the White House to invoke the Defense Production Act to keep struggling plants alive.
Typically, the DPA is used to compel companies to produce certain products, as was the case to manufacture medical supplies during the Covid-19 pandemic.
Reporters Brian Dabbs and Timothy Cama contributed.
