Dems Unleash Bill Targeting Fossil Fuel Tax Breaks, Subsidies

Source: By Law360 • Posted: Sunday, April 18, 2021

Law360 (April 15, 2021, 7:51 PM EDT) — Democratic lawmakers on Thursday proposed legislation targeting the fossil fuel industry that would increase payments companies must make to the government, eliminate tax benefits and subsidies, and ban taxpayer-funded fossil fuel research and development.

Sen. Bernie Sanders, I-Vt., and Rep. Ilhan Omar, D-Minn., said that their bill, the “End Polluter Welfare Act,” would save taxpayers up to $150 billion over the next ten years. They said the legislation backs up President Joe Biden’s proposals in his American Jobs plan to eliminate subsidies for fossil fuels and to provide incentives for renewable energy and the manufacturing of technologies, such as batteries and solar components.

“Providing corporate giveaways during a time of widespread suffering to fossil-fuel companies is unconscionable,” Omar said in a statement. “Our resources should go to helping the American people get through this crisis — not providing giveaways to the very people responsible for polluting our water and lands.”

Under the bill, the U.S. Department of Interior would lose its authority to provide discretionary royalty relief and would repeal special royalty relief for deepwater drilling. And it would increase onshore royalty rates to 18.75%, which would make them equal to offshore royalty rates.

In addition, the bill would create “unlimited” liability for companies that cause offshore oil spills. It would also remove a liability cap for spill damages on tar sands pipeline operators, which is currently set at $350 million.

Under another provision, the bill would amend the Comprehensive Environmental Response, Compensation, and Liability Act to create an ability to impose liability on large financial institutions or major investors who may fund endeavors deemed to damage the environment.

“In addition to ending domestic polluter welfare, this bill would end federal support for international oil, gas, and coal projects as a step toward fulfilling our responsibility to help the international community move away from dirty fossil fuels to clean sources of power,” Sanders and Ilhan said in a joint statement.

This bill would also guarantee the solvency of the Black Lung Disability Fund.

American Petroleum Institute Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola criticized the bill on Thursday.

“The legislation [the bill’s sponsors] introduced today singles out one sector to create an unlevel playing field, harms U.S. competitiveness and puts at risk the billions of government revenue that our industry generates at the state and federal level, including critical funding for conservation and education programs,” Macchiarola said in a statement.

Dozens of environmental groups voiced support for the proposed legislation, including the Sierra Club, GreenLatinos, Earthjustice and more. They said they’re in favor of eliminating subsidies that benefit the oil, gas and coal industries

“These subsidies include century old tax loopholes, giveaway leasing rules for extraction on our public lands and waters, and the misallocation of billions for fossil fuel projects through export credit and development finance agencies,” the groups said in a joint statement.