Governors' Wind Energy Coalition

Renewable energy backers are raising concerns the Senate’s tax bill may inadvertently discourage investment in wind and solar projects.

Members voted last night along party lines to proceed with debating the overhaul after concerns emerged about a technical glitch related to language allowing drilling in the Arctic National Wildlife Refuge. But backers say it won’t derail the effort.

While the legislation would keep the phaseout schedule for the production tax credit and investment tax credits agreed to in 2015, other language to prevent firms from shifting profits to low tax jurisdictions — a practice called base erosion — “would have a devastating, if unintended, impact on wind and solar energy investment and deployment,” a coalition of renewable groups wrote to senators yesterday.

The Senate’s base erosion anti-abuse tax (BEAT) provisions “undermine our capacity to use renewable energy tax credits, which have value only if they can be monetized,” wrote the American Council on Renewable Energy, the American Wind Energy Association, the Solar Energy Industries Association and Citizens for Responsible Energy Solutions.

“For multi-national companies covered under the BEAT provisions, the renewable tax credits would, as drafted, be subject to a new 100 percent tax,” the coalition said.

The renewable groups are urging lawmakers to change the BEAT program to exempt the PTC and ITC from the base erosion tax calculation.

If not, they say, “major financial institutions have indicated that, under such a regime, they would no longer participate in tax equity financing, the principle mechanism for monetizing credits. The tax equity marketplace would collapse under these provisions, leading to a dramatic reduction in wind and solar energy investment and development.”

The letter injects a new wrinkle into the tax reform push. While the House bill would slash the value of the PTC and added new qualification requirements for renewables, the Senate largely punted on energy issues.

Left hanging in the balance is an assortment of “orphaned” renewable tax breaks left out of the 2015 deal and an extension of a nuclear production tax credit. The House addressed those but not the Senate.

Sen. Dean Heller (R-Nev.), a Finance Committee member, predicted Congress would ultimately extend the orphaned sources in separate legislation.

“I do believe it will be this year,” he told E&E News yesterday.

ANWR

The Senate will continue to debate the tax bill today, after senators backed the motion to proceed yesterday on a 52-48 vote.

Under budget reconciliation rules, the legislation is subject to 20 hours of debate, after which an amendment “vote-a-rama” is expected.

Republicans are using reconciliation for tax reform to avoid the threat of a Democratic filibuster. Without the procedure, the majority would have no path forward for the ANWR language.

Still, reports emerged yesterday about an objection from the Senate parliamentarian to at least part of the drilling provision, which was said to stray into the jurisdiction of the Environment and Public Works Committee.

Reconciliation instructions did not include the EPW Committee. Instead they tasked the Energy and Natural Resource Committee with finding $1 billion in deficit savings to help pay for the tax bill. A GOP aide said the tax bill would be amended to comply with the instructions.

“This is what happens when you cut corners and try to sneak drilling into an already terrible tax bill,” said Tiernan Sittenfeld, senior vice president for government affairs at the League of Conservation Voters. “A rider turning the pristine Arctic National Wildlife Refuge into an oil field should not have been part of this tax bill in the first place.”

Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska), who says the ANWR provision is important to her support of the tax reform bill, said aides had been working with the parliamentarian. She didn’t envision problems.

“This is a fascinating process,” she said, noting that keeping to reconciliation rules “was a pretty arduous task.” She said, “I think it’s fair to say the big issue we would have faced, we have worked through.”

Budget Chairman Mike Enzi (R-Wyo.) said reconciliation limited his committee’s ability to tweak the language, but things were different now that the chamber is debating the bill.

Enzi called moving forward with tax reform legislation “historic” and reminded colleagues that their ability to offer amendments was “unlimited.”

Senate Energy and Natural Resources Committee ranking member Maria Cantwell (D-Wash.) signaled this week she’ll “try again” to strike the ANWR drilling provision from the bill.

If her amendment fails, Cantwell then vows to press conferees merging each chamber’s version of tax reform to strike any ANWR language.

Other concerns

Senate Republicans yesterday were still trying to balance deficit concerns that have bogged down the bill, which passed the Budget Committee on Tuesday only after leaders promised to consider a “trigger” to raise revenues in the event the bill fails to meet economic projections.

Sen. Thom Tillis (R-N.C.) yesterday called the idea “well-intentioned” but added that, “I don’t think it’s necessary.” Other senators have also come out against it.

Critics say it would inject uncertainty into business planning, stifling growth while also possibly compounding a slowing economy by raising taxes.

“I’m not a big fan of that,” House Energy and Commerce Chairman Greg Walden (R-Ore.) said yesterday. “I think it makes it hard to make long-term investment when the tax code may change unexpectedly.”

House Ways and Means Chairman Kevin Brady (R-Texas) declined to comment on a trigger yesterday, calling it the “Senate’s baby.” He told reporters, “Let the Senate do its work and then we’ll find common ground in conference.”

Outside conservative groups have railed against the idea since it emerged. Americans for Prosperity President Tim Phillips said yesterday GOP unity on taxes suggested there was a “path forward” for addressing deficit concerns without a trigger.

Republicans “are looking to get to yes,” he told reporters at a Capitol Hill press conference. “It’s the most unified effort I’ve seen on any issue in many years from Republicans in the House, and the Senate, and the president and the administration.

“And when you have that kind of unity and a desire to genuinely move forward,” he said, “there’s usually a way to find a way to get it done.”

Reporter Kellie Lunney contributed.