Congressional Action on Percentage Depletion and a Methane Tax.

Legislative, NSWA Legislative Report, Percentage DepletionLeave a Comment

Chris Kearney | NSWA Vice President, Governmental Affairs

Overview

This week, the House is scheduled to vote on the Senate-passed bipartisan infrastructure bill (background information below). As of this writing, scheduling of the vote remains uncertain (Thursday, September 30th, was the tentative date).  

However, consideration of that measure is directly tied to the outcome of ongoing conversations between moderate and progressive members of the House Democrat Caucus over political and policy disputes centered on the price of, and programmatic elements in, the FY22 Budget Reconciliation legislative package.

This week, talks between the two factions within, and between, the House and Senate Democrat Caucus have continued as they have engaged in intense and furious negotiations, attempting to hammer out an agreement on – at least the broad outlines of – the reconciliation package. The House version is pending floor consideration. The Senate has yet to formally develop their version of the bill.

If agreement can be reached, progressives are expected to vote in sufficient numbers to ensure passage of the infrastructure bill. The number of GOP votes on infrastructure is expected to be less than 10 given the overall three-seat majority, and the Speaker can lose few progressives. This will allow more in-depth conversations to continue on the final reconciliation package, consideration of which may be weeks away.         

Of note, for months, the expectation in Washington has been that infrastructure legislation would not be considered on the House floor until the Senate and House Democrats majorities had reached agreement and voted on the FY22 budget reconciliation bill.          

So, as the reconciliation process – and efforts at consensus – continues across the chambers and remains fluid in the weeks ahead, all NSWA members are encouraged to call and or email their House Representative and Senators and urge: (1) percentage depletion continue to not be included in the FY22 Budget Reconciliation bill, and (2) that the methane tax proposal included in the House bill be removed.   

Find your U.S. Representative here

Find your U.S. Senator here.

Background

In late August, the House passed, by a party-line vote of 220-212, a multi-section procedural measure (H. Res. 601) which includes the adoption of the Senate-passed FY 2022 budget resolution or “blueprint” (S. Con. Res. 14) and outlines a date certain for voting on the Senate-passed infrastructure bill.

With the House’s adoption of the FY22 budget resolution by both chambers, it officially kickstarted the budget reconciliation process that will allow congressional Democrats to pass a ten year $3.5 trillion annual expansive social spending and tax package aimed at implementing the President’s “Build Back Better agenda,” including large swaths of President Joe Biden’s proposed American Jobs and Families Plans unveiled earlier this year.

Once, the multiple bills are marked up and passed by the committees, the House Budget Committee will then bundle them together into a single, mammoth bill prior to a vote by the House.

Also, the House Energy and Commerce Committee has also completed its work on the committee’s contribution to the budget reconciliation process. The committee’s bill includes a methane fee on the oil and gas industry that “recognizes the cleanest performers” and “holds individual companies responsible for their own leaks and excess methane pollution.”

Specifically, the committee, by a vote of 31-26, approved a portion of the $3.5 trillion budget reconciliation measure that would direct the Environmental Protection Agency to impose a methane pollution fee on the oil and gas industry. Rep. Kurt Schrader (D-Ore.) joined Republicans in voting against the legislation.

The fee would vary depending on how much of the greenhouse gas a facility emits. Methane emissions are considered more toxic than carbon dioxide.

The amount of the fee, which would begin in calendar year 2023, would be $1,500 per ton of methane that a facility reports during the prior reporting period, based on the specific industry’s intensity threshold number.

The fee for petroleum and natural gas production, for example, would be based on the reported tons of methane emissions that exceed 0.20% of the natural gas sent to sale from such facility. The fee for nonproduction petroleum and gas industry would be on the reported tons of methane emissions that exceed 0.05% of natural gas sent to sale from the facility.

It is expected that Democrats and Republicans from oil and gas states – on and off the committee – will continue efforts to strike the fee from the bill in the upcoming House Floor debate. 

Senate action on a methane fee is unknown at this time, though leading progressive members are expected to push for inclusion of a broad methane tax on oil and gas operations. 

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