Republicans, Dems join forces in effort to reverse anti-fossil fuel provision in Biden’s climate package
FIRST ON FOX: A large bipartisan coalition in the House is introducing legislation Friday that would reverse a provision in the Inflation Reduction Act (IRA) targeting oil and gas producers.
The Promoting Domestic Energy Production Act — authored by Reps. Mike Carey, R-Ohio, and Vicente Gonzalez, D-Texas, and joined by more than a dozen fellow members — would aim to ensure the oil and gas industry is able to enjoy the same tax benefits as other capital-intensive industries. Specifically, it allows companies to receive tax deductions on intangible drilling costs (IDC).
“American energy independence is neither a right nor left issue, but one that should unite us all,” Carey told Fox News Digital in a statement. “Our bipartisan legislation fixes a provision within the Inflation Reduction Act that unfairly penalizes America’s energy producers.”
“At a time of sky-high inflation, the American people need any help they can get when it comes to lowering the cost of energy,” the Ohio Republican continued.
BIDEN ADMIN QUIETLY SETTLES WITH ECO GROUPS TO RESTRICT OIL DRILLING IN GULF OF MEXICO
Reps. Mike Carey, R-Ohio, (right) and Vicente Gonzalez, D-Texas, (left) introduced the Promoting Domestic Energy Production Act on Friday. (Getty Images)
The Inflation Reduction Act, President Biden’s $739 billion climate and tax package passed last year, imposes a book minimum tax on American companies. However, while companies in most industries can still reduce taxable income by the amount of depreciation deductions received under corporate tax, oil and gas companies are not able to do so.
IDCs, which account for about 85% of oil and gas exploration costs like labor and safety costs, are not eligible for accelerated cost recovery deductions allowed for tangible personal property under the IRA. As a result, the IRA’s book minimum tax has led to American oil and gas producers experiencing the third-highest tax hike compared to 30 different industries.
REPUBLICANS UNVEIL SWEEPING EFFORT TO EXPAND PIPELINE, ENERGY INFRASTRUCTURE
“Our country must be ready to face the energy challenges of the next few decades,” Gonzalez said in a statement shared with Fox News Digital.
“This commonsense bipartisan bill promotes our nation’s domestic energy production capabilities — ensuring we keep and create American jobs, lower energy prices, and decrease our dependence on foreign energy sources,” he said.
President Biden pictured next to an oil drilling rig in a photo illustration. (Chip Somodevilla/Getty Images | Sergio Flores/Bloomberg via Getty Images)
According to Carey’s office, IDC tax deductions have been included in the U.S. tax code for decades due to the costly and risky nature of oil and gas exploration.
And such deductions aren’t subsidies, his office added, because IDCs don’t reduce overall taxes paid. Instead, they are designed to allow companies to recover costs for future investment.
CLICK HERE TO GET THE FOX NEWS APP
The legislation, meanwhile, is the latest effort to chip away at the IRA which passed in August 2022 along party lines. Republican lawmakers have set their sights on billions of dollars earmarked under the law for various green energy projects, funds the Biden administration is racing to dole out to avoid a future GOP Congress or administration from clawing it back.
However, the Promoting Domestic Energy Production Act introduced by Carey and Gonzalez could represent the effort chipping away at the IRA with the highest likelihood of success. The bill could also be included in a broader tax package when Congress returns from its summer recess.
In addition to Carey and Gonzalez, Reps. Henry Cuellar, D-Texas, Alex Mooney, R-W.Va., Ryan Zinke, R-Mont., Dan Meuser, R-Pa., Greg Pence, R-Ind., and Tom Cole, R-Okla., who chairs the House Rules Committee, signed onto the bill.