Three Important Policy Reforms in H.R 1

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The House of Representatives this week is expected to consider H.R. 1, the “Lower Energy Costs Act.”  Here are three of the most important reforms:

1) Repeal of the Environmental Protection Agency’s (EPA) “Greenhouse Gas Reduction Fund”

The misleadingly named Inflation Reduction Act (IRA) created a $27 billion fund that gives the EPA excessive discretion to, among other things, hand out grants to nonprofit organizations to deploy zero-emission technologies.  One key aspect of the program is to fund programs that would otherwise not get financing.  As a result, taxpayers will be on the hook for projects deemed unworthy of private investment.
This program amounts to a huge EPA slush fund that is ripe for abuse, with very few limitations imposed on the EPA.  It gives the agency wide latitude to decide how to spend the money and who can receive the money.  It is yet another example of Congress arguably delegating its spending power to an agency, which by itself should be more than enough for legislators to reject this slush fund.  

H.R. 1 would repeal the slush fund and rescind any unobligated money.

2) Repeal of the Methane Fee

The IRA isn’t all carrots.  It also has sticks, and one of the biggest sticks is a charge on methane emissions for petroleum and natural gas companies. According to the House report accompanying the repeal legislation, there are rough estimates that the fee could result in an annual cost between $39-$65 billion.  The fee is part of the current war on conventional fuels that will almost certainly mean higher energy prices for consumers.

This fee is being imposed even as methane emissions are declining in the United States, based on the EPA’s “Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2021.”  According to the report, from 1990-2021, methane emissions from natural gas systems and petroleum systems (combined) decreased 13 percent.  The American Petroleum Institute states that “methane emissions per unit of production, measuring emissions intensity, fell about 70% between 2011 and 2019 across five of the major producing regions in the U.S.”

H.R. 1 would repeal this costly and unnecessary methane fee.

3) Clarification of the Proper Scope of Clean Water Act (CWA) Section 401 Certification

The CWA requires federal permits for discharges from point sources (i.e. discrete sources, such as pipes) into navigable waters. Section 401 of the statute gives states a role in the permitting process to ensure that federally licensed or permitted projects don’t hurt water quality.  A permit may only be issued if a state issues or waives a Section 401 certification.

There has been a concerted effort to greatly expand the reasons that states can use to block projects through the Section 401 certification process.  For example, the Biden administration proposed a rule that would allow states to block projects even if the reasons have nothing to do with discharges, point sources, or navigable waters.  In other words, states would be able to ignore these core elements of the statute.  Some states have already abused the Section 401 process by blocking projects for reasons that have nothing to do with water quality, such as climate change and train noise.

H.R. 1 would, among other things, clarify that Section 401 certification is limited to discharges from point sources into navigable waters and help ensure that states only focus on water quality issues.

Legislators need to unleash American energy and remove energy central planning that tries to dictate how energy is produced and consumed in the United States.  Repealing the EPA’s slush fund and the methane fee, as well as properly clarifying the scope of Section 401 certification, would help to achieve these objectives.