Stakeholders across the country are calling on President Trump to swiftly sign legislation passed by the House and Senate this week that would repeal the costly federal methane tax.
The methane tax, formally known as the Waste Emissions Charge (WEC), was included in the Inflation Reduction Act (IRA) as part of the Methane Emissions Reduction Program (MERP) without “ever being considered in a hearing, receiving expert testimony in favor or opposition, no economic analysis, and no consideration of efficacy,” as Independent Petroleum Association of America President & CEO Jeff Eshelman previously explained on EID. The measure had not yet gone into effect but would have added significant burden to America’s independent producers, with initial estimates finding it could increase costs “as high as $14.4 billion, increasing 5 percent above inflation annually.” Further, it was estimated that the tax would increase costs for consumers by 17 percent on average, or more than $100 per year for an average American family.
As Senate Majority Leader John Thune (R-SD) explained on the floor this week:
“This tax would increase costs for energy producers and limit energy production, leading to higher utility bills for many Americans. And under the Biden administration’s implementation of this tax, it would hit smaller operations the hardest. On top of that, the tax puts tens of thousands of jobs at risk, including in natural gas-rich states like Pennsylvania, New Mexico, Texas, and North Dakota.”
The move has been celebrated by U.S. energy industry leaders, who have continuously raised concerns that the methane fee effectively created a punitive tax model that would discourage domestic energy production and negatively impact American consumers. As Eshelman said:
“The tax was passed without appropriate understanding of its impact or industry safeguards. IPAA has always opposed the methane tax and believe it is simply a tax designed to hamper American oil and gas production. With the passage of H.J.Res.35 in both the House and Senate, IPAA urges quick action by President Trump to sign this resolution and will work with his Administration to eliminate this unnecessary tax on American oil and natural gas producers as soon as possible.”
Similarly, Rep. August Pfluger (R-TX) said in response to the Senate’s passage of his CRA and claims that the “rule is essential to ‘lowering toxic emissions’ and that eliminating the tax will ’cause prices to go up.’”:
“In reality, this rule has only stifled American energy production, discouraged investment, and increased energy prices across America. Before this rule was enacted, the American energy sector had already taken initiatives to hit record-low emissions while simultaneously hitting record-high production. No one wants to do business when the federal government creates regulations that will put them out of business, which is what this natural gas tax is doing. I thank Senator Hoeven for his leadership in the Senate, and I am thrilled that this legislation is now headed to the President’s desk to eliminate this harmful tax once and for all!”
Attack on U.S. Energy
The alleged goal of the methane fee was to push oil and gas companies to pursue better methane emission controls. There is an issue with that logic though: many major oil and gas producers already meet the Environmental Protection Agency’s methane reduction standards. In fact, EPA’s own data show that methane emissions in the top U.S. oil and gas-producing basins have fallen 44 percent since 2011.
The methane fee is just another example of the Biden Administration’s continuous attacks on the U.S. energy industry, with no regard for overregulation. A letter sent in June 2023 to the EPA, drafted by former Reps. Cathy McMorris Rogers (R-WA) and Bill Johnson (R-OH) detailed that the IRA’s MERP expanded EPA’s regulatory reach by giving the agency the ability to collect tax revenue, an unfamiliar responsibility. Furthermore, the methane fee undercuts rules meant to protect against duplicative regulation and taxes.
The American Petroleum Institute further emphasizes why the methane fee is not only unnecessary, but also retaliatory:
“This bipartisan resolution is an important step toward repealing the so-called ‘methane fee’—a duplicative, punitive tax on American energy production that stifles innovation. Thanks to industry action, methane emissions continue to decline as production increases, and we support building on this progress through smart and effective regulation.”
Bottom line: To the benefit of American consumers, Congress has taken an important step in rolling back this costly and unnecessary tax, paving the way for the U.S. energy industry to continue to provide reliable and affordable energy for Americans.
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