Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
After much debate and delay, the House late last week passed the bipartisan infrastructure package that had been languishing since it passed the Senate earlier this year.
House progressives had been holding up the process in order to force a vote on the larger Reconciliation package, which contains many of their legislative priorities. Upon receiving assurances from House leadership that a vote will happen on the larger package, the group gave enough votes to ensure passage, and the bipartisan infrastructure bill passed.
The bill contains billions for improvements to roads, bridges and ports – spending that could provide some benefit to our sector if distributed correctly. There are many reasons why the nation is currently facing a supply chain crunch, and some of this can be attributed to lacking infrastructure, which this bill aims to address.
Of particular note to our sector is the package contains the $4.7 billion dollar REGROW Act which the Council has been working on for many months. The legislation would distribute the funds to already existing state orphan well plugging programs subject to minimal federal requirements. Individual states would then use the funds to contract with local companies to perform the work.
Many Council companies will benefit from this funding, as our companies are uniquely suited to perform this work. The Council is working with the Department of Interior on the process for distribution of these funds and will soon host a webinar to discuss opportunities presented and to detail the process going forward. Stay tuned to the newsletter for additional information in the coming weeks.
Large Reconciliation Package Still in Flux
Despite a promise by House and Senate leadership to move quickly on the larger reconciliation package which contains much of President Biden’s domestic policy agenda, a path forward and timing of any vote remains unclear. The most recent version of this legislation contains many provisions we are watching and could have impacts on our sector.
Of particular note, the package contains a new corporate minimum tax of 15% on profits for companies reporting more than $1 billion in annual net income. It also contains provisions that provides incentives for the manufacturing of clean energy components. For instance, it would provide tax credits for U.S.-made thin-film and crystalline silicon solar cells, solar wafers, solar modules and polysilicon, which is a key ingredient in most solar panels. The package also contains a hydrogen production credit with qualification and thresholds are based on the amount of CO2 equivalent emissions generated per kilogram of hydrogen produced.
Our industry has been closely watching the development of the methane fee language in previous versions of the bill. The old formula, which based the fee on an average per basin estimate, is gone. The new language contains a formula where companies would begin reporting in 2023 and pay $900/ton for 2023, $1,200 in 2024 and $1,500 in 2025. This fee is levied per facility.
The language also includes $775 million in incentives to operators for investments in monitoring and mitigation of methane emissions. While the methane threshold would remain at .2% for reporting, producers would be exempt from emissions that were a result of unreasonable delay in environmental permitting.
Additionally, of particular importance to our sector, the legislation would increase royalties for new onshore oil, gas and coal leases to 18.75%, from the current 12.5%. Minimum bids for oil and gas leasing would rise to $10/acre, from $2/acre. New offshore oil and gas leases in shallow waters would see royalties increase to 14%, from 12.5%. Current 18.75% royalties for deepwater Gulf of Mexico leases would remain in place.
The bill would also ban new oil and gas leases in federal waters off the entire Pacific and Atlantic coasts, as well as the eastern Gulf of Mexico. It would require oil and gas leaseholders to show proof of an adequate bond to restore any lands or water damaged after the end of oil and gas operations.
The Council Government Affairs staff will continue to work on improving all problematic provisions until the legislation either passes or is scrapped.
USTR Deadline for 301 Exclusions
Council Members who are importing products that have fallen under a 301 exclusion in the past should review the below list to see if their products are covered by any exclusions and determine whether they are interested in having Energy Workforce file a comment in support of reinstating the exclusion.
The comment filing deadline is December 1, 2021. Companies interested in one or more exclusions will need to identify the exclusion(s) they would like Energy Workforce to comment on and provide an explanation as to why the product covered by the exclusion cannot be sourced from locations other than China.
The list below covers most products we believe are being used by Member Companies. However we strongly encourage your trade staff to review the full list to cover all possibilities.
- Oil well and oil field crank-balanced, long-stroke and beam pumps (described in statistical reporting number 8413.50.0010)
- Centrifugal pumps, submersible, other than for use with machines for making cellulosic pulp, paper or paperboard; the foregoing pumps rated not over 1.5 KW (described in statistical reporting number 8413.70.2004)
- Submersible pump incorporating a magnetic drive motor (described in statistical reporting number 8413.70.2004)
- Pump casings and bodies (described in statistical reporting number 8413.91.9080 prior to January 1, 2019; described in statistical reporting number 8413.91.9095 effective January 1, 2019 through December 31, 2019; described in statistical reporting number 8413.91.9085 or 8413.91.9096 effective January 1, 2020)
- Pump covers (described in statistical reporting number 8413.91.9080 prior to January 1, 2019; described in statistical reporting number 8413.91.9095 effective January 1, 2019 through December 31, 2019; described in statistical reporting number 8413.91.9085 or 8413.91.9096 effective January 1, 2020)
- Pump parts, of plastics, each valued not over $3 (described in statistical reporting number 8413.91.9080 prior to January 1, 2019; described in statistical reporting number 8413.91.9095 effective January 1, 2019 through December 31, 2019; described in statistical reporting number 8413.91.9085 or 8413.91.9096 effective January 1, 2020)
- Submersible centrifugal pumps (other than fuel, lubricating or cooling medium pumps for internal combustion piston engines; other than stock pumps imported for use with machines for making cellulosic pulp, paper or paperboard), not fitted or designed to be fitted with a measuring device, the foregoing capable of operating at 3,700 liters or more but not exceeding 41,000 liters per hour (described in statistical reporting number 8413.70.2004)
- Valve bodies, of aluminum, of valves for oleohydraulic or pneumatic transmissions (described in statistical reporting number 8481.90.9020)
- Hydraulic valve parts, other than valve bodies, of valves for oleohydraulic or pneumatic transmissions, each valued not over $5 (described in statistical reporting number 8481.90.9040)
- Electric motors, AC, permanent split capacitor type, not exceeding 16 W (described in statistical reporting number 8501.10.4020)
- DC motors, of an output exceeding 37.5 W but not exceeding 74.6 W, valued over $2 but not over $30 each (described in statistical reporting number 8501.31.2000)
- AC motors, of 18.65 W or more but not exceeding 37.5 W, each with attached actuators, crankshafts or gears (described in statistical reporting number 8501.10.6020)
For additional information about this process or to discuss options for making comments, please contact SVP Government Affairs & Counsel Tim Tarpley.
Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Council’s newsletter, which highlights sector-specific issues, best practices, Council activities and more.