After several near-death experiences, Congress has sent to President Biden a comprehensive climate and health care bill that, while far short of Biden’s original plans, represents significant new investments in Democrats’ domestic priorities.
The Inflation Reduction Act of 2022 (IRA) would reduce the federal deficit by $305 billion while spending $386 billon on energy and climate provisions and $98 billion on access to health care. It’s paid for with a new 15-percent minimum tax on corporate income, provisions that allow the government to negotiate the prices of certain prescription drugs under Medicare and Medicaid, and other revenue raisers.
What does the bill mean for the CRM industry? Here is a first look at some of the provisions that may impact CRM firms and the preservation process.
Permitting and Reviews
The bill provides additional spending to serval federal agencies to support “efficient, accurate and timely reviews,” including, among other activities:
- developing reviews for permitting and approval processes to improve agency transparency, accountability and public engagement
- hiring and training personnel
- developing programmatic documents
- procuring technical or scientific services for reviews
- developing environmental data or information systems
- stakeholder or community engagement
- purchasing new equipment
- developing geographic information systems and other analysis tools.
The amounts include:
| EPA | $40 million |
| DOE | $115 million |
| Interior | $150 million |
| DOT | $100 million |
| NOAA | $20 million |
| FERC | $100 million |
| CEQ | $30 million |
The bill also provides $350 million for the Federal Permitting Improvement Steering Council Environmental Review Improvement Fund .
Energy and Climate Spending
The bill’s centerpiece is a significant and historic increase in spending and tax incentives for energy production, which could lead to more energy infrastructure projects.
Tax Incentives for Energy Production. Among other provisions, the bill:
- Extends the renewable energy production tax credit (PTC) until the end of 2024, after which the PTC will transition to technology-neutral. This credit applies to the production of energy from solar, wind, geothermal, biomass and hydropower and other eligible projects.
- Extends the investment tax credit (ITC) for solar energy property and most other ITC-eligible property until the end of 2024. (Geothermal credit will be extended until 2035.)
- Revises and extends the advanced energy project credit, focusing on incentivizing manufacturing facilities related to the production of equipment.
- Extends the carbon sequestration credit for facilities that begin construction before 2033.
- Extends the tax credit available for alternative refueling property (i.e., electric vehicle charging), increasing the maximum credit available from $30,000 to $100,000.
Greenhouse Gas Reduction Fund. The bill creates a new $27 billion Greenhouse Gas Reduction Fund to invest in nonprofit, state and local financing institutions to deploy low- and zero- emission technologies by leveraging private sector investment. At least 40 percent of benefits flow to low-income and disadvantaged communities to deploy or benefit from zero-emission technologies.
Clean Heavy-Duty Vehicles and Infrastructure. The bill creates a $1 billion program to help states, local governments and nonprofit school transportation associations purchase zero-emission vehicles; funding also could be used to purchase, install, operate and maintain the infrastructure needed to charge, fuel or maintain zero-emission vehicles.
Methane Emissions Reduction Program. As part of a $1.55 billion program to reduce methane emissions from petroleum and natural gas systems, funding can be used to improve and deploy industrial equipment that reduces methane and other GHG emissions and waste, permanently shutting in and plugging wells on non-federal land, and environmental restoration projects.
Rural Clean Energy. The bill provides significant new funding to support the development of renewable energy and other energy production in rural areas, including nearly $10 billion to support rural cooperatives’ access to renewable energy and $1 billion in loan subsidies for projects that store electricity in support of renewable energy production.
Biofuel Infrastructure. The bill provides $500 million for infrastructure improvements for blending, storing, supplying or distributing biofuels, including installation, retrofitting or upgrading fuel dispensers for higher ethanol and biodiesel blends, or for construction and retrofitting home heating oil distribution centers to accommodate ethanol and biodiesel blends.
Domestic Energy Manufacturing. The bill provides $5 billion for loan guarantees for projects that retool, repower, repurpose or replace energy infrastructure that has ceased operations; or enable operating energy infrastructure to avoid, reduce, utilize or sequester air pollutants or anthropogenic emissions of GHG.
Tribal Energy. The bill increases the available commitment authority of the Tribal Energy Loan Guarantee Program from $2 billion to $20 billion and increases the percentage of an allowable guarantee from 90 percent to 100 percent.
Transmission Facility Financing. The bill provides $2 billion to DOE to provide direct loans to construct new high-capacity transmission lines and upgrade interconnections. It also provides $760 million to issue grants to siting authorities, including state, local or tribal governmental entities, to study the impacts of covered transmission projects; examine alternate transmission siting corridors; participate in regulatory proceedings; and conduct economic development activities for communities that may be affected by the construction and operation of a covered transmission project
Interregional and Offshore Wind Electricity Transmission Planning, Modeling and Analysis. The bill provides $100 million to perform transmission planning, modeling, and analyses regarding the development of interregional and offshore wind transmission projects and to convene stakeholders to address the development of such transmission projects.
Conservation and Public Lands
Conservation Programs. The bill increases funding for conservation programs administered by the Natural Resources Conservation Service (NRCS) by $20 billion, the second-largest single pot of money in the bill.
National Forest System Restoration and Fuels Reduction. The bill provides $2.15 billion to the Forest Service for hazardous fuels reduction projects on USFS land within the wildland- urban interface, vegetation management projects on USFS land in accordance with a water source management plan or a watershed production and restoration action plan, improved efficiency and effectiveness of USFS NEPA review, and for the USFS to complete an inventory of old-growth and mature forests within the NFS system, and for protection of those forests.
Grants for Non-Federal Forest Landowners. The bill provides grants for underserved foresters to invest climate mitigation or forest resilience practices and participate in emerging private markets for climate mitigation and forest resilience; and for small forest landowners (fewer than 2,500 acres) to participate in emerging private markets for climate mitigation and forest resilience. The bill also provides $50 million to pay private forestland owners to implement forest practices based on the best available science to provide measurable increases in carbon sequestration and storage, and $100 million for grants for the construction of facilities and hauling removed material to reduce hazardous fuels to locations where the material can be utilized.
Public Lands Conservation. The bill provides $250 million for the conservation, protection and resiliency of lands and resources administered by the National Park Service (NPS) and the Bureau of Land Management (BLM); and another $250 million for conservation, ecosystem and habitat restoration projects on NPS and BLM lands. The bill also provides $500 million to hire employees in units of the NPS, and $200 million for priority deferred maintenance projects within the bounds of the NPS.
Drought Mitigation in Reclamation States. The bill provides $4 billion for drought mitigation in reclamation states, prioritized to the Colorado River Basin and other basins experiencing comparable long- term drought. Activities eligible for funding include habitat restoration to address issues caused by drought. The bill also provides $550 million to the Bureau of Reclamation for grants, contracts or financial assistance agreements for disadvantaged communities for the planning, design or construction of water projects.
Tribal Climate Resilience and Electrification. The bill provides $220 million to the Bureau of Indian Affairs for tribal climate resilience and adaptation programs. It also provides $150 million for the provision of electricity to unelectrified tribal homes through zero-emissions energy systems; transitioning electrified tribal homes to zero-emissions energy systems; and associated home repairs and retrofitting necessary to install the zero-emissions energy systems.
National Wildlife Refuge System Resilience. The bill provides $121.2 million to the Fish and Wildlife Service to rebuild and restore units of the National Wildlife Refuge System and state wildlife management areas, including by addressing the threat of invasive species, increasing the resiliency and capacity of habitats and infrastructure to withstand climate induced-weather events, and reducing damage by climate-induced weather events.
Mining and Fossil Fuel Extraction
Critical Minerals. The bill provides $40 billion for projects that increase the domestic supply of critical minerals through production, processing, manufacturing, recycling or fabrication of mineral alternatives.
Offshore Oil and Gas Royalties. The bill raises the minimum royalty from 12.5 percent to 16.66 percent (with a maximum royalty of 18.75 percent) and requires the Department of Interior to hold numerous lease sales between now and 2023.
Mineral Leasing. The bill raises the minimum royalty for mineral leasing from 12.5 percent to 16.66 percent; it also increases minimum bids and fossil fuel rental rates.
Royalties on all Extracted Methane. The bill establishes royalties for gas produced from federal lands and on the Outer Continental Shelf, including gas consumed or lost by venting, flaring or negligent releases through equipment during upstream operations.
Wind and Solar Development. The bill will prohibit wind or solar energy development on federal land for 10 years unless 1) an onshore oil and gas lease sale has been held in the 120 days prior to the issuance of the right-of-way; and 2) the acreage offered to lease for oil and gas development in the last year is at least 2 million acres or 50 percent of the acreage for which expressions of interest have been made, whichever is smaller. The bill also prohibits leasing for offshore wind development unless 1) an offshore oil and gas lease sale has been held in the last year, and 2) at least 60 million acres have been offered for offshore oil and gas development in the last year.
Offshore Wind. The bill authorizes Interior to grant leases, easements and rights-of-way off the Atlantic, Gulf Coast and U.S. Territories Continental Shelves, directing a call for information and nominations for prosed wind lease sales for the latter by Sept. 30, 2025.
Taxes
Corporate Alternative Minimum Tax. The bill imposes a new 15-percent alternative minimum tax on applicable corporations, which includes U.S.-headquartered corporations with global financial statement revenue in excess of $1 billion over a three-year average.
Changes to Net Operating Loss Limitations for Individuals. The bill extends the current limitation on individuals for excess business losses arising from an active business (e.g., from a partnership). The limitation is generally $250,000 per individual (indexed to inflation). Current law is extended from Jan. 1, 2027 to Jan. 1, 2029.
IRS Enforcement. The bill also increases IRS funding for taxpayer services, enforcement, operations support and business systems modernization.