President Biden will soon sign into law the Inflation Reduction Act (IRA), which provides $750 billion in funding and major federal policy changes impacting the U.S. energy, environment, healthcare and tax sectors. On August 7, 2022, the IRA passed the U.S. Senate by an all-Democrat 50-50 party line vote, with Vice President Harris breaking the tie and ensuring passage. On August 12, 2022, the IRA passed the U.S. House by a vote of 220 to 207. The President’s signature, will make the bill law, and allow President Biden, U.S. Senate Majority Leader Chuck Schumer (D-NY), and U.S. House Speaker Nancy Pelosi (D-CA) to claim a major victory while making progress on a portion of the President’s Build Back Better agenda just three months before the mid-term elections on November 8, 2022.
The Crowell and Moring LLP and Crowell & Moring International (CMI) teams have put together this Client Alert with two main purposes. The first is to provide a summary of the highlights of the bill, which is included in Section I, and the second is to provide a more detailed section-by-section review of the bill, which is provided in Section II.
I. Summary of the Highlights of the Inflation Reduction Act
The Inflation Reduction Act, or IRA, is the product of approximately two years of attempts by President Biden to pass a major piece of his Build Back Better (BBB) agenda at a total cost of several trillion dollars. The Congressional Democrats wanted to use the budget reconciliation process, which requires only a simple majority, or 50 U.S. Senate votes with the vote of the Vice President, and thus could be passed by all Democratic votes in the U.S. Senate, to pass major components of the BBB agenda including those pertaining to energy, environment, healthcare and tax. The plan stalled in 2021 when Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) would not agree to the broader bill proposed by President Biden and Senate Majority Leader Chuck Schumer (D-NY). But, over time, Senators Schumer and Manchin were able to negotiate and agree upon the legislative framework that soon after developed into the Inflation Reduction Act.
The Inflation Reduction Act is expected to raise $739 billion in revenue to pay for, among other things, $369 billion in investments in energy security and climate change and an additional $64 billion to extend premium subsidies for the Affordable Care Act (ACA) enrollees. The bill generates revenue by imposing a 15 percent alternative minimum tax on certain corporations with income in excess of $1 billion, bolstering Internal Revenue Service (IRS) enforcement, and requiring pharmaceutical drug manufacturers to negotiate prices with the Federal government. The bill also authorizes major policy changes with regard to energy, environment, healthcare and tax issues.
The bill’s healthcare titles will result in significant changes for the sector. For the first time ever, the bill provides authority to the U.S. Secretary of Health and Human Services to negotiate directly with pharmaceutical manufacturers on the price of prescription drugs sold to the Medicare program. In addition to drug price negotiation, the bill’s healthcare provisions include an annual cap of $2,000 for Medicare Part D beneficiary out-of-pocket spending, the extension of premium subsidies for ACA enrollees, a rebate program for Medicare prescription drugs with price increases in excess of inflation rates, and targeted measures to cap the costs to Medicare beneficiaries of insulin products. The main Medicare prescription drug negotiation provisions do not truly get implemented until 2025-2026. Furthermore, the bill requires federal agencies to initiate and complete new rulemaking and there is likely to be a court challenge to these provisions. The results of the Presidential and Congressional elections in 2024 could also affect how and whether these new provisions get fully implemented. But absent a major change between now and 2025, there are going to be significant changes with regard to drug pricing, ACA coverage and the Medicare program which will affect millions of Americans and most of the healthcare industry.
The bill also includes major provisions that will impact energy and environmental policy with a particular focus on addressing climate change. They include the creation of new clean energy tax credits, funding for agricultural production incentives, residential and commercial construction and retrofitting programs, and fees on methane for the oil and gas industry among others. The solar, wind, and electric vehicle industries are expected to be spurred by the new tax provisions and incentives with the U.S. Congress focused on a carrot rather than stick approach to spur the clean energy revolution. The ultimate goal of these provisions is a 50 percent reduction in greenhouse gases by 2030 with a further eye on the goal of net zero emissions by 2050.
Finally, the bill includes a number of tax reform provisions to help pay for the health care, energy, and environmental titles. The bill imposes a new 15 percent alternative minimum tax (AMT) on corporations with average adjusted financial statement income in excess of $1 billion effective for taxable years ending after December 31, 2022. The bill imposes a new excise tax on the repurchase of corporate stock by certain publicly traded corporations occurring after December 31, 2022 with limited exceptions. The bill provides more than $80 billion in new funding to the IRS including more than $3 billion for taxpayer services, more than $45 billion for enforcement activities, more than $25 billion for operations support, and more than $4 billion for maintaining and modernizing the IRS’s business systems. This funding is in addition to the funding already in place for the IRS.
II. Section by Section Summary of the Inflation Reduction Act
The following summary provides of section-by-section analysis of the legislation. The individual groups at Crowell & Moring will be providing more guidance within their relevant sectors over the coming weeks. In the meantime, please reach out to our tax, healthcare, energy and environment colleagues identified with any inquiries below:
Title I – Committee on Finance
Subtitle A – Deficit Reduction
Part 1—Corporate Tax Reform
Sec. 10101—Corporate Alternative Minimum Tax: This section imposes a new 15-percent alternative minimum tax (“AMT”) on corporations (other than S corporations, regulated investment companies, and real estate investment trusts) with average annual adjusted financial statement income in excess of $1 billion effective for taxable years ending after December 31, 2022. Special rules apply for foreign-parented multinational groups and foreign corporations engaged in a U.S. trade or business. A corporation’s tentative minimum tax is equal to 15 percent of the corporation’s adjusted financial statement income minus the corporation’s AMT foreign tax credit. An AMT liability generally arises where the tentative minimum tax exceeds the sum of the corporation’s regular tax liability plus the corporation’s base erosion and anti-abuse tax (“BEAT”) imposed under Section 59A. Applicable financial statement income is generally the net income reported on a corporation’s “applicable financial statement,” subject to various adjustments, such as to account for differences in tax and financial statement consolidation, to adjust for differences between tax and financial statement depreciation, and to allow for financial statement loss carryovers incurred for taxable years ending after December 31, 2019 up to 80 percent of adjusted financial statement income.
Part 2—Excise Tax on the Repurchase of Corporate Stock
Sec. 10201—Excise Tax on Repurchase of Corporate Stock: This section imposes a non-deductible 1-percent excise tax on the fair market value of the stock repurchases (commonly referred to as “stock buybacks”) by certain publicly traded domestic corporations occurring after December 31, 2022. Fair market value of the stock repurchases subject to the excise tax may be reduced by the fair market value of any stock issuances during the relevant taxable year, including stock issued to employees of the corporation or employees of certain affiliates, whether or not issued in connection with the exercise of an option. Special rules apply for stock repurchases by affiliates of domestic corporations subject to the excise tax, and for stock repurchases by certain publicly traded foreign corporations and their affiliates. Exceptions may apply, including for stock repurchases: occurring in connection with certain non-taxable corporate reorganizations; by regulated investment companies and real estate investment trusts; not exceeding $1 million in aggregate during the taxable year; and to the extent treated as a dividend.
Part 3—Funding the Internal Revenue Service and Improving Taxpayer Compliance
Sec. 10301—Enhancement of Internal Revenue Service Resources: This section provides $80 billion in funding to the Internal Revenue Service (“IRS”), including more than $3 billion for taxpayer services, more than $45 billion for enforcement activities, more than $25 billion for operations support, and more than $4 billion for maintaining and modernizing the IRS’s business systems. This funding is in addition to the funding already in place for the IRS. The funding is in place for ten years, giving the IRS room to plan its programs for enhanced enforcement, operations support enhancements, and modernizing its business systems.
Subtitle B – Prescription Drug Pricing Reform
Part 1—Lowering Prices Through Drug Price Negotiation
Sec. 11001—Providing for Lower Prices for Certain High-Priced Single Source Drugs:This section amends the Social Security Act to allow the Secretary of Health and Human Services to establish a Drug Price Negotiation Program (“The Program”) and directs the Secretary to (1) publish a list of selected drugs, (2) enter into agreements with manufacturers of the selected drugs, (3) negotiate and renegotiate, if needed, maximum fair prices for the selected drugs, and (4) monitor compliance. The bill tasks the Secretary with selecting up to 10 eligible Medicare Part D drugs for price negotiation for 2026, the initial price applicability year. For 2027, the Secretary must select up to 15 Part D drugs and for 2028, the Secretary must select up to 15 Part B or Part D drugs. For 2029 and all subsequent years, the Secretary must select 20 Part B or Part D drugs. The Secretary is required to publish the list of eligible drugs by September 1, 2023. The list of eligible drugs will include the 50 Part B and 50 Part D drugs responsible for the highest program expenditures. The bill carves out exceptions for certain small biotech drugs and orphan drugs. The bill requires the Secretary to enter into agreements with the manufacturers of the selected drugs to determine a maximum fair price for the drug and indicates that negotiated agreements will remain in effect until the Secretary removes the drug as a selection. The Secretary is required to publish the maximum fair price, capped based on how long the drug has been available on the market, for the selected drugs by November 30 each year. Manufacturers of selected drugs in violation of offering the maximum fair price will be subject to civil monetary penalties equal to ten times the amount of the product dispensed or administered during that year and the difference between the price made available and the negotiated price.
Sec. 11002—Special Rule to Delay Selection and Negotiation of Biologics for Biosimilar Market Entry: This section amends the Social Security Act to allow the Secretary of Health and Human Services to exclude certain biologic or biosimilar drugs from its selection for negotiation if the Secretary determines that there is a high likelihood that the product will face biosimilar competition within two years after the selected drug publication date. The bill requires that the manufacturer of the product request for delay of applicability and provide information and documentation necessary for the Secretary to make the determination. The determination will account for whether a biosimilar application has been submitted for review or approval by the Food and Drug Administration and whether or not the requesting manufacturer presents “clear and convincing evidence” that a biosimilar will come to market within the defined period.
Sec. 11003—Excise Tax Imposed on Drug Manufacturers During Noncompliance Periods: This section amends Subtitle D of the Internal Revenue Code of 1986 to impose an excise tax on the sale of drugs selected by the Secretary during periods of noncompliance. The graduated excise tax during the first 90 days is 65 percent, for the 91st through the 180th day – 75 percent, for the 181st through the 270th day – 85 percent, and 95 percent thereafter.
Sec. 11004—Funding: Appropriates $3 billion to the Centers for Medicare and Medicaid Services from a balance of funds unused in the 2022 fiscal year.
Part 2—Prescription Drug Inflation Rebates
Sec. 11101—Medicare Part B Rebate by Manufacturers: This section amends the Social Security Act to require that manufacturers for single source and biologic drugs in the Medicare Part B program pay rebates when prices increase faster than inflation. Starting in 2023, the bill requires the Secretary of Health and Human Services to report to those manufacturers the total number of units subject to the rebate, the amount of the excess average sales price increase, and the rebate amount. The bill provides the Secretary discretion to delay the timeframe for reporting for 2023 and 2024. The bill likewise offers the Secretary discretion to impose civil monetary penalties of at least 125 percent of the applicable rebate on manufacturers that fail to comply with the rebate requirements. The bill appropriates $80 million to the Centers for Medicare and Medicaid Services for fiscal year 2022 and $7.5 million for fiscal years 2023 through 2031 to implement the rebate program.
Sec. 11102—Medicare Part D Rebate by Manufacturers: This section amends the Social Security Act to require that manufacturers for selected drugs in the Medicare Part D program pay rebates when prices increase faster than inflation. Starting in 2023, the bill requires the Secretary of Health and Human Services to report to those manufacturers the information needed to determine the rebate amount and the manufacturer is then required to provide the rebate within 30 days of receiving the Secretary’s report. The bill provides the Secretary discretion to delay the timeframe for reporting the information and the rebate amount through a transition period that will last until 2025. Implementation of the rebate program, however, is not left up to the discretion of the Secretary. Manufacturers that are found to be noncompliant are subject to civil monetary penalties equal to 125 percent of the rebate amount.
Part 3—Part D Improvements and Maximum Out-of-Pocket Cap for Medicare Beneficiaries
Sec. 11201—Medicare Part D Benefit Redesign: This section amends the Social Security act to adjust the out-of-pocket threshold, establishing an annual cap of $2,000 beginning in 2025 to be increased in subsequent years. Establishes reimbursements for individuals through insurance, group health plans, or other third-party payment arrangements, not including coverage provided by a prescription drug plan or an MA-PD plan or any payments by a manufacturer under the manufacturer discount program. The bill also establishes a 20 percent reinsurance of the gross covered prescription drug costs for applicable part D drugs for 2025 and after. Establishes a 40 percent reinsurance of the gross prescription drug costs for non-applicable part D drugs for 2025 and after. Defines allowable reinsurance costs as including the portion of the negotiated price of an applicable drug that was paid by a manufacturer under the manufacturer discount program. It also directs the Secretary to establish and administer a manufacturer discount program to last no less than 12 months, and to be automatically renewed unless terminated, in which the manufacturer is required to provide discounted prices dispensed to applicable beneficiaries on or after January 1, 2025. The bill establishes that this program will not affect coinsurance or copayment described. It also establishes a formula for determining drug cap in subsequent years, including monitoring compliance and data collection from prescription drug plans and MA-PD plans. And establishes a penalty for manufacturers that fail to provide discounted prices for applicable drugs as the sum of the amount the manufacturer would have paid under the agreement or 25 percent of such amount. The bill clarifies that nothing in this section would prevent an applicable beneficiary from purchasing a covered part D drug that is not an applicable drug. The program will not apply with respect to applicable drugs dispensed on or after January 1, 2025. This section also directs the Secretary to provide a subsidy to a PDP sponsor or the MA organization equal to 10 percent of the negotiated price of a drug and establishes a formula for computing the base beneficiary premium for a prescription drug plan for a month in 2024 through 2029. To carry out the provisions of this section, the bill appropriates $341,000,000 for fiscal year 2022, including $20,000,000 and $65,000,000 and $32,000,000 to carry out the provisions of this section in each of fiscal years 2024 through 2031.
Sec. 11202—Maximum Monthly Cap on Cost-Sharing Payments under Prescription Drug Plans and MA-PD Plans: This section amends the Social Security Act to establish a maximum monthly cap on cost-sharing payments on or after January 1, 2025. It directs PDP sponsors and MA organizations to provide the option to pay in monthly installments and appropriates $10 million to the Centers for Medicare and Medicaid Services.
Part 4—Continued Delay of Implementation of Prescription Drug Rebate Rule
Sec. 11301—Extension of Moratorium on Implementation of Rule Relating to Eliminating the Anti-Kickback Statute Safe Harbor Protection for Prescription Drug Rebates: This section prohibits the Secretary of Health and Human Services from administering, implementing, or enforcing the final rule published on November 30, 2020 entitled “Fraud and Abuse; Removal of Safe Harbor Protection for Rebates Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection for Certain Point-of-Sale Reductions in Price on prescription Pharmaceuticals and Certain Pharmacy Benefit Manager Service Fees” until January 1, 2032.
Sec. 11401—Coverage of Adult Vaccines Recommended by the Advisory Committee on Immunization Practices Under Medicare Part D: This section ensures treatment of cost-sharing and deductible is consistent with treatment of vaccines under Medicare Part B. For plans beginning on or after January 1, 2023, the bill eliminates deductibles, coinsurance, and cost-sharing for a vaccine recommended by the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices for Medicare Part D beneficiaries and authorizes a temporary retrospective subsidy for reduction in cost-sharing and deductible for low-income communities.
Sec. 11402—Payment for Biosimilar Biological Products During Initial Period: This section amends the Social Security Act to establish an amount payable to for biosimilar products furnished on or after July 1, 2024, as the lesser of the following: (a) The amount determined under clause (ii) of such subparagraph for the biosimilar biological product, or (b) The amount determined under subsection (b)(1)(B) for the reference biological product.
Sec. 11403—Temporary Increase in Medicare Part B Payment for Certain Biosimilar Biological Products: This section amends the Social Security Act to establish a temporary payment increase for qualifying biosimilar biological products furnished in the period from 2022 through 2027 from 6 percent of the reference product average sales price to 8 percent.
Sec. 11404—Expanding Eligibility for Low-Income Subsidies Under Part D of the Medicare Program: This section amends the Social Security Act to increase the threshold for subsidies for low-income individuals from below 135 percent the federal poverty line to below 150 percent.
Sec. 11405—Improving Access to Adult Vaccines under Medicare and CHIP: This section requires Medicaid to cover adult vaccinations and eliminates some cost sharing for vaccinations and increases Federal medical assistance percentage by 1 percentage point. The bill also requires CHIP to include vaccination coverage for individuals 19 years of age or older and eliminates cost sharing.
Sec. 11406—Appropriate Cost-Sharing for Covered Insulin Products under Medicare Part D: This section amends the Social Security Act to remove application of deductibles for any covered insulin products. For plan years 2023 and 2024, the bill establishes coverage benefits for any covered part D insulin product with cost-sharing for a month’s supply not to exceed the applicable copayment amount, regardless of whether the individual has reached the initial coverage limit or the out-of-pocket threshold. For plan years on or after January 1, 2025, the bill establishes coverage benefits before an individual reaches the out-of-pocket threshold for any covered insulin product with cost-sharing for a month’s supply not to exceed the applicable copayment amount. The bill appropriates $1.5 million for the Centers for Medicare and Medicaid services to carry out the provisions of this section.
Sec. 11407—Limitation on Monthly Coinsurance and Adjustments to Supplier Payment under Medicare Part B for Insulin Furnished through Durable Medical Equipment: This section amends the Social Security Act to waive deductibles with respect to insulin furnished on or after July 1, 2023. It also establishes the amount paid as 80 percent of the payment amount for insulin furnished through an item of durable medical equipment and establishes a $35 monthly cap on insulin coinsurance.
Sec. 11408—Safe Harbor for Absence of Deductible for Insulin: This section establishes that failing to have a deductible for selected insulin products still qualifies as a high deductible health plan.
Sec. 12001—Improve Affordability and Reduce Premium Costs of Health Insurance for Consumers: This section extends through 2025 the Affordable Care Act to allow credits to taxpayers whose household income exceeds 400 percent of the poverty line.
Subtitle C – ACA Subsidies
Sec. 12001—Improve Affordability and Reduce Premium Costs of Health Insurance for Consumers: This section amends the Internal Revenue Code of 1986 to extend enhanced premium tax credits offered through the Affordable Care Act to the end of 2025.
Subtitle D – Energy Security
Part 1— Clean Electricity and Reducing Carbon Emissions
Sec. 13101—Extension and Modification of Credit for Electricity Produced from Certain Renewable Resources: This section extends the Internal Revenue Code Section 45 production tax credit (“PTC”) for facilities that begin construction before January 1, 2025, including for solar energy facilities for which the PTC previously sunset in 2006. The PTC provides a tax credit for each kilowatt of electricity produced from qualifying facilities and sold to an unrelated party. The credit rate is 0.5 cents per kilowatt hour, and can increase to 2.5 cents per kilowatt hour if certain wage and apprenticeship requirements are met. For wind facilities, the current credit reduction and phaseout is eliminated for facilities placed in service after December 31, 2021, and these facilities are eligible to receive the full value of the tax credits. The applicable credit rate may be increased by 10 percent if the facility meets certain domestic content requirements, and by a further 10 percent for any facility placed in service in an energy community. An “energy community” is generally defined as a brownfield site, an area with employment significantly related to the fossil fuel industry, or a census tract (or an immediately adjacent census tract) in which a coal mine has closed or a coal-fired electric generating unit has been retired. For facilities that do not meet the domestic content requirements, the amount of the credit that is eligible for a direct pay election under new IRC Section 6417 (added by section 13801 of Title I, Subtitle D of the [Inflation Reduction Act]) is reduced.
Sec. 13102—Extension and Modification of Energy Credit: This section extends the Internal Revenue Code Section 48 energy investment tax credit (“ITC”) for property for which construction begins, in most cases, before January 1, 2025. The ITC generally allows taxpayers to claim a tax credit for the cost of energy property. Depending on the type of energy property, the credit rate is 2 or 6 percent of the basis of energy property. The credit rate may be increased by 10 or 30 percent of the basis of energy property if certain wage and apprenticeship requirements are met. Special rules apply geothermal property that begins construction before January 1, 2035 and for microturbine property for property that begins construction before January 1, 2025. The ITC is also expanded to include energy storage technology, biogas property, microgrid controllers, dynamic glass, and linear generators. These technologies are eligible for the 6 percent credit rate and additional 30 percent increase for property that begins construction before January 1, 2025.
The credit rate may be increased by 2 percentage points (or 10 percentage points if the taxpayer meets certain wage and apprenticeship requirements) for energy property placed into service after December 31, 2022, if such property meets certain domestic content requirements. For facilities that do not meet the domestic content requirements, the amount of the credit that is eligible for direct pay is reduced (similar to under the PTC discussed above). For energy property that is placed in service within an energy community, the credit percentage is increased by 2 percentage points (or 10 percentage points if the taxpayer meets certain wage and apprenticeship requirements). As under the PTC (discussed above), an “energy community” is generally defined as a brownfield site, an area with employment significantly related to the fossil fuel industry, or a census tract (or an immediately adjacent census tract) in which a coal mine has closed or a coal-fired electric generating unit has been retired.
Sec. 13103—Increase in Energy Credit for Solar and Wind Facilities Placed in Service in Connection with Low-Income Communities: This section increases the Internal Revenue Code Section 48 Energy Credit rate by 10 percentage points to 20 percentage points for certain qualified solar or wind facilities for which the IRS makes an allocation of “environmental justice solar and wind capacity.” The IRS may make allocations for calendar years 2023 and 2024. The facility must be located in a low-income community or on Indian land, or be part of a qualified low-income residential building project or a qualified low-income economic benefit project.
Sec. 13104—Extension and Modification of Credit for Carbon Oxide Sequestration: This section extends and expands the Internal Revenue Code Section 45Q credit for carbon capture and sequestration (the “45Q Credit”) for industrial or direct air capture facilities that begin construction before January 1, 2033. The annual carbon oxide capture requirements are reduced to at least 1,000 metric tons of carbon oxide per taxable year for direct air capture facilities, at least 18,750 metric tons of carbon oxide for electricity generating facilities, and at least 12,500 metric tons of carbon oxide per taxable year for all other facilities. With respect to electricity generating facilities, the carbon capture equipment for the applicable electric generating unit within such facility is required to have a capture design capacity of at least 75% of the baseline carbon oxide production of such electric generating unit.
The amount of the credit depends on the type of facility at which the qualified carbon oxide is captured. For carbon oxide captured at a direct air capture facility placed in service after December 31, 2022, the credit rate is (i) $36 per metric ton of carbon oxide captured and disposed of in secure geological storage, and (ii) $26 per metric ton of carbon oxide captured and used as a tertiary injectant in an enhanced oil or natural gas recovery project or otherwise utilized. For carbon oxide captured at a qualified facility other than a direct air capture facility, the credit rate is (i) $17 per metric ton of carbon oxide captured and disposed of in secure geological storage, and (ii) $12 per metric ton of carbon oxide captured and used as a tertiary injectant in an enhanced oil or natural gas recovery project or otherwise utilized. The amount of the credit, in each case, is increased five times per metric ton if certain wage and apprenticeship requirements are met.
Sec. 13105—Zero-Emission Nuclear Power Production Credit: This section provides a new credit for electricity produced by a qualified nuclear power facility. A qualified nuclear power facility is one that is owned by the taxpayer, is not an advanced nuclear power facility under IRC Section 45J, and was placed in service before the date of enactment of the [Inflation Reduction Act]. The credit amount generally is 0.3 cents per kilowatt hour of electricity produced, subject to a “reduction amount” based on the price of electricity. The credit amount may increase to 1.5 cents per kilowatt hour of electricity produced if certain prevailing wage requirements are met. The credit applies to electricity produced and sold after December 31, 2023, in taxable years beginning after such date. The credit does not apply to taxable years beginning after December 31, 2032.
Part 2 – Clean Fuels
Sec. 13201—Extension of Incentives for Biodiesel, Renewable Diesel and Alternative Fuels: This section extends the biodiesel mixture credit, the alternative fuel credit, the alternative fuel mixture credit and the payments for alternative fuels covered in Internal Revenue Code Section 6426 through December 31, 2024.
Sec. 13202—Extension of Second General Biofuel Incentives: This section extends the second-generation biofuel producer credit available under Section 40 through December 31, 2024.
Sec. 13203—Sustainable Aviation Fuel Credit: This section introduces a new tax credit for sustainable aviation fuels sold or used between January 1, 2022 and until December 31, 2024. The credit applies to sustainable aviation fuels certified as having reduced lifecycle greenhouse gas emissions by 50 percent as compared to petroleum-based aviation fuel. The base credit is $1.25 per gallon of fuel, and a supplemental credit of $0.01 applies for each percentage reduction of the lifecycle greenhouse gas emissions below 50 percent. . The new credit is codified at Section 40B of the Internal Revenue Code.
Sec. 13204—Clean Hydrogen: This section introduces a new production tax credit to incentivize clean hydrogen production in the United States by adding a new Internal Revenue Code Section 45V. Together with the monetary incentives introduced in the Infrastructure Development and Jobs Act of 2021 this is a welcome development for sponsors of the highly costly hydrogen projects.
The new credit will apply to hydrogen produced after December 31, 2022. To be clean hydrogen, the lifecycle greenhouse gas emissions rate may not exceed 4 kilograms of carbon dioxide equivalent per kilogram of hydrogen produced. The credit increases as the clean hydrogen’s lifecycle greenhouse emissions decrease. The credit has a 10-year term beginning on the date a clean hydrogen production facility is placed in service. A facility qualifies for credit only if its construction begins prior to January 1, 2033.
Similar to other production tax credits, the clean hydrogen credit is subject to a two-tiered system, with a base credit rate and a bonus credit rate. The base credit rate is up to $0.60 per kilogram of qualified clean hydrogen, depending on the lifecycle greenhouse gas emissions rate. The bonus credit rate could be as high as $3 per kilogram of qualified clean hydrogen produced, if the taxpayer meets prevailing wage and qualified apprenticeship requirements. The Act also amends the credits for electricity from renewable sources and zero emission nuclear energy to allow those credits for electricity used by the taxpayer to produce clean hydrogen.
Part 3—Clean Energy and Efficiency Incentive for Individuals
Sec. 13301—Extension, Increase, and Modifications of Nonbusiness Energy Property Credit: This section extends the Nonbusiness Energy Property Credit to December 31, 2032 and, in the case of an individual, allows annual tax credits equal to 30 percent of the amount paid for qualified energy efficiency improvements and residential energy property expenditures. The Act outlines certain limitations including that the credit for any taxpayer in any given year should not exceed $1,200. The Act also outlines standards for energy efficiency improvements that meet Energy Star most efficient certification requirements and International Energy Conservation Code standards and establishes a product identification number requirement after December 31, 2024. Finally, the Act adds a tax credit with a $150 limit for home energy audits.
Sec. 13302—Residential Clean Energy Credit: This section extends the Residential Clean Energy Credit from December 31, 2023 to December 31, 2034.
Sec. 13303—Energy Efficient Commercial Buildings Deduction: This section raises the tax deduction for commercial building construction to between $2.50 and $5.00 per square foot depending on the building’s energy efficiency and certain prevailing wage requirements.
Sec. 13304—Extension, Increase, and Modifications of New Energy Efficient Home Credit: This section extends the energy efficient home credit through December 31, 2032 and increases credit amounts for single family homes that meet Energy Star Manufactured New Homes standards to $2,500 and establishes that homes that also meet certification for zero energy home standards are also eligible for a $5,00 credit.
Part 4—Clean Vehicles
Sec. 13401—Clean Vehicle Credit: This section amends the tax credit for electric drive motor vehicles at Internal Revenue Code section 30D(b) by requiring that a certain percentage of the critical minerals used in an electric vehicle battery be extracted or processed in the United States or a country with which the United States has a free trade agreement or be recycled in North America in order to qualify for a $3,750 tax credit. Similarly, the amendment imposes a requirement that a certain percentage of the value of components contained in an electric vehicle battery be manufactured or assembled in North America in order to qualify for a credit of $3,750. This section also imposes an income-based eligibility limit of $300,000 in the case of a joint return; $225,000 for a head of household; and $150,000 for other tax filers. This section also prohibits vans, sport utility vehicles, and pick-up trucks with manufacturer’s suggested retail prices in excess of $80,000 and other vehicles in excess of $55,000 from being eligible for the tax credits. This section also eliminates the sales volume cap in IRC section 30D(e) that prohibited certain manufacturers with large numbers of EV sales from qualifying for the credit.
Sec. 13402—Credit for Previously Owned Clean Vehicles: This section amends Internal Revenue Code section 25 to include a new section 25E, allowing a tax credit of up to $4,000 to the buyer of a previously owned EV. This section also imposes an income-based eligibility limit of $150,000 for a joint return, $112,500 for the head of household, and $75,000 for other tax filers. This section also limits the tax credit to the first time the previously used vehicle is sold, to sales by car dealers, and for sales prices that do not exceed $25,000.
Sec. 13403—Qualified Commercial Vehicles: This section amends Internal Revenue Code section 45 by adding a new section 45W that establishes a tax credit for qualified commercial clean vehicles. The general credit is to be the lesser of 30 percent of the basis of a vehicle not powered by gasoline or diesel internal combustion engine, or the incremental cost of the vehicle, which is defined as an amount equal to the excess purchase price for such vehicle over the price of a comparable vehicle powered solely by a gasoline or diesel-powered engine. The section limits the available credit to $7,500 for vehicles less than 14,000 pounds and $40,000 for other vehicles. The section further limits the credit to vehicles manufactured primarily for use on public streets, roads, and highways (and not rails), among other requirements.
Sec. 13404—Alternative Fuel Refueling Property Credit: This section extends the credit found at Internal Revenue Code section 30C(g) from December 31, 2021 to December 31, 2032. This section also allows a tax credit for qualified electric vehicle charging equipment that is used to recharge an electric vehicle and also allows discharging electricity from such a battery to an electric load external to the motor vehicle. This section also increases the credit available by a multiple of five for certain projects that utilized prevailing wage and apprenticeship requirements and are located in eligible census tracts.
Part 5—Investment in Clean Energy Manufacturing and Energy Security
Sec. 13501—Extension of the Advanced Energy Project Credit: This section amends Section 48C to create a new program to consider and award certifications for qualified investments in advanced energy projects. The amount of credits that may be allocated shall not exceed $10 billion, of which $4 billion must be located in census tracts for underserved communities. The credit decreases, if the taxpayer does not meet prevailing wage and apprenticeship requirements.
Sec. 13502—Advanced Manufacturing Production Credit: This section amends Internal Revenue Code section 45 by adding a new section 45X to establish advanced manufacturing production tax credits for thin film photovoltaic cell or crystalline photovoltaic cell, photovoltaic wafer, solar grade polysilicon, battery cells, critical minerals, and other clean energy products and materials. Depending on the product, the credit is calculated based on area size, weight, number of units, or other factors.
Sec. 13601—Reinstatement of Superfund: This section reinstates hazardous substances superfund taxes imposed under Section 4611 with effect from January 1, 2023 and raises tax on crude oil received at a United States refinery, imported petroleum products and certain exports of domestic oil to 16.4% per barrel (indexed to inflation) and increases other taxes and fees on the fossil fuel sector. The tax rate will be indexed for inflation for taxable years beginning after 2023.
It also removes Section 4611(e) which limited the tax imposed under Section 4611 to January 1, 1996 but does not include a new deadline. Instead, the Act amends Section 9507(d)(3)(B) to limit the life of the Superfund through December 31, 2032. It is not clear whether the authors of the Act meant to make Section 4611 indefinite or whether a technical correction is required to clarify that Section 4611 taxes remain in place only during the life of the Superfund.
Part 7—Incentives for Clean Electricity and Clean Transportation
Sec. 13701-Clean Energy Production Credit: This section amends Section 45 to include new section 45Y, which provides tax credits for production of clean energy. A facility may be eligible to qualify for the credit if it is owned by the taxpayer, is used to generate electricity, was placed into service after December 31, 2024, and the greenhouse gas emissions rate is not greater than zero. The production credit would be available for only 10 years after the facility is placed into service. Facilities for which a credit has already been determined under Sections 45, 45J, 45Q, 45U, 48, 48A, or 48E would be ineligible. Section 45Ywould provide increased credits for facilities that meet domestic content requirements. The section also includes special rules for agricultural cooperatives.
Sec. 13702 – Clean Electricity Investment Credit: This section amends Internal Revenue Code section 48 to include a new section 48E establishing a clean energy investment credit for qualified facilities and any energy storage technology. The section also includes domestic content, labor, and apprenticeship requirements, and additional credit allocations for investments in environmental justice communities.
Part 8—Credit Monetization and Appropriations
Sec. 13801—Elective Payment for Energy Property and Electricity produced from Certain Renewable Resources, Etc.: This section allows eligible taxpayers to make a direct pay election with respect to the credits they generally would be eligible for under, among others, the ITC, the PTC, the 45Q Credit, and the new zero-emission nuclear power and clean hydrogen production credits. A direct pay election allows eligible taxpayers with little or no tax liability to accelerate utilization of these credits by electing to treat the amount of the credits as a refundable payment of tax instead of carrying the credits forward to taxable years when the credits can offset tax liability. Eligible taxpayers for purposes of the direct pay election generally include tax-exempt entities, state and local governments (and subdivisions thereof), tribal governments, and the Tennessee Valley Authority. This limitation on eligible taxpayers does not apply for purposes of taxpayers claiming the 45Q Credit, the clean hydrogen production credit, or the advanced manufacturing production credit for the specified portion of the credit period.
Taxpayers who are not eligible to make a direct pay election may transfer all or a portion of the applicable credits to another taxpayer. Transferable credits include, among others: the ITC, PTC, the 45Q Credit, and the new zero-emission nuclear power and clean hydrogen production credits. The consideration for a transfer of credits must be paid in cash, and is neither taxable to the transferor nor deductible by the transferee. Transferable credits may only be transferred once. The credit carryback period for transferable credits is extended from one to three years.
Sec. 13802—Appropriations: This section provides an additional $500 million in funding to the IRS to carry out the changes made by the Energy Security sections (Title I, Subtitle D) of the Inflation Reduction Act. This funding is available for ten years, and is in addition to any funding otherwise available to the IRS.
Part 9—Other Provisions
Sec. 13901—Permanent Extension of Tax Rate to Fund Black Lung Disability Trust Fund: The Act amends IRC section 4121 by striking subsection (e), which concerned a temporary increase expiration date.
Sec. 13902—Increase in Research Credit Against Payroll Tax for Small Businesses: The Act amends Section 41(h)(4)(B) to increase the amount of research related expenses that can qualify as credits against payroll expenses.
Sec. 13903—Tax Treatment of Certain Assistance to Farmers: This section exempts certain payments made to farmers under the American Rescue Plan Act of 2021 (as amended) and section 22006 of the Inflation Reduction Act of 2022 from adjusted gross income, and no exemption denied based on such exclusion, and other related activities.
Title II-Committee on Agriculture, Nutrition and Forestry
Subtitle A—General Provisions
Sec. 21001—Additional Agricultural Conservation Investments: This section appropriates an additional $8.45 billion for fiscal years 2023-2026 for environmental incentive programs, $3.25 billion for conservation stewardship programs, $1.4 billion for conservation easement programs, and $6 billion for regional conservation programs under the authority of the Commodity Credit Corporation.
Sec. 21002—Conservation Technical Assistance: This section appropriates $1 billion to the Natural Resource Conservation Service to provide technical assistance and $300 million to the Natural Resource Conservation Service to quantify carbon dioxide sequestration through the Department of Agriculture’s Greenhouse Gas Inventory and Assessment Program.
Subtitle C—Rural Development
Sec. 22001—Additional Funding for Electric Loans for Renewable Energy: This section appropriates $1 billion to the Department of Agriculture to fund the cost of loans for rural electrification projects, including projects that store electricity.
Sec. 22002—Rural Energy for America Program: This section appropriates $1.7 billion between fiscal years 2022 and 2027 for the Rural Energy for America Program, including grants to support underutilized renewable energy technologies and technical assistance.
Sec. 22003—Biofuel Infrastructure and Agriculture Product Market Expansion: This section appropriates $500 million to provide competitive grants to increase the sale and use of agriculture commodity-based fuels through infrastructure improvements for blending, storing or distributing biofuels, including installing or retrofitting fuel dispensers, pumps, and storage tanks.
Sec. 22004—USDA Assistance for Rural Electric Cooperatives: This section appropriates $9.7 billion to the Department of Agriculture to provides loans or other financial assistance to rural electric cooperatives for projects that improve long-term resiliency, reliability, and affordability of rural electric systems.
Sec. 22005—Additional USDA Rural Development Administrative Funds: This section appropriates the Department of Agriculture an additional $100 million for administrative costs for support rural development programs.
Sec. 22006—Farm Loan Immediate Relief for Borrowers with At-Risk Agricultural Operations: This section appropriates $3.1 billion to provide payments to, for the costs of loans, or loan modifications with respect to distressed borrowers of direct or guaranteed loans administered by the Farm Service Agency.
Sec. 22007—USDA Assistance and Support for Underserved Farmers, Ranchers, and Foresters: This section ppropriates $125 million for programs to assist underserved farmers, ranchers, or forest owners; appropriates $$250 million for grants and loans to improve land access for underserved farmers, ranchers, and forest owners; appropriates $10 million for one or more commissions to address racial equity issues within the Department of Agriculture; appropriates $250 million for scholarships and financial aid for internships and programs supporting career pathways to the agriculture sector; and appropriates $2.2 billion to provide financial assistance to farmers, ranchers, or forest landowners who have experienced discrimination by the Department of Agriculture prior to 2021.
Sec. 22008—Repeal of Farm Loan Assistance: Repeals section 1005 of the American Rescue Plan Act of 2021.
Sec. 23001—National Forest System Restoration and Fuels Reduction Projects: This section appropriates $1.8 billion to the Forest Service for fuels reduction programs on National Forest System land within the wildland-urban interface; $200 million for vegetation management; $100 million for environmental reviews under the National Environmental Policy Act; and $50 million for an inventory of old-growth forests.
Sec. 23002—Competitive Grants for Non-Federal Forest Landowners: This section appropriates $550 million to support climate mitigation and forest reliance practices for underserved forest landowners, to support entrance to emerging markets for climate mitigation or forest resilience by underserved forest landowners and forest landowners who own fewer than 2,500 acres, and for projects to support carbon sequestration.
Sec. 23003—State and Private Forestry Conservation Programs: This section appropriates $700 million for land acquisition by states through the Forest Legacy Program; and appropriates $$1.5 billion in grants to support tree planting.
Title III—Committee on Banking, Housing and Urban Affairs
Sec. 30001—Enhanced Use of Defense Production Act of 1950: This section appropriates $500 million, in addition to amounts otherwise available, to carry out the Defense Production Act.
Sec. 30002—Improving Energy Efficiency or Water Efficiency or Climate Resilience of Affordable Housing: This section appropriates $837.5 million to the Department of Housing and Urban Development (HUB) for the cost of providing direct loans, the cost of modifying such loans, and for grants, including to subsidize gross obligations for the principal amount of such loans, to fund projects that improve energy efficiency, enhance indoor air quality or sustainability, implement the use of zero-emission electricity generation, low emission building materials or processes, energy storage, or building certification strategies, or address climate resilience of an eligible property. The bill also appropriates $60 million for the Secretary of HUD for costs related to information technology, research, and evaluation, and administering and overseeing the implementation of this section; $60 million for expenses of contracts or cooperative agreements administered by the Secretary of HUD; and 45.5 million for energy and water benchmarking of properties eligible for grans or loans under this section.
Title IV—Committee on Commerce, Science, and Transportation
Title IV of the Inflation Reduction Act, which addresses allocations for the Committee on Commerce, Science, and Transportation, appropriates resource (1) to the National Oceanic and Atmospheric Administration (NOAA) for various and unrelated projects within NOAA’s purview, and (2) for an Alternative Fuel and Low-Emission Aviation Technology Program.
Title IV of the IRA appropriates money to support the following NOAA efforts: $2.6 billion to provide funding to coastal states, DC, Tribal Governments, non-profit organizations, local governments and institutions of higher learning for the conservation, restoration, and protection of coastal and marine habitats, resources, Pacific salmon and other marine fisheries, to enable coastal communities to prepare for extreme storms, and other changing climate conditions, and for projects that support natural resources that sustain coastal and marine resource dependent communities, marine fishery and marine mammal stock assessment;
$150 million for the construction of new facilities, facilities in need of replacement, piers, marine operations facilities, and fisheries laboratories;
$50 million for the construction of facilities to support the National Marine Sanctuary System;
$20 million to conduct more efficient, accurate and timely reviews for planning, permitting and approval processes through the hiring and training of personnel, and the purchase of technical and scientific services and new equipment, and to improve agency transparency, accountability, and public engagement;
$150 million to accelerate advances and improvements in research, observation systems, modeling, forecasting, assessments, and dissemination of information to the public as it pertains to ocean and atmospheric processes related to weather, coasts, oceans, and climate and to carry out the section of the Weather Research and Forecasting Innovation Act intended to develop improved understanding of and forecast capabilities for atmospheric events and their impacts;
$50 million for competitive grants to fund climate research as it relates to weather, ocean, coastal and atmospheric processes and conditions, and impacts to marine species and coastal habitat;
$190 million for the procurement of additional high-performance computing, data processing capacity, data management, and storage assets to carry out a section of the High-Performance Computing Act of 1991 that directs NOAA to conduct basic and applied research in weather prediction and ocean sciences, particularly in development of new forecast models, in computational fluid dynamics, and in the incorporation of evolving computer architectures and networks into the systems that carry out agency missions, and for certain transaction agreements; and
$100 million for the acquisition of hurricane hunter aircraft.
Alternative Fuel and Low-Emission Aviation Technology Program: Title IV also makes appropriations designed to promote advancement of “low-emission aviation technologies,” which are those that significantly improve aircraft fuel efficiency, increase utilization of sustainable aviation fuel, or reduce greenhouse gas emissions produced during operation of civil aircraft. Sustainable aviation fuel is liquid fuel, produced in the US that meets a host of criteria, including that it consists of synthesized hydrocarbons; meets one of two ASTM (American Society for Testing and Materials) standards; is derived from biomass, waste streams, renewable energy sources, or gaseous carbon oxides; is not derived from palm fatty acid distillate; and achieves at least a 50 percent lifecycle greenhouse gas emissions reduction, as determined by specified testing results. The Secretary of Transportation is required to adopt at least one methodology for such testing within 2 years of the IRA’s enactment.
In support of its goal to advance these technologies, Title IV of the IRA appropriates a total of $297 million “for purposes of establishing a competitive grant program for eligible entities . . . that produce, transport, blend, or store sustainable aviation fuel, or develop, demonstrate, or apply low-emission aviation technologies.” The IRA broadly defines eligible entities to include a state or local government that is not an airport sponsor; air carrier; airport sponsor; accredited institution of higher learning; research institution; a person or entity engaged in the production, transportation, blending or storage of sustainable aviation fuel or feedstocks (i.e., sources of hydrogen and carbon not originating from unrefined or refined petrochemicals) in the US that could be used to produce sustainable aviation fuel; a person or entity engaged in the development, demonstration, or application of low-emission aviation technologies; and non-profit entities or consortia with experience in sustainable aviation fuels, low-emission aviation technologies or other clean transportation research programs. Key considerations in implementing the program include (a) capacity to increase domestic production and deployment of sustainable aviation fuel or the use of low-emission aviation technologies; (b) projected greenhouse gas emissions and greenhouse gas emission benefits; (c) capacity to create new jobs and develop US supply chain partnerships; and (d) the benefits of ensuring a diversity of feedstocks for sustainable aviation fuel.
Projects awarded funding under the grant program will benefit from a Federal cost share of 75% of the total proposed cost of the project, with small or non-hub airport recipients receiving 90% cost share for their approved projects from grant funding.
Title V—Committee on Energy and Natural Resources
Part 1: General Provisions
Part 2: Residential Efficiency and Electrification Rebates
Sec. 50121—Home Energy Performance-Based, Whole House Rebates: This section appropriates $4.3 billion to Department of Energy (DOE) to award grants to state energy offices to develop and implement a Home Owner Managing Energy Savings (HOMES) rebate program. A HOMES rebate program is established by a state energy office as part of an approved State energy conservation plan under the State Energy Program, providing rebates to homeowners and aggregators for whole-house energy saving retrofits.
Sec. 50122—High-Efficiency Electric Home Rebate Program: This section appropriates $4.5 billion to DOE to award grants to states and Indian tribes to develop and implement a high-efficiency electric home rebate program under which rebates shall be provided to eligible entities (e.g., a low- or moderate-income household) for qualified electrification projects (e.g., purchase and installation of an electric heat pump water heater).
Sec. 50123—State-Based Home Energy Efficiency Contractor Training Grants: This section appropriates $200 million to DOE to provide financial assistance to States to develop and implement a state program training and educating contractors involved in the installation of home energy efficiency and electrification improvements, including improvements eligible for rebates under a HOMES rebate program or a high-efficiency electric home rebate program.
Part 3: Building Efficiency and Resilience
Sec. 50131—Assistance for Latest and Zero Building Energy Code Adoption: This section appropriates $330 million to DOE to make grants to assist states, etc. to adopt latest building codes; $670 million to DOE to make grants to assist states, etc. to adopt a building energy code that meets or exceeds the zero energy provisions in the 2021 International Energy Conservation Code or an equivalent stretch code and to implement a compliance plan.
Part 4: Doe Loan and Grant Programs
Sec. 50141—Funding for Department of Energy Loan Programs Office: This section authorizes DOE to make commitments to guarantee loans for eligible projects under 42 U.S.C. § 16513 up to a total principle amount of $40 billion. Appropriates $3.6 billion to DOE for costs of such guarantees.
Sec. 50142—Advanced Technology Vehicle Manufacturing: This section appropriates $300 million to DOE to make loans for advanced technology vehicle manufacturing.
Sec. 50143—Domestic Manufacturing Conversion Grants: This section appropriates $2 billion to DOE to make grants for domestic production of efficient hybrid, plug-in electric hybrid, plug-in electric drive, and hydrogen fuel cell electric vehicles.
Sec. 50144—Energy Infrastructure Reinvestment Financing: This section appropriates $5 billion to DOE for energy infrastructure reinvestment financing and authorizes DOE to make commitments to guarantee loans the total principal amount of which is not greater than $250 billion.
Sec. 50145—Tribal Energy Loan Guarantee Program: This section appropriates $75 million to DOE for a Tribal energy loan guarantee program and authorizes DOE to make commitments to guarantee loans the total outstanding amount of which is not greater than $20 billion.
Part 5: Electric Transmission
Sec. 50151—Transmission Facility Financing: This section appropriates $2 billion to DOE to pay the costs of direct loans to non-Federal borrowers for the construction or modification of electric transmission facilities designated to be necessary in the national interest.
Sec. 50152—Grants to Facilitate the Siting of Interstate Electricity Transmission Lines: This section appropriates $760 million to DOE to make grants to facilitate the siting of interstate electricity transmission lines.
Sec. 50153—Interregional and Offshore Wind Electricity Transmission Planning, Modeling, and Analysis: This section appropriates $100 million to DOE for interregional and offshore wind electricity transmission planning, modeling, and analysis.
Part 6: Industrial
Sec. 50161—Advanced Industrial Facilities Deployment Program: This section appropriates $5.812 billion to DOE provide competitive financial assistance to domestic, non-Federal, nonpower industrial or manufacturing facilities engaged in energy intensive industrial processes for projects such as the purchase and installation, or implementation, of advanced industrial technology at such facilities.
Part 7: Other Energy Matters
Sec. 50171—Department of Energy Oversight: This section appropriates $20 million to DOE for oversight of activities for which funding is appropriated.
Sec. 50172—National Laboratory Infrastructure: This section appropriates $1.2555 billion to DOE for national laboratory infrastructure projects such as science laboratory infrastructure projects; $450 million in total to DOE for infrastructure and general plant projects carried out by Office of Fossil Energy and Carbon Management, Office of Nuclear Energy, and Office of Energy Efficiency and Renewable Energy.
Sec. 50173—Availability of High-Assay Low-Enriched Uranium: This section appropriates $700 million to DOE to support the availability of high-assay low-enriched uranium for civilian domestic research, development, demonstration, and commercial use. Such research, development, demonstration, and deployment activities should be based on a competitive, merit-based review process.
Subtitle B—Natural Resources
Part 1: General Provisions
Part 2: Public Lands
Sec. 50221—National Parks and Public Lands Conservation and Resilience: This section appropriates $250 million for conservation, protection, and resiliency projects on Bureau of Land Management and National Park Service lands.
Sec. 50222—National Parks and Public Lands Conservation and Ecosystem Restoration: This section appropriates $250 million for habitat, conservation, and ecosystem restoration projects on Bureau of Land Management and National Park Service lands.
Sec. 50223—National Park Service Employees: This section appropriates $500 million to hire employees for the National Park System.
Sec. 50224—National Park Service Deferred Maintenance: This section appropriates $200 million for priority deferred maintenance projects within the National Park System.
Part 3: Drought Response and Preparedness
Sec. 50231—Bureau of Reclamation Domestic Water Supply Projects: This section appropriates $550 million to the Bureau of Reclamation for grants, contracts, or other financial assistance for up to 100 percent of the cost of planning, designing, or constructing water projects to provide domestic water supplies to households and communities that do not have reliable supplies.
Sec. 50232—Canal Improvement Projects: This section appropriates $25 million to the Bureau of Reclamation for the installation of solar panels on water conveyance facilities to increase water efficiency and assist in implementing clean energy goals.
Sec. 50233—Drought Mitigation in the Reclamation States: This section appropriates $4 billion to the Bureau of Reclamation for grants, contracts, and other financial assistance to mitigate the impacts of drought in the Colorado River Basin and other basins experiencing long-term drought, including compensation to reduce water diversions, voluntary conservation projects to reduce use and demand of water from the Colorado River, and ecosystem restoration projects.
Part 4: Insular Affairs
Sec. 50241—Office of Insular Affairs Climate Change Technical Assistance: This section appropriates $15 million to provide technical assistance for climate change planning, mitigation, adaptation, and resiliency in the Insular Areas.
Part 5: Offshore Wind
Sec. 50251—Leasing on the Outer Continental Shelf: This section authorizes the Secretary of the Interior to grant leases, easements, and rights-of-way pursuant to the Outer Continental Shelf Lands Act in areas that were the subject of Presidential Memoranda dates September 8, 2020 and September 25, 2020. It also provides authority to provide wind lease sales in the exclusive economic zone in areas adjacent to Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Mariana Islands.
Part 6: Fossil Fuel Resources
Sec. 50261—Offshore Oil and Gas Royalty Rate: This section increases the offshore oil and gas royalty rate from not less than 12.5 percent to not less than 16.67 percent but not more than 18.75 percent for a 10-year period beginning after enactment, and not less than 16.67 percent thereafter.
Sec. 50262—Mineral Leasing Modernization: This section increases the onshore oil and gas royalty rate from not less than 12.5 percent to not less than 16.67 percent but not more than 18.75 percent for a 10-year period beginning after enactment, and not less than 16.67 percent thereafter; increases the retroactive royalty rates for reinstating a suspended lease; increases per-acre lease rental fees; and amends the noncompetitive lease bid process, among other changes.
Sec. 50263—Royalties on All Extracted Methane: This section imposes a royalty requirement to be assessed for all gas produced from federal land, including gas that is consumed or lost by venting and flaring or negligent releases through any equipment during upstream operations and includes exceptions in emergency situations and gas consumed within the area of the lease for the benefit of lease.
Sec. 50264—Lease Sales Under the 2017-2022 Outer Continental Shelf Leasing Program: Notwithstanding the expiration of the 2017-2022 leasing program, the Secretary of the Interior is authorized to conduct Lease Sale 257, 258, 259, and 261.
Sec. 50265—Ensuring Energy Security: This section prohibits the Secretary of the Interior from issuing a right-of-way for solar or wind project on federal land during a 10-year period beginning upon enactment if the Secretary has not made certain onshore and offshore oil and gas lease sales.
Part 7: United States Geological Survey
Sec. 50271—USGS 3D Elevation Program: This section appropriates $23.5 million for the U.S. Geological Survey to conduct 3D elevation data.
Part 8: Other Natural Resource Matters
Sec. 50281—Department of the Interior Oversight: This section appropriates an additional $10 million to the Department of the Interior for oversight activities.
Subtitle C—Environmental Reviews
Sec. 50301—Department of Energy: This section appropriates $115 million for the hiring and training or personnel to assist with the development of programmatic environmental documents, procurement of technical services for environmental reviews, community and stakeholder engagement, and new equipment to facilitate timely and efficient environmental reviews and authorizations.
Sec. 50302—Federal Energy Regulatory Commission: This section appropriates $100 million for the hiring and training or personnel to assist with the development of programmatic environmental documents, procurement of technical services for environmental reviews, community and stakeholder engagement, and new equipment to facilitate timely and efficient environmental reviews and authorizations.
Sec. 50303—Department of the Interior: This section appropriates $150 million for the hiring and training or personnel to assist with the development of programmatic environmental documents, procurement of technical services for environmental reviews, community and stakeholder engagement, and new equipment to facilitate timely and efficient environmental reviews and authorizations.
Title VI—Committee on Environment and Public Works
Subtitle A—Air Pollution
Sec. 60101—Clean Heavy-Duty Vehicles: This section appropriates $600 million to Environmental Protection Agency (EPA) to make grants and rebates to states, etc. for transition to zero-emission vehicles (e.g., vehicle and infrastructure purchase, maintenance, workforce development, and technical support); $400 million to EPA to make awards for zero-emission vehicle replacement in nonattainment areas.
Sec. 60102—Grants to Reduce Air Pollution at Ports: This section appropriates $2.25 billion to EPA to make competitive grants to ports, states, etc. to purchase or install zero-emission port equipment or technology (including relevant planning and permitting) and develop climate action plans; 750 million to EPA to the above activities for ports in nonattainment areas.
Sec. 60103—Greenhouse Gas Reduction Fund: This section appropriates $7 billion to EPA to make competitive grants to states, etc. to make grants, loans, etc. to low income and disadvantaged communities to deploy or benefit from zero-emission technologies, including distributed solar; $11.97 billion to EPA for general assistance and technical assistance; and $8 billion for disadvantaged and low-income communities.
Sec. 60104—Diesel Emissions Reductions: This section appropriates $60 million to EPA to make grants, loans, etc. to identify and reduce diesel emissions resulting from goods movement facilities (including vehicles) in low-income and disadvantaged communities address health impacts of such emissions.
Sec. 60105—Funding to Address Air Pollution: This section appropriates $117.5 million to EPA to make grants, etc. for air toxics and community monitoring such as fenceline and screening air monitoring; $50 million to EPA to make grants, etc. to add new multipollutant monitoring stations and maintain existing stations; $3 million to EPA to make grants, etc. for air quality sensors in low-income and disadvantaged communities; $15 million to EPA to make grants, etc. for testing and other agency activities to address emissions from wood heaters; $20 million to EPA to make grants, etc. for monitoring methane emissions; $25 million Clean Air Act grants; and $5 million to EPA to make grants to states for greenhouse gas and zero-emission standards for mobile sources.
Sec. 60106—Funding to Address Air Pollution at Schools: This section appropriates $37.5 million to EPA to make grants, etc. to monitor and reduce greenhouse gas emissions and other air pollutants at schools in low-income and disadvantaged communities; and $12.5 million to EPA for technical assistance to schools in the above communities to address environmental and air pollution issues.
Sec. 60107—Low Emissions Electricity Program: This section appropriates $87 million to EPA for low emissions electricity program, which includes $17 million for consumer education and partnerships, $17 million for education, technical assistance, and partnerships within low-income and disadvantaged communities, $17 million for industry outreach, $17 million for outreach to state, etc., $1 million for greenhouse gas emissions reduction assessment, and $18 million to ensure that reductions in greenhouse gas emissions are achieved through use of the existing authorities of this Act.
Sec. 60108—Funding for Section 211(O) of the CAA: This section appropriates $5 million to EPA for test and protocol development regarding environmental and public health effects of a fuel or fuel additive, including a fuel’s lifecycle emissions and lifecycle implications on public and on low-income and disadvantaged communities and $10 million to EPA to support investments in advanced biofuels.
Sec. 60109—Funding for Implementation of the American Innovation and Manufacturing Act: This section appropriates $20 million to EPA for implementation of the American Innovation and Manufacturing Act in general; $3.5 million to EPA for new implementation and compliance tools; $15 million to EPA to make competitive grants for reclaim and innovative destruction technologies.
Sec. 60110—Funding for Enforcement Technology and Public Information: This section appropriates $18 million to EPA to update its Integrated Compliance Information System (ICIS), etc.; $3 million to EPA to make grants to states, etc. to update their systems to communicate with ICIS; and $4 million to EPA for inspection software.
Sec. 60111—Greenhouse Gas Corporate Reporting: This section appropriates $5 million to EPA to support greenhouse gas corporate reporting (e.g., enhanced standardization and transparency, climate action plan implementation).
Sec. 60112—Environmental Product Declaration Assistance: This section appropriates $250 million to EPA to develop a program to support the development, enhanced standardization and transparency, and reporting criteria for environmental product declarations.
Sec. 60113—Methane Emissions Reduction Program: This section appropriates $850 million to EPA to make grants, rebates, etc. to incentivize methane (and other greenhouse gases) mitigation and monitoring; $700 million to EPA to incentives for methane mitigation from conventional wells.
Sec. 60114—Climate Pollution Reduction Grants: This section appropriates $250 million to EPA as greenhouse gas air pollution planning grants; and $4.75 billion to EPA as greenhouse gas air pollution implementation grants.
Sec. 60115—EPA Efficient, Accurate, and Timely Reviews: This section appropriates $40 million to EPA to develop efficient, accurate, and timely reviews for permitting and approval processes.
Sec. 60116—Low-Embodied Carbon Labeling for Construction Materials: This section appropriates $100 million to EPA to identify and label construction materials and products that have substantially lower embodied greenhouse gas emissions.
Subtitle B—Hazardous Materials
Sec. 60201—Environmental and Climate Justice Block Grants: This section appropriates $3 billion to EPA to award grants for climate and climate justice activities (including technical assistance) that benefit disadvantaged communities.
Subtitle C—Fish and Wildlife Service
Sec. 60301—Endangered Species Act Recovery Plans: This section appropriates $125 million to United States Fish and Wildlife Service (FWS) to develop and implement Endangered Species Act Recovery Plans.
Sec. 60302—Funding for the United States Fish and Wildlife Service to Address Weather Events: This section appropriates $125 million (including administrative costs) to FWS to make direct expenditures, grants, etc. to rebuild and restore units of the National Wildlife Refuge System and State wildlife management areas.
Subtitle D— Council on Environmental Quality
Sec. 60401—Environmental and Climate Data Collection: This section appropriates $32.5 million to Council on Environmental Quality (CEQ) to support environmental and climate data collection.
Sec. 60402—Council on Environmental Quality Efficient and Effective Environmental Reviews: This section appropriates $30 million to CEQ to carry out its functions and to train personnel, develop programmatic environmental documents, and develop tools to improve stakeholder engagement.
Subtitle E—Transportation and Infrastructure
Sec. 60501—Neighborhood Access and Equity Grant Program: This section appropriates $3.205 billion to Federal Highway Administration (FHWA) to make competitive grants to states, communities, etc. for a neighborhood access and equity grant program (e.g., improving walkability, safety, and affordable transportation access through projects that are context-sensitive, mitigation, planning, and capacity building activities in disadvantaged or underserved communities).
Sec. 60502—Assistance for Federal Buildings: This section appropriates $250 million to be deposited in the Federal Buildings Fund for measures necessary to convert facilities of the General Services Administration (GSA) to high-performance green buildings.
Sec. 60503—Use of Low-Carbon Materials: This section appropriates $2.15 billion to be deposited in the Federal Buildings Fund to acquire and install low-carbon materials in the construction or alteration of buildings under GSA’s jurisdiction.
Sec. 60504—General Services Administration Emerging Technologies: This section appropriates $975 million to be deposited in the Federal Buildings Fund for emerging and sustainable technologies, and related sustainability and environmental programs.
Sec. 60505—Environmental Review Implementation Funds: This section appropriates $100 million to FHWA to facilitate development and review of documents for the environmental review process for proposed projects.
Sec. 60506—Low-Carbon Transportation Materials Grants: This section appropriates $2 billion to FHWA to reimburse or provide incentives to state, etc. to use low-carbon transportation materials (including FHWA’s operation and administration cost).
Title VII—Committee on Homeland Security and Governmental Affairs
Sects. 70001-70007: In addition to providing the Federal Emergency Management Agency with authority to grant financial assistance under the Stafford Act for low-carbon materials and low-carbon and net-zero energy projects, these sections appropriate $3 billion to the United States Postal Service (USPS) for zero-emission delivery vehicles and supporting infrastructure and $15 million to USPS’ Inspector General to oversee these zero-emission delivery vehicle and infrastructure efforts; $500 million to the Department of Homeland Security (DHS) for sustainability and environmental programs; $350 million to the Federal Permitting Improvement Steering Council Environmental Review Improvement Fund; $25 million each to the Government Accountability Office and Office of Management and Budget to oversee implementation of the act and track the impacts of the funds on labor, equity, and the environment.
Title VII—Committee on Indian Affairs
Sec. 80001—Tribal Climate Resilience: This section appropriates $220 million to the Director of the Bureau of Indian Affairs for Tribal climate resilience and adaptation programs; $10 million for fish hatchery operations and maintenance programs of the Bureau of Indian Affairs; and $5 million for administrative costs of carrying out this section.
Sec. 80002—Native Hawaiian Climate Resilience: This section appropriates $23.5 million for financial assistance, technical assistance, direct expenditure, grants, contracts, or cooperative agreements to carry out climate resilience and adaptation activities that serve the Native Hawaiian Community and appropriates an additional $1.5 million for administrative costs of carrying out this section.
Sec. 80003—Tribal Electrification Program: This section appropriates $145.5 million to the Director of the Bureau of Indian Affairs for the provision of electricity to unelectrified Tribal homes through zero-emissions systems, transitioning electrified Tribal homes to zero-emissions energy systems, and associated home repairs and retrofitting necessary to install zero-emission energy systems. The bill also provides an additional $4.5 million for the administrative costs of carrying out this section.
Sec. 80004—Emergency Drought Relief for Tribes: This section appropriates $12.5 million to the Commissioner of the Bureau of Reclamation to mitigate drought impacts for Indian Tribes that are impacted by the operation of a Bureau of Reclamation project, including through direct financial assistance to address drinking water shortages and to mitigate the loss of Tribal trust resources.