Capito cites shortcomings of EPA’s implementation of natural gas tax

The Biden administration is creating regulatory confusion across the nation’s natural gas sector via haphazard implementation of the natural gas tax under the Inflation Reduction Act (IRA), says U.S. Sen. Shelley Moore Capito (R-WV).

More than a year and a half has passed since President Joe Biden signed the IRA — “the Democrats’ reckless tax and spending spree” — into law, and the Environmental Protection Agency (EPA) has moved forward on implementing many of the IRA’s spending programs and started to outlay funding, wrote Sen. Capito in a March 26 letter sent to EPA Administrator Michael Regan.

But there have been problems, she wrote.

“Notably, the EPA has not finalized implementation regulations for the one taxation provision in the Committee on Environment and Public Works’ title of the [IRA] even though, as of the beginning of this year, oil and gas operators are subject to certain financial liability — a new natural gas tax — established in the bill,” wrote Sen. Capito.

The Biden administration has also made the potential impacts of the natural gas tax even worse because of the EPA’s disorderly implementation of the provision, she added.

“Together with other policies like the ‘pause’ on approvals of liquefied natural gas export facilities, the administration is sowing regulatory confusion across the natural gas sector,” Sen. Capito wrote. “These burdensome and punitive policies will hamstring investments in natural gas, which is responsible for a significant portion of American greenhouse gas emissions reductions since the widespread development of improved natural gas production technology.”

And due to the EPA’s implementation delay, oil and gas operators say they’re in the “unenviable position” of trying to guess financial liability for 2024 (the first covered year of the tax) with an unknown time for completion of the implementation rulemaking under the most recent Unified Regulatory Agenda, according to the senator’s letter.

Sen. Capito requested that the EPA address these shortcomings and others as it implements the natural gas tax and that her comments be included in the regulatory docket.