Proposed Tax Reform Effort is a Bad Deal for the Environment

There are many provisions in hundreds of pages in the House and Senate tax reform bills and the debate over the corporate tax rate, state and local tax deduction, and the individual mandate on healthcare has been sucking up much of the oxygen in the room. The legislation also includes a number of other measures that are flying under the radar and would have a negative impact on the environment.

The Senate’s bill, for example, would open up the Arctic National Wildlife Reserve (ANWR) to drilling. While oil drilling may seem an odd fit for a tax bill, its inclusion is not surprising. The companion legislation passed through the Senate Committee on Energy and Natural Resources on a 13-10, largely party-lines vote. Though opening up ANWR to drilling has previously been thwarted because it lacks the 60 votes needed to overcome a filibuster, in a clever parliamentary trick, the measure is tied to the tax bill, which is being advanced through a budget process that only requires 51 votes to advance to the full senate. The other reason is that Senator Lisa Murkowski of Alaska has been considered a swing vote on the tax bill and including opening ANWR as a sweetener is meant to influence her vote.

ANWR is a 19.6-million-acre section of northeastern Alaska that is considered one of the most pristine areas in the United States. It is home to polar bears, caribou, Alaskan moose, wolverines, migratory birds and other animals. Environmental groups contend that drilling is a risky endeavor that would cause widespread and permanent damage to the coastal plain, destroy the area’s natural beauty and jeopardize its wildlife and ecosystems. With falling crude oil prices, there is also no guarantee that drilling would bring in the revenues that proponents contend.

The other troubling aspect of opening up the Arctic to drilling is that it creates a slippery slope. Earlier this year, President Trump signed an executive order opening the door to Arctic and Atlantic drilling. With Arctic drilling moving forward, opening the Atlantic could be next, risking a spill with an even greater impact than Deepwater Horizon.

Meanwhile, the House bill includes several provisions that would reduce the tax benefits for the renewable energy industry. The production tax credit that helps wind energy would lose its inflation adjustment eroding the value of the credit substantially – by at least 40 percent. This version also includes stricter rules about which projects will qualify for the credit. The House bill would impact solar energy too: the investment tax credit for commercial scale solar energy would be phased out by 2027. Tax benefits for coal and fossil fuel would be left unchanged.

There is some good news: we have strong allies on both sides of the aisle in the New York delegation: 23 of 27 members voted no last week including Republicans Dan Donovan, Elise Stefanik, Peter King, Lee Zeldin and John Faso. The next days and weeks will be crucial to defeating these anti-environment provisions. If the tax bills pass both houses of congress, reconciling the differences could lead to some of these measures falling out. Renewable energy, for example, is much more popular in the Senate than in the House. Even getting to the point of reconciliation is no sure thing as first passage through the Senate faces a number of challenges. While time will tell where these end up, NYLCV and our partners will continue to remain vigilant and continue urging our federal representatives to fight back.