House Set to Approve Comprehensive Wildfire and Drought Resilience Package; Senators Announce Major Climate and Deficit Reduction Measure
July 28, 2022
Later today, the House is slated to consider a comprehensive wildfire and drought resilience package (H.R. 5118) that incorporates 48 separate legislative proposals, including several CSAC-endorsed bills, such as the Wildfire Emergency Act (H.R. 3534), the Disaster Equity and Fairness Act (H.R. 5780), and the FIRE Act (H.R. 5782). The Wildfire Emergency Act utilizes a three-pronged approach to tackle wildfire threats, namely implementation of large-scale forest restoration projects, hardening of critical infrastructure, and increased training of key fire response personnel. The Disaster Equity and Fairness Act would increase the federal cost-share to 90 percent (up from the current 75 percent) for communities that have experienced multiple disasters in a short period of time. The bill also would increase the federal cost-share for emergency food delivery, as well as for underserved communities.
With regard to the FIRE Act, the legislation would allow FEMA to explore ways to pre-deploy resources during a red flag warning. It also would direct FEMA and the National Academy of Sciences to conduct a study on potential solutions to address the availability and affordability of wildfire insurance. This study would be the first step in pursuing some form of federal insurance program for wildfires, similar to the National Flood Insurance Program. A separate study would be geared toward improving how the agency provides housing assistance after a disaster, while a third study would examine potential gaps in wildfire disaster response. In addition to these reforms, the wildfire and drought resilience package includes legislation (H.R. 5631) that would boost pay and benefits for wildland firefighters and includes a provision that would codify the U.S. Forest Service’s recently adopted 10-year wildfire strategy.
The drought title of H.R. 5118 would, among other things, direct $500 million to the Interior Department to prevent certain agricultural reservoirs in the West from falling to critical levels. Another bill (H.R. 7792) included in the omnibus package would create a multi-agency initiative to track and standardize information on stream flows, precipitation, groundwater, soil moisture, snow, evaporation, water quality, and water use by various sectors. The chamber is also set to consider an amendment sponsored by House Minority Leader Kevin McCarthy (R-CA) that would create a grant program to improve water supply reliability in communities experiencing shortages.
Looking ahead, the wildfire and drought package is expected to pass before the House departs for its August recess at the end of the week. It should be noted that the bill will likely advance with little to no Republican support. While the legislation incorporates some bipartisan proposals, it does not go as far as some GOP members would like in terms of limiting environmental reviews. The measure also shies away from some of the more aggressive forest management reforms pushed by congressional Republicans.
Senate to Vote on Reconciliation Package That Includes Sweeping Climate Provisions
This week, Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV) reached consensus on a major climate change and renewable energy measure that also includes various tax and health care provisions. Their agreement, which came after Senator Manchin had rejected a previous proposal due to concerns about rising inflation, is aimed at slashing carbon emissions by an estimated 40 percent (from 2005 levels economy-wide) by 2030.
The Manchin-Schumer deal, dubbed the Inflation Reduction Act of 2022, includes nearly $370 billion for a range of tax credits to help stimulate adoption of clean energy technologies. The package also includes a fee on oil and gas companies’ methane emissions, which would begin in 2025. In addition, the bill would send $60 billion to low-income areas and minority communities that suffer disproportionately from environmental pollution and calls for holding lease sales for oil and gas production on federal land and water.
Aside from the environmental provisions, the Inflation Reduction Act would allow Medicare to negotiate for prescription drug prices while providing three years of subsidies for Affordable Care Act premiums. A previous iteration of the bill would have limited the subsidies to two years.
It should be noted that the legislation would raise an estimated $739 billion in revenue by imposing a 15 percent corporate minimum tax, increasing IRS enforcement, reducing Medicare prescription drug prices, and closing the so-called carried interest loophole. Of those savings, $300 million would be dedicated to deficit reduction.
Looking ahead, the Inflation Reduction Act is expected to be on the Senate floor next week. Under the special rules for reconciliation legislation, the bill would need the support of all 50 Democrats to pass, since no Republican is expected to vote in favor of the measure. If and when the legislation is approved, House Democratic leaders are expected to briefly summon lawmakers back from their month-long recess for a final vote.
To follow are select highlights of the bill:
Health Provisions
The Schumer-Manchin deal includes savings for high cost drugs for Medicare beneficiaries and limits Medicare out-of-pocket co-pays to $2,000 annually. The agreement also extends for another three years the increased premium subsidies for Affordable Care Act coverage for approximately 13 million low- to moderate-income individuals who purchase coverage through a health exchange.
Clean Energy Tax Credits
The agreement includes 10-year extensions of existing credits for wind and solar, as well as provisions for heat pumps, rooftop solar and standalone energy storage, like batteries.
Electric Vehicles
The measure includes a $7,500 rebate for new electric vehicles (EVs) and a $4,500 tax credit for used vehicles. The package also would set aside financing and credits to promote EV manufacturing. It calls for $2 billion in grants to help convert existing auto manufacturing factories into EV production facilities and $20 billion in loans for new clean vehicle manufacturing sites.
Domestic clean energy manufacturing
The package includes a five-year, $60 billion production tax credit that would send payments directly to companies involved in clean energy manufacturing. About half of the credits would flow to efforts to spur manufacturing for solar panels, wind turbines, batteries and critical minerals processing. About $10 billion would be dedicated to build clean technology manufacturing facilities.
Environmental Justice
The package includes $60 billion for environmental justice initiatives. That proposed funding includes $3 billion in block grants to address environmental health problems, $3 billion for creating more access to transportation, $3 billion for improving air quality near ports, and $1 billion for clean heavy-duty vehicles like buses and garbage trucks.
Methane fee
Oil and gas companies that emit more than 25,000 metric tons of carbon dioxide annually would be fined beginning in 2025, if their methane leakage rate exceeds a certain threshold. The fee would escalate over time from $900 per metric ton of emissions to $1,500 beginning in 2027. The package gives EPA more than $1.5 billion through fiscal year 2028 to help companies reduce methane emissions, such as providing technical assistance to improve greenhouse gas reporting, shut-in wells, and deploying methane-reduction equipment and processes. It also would let companies that comply with any future federal methane rules to avoid paying the fee, so long as those regulations achieve the same amount of emissions reductions.
Offshore Wind
The package includes new measures that would tie offshore wind leasing to previous auctions for oil and gas. The bill would put in place a 10-year window in which a lease for offshore wind development cannot be issued unless an oil and gas lease sale has also been held in the year prior and is not less than 60 million acres. It also would withdraw the Trump administration’s moratorium on offshore wind leasing in the southeastern U.S. and eastern Gulf of Mexico.
Defense Production Act
The legislation includes $500 million in funding to support President Biden’s use of the Defense Production Act to produce heat pumps and spur critical minerals processing projects.
Green Bank
The agreement includes $27 billion for a clean energy technology accelerator to support deployment of emission-reduction technologies, especially in disadvantaged communities. The program resembles the national green bank that had emerged in earlier iterations of the bill.
Congressman Panetta Introduces CSAC-Supported Project-Based Housing Voucher Bill
This week, Representative Jimmy Panetta (D-CA) introduced legislation – the Housing Access Improvement Act (H.R. 8539) – that would increase the statutory cap of Project Based Vouchers (PBVs) from 20 percent to 50 percent, ultimately allowing housing agencies to spur new locations where housing vouchers are redeemable. Project basing gives developers a guarantee of a future source of stable income for a development.
For its part, CSAC has endorsed H.R. 8539. The association also worked closely with the National Association of Counties (NACo) to obtain their endorsement. Additional information on the bill, including a quote from CSAC President and Siskiyou County Supervisor Ed Valenzuela, can be accessed here.
U.S. Treasury Releases Guidance on Local Fiscal Recovery Funds & Affordable Housing
On July 26, the U.S. Treasury Department posted new guidance, along with a How To Guide, that provides new flexibility for counties that wish to use their recovery funds to increase affordable housing. The updated guidance permits counties to use recovery funds to fully finance long-term affordable housing loans, including the principal of any such loans, subject to certain conditions. It also expands the list of federal programs that are presumptively eligible for investments using recovery funds for affordable housing.
Majority Leader Schumer Unveils Comprehensive Cannabis Reform Legislation
Senate Majority Leader Schumer recently unveiled a long-awaited comprehensive cannabis proposal – the Cannabis Administration and Opportunity Act (CAOA) – that would legalize and regulate the drug at the federal level. Specifically, the legislation would require the U.S. Attorney General to remove cannabis from federal drug schedules under the Controlled Substances Act within 180 days of the bill’s enactment. Beyond ending the prohibition on cannabis, the measure proposes to expunge nonviolent federal cannabis-related criminal records and create a pathway for resentencing.
The bill also would impose a federal tax on cannabis products with the proceeds designated for various programs in communities that have been the most impacted by drugs. For large businesses, the tax would start at 10 percent in the first year, before gradually increasing to 25 percent. Small cannabis businesses – defined as those with less than $20 million in sales annually – would be eligible for a 50 percent reduction in their tax rate. The CAOA also lays out a structure for how businesses would be approved and regulated. Additionally, the measure would transfer regulatory authority over cannabis from the Drug Enforcement Administration (DEA) to the Food and Drug Administration (FDA), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and the Alcohol and Tobacco Tax and Trade Bureau (TTB).
Looking ahead, the bill does not have the necessary support to advance in the Senate. For their part, Republican senators are generally opposed to any measure that would remove cannabis from the CSA, let alone one that would also impose a new tax on cannabis sales. It should be noted that not all Democrats are supportive of the legislation either. While the measure is not expected to move, it will help shape the conversation around cannabis legalization going forward. Furthermore, portions of the package – including provisions that would improve banking access – are likely to be incorporated into other bills that could pass before the end of the year.
Additional information on the CAOA, including the bill text and summary, can be accessed here.