Senate Republicans have inserted a tax provision worth over $1 billion for oil and gas producers into their version of President Donald Trump’s expansive fiscal legislation.
The measure would allow energy companies subject to the 15% corporate alternative minimum tax to deduct certain drilling expenses when calculating taxable income. Firms such as ConocoPhillips, Ovintiv Inc., and Civitas Resources, Inc. actively lobbied for the change.
The provision is part of the bill released Monday by Senate Republicans on the chamber’s tax-writing committee. While it grants favorable treatment to fossil fuel companies, the bill also proposes significant cuts to tax credits for wind, solar, electric vehicles, and hydrogen energy.
The drilling tax break closely mirrors a separate proposal from Republican Senator James Lankford. His home state of Oklahoma is among the top producers of oil and gas in the country.
Lankford’s bill, the Promoting Domestic Energy Production Act, is projected to cost the federal government $1.1 billion over the next decade, according to the non-profit Tax Foundation, which cited estimates from the non-partisan Joint Committee on Taxation.
A representative for Lankford declined to comment.
Earlier this year, Lankford told CNBC that his legislation aimed to shield independent oil and gas producers from the Corporate Alternative Minimum Tax, which was enacted under former President Joe Biden to prevent large corporations from avoiding taxes through deductions and credits.
“If we can’t get rid of that entirely we at least need to give some relief to those folks who are independent producers,” Lankford said. “We need to be able to get some relief to them so they’re not constantly worried about it.”
Some Democrats and advocacy groups are pushing back on the measure, calling it a fossil fuel giveaway. Environmental and government watchdog organizations, including Friends of the Earth and Public Citizen, have voiced strong opposition.
“There is a giant give away to the oil industry tucked right into this bill,” said Senator Elizabeth Warren, a Massachusetts Democrat. “They are going to get a special get out of paying your taxes free.”
Supporters of the provision—which is not part of the House version of the bill—include the Domestic Energy Producers Alliance, a group founded by oil magnate and Trump donor Harold Hamm.
It’s also backed by the American Exploration & Production Council, which represents independent energy firms such as Oklahoma City-based Devon Energy Corp.
“America and the world need affordable, reliable energy – and this common-sense legislation will enable domestic producers to more quickly invest in production and meet this critical need,” said Anne Bradbury, the council’s chief executive officer.
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