End Polluter Welfare Act of 2025
Sponsored By: Representative Omar
Introduced
Summary
This bill would end federal subsidies for fossil fuels. It would sharply reduce tax breaks, raise royalty and severance charges, and block U.S. public financing for fossil‑fuel projects.
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- Fossil‑fuel producers and operators would lose many tax preferences and accounting advantages. The bill would terminate a long list of oil, gas, and coal incentives, end LIFO inventory treatment for fossil businesses, and raise royalty rates to 18.75% while imposing a 13% Gulf Outer Continental Shelf severance tax.
- Federal programs, international finance, and lenders would face new restrictions. It would bar Export‑Import Bank, U.S. International Development Finance Corporation, Loan Programs Office, Rural Utility Service guarantees, and similar funding for fossil projects. It would also terminate the DOE Office of Fossil Energy and Carbon Management, rescind unobligated funds, and remove certain lender protections under CERCLA while redefining ineligible lenders.
- Clean‑tech and accounting rules would be reshaped. The carbon capture credit (sec. 45Q) would be eliminated and the clean hydrogen credit narrowed to a $0.60 base with strict renewable electricity sourcing rules. The bill also lengthens amortization for drilling and IDCs and changes depreciation rules for pipeline and gathering property.
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Bill Overview
Analyzed Economic Effects
20 provisions identified: 1 benefits, 16 costs, 3 mixed.
Business deduction ends for fossil income
Owners of pass‑through businesses with fossil fuel income would lose the business income deduction for that income. This would apply to tax years after enactment. Partners, S‑corp owners, and sole proprietors in those activities would likely pay more tax.
Carbon capture tax credit would end
The carbon capture tax credit would end for carbon captured after enactment. Treasury would report to Congress within six months on who claimed past credits and how much. Projects that rely on 45Q would lose support going forward.
End many fossil fuel tax breaks
If enacted, the bill would end several fossil fuel tax breaks. Percentage depletion for coal and some oil shale would end for future years. Fossil fuel research would no longer qualify for the research tax credit. The refined coal production credit would stop for coal produced after December 31, 2025. It would also deny deductions for Oil Pollution Act damages, end LIFO for fossil fuel companies, undo recent drilling‑cost rules, and remove capital gains treatment on some coal royalties.
Higher royalties and new Gulf oil tax
If enacted, federal energy lease royalties would be set at 18.75%. Oil and gas from the Gulf of Mexico Outer Continental Shelf would face a 13% tax on the removal price after Dec. 31, 2025. Producers could claim a credit for federal royalties paid, but not more than the tax. Quarterly deposits and returns would be required.
Higher U.S. taxes on foreign oil income
U.S. taxes on foreign fossil fuel income would rise. The bill would count foreign oil and gas extraction income in GILTI and treat some foreign oil income as Subpart F for large producers (1,000 barrels per day or more). It would add fossil fuel income to FDII rules. It would also limit foreign tax credits for dual‑capacity taxpayers, so some payments to foreign governments would not count as taxes.
NEPA reviews and fees would change
Environmental reviews under NEPA would change. The bill would replace parts of the review checklist and strike some Builder Act sections. It would end the project sponsor opt‑in fee. It would also change which agency counts as the covered agency for certain activities. These steps could change timelines, costs, and what agencies must consider.
Clean hydrogen credit narrowed and reset
The bill would reset the clean hydrogen credit. The base amount would be $0.60, indexed for inflation, for new facilities placed in service after December 31, 2025. To qualify, the electrolyzer must use nearby renewable power made at least one hour before use and within strict timing and regional rules. It would also drop a reference to lifecycle emissions guidance for these new facilities. Some projects would newly qualify, while many others would not.
New rules for writing off fossil assets
This bill would change how companies write off fossil fuel assets. New fossil equipment would not get bonus depreciation. Many drilling, mining, and related costs would be deducted evenly over 84 months. Treasury could bar accelerated recovery for property labeled a fossil‑fuel subsidy. One exception: new natural gas gathering lines would use a 15‑year life, unless a contract or construction started before the bill was introduced.
Less federal funding for fossil projects
If enacted, ARPA‑E funds could not support fossil‑fuel projects. USDA grants and loans would no longer cover carbon capture and storage systems. Rural Utilities Service loans could not fund projects that will use fossil fuel.
Methane charge rule restored for oil and gas
If enacted, the EPA’s waste emissions charge rule for petroleum and natural gas systems would be restored. Operators could face methane‑related charges and compliance steps again, starting on enactment.
Methane program date moved earlier
The methane emissions and waste program date would move from 2034 to 2024. Oil and gas operators would face the earlier timeline if enacted.
Roll back recent energy leasing laws
The bill would repeal several recent energy laws tied to oil and gas leasing and development. It would repeal the Ensuring Energy Security provision and the authorization for the 2017–2022 offshore lease sales. It would also roll back multiple energy provisions enacted in Public Law 119‑21. Companies relying on those sections would lose those authorities.
Stronger spill liability and fewer royalty perks
The bill would tighten costs around oil spills and offshore royalties. Royalty relief on Outer Continental Shelf leases would be banned. Interest would no longer be paid on royalty overpayments. Oil spill liability would expand for certain offshore and onshore facilities and pipelines, including those moving diluted bitumen.
Federal financing blocked for fossil projects
If enacted, federal financing for fossil projects would be cut back. DOE’s Loan Programs Office could not fund fossil, carbon capture, or non‑qualified hydrogen projects. The DOE fossil energy office would be terminated, with unobligated funds rescinded. Export and development agencies could not finance fossil‑fuel projects. DOT funds could not support rail or port projects meant to move fossil fuels. Some Energy Policy Act section 1703 incentives would also be removed or reorganized.
Limits on U.S. backing for fossil finance
If enacted, Treasury would rescind unobligated U.S. contributions tied to fossil‑fuel projects at some international financial institutions. Future U.S. contributions would be barred unless those institutions agree not to use them for fossil‑fuel projects. This would take effect upon enactment.
Higher per-barrel and coal excise fees
If enacted, the Black Lung excise tax rates would rise to $1.38 and $0.69 per unit starting the first month after enactment. Crude oil received or petroleum products entered after Dec. 31, 2025 would add $0.10 per barrel when the Oil Spill Trust Fund balance is under $2 billion. The per-barrel charge would begin by quarter based on Treasury’s estimates.
No refunds of oil spill import taxes
Importers could not get drawback refunds of federal oil spill taxes for goods entered on or after January 1, 2026. This would raise net import costs for affected firms.
Tougher partnership and property rules for fossil
Publicly traded partnerships with fossil fuel income would lose special partnership tax status. Hydrogen income would only qualify if it is "qualified clean hydrogen." Real property used in fossil activities could not use like‑kind exchanges to defer gains after enactment. Together, these changes would raise taxes for some partnerships and property owners.
Define fossil fuels and map subsidies
If enacted, the bill would define “fossil fuel” as coal, petroleum, natural gas, and their fuel‑use derivatives. Treasury and Energy would report to Congress within one year listing federal laws and rules that include subsidies for fossil‑fuel production.
Big lenders face more cleanup liability
If enacted, very large lenders would lose the usual CERCLA lender shield. It would apply to investment firms with $250 billion or more in assets under management and bank holding companies with $10 billion or more in assets. This would take effect upon enactment.
Sponsors & CoSponsors
Sponsor
Omar
MN • D
Cosponsors
Barragan
CA • D
Sponsored 7/23/2025
Khanna
CA • D
Sponsored 7/23/2025
Casar
TX • D
Sponsored 7/23/2025
Cohen
TN • D
Sponsored 7/23/2025
Espaillat
NY • D
Sponsored 7/23/2025
Foushee
NC • D
Sponsored 7/23/2025
Frost
FL • D
Sponsored 7/23/2025
Garcia (CA)
CA • D
Sponsored 7/23/2025
Jayapal
WA • D
Sponsored 7/23/2025
McCollum
MN • D
Sponsored 7/23/2025
Del. Norton, Eleanor Holmes [D-DC-At Large]
DC • D
Sponsored 7/23/2025
Ocasio-Cortez
NY • D
Sponsored 7/23/2025
Pingree
ME • D
Sponsored 7/23/2025
Ramirez
IL • D
Sponsored 7/23/2025
Scanlon
PA • D
Sponsored 7/23/2025
Schakowsky
IL • D
Sponsored 7/23/2025
Tlaib
MI • D
Sponsored 7/23/2025
Tokuda
HI • D
Sponsored 7/23/2025
Torres (NY)
NY • D
Sponsored 7/23/2025
Watson Coleman
NJ • D
Sponsored 7/23/2025
Roll Call Votes
No roll call votes available for this bill.
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