New lawsuits challenge the constitutionality of the “Waste Emissions Charge” slipped into the 2022 Inflation Reduction Act that would disproportionately harm smaller operators and working-class and lower income families
Washington, D.C. –As outgoing President Joe Biden uses his waning days in office to saddle the American people and the economy with even more unpopular and unproven green policies they rejected last November, the American Free Enterprise Chamber of Commerce (AmFree) is taking legal action against an unconstitutional methane tax with far-reaching harmful consequences on natural gas producers, especially small and locally-operated family-owned businesses unable to comply with this crushing financial burden.
This methane tax also has a negative impact on working class and lower income families who work in the natural gas industry, and it will drive up costs for all Americans, making it more expensive to heat one’s home or cook dinner. The impacts of those price hikes will fall hardest on poor and working class Americans, who are already struggling to keep pace with inflation.
Slipped into the enormous 2022 so-called Inflation Reduction Act (IRA) was a new tax on methane emitted from certain petroleum and natural gas facilities. Dubbed the “Waste Emissions Charge” (WEC), the law empowered the Environmental Protection Agency (EPA) to assess a tax on methane producers, including any facility involved in the production, gathering, or boosting of petroleum or natural gas. The tax went into effect for calendar year 2024, with its financial penalties escalating year over year. These costs don’t bother large producers much, but they’re an existential threat to smaller independent operations.
Along with the Michigan Oil and Gas Association, AmFree has filed two lawsuits: one in the U.S Court of Appeals for the D.C. Circuit challenging EPA’s implementation of the rule, and a second in the U.S. District Court for the Western District of Michigan challenging the statute itself as unconstitutional. As the complaint explains, the IRA’s text is so incoherent and gives so much authority to EPA that it violates the basic principles of due process and separation of powers. According to the complaint, “The decision of whom and what to tax is the archetypal legislative decision, which the Constitution requires Congress to make. But Section 136’s unintelligible text leaves that decision to EPA in practice, violating Article I.” Further, because the statute requires EPA to determine if actual methane emissions exceed a standard that does not exist, “It is like asking if an ‘only child’ is taller than his siblings—one side of the comparison is a nullity.”
“Last year, the American people spoke with a clear voice in support of policies that would unleash energy dominance and rejected Biden era policies that drove inflation and prices to record highs,” said Gentry Collins, Chief Executive Officer of AmFree. “The final curtain may be closing on his failed presidency, but Biden is using every remaining minute in office to cement his green agenda, making it harder for the incoming administration to achieve their policy priorities. Our lawsuit aims to strike down an illegal, onerous and punitive tax aimed squarely at the natural gas industry and is designed to put an end to ordinary Americans’ access to reliable, safe and affordable energy to heat their homes and generate their electricity.”
“The ‘Waste Emissions Charge’ imposed by the Inflation Reduction Act represents an existential threat to small, family-owned operations that form the backbone of the oil and gas industry in Michigan,” said Jason Geer, President of the Michigan Oil and Gas Association. “This tax not only jeopardizes the livelihoods of countless workers but also risks driving up energy costs for working-class families already grappling with inflation. We stand with AmFree in challenging this overreach, which undermines both economic stability and energy independence.”
According to the U.S. Energy Information Administration (EIA), natural gas, which is a clean burning fuel long championed by liberal leaders like former President Barack Obama, comprised 43% of the electricity generated in the United States in 2023, making it the largest source of electricity generation in the country. Methane emissions from oil and gas facilities account for only 3% of U.S. greenhouse gas emissions.
AmFree has fought other Biden era environmental policies in the courts, including California’s electric vehicle mandates.