On June 23, 2020, United States Senator for Texas, John Cornyn, introduced the SAVE Jobs Act, to assist the American energy sector in retaining jobs during the challenging economic times that have followed the shutdowns caused by COVID-19. Save American Vital Energy Jobs Act, S. 4041, 116th Cong. (2019-2020). The bill aims to provide administrative clarity and short-term regulatory relief to the American energy sector in a time of economic uncertainty.
The SAVE Jobs Act contains provisions that:
- allow more carbon capture projects to break ground by extending the commence construction window for the 45Q tax credit by one year;
- allow energy companies to build liquidity by:
- suspending certain capitalization rules, allowing taxpayers to immediately expense certain direct and indirect costs, such as inventory, that would otherwise be required to be capitalized in 2020;
- reducing the required deposit of certain motor fuel excise taxes paid every two weeks by taxpayers from 95% to 25%, without reducing the total tax liability these companies owe the government; and
- allowing taxpayers to expense 100% of intangible drilling costs in 2020; and
- provide immediate relief to those with leases on federal lands and waters by:
- streamlining existing authority to grant lease extensions, suspensions of production and operations during the pandemic;
- simplifying the existing process for royalty rate reductions to provide more timely relief during the pandemic; and
- delaying the deadline for recalculation of royalty payments under the 2016 ONRR Valuation Rule until July 1, 2022.
The temporary and targeted relief proposed in the SAVE Jobs Act would increase confidence in the American energy sector, and allow it to remain competitive with its international counterparts. Importantly, the SAVE Jobs Act must pass both the Senate and the House and be signed by the President before it becomes law.