To amend the Internal Revenue Code of 1986 to disallow the production tax credit and investment tax credit for offshore wind facilities placed in service in the inland navigable waters of the United States or the coastal waters of the United States.
- Bill Number
- H.R. 2187
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-03-18: Referred to the House Committee on Ways and Means.
- Last Updated
- 2025-10-09T03:26:18Z
AI-Generated Summary
Purpose of the Legislation
This bill aims to modify the U.S. tax code to eliminate certain tax incentives for offshore wind energy projects located in specific U.S. waters. Specifically, it seeks to prevent these projects from qualifying for production and investment tax credits, which are financial benefits designed to encourage renewable energy development.
Key Provisions
- Amendments to Tax Credits:
- Removes eligibility for the Investment Tax Credit (under Section 48 of the Internal Revenue Code) by deleting a specific subparagraph that previously allowed offshore wind facilities in certain locations.
- Updates the Renewable Resources Production Tax Credit (under Section 45) to explicitly exclude any offshore wind facility located in the inland navigable waters (e.g., rivers and lakes used for interstate commerce) or coastal waters of the United States.
- Adds new rules to the Clean Electricity Production Tax Credit (under Section 45Y) defining "disqualified offshore wind facilities" as those in the specified U.S. waters, making them ineligible as "qualified facilities."
- Similarly amends the Clean Electricity Investment Tax Credit (under Section 48E) to exclude the same disqualified facilities, cross-referencing the definition from Section 45Y.
- Effective Date: The changes apply to energy produced and property placed in service after December 31, 2025, meaning projects starting before this date could still qualify under prior rules.
Significant Changes to Existing Law
- Prior to this bill, the Internal Revenue Code allowed offshore wind facilities, including those in U.S. inland navigable and coastal waters, to claim these tax credits as part of broader incentives for clean energy (e.g., from the Inflation Reduction Act of 2022).
- The bill introduces targeted exclusions for U.S. waters only, potentially preserving credits for facilities in international or deeper offshore areas, while striking or adding language to close loopholes for domestic coastal and inland projects.
- This represents a narrowing of renewable energy tax benefits, shifting away from supporting offshore wind in near-shore U.S. locations.
Potential Impacts
- On Government Agencies: The Internal Revenue Service (IRS) would enforce the new exclusions, potentially reducing administrative workload for qualifying projects but increasing scrutiny on facility locations. It could lead to higher federal tax revenue by disallowing credits, estimated in billions depending on project scale.
- On Citizens: Coastal residents and communities might see fewer offshore wind developments, potentially preserving viewsheds and fisheries but slowing the shift to cleaner energy, which could affect long-term energy costs and environmental quality.
- On International Relations: Minimal direct impact, though it might signal U.S. policy shifts on renewables, influencing partnerships with countries investing in offshore wind (e.g., European nations) or trade in energy technology.
- Broader effects include slowed growth in U.S. offshore wind capacity (currently a small but expanding sector), potentially hindering national goals for reducing carbon emissions.
Main Stakeholders Affected
- Offshore Wind Developers and Energy Companies: Primary targets, as they lose access to tax credits that reduce project costs by 30% or more, making U.S. coastal and inland projects less financially viable.
- Taxpayers and Federal Budget: Indirect beneficiaries through preserved tax revenue, but potential higher energy prices if renewable alternatives are delayed.
- Environmental and Conservation Groups: Divided impacts—some may oppose the bill for impeding clean energy, while others (e.g., focused on marine ecosystems) might support reduced near-shore development.
- Coastal States and Local Governments: Affected by changes in energy infrastructure, jobs, and economic development in regions like the Northeast and Gulf Coast planning offshore wind farms.
- Renewable Energy Industry Overall: Could redirect investments to other clean technologies or international waters.
Notable Legal, Constitutional, or Political Implications
- Legal: The amendments are straightforward tax code changes, likely constitutional as Congress has broad authority over taxation (under Article I, Section 8 of the U.S. Constitution). However, they could face challenges if seen as retroactively harming ongoing projects, though the post-2025 effective date mitigates this.
- Constitutional: No major issues anticipated, as it involves fiscal policy rather than rights or federalism concerns.
- Political: Highlights tensions in U.S. energy policy between fossil fuel interests and renewables; introduced by Republican representatives, it may reflect debates over subsidies for green energy amid concerns about project impacts on navigation, wildlife, and costs. If passed, it could influence broader climate legislation or state-level renewable mandates.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (4)
Rep. Gooden, Lance [R-TX-5], Rep. Hageman, Harriet M. [R-WY-At Large], Rep. Gill, Brandon [R-TX-26], Rep. Clyde, Andrew S. [R-GA-9]
Recent Actions
- 2025-03-18: Referred to the House Committee on Ways and Means.
- 2025-03-18: Introduced in House
- 2025-03-18: Introduced in House
Bill Versions
- To amend the Internal Revenue Code of 1986 to disallow the production tax credit and investment tax credit for offshore wind facilities placed in service in the inland navigable waters of the United States or the coastal waters of the United States. — issued 2025-03-18 — PDF (3 pages)