Airport Alert: Democrats Pass 'Inflation Reduction Act' In Senate

After a year-plus of various twists and turns that culminated in a marathon session in the Senate this weekend, Senate Democrats on August 8 finally passed a budget reconciliation package, now known as the Inflation Reduction Act (IRA), on party lines with Vice President Harris acting as the key, tiebreaking vote. Despite being a drastically slimmed down version of President Biden's original $3.5 trillion Build Back Better (BBB) plan, the IRA is still chock full of Democratic policy wins, from prescription drug reform to significant increases in funding to combat climate change.

On the aviation front, the IRA provides tax credits for five years to increase the production of sustainable aviation fuels (SAF). Specifically, the legislation would enact a SAF blender's tax credit (BTC) from January 2023 through December 2024. Beginning in 2025 and lasting through 2027, the BTC will transition into a Clean Fuel Production Credit, which applies to all low-carbon fuels, but provides an enhanced value for SAF relative to on-road transportation fuels. The IRA also provides close to $300 million for an Alternative Fuel and Low Emission Aviation Technology grant program for eligible entities, including airports, to carry out domestic projects that produce, transport, blend, or store SAF, or develop, demonstrate, or apply low-emission aviation technologies. The federal cost share for projects is 75 percent, except for those at small hub and nonhub airports, where the federal cost share will increase to 90 percent.

The passage of the IRA in the Senate is a huge legislative accomplishment for Democrats, plain and simple. After December, when Senator Joe Manchin (D-WV) shut down negotiations over BBB, it appeared that any hopes for a revived, reconciliation package were slim. However, Senate Majority Leader Chuck Schumer (D-NY) and Senator Manchin's persistence to keep chipping away at a deal opened up a window for a breakthrough agreement, eventually leading to today's successful vote.

Now that the Senate has done its part and passed the IRA, the House is expected to come back briefly from its August recess on August 12 to pass the bill. While Speaker Nancy Pelosi (D-CA) only has a slim majority to work with, all indications at this point are that Democrats have the votes to pass the bill and send it to the president's desk.