[Congressional Record Volume 149, Number 52 (Tuesday, April 1, 2003)]
[Senate]
[Page S4635]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself and Mrs. Hutchison):
  S. 752. A bill to amend the Internal Revenue Code of 1986 to treat 
distributions from publicly traded partnerships as qualifying income of 
regulated investment companies, and for other purposes; to the 
Committee on Finance.
  Mr. BINGAMAN. Mr. President, I rise today with my colleague from 
Texas, Senator Hutchison to introduce legislation that will allow 
publicly traded partnerships to sell their stock to mutual funds so 
they can raise sufficient capital for new investments in pipelines and 
infrastructure. Because of current restrictions, publicly traded 
partnerships are hindered in their ability to sell their equity to 
mutual funds even though their equity is sold on public exchanges. The 
overwhelming majority of these partnerships are energy-related 
companies that need the ability to raise capital from mutual funds to 
build pipelines and other facilities. This legislation would be a 
strong shot in the arm for the economy as it encourages companies to 
begin new projects that are currently on hold for lack of capital. It 
also provides us with the ability to expand our pipeline network to 
meet our current demands for natural gas. I look forward to working 
with my colleagues to advance this important legislation.
  Mrs. HUTCHISON. Mr. President, I am pleased to introduce a bill with 
Senator Bingaman that takes an important step toward modernizing the 
Internal Revenue Code.
  Decades ago, investment companies which manage mutual funds were 
limited in the amount of income they could receive from investments in 
partnerships.
  At the time, this restriction was established to address legitimate 
concerns and protect the interests of investors. Ownership interests in 
partnerships can be illiquid, so it is difficult to get one's money out 
of the investment. Partnerships are also not required to be transparent 
in their financial statements, so it could be difficult for investors 
to accurately assess a business
  However, the world has changed. Some partnerships have been able to 
go public and offer shares on the stock markets, so the problem of 
liquidity is solved. By going public, they must meet much higher 
standards of financial transparency, including regularly publishing 
audited financial statements for investors. Currently, 50 publicly 
traded partnerships trade on major U.S. stock exchanges; 14 of these 
companies are headquartered in my home State, Texas.
  Unfortunately, tax laws have not reflected this change in the 
business and financial worlds. Mutual funds are still restricted in how 
much they can invest in any partnership, including those that are 
publicly traded. This significantly impedes the ability of these 
companies to raise capital. It limits their ability to grow and create 
jobs.
  Publicly traded partnerships play an important role in the economy. 
About half are in the energy sector, actively involved in building and 
operating infrastructure to gather, process and transport oil and 
natural gas. These partnerships also include timber and real estate 
companies. It is clear we need a healthy energy sector to ensure the 
availability of oil and gas at reasonable prices.
  The bill Senator Bingaman and I introduce today will lead to a 
dramatic increase in the flow of capital to these companies. Mutual 
funds, which often purchase a majority of equity offerings, will be 
able to participate in stock offerings from publicly traded 
partnerships. This will expand the investor base and lower the cost of 
capital, ultimately helping to lower energy prices.
  Our bill will also provide millions of investors an opportunity, 
through their mutual funds, to participate in another investment 
opportunity if their professional mutual fund managers believe it is an 
attractive investment.
  It is wrong for the Federal Government to use the tax code to make 
decisions for investors. The bill we are introducing will modernize our 
tax laws so families can make their own financial planning decisions. 
This legislation will also provide an important source of capital for 
key areas of the economy. I hope my colleagues will support this long 
overdue improvement.
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