[Congressional Record Volume 158, Number 85 (Thursday, June 7, 2012)]
[Senate]
[Pages S3841-S3842]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COONS (for himself, Mr. Moran, Mr. Tester, Mr. Franken, 
        Ms. Klobuchar, Mr. Whitehouse, and Mrs. Shaheen):
  S. 3275. A bill to amend the Internal Revenue Code of 1986 to extend 
the publicly traded partnership ownership structure to energy power 
generation projects and transportation fuels, and for other purposes; 
to the Committee on Finance.
  Mr. COONS. Mr. President, when it comes to America's energy policy, 
Republicans and Democrats alike have made it clear they support an all-
of-the-above energy strategy.
  As the Presiding Officer knows, serving on the Energy Committee along 
with me, there is broad agreement on the need for a comprehensive 
approach that will develop secure, homegrown, efficient energy sources 
for our next generation.
  I believe an across-the-board policy that accepts the likely reality 
of our current dependence on our fossil-based fuels going forward, as 
well as the vital need to develop and deploy new, promising, clean 
energy fuels of the future, is essential. Such a policy will provide 
certainty to our markets, opportunities to our families and companies 
and communities, and ensure that we are not--as some would say--picking 
winners and losers in the energy space.
  Yet there is today an obstacle standing in the way of a truly 
comprehensive strategy that at least both parties say they want. It is 
a provision in our Federal Tax Code that has its metaphoric thumb on 
the scale, tipping the balance in favor of traditional fossil fuels. 
That is why I am so glad I have been able to work with my colleague and 
friend Senator Moran of Kansas to today introduce bipartisan 
legislation that will level the playing field and bring parity to one 
piece of Federal tax policy relating to energy.
  Investors in oil, natural gas, coal, and pipelines have for nearly 30 
years been able to form publicly traded entities called master limited 
partnerships, or MLPs. These partnerships include a passthrough tax 
structure that avoids double taxation and leaves more cash available to 
distribute to investors. They have for investors the liquidity and the 
return that is commonly associated with equity and the tax advantage 
that is associated with partnerships, and they have been able to 
aggregate and deploy a significant amount of private capital in the 
traditional fossil fuel marketplace, roughly $350 billion today across 
100 MLPs. They have access to private capital at a lower cost, 
something that capital-intensive alternative energy projects in the 
United States badly need now more than ever.
  As a result, MLPs should be a great source for raising private 
capital for clean energy projects as well as they have been for fossil 
fuel projects. The only problem is, under current law, only fossil 
fuel-based energy projects can attract this type of private energy 
investment. That is right--we are currently in our tax policies working 
against our broadly stated commitment as a country to an all-of-the-
above energy policy with a statute that explicitly excludes clean 
energy projects from forming these MLPs. This inequity is starving a 
growing portion of America's domestic energy sector of the very capital 
it needs to build and grow and compete. So Senator Moran and I, along 
with other colleagues, decided to fix it. We came together and said it 
was time to level the playing field.
  Sometimes when I have the opportunity, I have gone for a run here in 
Washington or, even better, in my home State in Delaware. Something any 
runner can tell you is that going up and down hills is what saps your 
strength. When a surface is flat, you can go farther, you can go 
faster, and it is the same with our Federal Tax Code. When it comes to 
evening things out, we have two choices. We can either lower everything 
to a common level by eliminating MLPs--by saying this tax advantage 
shouldn't be given to its traditional beneficiaries in gas and oil and 
coal, or we can raise the level of opportunity and attract greater 
investment by broadening the fields that can take advantage of MLPs to 
include wind and solar, biomass, geothermal, cellulosic, biodiesel.
  In my view, the better strategy, the better approach is the 
bipartisan one that takes our colleagues at their word and says we 
intend to stop picking winners and losers and, instead, embrace an all-
of-the-above energy strategy. Senator Moran and I have chosen this 
option and believe that rather than eliminating MLPs, bringing 
everything together and making renewables on the same level playing 
field with fossil fuels has a better promise for the future of the 
American energy economy.
  This is a relatively straightforward proposal. Our bill, the Master 
Limited Partnerships Parity Act, will bring new fairness to the Tax 
Code in this specific area. It recognizes revenue from projects that 
sell electricity or fuels produced from clean energy sources as 
qualifying MLPs.
  This change will encourage investment in domestic energy resources, 
and could bring substantial new private capital off the sidelines to 
finance renewable projects ranging from wind and solar to geothermal 
and cellulosic ethanol, just at a time when we so badly need it.
  Harnessing the power of the private market is essential if 
alternative energy projects are to grow and create jobs all across 
America. Two experts in energy finance, Felix Mormann and Dan Reicher 
from Stanford's Steyer-Taylor Center for Energy Policy and Finance, 
wrote an op-ed this past week in the New York Times endorsing this 
legislation.
  They said:

       If renewable energy is going to become fully competitive 
     and a significant source of energy in the United States, then 
     further technological innovation must be accompanied by 
     financial innovation so that clean energy sources gain access 
     to the same low-cost capital that traditional energy sources 
     like coal and oil and natural gas enjoy.

  In the search for common ground on energy policy, this kind of simple 
fairness is the sort of thing I hope we can all agree on. That is why 
the MLP Parity Act carries the strong support of a wide range of 
business groups, financial experts, and energy organizations.
  David Crane is the CEO of Fortune 300 company NRG Energy. NRG has 
generating assets across a wide range of traditional fuel sources and 
clean and alternative energy sources. Mr. Crane said:

       The MLP Parity Act is a phenomenal idea. It's a fairly 
     arcane part of the tax law, but it's worked well and has been 
     extremely beneficial to the private investment in the oil and 
     gas space. The fact that it doesn't currently apply to 
     renewables is just a silly inequity in our current law.

  We are also grateful for the support of national organizations such 
as the American Wind Energy Association, the Solar Energy Industries 
Association, the American Council on Renewable Energy, and many others, 
and thank them for their hard work in promoting this commonsense energy 
future for our country.
  I also wish to specifically thank Dr. Chris Avery and Franz 
Wuerfmanns-

[[Page S3842]]

dobler who worked in my office so well in preparing this and moving 
this forward as public policy. And I wish to thank Josh Freed of Third 
Way for bringing this to our attention and producing one of the first 
policy papers on how master limited partnerships can be a great 
financing vehicle for clean energy.

  I have no doubt there is significant growing opportunity worldwide in 
alternative fuels. There is a clean energy future coming. The only 
question is whether American workers, American communities, and 
American companies will benefit from this, or will simply be bystanders 
and watch our competitors pass us by. I think if we are going to lead, 
we have to work together. The private sector can and will provide the 
financing and the researchers to develop critical innovations and 
deploy them, but the Federal Government--the Congress in particular--
must set a realistic and positive policy pathway to sustain these 
innovations and let the market work to its fullest potential. The 
Master Limited Partnerships Parity Act moves us toward that goal. By 
leveling the playing field for fair competition, this market-driven 
solution could provide vital and needed support for the kind of 
comprehensive energy strategy we need to power our country for 
generations to come.
  Some of us who will support this bill also support things such as the 
ITC, the PTC, and other clean energy financing vehicles. Others may 
not. On the specific question of master limited partnerships, the bill 
we introduced today simply allows us to come together in a bipartisan 
way to open it up to all energy sources, and to build a sustainable 
energy financing future on this planet.
  Once again, I want to thank my cosponsor, Senator Moran. I look 
forward to working with all of my colleagues, on the Energy Committee 
and throughout the Senate and the House, to move forward this important 
legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3275

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Master Limited Partnerships 
     Parity Act''.

     SEC. 2. EXTENSION OF PUBLICLY TRADED PARTNERSHIP OWNERSHIP 
                   STRUCTURE TO ENERGY POWER GENERATION PROJECTS 
                   AND TRANSPORTATION FUELS.

       (a) In General.--Subparagraph (E) of section 7704(d)(1) of 
     the Internal Revenue Code of 1986 is amended by striking ``, 
     industrial source carbon dioxide,'' and all that follows and 
     inserting ``or of any industrial source carbon dioxide; or 
     the generation, storage, or transmission to the electrical 
     grid of electric power exclusively utilizing any resource 
     described in section 45(c)(1) or energy property described in 
     section 48, or the accepting or processing of such resource 
     or property for such utilization; or the generation or 
     storage of thermal power exclusively utilizing any such 
     resource or property; or the transportation or storage of any 
     fuel described in subsection (b), (c), (d), or (e) of section 
     6426; or the production for sale by the taxpayer, the 
     transportation, or the storage of any renewable fuel 
     described in section 211(o)(1)(J) of the Clean Air Act (42 
     U.S.C. 7545(o)(1)(J)),''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act, 
     in taxable years ending after such date.
                                 ______