[Congressional Record (Bound Edition), Volume 160 (2014), Part 13]
[Senate]
[Pages 18808-18809]
[From the U.S. Government Publishing Office, www.gpo.gov]




        REGARDING THE EXCISE TAX LEVIED ON LIQUEFIED NATURAL GAS

  Mr. BENNET. Madam President, I ask unanimous consent to engage in a 
colloquy with my colleagues.

[[Page 18809]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BENNET. Madam President, I rise to discuss an amendment regarding 
natural gas that was adopted earlier this year by the Senate Finance 
Committee and was included in the Senate-passed highway bill. I wish it 
were included in one of the year-end measures this body is passing in 
the next few days. This is a bipartisan proposal that passed the Senate 
overwhelmingly and deserves to be enacted before we conclude this 
Congress.
  The measure--a bill we worked on with Senator Burr from North 
Carolina--would equalize the tax treatment of liquefied natural gas, 
LNG, and diesel fuel. The federal highway excise tax on both diesel and 
LNG is set at 24.3 cents per gallon. However, because LNG contains less 
energy per gallon than diesel fuel, on an energy equivalent basis, LNG 
effectively pays 170 percent of the diesel tax rate. The current 
highway excise tax treatment of LNG is a disincentive to investment in 
new LNG trucks and fueling stations, and should be corrected to 
encourage capital investments and help diversify transportation fuel 
choices.
  LNG is a transportation fuel used for large trucks and some marine 
and rail vessels. The fuel has attracted the attention of fleet 
operators due to its low cost at the pump and reduced environmental 
impact. LNG produces significantly lower levels of toxic emissions than 
diesel fuel, including lower levels of carbon dioxide, nitrogen oxide 
and sulfur dioxide. Using LNG instead of diesel fuel also reduces 
pollution from so-called ``black carbon,'' also known as soot. Black 
carbon is a major contributor to climate change, second only to carbon 
dioxide in the amount of heat it traps in the atmosphere once emitted.
  This amendment would change the highway excise tax and the Inland 
Waterways Financing rate on LNG so that the tax is imposed on the 
energy content of a diesel gallon, known as a diesel gallon equivalent, 
rather than strictly on a per-gallon basis. LNG has huge potential as a 
cheaper, cleaner, domestic energy source and we need to ensure our tax 
system is not putting it at a disadvantage.
  Mr. BURR. Madam President, I rise as a cosponsor of the amendment 
from the Senator from Colorado. This amendment would correct a mistake 
and level the transportation fuel tax playing field by taxing LNG on an 
energy equivalent basis rather than a volumetric basis.
  It would also put this cleaner and cheaper source of energy on an 
even playing field with diesel fuel. It would help a new industry get 
off the ground and become commercially viable simply by leveling the 
playing field.
  When Congress first established the transportation fuel tax on LNG, 
it was not yet a fuel that had entered the commercial marketplace. 
There were no LNG trucks on the road. There was no one to educate us on 
the technical or marketing differences of these two fuels. Now that the 
LNG market is emerging, however, this unfortunate drafting error has 
shown its real world consequences.
  The current tax system can result in thousands of dollars of 
additional tax for those who choose to utilize LNG. For example, if a 
diesel truck travels 100,000 miles at 5 miles per gallon it consumes 
20,000 gallons of diesel fuel, however, an identical LNG truck would 
require 34,000 gallons of LNG to travel the same distance. Both trucks 
would consume the same amount of energy, measured in BTUs, but the 
current tax system would result in the LNG truck paying an additional 
$3,402 in taxes because of the 14,000 more gallons of liquid fuel 
consumed.
  In addition, although we do not yet have any marine vessels operating 
in the U.S. on LNG, this too is an emerging market with great 
potential. High horsepower manufacturers are still developing the 
engines that will be needed to power vessels on LNG and we do not yet 
have a marine fuel sales infrastructure, but some ship owners are 
planning ship conversions or new orders that will allow them to utilize 
cleaner and cheaper natural gas fuel. We should not be raising a new 
obstacle for the marine industry by perpetuating this differential tax 
treatment on marine diesel fuel. Furthermore, there should be no 
scoring penalty from CBO or Joint Tax when we eventually get around to 
fixing the tax treatment of LNG versus diesel.
  This is a commonsense proposal that allows diesel fuel and LNG to 
compete in the market fairly, opening doors for companies interested in 
switching to this environmentally friendly domestic energy source. We 
really need to find a way to fix this issue so that we can realize the 
economic and environmental benefits of the increased use of domestic 
natural gas.
  Mr. WYDEN. Madam President, I support the amendment from the Senators 
from Colorado and North Carolina and I especially want to thank Senator 
Bennet for his leadership on this issue. I was proud to help them by 
including it in the highway legislation mentioned by the Senator from 
Colorado and I regret that the measure is not included in any of the 
bills we are considering as we wind down this Congress. I would like to 
commit to working with my colleagues to find an appropriate vehicle for 
moving this proposal early next year.
  Mr. HATCH. Madam President, I was a cosponsor of this amendment to 
the highway bill in the Finance Committee and understand the importance 
of equalizing the tax rate between LNG and propane and diesel fuel. 
Unfortunately, we cannot add this amendment that I support to this 
time-sensitive legislation. Senator Burr and Senator Bennet, I hope to 
find an opportunity to include this important provision regarding LNG 
and propane in legislation next year. This inequitable treatment of LNG 
and propane deserves a better fate than what exists under current law. 
I especially want to thank Senator Burr for his tireless efforts on 
this issue.

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