Energy & Electric Utilities Committee

ENERGY UPDATE

A Federal Information Service of the NCSL Standing Committee on Energy and Electric Utilities
June 23, 2006
Volume 1, Number 4

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NATURAL GAS PIPELINE STATE TAXES – On June 15, 2006, the Commercial and Administrative Law Subcommittee of the House Judiciary Committee passed by voice vote a bill (HR 1369)prohibiting states from levying higher tax burdens on the natural gas pipeline industry than what is customary for other commercial and industrial sectors. The bill purportedly aims to create the same tax protections for the natural gas pipelines industry that companies who transport goods across state lines by plane, train, and truck have. Supporters hope that by protecting the industry from steep taxes, the bill will in turn protect consumers from higher natural gas costs. As the chairman of the subcommittee, Rep. Chris Cannon (R-UT), stated, “It is important to note that HR 1369 does not mandate what state tax rates should be, and it does not dictate how the states should assess property in their states. It merely requires them to treat all business property equally when assessing taxes.” Opponents of the bill believe that the bill will restrict states’ taxing rights. Rep. Melvin Watt (D-NC), the subcommittee’s Ranking Member, is worried that the bill allows the industry to bypass state procedures by challenging state tax policies in federal courts. Rep. Watt agreed, however, to hold off on expressing such concerns officially until the bill appears before the full committee.

POSSIBLY MORE OCS REVENUE SHARING, POSSIBLY MORE OCS DRILLING –

On June 21 the House Resources Committee approved by a vote of 29 to 9 a comprehensive measure, Deep Ocean Energy Resources Act (DOER Act), that would allow off-shore oil and gas drilling 50 miles from land, with options for individual states to either allow drilling within that domain, or to prohibit drilling up to 100 miles off of their coasts. The measure would also increase the states’ share of royalty revenue. Within 12 to 100 miles from shore, states would receive 50% of royalties paid, and a higher percentage for closer inland. The DOER Act was offered as a substitute amendment to HR 4761, introduced by Representative Bobby Jindal (R-LA) and was created as a compromise between Jindal’s bill and a bill (HR 3918) introduced by Representative John Peterson (R-PA). Although the Bush administration agreed to “discuss” revenue sharing during a June 14 committee hearing, future prospects for this bill are unclear. Whether the bill can pass the House floor is hazy, and passage in the Senate is improbable.

ENERGY WEEK – Five bills that were approved in the House Energy and Commerce Committee will be brought to the floor next week during ‘Energy Week’. Missing from the schedule are bills dealing with CAFÉ standards and boutique fuels. The CAFÉ bill will be brought to the floor when leadership is certain of support, and House Energy and Commerce Committee Chairman Joe Barton (R-TX) is holding off on the boutique fuels bill due to a lack of support during the committee hearing. Bills that will be brought to the floor next week include:

A draft bill promoting energy-efficient computer server research
HR 2730, which will create a $20 million annual grant program for US-Israeli alternative energies and energy efficiency project
HR 5534, which will create a new grant program promoting infrastructure for ethanol and other alternative fuels funded by CAFÉ violations.
HR 5611, which will create a program to teach drivers about fuel conservation, run by the automobile manufacturers, the Energy Department, and oil companies.
HR 5632, which will create a program to teach consumers about and rate the fuel efficiency of tires.

Also a possibility for consideration during Energy Week is the DOER Act just passed out of the House Resources Committee.