Senate negotiators closing gap on FAA bill’s tax provisions

Source: Geof Koss, E&E reporter • Posted: Friday, April 8, 2016

Senate negotiators appeared closer to an agreement on a much-anticipated tax title to the Senate’s Federal Aviation Administration reauthorization bill, but details on what energy provisions could make the cut remained scant.

“I think they’re getting there,” Senate Finance Chairman Orrin Hatch (R-Utah) said to reporters yesterday afternoon.

Aides and senators from both parties have signaled that an extension of the 48C investment tax credit for biomass, geothermal and fuel cells was likely to be included in the FAA bill (Greenwire, April 6).

The fate of breaks for biofuels and carbon capture, however, remained up in the air. Some proposals resurfaced in the dozens of amendments filed to the bill yesterday.

Sens. Bill Cassidy (R-La.) and Michael Bennet (D-Colo.) are pressing an amendment to ensure that tax treatment of liquefied natural gas used on inland vessels is on par with diesel and gasoline. The measure mirrors legislation (S. 2378) the pair introduced in December (E&ENews PM, Dec. 11, 2015).

“It takes about 1.7 gallons of LNG to provide the same amount of energy as a gallon of diesel,” Cassidy said yesterday in a statement. “Those who use LNG to power marine vessels would have to pay 50 cents in tax for the same amount of energy contained in a gallon of diesel fuel that is only taxed at 29 cents — that doesn’t make sense.”

He added, “By ensuring equal tax treatment for LNG, it encourages its use and its production — benefiting Louisiana’s economy and workers.”

A second Bennet amendment would allow companies to use tax-exempt bonds to finance carbon capture and sequestration projects. That proposal — co-sponsored by Sens. Rob Portman (R-Ohio), John Thune (R-S.D.) and Bill Nelson (D-Fla.) — mirrors legislation (S. 2305) from last year.

Sen. Johnny Isakson (R-Ga.) is floating a five-year extension of the production tax credit for advanced nuclear reactors, which would push the credit’s scheduled expiration from 2021 to 2026.

Sen. Joe Manchin (D-W.Va.) has filed an amendment to shore up the United Mine Workers of America’s 1974 pension plan from insolvency — mirroring a bipartisan bill, S. 1714, he introduced last year with other Appalachian lawmakers (Greenwire, July 7, 2015).

Sen. Marco Rubio (R-Fla.), through another proposed amendment to the FAA bill, is renewing his push to create uniform vessel discharge standards (E&E Daily, Feb. 5, 2015).

Conservative groups and companies continue to beat the drum against including renewable energy tax breaks in the FAA bill.

Chrissy Harbin, director of federal affairs and strategic initiatives for Americans for Prosperity, said yesterday the group would join other like-minded organizations in calling on lawmakers to block the FAA measure if green tax breaks become a part of it.

“This debate is all over the place,” she said yesterday, predicting “increased activity” among activists over the weekend ahead of next week’s resumption in the Senate. “Our state directors are hearing a lot about this.”

She said AFP prefers a straight extension of FAA programs and is opposing all extraneous amendments, including tax breaks for nuclear and fossil fuels.

The group is already looking to the House to head off any additions the Senate makes to the must-pass aviation bill. “We’ve been encouraging House leaders to hold firm in opposing this,” she said.

Philip Ellender, president of government and public affairs for Koch Industries Inc., said in a statement that, “Instead of continuing to promote corporate welfare that benefits the politically connected, Congress has an opportunity to show it is listening to voters by rejecting the unrelated special interest tax provisions being added to the FAA reauthorization bill.”

Reporters Hannah Hess and George Cahlink contributed.