Coons, Moran, Poe, Thompson reintroduce Master Limited Partnerships Parity Act of 2015

In Washington, Senators Chris Coons (D-DE) and Jerry Moran (R-KS) and Representatives Ted Poe (R-TX) and Mike Thompson (D-CA) for reintroducing the Master Limited Partnerships Parity Act of 2015 (S.1656 and H.R.2883).  This bill “levels the playing field” according to its sponsors, “by giving investors in renewable energy projects access to a decades-old corporate structure with a tax advantage currently available only to investors in fossil fuel-based energy projects.”

An MLP is a business structure that is taxed as a partnership, but whose ownership interests are traded like corporate stock on a market. Whereas profit from publicly traded C corporations is taxed at both the corporate level and the shareholder level, income from MLPs is taxed only at the shareholder level because it is treated as a partnership for tax purposes.

n MLP consists of limited partners (investors) and general partners (managers). The limited partners — who can number in the thousands — provide capital and receive quarterly required distributions generally equivalent to shareholder dividends in a C-corporation. They play no role in the operation of the MLP, while the general partners manage the MLP’s daily operations. General partners can take the form of another company or a group of individuals, typically holding a small percent ownership stake.

Co-sponsoring Senator Chris Coons wrote:

“The Master Limited Partnerships Parity Act is a straightforward, powerful tweak to the federal tax code that could unleash significant private capital into the energy market. At a time when the United States needs to increase domestic energy production and leaders of both political parties say they support an “all of the above” energy strategy, Congress should level the playing field and give all sources of domestic energy — renewable and non-renewable alike — a fair shot at success in the marketplace.

By statute, MLPs have only been available to investors in energy portfolios for oil, natural gas, coal extraction, and pipeline projects. These projects get access to capital at a lower cost and are more liquid than traditional financing approaches to energy projects, making them highly effective at attracting private investment. Investors in renewable energy projects, however, have been explicitly prevented from forming MLPs, starving a growing portion of America’s domestic energy sector of the capital it needs to build and grow.

BIO’s Brent Erickson added: “The Master Limited Partnership Parity Act would provide innovative renewable chemical and advanced biofuel companies access to a tax structure that currently benefits only the fossil fuel industry. Leveling the tax policy playing field for renewable fuels and chemicals is important in shaping private investment decisions that will help this industry commercialize new technology. This will clear a path for increased industrial biotechnology innovation that drives employment and economic growth and reduces U.S. dependence on foreign oil. BIO thanks the additional cosponsors of the act, Senators Michael Bennet (D-CO), Susan Collins (R-ME), Cory Gardner (R-CO), Angus King (I-ME), Lisa Murkowski (R-AK) and Debbie Stabenow (D-MI) and Representatives Mark Amodei (R-NV), Earl Blumenauer (D-OR), Mike Coffman (R-CO), Paul Gosar (R-AZ), Jerry McNerney (D-CA) and Peter Welch (D-VT).

http://www.coons.senate.gov/issues/master-limited-partnerships-parity-act