As a result of the November elections, the Senate has flipped to Republican control with Republicans now holding at least 52 seats. In the House, Republicans have likely picked up 12 seats to increase their seat count to 246. In terms of a legislative agenda, it is anticipated that one of the areas the Senate Committee on Energy and Natural Resources may focus its attention on will be exports and infrastructure.
As the Obama administration has pushed forward a strategy to use regulations to address global warming without action from Congress, soon to be Senate Majority Leader McConnell (R-Ky.) has indicated that he would work to rein in the Environmental Protection Agency as it finalizes a proposal to regulate pollution from coal-fired power plants. It is unclear to what extent comprehensive tax reform will be a focus in the next Congress, but this will be an issue APGA will continue to follow closely as issues related to tax-exempt financing are discussed. In the Senate, 60 votes are needed to invoke cloture and end debate, so that will be a magic number to reach in moving legislation forward.
No official agenda for the 114th Congress has been announced by House Majority Leader McCarthy (R-Calif.), but the agenda is expected to remain similar to that of the 113th Congress. Expect the House to continue to focus on reigning in the administration’s various rulemakings on energy production and the environment. With the Senate flipping, the House’s legislative priorities have a much better chance of becoming enacted as opposed to being stymied by a Democratic Senate during the 113th Congress.
Congress has returned for a lame duck session in which one of the primary tasks will be to pass legislation that continues funding the federal government beyond a temporary measure that expires on December 11. In addition, lawmakers may also move to pass legislation that extends several expiring tax credits. APGA is working to include two expiring natural gas vehicle credits in any tax extender legislation.
One other item that may come up during the lame duck session of interest to public natural gas systems is the Shaheen-Portman Energy Efficiency Bill. This bill contains a wide range of energy provisions covering topics from energy codes to the ability for homeowners to finance energy efficiency projects. The key provision for natural gas utilities in this legislation is the repeal of Section 433 of the Energy Independence and Security Act. Section 433 bans the use of fossil fuels in federal buildings after 2030. This means any new or renovated federal building would not be able to use natural gas, electricity generated from fossil fuels, or even fuel cells if the energy is derived from fossil fuels.
Earlier this year, the Shaheen-Portman bill succumbed to election year politics. However, with Republicans in the majority in the Senate, there will be a renewed push to introduce a straight repeal of Section 433.
There also appears to be an increasing amount of attention on the activities of large banks in physical commodities transactions. Earlier this year, the Federal Reserve released an advanced Notice of Proposed Rulemaking addressing the activities of large banks, referred to as Financial Holding Companies, as they pertain to the trading of physical commodities, including natural gas. More recently, the Senate Permanent Subcommittee on Investigations held a two-day hearing on a report they released that addressed the same subject.
On November 3, the APGA Board of Directors unanimously approved a policy resolution expressing the association’s position on regulations that may potentially impact the ability of large banks to engage in physical commodity transactions. Specifically, the Board approved APGA taking a position that opposes the “implementation of regulations that would prohibit, or inappropriately restrict, Financial Holding Companies from engaging in physical natural gas commodity transactions.”
APGA’s concern as it relates to bank activities in physical commodities transactions is focused solely on physical natural gas transactions. Many public natural gas systems utilize large banks as counterparties for a number of transactions, including prepays, and unduly limiting or preventing these entities from engaging in the physical natural gas business would harm market liquidity for public natural gas systems, potentially increase physical transaction costs, and threaten the viability of natural gas prepayment transactions. APGA has been meeting with congressional offices and other stakeholders to express these concerns.
For questions on APGA’s legislative and regulatory actions, please contact Dave Schryver by phone at 202-464-2742 or by email at email@example.com.