A House Judiciary subcommittee on Thursday approved by voice vote a bill that would prohibit states from assessing higher taxes on interstate natural gas pipelines than on in-state industrial and commercial facilities.
The legislation (HR 1369) seeks to bar states from discriminating in their taxation of interstate gas pipelines and potentially could drive down natural gas prices in the long term. The bill, sponsored by Rep. Chris Cannon (R-UT), also would clear the way for interstate gas lines to challenge a state’s taxation policy in federal court.
Cannon is chairman of the Commercial and Administrative Law Subcommittee, which voted out the bill. The measure has been sent to the full Judiciary Committee, but a mark-up has not been scheduled yet.
“States have been charging [interstate pipelines] at higher rates for many years,” said Martin Edwards, vice president of legislative affairs at the Interstate Natural Gas Association of America. He estimated that 12 to 15 states, particularly Ohio, currently impose higher taxes on interstate pipes than on in-state industrial and commercial facilities.
States would not be precluded from ever raising taxes on interstate gas pipelines under the Cannon bill, Edwards said. However, when doing so, the bill would require states to deal with interstate pipelines and in-state industrial and commercial facilities in a consistent fashion, he noted.
A companion bill has been introduced in the Senate by Sen. John Cornyn (R-TX), and is pending before the Senate Finance Committee. Cornyn is trying to get co-sponsors and move the bill to the Senate Judiciary Committee, where he is a member, a spokesman said.
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