E2 Law Blog : Environmental Lawyers & Attorneys : Greenberg Traurig Law Firm : Climate Change, Energy Legislation

Contributed by Marvin A. Kirsner
GT Tax Practice, Boca Raton

The Pennsylvania Department of Revenue has ruled that equipment purchased by a company that provides fracturing and acidizing services in connection with natural gas wells is exempt from the Commonwealth's sales and use tax under the mining exemption. The ruling also concludes that materials used in fracturing services (such as gases, sand, and cement) are also exempt from sales and use tax under the mining exemption. For the full text of SUT-10-003 click here.

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The always-useful Politico nails the Democrat plan for cap and trade legislation though Harry Reid won't use that term.  Look for the Bill to have four sections: (1) oil spill response; (2) a clean-energy and job-creation title based on work done in the Senate Energy and Natural Resources Committee; (3) a tax package from the Senate Finance Committee; and (4) a section that deals with greenhouse gas emissions from the electric utility industry.  Sections 1 and 2 seem to have bi-partisan support in concept and should pass (though more spending is somewhat problematic politically, given deficit concerns). Sections 3 and 4 may be jettisoned at the end of the day to assure passage of 1 and 2.  Still, the Bill is being written and deals are being cut now. 

We will post the Bill and analyze winners and losers as soon as the text is out. 

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Nuclear power and offshore drilling kick off the American Power Act.

The Power Act was supposed to include a "robust" nuclear title.  The good news is more government money is made available for nuclear grants and loan guarantees.  The bad news includes the following: (1) Although provisions for streamlining the permitting process are included, but the conditions for expedited approvall include construction of the reactor "based on a design approved by the Commission" and more importantly on "a site at which an operating nuclear power plant exists."   The Power Act thus hamstrings construction of new plants.  (2) Also, the Power Act reaffirms NEPA's applicability to nuclear plant siting and construction.  This means plant construction will be delayed by litigation from NIMBY and anti-nuclear zealots.  In other words, don't expect to see new nuclear plants anytime soon.

The rumor was offshore drilling might be "out" of the bill.  It seems to be in.  In an odd turn of language, the Power Act states that  "The purposes of this Act are...to consider through this Act or accompanying legislation (A) a moratorium on any new offshore drilling activities" until: (1) the cause of the Deepwater Horizon accident is determined; (2) the Secretary of the Interior certifies that it is safe to continue proposed drilling plans; (3) liability mechanisms to ensure adequate funds are available to pay for cleanup; (4) new safety measures are in place to protect oil workers; and (5) allowing States to determine whether offshore drilling should take place.  However, the Power Act does not prohibit drilling.  In fact, it explicitly allocates to the States 37.5% of any offshore lease rental and royalty payments, with 20% of that allocable share going directly to "certain coastal political subdivisions."

More to follow.     

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Here are the latest rumors about the Kerry-Graham-Lieberman draft Senate energy bill. 

• KGL plan to release their bill by the week of Earth Day, which is April 22.
• The bill will tax energy in multiple ways.  The taxes will be heavy.  To ease the pain somewhat, between 50-60 percent of the revenue taken by the government will be re-circulated back to the taxpayer/consumer.
• Contrary to earlier reports, there will not be much if any new off-shore drilling, due to Democrat opposition.   "Drill here, drill now" seems dead.
• There is a major fight over drilling for natural gas in the Marcellus shale.  This issue is still up in the air, but the enviros supposedly have vowed to do "whatever it takes to put drilling on the shelf."
• One of the key issues – division of energy rights, likely in the form of emission allocations, among different industries – is being deferred until the other sections of the bill are agreed.  However, the KGL bill accepts the proposition that the government should decide much energy consumers, and different sectors of the economy, may properly consume.
• Right now, the “bipartisan” aspect of the Bill seems confined to increased support for the nuclear industry.

 Of course, the draft bill is not final, much less law.  And these are just rumors. 

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