On March 8, 2017 the Master Limited Partnership Association (“MLPA”) submitted comments in response to the Federal Energy Regulatory Commission’s (“FERC”) December 15, 2016 Notice of Inquiry which requested comments on its “current income tax allowance and rate of return policies”.  MLPA maintains its long-standing position that permitting an income tax allowance for MLPs does not provide an unfair benefit that disadvantages corporate investors.  Rather, the allowance fairly and appropriately takes into consideration the following facts:

• In enacting the current MLP rules, Congress expressly intended to minimize the burdens of raising capital for MLPs – that intent should be honored in all contexts.  In doing so, Congress fully intended that MLPs and their investors benefit from the pass-through nature of partnership taxation.
• When pipeline assets are owned by a partnership, it is important to remember that the partners are taxed both as investors and as part of the regulated taxpaying entity in a rate making regime.
• The United States continues to have a critical need for energy infrastructure.  MLPs, which have invested some $177 billion of capital over the past ten years, are on track to invest another $60 billion through 2020.  MLPs are a large and essential part of ensuring that America’s energy infrastructure needs are met.

The income tax allowance policy adopted by FERC in 2005 was a sound policy that enabled MLPs to fulfill their role in building needed energy infrastructure.  MLPA encourages FERC to retain this important policy.

Click here to download the text of MLPA’s comments.