Fossil Fuel Companies Donated To House Tax Writer As Congress Finalized Tax Break For Industry

A new campaign finance report released Thursday shows an industry excited about a special provision in the GOP tax plan. A host of oil and gas pipeline companies, executives and a trade group made donations to the joint fundraising committee of Republican Texas Rep. Kevin Brady — chair of the House Ways and Means Committee, which wrote that chamber’s version of the tax bill — while the final bill was being negotiated between the House and Senate.

The House’s version, passed on Nov. 16, reduced the tax rate for income from master limited partnerships (MLPs), which are investment vehicles mostly used by oil and gas pipeline companies. Income from MLPs, which “passes through” these companies and goes directly to investors, would be capped at 25 percent, which is well below the 39.6 percent rate that most MLP investors then paid. The Senate’s version, passed on Dec. 2, included a special 23 percent tax deduction — inserted by Texas Republican Sen. John Cornyn, a member of the Senate Finance Committee — for MLP income.

The MLP Association said in a press release on Dec. 23, three days after the final tax bill passed both chambers, “Congress rightly decided to take steps to preserve MLPs and their ability to attract lower cost capital through the public markets.”

“The MLP rules have helped these companies avoid corporate-level taxation for decades,” Doug Koplow, founder of Earth Track, an organization that tracks energy subsidies, told IBT in December. “Under the tax bill the tax burden on the partners of the MLPs is going to be reduced as well.”

International Business Times first reported that 16 federal lawmakers, 13 of whom are Republicans, collectively own up to $10.6 million in energy-related MLPs. All 13 voted for the tax bill.

On Dec. 4, House Speaker Paul Ryan picked Brady, one of the top GOP representatives in charge of tax policy, to chair the House-Senate conference committee, which first met on Dec. 13 and agreed on the final bill that became law. MLP trade groups and oil and gas companies that own MLPs wanted the most favorable MLP tax benefit to make it into the final bill.

The Texas congressman’s final 2017 campaign finance report hasn’t yet surfaced, but the new report from his joint fundraising committee, the Brady Victory Fund, shows that a significant portion of his late 2017 donations came from the oil and gas industry.

The PAC of Energy Transfer, which is comprised of three separate MLPs, contributed $5,000 to the Brady Victory Fund on Nov. 27, 11 days after the House passed its version of the tax bill. (The fund reported the transaction as occurring on Dec. 4, but Energy Transfer’s PAC reported that it happened on Nov. 27.) The PAC also gave $5,000 to Brady’s campaign on Nov. 27.

Donations to Brady Victory Fund from MLP companies and executives in the fourth quarter of 2017 include:

• Petroleum Wholesale, LP president John Cook: $5,000 on Nov. 27.
• Jeffery Hildebrand, CEO of Hilcorp Energy, which operates MLP funds: $2,700 on Nov. 28.
• Enterprise Products Partners, LP PAC: $5,000 on Nov. 30.
• The MLP Association PAC: maximum amount of $5,400 on Nov. 30. On Sept. 27, the PAC donated $2,000 to Marchant.
• Robert Phillips, CEO of Crestwood Equity Partners, LP: $2,700 on Nov. 30.
• Magellan Midstream Holdings PAC: $5,000 on Dec. 1. On Sept. 19, the PAC gave $2,500 to Marchant. In March, the PAC gave $5,000 to Brady’s campaign.
• Lori Ziebart, executive director of the MLP Association: $1,500 on Dec. 4. Ziebert had already donated $2,500 to Brady’s campaign in March. She also contributed $1,500 to the campaign of Texas Rep. Kenny Marchant on Sept. 30, who is also on the House Ways and Means Committee and had $477,000 invested in MLPs — some of which are MLP Association members — as of 2016, per IBT research of the latest congressional financial disclosures.
• Randy Fowler, president of Enterprise Products Partners, LP: maximum $5,400 on Dec. 4.
• Silver Eagle Distributors CEO John Nau: $5,000 on Dec. 19, the day the House passed the final bill.

Energy Transfer and Ziebart did not return requests for comment.

The Brady Victory Fund sends the majority of the money it raises to Brady’s campaign and also provides cash to another Brady-controlled PAC, Making America Prosperous, and the National Republican Congressional Campaign Committee.

Over Brady’s lengthy career his campaign has received roughly $1.6 million from the oil and gas industry, the most of any industry, according to Federal Election Committee data compiled by the Center for Responsive Politics. Prior to this most recent disclosure, oil and gas company political action companies, including some that donated in December, had contributed nearly $100,000 to Brady’s campaign committee.

Another Texas House Republican, Pete Sessions, owns MLP interests of roughly $550,000 according to previous IBT reporting. Sessions, who voted for the tax bill but was not on the Ways and Means committee or conference committee, had between $100,001 and $250,000 invested in Energy Transfer Partners, LP in 2016, and that company’s PAC donated $5,000 to Sessions on Aug. 31.

Some of the same companies and executives who showered Brady with donations did the same with several other lawmakers involved in writing the tax bill. The Enterprise Products Partners PAC donated $5,000 to Marchant on Sept. 12, and the Energy Transfer PAC donated $2,500 to Marchant’s campaign on Nov. 28.

On Feb. 28, three Silver Eagle Distributors executives donated a total of $26,000 to Cornyn’s joint fundraising committee.

Hilcorp CEO Hildebrand donated $100,000 to Ryan’s joint fundraising committee on Dec. 6, after the House had passed its tax bill. IBT previously reported that billionaire industrialist Charles Koch and his wife Elizabeth donated nearly $500,000 to Ryan’s joint fundraising committee on Nov. 29, also after the House had passed its bill that resulted in potentially up to $1.4 billion in income tax savings each year for Charles Koch and his brother David Koch.

The final tax bill favored the Senate’s version, establishing a 20 percent deduction for MLP income. In its press release, the MLP Association gave special thanks to Brady, Cornyn and other GOP lawmakers for giving their members a special tax break.

“We applaud the leadership of Senate Majority Leader Mitch McConnell, Senate Majority Whip John Cornyn, Senate Finance Committee Chairman Orrin Hatch, Ways and Means Committee Chairman Kevin Brady, House Majority Whip Steve Scalise, Senators Jim Inhofe and Pat Roberts, and all of those Members who actively worked to preserve private sector investment in our energy future.”