APGA Weekly Update June 2, 2016

06-02-2016 13:31

APGA Weekly Update, June 2, 2016
APGA to Testify at IRS Public Hearing on Definition of Political Subdivision
On June 6, Dave Schryver, APGA’s Executive Vice President, will testify at an Internal Revenue Service
(IRS) public hearing addressing the definition of a “Political Subdivision.” The IRS has released proposed
regulations that would establish a new definition of the term political subdivision for tax-exempt
purposes. This regulation is significant as an entity that is not a political subdivision cannot issue taxexempt
bonds and many public natural gas systems have utilized tax-exempt financing for investments
in infrastructure as well as for natural gas prepays, which is the long-term purchase of natural gas. The
current political subdivision test requires that an entity possess at least one of the three “sovereign
powers,” which are the power of eminent domain, the power to tax, or the power to regulate. The
proposed regulation would add two new tests in the determination of whether an entity is a political
subdivision and all three tests (the two new tests and the original one) must be met for an entity to
qualify as a political subdivision. The two new tests are a governmental or public purpose test and a
governmental control test.
Under the governmental or public purpose test, an entity must be set up for a public purpose and
continually operate “in a manner that provides a significant public benefit with no more than an
incidental private benefit.” The term “incidental private benefit” is not defined in the regulation. If the
IRS makes a determination that he entity provides more than an incidental private benefit, the entity is
no longer considered a political subdivision and its bonds become taxable. The second new test is
governmental control and under this test “control” must be exercised either by a state or local
governmental unit or by an electorate. In addition, to meet this test a state or local governmental unit
must have all three of the sovereign powers identified above and act either through its governing body
or through its duly authorized elected or appointed officials.
On May 23, APGA filed comments with the IRS in response to the proposed regulation. In its comments,
APGA expressed opposition to the proposed rule and urges the IRS to withdraw it. The comments also
communicated that, “APGA members depend on access to tax-exempt funding for the construction of
necessary infrastructure to ensure their ability to continue to provide safe and reliable natural gas
service in their communities and to acquire long-term gas supplies at reasonable and competitive prices
for the benefit of the consumers they serve.” The comments further state that while some APGA
members have all three of the sovereign powers and therefore meet the governmental control test,
others do not and this proposed rule deny would many public natural gas systems and joint action
agencies the ability to issue tax-exempt bonds despite those entities meeting every reasonable standard
of providing a public benefit under powers expressly granted by the people of the states through their
elected representatives.
A copy of the comments filed with the IRS is available on the APGA website at www.apga.org. In
addition, once it is finalized, a copy of the testimony APGA will provide at the hearing will also be
available on the website. For questions on this article, please contact Dave Schryver of APGA staff by
phone at 202-464-2742 or by email at dschryver@apga.org.
APGA Annual Conference Update
The 2016 APGA Annual Conference in Newport, R.I., is less than two months away! If you have not yet
registered, please get your registrations submitted before July 1. As you may have heard, the Newport
Marriott is sold out. If you do not have a hotel reservation, it is strongly recommended that you secure
accommodations elsewhere. The waiting list for the Marriott is long and we would not want anyone to
be left without a hotel room. We have secured a block of rooms with The Hotel Viking, which is located
one-half mile from the Newport Marriott. The negotiated rate is $269 plus taxes and parking. This rate
will expire on June 24, so it is recommended you secure your reservation as soon as
possible. Reservation information can be found on our website at www.apga.org/newport.
We are pleased to be offering optional excursions for you to enjoy while you’re in Newport. There is no
better way to see the sights than being escorted by a professional tour guide. The tour registration
information can also be found on our website.
The conference kicks off with our welcome reception at the International Tennis Hall of Fame. We’ll be
providing roundtrip motor coach transportation from the Marriott. The facility is located about one mile
from the hotel, so if you are out and about on Sunday afternoon, feel free to walk over to the
reception. The doors will open at 5:00 p.m. and the museum will be open if you wish to take a walk
through and learn about the history of tennis!
We have a great program lined up and this year is on track to be our most attended conference
ever. Newport is a phenomenal location and we hope you will enjoy everything it has to offer. We want
to hear that this was the best APGA Annual Conference ever!
The 2017 Annual Conference will be held at the Hyatt Regency in San Francisco. More information on
the hotel will be available as a handout in Newport. Please make your reservations early.
For questions or assistance with your conference planning, please contact Sheila Deringis of APGA staff
by phone at 207-415-9414 or by email at sderingis@apga.org. See you in Newport!
CNG Road Rally Rolls On
After kicking off the CNG from Sea to Shining Sea road rally with a successful event in Long Beach, Calif.,
Pat Riley, General Manager of Gibson County Utility District, and Mike Kearns, Energy Services Manager
for the City of Richmond’s Department of Public Utilities, are well underway in their journey across the
country powered solely by compressed natural gas (CNG).
The Long Beach event was held on May 30 at the Long Beach Gas and Oil Station. It garnered significant
media attention and was attended by Long Beach Mayor Robert Garcia who told NGTnews.com, “Long
Beach fully supports the increased use of alternative fuels, and we’re excited to promote the viability of
natural gas vehicles and infrastructure by sponsoring this rally.” He added, “We know from experience
that increased use of natural gas over other fossil fuels reduces greenhouse gas emissions and improves
air quality.”
Pat and Mike then journeyed to Mesa, Ariz., for another successful event at the Mesa Convention
Center. The event featured a number of city vehicles, city officials, and print and video coverage from a
number of outlets including Mesa Now and the Mesa Independent.
The rally continued on Wednesday, June 2, with a stop in Albuquerque, N.M., at the Love’s Travel Stop
just off of I-40. Moving forward, the rally will travel on to Little Rock, Ark., Memphis, Tenn., and seven
other stops ending in Washington, D.C. APGA salutes all the sponsors of the event, participants, and Pat
and Mike for their inspiring work to promote NGVs.
For questions on this article, please contact Scott Morrison of APGA staff by phone at 202-464-2742 or
by email at smorrison@apga.org.
EIA Reports Storage Increase of 82 Bcf to Put Working Gas Storage at 2,907 Bcf
Here is the weekly EIA Summary Report issued on Thursday, June 2, 2016, which reports the week’s
storage report highlights for Friday, May 27, 2016. An 82 Bcf increase has been reported.
Working gas in storage was 2,907 Bcf as of Friday, May 27, 2016, according to EIA estimates. This
represents a net increase of 82 Bcf from the previous week. Stocks were 712 Bcf higher than last year at
this time and 753 Bcf above the five-year average of 2,154 Bcf. At 2,907 Bcf, total working gas is above
the five-year historical range.

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