Bill in Texas State House Proposes “Coastal Protection Fee” for LNG

A bill proposed by Texas State Rep. Tommy Merritt (R-Longview) would impose a fee for the transfer of liquefied natural gas, as well as crude oil and petroleum products, to or from marine terminals in Texas. HB 4667 sets the fee at $0.25 per barrel of oil equivalent of liquefied natural gas and could affect shippers using the Freeport LNG terminal. Proceeds from this measure would go toward maintaining a $20 million fund used to mitigate the effects of coastal erosion; all proceeds in excess of those necessary to maintain the $20 million fund would go to the state’s General Revenue Fund. However, a fiscal note prepared for HB 4667 by the Legislative Budget Board suggests that this measure might violate Article 1, Section 10, Clause 2 of the U.S. Constitution, which prohibits states from imposing duties on imports or exports.

Rep. Merritt also has proposed HB 4668, which would impose a $0.25 per Btu “fee” on the importation and exportation of natural gas for coastal protection.  The Legislative Budget Board concluded, “Because the fee established by the bill would likely be challenged as a violation of the U.S. Constitution, the amount of revenue that would be generated by the bill’s passage cannot be estimated.”