Dear Representative,
Taxpayers for Common Sense Action (TCS Action), a non-partisan, budget watchdog group, strongly opposes the "Energy Policy Act of 2003." This legislation is rife with large taxpayer-funded subsidies to mature energy industries. We urge you to vote against this bill.
The "Energy Policy Act of 2003" contains the following taxpayer giveaways:
Oil and Natural Gas
The oil and gas industries are slated to receive massive taxpayer handouts through H.R. 6, totaling more than $11.7 billion. We urge you to support Rep. Ron Kind's (D-WI) amendment to strike Title II of Division C. This amendment would strike the oil and gas provisions in this title, including oil royalty holidays that would cost taxpayers more than $1.4 billion. Anti-taxpayer oil and gas provisions include:
- Grant various royalty payment holidays for offshore and unconventional drilling. These royalty relief provisions will have a huge impact on already cash strapped states that count on royalty funding for important financial support.
- Give the Secretary of Interior the right to expand the royalty-in-kind program. This would allow oil companies drilling on public lands to pay for the royalties owed to taxpayers in barrels of oil instead of cash. In 1998, the Mineral Management Service estimated that similar provisions would cost the cost the federal government at least $1.4 billion over tens years.
- Establishes a fund called the "Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Products Fund." TCS Action is concerned about this provision, which creates a new research and development grant program for ultra-deepwater drilling, which occurs at water depths greater than 1,500 meters. Industry representatives are clamoring for government-funded subsidies of $3 to $5 billion in order to make this program economically viable. The reality is that many oil companies are already doing such exploration without government subsidies. The legislation is unclear as to whether this program will be funded through a direct appropriation or other means. Regardless, taxpayers should not be forced to pad the bottom line large oil companies when federal funding is unneeded to encourage exploration.
- Sets the stage for massive subsidies for natural gas producers in Alaska and potentially disrupting the domestic natural gas market. TCS Action is extremely concerned about bill language, which endorses the building of a natural gas pipeline system on the Alaskan North Slope, authorizing up to $20 million for a construction training program. This provision shows unfair bias towards specific natural gas producers in Alaska and is the beginning of large subsidies for the construction of a natural gas pipeline in Alaska.
Nuclear Power Subsidies
H.R. 6 contains billions of dollars worth of new subsidies for the nuclear power industry. This mature industry has already received over $66 billion in taxpayer subsidies since its inception.
- The bill provides over $2 billion from FY04 through FY07 to subsidize the nuclear industry. Since its inception, this industry has already received more than $60 billion in taxpayer subsidies. We are particularly concerned about bill sections 6411 and 6431, which provide $399 million over this time period to the Advanced Fuel Cycle Initiative Program, a program that would reprocess spent nuclear fuel. This program is incredibly expensive and would rewrite a U.S. policy against reprocessing of nuclear waste that was established during the Ford administration. This reprocessing of nuclear waste would yield weapons grade plutonium, vulnerable to theft and diversion and creating a huge homeland security concern. These provisions should be stripped from the bill.
- This legislation reauthorizes the Price-Anderson Act until 2017. The Price-Anderson Act was first enacted in 1957 as a temporary measure to jump-start the young nuclear power industry. This act limits the public liability of nuclear power plant operators, leaving federal taxpayers potentially on the hook for billions of dollars in the event of a nuclear incident. The nuclear industry is a mature industry and as such should be responsible for liability resulting from nuclear incidents. Taxpayers have already provided billions upon billions of dollars to subsidize this industry and should not have to carry the burden of liability any longer.
- Bill section 14029 authorizes $30 million for FY04 through FY06 for "in situ leach" uranium mining. This subsidy would provide funding for the domestic uranium industry to engage in new mining technology when the U.S. already has a more than ample supply. We urge you to support Rep. Tom Udall's (D-NM) amendment to strike this provision from the bill.
Coal Subsidies
Taxpayers have provided massive subsidies of $2.4 billion since 1984 to the coal industry through the "Clean Coal" Technology Program (CCTP). According to the General Accounting Office (GAO), this program, which allegedly encourages private companies to develop cleaner burning coal, has wasted and mismanaged CCTP funds. Unfortunately, the goal of "clean coal" by its very nature is unattainable because coal is without question the dirtiest fossil fuel and burning it produces contaminates such as carbon dioxide, sulfur dioxide, nitrogen oxides and mercury. This has amounted to an egregious waste of money.
- TCS Action is very concerned about bill provisions that establish a federally funded research and development program called the "Clean Coal" Power Initiative to ensure that coal remains a cost-competitive source of electricity. This program would cost taxpayers $1.8 billion over the next 9 years. The mature and very profitable coal industry does not need billions of dollars more in handouts from federal taxpayers.
- These provisions also authorize funding for the Department of Energy's coal research and development program, which supports producing, refining, and burning coal. This provision will cost taxpayers more than $1.3 billion over the next 4 years.
Other Taxpayer Giveaways
TCS Action is greatly concerned with the large, unnecessary hydropower subsidies included in the bill. The current hydropower subsidy program would last ten years and cost taxpayers at least $200 million. These provisions, including Division A, Title III, Sections 13201 and 13202 of the energy bill, provide incentive payments of 1.8 cents per kilowatt-hour to hydropower facilities with a potential price tag of $100 million over the next ten years. This language also includes payments for $10 million a year for capital investments over the next ten years. Both subsidies apply to any qualified non-federal facility that sells hydropower electricity.
The "Energy Policy Act of 2003" amounts to a taxpayer-funded give-away to a mature energy industry. At a time of mounting deficits, we can ill afford to waste precious taxpayer dollars on legislation that does little to advance the energy debate in our country. We urge you to oppose this legislation.
Aileen Roder
Program Director
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