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Energy Policy Act of 2003-Conference Report-Continued

Location: Washington, DC


Mr. McCAIN. Mr. President, I think this legislation is very timely because if we pass it, Thanksgiving will come early for the Washington special interests. The American public will be presented with an enormous turkey stuffed with their tax dollars. Tell your constituents to save their holiday Turkey carcasses because this farsighted bill even provides subsidies for carcasses used as biomass to generate energy.

We cannot discuss the bill without looking at the fiscal condition of the United States of America today. According to recent reports, Government spending, thanks to the Congress, grew at 12 percent. We are looking at a half a trillion budget deficit next year. We have gone from a $5 trillion surplus over the last few years to a multitrillion-dollar deficit. So what do we do? We are passing a bill that will increase the deficit by at least somewhere around $24 billion.

By the way, I am really sorry we have not gotten the bill. I understand it is 1,200 to 1,600 pages long. Of course, we are considering it without even having a chance to observe it, but it is printed in the RECORD. I imagine the RECORD is pretty big.

Adding to this feast, this bill also contains the other white meat. Of course, I am referring to pork. I fear for the passage of a 1,200-page, pork-laden bill. The outbreak of Washington trichinosis will be so severe we will be forced to have a field office for the Centers for Disease Control right next to the Capitol. I am not saying this will not generate some energy, not at all. It will fill the coffers of oil and gas corporations, propel corporate interests, and boost the deficit into the stratosphere.

Indeed, I have stated on several occasions the name of this bill should be the "Leave No Lobbyist Behind Act of 2003." Given the magnitude of the largess offered in this bill, I hardly know where to begin. I feel somewhat like a mosquito in a nudist colony. I hardly know where to begin.

At a time when it is crucial for our national security and economic welfare that we pursue a new course toward energy independence and global environmental protection, the provisions in this bill take exactly the wrong direction: increasing our dependence on conventional fuels; increasing environmental degradation; increasing our energy use; increasing our national debt; and diminishing protection for consumers and public health.

Let's start at the top of the corporate subsidy heap. We have the biggest increase in corn and cash this Congress has ever seen, doubling the national ethanol mandate. A doubling. Gasohol production is the worst subsidy-laden energy use ever perpetrated on the American public, and it starts with sweet corn. Ten percent of the corn grown in this country is used to produce ethanol. Corn producers, like producers of other major crops, receive farm income and price supports.

Let me remind my colleagues in the 107th Congress this body passed a farm bill which appropriated more than $26 billion in direct assistance to corn growers over 6 years. That is an average of $4.3 billion in direct subsidies each year just to corn growers. But obviously, they have not gotten enough. But add it up, and we are over $3 per gallon of ethanol.

The cost to consumers does not stop with the production of energy. Environmental costs of subsidized corn results in higher prices for meat, milk, and eggs because about 70 percent of corn grain is fed to livestock. A GAO report concluded, "ethanol tax incentives have not significantly enhanced United States energy security since it reduced United States gasoline consumption by less than 1 percent." So if we double it, maybe we will have less than 2 percent. It takes more energy to make ethanol from grain than the combustion ethanol produces. Seventy percent more energy is required to produce ethanol than the energy actually in ethanol. Every time you make 1 gallon of ethanol there is a net energy loss.

The National Academy of Sciences concluded in 2000 that "the use of commonly available oxygenates in Reformulated Gasoline (RFG) has little impact on improving ozone air quality and has some disadvantages." They found that oxygenates can lead to higher nitrous oxide emissions, "which are more important in determining-ozone levels in some areas."

Reformulated gasoline, without oxygenates like ethanol, are widely available and are superior to gasohol. California has started a program called the "Cleaner Burning Gasoline," which has better fuel economy and overall efficiency than gasohol.

I believe it was in recognition of this fact that the House and Senate both passed Energy bills that would remove the Clean Air Act requirement to include an oxygenate in reformulated gasoline. But, the overall economic and environmental benefits of no longer requiring an oxygenate is wiped out by the $2 billion ethanol mandate doubling ethanol production in this bill.

Another subsidy for ethanol producers is a partial exemption for the motor fuels excise tax, which is paid to the Highway Trust Fund. Presently, corn-to-gasohol producers take a $.052 per gallon exemption from the $.18 per gallon excise tax fuel producers are required to pay into the Highway Trust Fund.

According to a recent General Accounting Office study, between 1979-2000, this exemption has cost the Highway Trust Fund between $7.5 and $11.2 billion.

While a tax credit in this bill, called the Volumetric Ethanol Excise Tax Credit Act of 2003, attempts to change this trend, it merely provides the option for gasohol producers to pay the entire $.18 per gallon excise tax to the Highway Trust Fund, and claim a $.052 per gallon credit on their income tax. The credit would come from general treasury funds, and leave the Highway Trust Fund income in place, most blenders will continue to take the exemption, which is an immediate discount, rather than switching to the credit. This is a useless provision which won't actually bolster the Highway Trust Fund, or the U.S. Treasury. In fact, with doubled ethanol usage, the Federal government stands to lose even more in fuel tax revenue in the upcoming years.

The national ethanol consumption in 2002 was 2.1 billion gallons. Multiply that by 52 cents per gallon, and you see how much revenue the highway trust fund has lost in excise tax in this past year alone. About $1.1 billion. How much more, then, of taxpayer funds, will be given back to the ethanol producers, as ethanol production and consumption doubles? The Joint Committee on Taxation estimates that the ethanol mandate will cost $2 billion over the next 5 years.

For decades the largest ethanol producer has been Archer Daniels Midland, producer of more than one-third of all ethanol in 2002, and whose nearest competitor has the capacity to produce one-tenth of ADM's capacity.

The excise tax exemption from ethanol has been estimated to account for more than $10 billion in subsidies to ADM-one corporation with $10 billion in subsidies-from 1980 to the late 1990s. In fact, it has been estimated that every dollar in profits earned by Archer Daniels Midland costs the taxpayers $30.

Speaking of highly objectionable fuel additives, I must join my colleagues who have spoken against the MTBE liability waiver.

Mr. President, it is an outrage to see a product liability waiver for producers of MTBE retroactive to September 5, 2003. This nullifies the lawsuits against MTBE producers that were filed after September 5, such as the case last year in the Superior Court in California, where a jury found that MTBE was a defective product and resulted in a settlement in which MTBE producers agreed to pay more than $50 million to clean up MTBE-contaminated water supplies.

Who is going to pay to clean it up now? This provision to shield MTBE producers from product liability could, according to the U.S. Conference of Mayors, cost taxpayers-taxpayers, not industry-$29 billion to clean up contaminated ground and surface water.

In 1998, the U.S. Geological Survey conducted an MTBE survey of water wells in industrial areas, commercial areas, residential areas, and mixed urban areas nationwide, and also estimated that cleaning up the MTBE-contaminated sites in soil and water nationwide is approximately $29 billion.

Just when you believe this bill cannot get any worse, it does.

Mr. President, $800 million-I usually go through these bills, and we find pork in the hundreds of millions, sometimes billions. This exceeds all of my past experiences. Mr. President, $800 million for a loan guarantee to subsidize the creation of a brandnew polluting, coal gasification plant in an economically depressed area of Minnesota. This new company, Excelsior Energy, was formed by lobbyists and executives with ties to a company that filed for bankruptcy after amassing a $9.2 billion debt and being fined $25 million for market manipulation.

This brand new giveaway, which was in neither the House nor Senate-passed Energy bills, is estimated to cost between $2 billion to $3 billion. While this technology turns coal into a synthetic gas that can be combusted more efficiently, coal plants continue to be a leading source of global warming and should not be subsidized with scarce taxpayer dollars. Further, this $800 million loan guarantee does not require Excelsior Energy to meet any concrete job creation goals or standards. In a time of $400 billion annual budget deficits, why should U.S. taxpayers cover the cost of a new plant that will not even guarantee jobs? Minnesota already has a powerplant owned by Exel Energy. Now they need Excelsior Energy, a new plant burning more carbon?

Mr. President, $95 million for a subsidy for a process known as "thermal depolymerization." This is a good one. Now you can get a tax credit if you compress Turkey carcasses into energy. ConAgra Foods and Changing World Technologies, the two companies that would benefit from this giveaway, have built the only commercial "thermal technology" plant, which is located in Carthage, MO. The plant would convert poultry waste products from ConAgra's Butterball Turkey plant into energy.

After including their cash cows and all the polluter pork they could find, energy conferees have now moved on to tax breaks for turkey. I encourage my colleagues to save their leftover turkey this year after Thanksgiving dinner. Instead of making sandwiches the next day, how about turning in your poultry for a tax credit?

An amendment was added Monday night-Monday night-to authorize the lignite coal-fired electrical generating plant, which would employ clean coal technology to provide energy for a rapidly growing region. This amendment was not included in either the House or Senate passed energy bills.

Another provision that we understand was inserted at the eleventh hour, and was never reviewed by either the House or the Senate, would suspend important environmental reviews to facilitate the construction of uranium processing facilities in New Mexico by the consortium, Louisiana Energy Services. A Time magazine article that appeared earlier this year raised serious questions about one of the consortium members, which it characterized as "a European consortium linked to leaks of enrichment technology to, yes, Iran, Iraq, and North Korea-as well as to Pakistan." The article in Time magazine quotes a high-level U.S. nuclear security administrator as saying "to have this company operating in the U.S. after it was the source of sensitive technology reaching foreign powers does raise serious concerns."

I want to add, I do not know if that is true or not. I do not know if the Time magazine story is true or not. We do not know because we never had any scrutiny of the amendment. But I think it is a serious issue. I do not know.

In addition to possible security concerns suggested by the time article, this extraordinary rider raises critical environmental concerns.

Even though I understand that both Tennessee and Louisiana have rejected this facility, the Energy bill rider shortcuts the NEPA process and meaningful judicial review of the Environmental Impact Statement, for the construction of this facility in New Mexico. To add insult to injury, the provision further requires the Government to acquire the waste and dispose of it for a price that is possibly significantly less than the cost.

I ask unanimous consent the Time magazine article be printed in the RECORD.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

[From Time Magazine, Jan. 21, 2003]



(By Adam Zagorin)

Is President Bush's "axis of evil" campaign about to be undermined in his own backyard? A proposed uranium enrichment facility planned in Hartsville, Tenn. (pop. 2,395) raises just that question. One of the plant's principle backers is URENCO, a European consortium linked to leaks of enrichment technology to, yes, Iran, Iraq, and North Korea-as well as to Pakistan.

Sources tell TIME that senior Bush appointees, upset by the ongoing crisis with North Korea, have held detailed discussions in recent days on the need to stop leaks of nuclear technology to rogue states. "To have this company operate in the U.S. after it was the source of sensitive technology reaching foreign powers does raise serious concerns," a high-level U.S. nuclear security administrator told TIME, the first public comment by a Federal official on the proposed plant's ownership. "The national security community or the new Homeland Security Department will need to look at this."

Concerns about URENCO first emerged more than 10 years ago when thousands of centrifuge parts, based on URENCO designs, were discovered by U.N. inspectors in Iraq after the Gulf War. A one-time URENCO scientist, known as the "father" of Pakistan's nuclear bomb, is said to have taken URENCO centrifuge blueprints and information on the company's suppliers to his homeland, later passing similar sensitive material to North Korea and Iran.

The company that wants to build the new Tennessee enrichment plant is called Louisiana Energy Services. A consortium of U.S. and foreign companies in which URENCO has a major financial role, LES insists that the link between URENCO and nuclear proliferation is "long ago and far-fetched at this point." URENCO itself has denied authorizing leaks of technology to rogue states.

The only previous attempt by LES to build an enrichment plant involved a multi-year effort in the 1990's targeting a small town in Louisiana. Closed Congressional hearings on Iraqi attempts to acquire nuclear weapons were held not long before, and delved into URENCO's record. Subsequently, powerful Michigan Democrat JOHN DINGELL raised concerns that the LES plant in Louisiana might violate provisions governing the movement of classified technology from foreign countries under the Federal Atomic Energy Act. That issue was never resolved, but LES gave up attempts to build the Louisiana facility amid controversy over its impact on nearby African-American residents.

With its latest effort in Tennessee, LES seems especially anxious to avoid a reprise of those controversies. In an unusual move, LES has asked for a greenlight from the Nuclear Regulatory Commission without the usual public comment on various environmental, safety and security issues. But groups like the Sierra Club and the National Resources Defense Council contend that this will simply, "reduce the . . . licensing procedure to a flimsy rubber stamp." LES plans to file its 3,000 page license application with the Federal government by January 30, to be followed by a review process that could take at least a year.

Also controversial are unanswered questions about the disposal of the Tennessee plant's radioactive waste. Officials in Tennessee have reached a tentative agreement with LES to cap the amount of waste and, last week, the company announced that the material would not stay in Tennessee permanently. But it offered no details as to where the waste might be transferred, a process that can be subject to complex federal licensing procedures.

So far few Tennessee politicians have taken a position on the new enrichment plant. That includes Sen. BILL FRIST, the new Senate Majority Leader, who has remained neutral on the proposed plant in his home state. But he plans to follow the debate "very closely," says an aide.

Mr. McCAIN. There are also four proposals known as green bonds that will cost taxpayers $227 million to finance approximately $2 billion in private bonds. One of my favorite green bond proposals is a $150 million riverfront area in Shreveport, LA. This riverwalk has about 50 stores, a movie theater, and a bowling alley. One of the new tenants in this Louisiana riverwalk is a Hooters restaurant. Yes, my friends, an Energy bill subsidizing Hooters and polluters, probably giving new meaning to the phrase "budget busters." Although I am sure there is a great deal of energy expended at Hooters, I have never been present. Perhaps something has been missing in my life.

This bill was developed in a secret, exclusive, partisan process, but it is no secret anymore. In the last few days, editorials have appeared in papers throughout the country. Here are a few choice words from various papers.

One thing that is worthy of note, Mr. President, is that for the first time in my memory, the New York Times and the Wall Street Journal both editorialize strongly against this bill. It is on the rarest of occasions that the Wall Street Journal and the New York Times-the Wall Street Journal: "The Grassley Rain Forest Act," which refers to: "Special applause goes to Senator Chuck Grassley for grabbing millions to build an indoor rain forest and a million-gallon aquarium in lush, tropical Iowa. "

Of course, the New York Times editorial, titled "A Shortage of Energy," describes how the bill is a very serious one. Today China's message on energy-where it goes into a report from China-is that the Chinese are worried about their increasing reliance on foreign oil. The difference is, the Chinese are ready to do something about it, where Congress is not. Indeed, loopholes in the Energy bill could make American cars less efficient than they are. While the Chinese say their main concern is oil dependency, not global warming, more efficient cars should help on that, too. And where are our American leaders? Feathering nests rather than imposing discipline on the Nation's fuel use.

I will not go through all of the editorials that I have seen, but it is overwhelming. Everybody who has looked at this bill realizes that it is a terrible mistake. It seems to me that this is the result of a broken process, a process that is conducted behind closed doors.

I still do not have the bill in front of me. None of us do. I guess it is printed in the RECORD. I understand, because it is 1,200 pages long, the RECORD might be long.

There was very little, if any, consultation with other Members of the Senate. My understanding is the Democratic side was cut out of it completely. And we are given a few short hours to examine a 1,200-page "Energy bill."

I want to return to my initial comments. It is serious when we are looking at a $½ trillion debt next year, when we have growth in the size of Government of 12 percent. What has happened to the Republican Party? What has happened to the balanced budget amendment to the Constitution? What has happened to the lockbox where we were going to take your Social Security money and put it into an account with your name on it? Instead, we have a $20 billion and some energy bill loaded with wasteful porkbarrel projects most of us had not either seen or heard of until the last few hours.

I hope we can muster 40 votes-I hope so-because I think we have to restore some kind of fiscal sanity, some kind of environmental sanity to this Nation. This legislative process needs to be fixed.

I yield the remainder of my time.

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