Letter Opposing H.R. 3221, the "New Direction for Energy Independence, National Security, and Consumer Protection Act"

August 2, 2007

TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, urges you to oppose H.R. 3221, the "New Direction for Energy Independence, National Security, and Consumer Protection Act," and H.R. 2776, the "Renewable Energy and Conservation Tax Act of 2007." H.R. 3221 and H.R. 2776 limit access to valuable domestic oil and gas supplies while failing to produce any new energy. The Chamber also urges you to oppose any amendments establishing a mandatory federal renewable portfolio standard or excluding new nuclear power plants from the loan guarantee program.

H.R. 3221 effectively "turns off the lights" on the country's energy supply. It fails to produce a single Btu of new energy while scaling back energy production from both fossil fuels and renewables. The drawbacks in the overall energy package—such as attempts to renege on Clinton-era offshore deep water leases—still outweigh its benefits. The bill is a paradox: it restricts access to domestic oil and gas supplies while simultaneously calling for "energy independence." So-called "energy bills" like H.R. 3221 that produce no new energy will only ensure the nation's dependence on foreign fossil fuel sources for years to come.

H.R. 2776 is no better. Although fossil fuels constitute 86 percent of the nation's energy mix—and alternatives, while promising, are not economically viable—this energy tax package unfairly and punitively singles out the oil and gas industry. The changes proposed by the bill amount to a modern-day version of the 1980-88 Windfall Profit tax, essentially an excise tax on each barrel of oil produced that resulted in reduced domestic oil production and a greater dependency on foreign imports prior to its 1988 repeal. Congress must face reality: the United States will continue to depend on fossil fuels for its ever-increasing energy demands, and limiting access to these resources will push the U.S. farther away from achieving the stated goal of energy independence.

The Chamber disagrees with Congress's intent to reinvent the wheel vis-à-vis energy policy when legislation necessary to achieve many of these goals already exists in the Energy Policy Act of 2005 (EPAct). EPAct, if fully funded and implemented, would increase energy efficiency and conservation, ensure adequate energy supplies and generation, renew and expand energy infrastructure, and encourage investment in new energy technologies. Indeed, many of the energy efficiency and technology provisions contained in H.R. 3221 are duplicates of directives found in EPAct. Rather than using EPAct to enhance the country's energy security, bills like H.R. 3221 and H.R. 2776 either ignore or outright repeal its beneficial provisions.

The Chamber would oppose amendments on these issues should they be offered:

RPS—Reps. Udall and Platts are expected to offer an amendment, which would mandate a renewable portfolio standard (RPS) for electricity generation to be satisfied only by so called "renewables" wind, solar, biomass, geothermal, ocean, tidal, and incremental hydropower. A federally-mandated RPS could raise electricity prices for all consumers, result in a wealth transfer among states, and impose new burdens on the reliability of our nation's electric grid. Many states have chosen not to adopt an RPS because they lack sufficient renewable resources. Renewable generation sufficient to meet an unrealistic federal requirement is neither cost-effective nor achievable nationwide. Utilities will be forced to purchase renewable energy credits from the federal government, which amounts to a direct tax on electricity used by businesses and other consumers, driving up energy costs and hurting economic growth. And a mandatory RPS based exclusively on "renewables" chooses energy winners and losers, excluding good, clean energy sources like nuclear, hydroelectric, and clean coal for no good reason.

Loan Guarantees—An amendment may be offered excluding new nuclear plants from the list of projects eligible in FY2008 for loan guarantees authorized under Title XVII of EPAct. The EPAct loan guarantee, as drafted, is technology-neutral: Any project that "reduces, avoids, or sequesters" emissions is eligible. Several new nuclear power plants now being developed are depending on the loan guarantee program to support their project financing, and will need these loan guarantees in FY2008 in order to maintain project schedules. Excluding nuclear plants from the loan guarantee program is contrary to both the spirit and the letter of EPAct, and will only further limit nuclear energy, a clean, safe part of the solution to the country's growing energy demands.

The Chamber will include votes on, or in relation to, these issues in our annual How They Voted scorecard.

Sincerely,
R. Bruce Josten