Waxman parries Upton over energy subsidy report

Upton on Oct. 10 asked GAO to review federal support for power transmission, production and consumption; transportation fuels and related infrastructure; energy R&D; and facilities that manufacture energy-related equipment.

Waxman says the Republicans are leaving plenty out. From Waxman's new letter:

They defined “subsidy” to mean “federal grants, direct loans, loan guarantees, and tax credits, and other programmatic activities targeted at energy markets.” Our concern is that this is a narrow definition of subsidy.

For example, major federal subsidies that benefit the oil and gas companies include the expensing of intangible drilling costs, the percentage depletion allowance, and the favorable tax treatment given to payments of drilling royalties in foreign countries. It does not appear that the definition of subsidy in the request by Reps. Upton, Whitfield, Murphy, and Pompeo would include these subsidies.

The letter asks for a broader study or, alternatively, for a separate report with the wider scope Waxman seeks.

A GAO spokesman said the nonpartisan researchers have agreed to Upton’s study request and that the work will start in December. Waxman’s request will be reviewed, and it usually takes one or two weeks to provide a formal answer, spokesman Ned Griffith said.

Upton’s office did not provide immediate comment Thursday afternoon.

Meanwhile, many Republicans, including GOP nominee Mitt Romney, are criticizing federal support for green energy technologies, such as Energy Department loan guarantees and soon-to-expire tax credits for wind projects.

Romney opposes extension of soon-to-expire tax credits for wind energy projects, while President Obama is pushing Congress to renew the incentives.

Obama and many Democrats are also calling for repeal of the oil industry’s ability to claim an array of deductions.

Rep. Mike Pompeo (R-Kan.), one of the Republicans who joined Upton's GAO request, is pushing legislation that would end credits for biofuels, renewable power production, carbon sequestration, electric vehicles and a suite of other incentives, including some of the oil-industry’s tax breaks.

Upton recently signaled that he’s open to ending oil industry tax incentives if federal subsidies for green energy projects are also scuttled.

Romney, in his second debate with Obama, said that oil industry deductions would likely be on the chopping block under his plan to cut overall corporate rates.

Upton’s Oct. 10 letter noted expansion of federal support and tax breaks for energy technologies over the last two decades, including the 2009 stimulus law that provided tens of billions of dollars for alternative energy and efficiency programs.

It said there is “not a thorough understanding of how such federal interventions and subsidies are impacting . . . the energy sector and corresponding energy markets.”

Waxman’s letter to GAO says their study should explore a range of environmental topics.

“We also believe that a comprehensive analysis should include consideration of the environmental and public health impacts of energy activities, including the impacts of carbon emissions. Oil and coal companies do not bear the costs of the pollution their activities generate, which gives them an unfair advantage compared to clean energy sources. Your analysis should take this massive implicit subsidy into account,” it states.

This post was updated at 4:35 p.m.

More in Regulation

Poll: Most voters support stricter smog standards

Read more »