Energy & Environment

New Report Exposes Special Interests Tied to Cap-and-Trade Bill

Passage of the American Clean Energy and Security Act of 2009 — by only seven votes — was achieved through a combination of hefty Political Action Committee (PAC) contributions, pork-barrel politics, and provisions of corporate welfare and protectionism not seen since the Smoot-Hawley Act of 1930. So says a 29-page Americans for Prosperity (AFP) policy paper, Exposing the Special Interests Behind Waxman-Markey, Influence Corruption and Control in H.R. 2454 published September 17 on the AFP Web site.

The 1,428 pages of H.R. 2454 by Representatives Henry Waxman (D.-Calif.) and Ed Markey (D.-Mass.) claim to “create clean energy jobs, achieve energy independence, reduce global warming pollution and transition to a clean-energy economy.” AFP calls the bill “a case study in the evisceration of public policy used to buy votes, fool the public and appease powerful special interests, all for the benefit of an ‘enlightened’ few who claim to speak for us all.”

Among the findings of the report’s authors James Valvo and Carl Oberg:

• During the week of the June 26 rollcall vote, four key Democratic leadership PACs gave $130,000 to 41 swing Democratic voters. One PAC, Friends of Jim Clyburn, “directed by the minority whip from South Carolina, gave undecided members $60,000 just two days before the vote.”

• “Classic pork-barrel politics pushed this flawed legislation over the finish line.” Earmarks totaling $5.45 billion went to the districts of four Democratic Representatives: Bobby Rush (D.-Ill.), $1 billion, Alan Grayson (D.-Fla.), $50 million, Mary Kaptur (D.-Ohio), $3.5 billion, and Frank Kratovil (D-Md.), $1 billion. Minority Leader John Boehner (R.-Ohio) referred to his fellow Ohioan’s earmark as pork.

• In what has become standard practice in Congress with important legislation with wide-ranging implications, Waxman-Markey’s 309-page manager’s amendment containing many of the provisions “used to cajole last-minute supporters … was not made public until 3 a.m. the morning of the vote and was still being collated into the official text as members were being asked to vote on final passage.”

• Waxman-Markey requires foreign countries to take appropriate measures to limit greenhouse gas emissions, and beginning Jan. 1, 2020, the international reserve requirements of one of the bill’s subparts “may apply to a covered good,” meaning a good would be unable to reach the U.S. market without proof of a carbon offset. “This U.S. government-imposed cost is a tariff, which will drive up the cost of production and goods for consumers in all countries and leave everyone poorer for the exercise,” the report says. “It took a second world war before the Bretton Woods Agreement of 1944 lowered trade barriers again” [from those imposed by the Smoot Hawley Act of 1930].

• The report describes how emission allowances were given away free to buy votes. The bill passed because the carbon-emission “allowance distribution methodology was used to gain support from members of Congress who were rightly concerned over the negative effects [the] bill would have on their constituents.” White House Budget Director Peter Orszag had said in May that “If you didn’t auction the permit, it would represent the largest corporate welfare program that has ever been enacted in the history of the United States.”

• Energy companies are among the Waxman-Markey legislation supporters, and the authors cite a story in Forbes magazine in which American Electric Power CEO Mike Morris says his company’s rates “could go up as much as 30% to 50%” as the company begins “to react in a costly cap-and-trade market or deploy carbon-capture and storage technology.” However, carbon law will not negatively affect AEP, he says. “Our business profile actually increases.”

“John Rowe — CEO of Exelon, one of the nation’s largest electricity distributors — estimates that for every $10 increase in the price of cap-and-trade permits, Exelon’s annual revenues will increase $750 million,” the report says, adding that “electric utilities support Waxman-Markey, because they stand to make a fortune from it.”

“Everyone acknowledges that the cost of Waxman-Markey will fall on citizens and small businesses, not on so-called ‘carbon polluters,’” many of whom, the report says, “can shift their production activities — and the corresponding jobs — to countries with less stringent environmental standards.”

Nuclear Ignored

Many Waxman-Markey supporters clearly have something to gain by their support beyond environmental concerns, and the list of opponents contains some surprises, too — including the World Resources Institute, Greenpeace, the Rainforest Action Network, PepsiCo and the American Farm Bureau Federation (AFBF).

The AFP report demonstrates the complexity of the Waxman-Markey bill, said Rick Krause, senior director of congressional relations for AFBF. Waxman-Markey shepherds had to give something to so many groups to garner support a bill that would affect so many people, “so that they would be happy with it,” Krause said.

Trade is especially important to U.S. agriculture, and there is the uncertainty of whether or not the bill’s scheme of rebates and tariffs would be compliant with World Trade Organization requirements. “There’s no value in going alone in this thing,” Krause said, noting the importance of having the assent of China and India on something so important.
“Nuclear energy, the cleanest, most logical replacement for source for carbon-based energy is not even addressed,” Krause said.

Senate Committee on Environment and Public Works Chairman Barbara Boxer (D.-Calif.) is in the process of crafting the Senate version of Waxman-Markey. Senate Majority Leader Harry Reid (D.-Nev.) expects that climate-change legislation won’t reach the Senate floor until late in the year,” according to a news post on the committee’s press blog. Healthcare, financial services reform legislation, appropriations bills and other issues are likely to take precedent until then.

Sign Up