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Domenici criticized for slipping nuclear loan guarantees into farm bill

Posted Oct. 27, 2008 / Posted by: admin

For Immediate Release

For more information, contact:
Todd Larsen, Co-op America, 202-872-5310
Ben Schreiber, Environment America, 202-683-1250
Nick Berning, Friends of the Earth, 202-222-0745
Josh Dorner, Sierra Club, 202-675-2384

 

Washington -- Pointing to Senator Pete Domenici's decision on Tuesday to attach his fiscally irresponsible energy loan guarantee provision to the Senate Farm bill (H.R. 2419), environmental and public interest groups today criticized the move as "a blatant attempt to exempt the nuclear industry from congressional oversight and saddle taxpayers with billions of dollars of potential liability."

"The Farm bill is designed to address agricultural and food issues and it should not be used to hand out multi-billion dollar taxpayer subsidies to the already highly subsidized nuclear industry," said Brent Blackwelder, President of Friends of the Earth.

While the amendment appears to address loan guarantees for "renewable fuels" it contains a massive expansion of the program for nuclear and other polluting technologies. This is the same tactic that Senator Domenici used in the Senate energy bill to avoid scrutiny.

"Under current law, congressional appropriators set an annual cap on the amount of energy loan guarantees the Department of Energy (DOE) can grant. Senator Domenici's provision would cripple that authority and allow the DOE to provide the more than $50 billion in loan guarantees that the nuclear industry is seeking over the next two years," added Alice McKeown, energy expert at Sierra Club.

According to the Nuclear Energy Institute (NEI) the Domenici provision eliminates this key Congressional safeguard and ensures that "the high costs of these projects" are "not subject to a yearly appropriations battle." In October 2007, Moody's Investor Service concluded that reactor costs could be as much as $6 billion resulting in a "reasonably high likelihood" that the credit rating of utilities and merchant vendors "will also decline."

Nuclear power reactors pose the greatest risks of default, which the Congressional Budget Office found were "very high -- well above 50 percent." These risks are not lost on the private sector. In June of this year, six major Wall Street Banks urged the DOE to make taxpayers shoulder the risks of nuclear power because: "the higher capital costs and longer construction schedules of nuclear plants" will make lenders unwilling at present to extend long-term credit.

"If ever there was an invitation to a massive boondoggle, this would be it," said Ben Schreiber, staff attorney at Environment America. "Understanding the need for fiscal responsibility in developing America's energy technologies, President Bush has expressed his strong opposition stating that the provision 'would remove appropriate controls over the size of the program and significantly increase potential taxpayer liability.'"

"As Members of Congress discover the intent of Senator Domenici's loan guarantee provision, it is becoming clear that opposition is growing," said Yochi Zakai, Co-op America's Climate Change Program Coordinator.

The groups, which include Co-Op America, Environment America, Friends of the Earth, and the Sierra Club, called on Senators to oppose the section of Senator Domenici's amendment which not only has little relevance to the Farm bill, but would set a dangerous precedent for the government's fiscal policy.

 

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