Volume 141, No. 125 covering the 1st Session of the 104th Congress (1995 - 1996) was published by the Congressional Record.
The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“THE IMPORTANCE OF SECTION 29 TO LANDFILL GAS PROJECTS” mentioning the Environmental Protection Agency was published in the Extensions of Remarks section on pages E1563-E1564 on July 31, 1995.
The publication is reproduced in full below:
THE IMPORTANCE OF SECTION 29 TO LANDFILL GAS PROJECTS
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HON. NANCY L. JOHNSON
of connecticut
in the house of representatives
Monday, July 31, 1995
Mrs. JOHNSON of Connecticut. Mr. Speaker, I am introducing today a bill to extend a tax credit in section 29 of the Internal Revenue Code for producing gas from biomass or synthetic fuels from coal. The credit expires at the end of next year. My bill would extend it for another 4 years through the year 2000.
This tax credit was originally enacted in 1980 in the aftermath of the oil embargo as an inducement for Americans to look for fuel in unusual places. The country had just gone through oil shortages, long lines at gasoline stations, spiralling inflation, and record-high interest rates driven by the increase in energy prices, followed by a deep recession. We were determined not be be held hostage again. To this end, Congress enacted a series of measures intended to use what fuel we have more efficiently and to give business incentives to tap sunlight, wind, geothermal fluid, biomass, and similar resources for fuel.
The section 29 tax credit was part of the strategy. It was a credit of $3 for the equivalent of each barrel of oil in energy content produced from a list of unconventional fuels. The list included gas from Devonian shale, tight sand formations, coal seams, geopressured brine and biomass, and synethetic fuels from coal. None of these fuels could be economically produced without the credit. Congress provided for a phaseout of the credit if oil prices ever reached high enough levels again so that the market would produce them on its own. Both the amount of the credit and the phaseout prices are adjusted each year for inflation.
The credit was originally scheduled to expire in 1989. It has been extended three times.
The last time--in 1992--Congress drastically cut back the list of fuels that qualify to only two: gas from biomass and synthetic fuel from coal. An example of gas from biomass is methane produced by decomposing garbage at landfills.
To a degree, the logic for continuing the credit shifted by 1992. In the case of landfill gas, the credit produced important environmental benefits by collecting a dangerous greenhouse gas that might otherwise be released into the atmosphere. This was on top of tapping a potentially useful fuel that was otherwise going to waste. In the case of synthetic fuels from coal, the country has tremendous coal reserves, but coal can be a dirty fuel and there was a desire to continue efforts to develop coal-based fuels as an alternative to burning straight coal.
Why extend the credit again? My main interest is in seeing an incentive remain on the books to tap methane gas at landfills. We still are not doing enough in this area.
Methane gas at landfills is a serious health and safety hazard. It must find an outlet or it can explode. During the 1980's, there were more than two dozen life-threatening explosions and at least three deaths at U.S. landfills.
There are two possible outlets for landfill gases. Gas can migrate underground to adjoining properties, where it can kill or stunt vegetation by displacing oxygen from the ground. Alternatively, it can escape into the atmosphere. Contaminants in the gas contribute to air pollution and mix with sunlight to create smog.
Landfill operators control the gas either by installing so-called passive systems, like trenches, barriers and vents to prevent gas from migrating underground and to give it an outlet into the atmosphere, or by installing so-called active systems where the gas is pumped to the surface and either flared, vented, or collected for use as a fuel.
Use as fuel is still rare. There are approximately 6,000 landfills in the United States. At the end of 1990, gas was geing collected for fuel at just 97. In 1995, the figure is still only 143.
Last year, the U.S. Environmental Protection Agency created a special Landfill Methane Outreach Program in an effort to encourage more collection of landfill gas for use as fuel. Methane is a greenhouse gas that contributes to global warming. It is the second largest contributor to global warming after carbon dioxide, and landfills are the single largest source of methane emissions, accounting for more than a third of total methane.
Greenhouse gases are expected to increase by 14.5 percent during the 1990's. The Clinton administration committed in April 1993 to hold greenhouse gas emissions to 1990 levels. The Landfill Methane
Outreach Program is an effort to avert this increase. EPA is preparing a report to Congress on barriers to landfill gas projects, it has set up a hotline to cut through redtape, and it is in the process of signing cooperative agreements with States and utilities to encourage more landfill gas production.
Air pollution officials--not just at EPA but also at the State and local levels--are eager to see the tax credit extended. The credit is just starting to have an effect at landfills. Most landfill owners have only recently become aware of it, and the pace of landfill gas development is increasing noticeably. It took almost 15 years to get the word out. There was almost a 50-percent increase in landfill gas projects in the last 5 years. The credit needs more time to reach its potential.
EPA estimates that approximately 750 of the 6,000 landfills in the United States are candidates for landfill gas production. The experts believe it will not happen without the credit.
My bill would do four things.
First, it would extend the credit. The credit is currently scheduled to expire for projects placed in service after December 1996. Under the bill, this deadline would be pushed back 4 years through the year 2000.
Second, it would push back the so-called expiration date for the credit by a commensurate number of years. Under current law, landfill gas projects must be in service by next year, but if they meet this deadline, then they qualify for tax credits on the gas produced through the current expiration date, 2007. My bill would push back the expiration date by 4 years through 2011.
Third, my bill would eliminate a complication concerning expiration dates. There are two different expiration dates in the statute currently. The credit expires for pre-1993 projects in 2002. It expires for more recent projects in 2007. My bill would collapse these dates into a single expiration date of 2011 for all projects. There is a misconception that having made an investment to get a landfill gas project off the ground, the developer will continue producing gas after the credit expires. Many projects will not. Landfill gas production is not economic at most sites without the credit. Production will case, notwithstanding the capital investment the developer made to get the project going initially, because he cannot afford to operate at a loss. In addition, there are continuing capital costs that must be made to keep a project operating. Landfills expand. Garbage shifts underground. Pipes that have been put underground to collect the gas break or bend and new ones must be installed.
Finally, my bill would make a technical change in section 29 that, at a 1994 House Ways and Means Committee hearing, the Treasury Department said it does not oppose. To qualify for section 29 tax credits today, the person producing the gas must sell it to an unrelated party. The reason for this requirement is obscure. Most landfill gas is used to generate electricity for sale to the local utility. Landfill gas projects are structured currently so that ownership of the gas collection equipment is in different hands than the electric generating equipment. It would be simpler if the producer of the gas could use it himself to generate the electricity. My bill would allow him to do just that. The bill would treat the unrelated-party sale requirement as having been met in cases where the producer uses the gas to generate electricity which is sold to an unrelated party.
The Ways and Means Oversight subcommittee, which I chair, held a hearing on May 9, 1995, about whether to extend certain expiring tax benefits, including the section 29 credit. I look forward to extending the credit later this year before work on new landfill gas projects grinds to a halt because developers are worried there is not enough time to get them into service.
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