Manure tax break draws criticism

Senate considers subsidy for power from chicken waste

July 29, 1999|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON -- On the Delmarva Peninsula, farmers need a new way to get rid of the chicken manure that is believed to be a major polluter of the Chesapeake Bay.

And especially in the sweltering summer, the same Eastern Shore communities could use extra electricity to help avoid outages.

So Sen. William V. Roth Jr., a Delaware Republican, says "it just makes common sense" that taxpayers should subsidize the operation of power plants that can convert chicken droppings into electricity.

Roth, the chairman of the Senate Finance Committee, tucked into the $792 billion tax-cut bill the Senate began debating yesterday a $50 million tax credit for the use of chicken waste as a power source. The proposed tax break is one of hundreds of special-interest provisions included in the sweeping legislation, inserted by lawmakers whose constituents stand to benefit from them.

Roth's provision could be a boon to the many chicken farmers on the Eastern Shore and others throughout the country.

"It's an environmentally conscious solution to a national problem," said Sen. Barbara A. Mikulski, a Maryland Democrat who is a co-sponsor of the Roth proposal. "Who would possibly object?"

For one, there's Rep. Bill Archer of Texas, Roth's counterpart in the House.

Archer, the Republican chairman of the Ways and Means Committee, has already squelched a similar proposal, introduced in the House by Rep. Wayne T. Gilchrest, a Republican who represents Maryland's Eastern Shore. Archer is expected to try to keep the Roth measure out of the final version of the tax-cut bill that will go to the White House.

"He doesn't think we need any more energy tax credits," said Trent Duffy, a spokesman for Archer. "These credits are supposedly given on a temporary basis, but they never go away."

To Archer, the chicken-manure proposal is as indefensible as the tax break for ethanol, a clean-burning gasoline additive made from corn.

Congress gave a subsidy for ethanol production in late 1970s as a response to the energy crisis. The goal was to help farmers, reduce air pollution and lessen U.S. dependence on foreign oil.

Two decades later, ethanol's effectiveness in achieving the latter two goals is a matter of sharp dispute. But taxpayers are still providing a subsidy worth $600 million a year.

Much of this subsidy benefits the politically well-connected Archer Daniels Midland Co., producer of half the nation's ethanol supply. Archer has dubbed this a triumph of politics over policy.

"I can understand his point of view," said Sherry Tucker, a representative of London-based Fibrowatt Ltd., the company that is considering building two poultry-powered energy plants in the United States if the tax credit goes through.

But, Tucker added, "ethanol has been given 25 years to prove itself. We don't need 25 years."

Fibrowatt, a 7-year-old pioneer in the chicken-dropping recycling field, already has three plants operating in England.

The newest is designed to burn 500,000 tons of chicken manure a year -- about the amount produced in Maryland annually. The process yields 38.5 megawatts of electricity, enough to serve a city of 50,000.

Of the two plants that Fibrowatt is considering building in the United States, one would be somewhere on the Delmarva Peninsula, the other in Minnesota, the nation's leading producer of turkeys.

"We see it as a triple win," said Steve Behm, a spokesman for Sen. Rod Grams, a Minnesota Republican who is another supporter of the Roth proposal.

"It's good for the environment, it helps the turkey industry and it allows farmers a return on something they're getting nothing for today."

For chicken farmers in Maryland, Delaware and Virginia, disposing of manure is a matter of greater urgency. Scientists believe that the nutrients in chicken manure used as fertilizer are a leading cause of pollution in the lower Chesapeake Bay. Those nutrients were believed to have fueled the outbreak of Pfiesteria piscicida, the toxic microorganism that killed fish and sickened people in summer 1997.

Since then, all three Delmarva states have imposed restrictions on the use of farm fertilizers. In Maryland, whose law is the strictest, limits were set on how much chicken manure can be used. Farmers have until 2004 to comply or face fines of up to $2,000.

Not surprisingly, there is much enthusiasm among Eastern Shore farmers for selling manure for conversion into electricity, said William Satterfield, of Delmarva Poultry Industry Inc. But the technology is so expensive, said Tucker, the Fibrowatt representative, that it won't happen without a tax credit.

"We need a government incentive of some type, either federal or state," she said.

Not forever, though, Tucker added. Two of Fibrowatt's three plants in England have already been weaned off their government price supports. The five years contained in the Roth proposal, she said, would likely be enough.

The fate of any provision in either the House or Senate version of the tax-cut legislation is still in doubt. President Clinton has promised to veto the measure unless it is shrunk to about half the nearly $800 billion in tax cuts that congressional Republicans want.

Both Mikulski and Sen. Paul S. Sarbanes, her fellow Maryland Democrat and another co-sponsor of the chicken-manure tax credit, oppose the overall legislation in its current form.

Archer will play a pivotal role in the negotiations. The Texas Poultry Federation has mobilized its members to write letters and make phone calls, trying to convince the congressman that the chicken-waste tax credit would help an industry that is also important in his home state of Texas, said James Grimm, the group's executive vice president.

Archer remains unpersuaded.

"The chairman has no objection to entrepreneurial enterprises," said Duffy, the Archer spokesman. "We just don't see why the taxpayers should have to support it."

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