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Hon. Bill Thomas, Chairman
Ways & Means Committee
House Office Building
Washington, D.C. 20515-0521

July 23, 2001

Re: H.R. 2511 - Opposition to SECTION 45 Tax Credits for
Landfill Gas or Incineration

Dear Rep.Thomas:

On behalf of the Grassroots Recycling Network (GRRN), this letter is to OPPOSE the inclusion of two provisions in H.R. 2511, both relating to expanding SECTION 45 tax credits for municipal solid waste, specifically for:

  • Landfill gas energy recovery and,
  • Waste-to-energy incineration.


It is true that energy recovery from landfill gas is a desirable objective. But, it does not follow that tax subsidies should be used to encourage the practice instead of simply mandating recovery, just as we mandate liners, leachate collection systems and monitoring wells in landfills.

The source of the methane from landfills used for energy production is the decomposable organic fraction, and the growing weight of scientific and technical evidence demonstrates conclusively that it is impossible to safely manage rotting garbage in the ground.[1] This is illustrated by the fact that the European Commission has already acted to phase out land disposal of organic matter.[2]

For these reasons, subsidizing landfilling, instead of mandating energy recovery and permitting the price for disposal to rise to approach its true costs, would discourage the only sensible solution. That is to source separate our organic material for composting, just as we already do our recyclables, which is the simple and practical alternative.

In addition, even if for the sake of argument subsidization were considered desirable, credits for this application are an extremely ineffective tax mechanism. For municipally owned landfills, one of the more common applicants for the earlier SECTION 29 LFG credits, do not pay taxes. Thus, they must contract with third party shell entities, which divert a substantial part of the credits, in order to claim eligibility.

For privately owned landfills, a significant fraction of those using those credits under SECTION 29 were facilities in states with sufficiently high electricity rates to not require subsidies to economically justify the energy recovery projects. Those earlier SECTION 29 credits for landfill gas had little to no impact on encouraging energy recovery in states with the lower electricity tariffs where the ostensible need was greatest. [3]

Recent breakthrough developments with micro-turbines to recover energy from landfill gas are also bringing down costs and self-justifying more projects at the same time as electricity rates are rising to make landfill gas recovery competitive. Yet, the tax credit is set at a fixed level unrelated to any economic rationale for a particular claimant.

To add further tax inefficiencies to the provision, the language would qualify projects previously installed, albeit at a lower credit. This constitutes a pure transfer from taxpayers to a few selected parties without even any putative public benefits.

The disposal of organic matter in the ground - the source of the methane used for energy - is a demonstrably obsolete and hazardous practice. Where it continues as a relic of a bygone era of discredited solid waste management practices, energy recovery should be mandated, not subsidized to the detriment of the true solution. Tax subsidies make even less sense where most of the revenues are lost to projects that would be undertaken without subsidization.


The preliminary draft appears to proscribe SECTION 45 tax credits for incineration. However, the actual language used to do so can almost certainly be distorted from original legislative intent to permit WTE to be subsidized too.

In the draft bill, the WTE exclusion seems to be specified by excluding "unsegregated municipal solid waste" in the definition of qualified projects for SECTION 45 credits. However, there is a cottage industry of tax lawyers poised to exploit such vague language, which can be by evaded by advising clients to install an inexpensive magnet for steel can removal and low cost sortation screens at the head of the incoming stream [4]. The incineration exclusion should and must be expressly stated to insure that legislative intent is followed.


Bill Sheehan, PhD
Executive Director


  • [1] In terms of groundwater pollution, EPA itself has repeatedly acknowledged that the elaborate system of barriers required by current landfill rules "will ultimately fail" in decades while the toxicity of the waste load remains hazardous for centuries. For decomposing organic matter keeps the facility active for an indefinite period. 53 FED. REG. 168, at pp. 33344-33345 (August 30, 1988). Limited-life barriers may have been the very worst approach because it has only shifted in time the occurrence of environmental damage to such a distant future world that it will be a certainty the responsible entities will have departed the scene and remediation systems will have decayed. In terms of air pollution, gas collection systems suffer from myriad operational limitations and, although hard data does not exist, it is doubtful that more than 25% of the total emissions are captured. This means that most of the greenhouse gases and also the non-methanic carcinogens such as benzene and toluene are released to the atmosphere. Most recent data is now being published showing the previously unrecognized ways uncontrolled decomposition of organics when permitted to be mixed with toxics, threatens the environment. According to Oak Ridge National Laboratory, the dangerous dimethylated form of mercury, which is a deadly nerve poison that causes developmental impairment in 60,000 babies each year, comes not only from power plants, but also from bacterial digestion in landfills. S.E. Lindberg, Methylated Mercury Species in Municipal Waste Landfill Gas Samples in Florida USA," Atmospheric Environment 35 (20001), at p. 4011.
  • [2] European Community, Council Directive 1993/31EC (April 26, 1999), at Art. 5, pars. 1 and 2:
  • [3] The states three with the most intensive development of landfill energy recovery projects under SECTION 29 on a weight adjusted basis, Rhode Island, New Hampshire and Illinois, had industrial electric rates 51%, 162% and 3%, respectively, higher than the national average. Compiled from data base requested of the EPA Methane Outreach Project.
  • [4] See, e.g. John McKinnon, "Lobbying Helps Companies Turn Coal Into Tax Credits," Wall Street Journal (July 12, 2001)
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