Congress may be moving toward reinstating a protected market for U.S. energy companies at a huge Army base in Germany — an echo of a bygone earmark that cost the government an estimated $2 billion-plus over the last half century.
The provisions are contained in both the House’s fiscal 2019 defense bills — the authorization measure, which the chamber passed in late May, and the House Appropriations Committee’s draft spending bill, which the committee is marking up on Wednesday.
Nebraska Republican Don Bacon, the author of the authorization bill provision, says he’s interested in making sure the U.S. military facility in Germany is not dependent on Russian gas. But big U.S. energy companies that could benefit from the special provision, including leading coal producers, were top contributors to his campaign, and at least two of them are headquartered in his district. Bacon says the companies did not influence his decision.
Congressional critics of the provision say they intend to try to kill it, as they have similar legislation in the recent past.
“I look forward to working once again this year with colleagues from both sides of the aisle, along with taxpayer protection and conservation advocates, to ensure that this wasteful earmark is once again removed from the final Defense appropriations bill,” said California Democrat Jared Huffman.
Heaps of coal and cash
From 1961 until 2015, appropriators required to one degree or another that U.S. bases abroad be powered by Pennsylvania’s anthracite coal. The Buy America energy directive applied to all European bases until it was narrowed in the early 1990s to cover only energy that powered a base in Kaiserslautern, Germany, according to a history of the issue by Taxpayers for Common Sense.
The government spending watchdog group gave the program — which has been called “Coals to Newcastle” and “Coal to Kaiserslautern” — its 2015 Golden Fleece award for wasteful government spending.
The House voted in 2015 against retaining the Kaiserslautern provision, and it then dropped out of U.S. law. In 2016, though, the House had to beat back yet another attempt to resuscitate the measure.
Now, having lost that battle twice in the last few years — and after taking a break from the issue in 2017 — lawmakers are considering a more tailored approach.
Specifically, the House’s two fiscal 2019 defense bills contain virtually identical provisions on this issue. The language would require the Pentagon to give preference to U.S. energy sources, including but not limited to coal, in powering a nearly $1 billion hospital being built near Kaiserslautern.
“Lawmakers killed this parochial provision twice in recent years, but like a zombie, it keeps coming back,” said Steve Ellis, vice president of Taxpayers for Common Sense. “It may be slightly changed, but the intent is clear: force the Pentagon to buy domestic coal to fuel American facilities in Kaiserslautern, Germany.”
The Russian argument
The new proposal says that, before the Pentagon can spend money heating, cooling or powering its new hospital in Germany, the Defense secretary must certify in writing to the congressional defense panels that the hospital is minimizing use of fuel from Russia and is using “a diversified energy supply from a mixed fuel system” and that America is the “preferred source” of fuel. The secretary may waive the restriction if he thinks it is in “the national security interests of the United States.”
Bacon and other advocates of the provision say it is intended to free the new Rhine Ordnance Barracks Army Medical Center from a dangerous dependence on Russian gas. The hospital is scheduled to open in 2024.
“Since I joined Congress, I have clearly expressed my concern that our military installations are vulnerable to disruptions in the supply of energy they need to operate,” said Bacon, a former Air Force brigadier general who once was installation commander at the Ramstein Air Base in Germany. “Nowhere is this risk greater than our forward bases in Europe, where the bulk of the energy in the domestic market is sourced from the Russian Federation. We are on the verge of constructing a $1 billion facility in Germany to replace the critical Landstuhl regional medical center, and it is imperative we ensure Russia can’t shut it down by turning off the gas.”
Bacon, however, also has political and parochial stakes in the fate of the provisions. Kiewit Corp., a leading coal-mining company, and Berkshire Hathway Inc., a top operator of power plants, including many that are coal-fueled, are headquartered in Omaha. Kiewit is Bacon’s No. 2 contributor so far in the 2018 election cycle, according to the Center for Responsive Politics.
Energy companies, including several with mining interests, are among Bacon’s top contributors, including Emerson Electric, HDR Inc., TransCanada Corp. and Warburg Pincus.
Bacon said in a written response to a query that any suggestion his advocacy of the provision has to do with corporate influence and not just concern about Russia is “silly, and I’m being polite.”
“National security is the only reason behind this bill,” Bacon said. “This Nebraskan spent 30 years wearing the uniform before I got to Congress. I’ve spoken to no energy companies about this language and don’t plan to.”
Critics say the justification based on energy security is just a guise, and the real point of the provision is to create a protected market for U.S. businesses rather than allow the Pentagon to procure its energy however it thinks makes sense, as it does in other facilities. It is not clear that other forms of U.S.-produced energy besides coal are practical alternatives in Germany, said a House aide who is critical of the new provision.
“The Pentagon should be able to fulfill its energy generation needs by obtaining the best product at the best price,” said Ellis of Taxpayers for Common Sense. “This is just another example of lawmakers putting their thumb on the scale for parochial profit back home.”
Huffman blamed the return of a modified Kaiserslautern provision on pressure from the U.S. energy industry.
“Congress has twice acted to protect taxpayers and the environment from this zombie earmark, but it’s back again this year because the majority in Congress has yet again allowed a lobbyist to sneak it into the Defense bills,” Huffman said. “Shipping dirty coal across the Atlantic to power our military bases helps special interests at the expense of clean air, public health and wise budgeting.”
Even though the provision is not ostensibly intended to favor any particular part of America or form of energy, lawmakers from Pennsylvania, where the coal industry benefited from the old Kaiserslautern provision, are among the strongest advocates of the new proposal.
“How many generals need to provide Congress with testimony highlighting the threats our service members and military installations in Western Europe face due to the potential weaponization of Russian energy?” said Pennsylvania Republican Glenn Thompson. “The Pennsylvania delegation has been vocal about this issue for some time, and we have an opportunity to heed these warnings and get the construction of the new medical facility in the ROB [Rhine Ordnance Barracks] right, with the appropriate fuel sources that mitigate the Russian threat.”
Another Pennsylvania Republican, Lou Barletta, did not write the provision, his spokeswoman said. But “ensuring our military service members have energy independence from foreign powers is something he has continuously advocated for,” she added.
A 1989 study by the Departments of Defense, State and Commerce found that the congressional earmark requiring Pennsylvania coal for overseas bases had resulted in the equivalent, in today’s dollars, of more than $2 billion in excess spending, according to the Taxpayers group. The program continued in reduced form for more than a decade after the estimate was published.
The potential cost of the new program mandated by the pending House defense bills is not yet clear.
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