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Historic Anti-Corn Ethanol Amendment Faces Uphill Battle

Almost three-quarters of the Senate approved a measure to end the $6-billion-a-year blenders credit, but its prospects for ultimate passage remain cloudy

Jun 23, 2011
Sen. Dianne Feinstein (D-Calif.)

WASHINGTON—Deficit hawks have practically turned sharpened scissors into a fashion accessory on Capitol Hill. What's shocking some and delighting others is the unexpected pairings of legislators willing to share a whetstone this congressional session.

Take ethanol subsidies, for instance.

Just a week ago, the Renewable Fuels Association was taken aback and the Environmental Working Group was downright giddy when almost three-quarters of the Senate approved a subsidy-slicing measure co-sponsored by Sen. Dianne Feinstein, a liberal-leaning California Democrat, and Sen. Tom Coburn, a debt-obsessed Oklahoma Republican.

Senators agreed to save taxpayers an estimated $6 billion annually by voting overwhelmingly to repeal a tax credit on corn ethanol. What's officially known as the Volumetric Ethanol Excise Tax Credit, the VEETC for short, pays 45 cents for each blended gallon.

"Ethanol is the only industry I know of that receives a triple crown of government support: its use is mandated by law, it enjoys protective tariffs and oil companies receive federal subsidies to use it," Feinstein said. "These flawed policies ... must be changed."

Growth Energy, an organization of ethanol producers, reacted to the 73 to 27 vote with a news release headlined "Senate Votes to Keep OPEC in Charge of U.S. Economy." Meanwhile, the Renewable Fuels Association is adorning city buses in the nation's capital with ads claiming that corn ethanol reduces gas prices by 89 cents per gallon.

Sheila Karpf, a legislative and policy analyst at the advocacy organization Environmental Working Group, told SolveClimate News that the industry is attempting to downplay the amendment's passage as nothing more than symbolic.

"We're up against a pretty strong horse and this is a historic vote," Karpf explained. "With 73 votes in our favor, that's a pretty big signal that support for corn ethanol is waning.

"For the other side to say it's nothing is a way to cover up how badly they lost. They had to spin it in some way, and that's the way they tried to spin it."

No Guarantees Yet

The Feinstein-Coburn measure, which passed June 16, was tacked on to a bipartisan jobs bill that was larded up with close to 100 other unrelated amendments. Democratic leaders are blaming that clog on GOP senators stretching an agreement made earlier this year that lets floor legislation be laden with unlimited amendments.

Even though the Senate didn't advance the Economic Development Revitalization Act (S. 782) Tuesday, observers are hopeful their anti-corn ethanol amendment still has legislative legs.

"Its prospects in the Senate are unknown right now," Karpf said, adding that she expected the amendment to find another "home" because that initial vote garnered so much bipartisan support. "We really haven't had a stand-alone vote on the ethanol tax ever. Winning with such an overwhelming margin indicates the strength of our coalition."

The amendment also eliminates a 54-cent-per-gallon tariff on imported ethanol. Critics have maintained that the tariff protects the industry from cheaper-to-produce and cleaner-burning sugar-cane ethanol that can come from Brazil.

Both the tax credit and the tariff are scheduled to expire at the end of this year. The Feinstein-Coburn measure is designed to put a halt to the payments June 30.

Relatively recently, Congress had two prime chances to shut the corn ethanol subsidy spigot. For instance, while both chambers engaged in frantic, down-to-the-wire horse-trading to avoid a spring government shutdown, VEETC opponents pointed to eliminating ethanol tax credits as a no-brainer.

And back in December, they had the opportunity to let the then five-year-old tax credit die a natural death when it expired at the end of the month. However, stalwart ethanol-subsidy advocates from agricultural states, such as Iowa Republican Sen. Chuck Grassley, pressured legislators to renew the VEETC during the lame-duck session.

Gaining House Momentum?

After the lopsided vote on his amendment, Coburn urged his House colleagues to get rid of this "wasteful earmark and tariff at their earliest opportunity."

Over in the lower chamber, the Environmental Working Group is hopeful that Reps. Wally Herger, a California Republican, and Joseph Crowley, a New York Democrat, will join forces as early as this week — perhaps Thursday — to introduce companion legislation identical to the Feinstein-Coburn initiative.

That House effort also will have the backing of a diverse coalition that includes representation from business associations, hunger organizations, grassroots groups, agriculture, the environmental community and budget hawks.

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