WASHINGTON (DTN) — Ethanol got clobbered Thursday on Capitol Hill.
Reversing a vote from Tuesday, the U.S. Senate voted 73-27 to immediately end the 45-cent-per-gallon Volumetric Ethanol Excise Tax Credit, otherwise known as the blenders’ credit, and the 54-cent import tariff.
The vote came after the House of Representatives also had voted 283-128 as part of the House Agriculture appropriations bill to block USDA from using funds next year to help fuel stations offset the costs of installing ethanol blender pumps.
“You can see there is waning support for these ethanol subsidies,” said Rep. Jeff Flake, R-Ariz., in an interview off the House floor. “For those of us who are rediscovered fiscal conservatives, there’s little room for ethanol subsidies.”
Later in the afternoon, Sen. John McCain, R-Ariz., had a vote on similar language to block funding for ethanol infrastructure. Yet, that proposal lost by a 41-59 vote.
But the major vote was in the Senate to end the blenders’ credit and import tariff. The Senate had just voted on an almost identical bill Tuesday offered by Sen. Tom Coburn, R-Okla. That bill was defeated in a 40-59 vote.
The Senate bill would end the tariff on June 30, even though that would also require the House to pass an identical measure by then. Further, lawmakers pushed to immediately end the blenders’ credit and import tariff even though both are already set to expire at the end of the year under current law.
Agriculture Secretary Tom Vilsack issued a statement citing that the Obama administration opposes outright ending the tax credit, which he said undermines renewable energy production in the country.
“We need reforms and a smarter biofuels program, but simply cutting off support for the industry isn’t the right approach,” Vilsack stated. “Therefore, we oppose a straight repeal of the Volumetric Ethanol Excise Tax Credit (VEETC) and efforts to block biofuels infrastructure programs.”
Sen. Dianne Feinstein, D-Calif., sought the new vote, which Majority Leader Harry Reid, D-Nev., agreed to allow Wednesday. Feinstein, on the Senate floor, repeated her argument that no other industry has a “triple crown” of protections that included a tax credit, a tariff and a mandate to use.
“I know of no other industry in America that has a triple crown of protections,” Feinstein said.
The shift in votes came largely from the Democrats. Only five Democrats and one Independent voted for the Coburn amendment on Tuesday. This time, 38 Democrats and the Senate’s two Independents voted with 33 Republicans to kill the ethanol blenders’ credit. Fourteen Republicans and 13 Democrats, most of whom come from ethanol-producing states, voted against Feinstein’s amendment.
Feinstein cited that the ethanol blenders’ credit had cost $22.5 billion since 2005 and was continuing to go up in cost. Those costs have risen as the ethanol industry has gone from producing 3 billion gallons year to nearly 13 billion gallons in that time frame. Feinstein also complained that the tariff blocked what she considered more environmentally friendly sugar-cane ethanol from being imported from Brazil.
“So the tariff makes no sense and it should be repealed,” she said.
Growth Energy CEO Tom Buis stated that the Senate voted on an amendment that is unconstitutional because revenue-raising bills are required to start in the House. Further, Buis noted that the Senate debated the bill “even while the news pours in that OPEC has hit a high-water mark of $1 trillion in revenues.”
“The Senate missed an enormous opportunity to take real action on deficit reduction and energy policy when it failed to put oil subsidies and giveaways to the same test as ethanol,” Buis stated. “Instead, senators turned a blind eye to the hidden costs of oil, and chose to waste time on an amendment that can be tossed out on constitutional test.”
Feinstein also cited the price of corn that has soared since 2005 as well and the impact that has had on livestock producers.
“Does anybody think this is good for this nation?” Feinstein said. “Is it good for farmers who rely on corn for feed? I don’t think so.”
Coburn, who co-sponsored Feinstein’s amendment, had pushed aggressively for a vote, which unhinged some senators who did not care for the procedural way Coburn went about it. That element was removed from Thursday’s vote.
Sen. Dan Coats, R-Ind., also spoke earlier on the Senate floor and defended ethanol as an industry that essentially knows it needs to phase out the tax credit and is willing to change. He asked for time for industry supporters to come back with a different plan. He called it “draconian” to just cut off the industry.
“All we’re really asking for here is a transition process,” Coats said.
Chris Clayton can be reached at email@example.com
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