Senators Announce Bipartisan Agreement On Ethanol Reform

Jul 7: U.S. Senators Amy Klobuchar (D-MN), John Thune (R-SD), and Dianne Feinstein (D-CA) announced that a bipartisan agreement has been reached that allows for a transition to a more sustainable model of incentives for domestic renewable fuel production while reducing the nation's deficit by $1.3 billion. The agreement, based on Thune and Klobuchar's bipartisan Ethanol Reform and Deficit Reduction Act, would end the existing 45 cent per gallon Volumetric Ethanol Excise Tax Credit on July 31, 2011, instead of the current expiration date of December 31, 2011. The bipartisan agreement would dedicate two-thirds of the savings from existing money -- $1.3 billion -- to debt reduction and the remaining $668 million in savings to renewable fuel incentives, helping provide consumers with lower gas prices. The compromise can now be considered by the full Senate.

 

    Recent votes in the Senate on this issue have sought to end the current Volumetric Ethanol Excise Tax Credit while still continuing to fund blender pumps [See WIMS 6/17/11]. Sen. Klobuchar indicated that this agreement is consistent with those votes and would end the existing 45 cent per gallon Volumetric Ethanol Excise Tax Credit, provide funding for homegrown energy infrastructure and reduce the nation's deficit, based only on remaining 2011 funding.

    Sen. Klobuchar said, "This bipartisan agreement is a major step toward providing our businesses a clear path forward and keeping the biofuels industry competitive while reducing our debt by over a billion dollars this year. With this agreement we can not only continue to support homegrown energy, we can also demonstrate that members with different viewpoints can come together to find common ground to reduce the debt. It is a model for reducing government subsidies going forward."

    Sen. Thune said, "After productive discussions with industry stakeholders over the past several weeks, we have reached a bipartisan solution that reduces the federal deficit and modifies current biofuels policy without pulling the rug out from under American renewable energy producers. Domestic biofuels production in South Dakota and throughout the country continues to play an important role in reducing our nation's dependence on foreign oil and creating American jobs. I look forward to moving our bipartisan plan through both the Senate and the House of Representatives."

   

    Senator Dianne Feinstein (D-CA) issued a separate release and letter to the Senate leadership, signed by the three Senators, indicating the agreement would repeal the nearly $6-billion-a-year ethanol subsidy and end the tariff on foreign ethanol by the end of the month. Sen. Feinstein said, "This agreement is the best chance to repeal the ethanol subsidy, and it's the best chance to achieve real deficit reduction. Absent this agreement, taxpayers stand to lose $1.33 billion -- that was the bottom line for me. Every month that passes without repeal costs taxpayers $400 million. After years of fighting, there is simply no guarantee a full repeal would be signed into law. I believe this bipartisan agreement should be included in the deficit reduction package that will likely accompany a vote on raising the debt limit, and I hope the president will consider that approach."

    According to a release from Sen. Klobuchar the compromise has the support of the Minnesota Farm Bureau, the Minnesota's Farmer's Union, the American Coalition for Ethanol, Growth Energy, and the National Corn Growers Association.

 

    Brooke Coleman, Executive Director of the Advanced Ethanol Council (AEC) said, "We appreciate the willingness of Senators Klobuchar, Thune and Feinstein to put advanced biofuels at the forefront of ongoing negotiations about how to innovate and reduce the cost of U.S. ethanol policy. This agreement has enough of the right ingredients to move the conversation forward. At the same time, there is a fundamental problem with how the advanced biofuels piece is crafted that will need to be addressed to be meaningful to the industry. While we appreciate the ambition to lengthen the duration of the tax credits, the last minute switch from a yearly credit to a gallon-based, capped credit adds artificial and unnecessary layers of uncertainty and risk for the financing community. As the President said yesterday, it is critical to U.S. energy security and U.S. national security to get this right. We look forward to working with Congress and the Administration to fix these deficiencies before the proposal is enacted into law. We particularly appreciate Senators Klobuchar and Thune for their dogged commitment to reforming rather than terminating the federal commitment to renewable fuels, and their steadfast protection of tax incentives designed to create jobs and promote alternatives to foreign oil."

 

    Bob Dinneen, President and CEO of the Renewable Fuels Association (RFA) issued a statement saying, "This bipartisan effort to find common ground is the kind of sensible policy making American voters desperately want from their elected leaders. We greatly appreciate the leadership of Senators Klobuchar and Thune in doggedly pursuing a solution to this impasse. Walking away from investments made in America's ethanol industry cold turkey would jeopardize the future of biofuel production in America, including stifling the progress of advanced and cellulosic ethanol technologies.

    "A particularly important part of this agreement is the commitment to continue the evolution of the industry to new technologies and new feedstocks for cellulosic ethanol. We are pleased the agreement recognizes the importance of cellulosic ethanol by committing $305 million to this effort. However, we are concerned that capping cellulosic ethanol development sends the wrong signal and we will continue to work with the Congress and the Obama Administration to address this anomaly. . . as this process continues. This is not the perfect compromise, but it does demonstrate the willingness of American ethanol producers and advocates to do their part to address budget concerns while not sacrificing the progress and evolution of the industry. I would challenge other industries to step up to the plate in the same manner. The status quo of American energy and tax policy simply won't work."

    Craig Cox, Environmental Working Group (EWG) Senior VP for Agriculture and Natural Resources issued a statement saying, "Thanks to Senator Feinstein's leadership, we are witnessing a remarkable reversal of fortune for the ethanol and corn lobbies. This deal is a welcome sign that the iron grip these lobbies have had on biofuel policy is loosening. However, there's still a long way to go to get U.S. biofuels policy on the right track. We encourage lawmakers to make a clean break with corn ethanol, American taxpayers shouldn't be called upon to support this industry any longer." 

    Access a lengthy release from Sen. Klobuchar with further details on the agreement (click here). Access a release from Sen. Feinstein with the letter to Senate leaders on the agreement (click here). Access the statement from AEC (click here). Access the statement from RFA (click here). Access the statement from EWG(click here). [*Energy/Biofuels]

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Reactions To EPA's Cross-State Air Pollution Rule - Jul 8: In general Republican environmental leaders and industry reacted negatively, while Democratic leaders along with environmental and public health officials were supportive of U.S. EPA's finalized

Cross-State Air Pollution Rule (CSAPR, a.k.a. Transport Rule) announced yesterday (July 7). EPA said the rule "will slash hundreds of thousands of tons of smokestack emissions that travel long distances through the air leading to soot and smog, threatening the health of hundreds of millions of Americans living downwind." [See WIMS 7/7/11]. EPA said the rule will protect communities that are home to 240 million Americans from smog and soot pollution, preventing up to 34,000 premature deaths, 15,000 nonfatal heart attacks, 19,000 cases of acute bronchitis, 400,000 cases of aggravated asthma, and 1.8 million sick days a year beginning in 2014 -- achieving up to $280 billion in annual health benefits. The final rule will become effective 60-days following publication in the Federal Register and will apply to 27 states in the Eastern half the United States and affect 3,642 electric generating units at 1,081 facilities.

 

    House Energy and Commerce Committee Chairman Fred Upton (R-MI) issued a statement saying, "The goal for these rules should be reasonable regulation that protects public health and the environment while also preserving economic growth. Unfortunately, the unprecedented pace at which the administration is issuing major new rules that impose new costs and regulatory requirements on states, employers and consumers fails that basic test. By issuing multiple regulations for the energy and other sectors at such an accelerated rate, EPA has turned regulation from a manageable tool into an unpredictable moving target that makes it difficult for companies to invest and create jobs." Upton cited EPA's estimates that the projected annualized compliance costs are $1.4 billion in 2012 and $800 million in 2014."

 

    Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works (EPW) issued a statement saying, "This rule along with 'Utility MACT' could force the retirement of 30 to 100 gigawatts of coal-fired power plants, raise the price of electricity by as much as 23 percent, and cause 1.4 million job losses by 2020. True environmental progress will not come from these costly, heavy-handed regulations that harm the very people EPA claims to protect; real progress on clean air is best achieved through common sense multi-pollutant legislation that streamlines the Clean Air Act's many redundant and overlapping mandates.  This is something that I have and will continue to support. 

    "The bottom line is that reducing emissions does not have to be this expensive -- the Obama EPA just wants it to be. On both sides of the aisle we support efforts to reduce real pollution, but we should be doing it in a way that protects workers from losing their jobs, families from skyrocketing electricity prices, and businesses from unachievable requirements. It is little consolation that Oklahoma is not included in today's final rule. By separate notice, EPA has proposed to include the state in the program in the near future. As Ranking Member of the EPW Committee I will be keeping a close eye on this process." 

 

    Senator Joe Manchin (D-WV) issued a statement saying, "The continued jobs-destroying overreach of the EPA is outrageous, and it's incomprehensible that in these difficult economic times, the Administration would be so callous as to arbitrarily impose onerous rules that they know will cost countless American jobs and raise the daily costs of life for so many struggling families. Once again, the EPA is taking aim at the coal industry, small businesses and the hardworking families who help power and build this nation. As I have said before, it's time the EPA realizes that it cannot regulate what has not been legislated. Our government was designed so that elected representatives are in charge of making important decisions, not bureaucrats. That principle is even more true today when the American people see the consequences of the EPA making rules that affect our whole country and could hurt our fragile economy." 

 

    Senator Barbara Boxer (D-CA), Chairman of the Environment and Public Works Committee (EPW) , released a statement saying, "EPA's action will result in cleaner air and prevent thousands of premature deaths each year. Reducing smog and toxic soot that travels across states is good news for the millions of Americans who are harmed by this dangerous air pollution. These are the types of safeguards that are so important for the health of our children and families. I will continue to fight any effort to weaken the Clean Air Act's public health protections."

 

    Senator Tom Carper (D-DE), Chairman of the EPW Subcommittee on Clean Air and Nuclear Safety released a statement saying, ". . .Delaware and other so-called 'tail pipe' states on the East Coast know all too well, our neighboring states' dirty air has adversely affected the health and well-being of Delawareans, just by virtue of our location. We need to change that and this cross-state air pollution rule is an important tool to help us in that effort. . . As Governor of Delaware, I learned that despite their best efforts, states cannot clean up their air alone. We're all in this together. . . "Since coming to the Senate, I have worked to find a legislative solution to this challenge. While those efforts haven't born fruit, the courts have demanded that the EPA regulate this pollution. In response to those demands, the EPA has developed a sensible approach that will reduce smog and particle pollution and in turn, give us cleaner air and prevent thousands of deaths and billions of dollars in healthcare costs. In the end, this rule will help us achieve better health care results for less money. . ."

    Major environmental organizations issued supporting statements for the proposed CSAPR. For example, Environmental Defense Fund (EDF) President Fred Krupp praised EPA's proposal saying, "These clean air standards for power plant pollution will provide some of the greatest human health protections in our nation's history. Millions of Americans live downwind from this deadly pollution -- from the communities that live in the shadows of these smokestacks to those afflicted by the pollution that drifts hundreds of miles downwind. Today's clean air protections will help eastern states restore healthy air in communities hard hit by air pollution, and will help all of us live longer and healthier lives." In addition, EPA issued a release summarizing supporting comments from a number of organizations and interests including: American Lung Association, Massachusetts Secretary of Energy and Environmental Affairs, The American Public Health Association, League of Conservation Voters, Sierra Club, and Penn Environment.

    There were few releases commenting on the CSAPR from major industry associations. The National Association of Manufacturers (NAM) indicated in a posting on its "Shopfloor" blog that, ". . .EPA continued their aggressive regulatory agenda  and announced the first of two rules affecting power plants that will significantly increase electricity prices for manufacturers and consumers. . . In addition, the EPA plans to finalize the Utility MACT rule in November, which would require coal-fired power plants to reduce mercury emissions. The combination of CSAPR, Utility MACT and other regulations impacting coal-fired utilities are already having a significant impact on the economy. . . Higher energy prices heighten uncertainty and prevent manufacturers from investing in the future and expanding their operations, inhibiting the job creating necessary to get our economy back on track. Manufacturers urge the EPA to end these unreasonable, overreaching regulations. . ."

    Access a release from Rep. Upton (click here). Access a release from Sen. Inhofe (click here). Access a release from Sen. Manchin (click here). Access a release from Sen. Boxer (click here). Access a release from Sen. Carper (click here). Access a release from EDF (click here). Access the summary of supporting comments from EPA (click here). Access the NAM blog posting (click here). Access a release from EPA on the CSAPR (click here). Access a CSAPR fact sheet (click here). Access a prepublication copy of the 1,323 final rule (click here). Access a 33-page presentation on the CSAPR (click here). Access the Regulatory Impact Analysis for the Final CSAPR (click here). Access more information on CSAPR (click here). [*Air]