Fast food chains place order for no new ethanol subsidies

By Kris Bevill | September 16, 2011

Anti-ethanol interests have launched their latest campaign focused on ensuring the demise of ethanol subsidies with a letter sent Sept. 15 to all members of Congress urging them not to pass any last-minute extensions to the Volumetric Ethanol Excise Tax Credit program or the ethanol import tariff. They also asked them not to approve any replacement programs that might allow for infrastructure expansion or other tax credits.

“Our interest in this issue is due to the high food commodity costs facing all consumers and all channels of the food service industry, including food retailers such as chain restaurants,” members of the National Council of Chain Restaurants stated in the letter, adding, “We are concerned that the narrow interests of a single industry will again seek to extend these taxpayer subsidies, as has been done in recent years, or that they will seek to create new subsidies and support to build out an infrastructure for an older, food-based, conventional ethanol fuel at the expense of both the taxpayers and the more-promising next generation of advanced, non-food-based biofuels.”

The letter was sent to every member of the House of Representatives and Senate, but was targeted specifically toward the 12 members of the Joint Select Committee on Deficit Reduction, dubbed the super committee, as they begin their task of identifying more than $1 trillion in budget cuts over the next 10 years by Nov. 23. Congress is then expected to vote on the super committee’s budget cut plan by Dec. 23. The NCCR claimed in its letter that repealing VEETC will help the super committee meet its reduction goal in addition to being “sound public policy.”

Representatives of the ethanol industry said the NCCR’s letter was essentially too late, considering there is very little doubt that VEETC will be allowed to expire on Dec. 31. In fact, as Growth Energy spokeswoman Stephanie Dreyer pointed out, the ethanol industry overall supports the end of VEETC.  “If these companies were paying any attention at all, they would know that the ethanol industry has already come together to support the end of the tax credit as we know it today,” she said. “The super committee should not be fooled by this sob story; the only thing these companies want is cheap commodities, which come at the expense of our nation’s farmers and tax payers.”

Matt Hartwig, communications director for the RFA, said the NCCR’s claim that eliminating VEETC will help reduce the deficit is a flawed argument, considering it will expire anyway, and said the letter demonstrates a lack of understanding about Congress and the tax incentive. “Given the Dec. 23 deadline for the super committee proposal to pass Congress, there would be less than $100 million available in savings for the one week remaining,” he said. “These crocodile tears from corporate livestock, food processors, environmental groups, and now fast food restaurants, are nothing more than a distraction and the super committee would be wise to disregard their naïve pleas to end the tax credit before its scheduled expiration.”

During a webinar held Sept. 13, members of Washington D.C.-based law firm Van Ness Feldman’s public policy team offered their predictions for the super committee’s scrutiny of energy tax provisions and concluded that many energy provisions, specifically petroleum subsidies, could be cut but stressed that it was too early to tell what would happen to specific programs. Lisa Epifani, a partner in the firm, said she does not expect any last-minute changes to VEETC’s scheduled expiration and said that it would likely also be difficult to attempt to include an ethanol tax credit in any appropriations bill as a replacement. Considering the high amount of cuts to be made, the super committee clearly needs to entertain the notion of eliminating many programs. Epifani said super committee members emphasized repeatedly during their first meeting that their efforts to reduce the deficit would be directly connected to job growth. Therefore, stakeholders should emphasize a specific program’s ability to retain and create jobs when they lobby committee members and Congress to maintain it, she said. “It is imperative for stakeholders to be armed with quantitative evidence about why tax provision ‘x’ or why a [U.S.] DOE program helps maintain or, more importantly, creates jobs,” she said.