Ag leaders, RFA push for VEETC extension

By Holly Jessen | May 21, 2010
Posted May 26, 2010

In the space of a few days, a group of eight state agriculture officials and Renewable Fuels Association have each sent letters to leadership in the House and Senate, urging them to quickly extend the Volumetric Ethanol Excise Tax Credit (VEETC), also known as the blender's credit.

The credit is currently set to lapse at the end of the year. However, legislation to extend the tax credit has been introduced in both the House of Representatives and the Senate. The bills have been referred to the House Ways and Means Committee and the Senate Committee on Finance, respectively. If passed, the legislation would extend three tax incentives for ethanol and the U.S. tariff on imported ethanol through 2015. "As representatives of rural America, we strongly urge you to support the extension of these important policies that allow us to successfully produce domestic fuel," the letter from the ag leaders stated. "America's farmers stand ready to continue their role as providers of food, feed, fiber and renewable fuel as well."

The letter from ag officials pointed to a University of Missouri study that found that letting the tariff lapse would mean lost jobs and a decline economic activity. In addition, the ag officials said, the industry is developing technology for greater ethanol production efficiency. "Just this past year, American farmers harvested a record 13.2 billion bushels of corn on 7 million fewer acres than were needed to produce the previous record crop," the state officials said. "In addition ... cellulosic ethanol production will allow corn stalks to join dedicated energy crops, such as switch grass, to increase domestic supplies and provide new economic opportunities in rural America."

Letters signed by state ag officials from North Dakota, Iowa, South Dakota, Ohio, Illinois, Missouri, Wisconsin and Nebraska were sent to Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, Speaker of the House Nancy Pelosi and House Minority Leader John Boehner. "All present and future benefits of ethanol are in jeopardy if this tax credit and related policies are not maintained," said Doug Goehring, North Dakota agricultural commissioner, one of those that signed the letter. "Failure to continue these important tax policies would make us even more dependent on foreign energy sources."

RFA's letter went to Rep. Sander M. Levin, chairman of the House Ways and Means Committee and Rep. David L. Camp, a ranking member of the same committee. The second letter went to Sen. Max Baucus, the chairman of the Senate Committee on Finance. Both letters urged lawmakers to attach the VEETC extension to the relevant legislation. "By providing a value added market for farmers, the U.S. ethanol industry is an unrivaled engine for job creation and economic opportunity throughout our nation's beleaguered rural economy," wrote Bob Dinneen, president of RFA.

He pointed to an Osage Bio Energy ethanol plant under construction in Hopewell, Va., as evidence. A total of 1,200 applications poured in for 43 open positions at that plant. The company focused on hiring military veterans and those that had recently become unemployed. "Such benefits are not limited to areas of the country proficient in grain production," Dinneen said. "As the use of advanced and cellulosic feedstocks for ethanol expands under the Renewable Fuels Standard, the industry and its resulting green job creation and economic stimulus is expected to diversify geographically and expand throughout the entire country."

H.R. 4940, introduced by Reps. Earl Pomeroy (D-ND) and John Shimkus (R-IL) has 41 original cosponsors. Identical legislation has been introduced in the Senate by Finance Committee Ranking Member Sen. Charles Grassley (R-IA) and Budget Committee Chairman Sen. Kent Conrad (D-ND). That bill has nine cosponsors to date.