Coburn forces vote on repealing VEETC, tariff effective June 30

By Holly Jessen | June 10, 2011

The U.S. Senate will vote June 14 on an amendment that, if passed into law, would repeal the 45-cent Volumetric Ethanol Excise Tax Credit and the 54-cent tariff as of June 30.

Sen. Tom Coburn, R-Okla., introduced the amendment to the Economic Development Revitalization Act of 2011, a bill to reauthorize investments in infrastructure in economically distressed communities. He had the votes of 16 Republican senators, enough to vote for cloture, which limits consideration of a bill to 30 additional hours of debate.

This is not Coburn’s first attack on the blenders credit—he has introduced and withdrawn similar amendments before. In May he spoke out against a Senate Finance Committee hearing on repealing tax breaks for Big Oil, saying the effort was partisan. “Today’s hearing showed why the Senate seems incapable of producing serious solutions to our debt crisis,” he said. That effort ultimately failed.

Growth Energy called Coburn’s latest amendment a job-killing amendment that would permit countries hostile to the U.S. to continue to exert influence over the nation’s economy. "Sen. Coburn filed his legislation within 24 hours of OPEC's decision to let Americans suffer through high gas prices this summer,” said CEO Tom Buis. “[He] clearly doesn't see the danger of letting Iran, Venezuela and Libya control our economy, but there are other senators who do. Domestic ethanol is the only viable alternative we have to foreign oil.”

The Renewable Fuels Association called the amendment “political gamesmanship” and “oil-patch politics,” adding that few observers give the bill a chance to get to the President’s desk. Coburn is the recipient of hundreds of thousands in donations from the oil and gas industries, RFA noted. In fact, the senator received a total of more than $500,000 in donations from oil and gas from 1994 through 2010, putting that industry in the No. 3 spot within his top five contributors, according to “If this were truly about sound policy and concerns over energy tax subsidies, then this amendment would include efforts to repeal the billions of taxpayer dollars oil and other mature energy industries receive each year while posting tens of billions of dollars in profits quarterly,” said RFA President and CEO Bob Dinneen.

The RFA encouraged Coburn to work with the ethanol industry on legislation that would allow for continued growth of the industry and not push it off a cliff. "Ethanol is the only alternative to imported oil available today and the only technology keeping money out of bank accounts in Caracas and Tehran,” Dinneen said. “Pulling the rug out from under a still maturing industry would force consumers to pay more at the pump, do nothing to mitigate impacts of rising food prices resulting from exorbitant oil prices, and jeopardize the commercialization of promising new ethanol and biofuels technologies. This is an amendment meant with an eye toward reelection, not deficit reduction."

Sen. Chuck Grassley, R-Iowa, pointed out that America’s dependence on foreign oil is a major national security issue. An average of $84 billion yearly is spent for the U.S. military to keep oil transit routes open, he pointed out. “We’ve seen what ethanol can do, and the sky is the limit as we move to the next generation of advanced biofuels and cellulosic ethanol,” he said. “Even so, there are efforts in Congress to end the ethanol tax incentive immediately and entirely. With gas prices at record highs and the unemployment rate at 9.1 percent, that doesn’t make any sense.”

In early May, Grassley and Sen. Kent Conrad, D-N.D., introduced a bill to extend VEETC through 2013 at decreasing amounts, after which it would convert to a variable tax rate until 2016.  The bill has the support of the National Corn Growers Association, the American Coalition for Ethanol, Growth Energy, the RFA, and the Advanced Ethanol Council. “I’ve argued this year that it’s not fair or logical for Congress to debate changes to the tax incentive for ethanol in a vacuum,” Grassely said. “Biofuels are not the only form of energy that receives incentives or supportive policies from the federal government.  In fact, there are oil and gas incentives that have been permanent tax law for nearly 100 years.”

The American Coalition for Ethanol said approval of the Coburn amendment would hijack the bipartisan VEETC reform process supported by the ethanol industry. “ACE members encourage senators to vote against the Coburn amendment and support our effort to reform VEETC, promote next-generation biofuels and provide consumers with fuel choice," said ACE Executive Director Brian Jennings. "We also urge Congress to recognize that budget cuts shouldn’t disproportionately discriminate against American ethanol while leaving taxpayers on the hook for hundreds of billions of dollars of subsidies for oil companies.”