[Congressional Record Volume 157, Number 84 (Monday, June 13, 2011)]
[Senate]
[Pages S3732-S3734]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THUNE (for himself, Ms. Klobuchar, Mr. Grassley, Mr. 
        Johanns, Mr. Hoeven, Mr. Franken, Mr. Moran, Mr. Lugar, Mr. 
        Nelson of Nebraska, Mr. Harkin, Mr. Johnson of South Dakota, 
        Mr. Kirk, Mr. Coats, Mr. Durbin, and Mrs. McCaskill):
  S. 1185. A bill to amend the Internal Revenue Code of 1986 to provide 
for a variable VEETC rate based on the price of crude oil, and for 
other purposes; to the Committee on Finance.
  Ms. KLOBUCHAR. Mr. President, I first wish to thank my colleague from 
Minnesota who spoke before me for his strong words. Also, I am here 
with the Senator from South Dakota, Mr. Thune, to speak about the 
legislation we are introducing today, along with several other 
Senators, to find a good way to handle this--not the way it thus far 
has been handled.
  My colleague from Minnesota talked about Senator Coburn's amendment, 
which we will be voting on tomorrow. I urge my colleagues to oppose 
this amendment. First of all, I believe we need to invest in homegrown 
energy. The Coburn amendment would abruptly eliminate the VEETC--the 
Volumetric Ethanol Excise Tax Credit--without any kind of a glidepath 
during this year. Consequently, the 450,000 people who are directly or 
indirectly employed in this industry--when we think about all of the 
jobs we work on every single day, just because jobs are in States that 
maybe some people don't live in, including North Dakota, South Dakota, 
Minnesota, and Iowa, these are very important jobs throughout the 
country.
  The other piece of this I think we can't neglect is the effect this 
would have on gas prices. That being said, both Senator Thune and I 
understand this is a situation that needs to change. We are in a 
difficult budget situation in the Senate, and that is why we are 
introducing legislation today and working with stakeholders and Members 
from both sides of the aisle to find a reasonable solution that offers 
a responsible and cost-effective approach to reforming our biofuels 
policy.
  This bill would transition to a more sustainable model of support for 
renewable fuel production in America instead of pulling the rug out 
from under an industry, with 4 days' notice, that employs hundreds of 
thousands of people in this country, as well as provides an alternative 
to oil. Senator Thune is here, and maybe he wishes to address this a 
bit. We will go back and forth.
  But I think one thing people need to understand is that this biofuels 
industry has become a major component of our fuel supply. One statistic 
is that the gasoline that is made from the oil we import from Canada--
people know Canada is our biggest trading partner for oil. We literally 
produce as much biofuels as we produce gas from the oil we import from 
Canada, so it is a major part of our fuel supply. So we shouldn't just 
decide with 4 days' notice to change the rules of the game. In fact, as 
a recent vote showed us, oil is keeping every single cent of its 
subsidy.
  Senator Thune and I have a bill which basically gives away the 
subsidies for the rest of the year that the biofuels industry has and 
puts $1 billion toward deficit reduction--$1 billion toward deficit 
reduction--as well as making some investment with the remaining money 
in the infrastructure that this industry needs to be able to compete on 
any kind of an even playing field with oil.
  So I know Senator Thune has some thoughts on this as well, and I 
would like to come back and talk a little bit about what has been going 
on with oil versus ethanol in this country. But I think it is important 
to understand the

[[Page S3733]]

bill we are introducing today could be a major help with $1 billion in 
deficit reduction.
  Mr. THUNE. Mr. President, if I might just say to my colleague from 
Minnesota, I appreciate her good work and advocacy on this subject. 
This is something we have been working on for some time, along with 
some of our colleagues on both sides of the aisle, for a lot of 
reasons; one of which, of course, is because, as the Senator from 
Minnesota mentioned, these are difficult fiscal times.
  Obviously, every area in our budget needs to be reviewed and 
scrutinized and looked at to see where we might be able to achieve some 
savings. But, as my colleague noted, there is a right way and a wrong 
way to do this. The way that has been proposed in the amendment that 
was offered, and on which the cloture vote will occur tomorrow, is the 
wrong way. We cannot tell an industry in December we are going to give 
them a set of policies that are going to be in effect for the year, 
that they are going to be able to make investment decisions, they are 
going to be able to go to their lenders, they are going to be able to 
go secure financing based upon this set of policies--we do that around 
here all the time. We make policy, and we try to do it in a way, 
hopefully, that gives those who are investing their dollars some 
certainty about what those policies are going to be. Well, how can we 
then, in the middle of the year, come back and say we are just going to 
pull the rug right out from under them? We are sorry, that is just the 
way it is. This is gone.
  Well, frankly, there is a much better way to go about doing this, and 
what the Senator from Minnesota and I have proposed does just that and, 
in my view, does this in a responsible, measured, thoughtful, 
reasonable way. We get to the same ultimate result, which is that for 
those who are really interested in doing away with the volumetric 
ethanol excise tax credit, it does phase it out, but it does it in a 
way that does not create disruption and harm and allows people to plan 
for the future. It also invests some of those resources in areas that 
are important to the future of that industry; namely, blender pumps, 
which is the one thing that does not exist out there today, at least 
not in any great numbers. If those pumps were more available, I believe 
we would see a lot higher usage of the fuel than we already have seen. 
But we already know it is 10 percent of our fuel supply.
  Whether the opponents of this like it or not--and I know they do 
not--there are 13 billion gallons of ethanol produced in this country. 
At least that is what it was in 2010. We assume it will be that number, 
maybe a little higher, this year. That displaces 445 million barrels of 
imported crude oil. That is 55 million barrels more than the total 
crude oil imports from Saudi Arabia last year.
  Now, think about that: a fuel that is produced from a kernel of corn 
now displaces more than the entire imports of Saudi foreign oil into 
this country. That is what we ought to be looking at. We ought to be 
looking at more ways to produce domestic energy, home-grown energy, 
adding that to our fuel supply rather than taking it out.
  What the amendment our colleagues are trying to get a vote on 
tomorrow would do is basically to say to this industry: Yes, we are 
going to take away this particular tax incentive, and we are going to 
do it right in the middle of the year. We are going to do it, and we do 
not like this industry--which is probably what animates a lot of the 
opposition to this because if people look at the facts, if they look at 
the contribution that biofuels have made to our fuel supply in this 
country, it is significant.
  Ten percent of our entire fuel now is biofuels. In fact, if we look 
at the other byproduct of biofuels--once we take the starch out of that 
kernel of corn and convert it into liquid form, we can get, for every 
bushel of corn, almost 3 gallons of ethanol. But we also get dry 
distillers grain, which is something that has been used extensively now 
for feed for livestock.
  So if we take 5 billion bushels of corn, for example, that are used 
for ethanol production in any given year, the feed product equivalent 
is about 1.7 billion bushels of corn that is returned to the livestock 
food chain as this ethanol byproduct called dry distillers grain. So we 
are adding additional protein that is fed to livestock in addition to 
the almost 3 gallons of ethanol we get from every single bushel of 
corn.
  So I do believe there is an approach that makes sense. What the 
Senator from Minnesota and I and many of our colleagues on both sides 
have come together around is a way in which we can move forward, and do 
it in a way that not only makes it reasonable for the industry to plan 
for the future but also in a way that returns dollars to the Treasury 
of this country because there is $1 billion in here for debt 
retirement. I think that is something the industry recognizes, we all 
recognize, and we need to address. It is addressed as part of this 
bill.
  So I appreciate the good work of the Senator from Minnesota in 
working with me, along with other colleagues of ours, to introduce the 
bill we introduce today.
  Ms. KLOBUCHAR. Mr. President, if I may continue, I thank Senator 
Thune for his work.
  One point I think he made that is incredibly important: I think not 
all of our colleagues understand that the way it is under the current 
rules is VEETC, which has been in place to make sure we have an 
alternative to oil in this country, ends at the end of this year. The 
one piece of it that continues for another year is the cellulosic 
research, the cellulosic credit. But the rest of it ends at the end of 
this year.
  So instead of looking at a glidepath, as suggested in our bill, where 
we could take $1 billion and put it into deficit reduction, and take 
another $1 billion or so--which would be going right now as a credit--
and put that into the infrastructure, the alternative that is suggested 
by the amendment offered by our colleague from Oklahoma is just to cut 
it off today, basically, with a few days' notice.
  What I have heard time and time again from businesses--whether it is 
in the energy area or in the medical device area--is they want 
certainty. They do not want Washington just coming in with one day's 
notice and changing things. That is why I ask my colleagues to look at 
this bill as an alternative. We are glad to discuss details with them.
  One of the things we have tried to do with this bill is to 
acknowledge the emerging field of cellulosic with algae and other forms 
of research into biofuels. That would continue into next year. But, 
basically, the proposal Senator Thune and I have put forward would end 
VEETC as we know it.
  We look at the comparisons here. Over the last few decades more than 
$360 billion worth of subsidies have gone to the oil companies. That is 
nearly 10 times greater than the investments we have made in home-grown 
biofuels. Now they are set up in a different way, but those are the 
numbers. We have to remember the jobs with biofuels are jobs that are 
made in America. We are basically investing in the farmers and the 
workers of the Midwest instead of the oil cartels in the Mideast.
  I have seen the boom in oil drilling in North Dakota. That has been a 
good thing. So I am not just a one-size fuel person. But I think to 
disrupt an industry like this, with no notice, is the wrong way to go. 
I hope our colleagues will look at our bill seriously, talk to us about 
this, think about the gas prices which have now topped $3.75 per 
gallon. While they are high now, look at the fact that the Chicago 
Tribune looked at the fact that if we ceased to produce the 13 billion 
gallons of ethanol we make every year, as Senator Thune has pointed 
out, it would drive up prices at the pump by as much as $1.40 per 
gallon. I do not think that is something we can afford right now.
  We have put together a good-faith proposal that basically even those 
who have a lot of questions about biofuels right now, about ethanol, 
will have to admit is a dramatic change. It ends VEETC as we know it. 
It puts a big chunk of change, $1 billion--that otherwise would 
be going to subsidies this year, right now--toward deficit reduction 
while still allowing for that infrastructure investment, and then 
looking into next year for just some of the key pieces but severely 
changing any kind of subsidy for this industry.

  So with that, I thank Senator Thune. I do not know if the Senator has 
something else to add.

[[Page S3734]]

  Mr. THUNE. Mr. President, if I might add one point.
  I think the Senator from Minnesota did point out that there are a 
significant number of jobs that are associated with this industry--in 
fact, one-half million jobs. They are American jobs. They are jobs in 
the heartland of this country. They are jobs that help grow the 
economy, make it more prosperous. It strikes me, at least, that what we 
ought to be looking at is more jobs in this country and less investment 
in foreign regimes, where we get a lot of our energy today.
  Mr. President, $1 billion a day is what we send outside the United 
States because of our addiction to foreign oil. We have a dangerous 
dependence upon foreign energy, and we have a fuel that, as I said, 
displaces 445 million barrels of oil every single year--more than we 
import from Saudi Arabia. That is a pretty remarkable number when you 
think about it.
  We had a debate here a few weeks ago on the floor of the Senate about 
whether we ought to change tax policy with regard to oil companies. The 
decision was reached that we should not do that; that it would be 
punitive, directed at oil companies. We decided, too, that it would 
raise taxes on gas for people in this country.
  I would make the same argument today. We are talking about a tax 
increase--a large tax increase--which we know is going to get passed 
on. So we are talking about raising taxes on consumers at a time when 
they can least afford it.
  We have today 3\1/2\ to $4-a-gallon gasoline. The last thing 
consumers in this country need is something that would actually push 
that gas price higher. In fact, if we did away with biofuels 
altogether--which some people would like to do--there was a study out 
last year, in 2010, that said the price per gallon of gasoline would go 
up by 89 cents a gallon. So we have a proposal here that would have an 
adverse impact on energy prices, fuel prices for people in this 
country, which, frankly, again, because of the commitment that was made 
last December, strikes at the very heart of economic certainty, which 
so many of us come down here and talk about: the importance of having 
policies in place that are reliable, that people who are investing in 
particular areas of our economy can know they are going to be there, at 
least when Congress makes a commitment.
  This completely undermines the commitment Congress made back in 
December that this particular tax credit would be in place until the 
end of the year. So what the Senator from Minnesota and I have done is 
propose a path forward that we believe makes sense and that is a 
thoughtful, measured, reasonable, responsible way in which to get to 
the goal that many of the proponents of the amendment that will be 
voted on tomorrow want to get to; that is, to phase down the volumetric 
ethanol excise tax credit. But it does it in a way that makes sense for 
American consumers and those who have investments in the industry 
today.
  So I hope my colleagues will take a look at this legislation. We 
think we can get it moving this year. It does, as was noted by my 
colleague from Minnesota, put a significant amount toward reducing the 
debt, which I think is something all of our colleagues are very 
interested in doing. So we will present this legislation, obviously, to 
our colleagues and hope there will be many who will choose to support 
it.
  Mr. President, I yield the floor back to the Senator from Minnesota.
  Ms. KLOBUCHAR. Mr. President, again, we just hope our colleagues will 
look at this bill. It is a serious bill and very different than other 
bills that have been proposed in the past, and it actually takes 
existing money that was set out for the end of this year and puts a big 
number--$1 billion--into debt reduction.

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