[Congressional Record (Bound Edition), Volume 148 (2002), Part 4]
[Senate]
[Pages 4372-4381]
[From the U.S. Government Publishing Office, www.gpo.gov]




       NATIONAL LABORATORIES PARTNERSHIP IMPROVEMENT ACT OF 2001

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will now resume consideration of S. 517, which the clerk will 
report.
  The assistant legislative clerk read as follows:

       A bill (S. 517) to authorize funding the Department of 
     Energy to enhance its mission areas through technology 
     transfer and partnerships for fiscal years 2002 and 2006, and 
     for other purposes.

  Pending:

       Daschle/Bingaman further modified amendment No. 2917, in 
     the nature of a substitute.
       Kerry/McCain amendment No. 2999 (to amendment No. 2917), to 
     provide for increased average fuel economy standards for 
     passenger automobiles and light trucks.
       Dayton/Grassley amendment No. 3008 (to amendment No. 2917), 
     to require that Federal agencies use ethanol-blended gasoline 
     and biodiesel-blended diesel fuel in areas in which ethanol-
     blended gasoline and biodiesel-blended diesel fuel are 
     available.
       Lott amendment No. 3028 (to amendment No. 2917), to provide 
     for the fair treatment of Presidential judicial nominees.
       Landrieu/Kyl amendment No. 3050 (to amendment No. 2917), to 
     increase the transfer capability of electric energy 
     transmission systems through participant-funded investment.
       Graham amendment No. 3070 (to amendment No. 2917), to 
     clarify the provisions relating to the Renewable Portfolio 
     Standard.
       Schumer/Clinton amendment No. 3093 (to amendment No. 2917), 
     to prohibit oil and gas drilling activity in Finger Lakes 
     National Forest, New York.
       Durbin amendment No. 3094 (to amendment No. 2917), to 
     establish a Consumer Energy Commission to assess and provide 
     recommendations regarding energy price spikes from the 
     perspective of consumers.
       Dayton amendment No. 3097 (to amendment No. 2917), to 
     require additional findings for FERC approval of an electric 
     utility merger.


                Amendment No. 3114 To Amendment No. 2917

  Mrs. FEINSTEIN. Mr. President, I rise today to open the debate on the 
so-called renewable fuels or ethanol mandate in the Senate energy bill. 
I strongly believe the fuel provisions in this

[[Page 4373]]

legislation are egregious public policy, that they amount to a wish 
list for the ethanol industry, and the Senate has to consider the 
impact of these provisions on the rest of the Nation.
  Frankly, I believe it is terrible public policy. Frankly, I believe 
this amounts to a wealth transfer of literally billions of dollars from 
every State in the Nation to a handful of ethanol producers. Frankly, I 
believe this mandate amounts to a new gas tax in the Nation.
  Here are my objections to the renewable fuels requirement in the 
Senate energy bill: First, despite limited clean air benefits, the 
mandate will almost triple the amount of ethanol in our Nation's fuel.
  Second, even if States do not use this ethanol, they are required--
forced--to pay for it anyway.
  Third, forcing more ethanol into gasoline will only drive prices up 
at the pump.
  Fourth, since over 98 percent of the production capacity of ethanol 
is based in the Midwest, it is extremely difficult to transport large 
amounts of ethanol to States where it is not produced.
  Fifth, I am very concerned the limited number of ethanol suppliers in 
the United States will be able to exercise their market power and drive 
up price. This is exactly what happened last year in the West when 
electricity and natural gas prices soared due to supply manipulation by 
out-of-State energy companies.
  Sixth, there may not be enough ethanol produced in the United States 
to meet future demand.
  Seventh, almost tripling the amount of ethanol we produce raises 
serious health and environmental questions. Tripling it is a big step 
into the unknown, environmentally and health-wise. I hope to show this 
in my remarks.
  Finally, because ethanol is subsidized, mandating more of it will 
divert money from the highway trust fund. What I mean by this is there 
is a 5.4-cent-per-gallon tax credit for ethanol that will continue to 
divert more and more resources to ethanol instead of the highway trust 
fund where every State gets its essential resources to reduce traffic 
congestion and improve the safety of roads and bridges.
  Let me explain each objection, one at a time. Let me begin by talking 
about my concerns with mandating more ethanol than is needed. This bill 
forces California, my State, to use 2.68 billion gallons of ethanol 
over the 9 years it does not need to meet clean air standards.
  Look at this chart. The red is the amount of ethanol California will 
be forced to use from 2004 to 2012 under the mandate in the Senate 
energy bill. The blue is the amount of ethanol we would use without the 
mandate, largely in the winter months in the southern California 
market.
  Here you see, to meet clean air standards, by 2004, we will be forced 
to use 126 million gallons. This bill forces us to use 276 million 
gallons in 2004 and it forces us to use 312 million gallons in 2005 and 
it ratchets up every year until we are forced to use, by the end of 
this mandate, 600 million gallons of ethanol in 2012 when we only need 
to use 143 million gallons to meet clean air standards.
  What kind of public policy would do that? What kind of public policy 
would require a State to use a dramatic amount more of ethanol, an 
untested health and environmental additive to gasoline, that it doesn't 
really need? Is that good public policy? I do not think it is.
  What makes it even more egregious--and the reason I use the word 
``egregious'' is if we do not use it, if we trade it, we are forced to 
pay for it anyway. That is the massive transfer of wealth that takes 
place under this amount. No one knows how much more consumers will be 
forced to pay, but a recent study by the Department of Energy indicates 
that prices will increase 4 to 10 cents a gallon across the United 
States if this ethanol mandate becomes law.
  A study sponsored by the California Energy Commission indicates that 
in a State such as California, where ethanol is not produced, gas 
prices could double and even reach $4 per gallon. This chart shows the 
real hazard this mandate is on both coasts. In California, where it is 
estimated the price increase is .096 cents per gallon. Then in other 
states: Connecticut, it will increase the price of gasoline 9 cents a 
gallon; Delaware, 9 cents a gallon; New Hampshire, 8 cents a gallon; 
New Jersey, 9 cents a gallon; New York, 7 cents a gallon; Pennsylvania, 
5 cents a gallon; Rhode Island, 9 cents a gallon; Virginia, 7 cents a 
gallon; Massachusetts, 9 cents a gallon; Missouri, 5 cents a gallon--
and on and on and on. This is bad public policy.
  California does not have the infrastructure in place to be able to 
transport large amounts of ethanol into the State, therefore any 
shortfall of supply--either because of manipulation or raw market 
forces--will be exacerbated because the State will be reliant on 
ethanol from another area of the United States.
  According to a recent report issued by the GAO, over 98 percent of 
the U.S. ethanol production capacity is located in the Midwest. Here it 
is: In the West, 10 million gallons--that is all we produce; in the 
Rocky Mountain region, 12 million gallons; the South, here, 15 million 
gallons; and the east coast, 4 million gallons.
  In the Midwest, which is the big beneficiary of this ethanol 
mandate--nobody should doubt that--they produce 2.27 billion gallons of 
ethanol. So the ethanol is all produced in the Midwest.
  There is only one ethanol plant in California today, so it is going 
to be impossible for California to respond to any ethanol shortage. As 
the GAO reports:

       Ethanol imports from other regions are vital. However, any 
     potential price spike could be exacerbated if it takes too 
     long for supplies from out-of-State (primarily the Midwest 
     where virtually all the production capacity is located) to 
     make their way to California.

  Since there is no quick or effective way to send ethanol to 
California as of yet, more time is needed to develop the proper ethanol 
delivery infrastructure. One of the amendments I will be sending to the 
desk essentially delays the beginning of this by an additional year to 
give us the time to get the infrastructure.
  This is why it is important. Because moisture causes ethanol to 
separate from gasoline, this fuel additive cannot be shipped through 
traditional gasoline pipelines. So it needs a whole new infrastructure. 
Ethanol needs to be transported separately by truck, by boat, and by 
rail, and blended into gasoline after arrival. Unfortunately, this 
makes the 1- to 3-week delivery time from the Midwest to either coast--
either to California and the west coast, or to the east coast--
dependent upon good weather conditions as well as available ship, 
truck, and train equipped to handle large amounts of ethanol. Again, 
this is a tripling of the ethanol use in America over the next 9 years.
  I believe everyone outside of the Midwest will have to grapple with 
how to bring ethanol to their States. According to the California 
Energy Commission:

       The adequacy of logistics to deliver large volumes of 
     ethanol to California on a consistent basis--

  This is the key. Gasoline is sold every day. You can't just import it 
once and then forget it for 3 weeks. Every single day on a consistent 
basis is uncertain.
  A recent report sponsored by the same energy commission predicts that 
there will be future logistical problems since the gasoline supply is 
currently constrained with demand exceeding the existing infrastructure 
capacity.
  This means that California is already at its refining capacity. It is 
actually at about 98 percent of refining capacity. If there is 
insufficient transportation infrastructure to ship large amounts, this 
just makes the problem worse.
  I don't see any way for California to avoid experiencing a new energy 
crisis. This one would be a direct result of an unnecessary Federal 
requirement that increases our mandatory use of ethanol far beyond what 
we need to use to meet the clean air standard.
  The fact that there are limited numbers of suppliers in the ethanol 
market

[[Page 4374]]

reminds me of the situation with electricity a year ago when prices 
soared in the West because of a few out-of-State generating firms 
dominating the market. What do I mean by that?
  According to the GAO, the largest ethanol producer is Archer Daniels 
Midland. That is this company. They have a 41-percent share of the 
ethanol market. The entire ethanol market really consists of these 
companies: Minnesota Corn Producers, 6 percent; Williams Bio-Energy, 6 
percent; Cargill, 5 percent; High Plains Corporation, 4 percent; New 
Energy Corporation, 4 percent; Midwest Grain, 3 percent; and, Chief 
Ethanol, 3 percent.
  These eight companies corner the market on ethanol. There is a market 
concentration of ethanol. That is a danger signal for all of us--a 
concentrated market, and a huge mandate that triples.
  ADM has a 41-percent market share. The top eight firms have a 71-
percent market share. The GAO finds their market share to be ``highly 
concentrated.''
  How can those in the West who suffered last year believe these firms 
will not abuse their market power to drive prices up? If we learned 
anything from the energy crisis last year, it is that when there is not 
an ample supply or adequate competition in the marketplace, prices will 
soar, and consumers will pay.
  Mr. President, I ask unanimous consent to have printed in the Record 
an op-ed by Peter Schrag that appeared in the Sacramento Bee on January 
30.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Sacramento Bee, Jan. 30, 2002]

               Can California Avoid the Next Energy Mess?

                           (By Peter Schrag)

       The two sets of terms aren't corollaries, but close enough. 
     The Bush administration has ruled that without an 
     ``oxygenate'' additive such as ethanol or MTBE, now being 
     phased out because of water pollution problems, California 
     gasoline won't burn cleanly enough to meet air-quality 
     standards. It thus won't give the state a waiver from the 
     federal requirement. But as a leading environmentalist says, 
     the decision is based a lot more on political science than 
     science. And it could cost California motorists close to a 
     half-billion a year.
       And that's where ADM comes in. The monster agribusiness 
     company, which calls itself supermarket to the world, markets 
     about half the ethanol produced in this country. ADM's 
     contributions to politicians of both parties--some $4.5 
     million in the 1990s, plus some $930,000 in soft money in the 
     2000 election cycle alone, including $100,000 for the Bush 
     inauguration last year--put it ahead of Enron on many lists 
     of political-influence peddlers.
       The investment, bolstered by intensive lobbying from 
     Midwest farmers, is paying off handsomely. The president says 
     that ethanol, a ``renewable'' fuel that comes mostly from 
     corn, not only reduces emissions but also fosters energy 
     independence.
       The claim is dubious. Many studies indicate that ethanol, 
     while reducing carbon monoxide emissions, increases the 
     emission of smog-producing and other toxic compounds. A 1999 
     report commissioned by the U.S. Environmental Protection 
     Agency itself called for an end to the requirement. That, the 
     panel said, ``will result in greater flexibility to maintain 
     and enhance emission reductions, particularly as California 
     pursues new formulation requirements for gasoline.
       The Sierra Club, the Natural Resources Defense Council, the 
     Clean Air Trust and other environmental groups echo the 
     findings. But Washington hasn't paid much attention. Despite 
     evidence that ethanol has contributed nothing to energy 
     independence, every gallon of gas with ethanol gets a 5.4-
     cent federal subsidy (without costs $600 million a year in 
     federal highway funds). And as MTBE is being phased out--in 
     California, Gov. Gray Davis has set Jan. 1, 2003, as the 
     deadline--ADM and other ethanol producers stand to gain 
     handsomely.
       Davis has lobbied vigorously for a waiver of the ethanol 
     requirement, arguing, with considerable evidence, that 
     California's auto and fuel standards will achieve the same or 
     even better results without ethanol. He's also suing the 
     federal EPA.
       According to a North American Free Trade Agreement claim by 
     Methanex Corp., a Canadian producer of MTBE, Davis himself 
     got $200,000 from ADM during the 1998 gubernatorial campaign 
     and allegedly was flown to ADM headquarters in Decatur, Ill., 
     to meet with company officials. MTBE didn't have to be phased 
     out, Methanex says; the problem is not the compound but the 
     flawed underground tanks from which it leaks. Davis' phaseout 
     order, says the claim, suggests still more influence 
     peddling.
       But in this case, ADM's investment hasn't paid off. There's 
     been overwhelming pressure in California, as elsewhere, to 
     get MTBE out of gasoline as quickly as possible. Davis is not 
     doing ADM's bidding; he's trying to straddle a line between 
     cleaner water and higher gas prices. Chances are he'll extend 
     the MTBE phaseout and try to negotiate with Congress for (at 
     least) more flexibility on ethanol.
       Unlike Enron, ADM is not likely to implode; there's no sign 
     of accounting shenanigans, no ``partners'' where red ink can 
     be hidden. But six years ago, ADM was forced to pay $100 
     million in what was then the largest price-fixing fine ever 
     imposed. In 1998, three of its senior executives, including 
     Chief Operating Officer Michael Andreas, son of former board 
     chairman Wayne Andreas, were sentenced to prison.
       The case, said a federal appeals court, reflects ``an 
     inexplicable lack of business ethics and an atmosphere of 
     general lawlessness. . . . Top executives at ADM and its 
     Asian co-conspirators . . . spied on each other, fabricated 
     aliases and front organizations to hide their activities, 
     hired prostitutes to gather information from competitors, 
     lied, cheated, embezzled, extorted and obstructed justice.'' 
     These are not the kind of guys you want to depend on when you 
     fill your tank.
       California's gasoline situation will probably never become 
     the crisis that electricity was last year--and in this case, 
     no one can blame the state or its politicians. But if 
     something doesn't give before the end of the year, the state 
     will not only be paying for ethanol it doesn't need, but also 
     be subject to sudden supply shortages.
       California may be able to produce some of its own ethanol, 
     but most will have to come from the Midwest, either by ship 
     (down the Mississippi, which sometimes freezes) or by train. 
     Without a federal waiver, every gallon of ethanol not 
     available at the refinery means a shortage of 14 gallons of 
     gas. If ever there was a price-spike formula, this one is it.
       Last week, California's Republican gubernatorial candidates 
     once again rehashed last year's energy crisis. Somebody ought 
     to start asking what they'd do about the next one.

  Mrs. FEINSTEIN. Mr. President, in this article, Schrag mentions:

       Now that ``energy crisis'' and Enron have become household 
     words, Californians had better get familiar with ethanol and 
     Archer Daniels Midland.

  ADM is already an admitted price-fixing firm. Three of its executives 
have served prison time for colluding with competitors.
  In 1996, ADM pled guilty and paid a $100 million fine for conspiring 
to set the price of an animal feed additive. That is the company that 
has a 41-percent share of ethanol.
  The ethanol industry tells us they will be able to produce enough 
ethanol to meet future demands under this mandate. But what if some of 
the planned ethanol plants fail to be built? This is a key point. 
Plants could be delayed, or not coming online at all. We are finding 
this with the electricity-generation facilities right now in 
California. Plants that said they were going to come in, because of the 
economy, or because of their own financial conditions, or one thing or 
another, have decided no--they are not really going to go ahead with 
it. What is to preclude that same thing from happening with respect to 
ethanol? The answer to the question is nothing precludes it.
  The GAO reports:

       Projected capacity may be lower if some plants cease 
     production, plants under construction don't come online in 
     time, or some new plants' plans do not materialize.

  The ethanol industry is asking this Nation to make a blind leap of 
faith that there will be a sufficient amount of ethanol in the future. 
In fact, projections of the future domestic ethanol supply are based 
upon numbers supplied by ethanol producers themselves. We are taking a 
very big risk here. We should know it.
  I am also particularly concerned about the long-term effect of nearly 
tripling the amount of ethanol in our gasoline supply. What effect will 
this have on our environment? What are the health risks of ethanol?
  The answers are truthfully largely unknown. That is the rub, too. I 
believe it is bad public policy to mandate an amount of ethanol that is 
way above what is required to meet clean air standards before 
scientific and health experts can fully investigate the impact of 
ethanol on the air we breathe and the water we drink.
  There was a 2-percent oxygenate requirement put in some time ago. One 
of

[[Page 4375]]

the oxygenates that was chosen was MTBE. Now we find that MTBE has 
contaminated 10,000 wells in California, the water supply for Santa 
Monica, the Santa Clara Valley reservoirs, Lake Tahoe, and a number of 
other places in California. We now find that MTBE may well be a human 
carcinogen. We learned all of this, the horse is out, and the barn door 
is shut. Now we are going to do the same thing with respect to ethanol.
  Just what are the environmental ramifications of more ethanol in our 
fuel supply?
  Although the scientific opinion is not unanimous, evidence suggests 
that, one, reformulated gasoline with ethanol produces more smog 
pollution than reformulated gas without it. We have reformulated 
gasoline. That is why we don't need to use it. The finding is that 
there is more smog pollution with ethanol than if States simply went to 
reformulated gasoline.
  Second, ethanol enables the toxic chemicals in gasoline to seep 
further into ground water and even faster than conventional gasoline.
  Ethanol is also made out to be an ideal renewable fuel, giving off 
fewer emissions. Yet on balance, ethanol can be a cause of more air 
pollution because it produces smog in the summer months. Smog is a 
powerful respiratory irritant. It affects a large amount of the 
population. It has an especially pernicious effect on the elderly, on 
children, and individuals with existing respiratory problems such as 
asthma. And asthma is going up in America. It is time we begin to ask 
why.
  A 1999 report from the National Academy of Sciences found:

       [T]he use of commonly available oxygenates [like ethanol] 
     in [Reformulated Gasoline] has little impact on improving 
     ozone air quality and has some disadvantages. Moreover, some 
     data suggests that oxygenates can lead to higher Nitrogen 
     Oxide (NOX) emissions.

  Nitrogen oxides are known to cause smog.
  The National Academy report also found that ethanol-blended gasoline 
will ``lead to increased emissions of acetaldehyde''--a toxic 
pollutant.
  Thus, ethanol is both good and bad for air quality. And we triple it. 
That is the unknown. That is the big step into the unknown we are 
taking. To me, it would make sense to maximize the advantages of 
ethanol and minimize the disadvantages. This bill, this mandate does 
not do that. This is exactly why States should have flexibility to 
decide what goes into their gasoline in order to meet clean air 
standards. Ethanol should not be mandated, certainly not at this level.
  Why are some forcing smog pollution into our air during the summer?
  Evidence also suggests that ethanol accelerates the ability of toxins 
found in gasoline to seep into our ground water supplies. The EPA Blue 
Ribbon Panel on Oxygenates found that ethanol ``may retard 
biodegradation and increase movement of benzene and other hydrocarbons 
around leaking tanks.''
  Now, benzene is a carcinogen. Just know what we are doing.
  Let me quote the EPA Blue Ribbon Panel on Oxygenates. Ethanol ``may 
retard biodegradation and increase movement of benzene and other 
hydrocarbons around leaking tanks.''
  According to a report by the State of California entitled, ``Health 
and Environmental Assessment of the Use of Ethanol as a Fuel 
Oxygenate,'' there are valid questions about the use of ethanol and its 
impact on ground and surface water. An analysis in the report found 
that there will be a 20-percent increase in public drinking water wells 
contaminated with benzene if a significant amount of ethanol is used--a 
20-percent increase in public drinking water wells contaminated with 
benzene, a known carcinogen.
  We are tripling the amount of ethanol, and we are tripling it when it 
isn't needed to meet clean air standards. What kind of public policy is 
this? It is egregious public policy. It is wrong public policy. If you 
think I am passionate about it, you are right.
  So what is the rush to force more ethanol on the American motorists 
if it will only drive up the price of gasoline and produce mixed 
environmental results?
  On top of that, how can the Senate favor protecting the ethanol 
industry from liability? And this is the clincher in this bill: They 
are protected from liability. So if you get sick from it, if it 
pollutes our wells, if benzene increases, you cannot sue. What kind of 
public policy is this?
  I urge my colleagues to look at pages 204 and 205 of the energy 
legislation where a so-called safe harbor provision gives the ethanol 
industry unprecedented protection against consumers and communities 
that may seek legal redress against the harm ethanol may cause. I am 
very pleased to say that my colleague, Senator Boxer from California, 
will have an amendment which will eliminate this safe harbor provision.
  More ethanol will force the Government to collect less gasoline tax 
revenue for the highway trust fund. This is a very big consideration. 
It is huge.
  Let me argue this point. Ethanol is exempted from 5.3 cents of the 
Federal motor fuels tax. The Congressional Research Service has 
indicated that the ethanol mandate in this bill will divert $7 billion 
over the 9 years away from the highway trust fund, which States use to 
pay for essential transportation projects. And that is on top of the 
cut that is in the Bush budget.
  So per gallon of gasoline today, 18.4 cents goes into the trust fund. 
With the tripled amount of ethanol, CRS estimates there will be a $7 
billion loss in the highway trust fund over the next 9 years--a $7 
billion loss. That is enough in itself to vote against this 
legislation.
  California is able to produce special gasoline that is the cleanest 
burning gasoline in the country today. We meet clean air standards with 
reformulated gasoline. The State only needs to use ethanol in the 
winter months to meet clean air requirements. That is why the State has 
continually asked the Federal Government for a waiver of the 2-percent 
oxygenate requirement.
  Yet time and time again, the ethanol industry has flexed its 
political muscle in the White House, in the Senate, and in the House to 
force California to use fuel additives the State does not need. This 
time is no different. And it is clear to me that all of this is merely 
serving to prop up an industry that would fall apart without 
overwhelming Government subsidy and action.
  I am very concerned about the repercussions this mandate may have on 
the price and supply of gasoline. I cannot vote for this bill with this 
mandate in it. It is bad public policy. It is egregious public policy.
  The California Energy Commission again points out:

       The combination of limited local capacity, restrained 
     imports, limited storage, and a strong demand, has caused the 
     California gasoline market to become increasingly unstable, 
     with wild price swings.

  The bottom line is that my State's gasoline market is extraordinarily 
volatile and vulnerable. And this is the fifth largest economic engine 
in the world. People have to get to work, and gasoline fuels the 
economy as well as automobiles. And we are going to do this to it?
  In 1999, fires at Tosco and Chevron refineries during the summer 
forced the price of gasoline to double in California.
  This bill will strain California's gasoline supply even further with 
a Federal ethanol mandate that risks plunging California and other 
States into the next energy crisis. Every indicator I have seen points 
to this ethanol requirement as having unanticipated side effects, such 
as supply problems and resulting in higher gasoline prices for the 
consumer.
  So by passing this legislation, the Senate will be making 
California's and the Nation's gasoline more expensive by mandating a 
fuel additive with a negative value as an energy source and a mixed 
value for the environment.
  On balance, it makes no public policy sense. I want to make clear, 
once again, my strong opposition to this greedy and misguided renewable 
fuels requirement. The mandate is a dangerous step that could force 
gasoline prices to soar, cause shortages of fuel, create more smog, and 
usher in the next energy crisis.

[[Page 4376]]

  Plain and simple, it is bad policy to charge all consumers more to 
benefit a collection of very few ethanol producers. I hope this 
commentary will begin an honest debate in the Senate about the ethanol 
provisions of the Senate energy bill and what they will really do.
  I know Senator Schumer is going to follow up on this. However, I take 
this opportunity to indicate that there will be a number of amendments 
from those of us on the west coast and those of us on the east coast. 
We intend to press this debate. We do not intend to let this bill go 
forward if we can prevent it.
  I begin with one of my first amendments. Another diabolical thing in 
this bill is essentially to state that if a waiver is provided, if a 
State asks to waive--this is on page 195 of the bill--the 
Administrator, in consultation with the Secretary of Energy, may waive 
the renewable fuels requirement in whole or in part on petition by one 
or more States by reducing the national quantity of renewable fuel 
required under this section based on a determination by EPA, after 
public notice and opportunity for comment, that implementation of the 
requirement would severely harm the economy or the environment of a 
State or a region or the United States; and that based on a 
determination by the EPA Administrator, after public notice and 
opportunity, there is an inadequate domestic supply or distribution 
capacity to meet the requirement.
  In simple English, this means that if there is an emergency, the 
ethanol mandate can be temporarily suspended.
  This is the rub: The bill, as currently drafted, gives EPA 240 days 
in an emergency to make a decision. That is a good part of a year to 
decide whether or not to grant a waiver. This is unconscionable. In 
other words, if you can't obtain enough ethanol and you have an 
emergency and you petition to waive it, it takes 240 days. What do you 
do for 240 days?
  This, in my view, is ridiculous. Can you imagine if in a few years 
there is an ethanol shortage, there are problems getting enough ethanol 
to New York or to California and our two Governors ask for a waiver and 
we have to wait 240 days to get it? Our economy would take a 
devastating blow if such a situation were to occur.
  To make this waiver more reasonable, I am offering this amendment to 
require the EPA to respond in a reasonable time to an emergency request 
by a State for a waiver. This amendment will give the EPA 30 days to 
rule on a waiver so consumers will not unduly suffer. By reducing the 
time period, the Administrator will have not 240 days but 30 days to 
decide whether or not an emergency waiver should be approved. We can 
ensure that any price spikes or supply shortage will be as temporary as 
possible.
  I believe that 240 days is in there for a reason: Because if your 
gasoline spikes in price, as we think it is, you can't stop it. It goes 
on for the 240 days.
  I will end my remarks. I reserve the right to come back for 
additional remarks. One of the things I would like to go into is how 
energy inefficient this ethanol proposal really is because ethanol 
increases the need for gasoline, it does not reduce it. MTBE reduces 
the amount of gasoline you need. So if you are short refinery capacity, 
MTBE works to your advantage. Ethanol does exactly the opposite. If you 
don't have that refinery capacity, you are stuck. It is a big problem.
  I would like to do more on that, but at the present time I send an 
amendment to the desk and yield the floor. I notice the distinguished 
senior Senator from New York is here and will continue our opposition 
to this ethanol mandate.
  I yield the floor, if I might, to the Senator from New York.
  The ACTING PRESIDENT pro tempore. Without objection, the pending 
amendments are set aside and the clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from California [Mrs. Feinstein] proposes an 
     amendment numbered 3114.

  Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that reading 
of the amendment be dispensed with.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The amendment is as follows:

 (Purpose: To reduce the period of time in which the Administrator may 
   act on a petition by 1 or more States to waive the renewable fuel 
                          content requirement)

       Beginning on page 195, strike line 19 and all that follows 
     through page 196, line 4, and insert the following:
       ``(B) Petitions for waivers.--
       ``(i) In general.--The Administrator, in consultation with 
     the Secretary of Agriculture and the Secretary of Energy, 
     shall approve or disapprove a State petition for a waiver of 
     the requirement of paragraph (2) within 30 days after the 
     date on which the petition is received by the Administrator.
       ``(ii) Failure to act.--If the Administrator fails to 
     approve or disapprove a petition within the period specified 
     in clause (i), the petition shall be deemed to be approved.


                Amendment No. 3030 To Amendment No. 2917

  The ACTING PRESIDENT pro tempore. The Chair recognizes the senior 
Senator from New York.
  Mr. SCHUMER. Mr. President, I thank my colleague for her strong and 
eloquent remarks. I ask unanimous consent to lay aside the pending 
amendment and call up amendment No. 3030 and ask for its consideration.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from New York [Mr. Schumer] proposes an 
     amendment numbered 3030.

  Mr. SCHUMER. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The amendment is as follows:

 (Purpose: To strike the section establishing a renewable fuel content 
                  requirement for motor vehicle fuel)

       Beginning on page 186, strike line 9 and all that follows 
     through page 205, line 8.
       On page 236, strike lines 7 through 9 and insert the 
     following:

     is amended--
       (1) by redesignating subsection (o) as subsection (p); and
       (2) by inserting after subsection (n) the following:
       ``(o) Analyses of Motor Vehicle Fuel Changes''.

  The ACTING PRESIDENT pro tempore. The Senator from New York.
  Mr. SCHUMER. Mr. President, I compliment my colleague from California 
for her fine remarks on this issue, which I share. We have a serious 
problem in this bill, a problem that most Members don't know about. 
There is a hidden gas tax in this bill. It is not going to be hidden 
after today.
  This bill will raise the cost of gasoline on average in America more 
than the nickel gas tax did back in 1993, when I was not a Member of 
this distinguished body but which caused so much controversy.
  I urge my colleagues to pay careful attention over the next few days 
as many of us bring up this issue. It is complicated. It is anti-free 
market, I say to my friend from Oklahoma who I know has been a strong 
defender of free market principles, when I agree with him and when I 
disagree with him. It is something that should not be in this bill. I 
think it could be the death knell of this bill, as the Senator from 
California said. I myself--and I know many others--cannot vote for this 
final bill with this provision included.
  Let me express my concerns about this unprecedented new ethanol 
mandate provision which was quietly inserted into the Senate energy 
bill a few weeks ago without any debate. The provision accomplishes two 
goals not being disputed by my amendment. One is banning the use of 
MTBEs which has resulted in groundwater pollution all over the country. 
The second is scrapping the oxygenate mandate that led so many States 
to make such heavy use of MTBEs in the first place.
  The proposal in the bill provides an anti-backsliding provision to 
require continued efforts on clean air. Though those provisions could 
be stronger, we are not opposing any of those parts of the bill. But 
beyond those provisions, this new amendment adds an astonishing new 
anti-consumer, anti-premarket requirement that every refiner in the 
country, regardless of where

[[Page 4377]]

they are located, regardless of whether the State mandates it or not, 
regardless of whether the State chooses a different path to get to 
clean air, must use an ever-increasing volume of ethanol. If they don't 
use the ethanol--and this is the most amazing part of the bill--they 
still have to pay for ethanol credits.
  Now, our amendment--the amendment I have introduced--would simply 
strike that provision, plain, simple, and clean. As to the provision we 
are striking, simply put, what it does is it requires all gasoline 
users, our consumers, to pay for ethanol whether or not they use it. It 
is nothing less than an ethanol gas tax levied on every driver--the mom 
who is driving the kids to school, a truck driver who earns a living. 
Every gasoline user in this country will pay.
  Under this ethanol gas tax, gas prices will rise significantly, even 
under the best of circumstances. I am first going to bring this part 
out because I think this part will get the most attention in terms of 
people understanding how bad this provision is. Using Department of 
Energy numbers, impartial Hart/IRI Fuels Information Services estimates 
that gasoline prices will increase by a staggering 4 cents to 9.7 cents 
per gallon, depending on the region. Should there be market 
disruptions, which my friend from California brought up, the price 
would go much higher because without the gasoline they need, the 
ethanol they need, boom, it goes way up. It also favors some regions 
over others, so that California would pay the most--about 9.7 cents a 
gallon. So would New England. My State of New York would pay about 7 
cents. But every part of the country would pay more--every single part. 
Even in the Midwest, where there is lots of ethanol production, the 
average price of gasoline would go up 4 or 5 cents a gallon.
  Listen to this, my colleagues. In the heart of farm country--and I 
want to help farmers, as I think I have shown in my few years here--
both Iowa and Nebraska had a referendum on the ballot to require this 
kind of provision and rejected it. Well, if the voters in the heart of 
farm country, in the heart of ethanol country, were against this 
provision, how are we in the Senate imposing this on every part of the 
country? I don't know what their philosophy is, but let me read from 
the Des Moines Sun Register:

       An ethanol mandate would deny Iowans a choice of fuels and 
     short circuit the process of establishing its own worth in 
     the marketplace. The justification is to marginally boost the 
     price of corn. If that were the goal, other measures would be 
     far more effective.

  How about the Quad City Times editorial entitled ``Ethanol Only 
Proposal Doesn't Help Consumers.''
  How about the Grand Island (Nebraska) Independent: ``Ethanol use 
should not be a forced buy.''
  How about the Omaha World Herald: ``More Alcohol, Less Choice.''
  These are all editorials. I don't know about these newspapers. I 
doubt they are philosophically like the New York Times; yet they are 
thinking this is a bad proposal. I want to read for you about your 
States. This is a low estimate, but this is how much the price of 
gasoline will go up if this provision is kept in the bill, if our 
amendment is defeated. I will read every State. I think you ought to 
know it. This is important. The minimum is 4 cents, and in many it is 4 
cents. In many it is higher. Keep your ears perked. Alabama would go up 
4 cents a gallon; Alaska, 4 cents; Arizona, 7.6 cents; Arkansas, 4 
cents; California--the senior Senator from California is here--9.6 
cents a gallon; Colorado, 4 cents; Connecticut, 9.7 cents a gallon; 
Delaware, 9.7 cents; District of Columbia, 9.7 cents; Florida, 4 cents 
a gallon; Georgia, 4 cents a gallon; Hawaii, 4 cents a gallon; Idaho, 4 
cents; Illinois--I just read in today's newspaper how the price of 
gasoline is going through the roof in Illinois. That would be an 
additional 7.3 cents a gallon. We are going to tell the drivers in 
Chicago and Springfield and East St. Louis, where the price is through 
the roof already, we are going to impose a mandate that will raise 
their price 7.3 cents a gallon. How can we?
  Indiana, 4.9 cents; Iowa, 4 cents; Kansas, 4 cents; Kentucky, 5.4 
cents; Louisiana, 4.2 cents a gallon; Maine, 4 cents; Maryland, 9.1 
cents; Massachusetts, 9.7 cents a gallon; Michigan, 4 cents a gallon; 
Minnesota, 4 cents a gallon; Missouri, 5.6 cents a gallon; Mississippi, 
4 cents; Montana, 4 cents; Nebraska, 4 cents a gallon for a product we 
don't make in New York, that we might not even use?
  I have spoken to some of the refiners in our area. They think we can 
meet the clean air mandate in a lot cheaper and better way. If we 
choose to, we still have to buy the ethanol credit. My goodness.
  Nevada, 4 cents; North Carolina, 4 cents; North Dakota, 4 cents; 
Ohio, 4 cents; Oklahoma, 4 cents; Oregon, 4 cents; Pennsylvania, 5.5 
cents a gallon; Rhode Island, 9.7 cents; Tennessee, 4 cents a gallon; 
Texas, 5.7 cents a gallon; Utah, 4 cents a gallon; Vermont, 4 cents a 
gallon; Virginia, 7.2 cents a gallon; Washington, 4 cents a gallon; 
West Virginia, 4 cents; Wisconsin, 5.5 cents a gallon; Wyoming, 4 cents 
a gallon.
  The reason it varies, of course, is the availability of ethanol. It 
is very hard to ship. You can't create a pipeline--even though that 
could be expensive to do--the way you can for oil. So the ethanol has 
to be reduced, and you can see it is mainly in a few States in the 
heartland, where nice, hard-working people live, in the middle of the 
country.
  If you are far away from these ethanol plants, it is hard to get to; 
it is hard for you to get the ethanol. It usually has to be produced, 
put on a truck, a barge, sent down to Mississippi, and then, by boat, 
sent all around the country and then loaded back, put on a truck, and 
put into the gasoline. You can see why it is so expensive.
  Now, that is in normal times. Should there be market disruptions, of 
which you can be sure-as-shooting, if we are going to impose this huge 
mandate requiring more ethanol to be added to gasoline than we produce 
in the United States right now, there are going to be disruptions and 
the price of gasoline could double.
  This is one of these quiet little amendments that could come back to 
haunt every one of us. I have been here in the Congress--only 4 years 
in the Senate but 18 in the House. Every so often, there is an 
amendment and people vote for it and don't pay much attention, and a 
year later the public gets wind and says: What the heck have those guys 
done? Everybody here says: I didn't know or, oh, we didn't realize it. 
The Senator from California, I, and the others joining us in this 
debate are putting you on notice: This is one of those amendments. 
Beware. If there was ever an amendment quietly put in a bill that 
should have a skull and crossbones on it, be careful, this is it. So 
pay attention.
  Now, my State has already banned the use of MTBEs. We don't take that 
out in this bill. So have 12 other States, including Arizona, 
California, Colorado, Connecticut, Illinois, Kansas, Michigan, 
Minnesota, Nebraska, New Hampshire, South Dakota, and Washington. All 
have banned MTBEs. A number of other States are in the process of 
taking action as well because MTBEs pollute the ground water.
  Every one of those States that has banned MTBEs is going to be in an 
impossible dilemma. Their citizens are demanding they ban MTBE, but 
with the oxygenate requirement in place, they cannot successfully do 
so.
  Last year President Bush's administration denied California's 
petition to waive the oxygenate requirement, despite the State's 
ability to comply with air quality standards without it. In New York, 
we are in the same position. This denial forced the State to defer its 
critical ban on MTBE and suffer ground water contamination. New York 
State is now considering requesting a waiver, and I expect their 
request will be met with the same denial.
  We are between a rock and a hard place. Our citizens' health and the 
environment are being held hostage to the desire of the ethanol lobby 
to make ever larger profits. We all know one company is way ahead of 
everybody else in producing ethanol. That was brought out by my 
colleague from California. I am not going to bring it out--maybe I will 
since we are at the beginning of the debate.

[[Page 4378]]

  This chart, which was prepared by my colleague from California, shows 
that 41 percent of the ethanol comes from one company. This is what we 
are doing in this great free market, capitalistic economy: We are 
requiring everybody to buy this stuff, and one company has 41 percent 
of the market--one company.
  We are setting ourselves up for a huge fall, the kind of price spikes 
we have seen occasionally in California, in Illinois, and in other 
places. We are going to see them everywhere. They are going to pop up 
like weeds if we increase the demand for ethanol when only one company 
is making it and there is a natural bottleneck. It is not quite like 
electricity, but it is not that far away, electricity being an actual 
monopoly.
  The bottom line is for many States that are outside the Corn Belt and 
lack the infrastructure to transport and refine ethanol, the most 
efficient method of achieving clean air goals will be to reformulate 
gasoline without using large amounts of ethanol.
  Again, I have talked to leaders in the refining industry in my area, 
and they believe they can do it and do it rather easily. States outside 
the Corn Belt that do not currently use much ethanol will have to pay 
to have the ethanol, as I say, trucked across the country or floated on 
barges to the Gulf of Mexico and loaded on to tankers.
  Those States will also have to pay to retrofit their refineries. 
Every refinery that does not now use ethanol will have to be refitted 
to add ethanol to the gasoline. Both of these would represent 
significant increases in costs for refineries supplying my State. 
Retrofitting would cost millions of dollars, and under this bill New 
York would incur millions more in ethanol transportation costs.
  What is the public policy for mandating the use of ethanol? I have 
not heard one. If you believe ethanol works, as the Iowa, Nebraska, and 
Illinois newspapers said, let the market determine it. This is a 
mandate that sort of assumes we know ethanol is best for everybody, and 
most people do not believe it is.
  We all know what is going on here. The Senator from California 
mentioned it. It is the ethanol lobby, their power. But we also have 
one other thing. They made their deal with the petroleum industry, and 
so we have this provision that does not allow one to sue. I am 
surprised that so many people on both sides of the aisle who have 
maintained the right to sue in every other area now say: Never mind. 
The provision is renewable fuels safe harbor.
  There is another reason, too, and this is probably the most 
legitimate reason. I know many of my colleagues from the Midwest want 
to help their farmers who are suffering. We know that. I want to help 
those farmers. I have voted for large amounts of agricultural subsidies 
to help the farmers in the West and the South with their row crops. I 
did not used to do that when I was in the House, but as I traveled 
around my State, I learned the burdens that farmers face.
  It is a heck of a lot different if the Government makes a collective 
decision to help support the price of a crop to keep farmers in 
existence than an inefficient, jerry-built contraption that does not 
just make this what the Government does but, rather, forces every 
consumer to pay. When we have done agricultural subsidies, the 
rationale has been cheap food. This is not cheap gasoline. This is more 
expensive gasoline, and it absolutely makes no sense to help our 
farmers in this way. If it did, I suspect this amendment would have 
been debated in the open, but instead, as I said, there has been no 
debate.
  I, frankly, wrestled with my conscience whether to go forward. I do 
want to help my colleagues in the farm areas, but this one was so far 
off the charts and so deleterious to my constituents, in terms of 
raising the price of gasoline, that I just could not come to do that.
  I say to my colleagues from the Midwest, figure out better ways we 
can help the farmers, and I say that as somebody who has been 
supportive of doing that before.
  Let me show my colleagues how crazy this proposal is. Currently, 
refiners across the Nation use 1.7 billion gallons of ethanol. That is 
what refiners use right now. Starting in 2004, a mere 2 years away, 
they would be required to use 2.3 billion gallons of ethanol.
  Right away we are asking them to use a lot more ethanol. If the 
production does not happen, we know what is going to happen: a price 
spike.
  We ratchet up that number to 5 billion gallons of ethanol in 2012 and 
increase it every year by a percentage equivalent to the proportion of 
ethanol in the entire U.S. gas supply after 2012 in perpetuity. That 
means that from 2012 on, the Nation's ethanol producers will have a 
guaranteed annual market of over 5 billion gallons, which every 
gasoline consumer in this country will pay at the pump.
  It will stifle any development and new ways of finding cleaner 
gasoline and cleaner burning fuels. It means if someone comes up with a 
better way, it does not matter. It means a huge investment in 
infrastructure. I would rather have that money go to build our 
highways, for God's sake, than to build new ethanol refineries.
  In my State, our highways are hurting, and we are going to be 
debating in the appropriations bill whether to cut Federal highway 
funding.
  The ethanol mandate will reduce the amount of money that goes into 
the highway trust fund. In addition, it will cost our consumers more as 
well. If we want to build a big infrastructure, do not create a whole 
new ethanol infrastructure which the market is not demanding, build 
more highways. It makes no sense.
  One other point I have made already, this safe harbor provision is 
sort of the cherry on top of the icing on top of the cake, the evil 
cake it is. The safe harbor provision gives unprecedented product 
liability protection against consumers and communities that seek legal 
redress from the manufacturers and oil companies that produce and 
utilize defective additives in their gasoline. Not just ethanol; all of 
them. That was the sort of deal, I guess, that was made.
  So for those who believe in their consumers, God forbid, and a 
refinery makes a huge mistake and puts something terrible in the 
gasoline that either pollutes the air or is defective, you cannot sue. 
We have held that insurance reform be over the right to sue. Much 
legislation ends up shipwrecked on the shoals of the battle of tort 
reform, and yet in this bill we say not only never mind, we put in a 
safe harbor provision that makes one's jaw drop.
  The Presiding Officer was out of the room, but as I stated, it will 
raise the cost of gasoline in his great State of Delaware some 9.7 
cents a gallon by the time this is implemented, something I think the 
drivers in Dover, Wilmington, Rehoboth, and all the other beautiful 
cities of Delaware would dare not want to pay.
  For consumers throughout this country, this ethanol gas tax is a one-
two punch. First, consumers will be forced to pay more at the pump to 
meet arbitrary goals that boost the sale of ethanol but are not 
necessary to achieve the bill's air quality goals.
  Second, consumers will face restrictions from suing manufacturers and 
oil companies, and they will have less incentive to ensure the 
additives they manufacture and use are safe. The provision denies 
consumers and communities appropriate redress, eliminates an important 
disincentive to pollute, and creates a dangerous precedent for future 
environmental policy.
  In conclusion, I support the anti-backsliding air quality provisions. 
I want to see our air cleaner without dirtying our ground water. I do 
not want to be put between that rock and hard place, but I strongly 
oppose creating a mandatory ethanol market, whether it is used or not, 
and providing the producers of that ethanol with extraordinary legal 
protections to boot. The ethanol industry already benefits from 
billions of dollars in direct farm subsidies and a 54-cent-per-gallon 
subsidy. If my colleagues want to subsidize that more, let us debate 
that in the Senate. Who knows? I might support it.

[[Page 4379]]

But do not make our drivers pay for it and do not mandate it.
  Ethanol, which is twice as expensive as gasoline, right now would not 
be economically viable but for the massive Federal subsidies it already 
receives. On top of that, with the phaseout of MTBEs, regardless, the 
demand for ethanol by free market processes is going to go up. States 
near the Corn Belt will probably use more ethanol. So ethanol is in 
good shape.
  All that is not enough to satisfy the ethanol lobby. As I said, do 
not take the word of a New Yorker or a Californian. Look at the voters 
in Iowa and Nebraska, the heartland--where if anyplace on the face of 
this continent or in this country would benefit from this mandate, they 
would--they both recently defeated efforts in those States to create a 
statewide ethanol mandate.
  They knew, as I hope we will learn in this body, that mandated 
ethanol is an indefensible public policy and will unnecessarily hurt 
consumers all across the country. To my colleagues, defeat the ethanol 
gas tax.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Carper). The Senator from California is 
recognized.
  Mrs. FEINSTEIN. Mr. President, I thank the Senator from New York for 
his comments. I thought they were excellent. I appreciate him naming 
every State that will have an effective gas tax, and stating that this 
methanol mandate is a tax hike anyway one looks at it. I do not think 
there is any doubt there is going to be an increase in gas prices. I do 
not doubt them at all.
  I also appreciate his concern for farmers. I come from a State that 
is the largest farming State in the Union. I have spent time in the 
central valley of California. I know what farmers go through, and I 
appreciate it.
  I am also faced with the problem in my State of forcing a tax hike 
for something that we do not need to meet clean air standards, which 
has questions about its environmental value as well as its real 
questions about what it might do to the public health, that prevents 
anybody's right to sue if there is a real hazard that comes about. 
This, to me, is unbelievable.
  I will take a couple of moments on the subject of what ethanol does 
in gasoline. I mentioned in my remarks that ethanol is also 
fundamentally different from MTBE because the two oxygenated additives 
react differently when mixed with gasoline. I think this is an 
important point because this is not going to help the energy shortage. 
It is going to exacerbate it.
  The same amount of ethanol, as opposed to MTBE, actually contracts 
fuel so it takes more to produce the same amount of gasoline.
  The report, sponsored by the California Energy Commission, predicts 
replacement of MTBE by ethanol will result in a supply shortfall of 5 
to 10 percent for the California gasoline pool as a whole. Thus, 
California's gasoline supply is not going to go as far as it did.
  That is critical because we are at 98 percent of refining capacity. 
So I do not know how we meet the need without a huge price spike that 
will result from a shortage of gasoline, and that is why I think for my 
State this mandate actually produces a very egregious gas spike. It 
also can impact refineries very critically.
  So what I have tried to point out today is that essentially this 
mandate triples the amount of ethanol from 1.7 billion gallons used 
nationally today to 5 billion gallons nationally by 2012.
  Secondly, because of the way the credit situation is set up, one pays 
whether they use it or not.
  Thirdly, what it does to gas prices.
  Fourthly, the market concentration of ethanol: 41 percent from one 
company, 71 percent from eight companies. That in itself creates a 
problem that if there is a shortfall the price can be manipulated.
  I have mentioned the environmental problems, that we can anticipate 
the smell in the summer months will get worse, not better, because of 
the use of ethanol. I also indicated that essentially over the 9 years 
everybody should know that this is a $7 billion cut in the highway 
trust fund.
  There is another point I would like to make. The ethanol mandate 
essentially helps the producer. Only 30 percent goes to the farmers, 
and about 70 percent goes to producers. This is a windfall for those 
companies, any way you look at it. The New York Times ran an editorial 
pointing this out, mentioning that an energy economist estimated 30 
percent of the cost will end up in the pockets of farmers, while about 
70 percent will go to the processors, such as ADM. This mandate is a 
ridiculously expensive way to subsidize farmers.
  Additionally, it cuts imports by about only 9,000 barrels, of about 8 
million barrels. So no one can say this saves a great deal of our 
energy requirements related to fuel.
  I ask unanimous consent this be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the New York Times, July 8, 1994]

                       This Clean Air Looks Dirty

       The Environmental Protection Agency has effectively ordered 
     refiners to add corn-based ethanol to make gasoline 
     environmentally friendly. But the added ethanol will not 
     clean the air beyond what the 1990 Clean Air Act would 
     already require; nor will it, as advocates claim, raise farm 
     income very much or significantly cut oil imports.
       What the E.P.A.'s rule will do is take money from consumers 
     and taxpayers and hand it over to Archer Daniels Midland, 
     which produces about 60 percent of the nation's supply of 
     ethanol. It is certainly no coincidence that A.D.M.'s chief 
     executive, Dwayne Andreas, is a major political contributor; 
     he donated $100,000 to a recent Democratic fund-raising 
     dinner. The Clean Air Act requires high-smog areas to phase 
     in use of ``reformulated'' gasoline whose weight is at least 
     2 percent oxygen; the goal was to reduce pollution by 
     replacing gasoline with oxygenates. The E.P.A. order would 
     now add another requirement: 30 percent of the oxygenates 
     would have to come from ``renewable'' resources--which in 
     reality means corn-based ethanol.
       Because the oxygen content of reformulated gasoline remains 
     unchanged, the order will not reduce smog-creating emissions. 
     But by forcing refiners to use ethanol rather than less 
     expensive oxygenates like methanol, the rule will drive up 
     the cost of gasoline. Indeed, ethanol remains a high-cost 
     additive even though it benefits from substantial tax breaks. 
     And some experts argue that ethanol may be environmentally 
     damaging because coal used in producing it contributes to 
     carbon dioxide emissions, adding to global warming.
       David Montgomery, an energy economist for Charles River 
     Associates, estimates that only 30 percent of the cost of 
     ethanol will wind up in the pockets of farmers while about 70 
     percent will go to processors like A.D.M. So the rule is a 
     ridiculously expensive way to subsidize farmers. And the 
     addition of ethanol will cut imports by only 9,000 barrels 
     out of about eight million barrels a day.
       Carol Browner, head of the E.P.A., asserts that the policy 
     will spur development of renewable energy sources. But the 
     impact looms small when stacked against the obvious defects. 
     President Clinton is twisting high-minded environmental 
     promises into low-minded favors for special interests.


 additional gasoline costs from proposed renewable fuels standard for 
              years 2003-2007 (average increase in $/gal)

       Hart Downstream Energy Services (Hart) compiled the 
     following information based on the recent analysis from the 
     Department of Energy, Energy Information Administration 
     (EIA). According to EIA's analysis, the impact of the fuels 
     provisions contained in S517 will cause conventional gasoline 
     prices to rise by 4 cents per gallon, and Reformulated 
     Gasoline (RFG) prices to rise by approximately 9.75 cents per 
     gallon.
       Assuming annual growth in U.S. gasoline demand of 2 
     percent, Hart measured the impact on each individual state by 
     calculating the total gasoline cost increase and the total 
     gallons of conventional gasoline and/or RFG sold in each 
     state.

------------------------------------------------------------------------
                                                               Gasoline
                            State                                price
                                                               increase
------------------------------------------------------------------------
Alabama.....................................................       0.04
Alaska......................................................       0.04
Arizona.....................................................       0.076
Arkansas....................................................       0.04
California..................................................       0.096
Colorado....................................................       0.04
Connecticut.................................................       0.097
Delaware....................................................       0.097
District of Columbia........................................       0.097
Florida.....................................................       0.04
Georgia.....................................................       0.04
Hawaii......................................................       0.04
Idaho.......................................................       0.04
Illinois....................................................       0.073
Indiana.....................................................       0.049
Iowa........................................................       0.04
Kansas......................................................       0.04
Kentucky....................................................       0.054
Louisiana...................................................       0.042
Maine.......................................................       0.04
Maryland....................................................       0.091
Massachusetts...............................................       0.097

[[Page 4380]]

 
Michigan....................................................       0.04
Minnesota...................................................       0.04
Missouri....................................................       0.056
Mississippi.................................................       0.04
Montana.....................................................       0.04
Nebraska....................................................       0.04
New Hampshire...............................................       0.084
New Jersey..................................................       0.091
New Mexico..................................................       0.04
New York....................................................       0.071
Nevada......................................................       0.04
North Carolina..............................................       0.04
North Dakota................................................       0.04
Ohio........................................................       0.04
Oklahoma....................................................       0.04
Oregon......................................................       0.04
Pennsylvania................................................       0.055
Rhode Island................................................       0.097
South Carolina..............................................       0.04
South Dakota................................................       0.04
Tennessee...................................................       0.04
Texas.......................................................       0.057
Utah........................................................       0.04
Vermont.....................................................       0.04
Virginia....................................................       0.072
Washington..................................................       0.04
West Virginia...............................................       0.04
Wisconsin...................................................       0.055
Wyoming.....................................................       0.04
 
    Aggregate Annual Cost Impact of All 50 States: $8,389
                           Billion
------------------------------------------------------------------------
Source: Energy Information Administration (EIA), ``Impact of Renewable
  Fuels Provisions of S1766,'' March 12, 2002. Compiled by Hart
  Downstream Energy Services.

                Amendment No. 3115 to Amendment No. 2917

  Mrs. FEINSTEIN. I send another amendment to the desk which delays the 
beginning date from 2004 to 2005. It is sent to the desk on behalf of 
Senator Boxer and myself.
  The PRESIDING OFFICER. Without objection, the pending amendments are 
set aside.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from California [Mrs. Feinstein], for herself 
     and Mrs. Boxer, proposes an amendment numbered 3115.

  Mrs. FEINSTEIN. I ask unanimous consent reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To modify the provision relating to the renewable content of 
 motor vehicle fuel to eliminate the required volume of renewable fuel 
                        for calendar year 2004)

       On page 189, line 3, strike ``2004'' and insert ``2005''.
       On page 189, line 5, strike ``2004'' and insert ``2005''.
       On page 189, line 8, strike ``2004'' and insert ``2005''.
       On page 189, in the table between lines 10 and 11, strike 
     the item relating to calendar year 2004.
       On page 193, line 10, strike ``2004'' and insert ``2005''.
       On page 194, line 21, strike ``2004'' and insert ``2005''.
       On page 196, line 17, strike ``2004'' and insert ``2005''.
       On page 197, line 4, strike ``2004'' and insert ``2005''.
       On page 199, line 4, strike ``2004'' and insert ``2005''.
       On page 199, line 17, strike ``2004'' and insert ``2005''.

  Mrs. FEINSTEIN. This is modest and delays the implementation of the 
ethanol mandate by a year, eliminating a requirement to use 2.3 million 
gallons of ethanol in 2004 and will give States more time to make 
essential infrastructure, refinery, and storage improvements.
  This is an essential modification since virtually all ethanol, as has 
been explained, comes by tank--not pipeline--from the Midwest.
  Although the ethanol industry says they can meet the future demand, 
virtually every single expert we have talked with has said delivery 
interruptions and shortfalls are likely, if not inevitable.
  I ask I be included as a cosponsor of the amendment of Senator 
Schumer to strike the renewable fuels section of this bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. FEINSTEIN. Mr. President, I send to the desk to be printed in 
the Record an editorial from the Sacramento Bee entitled ``Highway 
Robbery,'' which essentially characterizes what this does to the 
highway trust fund, how it hurts the country, how energy experts show 
that producing ethanol from corn requires more energy than the fuel 
produces, and that the ethanol mandate would make the country more 
fossil fuel dependent, not less.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Sacramento Bee, Apr. 8, 2002]

          Highway Robbery--Corn Is for Eating, Not for Driving

       Here's another piece of the ethanol idiocy in Washington: 
     Not only will Californians soon have to pay more for gasoline 
     laced with corn liquor, but as a result, we'll have less 
     money to alleviate congestion on our roads.
       Blame this nonsense on Senator Majority Leader Tom Daschle, 
     D-S.D., and President Bush. They are pushing a provision for 
     the Senate energy bill that would require gasoline producers 
     to use rising amounts of ethanol. Ethanol is mostly made from 
     corn in states that Bush would dearly like to win in the next 
     election.
       The measure would eliminate the current requirement in the 
     Clear Air Act that smoggy areas use gasoline containing an 
     oxygen additive--either ethanol or MTBE. But then it goes 
     ahead to require that refineries triple their purchases of 
     ethanol for gasoline by 2012.
       The mandate hurts consumers in obvious ways: It will drive 
     up the cost of driving, taking dollars out of the pockets of 
     motorists and putting them into the coffers of Archer Daniels 
     Midland, the Enron of the Corn Belt, which dominates the 
     ethanol market. (Why is it that the politicians who are eager 
     to give back their Enron donations seem to have no trouble 
     taking money from--and giving billions in benefits to--a 
     company that was convicted of price fixing a few years ago?)
       The mandate will also hurt the country. Although ethanol is 
     touted as a renewable fuel, a recent study by Cornell 
     University scientist David Pimentel shows that producing 
     ethanol from corn actually requires more energy than the fuel 
     produces. The ethanol mandate would thus make the country 
     more fossil-fuel dependent, not less.
       But the mandate will also hit in a less obvious way: It 
     will take dollars away from transportation investment. That's 
     because ethanol already gets another federal subsidy--the 
     federal fuel tax at the pump is a nickel less on fuel 
     containing ethanol. If the Daschle-Bush ethanol mandate is 
     passed, federal revenues for transportation repair, operation 
     and construction will plummet by nearly $3 billion a year, 
     transportation experts estimate.
       So this is what Californians get from the proposed Daschle-
     Bush ethanol bailout--higher prices at the pump and more 
     crowded roads. It gives the term ``highway robbery'' a whole 
     new dimension.

  Mrs. FEINSTEIN. Mr. President, I yield the floor and suggest the 
absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. MURKOWSKI. Mr. President, I have listened to portions of the 
debate this morning. Obviously, on the issue of ethanol we will have 
extended discussion, but I am sympathetic to the concerns expressed by 
the Senator from California and the Senator from New York. It addresses 
an underlying situation in this country of which we should all be 
aware. The mandate on ethanol in the energy bill is quite clear, and 
the realization that the ethanol industry is not prepared, does not 
have current capacity.
  As a consequence, more gasoline will have to be used. That brings 
into focus the reality of where our gasoline comes from; it comes from 
crude oil. Where does crude oil come from? Most of it comes from 
overseas. We are seeing a price increase for a couple of reasons. The 
effectiveness of the OPEC cartel, which some time ago set a floor of 
$22 and a ceiling of $28, is shown with the price of oil up to $27. We 
are seeing a situation escalate in the Middle East. Saddam Hussein, who 
is supplying this Nation with roughly a million barrels a day, has 
indicated he is going to cease production for 30 days. Venezuela, our 
neighbor, that we depend on from the standpoint of proximity, is on 
strike. It is estimated the United States, in the last few days, has 
lost 30 percent of its available imports. These are the underlying 
issues associated with the debate in the sense of price.
  Where does gasoline come from? It comes from crude oil. Where does 
crude oil come from? From overseas, because we have increased our 
dependence on those sources. It gets more complex when considering the 
motivation occurring as a consequence of the policies of Saddam Hussein 
and Iraq. He is paying the families of those who sacrificed their lives 
to kill people in Israel. It used to be $10,000 per family; now it is 
$25,000 per family. This whole thing is escalating. It is escalating as 
a consequence of the costs of oil increasing

[[Page 4381]]

because that is where the cashflow emanates.
  Procedurally, may I make an inquiry as to where we are on the timing 
and so forth?
  The PRESIDING OFFICER. There is an order to proceed to another 
measure at 11:30.
  Mr. MURKOWSKI. I ask unanimous consent for 4 more minutes, until such 
time as I see Members are ready to proceed.
  The PRESIDING OFFICER. The Chair will note the presence of the 
manager for the majority. Is there objection to the request to proceed 
for 4 minutes?
  Mr. DODD. No objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. MURKOWSKI. Mr. President, let me summarize the dilemma. By our 
own inaction, we are seeing, if you will, greater vulnerability as this 
country increases its dependence on imported oil. As I have indicated, 
Venezuela is on strike. Iraq has terminated its production. We are told 
there is a grave threat in Colombia by revolutionists who are 
threatening to blow up the pipeline. There are complications now that 
the Saudis have been accused of funding, if you will, terrorist 
activities associated with the deaths of Israelis and the bombings, 
human bombings that have taken place.
  As we address this vulnerability, we have to recognize the reality. 
It focuses in on the current debate on ethanol. As we look at where we 
are, we are going to have to have more gasoline in California; we are 
going to have to have more gasoline in New York. The price is going to 
go up.
  Our alternatives, it seems to me, are quite obvious. We should reduce 
our dependence on imported sources. That brings us to the ANWR debate 
which will be taking place very soon.
  Finally, the Schumer amendment would strike the renewable fuels 
standards, as we know, contained in section 819 of the bill. That 
portion called for mandated use of renewable motor fuels such as 
ethanol and biodiesel. This mandate is part of a larger package of 
provisions on MTBE and boutique fuels, and I am certainly supportive of 
reducing the boutique fuels.
  I am not usually a big fan of mandates, but the renewable fuel 
standards will reduce our dependence on foreign oil.
  I will have more to say later, but I encourage my colleagues to 
participate in this discussion and recognize the significance of our 
increased vulnerability and why we are going to be using the gasoline 
when in reality we will be paying for it.
  I find it ironic that California is dependent on Alaska, and as 
Alaskan oil declines, that dependence is going to shift over to the 
importation of oil to California from Iran, Iraq, wherever--Saudi 
Arabia. Of course, New York is dependent on Venezuelan oil as well. If 
we do not do something domestically, we are going to pay the piper.
  I yield the floor.

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