[Congressional Record (Bound Edition), Volume 151 (2005), Part 9]
[Senate]
[Pages 12700-12713]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       ENERGY POLICY ACT OF 2005

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of H.R. 6, which the clerk will report.
  The legislative clerk read as follows:

       A bill (H.R. 6) to ensure jobs for our future with secure, 
     affordable and reliable energy.

  Pending:

       Domenici amendment No. 779 (to amendment No. 775), to 
     eliminate methyl tertiary butyl ether from the United States 
     fuel supply, to increase production and use of renewable 
     fuel, and to increase the Nation's energy independence.
       Schumer amendment No. 782 (to amendment No. 779), to strike 
     the reliable fuels subtitle of the amendment.

  The PRESIDING OFFICER. The Senator from New York.
  Mr. SCHUMER. Mr. President, I believe the order of business is my 
second-degree amendment to the amendment of my friend from New Mexico.
  The PRESIDING OFFICER. That is the pending question.
  Mr. SCHUMER. When do we expect a vote, Mr. President? What is the 
order of business here?
  The PRESIDING OFFICER. We do not yet have a consent request. We are 
expecting that soon.
  Mr. SCHUMER. Mr. President, I will address this amendment. Let me 
say, this amendment is one that still requires all the Clean Air 
standards to be met but removes the ethanol mandate. That is what this 
amendment does.
  The underlying Domenici amendment on ethanol is so wrong. The 
amendment is a boondoggle. It hurts drivers and it hurts the free 
market. It is a boondoggle because it takes money out of the pockets of 
drivers and puts it into the pockets of the big ethanol producers.
  The bottom line is very simple. In places where they need ethanol, 
there is a mandate, and in places where they do not need ethanol, there 
is a mandate. This is nothing less than an ethanol gas tax levied on 
every driver: the employee driving to work, the mom driving the kids to 
school, the truckdriver who earns a living. Gas prices are high enough. 
It is utterly amazing that in this body we seek to raise the prices 
even higher than they are now because that is what this amendment will 
do--particularly if you are on the coasts or in large parts of the 
South. If you are not in an area that has a lot of ethanol production, 
make no mistake about it, the underlying amendment will raise your gas 
prices. The Schumer amendment will make sure that gas prices do not go 
up any higher because of an ethanol mandate.
  The bottom line is this boondoggle not only hurts drivers and puts 
money in the pockets of the big ethanol producers, but this amendment 
puts a dagger in the heart of the concept of a free market. We have 
lots of my friends, particularly on the other side of the aisle, who 
praise the free market all the time--as they should. But then they fold 
to the ethanol lobby and vote for one of the most anti-free-market 
amendments that has come on this

[[Page 12701]]

floor in decades, because not only do we subsidize ethanol, which we 
do, and not only do we deal with ethanol in terms of imports, not only 
do we require ethanol in this amendment whether you need it but, 
amazingly enough, this amendment says: If you do not use the ethanol, 
you still have to pay for it.
  So somebody driving in New York or Philadelphia or Boston or Bangor, 
ME, somebody driving in Seattle or Portland or Los Angeles or San 
Francisco--areas where there is not much ethanol--is going to pay 5 
cents, 10 cents, 15 cents more to go into the pockets of the ethanol 
producers, even when the drivers do not use ethanol.
  It is so unfair to do this. It is wrong to do this. If you come from 
Iowa or Illinois, and ethanol is good for your gasoline and it is the 
best way to make it cleaner, that is fine. But if there are other ways 
to do this, then why do we require ethanol?
  We know why. Some say it will help the corn grower. When was the last 
time the little family farmer benefited from a policy where three or 
four big companies control the show? They do not benefit when it comes 
to meat, they do not benefit when it comes to milk, they do not benefit 
when it comes to wheat, they do not benefit when it comes to corn. So 
to put a few pennies--and that is all it will be--in the pocket of the 
family farmer, we charge drivers around the country billions of 
dollars.
  Make no mistake about it, most of those billions will not go to the 
family farmer, they will go to the Archer Daniels Midlands of the 
world--a company that was once accused of price fixing. There will be 
no free market here at all.
  There could not be an amendment that does more damage--damage to 
drivers, damage to the free market, damage to the system that says we 
do not force things on people they do not need. It is hard to believe.
  I know the political forces here. We have coalitions. We have big 
industry and people from the corn-growing States on one side. But if we 
required every person in New Mexico or Georgia or West Virginia or 
Montana to buy New York milk, no matter how much it cost and whether 
they needed it, you would be on your feet hollering. But to require New 
York drivers and drivers from Maine and Florida and Texas and Arizona 
and California and Washington to buy Middle Western corn-based ethanol 
is equally outrageous.
  We have had this amendment around for a while. I have been fighting 
it as long as I have been here. I understand the political forces, but 
the political forces should not mitigate what is right. If you believe 
in the free market, if you believe in protecting drivers, do not vote 
for this amendment. If you would not vote for a gas tax, why vote for 
an ethanol tax? It is the same thing. It is the same concept. There are 
many other ways to make the air cleaner.
  Talk to refiners on the coasts. They can crack the petroleum to meet 
the Clean Air standards. They are not going to buy the ethanol, anyway, 
but they are still going to have to pay for it.
  I urge my colleagues to defeat this poorly conceived, unfair 
amendment that puts a dagger in the heart of anything that we might 
consider the free market.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, this amendment will gut the ethanol 
amendment which has been crafted in a bipartisan manner. My good friend 
from New York suggested it would be unfair to make us all buy milk 
produced in New York. I think that would not only be unfair, but it 
would be a disaster because we wouldn't have any milk anywhere because 
they do not produce enough milk to go anywhere in the United States.
  In any event, we ought to table this amendment and get on with the 
Energy bill. I compliment the Senator on his arguments. He always makes 
excellent arguments in behalf of his State and his people. In this case 
I believe the country is going to be well served by making us less 
dependent upon oil that is imported from a cartel.
  He speaks of competition and whether there is going to be competition 
in ethanol. Let's be serious about this. There is no competition in the 
world markets for oil. In this case we are going to be producing 
ethanol that is American in order to displace, gallon by gallon, the 
oil we import.
  Having said that, I move to table the amendment. I ask for the yeas 
and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the motion.
  The clerk will call the roll.
  The assistant legislatuve clerk called the roll.
  Mr. McCONNELL. The following Senators were necessarily absent: the 
Senator from Alaska (Ms. Murkowski), and the Senator from Alaska (Mr. 
Stevens).
  Mr. DURBIN. I announce that the Senator from Vermont (Mr. Jeffords) 
is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 69, nays 28, as follows:

                      [Rollcall Vote No. 138 Leg.]

                                YEAS--69

     Akaka
     Alexander
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Byrd
     Cantwell
     Carper
     Chambliss
     Cochran
     Coleman
     Conrad
     Cornyn
     Craig
     Crapo
     Dayton
     DeMint
     DeWine
     Dole
     Domenici
     Dorgan
     Durbin
     Enzi
     Feingold
     Frist
     Graham
     Grassley
     Hagel
     Harkin
     Hatch
     Hutchison
     Inhofe
     Inouye
     Isakson
     Johnson
     Kerry
     Kohl
     Landrieu
     Levin
     Lincoln
     Lugar
     Martinez
     McConnell
     Murray
     Nelson (FL)
     Nelson (NE)
     Obama
     Pryor
     Reid
     Roberts
     Salazar
     Sarbanes
     Sessions
     Shelby
     Smith
     Stabenow
     Talent
     Thomas
     Thune
     Vitter
     Voinovich

                                NAYS--28

     Allard
     Boxer
     Chafee
     Clinton
     Coburn
     Collins
     Corzine
     Dodd
     Ensign
     Feinstein
     Gregg
     Kennedy
     Kyl
     Lautenberg
     Leahy
     Lieberman
     Lott
     McCain
     Mikulski
     Reed
     Rockefeller
     Santorum
     Schumer
     Snowe
     Specter
     Sununu
     Warner
     Wyden

                             NOT VOTING--3

     Jeffords
     Murkowski
     Stevens
  The motion was agreed to.
  Mr. DOMENICI. I move to reconsider the vote.
  Mr. REID. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from New Mexico is recognized.


                           Amendment No. 779

  Mr. DOMENICI. We are still on the ethanol amendment. I understand--so 
Senators will know--there are still negotiations taking place. I am 
hopeful they will be fruitful with reference to some portion of this 
amendment. We are going to stay on it and see what happens.
  In the meantime, a couple Senators have indicated they would like to 
speak. I understood Senator Akaka had come up and asked if he could be 
heard. He is not here.
  I yield to the Senator.
  Mr. REID. Mr. President, we are ready for the next amendment. What I 
would suggest for the good of the order is that while they are 
negotiating a finality of this ethanol amendment--that is taking place 
as we speak--Senator Cantwell be allowed to move forward on her 
amendment. We would certainly agree that anytime they want to come back 
and finish the work on ethanol, she would step aside. But we have such 
a limited amount of time on this most important piece of legislation.
  We have today. Of course, because of the funeral of Senator Exon, we 
cannot have votes this afternoon. There are six or seven Senators 
leaving. Then we have a longstanding conference on Friday, so tomorrow 
is going to be the heavy workload of this week.

[[Page 12702]]

  This is our first amendment. We believe we would do well if we could 
move forward with it. Senator Cantwell has been very patient. She 
waited here all day yesterday, and she is here again today.
  So I am wondering--I see, of course, that the distinguished chairman 
of the committee is here. I wonder if I could have Senator Inhofe's 
attention. If I could, I am sorry to interrupt the conversation, but I 
am wondering if the distinguished Senator from Oklahoma would allow the 
present amendment to be set aside. I know there are negotiations going 
on at the present time. We could allow Senator Cantwell to offer her 
amendment. Anytime you wanted to come back on the floor, we would be 
happy to yield the floor and come back to you. It would just help 
things move along.
  Mr. INHOFE. I say to the distinguished minority leader that I 
appreciate his comments and I note his thoughts, but the answer would 
be no.
  Mr. REID. Mr. President, I know the majority leader, and I want to 
move this legislation along. We have great plans for the last week of 
this work period to do some appropriations bills, one of which I hope 
would be the bill of Senator Domenici and this Senator which we have 
been fortunate enough to be chairman and ranking member of that 
committee for many years. We were able to complete that yesterday in 
the subcommittee and will be ready to move. It is such a waste of the 
country's time not to move forward. I have made my good-faith gesture 
to do so. I hope everyone understands that we can't rush forward on 
cloture when there is nothing having been done to allow us to offer 
amendments.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Let me say to the distinguished minority leader, I am 
fully aware of the problem he has discussed. I am empathetic and want 
to move ahead. But I think it is better for a while to let the ethanol 
deal which is being considered in terms of perhaps some modification to 
continue for a while rather than get off of it. We are going to do the 
best we can to move this bill. We need your help. We need our leader's 
help to move ahead.
  Mr. McCONNELL. Will the chairman yield?
  Mr. DOMENICI. I am pleased to yield.
  Mr. McCONNELL. I say to my friend from Oklahoma that if his amendment 
became the pending business right after Cantwell, he would be in 
exactly the same position he is in right now. Our discussions could 
continue. It would at least allow the Senate to process another 
amendment.
  Mr. REID. It is my understanding that Senator Inhofe's amendment or 
the underlying ethanol amendment will be the pending business after 
Cantwell. That would be fine with us.
  Mr. DOMENICI. Let me ask maybe if we could put in a quorum for a 
minute.
  Mr. REID. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. 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. REID. Mr. President, we have had a conversation as suggested by 
the distinguished chairman. He is, as usual, right.
  I ask unanimous consent that the pending amendment be set aside and 
that Senator Cantwell be allowed to offer her amendment, and that at 
such time as the majority wants to regain the floor to discuss the 
matter of ethanol, Senator Cantwell would step down.
  Mr. DOMENICI. Reserving the right to object, how long do you think 
the Cantwell amendment might take?
  Mr. REID. A couple of hours. With the 12:30 schedule, I would hope we 
would have a vote on ethanol; otherwise, we will debate that and 
whenever that finishes move to another issue, if ethanol is not 
resolved. It is not going to be a day-long debate.
  Mr. DOMENICI. Could I ask the distinguished minority leader another 
question? Do you know if there are any other amendments that are ready 
on your side after Senator Cantwell?
  Mr. REID. It is my understanding that the ranking member of the 
committee has one on renewables that is ready to go, electricity 
renewables, portfolio standard that we have debated on a number of 
occasions. I assume that with all the work done on global warming, 
there are several amendments around, some of which are bipartisan. I am 
sure that is ready to go. So there are a number of amendments ready to 
go.
  Mr. DOMENICI. I think global warming is going to wait until next 
week.
  Mr. REID. Which is fine with us.
  Mr. DOMENICI. I have no objection--just a moment.
  Mr. INHOFE. Reserving the right to object, I would inquire of the 
Chair, was there a UC proposed?
  Mr. REID. Basically, to set aside this amendment.
  Mr. INHOFE. To set aside mine. I object.
  The PRESIDING OFFICER. Objection is heard.
  The Senator from Nebraska is recognized.
  Mr. NELSON of Nebraska. Mr. President, I thank the Chair for giving 
me this brief opportunity to speak about the renewable fuels provisions 
in the Energy bill. I thank my colleagues, Senators Frist and Reid, for 
their leadership, and Senators Lugar, Harkin, Talent, and so many 
others for their efforts in developing this important legislation.
  I am here today to support the renewable fuels provision in the 
Senate Energy bill. This legislation is one of the pillars for economic 
development for rural America, one segment of the population that 
lagged behind in the economic surge of the 1990s, yet a segment 
positioned to play such an integral role in fueling our Nation.
  It is rare when legislation benefits all. It is rare when legislation 
creates only winners. It is clear that the production and use of 
renewable fuels is a win/win situation--a win for farmers from rural 
communities, a win for consumers, and a win for the environment. That 
is why as Governor of Nebraska, I invited other Governors interested in 
creating a group devoted to the promotion and increased use of ethanol 
to join me in Nebraska. In September of 1991, we met, and the 
Governors' Ethanol Coalition emerged. Membership in the coalition 
doubled from 9 to 19 States during the first year, and now stands at 30 
States, with international representatives from Brazil, Canada, Mexico, 
Sweden, and Thailand--30 States, red and blue States.
  First, I mentioned this legislation is a win for farmers in rural 
communities. Three years ago, we completed the farm bill which at the 
time was characterized as one very important part of the economic 
revitalization plan for rural America. Economic stimulus can come in 
many forms and the production of renewable fuels is certainly a viable 
option for rural America, especially--and candidly--in my State of 
Nebraska.
  It is as simple as this: Demand for corn to create ethanol raises 
prices for corn. Demand for sorghum to create ethanol raises prices for 
sorghum. Demand for soybeans to create biodiesel raises prices for 
soybeans. Added to the important feature of farm profitability is the 
idea that increased grain prices result in less assistance to producers 
under the farm bill in the form of loan deficiency payments and 
countercyclical payments--yes, less government assistance. Merging the 
realities of agricultural economics and farm policy into energy 
legislation is the type of responsible legislation the voters sent us 
here to enact.
  I am unabashedly proud of what my home State has accomplished in this 
area. Within the State of Nebraska, 11 ethanol plants currently produce 
523 million gallons of ethanol per year or 12 percent of the Nation's 
total. The benefits of the ethanol program in Nebraska don't just 
involve grain producers. It involves investment in industry, the 
creation of jobs related to plant construction, operation, and 
maintenance. It includes permanent jobs at the ethanol facilities and 
stimulates the economic engines in small

[[Page 12703]]

rural communities. In Nebraska alone, more than 270 million bushels of 
corn and grain sorghum is processed at the plants annually. These 
economic benefits and others have increased each year during the past 
decade due to plant expansion, employment increases, and additional 
capital investment.
  Next, a win for consumers: A study released by the Consumer 
Federation of America points out that motorists could be saving as much 
as 8 cents per gallon of gasoline at the pump if oil refiners would 
blend more ethanol into their gasoline supplies.
  I ask unanimous consent to print in the Record a copy of the Consumer 
Federation of America Report.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Over a Barrel--Why Aren't Oil Companies Using Ethanol To Lower Gasoline 
                                Prices?

                            (By Mark Cooper)

       Across the country, consumers are facing the highest 
     gasoline prices in memory, while oil companies are reporting 
     record profits. The profits at ExxonMobil alone exceeded $25 
     billion in 2004 with every expectation that 2005 profits will 
     be even greater. The Wall Street Journal recently reported, 
     ``Exxon Mobil Corp. is gushing money. Amid soaring crude-oil 
     prices, it recently reported a fourth-quarter profit that 
     amounted to the fattest quarterly take for a publicly traded 
     U.S. company ever: $8.4 billion. That translated into $3.8 
     million an hour.'' As oil companies squeeze every penny they 
     can from consumers' pocketbooks, they continue to import high 
     priced crude oil from the Middle East and elsewhere, engage 
     in mergers that further reduce already constrained 
     competition, and avoid, wherever possible, blending their 
     gasoline with alternative fuels like ethanol.
       In the past, some consumers have expressed skepticism of 
     economic benefits derived from blending ethanol into 
     gasoline. But in the face of rising gasoline prices that 
     skepticism is beginning to wane. For example, Senator Chuck 
     Schumer (D-NY), once a critic of ethanol, now points to the 
     benefits of building local production capacity in New York to 
     create jobs and markets for farmers and lower gasoline prices 
     for consumers.
       Contributing to the changing attitude toward ethanol is the 
     fact that prices for ethanol have declined while pump prices 
     for gasoline now exceed $2.20 per gallon in many parts of the 
     country. As Business Week recently reported, ``. . . since 
     the start of the year, the wholesale price of ethanol has 
     fallen more than 20 percent, to around $1.20 a gallon, while 
     black gold is soaring to record highs.'' Given the sharp 
     decline in ethanol prices, one would expect major oil 
     companies to increase their purchases of ethanol beyond what 
     is required by the Clean Air Act. However, contrary to 
     rational economic expectations, oil companies are not 
     expanding their purchases of lower-priced ethanol, but are 
     continuing to purchase expensive crude oil and raising 
     gasoline prices to consumers. Frustrated, some ethanol 
     producers are beginning to export their product. This creates 
     a situation of lower-priced ethanol leaving the country while 
     higher-priced oil enters it--hardly an indication of rational 
     economic behavior.
       Changing consumer perceptions about the benefits of ethanol 
     are reinforced by several recent developments:
       Rising gasoline prices amidst declining ethanol prices.
       At a time when the price of gasoline all over the country 
     is increasing, the price of ethanol has been declining in 
     part because of increased production, but in part because oil 
     companies are refusing to purchase the available supplies to 
     blend with their gasoline.
       Major oil companies cost consumers as much as 8 a gallon by 
     boycotting lower-cost ethanol.
       With today's price differential between the wholesale price 
     of ethanol and the average wholesale price of gasoline, 
     consumers who purchase gasoline blended with 10 percent 
     ethanol could be saving as much as 8 cents a gallon if oil 
     companies purchased ethanol instead of importing more 
     expensive foreign oil.
       Terminal and other infrastructure exists to handle 
     additional ethanol supplies in markets across the country.
       Companies have built capacity--terminals, storage tanks, 
     blending equipment--to use ethanol. But even though this 
     capacity exists, oil companies have chosen to purchase more 
     expensive petroleum instead of ethanol.


    Gasoline Price Increases, Consumer Costs and Oil Company Profits

       According to the most recent data published by the Energy 
     Information Administration, the average US price for a gallon 
     of regular unleaded gasoline was $2.24 as of April 25, 2005. 
     This price is 42 cents a gallon higher than the year before, 
     a jump of 23 percent. Since December 2004, the average price 
     has climbed 40 cents a gallon. While some of this price 
     increase is due to the higher cost of crude oil, some of it 
     is directly related to continuing efforts by the major oil 
     companies to keep their inventories as tight as possible.
       Decisions about refinery capacity and stockpiling of 
     product are business decisions. Figure 1 below demonstrates 
     that oil refiners have limited gasoline inventories to less 
     than 3 or fewer days of supply above the minimum operating 
     reserves necessary to keep the system functioning since the 
     consolidation of the industry. There is simply no slack in 
     the system and this keeps markets tight. The closure of fifty 
     refineries and the failure to build new ones in the past 
     decade and a half reinforce this strategy.
       Oil company refinery and inventory management has not only 
     kept inventories low and prices high, but also resulted in 
     record high monopoly profits (see Table 1). The 13 oil 
     companies that account for over 84 percent of U.S. refinery 
     runs in 2004 increased their income on U.S. refining and 
     marketing operations in 2004 by more than 130 percent over 
     2003--from $6.6 billion to $15.3 billion. In other words, as 
     oil companies charged consumers an average of nearly 29 cents 
     a gallon more in 2004 than in 2003 for their gasoline, major 
     oil companies were reaping windfall profits. For the average 
     consumer, an increase of 29 cents a gallon means an extra 
     $160 per year in the cost of driving the average car.
       When assessing oil company profitability in the refining 
     and marketing segment, it is important to recognize that 
     ``Domestic refining and marketing has become a more prominent 
     contributor to net income over the past 4 years but has also 
     demonstrated how volatile this segment of the industry can 
     be. In 2000, 2001, and 2003, domestic refining and marketing 
     had 3 of the 4 best years in terms of net income in the 
     history of the FRS survey . . .'' And 2004 was significantly 
     better than 2001, the industry's previous best year.

               TABLE 1.--INCOME FROM DOWNSTREAM OPERATIONS
                        [In millions of dollars]
------------------------------------------------------------------------
                                          Refining/Marketing Income
              Company              -------------------------------------
                                           2003               2004
------------------------------------------------------------------------
ExxonMobil........................           $1,348.0           $2,186.0
Shell.............................              379.0            1,686.0
ChevronTexaco.....................              482.0            1,261.0
BP................................              748.0            2,478.0
ConocoPhillips....................            1,272.0            2,743.0
Valero............................              621.5            1,803.8
Marathon..........................              819.0            1,406.0
Amerada Hess......................              643.0              977.0
Murphy............................              -21.2               53.4
CITGO.............................              439.0              625.0
Sunoco............................              352.0              609.0
Premcor...........................              116.6              477.9
Tesoro............................               76.1              327.9
Total.............................              6,730            15,219
------------------------------------------------------------------------
Source: Company Annual Reports.

       The first quarter of 2005, with dramatically rising crude 
     oil prices presents a stunning example of how domestic oil 
     companies exercise market power over price to abuse 
     consumers. If rising raw material (crude oil) costs were the 
     problem then we would expect the domestic spread to decline 
     as competition and consumer resistance (the elasticity of 
     demand) squeezed the margin between the cost of inputs and 
     the retail price. The opposite has happened because the 
     industry is not competitive. Only in 2002, when demand was 
     very weak due to the recession following September 11, did 
     margins return to their historic levels. The winter of 2002 
     also taught the industry a lesson, that competition on price 
     lowers profits.
       The rising domestic spread numbers translate immediately 
     into rising profits in the domestic refining and marketing 
     industry (see Table 2). For the ten largest companies that 
     refine crude oil in the U.S. profits increased by almost 60 
     percent in the first quarter of 2005 compared to the first 
     quarter of 2004. This was a larger increase in profits than 
     domestic exploration and production (16 percent) and total 
     oil company operations (39 percent). There is no doubt that 
     crude oil price increases contributed to the increase in the 
     price at the pump, but so too did increasing margins and 
     profits for domestic refining and marketing.

                                         TABLE 2.--OIL INDUSTRY PROFITS
----------------------------------------------------------------------------------------------------------------
                                                   Refining/Marketing U.S. Only            Global Total
                     Company                     ---------------------------------------------------------------
                                                      1q 2004         1q 2005         1q 2004         1q 2005
----------------------------------------------------------------------------------------------------------------
EXXONMOBIL......................................            $392            $645          $5,440          $7,860
SHELL...........................................             215             405           4,702           6,673
BP..............................................             827           1,429           4,912           6,602
CONOCOPHILLIPS..................................             403             570           1,616           2,912

[[Page 12704]]

 
CHEVRONTEXACO...................................             276              58           2,562           2,677
VALERO..........................................             273             622             248             534
MARATHON........................................              49             210             258             324
AMERADA HESS....................................             137             102             281             219
MURPHY..........................................             -11              -8              98             113
PREMCOR.........................................              53             129              53             129
      TOTAL.....................................           2,614           4,162          20,170         28,043
----------------------------------------------------------------------------------------------------------------
Source: Company 1q2005 Reports.

       In contrast to gasoline prices, which have risen as a 
     result of rising input prices and the exercise of market 
     power by domestic refiners, ethanol prices have not risen 
     because the cost of the raw materials has not risen and the 
     producers of ethanol do not have market power.
       So why don't oil companies use more ethanol to keep price 
     increases down? The answer is simple. The market is not 
     competitive enough to force them to worry about price 
     increases. They also do not own the ethanol. They prefer to 
     process more crude oil and make more money by keeping the 
     price up.


           Gasoline Price Decreases Consumers Aren't Getting

       While the oil marketplace has become much less competitive 
     over the past ten years because of huge mergers between the 
     largest companies, one would still expect that the 
     availability of lower cost gasoline components would attract 
     buyers.
       In sharp contrast to the oil industry, the ethanol industry 
     has become more competitive. According to a recent study 
     ``ethanol production was the only agricultural sector in 
     which concentration has steadily decreased. A decade ago, the 
     top four companies owned 73 percent of the ethanol market. 
     Today the top four companies control 41 percent of the 
     ethanol produced.
       But, when it comes to ethanol, oil companies have failed to 
     respond. Over the last several months, ethanol prices have 
     fallen by between 40 cents and 50 cents a gallon in different 
     parts of the country, yet there is little, if any, evidence 
     that refiners have taken advantage of the opportunity to 
     purchase any supplies other than those required to meet the 
     requirements of the Clean Air Act. According to Bernie Punt, 
     general manager of an ethanol plant in Sioux Center, Iowa, 
     ``Unless most of these oil companies are told by the 
     government they have to use it, they won't.''
       Table 3 below shows price changes for spot or wholesale 
     prices for ethanol and regular reformulated gasoline sold in 
     three major U.S. markets between November 2004 and March 
     2005. In all three markets, the spot price of ethanol fell 
     between 41 cents and 50 cents a gallon while the spot price 
     of gasoline rose between 13 cents and 30 cents a gallon.
       Ethanol production has been climbing steadily as new 
     producers continue to add capacity that is expected to reach 
     4 billion gallons this year. On a monthly basis, production 
     of ethanol reached an all-time high of 245,000 barrels per 
     day in February.

                                      TABLE 3.--ETHANOL AND GASOLINE PRICES
----------------------------------------------------------------------------------------------------------------
                             Market                                    Nov.            Mar.           Change
----------------------------------------------------------------------------------------------------------------
                                        Spot Ethanol Prices (per gallon)
 
LA..............................................................          $1.785          $1.373         -$0.412
CHIC............................................................           1.821           1.394          -0.427
NY..............................................................           1.771           1.275          -0.496
 
                                  Spot Regular RFG Gasoline Prices (per gallon)
 
LA..............................................................           1.386           1.682          +0.296
CHIC............................................................           1.256           1.492          +0.236
NY..............................................................           1.265           1.398          +0.133
----------------------------------------------------------------------------------------------------------------
Source: Platt's Oilgram Price Report.

       Ethanol is blended with gasoline to help reduce air 
     pollution. In California, New York and Connecticut--states 
     which have phased out the use of MTBE--ethanol must be 
     blended with gasoline to meet Clean Air Act requirements for 
     oxygenated fuel. In New York and Connecticut, 10 percent 
     ethanol is blended with 90 percent gasoline while in 
     California, 5.7 percent ethanol is blended with 94.3 percent 
     gasoline.


  gasoline price reductions to consumers with increased use of ethanol

       The best example of how consumers could realize lower 
     gasoline prices is using sales of petroleum products and 
     ethanol in New York harbor (see Table 4). Gasoline and 
     ethanol shipped into New York harbor serve markets in New 
     Jersey where refiners still use MTBE and New York and 
     Connecticut where refiners blend ethanol. Assuming that 
     refiners and gasoline marketers in New York harbor took 
     advantage of lower-priced ethanol during March, they could 
     have lowered consumer gasoline prices by 5 cents a gallon in 
     New Jersey compared to RFG using MTBE and by 7 cents a gallon 
     compared to conventional gasoline used outside of the 
     metropolitan areas required use of RFG.

                                            TABLE 4.--PRICES FOR REFORMULATED GASOLINE--NEW YORK SPOT PRICES
                                                                     [$ per gallon]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      NY RFG-MTBE                          NY RFG-ETH         Diff.           NYRUL             NY            RFG-ETH          Diff.
--------------------------------------------------------------------------------------------------------------------------------------------------------
March 2005.............................................           $1.40           $1.35           $0.05            $1.44           $1.37           $0.07
--------------------------------------------------------------------------------------------------------------------------------------------------------

       Another example where consumers could save money at the 
     pump is California, the nation's highest price gasoline 
     market (with the exception of Hawaii). If, instead of just 
     blending 5.7 percent ethanol, California refiners chose to 
     blend 10 percent ethanol as they do in New York, Chicago and 
     Connecticut, California motorists could save as much as 8 
     cents a gallon.
       These potential cost savings to consumers represent only 
     the arithmetic result of blending more lower cost ethanol 
     with higher cost gasoline. The increase in available supplies 
     could have an additional effect in lowering prices and 
     reducing volatility.
       Oil companies have the capacity to use more ethanol to 
     lower consumer gasoline prices.
       In numerous markets across the country, oil companies have 
     put in place all the necessary equipment to blend ethanol. In 
     Atlanta, for example, where oil companies had prepared to 
     supply ethanol blends starting January 1, 2005, Chevron with 
     a market share of 14 percent stated it ``invested over 
     $2,000,000'' to its Atlanta area gasoline supply terminal. In 
     northern New Jersey, oil companies that supply metropolitan 
     New York (including southern Connecticut) have had capacity 
     to blend ethanol in place since January 1, 2004. Instead of 
     supplying more expensive reformulated gasoline (RFG) with 
     MTBE, these companies could choose to blend with less 
     expensive ethanol to supply outlets in northern New Jersey. 
     And in most Midwestern states--Iowa, Nebraska, Illinois, 
     Missouri, and others--where ethanol is blended in mid-grade 
     (89 octane) gasoline, there is nothing to prevent oil 
     companies from blending ethanol in regular (87) and premium 
     (91) grades of gasoline.


                               Conclusion

       The consumer implications of the refusal to use more 
     ethanol are clear. While gasoline refiners are using as much 
     ethanol as required, the same refiners are not buying lower-
     cost ethanol in other gasoline markets. Thus, consumers in 
     many parts of the country where ethanol can be delivered to 
     existing storage and terminal facilities are not receiving 
     lower cost supplies and are paying as much as 8 cents a 
     gallon more at the pump than they would if oil refiners 
     purchased ethanol to blend.
       The broader public policy implications should not be 
     overlooked because the added abuse of consumers frustrates 
     the nation's ability to address the fundamental energy 
     problem. The failure of the oil industry to increase the use 
     of ethanol undercuts the claim that they need to drill in 
     Alaska to solve the problem for two reasons. First, we could 
     increase the production of ethanol much faster and provide a 
     lot more output to displace imported oil than new finds in 
     Alaska could ever produce. Second, the same companies that 
     dominate the gasoline business would control the flow of oil 
     from Alaska, so there is not guarantee that it would have a 
     substantial impact on prices, even if the amount of oil found 
     was significant.
       When the American people are asked about the current 
     gasoline situation, they blame oil companies and the Bush 
     administration. This analysis suggests that they are correct 
     in that assessment. The Bush Administration defends the oil 
     companies, whose increased profits and strategic business 
     actions have played a big part in the recent price increases, 
     keeps asking the American people to

[[Page 12705]]

     make hard sacrifices to deal with the problem in the long 
     term, while the oil companies get off easy and policy makers 
     fail to implement the simple and obvious policies that would 
     help consumers in the short and long term.
       The New York Times took the administration to task because 
     President Bush:

     ``. . . completely ignored the surest way to reduce demand 
     and thus oil dependency, which is to improve the fuel 
     efficiency of America's cars and trucks. Indeed, everything 
     Mr. Bush said seemed designed to divert attention from this 
     simple and technologically feasible idea . . . Then, too, he 
     could not resist the deceptions that make debating energy in 
     Washington such a frustrating matter. These include . . . 
     drilling in the Arctic Natural Wildlife Refuge.''
       Pointing out that the ``House bill is dreadful,'' the Times 
     concluded that this ``leaves the job of fashioning a coherent 
     strategy in the Senate's hands.'' Among the ideas with merit 
     that the Times noted for addressing the gasoline problem, in 
     addition to ``stricter fuel economy standards,'' is creating 
     ``biofuels'' from agricultural waste. The irony is that we 
     already have a ``biofuels'' industry that is not being fully 
     utilized.
       Until policymakers start advocating sensible and simple 
     policies in the short and long term, American consumers are 
     right to resist the bad policies that are being foisted on 
     them.

  Mr. NELSON of Nebraska. The recent decline in ethanol prices, coupled 
with surging pump prices for gasoline, have created a market dynamic in 
which increased ethanol use could help curtail record high gas prices. 
Consumers in many parts of the country where ethanol can be delivered 
to existing storage and terminal facilities are not receiving lower 
cost supplies and are paying as much as 8 cents a gallon more at the 
pump than they would if oil refiners purchased ethanol to blend. 
Blending high-priced gasoline with more modestly priced ethanol results 
in a more affordable final product. By using ethanol, oil refiners have 
an opportunity to pass along real savings to consumers during this 
period of high gasoline prices.
  The Consumer Federation of America cites several reasons for the 
dramatic increase in gasoline prices, including tight crude oil 
inventories, inadequate oil refinery capacity, lack of competition, and 
the oil industry's increasing market power. In contrast to gasoline 
prices, ethanol prices have actually fallen during the past 6 months.
  As an example, the price of ethanol on the Chicago spot market hit 
$1.82 per gallon in November 2004 but averaged about $1.18 per gallon 
last month. At these prices, why don't oil companies blend more ethanol 
to lower consumer prices? We have an opportunity to see that consumers 
benefit from cleaner burning, affordable, and domestically produced 
fuel.
  Finally, a win for the environment: For environmental and health 
concerns, the Nation decided to clean up the fuels which have powered 
America for nearly a century. The Clean Air Act identified numerous 
areas of the country which must reduce or eliminate their pollution 
levels. Those areas have been meeting the challenges of the Clean Air 
Act through changing the gasoline and diesel fuels used, either year-
round or seasonally. Studies show ethanol reduces emissions of carbon 
monoxide and hydrocarbons by 20 percent, and particulates by 40 percent 
in 1990 and newer vehicles. In 2001 alone, ethanol reportedly reduced 
greenhouse gas emissions by 3.6 million tons or the equivalent of 
removing more than 520,000 vehicles from the road.
  Now and through the next several years, cleaner and cleaner fuels 
such as ethanol, natural gas, propane, and biodiesel will be used in 
cars, trucks, and buses. Today's key issue is to determine which 
alternatives will extend or replace gasoline and diesel fuel to reduce 
pollution.
  We need to be working hard to craft a comprehensive rural development 
plan that will spur investment in agribusiness and promote economic 
activity in the agricultural sector. This Energy bill, and the 
renewable fuels standard contained within, is an important part of such 
a rural development plan and is key to reversing the realities of 
outmigration in the rural areas.
  If passed, this fuels language will establish a 4.0-billion-gallon 
renewable fuels standard in 2006, growing every year until it reaches 8 
billion gallons by 2012. This is a responsible approach to meeting the 
demands of an ever-increasing demand for fuel sources. Additional 
benefits to this legislation include the displacement of foreign 
supplies of crude oil, reduction in the U.S. trade deficit, and the 
creation of tens of thousands of jobs throughout the United States.
  It is quite apparent that increased use of ethanol will do much to 
boost a struggling U.S. agricultural economy and at the same time will 
help establish a more sound national energy policy.
  A choice for renewable fuels is a choice for America, its energy 
consumers, its farmers, and its environment. It will help us to reverse 
our 100-year-old reliance on fossil fuels, a more pressing concern than 
ever given the unrest in the Middle East and increased competition for 
energy from growing economies throughout the world.
  If each State were to produce 10 percent of its own domestic 
renewable fuel as Nebraska does, America will have turned the corner 
away from dependence on foreign sources of energy. When you take a hard 
look at the facts, you will see that this legislation is nothing but 
beneficial for America.
  The Fuels Security Act is balanced, comprehensive, and is the result 
of the dedication of so many, especially Senator Lugar and Senator 
Harkin.
  Now I ask my colleagues to join me in promoting new opportunities for 
the technologies that will put our Nation and our world's 
transportation fuels on solid, sustainable, environmentally enhancing 
ground. We owe it to our country now and to future generations to pass 
this legislation.
  Mr. President, I yield the floor and I suggest the absence of a 
quorum.
  The PRESIDING OFFICER (Mr. Graham). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. THOMAS. 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. THOMAS. Mr. President, I am delighted that we are now into the 
debate and soon the passage of our energy bill. This is a bill we have 
worked on for several years. It is a bill that is an energy policy for 
this country. It looks ahead through the years and tries to get an idea 
of what our needs are going to be and how we fill those needs. It is 
something we really need.
  Certainly, everyone recognizes increasingly the profound effect it 
has on our lives. Look outside at the thousands of cars. All of them 
are running on gasoline, of course. Look at electricity. We take it for 
granted. We turn the lights on, and we do not think of where it comes 
from or how it got there. Air-conditioning is the same. We have noticed 
that a lot the last few days. Think of what it would be like if we did 
not have air-conditioning. We would probably be on recess, and I would 
go back to Wyoming.
  All of our technology now is tied to computers. We do not think much 
about it. This is an opportunity for us to give some analysis to how we 
provide this and, of course, costs. We do pay some attention to the 
costs.
  We have talked about this for years, and we have had bills on the 
Senate floor. In the last session, we had bills passed in the Senate 
and in the House. We went to a conference in which they were put 
together. We came back to the Senate floor, and over a couple of 
smaller or singular items, we lost. So we have not had a comprehensive 
energy bill.
  We rely increasingly on foreign resources, some 60 percent or so on 
foreign oil. Unfortunately, that is continuing to grow. At the same 
time it grows for us, the demand grows in other countries. Even though 
there is some increased production, we see a smaller amount coming, and 
we see the prices continue to go up.
  We have greater demand. One of the things that has to be in a policy 
is a decision about efficient use and conservation so that not only do 
we talk about supply but we talk about how we can more efficiently use 
the resources we do have.
  We think quite a bit about renewables. We think, Oh, my gosh, we do

[[Page 12706]]

not need to use oil all the time, there must be a lot of other things. 
Indeed, there are. The fact is that they are in the future. They are 
yet in need of a great deal of research, and right now, if we take out 
hydro, which is a renewable, about 3 percent of our power is provided 
by renewable energy resources. I am optimistic that over time that can 
certainly be larger, but right now it is a very small part of the 
overall mix.
  We have natural gas prices which have reenergized the effort, and we 
should pay attention to clean coal. Over the years, it has been easier, 
frankly, and somewhat less expensive to build generating plants that 
are fueled by gas, and so that is what has happened. We have smaller 
plants closer to the market, so we do not have to worry about the 
transmission as much, when the fact is that our greatest fossil 
resource for the future is coal. Coal is the largest generator of 
electricity, but we can use gas for many more things than we can coal.
  With coal there are some challenges. One challenge is to be able to 
generate electricity and still take care of the clean air and 
environmental problems that go with that. So we want to emphasize that 
need for making clean coal technologies. Hydrogen is an energy that can 
come from coal as well. In fact, there are plants now being planned 
that will make synthetic diesel out of coal. So, again, that is an 
alternative source from where we are now.
  We have some alternatives. We are importing a good deal of liquefied 
natural gas, which is also more expensive and has created, some 
controversy about the necessary facilities to have dockings for those 
kinds of things. All of these are very difficult issues.
  I have been on the committee a good long time and have enjoyed it 
very much and certainly appreciate the leadership we are getting from 
our chairman and also our Democrat ranking member to work toward these 
things, but I hope that we do look out long term. We are not going to 
solve these problems next week or next month. We have to look out a 
little ways and say, all right, what are our needs, how are we going to 
meet those needs, and what do we have to do in the long term to get 
there. I hope this is a roadmap for the future. That is what it has 
been.
  For over 4 years now, the President and the Vice President have been 
working. My colleagues will recall they had an energy task force which 
became a little controversial for unknown reasons, really, but that was 
one of the first items this administration talked about, and properly 
so. One of the controversies was that both of these gentlemen had been 
in the energy business, but all that did was give them more knowledge 
about it.
  Since that time, we have experienced higher prices and low prices, 
and now we are back to higher prices. We have experienced blackouts, 
which, of course, are a possibility at any time.
  There are some things we can do in terms of generation. There have 
been no electric generation plants built in a number of years, and we 
are right up to capacity, and the same way with refineries. In fact, 
some say we can get more oil shipped in from other places and refined 
here, but we do not have the refining capacity. So those are some of 
the things we need to talk about.
  I emphasize again to my colleagues that we need a balanced program. I 
know we all get involved in different aspects of it as it impacts our 
communities and our States, but the fact is, when it is all over, we 
need to deal with alternatives, we need to deal with efficiency, we 
need to deal with conservation, we need to deal with domestic 
production, and we need to deal with research for alternatives and 
renewables. All of those things have to go together.
  Then we get into the electric business. We have to talk about 
transmission and about a lot of things. It is not an easy subject. When 
a subject is brought to the Senate floor that has that many aspects, 
many of which affect States and communities differently--for instance, 
offshore drilling. Well, in Wyoming, we are not too interested in 
offshore drilling as it affects us. We are interested in it in that it 
is the largest resource we have for the future. So we have to deal with 
different facts in different places. We have a chance now to pass a 
balanced and comprehensive bill.
  I am, obviously, very interested in this issue, partly because I am 
on the committee but more importantly because it is very important for 
our country. I come from a State that has incredible natural resources. 
They mean very much to us economically, but more than anything we are a 
resource for the whole country. We have probably more coal than any 
other State. We have low sulfur coal. We have coal that burns 
relatively cleaner than most. We need to continue to make it even more 
so. We have oil.
  Some of the earliest oilfields in the West were in Wyoming, and they 
continue to produce. We are finding new ways to try to recapture oil 
that we have not been able to bring out of the Earth. We can do that. 
We have had a whole new growth of natural gas called methane gas. It is 
engulfed in water under the ground in the relatively shallow wells. We 
have uranium. We had uranium mines active a number of years ago, and 
then we kind of got away from nuclear powerplants. Now there is a new 
opportunity to go back into that area and some real advantages to that, 
particularly in terms of clean air and climate control.
  Nuclear powerplants, we kind of think, well, that is a funny thing. 
We do not know much about them. I think 40 percent of the energy in 
Illinois is produced now with nuclear plants. We are concerned about 
the waste areas, such as the Yucca Mountain issue out in Nevada. The 
fact is, however, that there are opportunities to do things better 
there. We can look again at France. France uses almost all nuclear 
power. They have a system of recycling uranium so they do not have the 
waste the way we do. So there are opportunities to do that.
  We also have quite a bit of wind, and so we can capture wind energy 
as well.
  These are the kinds of things we must do. We must modernize 
conservation such as with cars--and we are doing that, but it takes a 
while--so we get better mileage. We are finding household equipment 
that better utilizes energy and electricity. We have to modernize our 
infrastructure. This is a tough one, too.
  One of the issues most of us like to talk about is mine-mouth 
generation for coal-powered electricity but yet generated at the mine. 
One has to get it to the marketplace, and that takes very efficient 
transmission, more transmission than we have now.
  So these are some of the things we need to do. At the same time we 
work with more production and different kinds of production with 
research, we need to protect the environment. We have issues in the 
West. Half of our State, nearly 85 percent of Nevada is Federal lands. 
So we have to have a program that allows for multiple use of public 
lands so that we can continue to use them for grazing, fishing, and 
wildlife, and at the same time in careful ways we can have production 
of energy as well.
  This bill sets some direction in terms of research and incentives. We 
are beginning to do what we have not done before that may not be as 
efficient initially economically, but if we can provide some tax 
credits, we can provide some sort of assistance, then it will become 
efficient, and then we can back out of that. The way businesses are 
initiated into new things is to provide some incentive. These are all 
things most of us would agree to, and the opportunity to pass them is 
now.
  The House has passed their energy bill, and when we pass ours, we 
will go to the conference committee and work out some differences. 
There are some differences, and there will be differences here. There 
are different ideas about what we do on world climate activities, 
Kyoto. I have been to several of the Kyoto meetings, and over the whole 
world there are different ideas. I seek to remind folks when I go there 
that we are not putting on some of the regulations that some countries 
are. We want our economy to continue, and at the same time we are 
spending more

[[Page 12707]]

in research for clean air and on the global situation than the whole 
rest of the world put together. What really is important is to find new 
ways to be able to maintain the economy, manufacturing and production, 
and do it in such a way that it does protect the economy.
  National security, of course, is obviously a real part of this. As we 
become more dependent on foreign countries' resources, there is some 
question about our security. We are getting 62 percent of our oil from 
outside of the United States. Fortunately, much of that comes from 
Canada, so that is a little less concerning. But we are at the hands of 
Venezuela and lots of other places if we are not able to be a little 
more dependent on ourselves. Energy independence depends on the things 
I have talked about: conservation, efficiency, and new sources of 
energy.
  The global energy demand is changing as well. Certain places, such as 
China, are using a great deal more energy than they did just a few 
years ago. So the demand for coal has changed where they are importing 
the kinds of things they were not importing before. India, the whole 
Asian picture is changing.
  So these are some of the things that I believe we need to take a look 
at. We need to be realistic about it. Sometimes we get in sort of a 
fantasy that we can do all of this with renewables and we do not need 
to worry about oil and coal. Frankly, at least for the foreseeable 
future, that is not the case. We are getting about 3 percent of our 
energy from renewables at this point.
  We will get more. But, nevertheless, we have to also continue to 
improve and make sure we have those kinds of sources of energy that we 
now can depend on.
  I am particularly involved and interested in the electricity portion 
of it. We need to encourage investment in generation as the demand 
increases--and it does, constantly. Look around our cities. Even in our 
rural areas, there is an increasing demand. Everything we do demands 
more energy. We need to generate the energy.
  It becomes difficult, of course, particularly on private lands and 
some Federal lands, to get efficient transmission. We think there are 
some possibilities of getting more efficient so the same transmission 
lines can carry a great deal more of a load than they have in the past.
  When we get into multiple kinds of ownership, we get controversy 
about how you have access to the lines and all those things, but we can 
work those out. That is partly what we are doing.
  I again congratulate the leadership on this committee for getting us 
where we are. I am committed to doing whatever I can to get it through 
because I think it is so important. I believe we have a good bill, a 
comprehensive bill, a bill that deals with all the aspects of the 
future. It helps create jobs and maintain the economy--which is, of 
course, one of the key things--and to keep this country self-reliant 
and not dependent on the rest of the world.
  I hope we can move forward to deal with the issues, to talk about 
them. It is all right to have different views. But I hope we don't get 
into objecting and holding up things just because we have a point of 
view.
  Offshore drilling, already there is some debate about it. We are 
willing to give the States a lot of their own decisionmaking with 
regard to offshore. We are not going to tell them what to do.
  We can make this work. I hope we can move forward and get this job 
done. Let's get it done.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Let me say, before the distinguished Senator leaves the 
floor, how much I appreciate his comments today and his analysis of 
this bill. But more than that, around the Senate there are some 
people--I guess, in the parlance of the racetrack, some are show horses 
and some are work horses. This Senator is a work horse. He has been on 
this committee for a few years--not as long as this Senator, but that 
is just because I have been here so long. Hardly anybody has been here 
longer than this Senator. But he works all the time on this. He knows a 
lot about this bill. He has some specialties in this area to which he 
has contributed immensely.
  Some things on this bill he is right on. He is more correct than the 
bill. He didn't get to do what he wanted on some of them, but he 
understands that we have a good bill.
  It is hard work. He was there all the time, helping us, doing his 
share, pulling his part of the load, helping us get this bill through.
  I want those who are aware of him and know of him to understand that 
is what the Senator from New Mexico thinks about that. I want the 
record to reflect that.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DOMENICI. Mr. President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                   Modifications to Amendment No. 779

  Mr. DOMENICI. Mr. President, I send modifications to the pending 
amendment to the desk. It has been approved by both sides and the 
parties to this discussion.
  The PRESIDING OFFICER. The amendment is so modified.
  The modifications to the amendment (No. 779), are as follows:

       1. Page 27, beginning on line 20, delete ``section'' and 
     all that follows through the parenthetical on line 22, and 
     insert ``Title XIV of the Energy Policy Act of 2005''.
       2. Page 29, beginning on line 5, delete ``notwithstanding'' 
     and all that follows through the parenthetical on line 8.
       3. Page 30, delete lines 5 through 13, and renumber 
     paragraphs (7) and (8) accordingly.
       4. Page 39, line 1, delete ``significant'' and insert 
     ``increased''.
       5. Page 39, lines 3 and 4, delete ``important to the cost-
     effective implementatation of'' and insert ``needed to 
     implement''.
       6. Page 45, line 11, strike ``the law in effect on the 
     day'' and insert ``any law enacted or in effect''.
       7. Page 52, line 4, strike ``2005'' and insert ``2006''.

                           *   *   *   *   *

       ``(B) Reliance on existing requirements.--To avoid 
     duplicative requirements, in carrying out subparagraph (A), 
     the Administrator shall rely, to the maximum extent 
     practicable, on reporting and recordkeeping requirements in 
     effect on the date of enactment of this section.
       ``(3) Confidentiality.--Activities carried out under this 
     subsection shall be conducted in a manner designed to protect 
     confidentiality of individual responses.
       ``(c)  Cellulosic Biomass Ethanol And Municipal Solid Waste 
     Loan Guarantee Program.--
       ``(1) In general.--Funds may be provided for the cost (as 
     defined in the Federal Credit Reform Act of 1990 (2 U.S.C. 
     661 et seq.)) of loan guarantees issued under title XIV of 
     the Energy Policy Act of 2005 to carry out commercial 
     demonstration projects for celluosic biomass and sucrose-
     derived ethanol.
       ``(2) Demonstration projects.--
       ``(E) there is a reasonable assurance of repayment of the 
     guaranteed loan.
       ``(4) Limitations.--
       ``(A) Maximum guarantee.--Except as provided in 
     subparagraph (B), a loan guarantee under this section may be 
     issued for up to 80 percent of the estimated cost of a 
     project, but may not exceed $250,000,000 for a project.
       ``(B) Additional guarantees.--
       ``(i) In general.--The Secretary may issue additional loan 
     guarantees for a project to cover up to 80 percent of the 
     excess of actual project cost over estimated project cost but 
     not to exceed 15 percent of the amount of the original 
     guarantee.
       ``(ii) Principal and interest.--Subject to subparagraph 
     (A), the Secretary shall guarantee 100 percent of the 
     principal and interest of a loan made under subparagraph (A).
       ``(5) Equity contributions.--To be eligible for a loan 
     guarantee under this section, an applicant for the loan 
     guarantee shall have binding commitments from equity 
     investors to provide an initial equity contribution of at 
     least 20 percent of the total project cost.
       ``(6) Insufficient amounts.--If the amount made available 
     to carry out this section is insufficient to allow the 
     Secretary to make loan guarantees for 3 projects described in 
     subsection (b), the Secretary shall issue loan guarantees for 
     1 or more qualifying projects under this section in the order 
     in which the applications for the projects are received by 
     the Secretary.
       ``(7) Approval.--An application for a loan guarantee under 
     this section shall be approved or disapproved by the 
     Secretary not later than 90 days after the application is 
     received by the Secretary.
       (A) increased use of MTBE could result from the adoption of 
     that standard; and
       (B) the use of MTBE would likely be needed to implement 
     that standard;

[[Page 12708]]

       (4) Congress is aware that gasoline and its component 
     additives have leaked from storage tanks, with consequences 
     for water quality;
       (5) the fuel industry responded to the fuel oxygenate 
     standard established by Public Law 101-549 by making 
     substantial investments in--
       (A) MTBE production capacity; and
       (B) systems to deliver MTBE-containing gasoline to the 
     marketplace;
       (6) when leaked or spilled into the environment, MTBE may 
     cause serious problems of drinking water quality;
       (7) in recent years, MTBE has been detected in water 
     sources throughout the United States;
       (8) MTBE can be detected by smell and taste at low 
     concentrations;
       (9) while small quantities of MTBE can render water 
     supplies unpalatable, the precise human health effects of 
     MTBE consumption at low levels are yet unknown as of the date 
     of enactment of this Act;

       ``(II) ending on the effective date of the prohibition on 
     the use of methyl tertiary butyl ether under paragraph (5).

       ``(D) Authorization of appropriations.--There is authorized 
     to be appropriated to carry out this paragraph $250,000,000 
     for each of fiscal years 2005 through 2008.''.
       (d) No Effect on Law Concerning State Authority.--The 
     amendments made by subsection (c) have no effect on the law 
     in effect before the date of enactment of this Act concerning 
     the authority of States to limit the use of methyl tertiary 
     butyl ether in motor vehicle fuel.

     SEC. 212. ELIMINATION OF OXYGEN CONTENT REQUIREMENT FOR 
                   REFORMULATED GASOLINE.

       (a) Elimination.--
       (1) In general.--Section 211(k) of the Clean Air Act (42 
     U.S.C. 7545(k)) is amended--
       (A) in paragraph (2)--
       (i) in the second sentence of subparagraph (A), by striking 
     ``(including the oxygen content requirement contained in 
     subparagraph (B))'';
       (ii) by striking subparagraph (B); and
       ``(vi) Regulations to control hazardous air pollutants from 
     motor vehicles and motor vehicle fuels.--Not later than July 
     1, 2006, the Administrator shall promulgate final regulations 
     to control hazardous air pollutants from motor vehicles and 
     motor vehicle fuels, as provided for in section 80.1045 of 
     title 40, Code of Federal Regulations (as in effect on the 
     date of enactment of this subparagraph).''.
       (c) Commingling.--
       (1) In general.--Section 211(k) of the Clean Air Act (42 
     U.S.C. 7545(k)) is amended by adding at the end the 
     following:
       ``(11) Commingling.--The regulations under paragraph (1) 
     shall permit the commingling at a retail station of 
     reformulated gasoline containing ethanol and reformulated 
     gasoline that does not contain ethanol if, each time such 
     commingling occurs--
       ``(A) the retailer notifies the Administrator before the 
     commingling, identifying the exact location of the retail 
     station and the specific tank in which the commingling will 
     take place; and

  Mr. DOMENICI. Just for the benefit of the Senators, I know it is 
close here to leaving, but we are getting close also to a vote. I am 
very hopeful that will occur in a couple of minutes here. We will ask 
for the yeas and nays and have a vote on the ethanol amendment, as 
modified, which I think will make many people happy, before we draw to 
a close this afternoon. We will not be closing the Senate, but as far 
as voting, we will wait until the Senators return from the Nebraska 
trip on behalf of the late Senator Exon.
  Mr. BINGAMAN. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DOMENICI. Mr. President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. OBAMA. Mr. President, I rise today in support of the amendment 
offered by the Senator from New Mexico.
  During the debate on this energy bill, we have already heard and will 
continue to hear about the importance of strengthening the energy 
independence of America. The phrase ``energy independence,'' however, 
must be heard no longer as a routine utterance. It must be heard as an 
urgent warning of the most serious magnitude.
  The sirens are sounding, and I fear that we are not listening.
  The days of running a 21st century economy on a 20th century fossil 
fuel are numbered--and we need to realize that before it is too late. 
The price of gas is now around $2.24 per gallon. Crude oil is now 
soaring over $50 a barrel. The Saudis are pumping at near-full 
capacity, and their own oil minister says that the price of crude will 
probably stay at this price for the rest of the year. And Goldman Sachs 
predicts that soon it may reach $100 a barrel.
  Imagine what that would do the price of gas--$100 for one barrel of 
oil.
  Our own Department of Energy predicts that American demand will jump 
by 50 percent over the next 15 years. And as developing countries like 
China and India continue to grow, the world will be faced with more 
drivers than it knows what to do with. Right now, there are 800 million 
cars on the road. By 2050, that number will grow to 3.25 billion.
  Think about that 3.25 billion cars guzzling oil that is becoming more 
limited and more expensive with each passing day. We could open up 
every corner of the United States for drilling and tell the oil 
companies to go to town, but with only 3 percent of the world's oil 
supplies, it wouldn't even make a dent in the problem.
  Of course, most of the rest of the world's oil lies in the Middle 
East, a region we have seen torn by war and terror. Every year, we send 
$25 billion to these countries to buy oil. It doesn't matter if they 
are budding democracies, despotic regimes with nuclear intentions, or 
havens for the madrasas that plant the seeds of terror in young minds 
they get our money because we need their oil.
  What is worse--this oil isn't even well-protected. Over the last few 
years, terrorists have stepped up their attempts to attack poorly 
defended oil tankers and pipelines. And a former CIA agent tells us 
that if a terrorist hijacked a plane in Kuwait and crashed it into an 
oil complex in Saudi Arabia, it could take enough oil off the market 
and cause more economic damage in the United States than if a dirty 
nuclear weapon exploded in downtown Manhattan.
  Recently, I came across a quote from Henry Ford, the carmaker, who 
said these prophetic words in 1916:

       All the world is waiting for a substitute to gasoline. When 
     that is gone, there will be no more gasoline, and long before 
     that time, the price of gasoline will have risen to a point 
     where it will be too expensive to burn as a motor fuel.

  Mr. Ford was right--he was just ahead of his time. His words were 
spoken before the shocks to our economy caused by the oil crisis of the 
1970s, before the world's oil fields became areas of turmoil and 
terrorism, before growing nations like China and India joined us at the 
trough of massive petroleum consumption.
  We need a 21st century energy policy. Whether this bill accomplishes 
that remains to be seen. But it is clear that part of the solution must 
be greater use of renewable fuels instead of continued reliance on 
foreign oil. That is why I am astonished that there is any effort in 
this Chamber to eviscerate a renewable fuels standard that can and 
will--further America's energy independence while also strengthening 
our economy.
  The Nation's ethanol production is expected to exceed 4 billion 
gallons this year. In the coming years, ethanol production is expected 
to be so robust that as much as 8 billion gallons of renewable fuels 
could be in our fuel supply by 2012.
  Right now, outside Washington, in cities and towns, on farms and in 
factories across America, there is hope for us to do so much more than 
we have been doing on energy. Whether it is farming the corn in 
Galesburg that can fuel our cars or fine-tuning the microchip in 
Chicago that let's us plug them in, people are taking America's energy 
future into their own hands with the same sense of innovation and 
optimism that has always kept our country on the forefront of discovery 
and exploration.
  They deserve a government that can see that future too.
  The American people are asking us to address high gas prices. The 
American people are asking us for greater national security. The 
American people are asking us to invest in job creation. The renewable 
fuels standard in the Domenici amendment proposes to do

[[Page 12709]]

just that in 7 years, and I am proud to be a cosponsor of the 
amendment.
  Instead of continuing to link our energy policy to foreign fields of 
oil, it should be linked to farm fields of corn. I urge my colleagues 
to support the Domenici amendment.
  Mrs. FEINSTEIN. Mr. President, I rise today to oppose Senator 
Domenici's amendment to require that U.S. refiners blend 8 billion 
gallons of ethanol into gasoline each year by 2012.
  I think this is a mistake that will cost the Federal treasury $2 
billion by the time it is fully implemented and could further pollute 
California's air.
  In my home State, the mandate will mean that refiners must choose 
between blending ethanol into gasoline or using a costly credit/trading 
system.
  Either choice will mean California consumers pay more at the pump.
  Accordiing to the California Air Resources Board, California would be 
able to mitigate the air quality impacts of a mandate if it were 
limited to 6 billion gallons or less.
  With a 6 billion gallon mandate, refiners in California would be 
required to use about 660 million gallons of ethanol, which they could 
accomplish in the cooler winter months alone.
  However, at 8 billion gallons, the State's refiners would be forced 
to use about 880 million gallons of ethanol and they would either have 
to use ethanol in the hot summer months, when it could pollute the air, 
or buy costly ``credits'' for not using ethanol.
  While we do not know exactly how the credit trading system will work, 
it is estimated that the credits would cost about 40 cents per gallon 
of ethanol.
  So if California refiners were not able to use about 220 million 
gallons of ethanol per year, it could cost $88 million annually to buy 
the credits--money that would inevitably be passed on to drivers.
  I do want to thank Chairman Domenici for including two provisions in 
the amendment that could help my State: repealing the 2 percent 
oxygenate standard; and maintaining the summertime waiver for 
California.
  The Federal 2 percent oxygenate standard has forced areas with poor 
air quality, including the entire State of California, to use either 
MTBE or ethanol in gasoline.
  This Federal requirement has forced California's refiners to use an 
oxygenate even though they can make cleaner-burning gasoline without 
MTBE or ethanol.
  To meet this oxygenate requirement, California has been forced to use 
ethanol since 2004 when the State officially banned MTBE, although many 
refiners in the State started using ethanol as early as 2003.
  Beginning in the Summer of 2003, ethanol was found to have had a 
detrimental impact on the State's air quality. And on August 1, 2003 
the California Environmental Protection Agency informed me that:

     . . . our current best estimate is that the increase in the 
     use of ethanol-blended gasoline has likely resulted in about 
     a one percent increase in emissions of volatile organic gases 
     (VOC) in the SCAQMD [South Coast Air Quality Management 
     District] in the summer of 2003. Given the very poor air 
     quality in the region and the great difficulty of reaching 
     the current federal ozone standard by the required attainment 
     date of 2010, an increase of this magnitude is of great 
     concern. Clearly, these emission increases have resulted in 
     higher ozone levels this year that what would have otherwise 
     occurred, and are responsible for at least some of the rise 
     in ozone levels that have been observed.

  I will provide a copy of this letter for the record.
  In September 2004, the California Air Resources Board sponsored a 
study by the Coordinating Research council entitled ``Fuel Permeation 
From Automotive Systems.''
  The purpose of the study was to find out if three different fuels had 
different chemical properties that made one evaporate more rapidly then 
the others.
  The fuels that were studied were MTBE-blended gasoline, ethanol-
blended gasoline, and gasoline with no oxygenate.
  The study found that emissions increased from all 10 of the gas tanks 
and engines that were studied when ethanol replaced the MTBE in 
gasoline.
  In fact, the ethanol blended gasoline caused emissions to increase by 
65 percent when compared with MTBE blended gasoline, and by 45 percent 
when compared with non-oxygenated gasoline.
  Here's why: ethanol-blended gasoline evaporate from the car's parts 
faster and does so in a vapor form. Those vapors cause smog.
  Ethanol's evaporative tendencies only get worse in hot climates. The 
Air Resources Board has since found that the use of ethanol on hot 
summer days increases emissions of ozone forming compounds by about 75 
tons per day above what they would be if we were allowed to use 
summertime gasoline without ethanol.
  This is important because ozone can cause respiratory difficulties in 
the elderly and those with asthma.
  There is a strong direct relationship between temperature and 
ethanol--the hotter the day, the higher the emissions. On a 100 degree 
day, emissions are four times higher than on a 68 degree day. 
Therefore, the worst time to use ethanol is in the summer months.
  Overall, the Air Resources Board believes that ozone levels in 
California are about 1 to 2 percent higher than they should be because 
of the oxygenate requirement.
  This is a significant problem. Almost all of California's 37 million 
residents already breathe unhealthy air. Current levels of ozone 
pollution annually result in an estimated 630 premature deaths; 4,200 
hospitalizations for respiratory diseases; and 3.7 million school 
absences.
  The Energy Committee approved my amendment to this bill to provide 
California with a waiver so that the State does not have to use ethanol 
in the summertime when ethanol-blended gasoline impacts air quality the 
most.
  I do appreciate the fact that Chairman Domenici has retained this 
waiver in his amendment. However, I still believe the ethanol mandate 
is bad public policy, which increases the cost of gasoline for 
consumers; does next to nothing to reduce oil consumption to increase 
energy security; and, has severe impacts on the federal budget.
  Last month, the Director of the Petroleum Division at the Energy 
Information Administration stated before the House Government Reform 
Committee that:

       . . . refiners lost production capability when replacing 
     MTBE with ethanol. This, along with continued demand growth, 
     has contributed to price pressures. From 2000 through 2002, 
     California retail gasoline prices averaged about 19 cents per 
     gallon more than the U.S. average gasoline price, but in 2003 
     as MTBE began to be removed, California prices averaged 27 
     cents per gallon higher than the U.S. average, and remained 
     at that level through 2004.

  So far this year, California's gasoline prices are at least 23 cents 
higher than the U.S. average.
  Much of this additional cost can be attributed to the cost of 
transporting ethanol. Because ethanol cannot be transported through the 
existing pipeline infrastructure and has to be trucked from the Midwest 
to the coasts, it adds another 10 cents to the retail cost of gasoline.
  In other words, adding ethanol to our gasoline has increased the cost 
at the pump.
  Moreover, the ethanol mandate does not improve energy security. The 
ethanol mandate will only reduce U.S. oil consumption by one-half of 
one percent when the 8 billion gallon mandate is fully implemented in 
2012.
  In addition, since ethanol has a somewhat lower energy content, more 
fuel is required to travel the same distance.
  This energy loss leads to an approximate 3 percent decrease in miles 
per gallon vehicle fuel economy with ethanol-blended gasoline.
  And finally, I would like to point out how expensive this mandate is. 
Ethanol receives a tax credit of 51 cents per gallon. If the mandate 
were to increase to 8 billion gallons by 2012 from the 3.85 billion 
gallons of ethanol sold today, that would mean a net loss of an 
additional $2 billion to the U.S. Treasury.
  We should not be imposing a larger mandate for ethanol at a time when 
the ethanol industry already receives such a huge subsidy, and when the 
Nation has such huge budget deficits.

[[Page 12710]]

  We need to either eliminate the mandate or end the subsidy. We can 
keep one or the other but not both.
  Yes, the provision to allow California not to use ethanol in the 
summertime is a win for California's air quality. But the mandate, 
itself, could well be a loss for consumers and the Federal Treasury.
  I hope my colleagues will join me in opposing this amendment.
  I ask unanimous consent that the letter from which I quoted be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                          California Environmental


                                            Protection Agency,

                                   Sacramento, CA, August 1, 2003.
     Hon. Dianne Feinstein,
     U.S. Senate, Hart Senate Office Building, Washington DC.
       Dear Senator Feinstein: Thank you for your letter dated 
     July 15, 2003, in which you requested that the California 
     Environmental Protection Agency and the California Air 
     Resources Board (ARB/Board) investigate the impacts of 
     ethanol-blended gasoline and its potential contribution to 
     the recently degraded air quality in Southern California.
       Like you, I am extremely concerned about the recent 
     increase in the number of exceedances of the federal ozone 
     standard and the high elevated peak ozone levels observed in 
     the South Coast Air Quality Management District (SCAQMD) this 
     summer. As you observe in your letter, the air quality in the 
     Los Angeles Basin has deteriorated this year, concurrent with 
     a dramatic increase in the use of ethanol-blended gasoline.
       All of the causes of this year's increased ozone are not 
     yet known. In the two weeks since you wrote, the ARB has not 
     had sufficient time to fully determine the role that ethanol-
     blended gasoline has played relative to other factors. We do 
     know that weather conditions have played a very important 
     role, and that increased use of ethanol-blended gasoline has 
     increased emissions over what they otherwise would have been. 
     That said, I also think it is fair to point out that the 
     impact of ethanol-gasoline blends, while significant and of 
     great concern in California's ongoing efforts to reduce 
     ozone, is not large enough to explain the majority of air 
     quality deterioration that occurred in the SCAQMD this 
     summer.
       Unfortunately, at this time we are not able to precisely 
     quantify the magnitude of the impact that higher emissions 
     associated with the increased use of ethanol-blend gasoline 
     has had relative to either weather or other factors affecting 
     this year's ozone pollution. However, I would like to convey 
     what we know today about the potential impact of ethanol use 
     on emissions of smog forming compounds in Southern 
     California.
       As you know, as part of our efforts to obtain a waiver from 
     the two percent oxygen requirement that now applies to most 
     of the gasoline sold in California, the ARB has prepared 
     extensive analyses of the impact of ethanol-gasoline blends 
     on emissions and air quality. This information was submitted 
     to the U.S. Environmental Protection Agency (U.S. EPA) to 
     support our waiver request, and showed that emissions of 
     ozone and particulate matter precursors would be reduced in 
     California if U.S. EPA approved the waiver request.
       In addition to the information previously submitted, the 
     ARB has continued to conduct studies to further our 
     understanding of how ethanol-blended gasoline would affect 
     emissions in California. As is explained below, our current 
     best estimate is that the increase in the use of ethanol-
     blended gasoline has likely resulted in about a one percent 
     increase in emissions of volatile organic gases (VOC) in the 
     SCAQMD in the summer of 2003. Given the very poor air quality 
     in the region and the great difficulty of reaching the 
     current federal ozone standard by the required attainment 
     date of 2010, an increase of this magnitude is of great 
     concern. Clearly, these emission increases have resulted in 
     higher ozone levels this year than what would have otherwise 
     occurred, and are responsible for at least some of the rise 
     in ozone levels that have been observed.
       To elaborate on the ARB's analyses, there are several ways 
     that the use of ethanol in gasoline could potentially 
     increase VOC emissions. The most import factors are: 
     increased volatility of gasoline; the commingling of ethanol 
     and non-ethanol blends in vehicle tanks; and permeation of 
     ethanol through hoses and fuel system components.
       Your letter mentions the potential for ethanol to increase 
     the volatility of gasoline. Increases in volatility lead to 
     increases in evaporative emissions from both the fuel 
     distribution system and from vehicles. This effect may result 
     in emission increases in other parts of the Nation where 
     volatility of ethanol-gasoline blends is not tightly 
     controlled. However, the California Phase 3 Reformulated 
     Gasoline regulations, which ban the use of Methyl Tertiary 
     Butyl Ether (MTBE) in California gasoline, anticipated this 
     effect and required all gasoline to meet the same volatility 
     standards whether ethanol was used or not. In addition, these 
     regulations actually slightly lowered the volatility limit 
     that most gasoline must meet. Therefore, we do not believe 
     that this factor is contributing to increased VOC emissions 
     in California.
       Commingling emissions occur when consumers fill their fuel 
     tanks and mix ethanol and non-ethanol gasolines. The 
     California Phase 3 Reformulated Gasoline regulations were 
     designed to preserve the existing Phase 2 Reformulated 
     Gasoline vehicle emission benefits and to provide additional 
     emission reductions to offset potential commingling effects. 
     However, in 1999 when these rules were adopted, there was 
     limited information on the real-world effects of commingling, 
     and the ARB committed to further analyze this issue.
       Board staff recently completed a study of the likely 
     emissions impacts of commingling in California. Based on this 
     study, we continue to believe that the California Phase 3 
     Reformulated Gasoline regulations provide adequate 
     compensating reductions to offset the emission increases due 
     to commingling. The findings in the commingling study have 
     been submitted to the University of California for formal 
     peer review, and the review is expected to be completed 
     within the next month.
       Increases in permeation emissions occur due to ethanol's 
     greater propensity (relative to most other components of 
     gasoline) to leak through the soft components of fuel lines 
     and through other parts of the fuel system. Because this 
     effect was not adequately quantified when the ARB adopted the 
     California Phase 3 Reformulated Gasoline regulation in 1999, 
     ARB staff was directed to investigate these impacts and to 
     return to the Board with recommendations on whether there is 
     a need to take further actions to address those impacts.
       Preliminary results from this study are now available, and 
     strongly suggest that permeation impacts are both real and 
     significant. The ARB's analyses indicate that this effect 
     could increase ethanol evaporative hydrocarbon emissions by 
     between 10 and 15 tons per day in the SCAQMD at the current 
     level of ethanol use.
       The information presented above is especially relevant in 
     light of the recent decision by the 9th Circuit Court that 
     overturns U.S. EPA's denial of California's oxygen content 
     waiver request, and requires U.S. EPA to reconsider this 
     issue. ARB believes that the information now available on the 
     impact of ethanol in gasoline on VOC emissions must be part 
     of U.S. EPA's reconsideration. We believe that the data on 
     commingling and permeation effects demonstrate that U.S. 
     EPA's denial of California's waiver request, which was based 
     on its conclusion that granting the waiver might lead to an 
     increase in overall VOC emissions due to commingling effects, 
     was in error. As part of our effort to gain a reversal of 
     this waiver denial, California is now preparing an 
     information package to submit this information to the U.S. 
     EPA.
       I hope the information provided above is of value to you. 
     As in the past, I am sure that your office will be of great 
     assistance in assuring that California receives the needed 
     waiver, and I look forward to working with you on this 
     effort. Relative to understanding the factors that 
     contributed to higher ozone levels this summer, the ARB staff 
     will continue to work closely with SCAQMD staff to understand 
     the cause of the recent increases in ozone levels in southern 
     California. We will keep you informed of the results of this 
     effort. If you have any additional questions about this 
     important issue, please feel free to contact me, at (916) 
     323-2514, or Alan C. Lloyd, Ph.D., Chairman, ARB, at (916) 
     322-5840.
           Sincerely,
                                                Winston H. Hickox,
                                                 Agency Secretary.

  Mr. SALAZAR. Mr. President, I rise in strong support of the 
bipartisan amendment to increase the renewable fuels standard. I am 
proud to be a cosponsor of this commonsense amendment--and honored to 
join the senators, such as Senators Johnson and Lugar, who have been 
working on this issue literally since its inception.
  My parents always taught me that it was important to understand the 
history of our family, the lands around us and our Nation. I don't 
think it's out of the question for us to take a moment to reflect on 
the history of ethanol, too.
  The use of ethanol in this Nation reaches back more than a century. 
Henry Ford's Model T was designed to run on ethanol. During World War 
I, ethanol accounted for 20 percent of vehicle fuels and during World 
War II we converted whiskey distilleries to produce fuel ethanol. 
Ethanol helped combat the oil crisis of the 1970s and was pivotal in 
the phase-out of leaded gasoline in the early 1980s.
  Now we have an opportunity to move forward again with ethanol, which 
Henry Ford referred to as the ``fuel of the future''. Last year this 
Nation used 140 billion gallons of motor fuel, but

[[Page 12711]]

only 3.45 billion gallons of ethanol and biodiesel. In other words, in 
2004 only 2.5 percent of our Nation's fuel was renewable. The amendment 
we are considering now calls for 8 billion gallons of ethanol and 
biodiesel to be produced in America by 2012. This will represent 
slightly less than 5 percent of the transportation fuel that will be 
used in 2012.
  At the moment, most of our biofuels are ethanol, and most of that is 
derived from corn. But this legislation helps the country to transition 
to producing more biodiesel and more diverse ethanol feedstocks. This 
transition to a more diverse set of feedstocks will help our national 
security and national economy, because it will allow farmers from all 
over the country to grow crops that can be used to make transportation 
fuels. These diverse feedstocks will include potatoes, tobacco, sugar, 
wood waste and more. And while this amendment works to diversify the 
feedstocks for renewable fuels, it also contain very good incentives to 
establish cellulosic ethanol. This is the ethanol of the future and we 
need to develop it. While current ethanol has a positive energy return 
of around 35 percent, cellulosic ethanol has the potential to return as 
much as 500 percent of the energy required to make it. This will be a 
significant advance in our quest to set America free from foreign oil.
  The amendment is meant to send a very clear signal to the market that 
America is committed to this cheap, clean and reliable energy source. 
This amendment is not, as some of my colleagues have suggested, an 
``outrage.'' This amendment is good for Colorado, good for America, and 
good for the environment.
  First of all, this amendment is good for Colorado. Rural economies in 
Colorado and across the country need help. We cannot continue to 
maintain the policies that have made rural America the forgotten 
America. It is said that a rising tide lifts all boats, but too often 
the tides never reach the Main Streets of our rural communities. 
Ethanol can help make it possible for everyone to benefit from economic 
growth.
  Domestically produced biofuels can provide that assistance, in the 
form of good jobs, an influx of construction dollars, and new markets 
for local agriculture. In Colorado alone, new ethanol plants are 
planned for Windsor, Evans, and Sterling. There is some talk of future 
ethanol plants in Fort Morgan, Commerce City, and Lamar. The facility 
in Sterling is under construction now and should be up and running by 
October of this year. It will employ about 32 people and may add up to 
100 secondary jobs. The facility hopes to supply about 1 million 
gallons of ethanol each year.
  For biodiesel, we have small producers in Berthoud and in Denver, and 
a new production and blending facility will come on line in Monte Vista 
this year that should be producing biodiesel fuel within the next two 
months and will employ 12 people around the clock. Once in full 
production, this Monte Vista plant should create a ripple effect of up 
to 200 additional jobs. And right now, in my own San Luis Valley, 
canola is being grown specifically for the production of biodiesel.
  This amendment also includes potatoes as a possible feedstock for 
bio-fuel. The San Luis Valley grows, but cannot use, tons and tons of 
potatoes each year. The amendment allows for the possibility that 
someone in the San Luis Valley will pick up on this cheap feedstock and 
turn it into fuel.
  Second, this amendment is good for America. It is a simple fact that 
our dependence on oil from a politically unstable region of the world 
puts our I national security at risk.
  Remember what we are dealing with when we are so dependent on foreign 
sources of energy. Our four top sources for oil are Saudi Arabia, 
Canada, Mexico and Venezuela. It is no secret that stability in Saudi 
Arabia is an open question, and each week records a new outrage from 
the President of Venezuela.
  Developing our own transportation fuels directly reduces this 
dependence on foreign oil and frees our nation to better protect its 
citizens from economic or other harms. The production and use of 8 
billion gallons of ethanol and biodiesel by 2012 will displace more 
than 2 billion barrels of crude oil, and it will reduce the outflow of 
dollars to foreign oil producers by more than $60 billion.
  By reducing our dependence on foreign oil and the unstable 
governments that provide it, we strengthen our national security. By 
reducing our trade deficit, we strengthen our economy. This amendment 
does both.
  Finally, ethanol and biodiesel are good for the environment. There is 
no monopoly on concern for protecting our natural heritage. Everyone in 
this chamber share the goal of clean air, and ethanol is a simple, 
direct route to getting there. Net carbon dioxide emissions from 
biofuels are lower than from fossil fuels, because the carbon released 
during combustion was taken out of the air by the agricultural crops in 
the first place.
  According to Argonne National Labs in Illinois, in 2004 ethanol use 
in the U.S. reduced greenhouse gas emissions by approximately 7.3 
million tons, equivalent to removing the annual emissions of more than 
1 million cars from the road. According to the EPA, ethanol can reduce 
the production of carbon monoxide, one of the chief ingredients of 
smog, by as much as 30 percent. In fact, ethanol can reduce urban smog 
more than any other fuel available.
  Supporting this, amendment is the common-sense thing for the Senate 
today. It's a win for big cities and rural small towns alike. It 
benefits the environment while putting us on a stronger economic and 
national security footing. How often are we presented with an 
opportunity to implement policy that benefits every person in this 
country? To pass it up would be a I shame.
  In closing, Mr. President, I reiterate that I am proud to cosponsor 
this amendment to establish a strong renewable fuels standard. It is a 
clear-cut case of what we can do when we work together--Republicans and 
Democrats--to fix problems that face our country. I wish it were not 
such a I unique development.
  (At the request of Mr. Reid, the following statement was ordered to 
be printed in the Record.)
 Mr. JEFFORDS. Mr. President, I regret that I am unable to be 
present for the vote on the Domenici renewable fuels amendment, No. 
779. I support this amendment, and I am pleased that a majority of my 
colleagues do as well. The Domenici amendment makes a significant step 
toward reducing our Nation's reliance on foreign oil. For 30 years I 
have been a supporter of renewable energy and alternative fuels, and I 
support this amendment which will require 8 billion gallons of ethanol 
in gasoline by 2012.
  The Energy Committee's reported Energy bill sought to promote the use 
of biomass ethanol, biodiesel, hydrogen and biogas. I appreciate that 
effort. But, as we move forward with increased production of these 
renewable fuels, we must do so in a manner that is environmentally 
sound.
  We cannot separate energy policy from environmental policy. The 
Senate Energy Committee reported bill encompasses many provisions in 
the jurisdiction of the Environment and Public Works Committee. 
Unfortunately, the only provision in this bill that was actually 
considered by the Environment Committee is the renewable fuels program. 
The reason is that boosting the use of ethanol in gasoline has 
significant Clean Air Act implications, and we must ensure that 
conforming changes to the Clean Air Act are made to ensure no worsening 
of air quality. As included in the reported version of the Energy bill, 
giving the Department of Energy authority for a new billion gallon 
renewable fuels program does not accomplish our dual objectives of 
increasing the use of renewable fuels while maintaining our Nation's 
air quality.
  Prior to the Energy Committee consideration of this renewable fuels 
provision, Senator Inhofe wrote Senator Domenici regarding the need for 
changes in the Clean Air Act for an ethanol mandate to be effective. 
The Environment and Public Works Committee has repeatedly approved 
legislation to make such changes in the Clean

[[Page 12712]]

Air Act to make the ethanol mandate work and for the environment, air 
quality and public health to be protected.
  The Domenici amendment is basically the same as the measure, S. 606, 
approved earlier this year by the Environment and Public Works 
Committee but with a higher ethanol mandate and updated to prevent 
backsliding on toxic emissions. The amendment phases out the use of 
methyl tertiary butyl ether, or MTBE, within 4 years. This phase-out 
will be accomplished more safely because refiners will be required to 
maintain no worse toxic emissions than occurred in 2001-2002. Those 
were much better performing years than the 1999-2000 baseline in S. 
606. The amendment also provides EPA with authority to regulate fuels 
and fuel additives for the protection, not just of air, but of water 
resources too. This is an important provision that will allow EPA to 
take action should another fuel additive prove a threat to drinking 
water.
  In addition, the amendment eliminates the oxygen content requirement 
for reformulated gasoline--RFG--that was put into the 1990 Clean Air 
Act Amendments. EPA is required to issue regulations to ensure that all 
nonattainment areas use RFG that contributes less to smog. The Agency 
must also regularly require fuel and fuel additive manufacturers to 
conduct health and environmental studies and make them public and to 
update its complex model for vehicle emissions from the outdated 1990 
baseline vehicle. Further, governors in the ozone transport region may 
opt-in to the RFG program for their entire State, not just a 
nonattainment area. The amendment also sets up an automatic check-back 
to see what impacts the fuel system changes, the ethanol mandate and 
the MTBE phase-out will have on health, air quality, gasoline prices 
and supply, and other factors.
  Oil companies began adding MTBE to gasoline as early as 1979 and by 
1991, 1 year before the Clean Air Act oxygenate requirement went into 
effect, oil companies were using more than 100,000 barrels of MTBE per 
day.
  These facts belie the oil companies' argument that Congress made them 
use MTBE and therefore Congress should stop the lawsuits. It is a well-
established fact that oil companies were using MTBE years before the 
Clean Air Act oxygenate requirement went into effect. The Clean Air Act 
does not mandate the use of MTBE, and the fact that there was any 
oxygenate requirement in the Clean Air Act at all was due in part to 
oil industry lobbying.
  Earlier today there was also a rollcall vote on the Schumer 
amendment, No. 782. Had I been present, I would have voted in 
opposition to the amendment offered by the Senator from New York, Mr. 
Schumer.
  The Senator from New York, Mr. Schumer, was proposing to strike the 
whole second subtitle, Subtitle B, from the Domenici amendment. While 
the Senator from New York, Mr. Schumer, argues that his strike merely 
eliminates the ``mandate'' of requiring ethanol in gasoline, it does 
much more. First, the fact that it eliminates a national commitment to 
use ethanol in gasoline at significant volumes should not be 
overlooked. Second, the Domenici provision would promote 
diversification in ethanol production by promoting the development of 
cellulosic biomass ethanol. This is an important new technology, 
designed to produce ethanol from wood waste, plant materials, and 
animal waste, in addition to corn and soybeans. It will allow more 
States the opportunity to produce ethanol with locally appropriate and 
available materials.
  In addition, to address the concerns of the Senator from New York, 
Mr. Schumer, there is detailed language in the part of the Domenici 
amendment he seeks to strike that would allow States to seek waivers 
from the use of ethanol in the event that there is disproportionate 
economic hardship. I think that this is the appropriate way to proceed. 
High gasoline prices and dependence upon foreign sources of oil are 
already causing economic hardship, and now is the time to try to get 
more domestically produced ethanol blended with our gasoline so that we 
can reduce that dependence.
  Though I support removing the liability shield for renewable fuels in 
Subtitle B of the Domenici amendment, I think that the Schumer 
amendment is too drastic a tool to deal with the price concerns of his 
State and moves us away from a serious national commitment to renewable 
fuels. For those reasons, I would have opposed Senate Amendment 782 had 
I been present.
  I support efforts to increase the use of renewable fuels. I believe 
it can and should be done in a way that is protective of this country's 
air, land and water. That means not allowing gasoline to become 
dirtier. And that means maintaining EPA's role in regulating fuels to 
improve air quality while protecting current and future drinking water 
sources and not transferring these authorities to the Energy 
Department. The Domenici amendment accomplishes those objectives and I 
am pleased it has been added to the bill.
  Mr. DURBIN. Mr. President, I rise today in support of the renewable 
fuels standard, RFS, amendment. This important amendment, which I have 
cosponsored, will create a nationwide standard for the use of renewable 
fuels.
  A renewable fuels standard is created that will increase the use of 
domestically produced renewable fuels to 8 billion gallons by 2012. The 
bill also allows the Nation's refiners to buy credits from refiners 
that use ethanol in other States to meet the requirement, ensuring 
additional refiner flexibility to use ethanol where it is most 
efficient and economical.
  In Illinois, roughly one in every six rows of corn, approximately 280 
million bushels is the source for ethanol. Illinois ranks second in the 
Nation in corn production, with more than 1.5 billion bushels produced 
annually, and is the Nation's leading source of clean-burning ethanol. 
Illinois currently has five ethanol plants, with two other plants in 
production. Corn grown in Illinois is used to make 40 percent of the 
ethanol consumed in the United States. More than 95 percent of the 
gasoline sold in the Chicago area contains 10 percent ethanol.
  Investment in the ethanol industry in Illinois exceeds $1 billion, 
generating 800 jobs in plant operations and 4,000 jobs in the industry-
related service sector. In fact, Illinois ethanol production alone has 
increased the national market price for corn by 25 cents per bushel.
  Illinois farmers stand ready and eager to contribute to our Nation's 
energy security, and the benefits extend to the environment as well. 
Replacing Mideast oil with Midwest ethanol is a winner for everyone but 
the oil sheiks. When we can use our Illinois agricultural expertise to 
reduce our dependence on foreign suppliers, the whole Nation benefits.
  This expanded role for renewable fuels means more than a boost to 
industry; it means jobs to rural America, and increased energy 
security. And in contrast to the environmental damage that can be 
caused by drilling for oil, the only drilling required to produce 
ethanol is the initial inch and a half deep planting of the corn seed. 
And for the soybeans used to make biodiesel, the seeds are only drilled 
an inch into the ground.
  American farmers are the foot soldiers in our battle for energy 
independence. Farmers throughout the country have come together to 
build ethanol production facilities that, in many instances, have 
become the backbone of a regional rural economy. In fact, farmer-owned 
ethanol plants, taken together, are the single largest segment of the 
U.S. ethanol industry. As we look for solutions to high oil prices, we 
must remember that renewable fuels are viable alternative fuels--
domestically produced and environmentally friendly.
  Cleaner burning biofuels, that can be produced, transported and 
combusted with major environmental benefits will contribute to cleaner 
and healthier air and less water and soil pollution. Importantly, 
biofuels, being essentially greenhouse gas neutral, will also 
contribute to achieving environmental goals while advancing the 
economies of rural America.

[[Page 12713]]

  According to an analysis completed by renowned economist John 
Urbanchuk of LEGC, Inc., an RFS that grows to 8 billion gallons of 
ethanol by 2012 would have a significant impact on both the farm and 
overall economy over the next decade.
  It would reduce crude oil imports by 2 billion barrels and reduce the 
outflow of dollars largely to foreign oil producers by $64 billion.
  It would create 234,840 new jobs in all sectors of the U.S. economy.
  It would increase U.S. household income by $43 billion.
  It would add $200 billion to GDP between 2005 and 2012.
  It would create $6 billion in new investment in renewable fuel 
production facilities.
  And it would result in the spending of $70 billion on goods and 
services required to produce 8 billion gallons of ethanol and biodiesel 
by 2012.
  Renewable fuels provide for a dependable domestic source of energy 
that increases fuel supplies, reduces our reliance on foreign oil, and 
enhances our ability to control our own security and economic future--
while helping our farmers by increasing demand for their crops. 
Increasing the use of ethanol and other renewable fuels achieves many 
positive public policy goals.
  This amendment should be adopted.
  Mr. DOMENICI. Mr. President, we are ready to vote on the ethanol 
amendment, as modified.
  I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The question is on agreeing to the amendment.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. McCONNELL. The following Senators were necessarily absent: The 
Senator from Idaho (Mr. Crapo), the Senator from Alaska (Ms. 
Murkowski), and the Senator from Alaska (Mr. Stevens).
  Further, if present and voting, the Senator from Idaho (Mr. Crapo) 
would have voted ``yea.''
  Mr. DURBIN. I announce that the Senator from Vermont (Mr. Jeffords) 
is necessarily absent.
  The PRESIDING OFFICER (Mr. Burr). Are there any Senators in the 
Chamber desiring to vote?
  The result was announced--yeas 70, nays 26, as follows:

                      [Rollcall Vote No. 139 Leg.]

                                YEAS--70

     Akaka
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Byrd
     Cantwell
     Carper
     Chafee
     Chambliss
     Cochran
     Coleman
     Collins
     Conrad
     Cornyn
     Craig
     Dayton
     DeWine
     Dodd
     Dole
     Domenici
     Dorgan
     Durbin
     Enzi
     Feingold
     Frist
     Graham
     Grassley
     Hagel
     Harkin
     Hatch
     Hutchison
     Inhofe
     Inouye
     Isakson
     Johnson
     Kerry
     Kohl
     Landrieu
     Levin
     Lincoln
     Lugar
     Martinez
     McConnell
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Obama
     Pryor
     Reid
     Roberts
     Salazar
     Sarbanes
     Sessions
     Smith
     Snowe
     Stabenow
     Talent
     Thomas
     Thune
     Vitter
     Voinovich

                                NAYS--26

     Alexander
     Allard
     Boxer
     Clinton
     Coburn
     Corzine
     DeMint
     Ensign
     Feinstein
     Gregg
     Kennedy
     Kyl
     Lautenberg
     Leahy
     Lieberman
     Lott
     McCain
     Reed
     Rockefeller
     Santorum
     Schumer
     Shelby
     Specter
     Sununu
     Warner
     Wyden

                             NOT VOTING--4

     Crapo
     Jeffords
     Murkowski
     Stevens
  The amendment (No. 779), as modified, was agreed to.
  Mr. DOMENICI. I move to reconsider the vote.
  Mr. SUNUNU. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.

                          ____________________