Senate to vote again on ending ethanol industry tax breaks on Thursday

The Senate will vote again Thursday on a plan to strip a major ethanol industry tax break and end the ethanol import tariff.

Forty senators voted for the measure Tuesday, well shy of the 60 votes needed to advance the plan, when Sen. Tom Coburn (R-Okla.) offered it as an amendment to an economic development bill.

But the politics of Tuesday’s battle were clouded by Democratic anger at Coburn’s surprise procedural move last week that set up the vote.

Majority Leader Harry Reid (D-Nev.) said Wednesday evening that the Senate would vote on Sen. Dianne Feinstein’s (D-Calif.) identical version of the amendment tomorrow.

Lawmakers will then vote on Sen. John McCain’s (R-Ariz.) amendment that would block use of federal funds for the construction of ethanol blender pumps or storage facilities. Both will need 60 votes to pass.

Feinstein said on the floor Tuesday that the plan Coburn offered would have been successful absent the controversy over his procedural tactics.

“I believe if it weren’t for the process, we would have 60 votes,” Feinstein said. Democratic leadership had whipped against Coburn's amendment.

The tax amendments mirror legislation that Feinstein and Coburn introduced earlier this year that would quickly end the 45 cent credit for each gallon of ethanol that fuel blenders mix into gasoline, and end the 54 cent-per-gallon import tariff that protects the domestic industry.

The blender's credit resulted in $5.4 billion in foregone federal revenue last year, according to the Government Accountability Office

But while Feinstein was optimistic, ethanol retains powerful political support from Corn Belt lawmakers in both parties.

Thrown onto the defensive over the billions of dollars in tax credits that benefit the industry, they are floating plans aimed at altering the incentives without killing them outright.

Sens. John Thune (R-S.D.), Amy Klobuchar (D-Minn.) and other ethanol backers this week floated a bill that would end the 45-cent per gallon ethanol blender’s credit (which is slated to expire at year’s end), but maintain a smaller and “variable” blender’s credit for three years when oil prices are below certain levels.

It would steer some savings from ending the credit to deficit reduction, while also extending credits for cellulosic ethanol production, small ethanol producers, and installing alternative fuel pumps.

Feinstein has held out the prospect of a compromise. “Whether we can do this or not, I don’t know, but I am certainly willing to try,” Feinstein said Tuesday.