Norquist’s group steers clear of new ethanol fight – for now

But the Senate – with the support of 33 Republicans – voted for the Feinstein amendment. The vote was a setback for ATR, even though the amendment was attached to a bill that eventually collapsed.

Now, Feinstein is floating a compromise plan with two pro-ethanol senators – John Thune (R-S.D.) and Amy Klobuchar (D-Minn.) – that would kill the ethanol blenders’ credit, but extend credits for producing next-wave cellulosic fuels and installing ethanol pumps at gas stations.

The plan, which also extends a credit for small biofuel producers, brings in more money than it costs, the senators say.

Ending the multibillion-dollar blenders’ credit in late July would save $2 billion this year, according to the senators, whose plan would steer $1.33 billion into deficit-reduction and the balance (about $670 million) into paying for extending the other incentives.

The proposal would appear to violate the ATR pledge because it dedicates revenue to reducing the deficit instead of applying it all to cutting taxes.

It is unclear if the Thune-Klobuchar-Feinstein agreement will make it into a deal to raise the debt ceiling.

Republican leaders in the House and Senate have, by and large, echoed ATR in saying they are open to eradicating tax loopholes but only if that revenue is used to cut taxes. Thune, however, is part of the Senate GOP leadership team.

The Joint Committee on Taxation has scored all aspects of their plan except what the lawmakers say would be the $308 million cost of extending cellulosic ethanol production credits for three years, according to Feinstein’s office.

More in E2-Wire

Grueling Keystone fight to hit new Senate

Read more »