Grassley advanced his pro-ethanol measure with Sen. Carol Moseley-Braun of Illinois. Both senators are members of the tax-writing Finance Committee.
Their amendment to extend the federal tax exemption from its current expiration date in the year 2000 to the year 2007 was included in the $204 billion highway funding bill approved today by the U.S. Senate and House of Representatives. President Clinton is expected to sign the transportation measure.
"Every public policy argument favors domestically-produced, clean-burning ethanol," said Grassley. "Ethanol is good for America's energy independence from foreign sources of oil. It's good for the U.S. balance of trade because we import so much oil from other countries. It is good for the environment because it reduces fossil fuel emissions. And ethanol is good for farmers and jobs in rural America. Ethanol represents our third largest corn market. Ethanol production already accounts for 200,000 jobs nationwide."
Grassley said that America "can't afford not to keep this renewable fuel viable in the 21stcentury. Extending ethanol's tax exemption will encourage new investment in ethanol production," he said.
Grassley and Moseley-Braun began their quest to extend the ethanol program last June, during Finance Committee consideration of the Balanced Budget Act. Their amendment received strong bi-partisan support in the Senate but was ultimately dropped from the budget plan during negotiations involving the House of Representatives and the administration.
Grassley and Moseley-Braun immediately renewed their pro-ethanol campaign. Grassley secured support to extend the tax exemption as part of the highway bill from President Clinton, Vice President Al Gore, House Speaker Newt Gingrich, and Senate Majority Leader Trent Lott. And, he won an important endorsement from the chairman of the Finance Committee, Sen. Bill Roth of Delaware. Roth included the extension of the tax incentive for ethanol in his original draft of the Senate highway bill last fall. An effort to strike the Grassley/Moseley-Braun amendment from the Senate bill this spring was sharply rebuked with a vote of 71 to 26 for ethanol.
The final obstacle to extending the ethanol tax provision was removed earlier this month when Speaker Gingrich announced that Rep. Jim Nussle of Iowa ? a staunch ethanol supporter ? would head up the conference committee that reconciled differences in the highway bills passed by the Senate and House of Representatives. Nussle was appointed by Gingrich in place of the anti- ethanol chairman of the House Ways and Means Committee, Rep. Bill Archer of Texas.
The highway bill now on its way to the White House maintains the ethanol tax exemption per gallon at its current 5.4 cents through the year 2000. It is reduced to 5.3 cents in the years 2001 and 2002, to 5.2 cents for the years 2003 and 2004, and to 5.1 cents for the years 2005, 2006 and 2007. Grassley said improving cost efficiencies in ethanol production allow for the out-year subsidy reductions.
Grassley has long been an outspoken proponent of expanding the production of ethanol. He and former Senate Majority Leader Bob Dole joined forces to re-authorize the ethanol program in 1990. Grassley also fought for ethanol's inclusion in our nation's clean air strategies during debate on the Clean Air Act of 1990.