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.

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.

[[Page S6602]]

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 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

[[Page S6603]]

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.
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.

[[Page S6604]]

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 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 cents 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

[[Page S6605]]

SHELL...........................................             215             405           4,702           6,673
BP..............................................             827           1,429           4,912           6,602
CONOCOPHILLIPS..................................             403             570           1,616           2,912
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 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

[[Page S6606]]

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
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

[[Page S6607]]

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 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.

[[Page S6608]]

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;
(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

[[Page S6609]]

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 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

[[Page S6610]]

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.
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

[[Page S6611]]

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 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.

[[Page S6612]]

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.)
<bullet> 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 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

[[Page S6613]]

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.<bullet>
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.
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

[[Page S6614]]

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.

____________________