Imported Ethanol Parity Act

Mr. President, I rise to introduce the Imported Ethanol Parity Act of 2008.

This legislation is cosponsored by Senators Gregg, Cantwell, Allard and Collins.

First, let me explain what this bill does. The Imported Ethanol Parity Act instructs the President to lower the ethanol import tariff, so that it is no higher than the subsidy for blending ethanol into gasoline.

This legislation is necessary because the Farm Bill extended the tariff for two more years at $0.54 per gallon, even though the Farm Bill reduced the ethanol blending subsidy to $0.45 per gallon.

In effect, the Farm Bill has turned the tariff from an ``offset'' into a true trade barrier of at least $0.09 per gallon.

The Ethanol tariff poses many problems.

It increases the cost of Gasoline in the United States by making ethanol more expensive.

It prevents Americans from importing ethanol made from sugarcane. Sugar ethanol is the only available transportation fuel that works in today's cars and emits considerably less lifecycle greenhouse gas than gasoline;.

It taxes imports from our friends in Brazil, India, and Australia, while oil and gasoline imports from OPEC enter the United States tax free.

It hinders the emergence of a global biofuels marketplace through which countries with a strong biofuel crop could sell fuel to countries that suffered drought or other agricultural difficulties in the same crop year. Such a global market would permit mutually beneficial trade between producing regions and stabilize both fuel and food prices.

It makes us more dependent on the Middle East for fuel when we should be increasing the number of countries from whom we buy fuel. When it comes to energy security for the United States, which has less than 3 percent of proven global oil reserves and 25 percent of demand, we must diversify supply.

Bottom Line: until the tariff is lowered, the United States will tax the only fuel it can import that increases energy security, reduces greenhouse gas emissions, and lowers gasoline prices.

In 2006 I introduced legislation to eliminate the ethanol tariff entirely, and in 2007 I cosponsored an amendment to the Energy Bill which would have eliminated the tariff.

The Imported Ethanol Parity Act is a different proposal that I believe addresses the concerns of tariff defenders.

The advocates of the $0.54 per gallon tariff on ethanol imports have always argued that the tariff is necessary in order to offset the blender subsidy that applies to the use of all ethanol, whether produced domestically or internationally. They argue that the ethanol subsidy exists to support American farmers who produce ethanol at higher cost than foreign producers.

For instance, on May 6, 2006, the Chairman of the Senate Finance Committee stated on the Senate floor that, ``the U.S. tariff on ethanol operates as an offset to an excise tax credit that applies to both domestically produced and imported ethanol.''

On May 9, 2006, the Renewable Fuels Association stated in a press release: ``the secondary tariff exists as an offset to the tax incentive gasoline refiners receive for every gallon of ethanol they blend, regardless of the ethanol's origin.''

In a letter to Congress dated June 20, 2007, the American Coalition for Ethanol, the American Farm Bureau Federation, the National Corn Growers Association, the National Council of Farmer Cooperatives, the National Sorghum Producers, and the Renewable Fuels Association stated that the ``(blender) tax credit is available to refiners regardless of whether the ethanol blended is imported or domestic. To prevent U.S. taxpayers from subsidizing foreign ethanol companies, Congress passed an offset to the tax credit that foreign companies pay in the form of a tariff.''

Just this month, the Renewable Fuels Association's Executive Director asserted that ``The tariff is there not so much to protect the industry but the U.S. taxpayer.''

Bottom Line: the tariff cannot be justifiably maintained at $0.54 per gallon if its intent is to offset a $0.45 per gallon blender subsidy, and it should be reduced.

Ethanol from Brazil or Australia should not have to overcome a trade barrier that no drop of OPEC oil must face.

Tariff defenders either should support this legislation or explain how a tariff can justifiably be higher than the subsidy it is designed to offset.

Climate Change is the most significant environmental challenge we face, and I believe that lowering the ethanol tariff will make it less expensive for the United States to combat global warming.

The fuel we burn to power our cars is a major source of the greenhouse gas emissions warming our planet. To reduce this impact, we need to increase the fuel efficiency of our vehicles and lower the lifecycle carbon emissions of the fuel itself.

For this reason, in March 2007, I introduced the Clean Fuels and Vehicles Act with Senators Olympia Snowe and Susan Collins.

The legislation proposed a ``Low Carbon Fuels Standard,'' which would require each major oil company selling gasoline in the United States to reduce the average lifecycle greenhouse gas emissions per unit of energy in their gasoline by 3 percent by 2015 and by 3 percent more in 2020.

The legislation was modeled on the state of California's Low Carbon Fuels Standard, which also requires a reduction in the lifecycle greenhouse gas emissions from transportation fuels.

This concept became a major aspect of the Energy Independence and Security Act of 2007, in which Congress required oil companies to use an increasing quantity of ``advanced biofuels'' that produce at least 50 percent less lifecycle greenhouse gas than gasoline.

Unfortunately the ethanol tariff puts a trade barrier in front of the lowest carbon fuel available, making it considerably more expensive for the United States to lower the lifecycle carbon emissions of transportation fuel.

The lifecycle greenhouse gas emissions of ethanol vary depending on production methods and feedstocks, and these differences will impact the degree to which ethanol may be used to meet ``low-carbon'' fuel requirements under California law and the Energy Independence and Security Act of 2007.

For instance, sugar cane ethanol plants use biomass from sugar stalks as process energy, resulting in less fossil fuel input compared to current corn-to-ethanol processes. By comparison, researchers at the University of California concluded that ``only 5 to 26 percent of the energy content (in corn ethanol) is renewable. The rest is primarily natural gas and coal,'' which are used in the production process.

The 2007 California Energy Commission Report entitled Full Fuel Cycle Assessment: Well-to-Wheels Energy Inputs, Emissions, and Water Impacts

concluded that the direct lifecycle greenhouse gas emissions of imported sugar based ethanol are 68 percent lower than gasoline, while the direct lifecycle greenhouse gas emissions of corn based ethanol from the Midwest are 15 to 28 percent lower than gasoline.

Further research released in 2008 suggests that the lifecycle greenhouse gas emissions of corn based ethanol may be higher than gasoline, when land use change is factored into the equation.

The bottom line: biofuels that protect our planet may be produced abroad, and we should not put tariffs in front of these fuels, while we import crude oil and gasoline tariff free.

Energy and food prices are both rising at unprecedented rates, and there is a great deal of debate about whether the renewable fuels standard mandating ethanol use is causing the problem.

I have always opposed corn ethanol mandates. But I remain concerned that the blending subsidy and the ethanol tariff have as much to do with rising corn prices as the ethanol mandate.

Corn ethanol production has considerably exceeded the renewable fuels standard every year since its adoption in 2005. With oil prices this high, it is profitable to produce ethanol at record corn prices with or without the mandate. The low value of renewable fuels standard credits, known as RINs, confirms that using ethanol is not a burden for oil companies.

To address the rising cost of corn, we have to address the underlying economics of corn ethanol production, and effectively increasing the tariff on imports, as the Farm Bill has done, is a step in the wrong direction.

This legislation corrects the Farm Bill's mistaken policy that imposed a real trade barrier on clean and climate friendly ethanol imports, giving gasoline imports a competitive advantage over cleaner fuel that simply should not exist at a time we are trying to combat climate change.

It prevents ethanol producers abroad from receiving American ethanol subsidies, which is supposedly the intent of the ethanol tariff.

I think it strikes the right balance, and I urge Congress to pass this legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise to introduce the Imported Ethanol Parity Act of 2008.

This legislation is cosponsored by Senators Gregg, Cantwell, Allard and Collins.

First, let me explain what this bill does. The Imported Ethanol Parity Act instructs the President to lower the ethanol import tariff, so that it is no higher than the subsidy for blending ethanol into gasoline.

This legislation is necessary because the Farm Bill extended the tariff for two more years at $0.54 per gallon, even though the Farm Bill reduced the ethanol blending subsidy to $0.45 per gallon.

In effect, the Farm Bill has turned the tariff from an ``offset'' into a true trade barrier of at least $0.09 per gallon.

The Ethanol tariff poses many problems.

It increases the cost of Gasoline in the United States by making ethanol more expensive.

It prevents Americans from importing ethanol made from sugarcane. Sugar ethanol is the only available transportation fuel that works in today's cars and emits considerably less lifecycle greenhouse gas than gasoline;.

It taxes imports from our friends in Brazil, India, and Australia, while oil and gasoline imports from OPEC enter the United States tax free.

It hinders the emergence of a global biofuels marketplace through which countries with a strong biofuel crop could sell fuel to countries that suffered drought or other agricultural difficulties in the same crop year. Such a global market would permit mutually beneficial trade between producing regions and stabilize both fuel and food prices.

It makes us more dependent on the Middle East for fuel when we should be increasing the number of countries from whom we buy fuel. When it comes to energy security for the United States, which has less than 3 percent of proven global oil reserves and 25 percent of demand, we must diversify supply.

Bottom Line: until the tariff is lowered, the United States will tax the only fuel it can import that increases energy security, reduces greenhouse gas emissions, and lowers gasoline prices.

In 2006 I introduced legislation to eliminate the ethanol tariff entirely, and in 2007 I cosponsored an amendment to the Energy Bill which would have eliminated the tariff.

The Imported Ethanol Parity Act is a different proposal that I believe addresses the concerns of tariff defenders.

The advocates of the $0.54 per gallon tariff on ethanol imports have always argued that the tariff is necessary in order to offset the blender subsidy that applies to the use of all ethanol, whether produced domestically or internationally. They argue that the ethanol subsidy exists to support American farmers who produce ethanol at higher cost than foreign producers.

For instance, on May 6, 2006, the Chairman of the Senate Finance Committee stated on the Senate floor that, ``the U.S. tariff on ethanol operates as an offset to an excise tax credit that applies to both domestically produced and imported ethanol.''

On May 9, 2006, the Renewable Fuels Association stated in a press release: ``the secondary tariff exists as an offset to the tax incentive gasoline refiners receive for every gallon of ethanol they blend, regardless of the ethanol's origin.''

In a letter to Congress dated June 20, 2007, the American Coalition for Ethanol, the American Farm Bureau Federation, the National Corn Growers Association, the National Council of Farmer Cooperatives, the National Sorghum Producers, and the Renewable Fuels Association stated that the ``(blender) tax credit is available to refiners regardless of whether the ethanol blended is imported or domestic. To prevent U.S. taxpayers from subsidizing foreign ethanol companies, Congress passed an offset to the tax credit that foreign companies pay in the form of a tariff.''

Just this month, the Renewable Fuels Association's Executive Director asserted that ``The tariff is there not so much to protect the industry but the U.S. taxpayer.''

Bottom Line: the tariff cannot be justifiably maintained at $0.54 per gallon if its intent is to offset a $0.45 per gallon blender subsidy, and it should be reduced.

Ethanol from Brazil or Australia should not have to overcome a trade barrier that no drop of OPEC oil must face.

Tariff defenders either should support this legislation or explain how a tariff can justifiably be higher than the subsidy it is designed to offset.

Climate Change is the most significant environmental challenge we face, and I believe that lowering the ethanol tariff will make it less expensive for the United States to combat global warming.

The fuel we burn to power our cars is a major source of the greenhouse gas emissions warming our planet. To reduce this impact, we need to increase the fuel efficiency of our vehicles and lower the lifecycle carbon emissions of the fuel itself.

For this reason, in March 2007, I introduced the Clean Fuels and Vehicles Act with Senators Olympia Snowe and Susan Collins.

The legislation proposed a ``Low Carbon Fuels Standard,'' which would require each major oil company selling gasoline in the United States to reduce the average lifecycle greenhouse gas emissions per unit of energy in their gasoline by 3 percent by 2015 and by 3 percent more in 2020.

The legislation was modeled on the state of California's Low Carbon Fuels Standard, which also requires a reduction in the lifecycle greenhouse gas emissions from transportation fuels.

This concept became a major aspect of the Energy Independence and Security Act of 2007, in which Congress required oil companies to use an increasing quantity of ``advanced biofuels'' that produce at least 50 percent less lifecycle greenhouse gas than gasoline.

Unfortunately the ethanol tariff puts a trade barrier in front of the lowest carbon fuel available, making it considerably more expensive for the United States to lower the lifecycle carbon emissions of transportation fuel.

The lifecycle greenhouse gas emissions of ethanol vary depending on production methods and feedstocks, and these differences will impact the degree to which ethanol may be used to meet ``low-carbon'' fuel requirements under California law and the Energy Independence and Security Act of 2007.

For instance, sugar cane ethanol plants use biomass from sugar stalks as process energy, resulting in less fossil fuel input compared to current corn-to-ethanol processes. By comparison, researchers at the University of California concluded that ``only 5 to 26 percent of the energy content (in corn ethanol) is renewable. The rest is primarily natural gas and coal,'' which are used in the production process.

The 2007 California Energy Commission Report entitled Full Fuel Cycle Assessment: Well-to-Wheels Energy Inputs, Emissions, and Water Impacts

concluded that the direct lifecycle greenhouse gas emissions of imported sugar based ethanol are 68 percent lower than gasoline, while the direct lifecycle greenhouse gas emissions of corn based ethanol from the Midwest are 15 to 28 percent lower than gasoline.

Further research released in 2008 suggests that the lifecycle greenhouse gas emissions of corn based ethanol may be higher than gasoline, when land use change is factored into the equation.

The bottom line: biofuels that protect our planet may be produced abroad, and we should not put tariffs in front of these fuels, while we import crude oil and gasoline tariff free.

Energy and food prices are both rising at unprecedented rates, and there is a great deal of debate about whether the renewable fuels standard mandating ethanol use is causing the problem.

I have always opposed corn ethanol mandates. But I remain concerned that the blending subsidy and the ethanol tariff have as much to do with rising corn prices as the ethanol mandate.

Corn ethanol production has considerably exceeded the renewable fuels standard every year since its adoption in 2005. With oil prices this high, it is profitable to produce ethanol at record corn prices with or without the mandate. The low value of renewable fuels standard credits, known as RINs, confirms that using ethanol is not a burden for oil companies.

To address the rising cost of corn, we have to address the underlying economics of corn ethanol production, and effectively increasing the tariff on imports, as the Farm Bill has done, is a step in the wrong direction.

This legislation corrects the Farm Bill's mistaken policy that imposed a real trade barrier on clean and climate friendly ethanol imports, giving gasoline imports a competitive advantage over cleaner fuel that simply should not exist at a time we are trying to combat climate change.

It prevents ethanol producers abroad from receiving American ethanol subsidies, which is supposedly the intent of the ethanol tariff.

I think it strikes the right balance, and I urge Congress to pass this legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, the goal of our trade policy should be to promote fair competition and lift up workers at home and abroad.

Americans support trade that allows responsible businesses to thrive, fueling good-paying jobs and a strong, resilient economy.

But wrong-headed trade pacts following the failed NAFTA-model have betrayed middle class families across the country, destabilizing our economy and destroying communities in rural and urban areas alike.

In my state of Ohio, more than 200,000 manufacturing jobs have been eliminated since 2001. Across the country, more than 3 million manufacturing jobs have been eliminated in that time.

Our failures to modernize our Nation's trade policy, to learn from our mistakes, and to respond to changing dynamics in the global arena, hurt communities like Toledo and Steubenville and Dayton.

That is why voters in my state of Ohio and across the country have sent a message loud and clear demanding a new direction, a very different direction, for our nation's trade policy.

Over the last 8 years, our approach to trade has been haphazard at best.

In the last 2 years, since voters elected candidates who support fair trade, Congress has reasserted itself in trade policy-making, with some improvements to proposed deals with Peru, Panama, Colombia, and South Korea.

We also have chosen not to grant President Bush a renewal of Fast Track.

But our approach to trade has not evolved from reactive to proactive. We have not forged a new approach to trade that is results-oriented, an approach focused squarely on the goals of economic strength, job creation, and U.S. self-sufficiency.

Not surprisingly, polls show that Americans reject current trade policy as misguided.

That is because it is.

It is time to learn from our mistakes.

It is time for a change. The Trade Reform, Accountability, Development and Employment, TRADE, Act, which Senator Dorgan, Senator Feingold, Senator Casey, Senator Whitehouse and I are introducing today, is a step towards that change.

This legislation will serve as a template for how to craft a trade agreement that works for workers, for business owners, for our country.

This legislation will mandate a review of all existing trade agreements and will require the President to submit renegotiation plans for those agreements before pursuing new trade agreements.

The TRADE Act will create a committee comprised of House and Senate leaders who will review the President's plan for renegotiation.

This bill spells out standards for future trade agreements, standards based on fostering fair competition, promoting good-paying jobs, and addressing unethical behavior by multinational corporations, including the exploitation of people and natural resources in developing nations.

Trade is an exchange that relies on the integrity of its participants. We must not trade away our fundamental belief in basic human rights and our responsibility to fight the kind of exploitation that threatens vulnerable peoples and vulnerable nations.

That is why our trade policy must not sidestep the impact of lax trade agreements and unethical corporations on developing nations.

The TRADE Act also sets out criteria for a new negotiating process-- one that would do away with the fundamentally-flawed Fast Track process and return power to Congress when considering our nation's trade pacts.

We take for granted our clean air, safe food, and safe drinking water. But these blessings are not by chance: they result from laws and rules that foster fair wages, protect the public health, and promote environmental stewardship.

Flawed trade policy accelerates the import of toxic toys, contaminated toothpaste, and poisonous pet food into this country.

It does not have to be this way.

We have a choice.

We can continue a race to the bottom in wages, worker safety, environmental protection, and health standards.

Or, we can use trade agreements to lift standards abroad--not threaten workers and consumers.

We can continue down the path of the failed NAFTA model, or we can write trade agreements that sustain and grow our Nation's manufacturing self-sufficiency, create good-paying jobs and reduce the trade deficit by providing fair and transparent market access.

We can forsake U.S. standards and U.S. values and ignore trade abuses in order to mass produce trade agreements, or we can write trade agreements that fulfill their promises, that hold our trading partners accountable for abiding by the rules, and that build on the hard-fought battles waged to build a strong middle class, reward good corporate citizens, preserve our natural resources, and ensure that the food and products Americans purchase are safe.

We can continue to use trade deals to lock in protections for Wall Street, the drug companies, and oil companies, or we can create a predictable structure for international trade without providing corporations with overreaching privileges and rights of private enforcement that undermine our laws.

Middle class families, American manufacturers and farmers, and community leaders across the country all know that we need a new direction for trade.

I am going to ask my leadership, and my caucus, to work with me on this legislation. And I look forward to working with my allies on the other side of the aisle to modernize U.S. trade policy.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Madam Speaker, today I am introducing a bill to facilitate the importation of ethanol. It is cosponsored by my colleague from Colorado, Mr. Perlmutter, and I appreciate his support.

The bill will direct the President to lower the ethanol import tariff, so that it will never be higher than the tax-credit subsidy for blending ethanol into gasoline.

Historically, the ethanol tariff was linked to the subsidy, and so had the effect of precluding foreign ethanol blenders from benefiting from the subsidy. However, the recently-enacted Farm Bill will reduce the subsidy but simultaneously extend the tariff for 2 more years at $0.54 per gallon.

Unless that changes, the tariff will be changed into a trade barrier that will make it even harder for ethanol imports to enter the U.S. market. This can have serious adverse consequences. For example--

By restricting supplies, it will tend to increase the price of fuel-- including both gasoline and ethanol--in the United States.

It will make it harder to import sugar-based ethanol, which can work in today's cars and, like other ethanol emits considerably less lifecycle greenhouse gas than gasoline.

It works against imports from friendly countries that produce ethanol while oil and gasoline imports from OPEC enter the United States tax- free.

It hinders the emergence of a global biofuels marketplace that could permit mutually beneficial trade between producing regions and stabilize both fuel and food prices.

And it tends to increase our dependency on fossil fuels--including petroleum from the Middle East--when we should be working to reduce that dependency.

By restoring the role of the tariff as an offset, not a trade barrier, my bill will prevent those consequences. In this respect, it is a companion to legislation (S. 3080) introduced in the Senate by Senator Feinstein.

In addition, my bill will require the Energy and Commerce Departments to report to Congress regarding the possible effect of further reducing--or even eliminating--the tariff on ethanol on fuel supplies and prices in the United States and on the domestic production of ethanol.

I have included this provision because I think it is worth exploring whether legislation to further reduce or eliminate the tariff could help reduce fuel prices without serious harm to our domestic ethanol industry.

Madam Speaker, this bill alone will not do all that should be done to revise and reform our energy policies. But I think it can help, and I think it deserves the support of all our colleagues.

For the benefit of our colleagues, here is an outline of the bill's provisions:

Section-By-Section Outline

Section one provides a short title, ``Imported Ethanol Facilitation Act.''

Section two sets out findings regarding the reasons for the bill. It also states the bill's purpose, which is ``to ensure that the tariff on ethanol does not exceed the tax credit applicable to blenders of ethanol, to avoid erecting a new trade barrier to imports of ethanol while assuring that foreign blenders will not benefit from the tax credit, and to require a study of potential effects of further reduction in or elimination of the duty on ethanol.''

Section three directs the president to act to ensure that the ethanol tariff will not exceed any tax credit applicable to ethanol.

Section four requires the Department of Energy and the Commerce Department to report to Congress regarding the effects any further reduction--or elimination--of the ethanol tariff would have on (1) fuel supplies and fuel prices in the U.S.; and (2) the domestic production of ethanol. The deadline for this report would be 90 days after the bill's enactment.

Mr. President, from the skyrocketing price of crude oil, now hovering well above $120 a barrel, to the $4.00 per gallon being sold at gas stations across the country, Americans are frustrated and there appears to be no end in sight.

I've talked to school superintendents who have had to cut academic programs because the cost of fueling school buses has gone through the roof. I have met with constituents who are pleading for the Federal Government to take some kind of action to provide relief. Just last week, I held a field hearing in Pittsfield, Massachusetts to examine how gas prices were impacting small business owners, and the testimony was striking. Businesses that have been sustainable for decades are now wondering whether they'll be forced to shut their doors for good.

Congress has received testimony from energy market experts and major oil company executives that the price of oil and gas can no longer be explained or predicted by normal market dynamics or their historic understanding of supply and demand forces. An executive from Exxon Mobil recently testified before Congress under oath that the price of crude oil should be about $50 to $55 per barrel based on the supply and demand fundamentals he had observed. Yet current crude oil prices are more than double that.

We are all owed a clearer understanding as to why prices are so disconnected from what normal supply and demand would indicate. Why has the price of oil nearly doubled in the last year? Prices should not skyrocket like this in a properly functioning, competitive market. Twice I have written to

the Bush Administration demanding an investigation and twice I have received a response of ``we're working on it''. Well, this response rings awfully hollow to Americans struggling to understand what's going on.

How the Federal Government responds to the changing dynamics of energy markets is vital to our continued national and economic security. If the Enron energy crisis taught us anything it is that consumers are best protected when energy markets are subject to aggressive oversight and enforcement. Unless there is a cop on the beat vigilantly policing energy markets--especially when supplies are tight in markets with extremely inelastic demand--sophisticated companies can fleece consumer pocketbooks without fear of penalty.

Therefore, I am introducing legislation today to establish a new interagency Oil and Gas Market Fraud Task Force under the leadership of the Department of Justice to ensure that energy markets are free from illegal market manipulation or corporate corruption. This legislation will allow us to root out fraud and manipulation in all corners of the oil and gas marketplace, and restore consumer confidence. When that happens, everyone wins. I urge my colleagues to support this legislation.