Corn Ethanol Mandate Elimination Act of 2013

Mr. President, I rise to introduce The Corn Ethanol Mandate Elimination Act of 2013, a bill cosponsored by my distinguished colleagues: Senators Tom Coburn, Kay Hagan, Susan Collins, Patrick Toomey, Jeff Flake, Bob Corker, Richard Burr, James Risch, and Joe Manchin.

This legislation would eliminate the Federal corn ethanol mandate from the Renewable Fuel Standard, RFS, while leaving the requirement that oil companies purchase and use low-carbon ``advanced biofuel'' in place.

Let me briefly explain why this legislation is necessary.

The Renewable Fuel Standard, a statute enacted in 2007, requires oil companies to use 16.55 billion gallons of renewable fuel in 2013. This annual requirement increases to 36 billion gallons in 2022.

Every year, the law directs that an increasing portion of this mandate be met using low-carbon ``advanced biofuel'' that is not derived from corn starch and lowers lifecycle greenhouse gas emissions by at least 50 percent. I strongly support this provision to lower the carbon emissions from our fuel supply.

However, 14.4 billion gallons in 2014, and 15 billion gallons each year after, of the RFS mandate established in statute is met using corn ethanol, which amounts to a corn ethanol mandate.

There are two major problems with continuing to mandate the consumption of more and more corn ethanol in the United States each year.

First and foremost, the policy has led us to divert 44 percent of the U.S. corn crop from food to fuel, about twice the rate in 2006.

As the Associated Press laid out in a recent detailed investigation, the use of corn for ethanol is artificially pushing up food and feed prices while damaging the environment. The investigation found conservation lands are disappearing.

Before Congress enacted the corn ethanol mandate, the U.S. Department of Agriculture Conservation Reserve Program grew every year for nearly a decade. But in the first year after the corn ethanol mandate, more than 2 million acres were removed. Since Obama took office, 5 million more acres have been repurposed.

The AP also found that farmers have broken ground on virgin land, which it described as ``the untouched terrain that represents, from an environmental standpoint, the country's most important asset.''

Using government satellite data, the AP estimates that 1.2 million acres of virgin land in Nebraska and the Dakotas alone have been converted to fields of corn and soybeans since 2006.

Since 2005, the AP calculates that corn farmers increased their use of nitrogen fertilizer by more than two billion pounds.

The nitrates from this fertilizer wash into our rivers and flow to the Gulf of Mexico, where they feed algae. When the algae die, the decomposition consumes oxygen, leaving behind a ``dead zone.''

This year, the AP reports the dead zone covered 5,800 square miles of sea floor, about the size of Connecticut.

Using more and more corn for ethanol, in drought years as well as years with bumper crops, has had economic consequences as well as environmental effects.

Higher feed prices have cost our beef, poultry, restaurant, and dairy industries dearly.

According to recent testimony in the House of Representatives, from October 2006 to July 2013, poultry and egg producers have had to bear the burden of higher feed costs totaling over $50 billion.

Joel Brandenberger, the President of the National Turkey Federation, estimates that the RFS cost the turkey industry $1.9 billion in increased feed expenses last year.

According to a recent Price-Waterhouse-Coopers study, the federal mandate on corn-based ethanol substantially raised prices and costs throughout the food supply chain. If the RFS mandate were left unchanged, it would increase chain restaurant industry costs by up to $3.2 billion a year.

But the damage has probably been greatest in California, where dairymen are drowning under a combination of low milk prices and high feed costs.

The milk producers' group Western United Dairymen reports that more than 400 dairies have gone out of business in the past 5 years, including 105 in the past year alone.

``California's remaining 1,500 dairies are fighting for survival,'' the group said in a recent statement.

The bottom line is increased feed prices associated with corn ethanol have bent this industry to its breaking point.

But the corn ethanol mandate in the Renewable Fuel Standard also presents an additional problem.

As Corporate Average Fuel Economy, CAFE, Standards required by the Ten in Ten Fuel Economy Act drive down gasoline consumption, oil companies face a ``blend wall'' as the RFS mandate exceeds the limit at which ethanol can be blended into the fuel supply--determined to be 10 percent of total gasoline consumption.

This blend wall is about 13.4 billion gallons of ethanol--well below the 2014 corn ethanol statutory mandate of 14.4 billion gallons.

According to EPA: ``EPA does not currently foresee a scenario in which the market could consume enough ethanol . . . to meet the volumes . . . stated in the statute.'' This situation is likely to increase gasoline prices.

While EPA has proposed using a creative statutory interpretation to reduce the RFS volumes in 2014, unfortunately EPA's proposal would reduce the advanced biofuel side of the RFS mandate by more than 41 percent, while it proposes to reduce the corn ethanol portion of the mandate by only 10 percent.

The Corn Ethanol Mandate Elimination Act would address the blend wall directly, thereby allowing EPA to continue increasing volumes of low carbon advanced biofuel.

This legislation would eliminate the corn ethanol mandate, but it's important to point out it would by no means eliminate the corn ethanol industry. Refiners will continue to blend com ethanol into the fuel supply in the absence of a mandate for two reasons.

First, ethanol is the preferred octane booster used to increase the efficiency of gasoline.

Second, the wholesale price of ethanol is currently 65 cents per gallon less than the wholesale price of unblended gasoline, meaning blenders lower their costs and increase profits when they add ethanol to gasoline.

The multi-billion dollar corn ethanol industry will compete directly with oil based on price without a mandate, and the economic benefits of mixing corn ethanol into gasoline would remain.

I am aware that the advanced biofuel industry is working to scale and commercialize their technologies, and their investors seek regulatory and economic certainty during this period.

I am also fundamentally committed to the vitally important public health protections provided by the Clean Air Act.

That is why I would like to make it crystal clear that this legislation is a narrow bill repealing the corn ethanol mandate. Senator Coburn and I jointly made this clear when we agreed to the following statement:

``We are opposed to a mandate on the use of corn ethanol and plan to introduce the Corn Ethanol Mandate Elimination Act to repeal this unwise policy. The bill's language will explicitly clarify that the legislation has no effect on the low-carbon advanced biofuel provisions in the Renewable Fuel Standard, and we are both committed to opposing any amendment to the bill that would broaden its scope to amend, revise or weaken the advanced biofuel provisions or other public health protections provided by the Clean Air Act.

If provisions threatening public health were successfully added to the Corn Ethanol Mandate Elimination Act, we would no longer support the bill.

I also understand that some in the advanced biofuel industry argue that legislative changes to the corn ethanol portion of the Renewable Fuel Standard could reduce certainty for their industry.

Respectfully, I disagree. The current law is not providing this industry with the certainty it needs.

While EPA has some flexibility under the RFS statute to adjust RFS mandated volumes, most of that flexibility rests in EPA's power to reduce the amount of ``advanced biofuel'' mandated under the RFS.

EPA's ability to reduce the corn ethanol mandate under current law and current circumstances is far from clear. Its proposal to reduce the corn ethanol mandate in its recently released draft rule for 2014 will be subject to aggressive legal challenge.

EPA's lack of discretion has led EPA to propose a rule drastically reducing volumes for advanced biofuels, including biodiesel, by 41 percent, while it proposes only a modest 10 percent reduction in corn ethanol volumes.

Unless The Corn Ethanol Mandate Elimination Act is enacted, EPA will likely carry forward its proposal to dramatically reduce ``advanced biofuel'' volumes in order to address the blend wall. We believe eliminating the corn ethanol mandate is a much more responsible alternative.

This legislation has strong support from the prepared food industry, dairy, beef, poultry, oil and gas, engine manufacturers, boaters, hunger relief organizations and environmental groups. I would like to list all the organizations that have expressed support for this bill:

ActionAid USA; American Bakers Association; American Frozen Food Institute; American Fuel & Petrochemical Manufacturers; American Meat Institute; American Sportfishing Association; Americans for Prosperity; BoatU.S.; California Dairies, Inc.; California Dairy Campaign; California Poultry Federation; Clean Air Task Force; Competitive Enterprise Institute; Dairy Producers of New Mexico; Dairy Producers of Utah; Environmental Working Group; Freedom Action; Georgia Poultry Federation; Grocery Manufacturers Association; Idaho Dairymen's Association; Indiana State Poultry Association; International Snowmobile Manufacturers Association; Iowa Turkey Federation; Marine Retailers Association of the Americas; Michigan Allied Poultry Industries, Inc.; Milk Producers Council; Minnesota Turkey Growers Association; National Cattlemen's Beef Association; National Chicken Council; National Council of Chain Restaurants; National Marine Manufacturers Association; National Restaurant Association; National Taxpayers Union; National Turkey Federation; Nevada State Dairy Commission; North American Meat Association; North Carolina Poultry Federation; Northwest Dairy Association; Oregon Dairy Farmers Association; Oxfam; South Carolina Poultry Federation; South East Dairy Farmers Association; Southeast Milk Inc.; Specialty Equipment Market Association; Taxpayers for Common Sense; Texas Poultry Federation; The Poultry Federation; Virginia Poultry Federation; Washington State Dairy Federation; Western United Dairymen; and the Wisconsin Poultry & Egg Industries Association.

The Corn Ethanol Mandate Elimination Act of 2013 would fix both of the problems with the current Renewable Fuel Standard.

First, it would eliminate the unnecessary pressure on corn prices and corn production, allowing the multi-billion dollar corn ethanol industry to compete directly with oil based on price, not mandates.

Second, it reduces RFS mandated volumes below the blend wall.

The bill addresses both problems while maintaining the RFS provisions that encourage the development, deployment and growth of cellulosic ethanol, algae-based fuel, green diesel, and other low carbon advanced biofuels, maintaining a market for the innovative, nascent, domestic industry that this statute was designed to build up.

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

Mr. President, I rise today to reintroduce the Earthquake Insurance Affordability Act.

This bill will help families and communities quickly recover after major earthquakes by encouraging local investment in mitigation and insurance coverage.

You see, in California, the State with the greatest exposure to earthquake damage, only about 1 in 10 homeowners has insurance to pay for earthquake damage. Other States, including Washington, Oregon, Alaska, Tennessee, Missouri and Arkansas, also have significant earthquake risks and low rates of earthquake insurance.

Insurance coverage rates are so low that many believe it has now become a national crisis.

Because when homes aren't structurally sound, and insurance is lacking, local earthquake recovery costs quickly become America's costs.

The math is simple: less insurance means more Federal spending after a disaster.

For example, the August 2011 Virginia earthquake was devastating to

homeowners in and around Spotsylvania County. Most of those homeowners did not have an insurance policy that covered earthquake damage.

Mr. Cantor, the House Majority Leader, summed it up: ``Obviously the problem is most people in Virginia don't have earthquake insurance. That is going to be a hardship. If there needs to be money from the Federal Government, we'll find the money.''

Congress did ultimately find that money. A Federal disaster declaration was made, and homeowners received more than $16 million to cover uninsured losses.

But with bigger disasters come bigger uninsured losses.

Consider the costs of Hurricanes Katrina and Sandy.

The GAO estimates that the federal government provided about $26 billion to homeowners who lacked adequate insurance in response to Hurricanes Katrina, Rita, and Wilma.

Congress provided $16 billion housing recovery for Sandy victims.

The bottom line is this: Uninsured homeowners drive up federal disaster spending. So if we can find a way to convert uninsured homeowners into insured homeowners, we will lower federal disaster spending and save American taxpayers millions each year.

The Earthquake Insurance Affordability Act will do just that. It will make earthquake insurance more affordable and expand access to coverage. It will dedicate non-federal funding to earthquake loss- mitigation programs to make houses and communities more resilient.

At its core, this legislation would authorize a private-market debt- guarantee program. The U.S. Treasury would guarantee certain debt issued by eligible state earthquake insurance programs following a catastrophic earthquake.

The debt would be limited in amount, and pre-arranged, and the eligible State programs would be highly creditworthy.

By definition, this legislation is designed to promote the use of private capital to finance earthquake risk. So this means that private capital, not Congressional appropriations, will support rebuilding homes and restoring communities.

The Federal guarantee will assure that qualified insurance programs can sell debt at reasonable rates, even during difficult post-disaster market conditions.

By lowering interest rates, insurance programs can spend less on interest and reinsurance, and instead invest that money on rate reductions and mitigation.

Rate reduction is the key goal; because uninsured homeowners overwhelmingly attribute their lack of insurance to the high price of these policies.

The California Earthquake Authority, the largest earthquake-insurance provider in the state, estimates the Earthquake Insurance Affordability Act will allow them to lower premiums and direct millions of dollars into mitigating homes.

That means the bill will not only lower insurance rates, but thousands more homes would become more earthquake-resistant.

Every homeowner who benefits from this legislation is one less homeowner who will rely on Federal disaster benefits after a catastrophic earthquake--that's millions of taxpayer dollars saved.

I know some of my colleagues will be concerned about putting the full faith and credit of our Federal Government behind insurance programs that are working to pay off catastrophic damages. I shared these concerns; and that is why the bill mandates strict criteria for determining how and when an insurance program can access a Federal guarantee.

First, the program must be an independent, State-run program.

Second, the program must be not for profit. The benefits of a Federal guarantee must go to policyholders, not shareholders.

Third, and most importantly, only financially sound programs are eligible. Before any Federal guarantee is offered, the Treasury Department must carefully confirm, then certify, that the program can repay the debt it incurs.

What is more: as a condition getting approved by the Department, the program must cover all actual and expected costs of conducting these credit reviews and administering the program.

Because of these key features, initial estimates from Congressional Budget Office staff affirm that this legislation brings no budgetary impact.

An independent assessment by the RAND Corporation also found that a program such as this would likely save tens of millions of dollars during a major disaster.

The bill brings other benefits to the taxpayer as well. Under a new provision added to the bill this year, participating State insurance programs must dedicate 2 percent of their Federal guarantee toward mitigating vulnerable properties and providing earthquake-hazard education.

Again, these mitigation funds will bring real benefits to homeowners, without appropriating Federal funds.

According to the United States Geological Survey, there is a 99.7 percent chance that a magnitude 6.7 earthquake will strike California within the next 30 years.

Even more concerning--the USGS forecasts a 46 percent chance that a much more devastating magnitude 7.5 or higher earthquake will occur in California during the same period.

The question is what are we doing to prepare?

Will we stick with the status quo; a system where the Federal Government comes in after the fact and spends billions to try to clean up the mess but leaves the community just as vulnerable to the next disaster?

Or will we apply the lessons from disasters like the 1994 Northridge earthquake where we spent the equivalent of more than $10 billion, and transition to a system where homeowners are encouraged to share the financial burden by purchasing earthquake insurance and making their homes stronger?

In the current budget environment, the choice cannot be simpler. We cannot continue to spend billions on disaster relief when reliable, cheaper options are available.

With a few simple steps, the Earthquake Insurance Affordability will create an affordable mechanism to help our country prepare for, and recover more quickly from, the major earthquakes that we all know are just around the corner. I urge my colleagues to quickly adopt this critical legislation.

Mr. President, I rise to introduce The Corn Ethanol Mandate Elimination Act of 2013, a bill cosponsored by my distinguished colleagues: Senators Tom Coburn, Kay Hagan, Susan Collins, Patrick Toomey, Jeff Flake, Bob Corker, Richard Burr, James Risch, and Joe Manchin.

This legislation would eliminate the Federal corn ethanol mandate from the Renewable Fuel Standard, RFS, while leaving the requirement that oil companies purchase and use low-carbon ``advanced biofuel'' in place.

Let me briefly explain why this legislation is necessary.

The Renewable Fuel Standard, a statute enacted in 2007, requires oil companies to use 16.55 billion gallons of renewable fuel in 2013. This annual requirement increases to 36 billion gallons in 2022.

Every year, the law directs that an increasing portion of this mandate be met using low-carbon ``advanced biofuel'' that is not derived from corn starch and lowers lifecycle greenhouse gas emissions by at least 50 percent. I strongly support this provision to lower the carbon emissions from our fuel supply.

However, 14.4 billion gallons in 2014, and 15 billion gallons each year after, of the RFS mandate established in statute is met using corn ethanol, which amounts to a corn ethanol mandate.

There are two major problems with continuing to mandate the consumption of more and more corn ethanol in the United States each year.

First and foremost, the policy has led us to divert 44 percent of the U.S. corn crop from food to fuel, about twice the rate in 2006.

As the Associated Press laid out in a recent detailed investigation, the use of corn for ethanol is artificially pushing up food and feed prices while damaging the environment. The investigation found conservation lands are disappearing.

Before Congress enacted the corn ethanol mandate, the U.S. Department of Agriculture Conservation Reserve Program grew every year for nearly a decade. But in the first year after the corn ethanol mandate, more than 2 million acres were removed. Since Obama took office, 5 million more acres have been repurposed.

The AP also found that farmers have broken ground on virgin land, which it described as ``the untouched terrain that represents, from an environmental standpoint, the country's most important asset.''

Using government satellite data, the AP estimates that 1.2 million acres of virgin land in Nebraska and the Dakotas alone have been converted to fields of corn and soybeans since 2006.

Since 2005, the AP calculates that corn farmers increased their use of nitrogen fertilizer by more than two billion pounds.

The nitrates from this fertilizer wash into our rivers and flow to the Gulf of Mexico, where they feed algae. When the algae die, the decomposition consumes oxygen, leaving behind a ``dead zone.''

This year, the AP reports the dead zone covered 5,800 square miles of sea floor, about the size of Connecticut.

Using more and more corn for ethanol, in drought years as well as years with bumper crops, has had economic consequences as well as environmental effects.

Higher feed prices have cost our beef, poultry, restaurant, and dairy industries dearly.

According to recent testimony in the House of Representatives, from October 2006 to July 2013, poultry and egg producers have had to bear the burden of higher feed costs totaling over $50 billion.

Joel Brandenberger, the President of the National Turkey Federation, estimates that the RFS cost the turkey industry $1.9 billion in increased feed expenses last year.

According to a recent Price-Waterhouse-Coopers study, the federal mandate on corn-based ethanol substantially raised prices and costs throughout the food supply chain. If the RFS mandate were left unchanged, it would increase chain restaurant industry costs by up to $3.2 billion a year.

But the damage has probably been greatest in California, where dairymen are drowning under a combination of low milk prices and high feed costs.

The milk producers' group Western United Dairymen reports that more than 400 dairies have gone out of business in the past 5 years, including 105 in the past year alone.

``California's remaining 1,500 dairies are fighting for survival,'' the group said in a recent statement.

The bottom line is increased feed prices associated with corn ethanol have bent this industry to its breaking point.

But the corn ethanol mandate in the Renewable Fuel Standard also presents an additional problem.

As Corporate Average Fuel Economy, CAFE, Standards required by the Ten in Ten Fuel Economy Act drive down gasoline consumption, oil companies face a ``blend wall'' as the RFS mandate exceeds the limit at which ethanol can be blended into the fuel supply--determined to be 10 percent of total gasoline consumption.

This blend wall is about 13.4 billion gallons of ethanol--well below the 2014 corn ethanol statutory mandate of 14.4 billion gallons.

According to EPA: ``EPA does not currently foresee a scenario in which the market could consume enough ethanol . . . to meet the volumes . . . stated in the statute.'' This situation is likely to increase gasoline prices.

While EPA has proposed using a creative statutory interpretation to reduce the RFS volumes in 2014, unfortunately EPA's proposal would reduce the advanced biofuel side of the RFS mandate by more than 41 percent, while it proposes to reduce the corn ethanol portion of the mandate by only 10 percent.

The Corn Ethanol Mandate Elimination Act would address the blend wall directly, thereby allowing EPA to continue increasing volumes of low carbon advanced biofuel.

This legislation would eliminate the corn ethanol mandate, but it's important to point out it would by no means eliminate the corn ethanol industry. Refiners will continue to blend com ethanol into the fuel supply in the absence of a mandate for two reasons.

First, ethanol is the preferred octane booster used to increase the efficiency of gasoline.

Second, the wholesale price of ethanol is currently 65 cents per gallon less than the wholesale price of unblended gasoline, meaning blenders lower their costs and increase profits when they add ethanol to gasoline.

The multi-billion dollar corn ethanol industry will compete directly with oil based on price without a mandate, and the economic benefits of mixing corn ethanol into gasoline would remain.

I am aware that the advanced biofuel industry is working to scale and commercialize their technologies, and their investors seek regulatory and economic certainty during this period.

I am also fundamentally committed to the vitally important public health protections provided by the Clean Air Act.

That is why I would like to make it crystal clear that this legislation is a narrow bill repealing the corn ethanol mandate. Senator Coburn and I jointly made this clear when we agreed to the following statement:

``We are opposed to a mandate on the use of corn ethanol and plan to introduce the Corn Ethanol Mandate Elimination Act to repeal this unwise policy. The bill's language will explicitly clarify that the legislation has no effect on the low-carbon advanced biofuel provisions in the Renewable Fuel Standard, and we are both committed to opposing any amendment to the bill that would broaden its scope to amend, revise or weaken the advanced biofuel provisions or other public health protections provided by the Clean Air Act.

If provisions threatening public health were successfully added to the Corn Ethanol Mandate Elimination Act, we would no longer support the bill.

I also understand that some in the advanced biofuel industry argue that legislative changes to the corn ethanol portion of the Renewable Fuel Standard could reduce certainty for their industry.

Respectfully, I disagree. The current law is not providing this industry with the certainty it needs.

While EPA has some flexibility under the RFS statute to adjust RFS mandated volumes, most of that flexibility rests in EPA's power to reduce the amount of ``advanced biofuel'' mandated under the RFS.

EPA's ability to reduce the corn ethanol mandate under current law and current circumstances is far from clear. Its proposal to reduce the corn ethanol mandate in its recently released draft rule for 2014 will be subject to aggressive legal challenge.

EPA's lack of discretion has led EPA to propose a rule drastically reducing volumes for advanced biofuels, including biodiesel, by 41 percent, while it proposes only a modest 10 percent reduction in corn ethanol volumes.

Unless The Corn Ethanol Mandate Elimination Act is enacted, EPA will likely carry forward its proposal to dramatically reduce ``advanced biofuel'' volumes in order to address the blend wall. We believe eliminating the corn ethanol mandate is a much more responsible alternative.

This legislation has strong support from the prepared food industry, dairy, beef, poultry, oil and gas, engine manufacturers, boaters, hunger relief organizations and environmental groups. I would like to list all the organizations that have expressed support for this bill:

ActionAid USA; American Bakers Association; American Frozen Food Institute; American Fuel & Petrochemical Manufacturers; American Meat Institute; American Sportfishing Association; Americans for Prosperity; BoatU.S.; California Dairies, Inc.; California Dairy Campaign; California Poultry Federation; Clean Air Task Force; Competitive Enterprise Institute; Dairy Producers of New Mexico; Dairy Producers of Utah; Environmental Working Group; Freedom Action; Georgia Poultry Federation; Grocery Manufacturers Association; Idaho Dairymen's Association; Indiana State Poultry Association; International Snowmobile Manufacturers Association; Iowa Turkey Federation; Marine Retailers Association of the Americas; Michigan Allied Poultry Industries, Inc.; Milk Producers Council; Minnesota Turkey Growers Association; National Cattlemen's Beef Association; National Chicken Council; National Council of Chain Restaurants; National Marine Manufacturers Association; National Restaurant Association; National Taxpayers Union; National Turkey Federation; Nevada State Dairy Commission; North American Meat Association; North Carolina Poultry Federation; Northwest Dairy Association; Oregon Dairy Farmers Association; Oxfam; South Carolina Poultry Federation; South East Dairy Farmers Association; Southeast Milk Inc.; Specialty Equipment Market Association; Taxpayers for Common Sense; Texas Poultry Federation; The Poultry Federation; Virginia Poultry Federation; Washington State Dairy Federation; Western United Dairymen; and the Wisconsin Poultry & Egg Industries Association.

The Corn Ethanol Mandate Elimination Act of 2013 would fix both of the problems with the current Renewable Fuel Standard.

First, it would eliminate the unnecessary pressure on corn prices and corn production, allowing the multi-billion dollar corn ethanol industry to compete directly with oil based on price, not mandates.

Second, it reduces RFS mandated volumes below the blend wall.

The bill addresses both problems while maintaining the RFS provisions that encourage the development, deployment and growth of cellulosic ethanol, algae-based fuel, green diesel, and other low carbon advanced biofuels, maintaining a market for the innovative, nascent, domestic industry that this statute was designed to build up.

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

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