Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. What is the order of business? I ask unanimous consent to set aside the pending amendment. Mr. President, I send an amendment to the desk. Mr.…
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
What is the order of business?
I ask unanimous consent to set aside the pending amendment.
Mr. President, I send an amendment to the desk.
Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.
I yield.
This is an amendment to the pending first-degree ethanol mandate amendment to provide authority to the Administrator of the Environmental Protection Agency to waive the ethanol mandate if a State or region does not need to meet the requirements of the Clean Air Act.
We all must understand this ethanol amendment is a permanent mandate. Regardless of what advances are made in technology, whether a hybrid engine, whether a hydrogen-driven engine, regardless of any advance, this ethanol mandate is forever. Therefore, it offers very real concern.
In the pending first-degree ethanol amendment, there is a waiver now that allows the Administrator of the EPA to waive the ethanol amendment if it would harm the economy or the environment of a State, a region, or the United States. I believe the EPA Administrator should also be able to waive the ethanol mandate if a State or a region does not need ethanol to make the air cleaner and meet the requirements of the Clean Air Act. Why require something that is not needed? Why require it if there should be an advance in technology that makes the use of ethanol unnecessary?
California and other States that do not need ethanol to meet the requirements of the Clean Air Act should be allowed to make their case to the EPA and then the Administrator can decide if the ethanol mandate should be waived.
For California, the ethanol mandate will force more ethanol into our fuel supply than we need to achieve clean air. The mandate forces California to use over 8 years 2.5 billion gallons that the State does not need.
This chart makes very clear this is a superfluous mandate. The blue shows what California needs in terms of ethanol over the next 8 years, to 2012. The top amount is 143 million gallons. It averages about 140 million gallons a year. California could use that amount and meet all of the clean air standards. This bill requires California to use over this period of time up to 600 million gallons, so it almost triples in the outyears the amount of ethanol that is forced on California beyond its need. This is a real problem in terms of legislation. Why would anyone force something on a State that it does not need and then provide, if the State does not use it, that it has to pay anyway?
If anything is poor public policy, this ethanol mandate is poor public policy. It also actually achieves a transfer of wealth from all States to the midwest corn States.
California does not need ethanol to produce cleaner air because the State has developed its own unique gasoline formula. Refiners use an approach called the predictive model which can produce clean burning reformulated gasoline with oxygenates, with less than 2 percent oxygenate or with no oxygenate at all.
As Red Cavaney, president of the American Petroleum Institute, said in March before the Energy and Natural Resources Committee:
Refiners have been saying for years that they can produce
gasoline meeting clean-burning fuels and federal reformulated
gasoline requirements without the use of oxygenates. . . . In
addition, reformulated blendstocks--the base in which
oxygenates are added--typically meet RFG performance
requirements before oxygenates are added. These facts
demonstrate that oxygenates are not needed.
As a matter of fact, virtually every refiner I talked to says if you want to clean the air, give us flexibility, allow us to blend gasoline to do that. In other words, set the standards as the Clean Air Act does and allow us to have the flexibility needed to meet those standards.
This mandate prevents that. It is driven by the self-interest of the corn States and driven by the self-interest of the ethanol producers, of which the largest beneficiary is Archer Daniels Midland. Archer Daniels Midland will control 46 percent of the ethanol market, with every other company controlling not more than 6 percent of the market. In essence, what we are doing is giving a huge transfer of wealth to one American company, an American company that has been convicted of corrupt practices in the 1990s.
I have real problems with this bill. As I said, California can achieve clean air without the use of oxygenates. The State has long sought a waiver of the 2-percent oxygenate requirement. I have written and called former EPA Administrator Browner, the current Administrator, Christine Todd Whitman, and President Clinton and President Bush, urging approval of a waiver for our State. Yet both the Clinton administration and the Bush administration have denied California's request. Despite the scientific evidence, it is unlikely that the EPA Administrator will ever grant a waiver for California, but I believe the necessity of the ethanol mandate for a State or region should be something the EPA Administrator considers. I don't believe it is too much to ask for the EPA to consider if ethanol is needed in a specific State or region when determining if a waiver from the mandate should be granted.
As I say, this amendment simply amends the waiver part of the Frist- Daschle bill to permit a waiver in the event that a State can demonstrate to the EPA Administrator that it can meet the clean air standards without the use of ethanol.
I hope this amendment will have an opportunity of being agreed to. I believe it is the right thing to do. I believe it is the good public policy thing to do. I believe that creating a mandate preventing flexibility in the blending of gasoline forever--which this mandate does--is flawed and potentially dangerous public policy.
I yield the floor.
Mr. President, I look forward to responding to the distinguished Democratic leader, with whom I profoundly disagree. The distinguished Democratic leader made the point--well, California is already using ethanol in its gasoline. My goodness, it is already using it up to 65 percent. California is forced to use it. It is forced to use it. Yet it doesn't need to use it. That is my point. The egregious 2-percent Federal oxygenate requirement forces California to move in this direction if it is going to phase out MTBE, which is another oxygenate which has been shown to have very detrimental environmental and health effects. The Governor has said he is going to phase it out by the end of this year. Consequently, to meet the 2-percent oxygenate requirement--which I think is flawed public policy--again, California is forced to begin to use this ethanol.
The Democratic leader also says that I have supported a renewable portfolio standard. In fact I have. California has a renewable portfolio standard. It is for wind, it is for solar, it is for alternative energies, and California has set it at 10 percent. Yes, I support that. That is totally different than an ethanol requirement, which is not a renewable energy source like solar or wind.
To add insult to injury, the Democratic leader says this doesn't require States to use it. Then I ask the question: Why does his legislation exempt Alaska and Hawaii? If it doesn't force States to use it, why is there an exemption that exempts Alaska and Hawaii? Let me read it to you, on page 4 of the bill:
Not later than 1 year after the date of enactment of this
paragraph the administrator shall promulgate regulations to
ensure that gasoline sold or introduced into commerce in the
United States, except in Alaska and Hawaii, on an annual
average basis, contains the applicable volume of renewable
fuel determined in accordance with subparagraph (b).
Yes, except I am not feeling too gentle at the moment, but I am happy to.
I thank the distinguished Democratic leader.
I would like to refute his comment on how well things are going in California and ethanol being accommodated by reading an article in the Los Angeles Times of May 10.
California gasoline prices rose higher and faster than pump
prices elsewhere in the nation this year because of supply
problems caused by refinery repairs and the transition to a
new clean-fuel additive, the U.S. Energy Department said
Friday.
Refiners in the state are switching to ethanol as part of
the recipe for cleaner-burning fuel, eliminating water-
polluting methyl tertiary butyl ether, or MTBE, in advance of
a Jan. 1 State ban.
This change in fuel additives, designed to meet the Federal
oxygen requirement for gas, helped push California gas prices
higher and might leave the state short of supplies during
peak summer driving months, the report by the Energy
Information Administration said.
That in turn could trigger more frequent price spikes, said
the EIA, the Energy Department's research and statistical
arm. The agency said the report was a preliminary assessment
and that it plans to release more detailed findings this
fall.
``There is a chance that California could see a recurring
problem with volatility,'' said Joanne Shore, an EIA senior
analyst who led the team that produced the report.
``Certainly, that is an issue for this summer that everyone
is going to continue to watch.''
The report, requested by Rep. Doug Ose (R-Sacramento),
provides more ammunition for California officials who have
demanded without success that the state be freed from the
Federal requirement to add oxygenates to its gasoline.
I don't understand why the Democratic leader is so determined to force on those who do not want a special mandate, which not only he doesn't want, but who do not need the special mandate. We can have as clean a gas as they can refine in South Dakota, provided they refine gas in South Dakota. We can do it as well, or better. We can do it in a reformulated formula which will mean clean air standards. The 2 percent oxygenate requirement was flawed and the leader is replacing it with something equally flawed. Supposing in 5 years we have new technology that enables the cleaner burning engine. We still have to put ethanol in it, and we still have to put ethanol in a hydrogen engine.
I guess what I object to--and I can go into trade preferences and I can go into subsidies. Subsidies for a mandate is incredible. It is just such a bad bill.
No. I would like to ask the Democratic leader a question, if I might. What objection does he have against my amendment, which is a simple amendment which simply says if the State can provide adequate evidence to the EPA that it can burn or refine gasoline to meet clean air standards that it should not be required to use ethanol? What objection does he have to that?
Will the Senator yield on that point?
I thank the distinguished Democratic leader.
As I understood what he said, he said there is a waiver in the amendment. Well, indeed there is a waiver in the amendment. It is on page 12 of the amendment. It begins on line 12. I would like to read it:
The Administrator, in consultation with the Secretary of
Agriculture and the Secretary of Energy, may waive the
requirements of paragraph (2) in whole or in part on petition
by 1 or more States by reducing the national quantity of
renewable fuel required under paragraph (2)--
based on a determination by the Administrator, after public
notice and opportunity for comment, that implementation of
the requirement would severely harm the economy or
environment of a State, a region, or the United States; or
[secondly,] based on a determination by the Administrator,
after public notice and opportunity for comment, that there
is an inadequate domestic supply or distribution capacity to
meet the requirement.
There is no waiver if you can meet the clean air standards without a renewable fuel such as ethanol. There is no waiver in this amendment for that. And if you are so sure of the ground you stand on, why, for Heaven's sake, wouldn't you allow a waiver if we can demonstrate--this is a rhetorical question--if we can demonstrate to the EPA Administrator that, yes, California, through its formula, can reformulate gasoline to meet the Clean Air Act without either a 2 percent oxygenate requirement or a renewable fuel to the extent that we have here?
Also, since you are on the floor, I just want you to see what you are pressing upon California. As shown on this chart, this is the amount of ethanol we would have to use, and this is the amount of ethanol your amendment forces us to use.
I would appreciate finishing, if I might.
Yes. The Senator mentioned my support of a renewable portfolio standard. Indeed, I do support a renewable portfolio standard. But the renewable portfolio standard is essentially a percentage requirement that a State would use of renewable fuels,
such as wind, solar, biomass, et cetera. And California has elected to provide that 10 percent of its portfolio should be in wind, solar, biomass, et cetera. I have supported that requirement in this amendment as well, and California is able to do it, and has been doing it. I think that is an extraordinarily positive thing.
I have great concerns about ethanol because I do not think all of the science has been completed on ethanol. We know ethanol produces a benzene plume which can break away in the ground if the fuel leaks from an underground--the minority leader is smiling, but I wonder if this same discussion took place when MTBE was introduced and people thought it was going to be just fine. It has polluted about 20,000 wells in California and has shown to have a significant hazard.
Now, I think to dismiss this as being wonderful for the environment is not quite correct because we know it reduces some components, but we also know it increases other components in the air that produce smog and ozone. And California has two of the most difficult nonattainment regions in the United States, one of them being the Los Angeles area, the other being the Fresno area. I don't know whether this requirement will, in fact, result in California's two difficult areas increasing in smog, but I do think that providing flexibility to a manufacturer to be able to produce reformulated fuels that meet the requirements is important.
The other thing that is of concern to me, since we are on this, is the safe harbor provision. I know my colleague from California, Senator Barbara Boxer, is going to offer an amendment that would remove the safe harbor. The American Petroleum Association, as they have indicated to me, agreed to support this largely because they were protected from any liability.
My understanding is, there is a provision in the amendment offered by the two leaders that would shield ethanol producers and refiners from any liability if the fuel additive harms the environment or public health. Candidly, I find this safe harbor provision astonishing. Ethanol is subsidized by the Government, protected from foreign competition by high trade barriers, and now, on top of mandating its use, we are going to exempt the fuel additive from liability in this amendment. This is unconscionable, and I think it is egregious public policy to mandate ethanol into our fuel supply in the first place and, even worse, to provide it with a complete liability protection before scientific and health experts can fully investigate the impact of tripling ethanol in the air we breathe and the water we drink.
As I said, this is exactly the mistake we made with MTBE. Over the past several years, we have learned that MTBE has contaminated our water and may, in fact, be a human carcinogen.
Last fall, a California jury found that there was clear and convincing evidence that three major oil companies acted with malice by polluting ground water at Lake Tahoe with MTBE because the gasoline they sold was defective in design and there was failure to warn of its pollution hazard.
After a 5-month trial, Shell Oil and Lyondell Chemical Company were found guilty of withholding information on the dangers of MTBE. The firms settled with the South Lake Tahoe Water District for $69 million. This case demonstrates why we cannot surrender the rights of citizens to hold polluters accountable for the harm they inflict. Yet this amendment has a safe harbor provision, and if I should be right, and if there should be--and I hope there are not--undue environmental or health consequences from this mandate, consumers cannot use their right to go to court to find justice.
So I do not know how those who favor this legislation can exempt the ethanol industry from this kind of wrongdoing. It is not as if the industry has not had some wrongdoing in the past. So I urge everyone--I know my colleague is going to move this amendment that would remove the safe harbor provision, and I certainly intend to support her in doing so.
I still--although many other things have been proposed or said by the distinguished Democratic leader--I do not understand why he would have opposition to my amendment, why he would say that if the State can prove we can produce gasoline without a 2-percent requirement or without this ethanol mandate that meets clean air standards, we cannot get a waiver. That is all we are asking for, that opportunity to make a showing that that is the case. Yet the Democratic leader has produced a lot of other things but has not answered why there should not--if you are going to have an economic waiver and an environmental waiver--why you cannot have a waiver if a State can show that it does not need ethanol to maintain clean air standards.
So I think it is an eminently fair amendment, and I just have a hard time understanding why we would be so anxious to pass this kind of public policy that mandates on States a use when most people, I think, have derided and derogated mandates from the Federal Government.
I would like to make one more point. The last time I looked--and this may have changed--but California is almost up to 100 percent of its refining capacity. My understanding is, if you put ethanol in--probably not in the early years, but in the outyears--to the extent required, we will not have the refining capacity available to maintain this mandate with adequate gasoline.
California is predicted to have 50 million people by 2020. They drive. They use gasoline. And I very much worry that refining capacity, which is about 98 percent at the present time because MTBE minimizes gasoline and ethanol requires added gasoline per gallon, that we really won't have the refining capacity. And that will create another problem for California.
I am hopeful the Democratic leader would see his way clear to allowing California and other States that wish to try to submit a case to the EPA, to say we can refine gasoline to meet clean air standards with flexibility and without this mandate, the opportunity to do so.
I thank the Chair and yield the floor.
It is. While the Democratic leader is still on the floor, I would like to address his comment about California's support, theoretically, which I don't think is correct. I address it with a letter from the California Environmental Protection Agency. California is very eager to get out from under the 2-percent oxygenate requirement. Just to sum up this last paragraph of an April 7 letter from Mr. Winston Hickox, the agency Secretary, it says:
Some have suggested that California should go along with
the safe harbor as a small price to pay for elimination of
the 2 percent mandate.
I disagree. Such a tradeoff makes no logical sense.
Elimination of the costly and unnecessary oxygenate
requirement has nothing to do with assuring that the State of
California has a full array of enforcement and restitution
options available to address MTBE-caused pollution problems.
In short, I do not support a tradeoff that puts at risk the
health of the citizens of the State.
I ask unanimous consent that this be printed in the Record.
Mr. President, I send another amendment to the desk.
Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with.
The amendment would give the right to the Governors of States to opt into the program.
A second degree to the Frist-Daschle amendment, yes.
I thank the Senator from New Mexico.
Mr. President, this second-degree amendment to the first-degree ethanol
amendment would require the Governor of each State to opt into the ethanol mandate. Senators Nickles, McCain, Kyl, Gregg, Wyden, Leahy, Schumer, Reed, and Sununu are cosponsors of this amendment. I thank them for their support.
The pending first-degree ethanol amendment mandates 5 billion gallons of ethanol into our fuel supply by 2012, yet it exempts Alaska and Hawaii from this nationwide mandate. I strongly believe that each State should have this choice.
In the Environment and Public Works Committee, Senator Murkowski offered an amendment to the ethanol mandate to exempt Alaska and Hawaii from the requirement because, first, Alaska and Hawaii are a great distance from the Midwest, where 99 percent of the ethanol is produced in the United States; secondly, families and businesses in Alaska and Hawaii would have to pay exorbitant costs for ethanol to be shipped to these States and blended into their gasoline.
I have the same concerns about increased fuel costs to families and businesses in California if the ethanol mandate becomes law. I am sure other Senators up and down the east and west coasts have the same concerns I do.
Because moisture causes ethanol to separate from gasoline, the fuel additive cannot be shipped through traditional gasoline pipelines. Ethanol needs to be transported separately by truck, boat, or rail, and blended into gasoline after arrival. Unfortunately, this makes the 1- to 2- to 3-week delivery time from the Midwest to either coast dependent upon good weather conditions as well as available ships, trucks, and trains equipped to handle large amounts of ethanol.
According to Steve Larson, former executive director of the California Energy Commission:
The adequacy of logistics to deliver large volumes of
ethanol to [California] on a consistent basis is uncertain.
In sum, it will be extremely costly to ship large amounts of ethanol to California and other States.
I believe every State outside the Midwest will have to grapple with how to bring ethanol to their States since the Midwest controls 99 percent of the production. Last year, the General Accounting Office indicated how unequal the effects of the mandate will be across the Nation. As the GAO reported:
Ethanol imports from other regions are vital. However, any
potential price spike could be exacerbated if it takes too
long for supplies from out-of-State (primarily the Midwest,
where virtually all of the production capacity is located).
Mr. President, on the issue of increased costs, let me quote from a Wall Street Journal editorial that ran last year:
If consumers think the Federal gas tax is ugly, this new
ethanol tax will give them shudders. Moving ethanol to places
outside the Midwest involves big shipping fees or building
new capacity. Refiners also face costs in adding ethanol to
their products. According to independent consultant Hart
Downstream Energy Services, the mandate would cost consumers
an extra annual $8.4 billion at the pump the first 5 years.
New York and California would see gas prices rise by 7 to 10
cents a gallon.
So Hart Downstream Energy Services is estimating an annual $8.4 billion increase cost at the pump over the first 5 years. They are saying that New York and California would see gas prices rise by 7 to 10 cents a gallon. Therefore, any shortfall in supply, either because of manipulation or raw market forces, will be exacerbated on the west and the east coasts, which will be reliant on ethanol coming from another region of the United States. Are we not just asking for trouble by mandating ethanol nationwide if it is produced almost entirely in one region?
The fraud and manipulation that went into the California energy market 2 years ago wasn't expected, nor did anyone ever believe it would happen. But it did. I think there is a problem when you concentrate too much control in either one region or in one producer. As you know, this bill does both. The largest production center is the Midwest, and the largest producer is Archer Daniels Midland, and they produce 46 percent of the supply. This sets up a scenario that leads to the concern, I believe, of both coasts about this mandate.
Since Alaska and Hawaii have an exemption in the ethanol mandate, why not give other States the opportunity to choose whether they want to enter the program? Why not give this choice to California, Oregon, Washington, Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, North Carolina, South Carolina, Georgia, and Florida? These are States that are far from the Midwest but where families and businesses will have to pay more for gasoline under the ethanol mandate.
This ethanol mandate forces ethanol into our fuel supply nationwide, and under the credit trading provisions of the mandate, if States do not use the ethanol, they have to pay for it anyway. This really adds insult to injury. If you do not use it, you have to pay for it anyway. What kind of public policy is that?
Additionally, forcing States to use ethanol they do not need and forcing States to pay for ethanol they do not use amounts to a transfer of wealth from all States to the midwest corn States.
Remember, ethanol is not necessary to achieve cleaner air. For California, the ethanol mandate will force more ethanol into our fuel supply than we actually need to achieve clean air. Once again, I will show you that chart because the cumulative answer to this chart is that it forces California to use 2.5 billion gallons of ethanol it does not need over 8 years, and that is fact.
If the ethanol amendment proves itself, if it cleans the air and does not pollute the air with increased ozone or smog and if it is cost effective, Governors will want to include their States. In fact, I believe most States in the Midwest will opt into the ethanol mandate because that is where 99 percent of the ethanol is produced.
The belief is there are 69 votes to support this ethanol mandate in this House. If that is true, what are they worried about? We would have 34 or 35 States automatically opting in. Why not give those few States that have real concerns and want out of the 2-percent oxygenate mandate and also out of the ethanol mandate the opportunity to show that they can reformulate gasoline to meet clean air standards without the amount that is prescribed upon them by this mandate?
This year we saw retail gasoline prices across the U.S. In the United States, retail gas prices rose from $1.44 to $1.73 per gallon over the first 10 weeks of this year. California's gasoline prices rose even more precipitously than across the United States, climbing from $1.58 a gallon on January 1 to a record setting $2.15 a gallon on March 17.
I recall on a recent weekend during that period when I was in the State, I actually paid, for the first time in my life, $50 for a tankful of nonpremium gasoline.
Since the middle of March, gasoline prices have decreased largely due to the decrease in the price of crude oil since the war in Iraq has ended. But gasoline in my State still sells for around $1.80. That is still up 30 cents from the beginning of the year.
One reason prices are so high is that the 1990 Clean Air Act required States to use fuel additives, called oxygenates, that we no longer need to achieve cleaner air. This ethanol mandate offered by the majority and minority leaders will only trade one bad requirement, the 2-percent oxygenate requirement, for another, the ethanol mandate, because now we will be mandating 5 billion gallons of ethanol into our fuel supply.
Since there are high costs for States, such as California, to comply with any mandated Federal requirement, and these costs are passed on, as we all know, to drivers at the pump, the ethanol mandate amounts effectively to a hidden gas tax, and I think consumers should know that. In fact, when we pass this mandate, not only are we passing subsidies for the industry, not only are we mandating its use, but we are also providing a gas tax raise.
Instead of mandating 5 billion gallons of ethanol into our fuel supply, we should be lifting all mandates, or at least allow the Governor of a State to opt in to this mandate if that State wishes to. We need to provide flexibility to refiners for them to optimize how and what they blend instead of forcing them to blend gasoline with either MTBE or ethanol.
Without eliminating these mandates, we can expect disruptions and price spikes during the peak driving months of this summer, on top of the high price motorists are already paying.
Bob Slaughter, the president of the National Petrochemical and Refiners Association, wrote in a letter to all Senators last week:
Forcing ethanol's use throughout the Nation will reduce
flexibility in this Nation's gasoline manufacturing and
distribution system, raise environmental concerns in ozone
control areas--
For me, that is the Los Angeles area and the Fresno Central Valley area--
and will result in increased costs. And this is in addition
to the fact that the product is uneconomic without the very
significant Federal subsidies--a total of roughly $10
billion--it has received for 25 years.
This is not me saying this. This is the president of the National Petrochemical and Refiners Association pointing out that ethanol to date has received roughly a $10 billion subsidy which this bill, of course, continues, and increases.
Proponents of the ethanol mandate argue that gas price increases will be minimal, but their projections do not take into consideration the real-world infrastructure constraints and concentration in the market that I have just pointed out on this chart--concentration in the marketplace that could lead to price spikes. If I have ever seen a scenario that lends itself to control of the marketplace and to potential antitrust violations, it is this one.
Just look at the disparity. It is not spread out evenly: 46 percent for one company; Williams, 6 percent; Cargill, 5 percent; High Plains Corporation, 4 percent; New Energy Corporation, 4 percent; Midwest Grain, 3 percent; and Chief Ethanol, 3 percent. If I have ever seen a scenario for market concentration, it is this one.
The second-degree amendment I have offered will require the Governor of a State to opt into the ethanol mandate. If the amendment offered by the two leaders is so fine, so good, so beneficial for all of America, then Governors should want to include their States.
The Senators from Alaska and Hawaii have worked to allow their States to be exempted from this mandate. That is the first break in the dike. They said they did not even want to try it. I believe, and the cosponsors of this amendment believe, each and every State should have this choice.
If this program, as put forward by the leaders, is so fine, the Governors will opt in. If they believe it enables their State to have cleaner air, the Governors will opt in. If they believe they can produce the adequate infrastructure, the Governors will opt in. If they believe they want to see the tariff protection, the subsidies, the potential taxes at the pump, their Governor will opt in. But to force it on a State, when that State does not require it, when it can meet the clean air standards in another way, I believe is wrong-headed and short-sighted public policy.
I urge my colleagues to support this second-degree amendment.
Before I yield the floor, I remind the Chair I have offered two separate amendments, the EPA waiver first and the State opt-in as a second freestanding amendment.
I yield the floor.