When Rep. Bill Archer — then the powerful chairman of the House Ways and Means Committee — slipped in language in a key Republican tax-cut package in 1997 stripping out subsidies for corn ethanol, he ran into a brick wall.
That obstacle was in the form of Chief Deputy Whip Dennis Hastert, who reminded Speaker Newt Gingrich that he would lose the crucial support of nearly three dozen farm-state Republicans if he allowed the language to stay. Gingrich — who personally intervened to stop a prior attempt to squash ethanol help in 1995 — quickly acquiesced and the language was history, allowing the subsidy to continue.
Now, after major losses in the House and Senate last week, the ethanol industry is missing the influence of those pro-ethanol congressional leaders.
Hastert later used his influence as House speaker to ensure the Energy Policy Act of 2005 included a crucial renewable fuels mandate that remains the ire of fiscal conservatives and coastal lawmakers as part of a triple play of ethanol subsidies along with a blender tax credit and an import tariff.
Also gone are former Senate GOP leader Bob Dole of Kansas and former Senate Democratic leader Tom Daschle of South Dakota.
“You’ve had key House members and key senators in key places that could either begin the programs or protect them,” Rep. Joe Barton (R-Texas) told POLITICO last week.
“That’s no longer the case overall. John Boehner, Eric Cantor are not corn-state people,” Barton added. “Harry Reid, Mitch McConnell. So you get down to the committee chairmen and ranking members, they’re just not in a stronger position.”
Barton knows all too well what powerful leadership ethanol once had. Following in the reluctant footsteps of Archer, a fellow Texas Republican, Barton included the renewable fuels mandate in the 2005 energy bill at the behest of Hastert.
“If it weren’t for Denny Hastert, we probably wouldn’t have [a renewable fuel standard],” said Stephen Brown, vice president and counsel for federal government affairs at the independent refiner Tesoro Corp.
Daschle was defeated in his 2004 reelection bid by Sen. John Thune (R-S.D.), now the fourth-ranking Senate Republican. Thune is helping to lead an effort to salvage federal funds for ethanol infrastructure and other future aid after the Senate last Thursday resoundingly voted to immediately end the blender credit and ethanol import tariff set to expire at the end of the year.
Seventy-three supported an amendment from Sens. Dianne Feinstein (D-Calif.) and Tom Coburn (R-Okla.) despite the opposition of Thune, the White House and Senate Democratic Whip Dick Durbin of Illinois.
The same day, the House voted to prevent future funds for ethanol blender pumps and storage facilities. But a similar amendment from Sen. John McCain (R-Ariz.) attracted only 41 Senate votes.
President Barack Obama praised ethanol often while partnering with Durbin in representing Illinois in the Senate and on the 2008 presidential campaign trail. But Obama appeared largely powerless to stop the speeding train that led to the victory for Feinstein, Coburn and a mix of environmental, budget hawk, agriculture and oil interests that lobbied heavily for the measure.
The effort was so aggressive that Senate Majority Leader Harry Reid’s top energy aide had to ask environmentalists to ease up on their push for passage of an earlier vote on an anti-ethanol amendment from Coburn, because Senate Democratic leaders were whipping against that particular vote on procedural grounds.
Reid later voted for the identical Feinstein-Coburn amendment Thursday. Senate Republican leader Mitch McConnell voted for both the Feinstein and McCain amendments.
“Anything that is subsidized is going to be reviewed and scrutinized carefully by the Congress these days,” said former Sen. Byron Dorgan (D-N.D.), now co-chairman of the Bipartisan Policy Center’s Energy Project. “In this fiscal climate, any industry that doesn’t get out ahead with proposals for subsidies reform is in jeopardy of losing support.”
The ethanol industry banded together an at-times fractious collection of trade associations last year to start proposing to their allies in the Obama administration and on Capitol Hill ways to wean off of the blender credit and instead provide other help to expand its reach in the marketplace.
The four main ethanol industry groups brought along a draft blueprint to a Sept. 30, 2010, meeting at the White House with Pete Rouse — a former senior aide to Daschle and then-freshman Sen. Obama — and top White House energy and climate aides. Rouse, then Obama’s interim chief of staff and now counselor to the president, is part of a fraternity of former Daschle aides with Growth Energy CEO Tom Buis, who was among those at the meeting.
The idea at the time was to extend the blender credit worth at least $5 billion this year and a 54-cent ethanol import tariff for another year or so and transition to more frugal tax incentives.
The push worked in the short term as the industry got the lame duck to extend the blender credit and tariff until the end of this year on the condition that it come up with other ideas.
Now the ethanol industry has the task of trying to follow through on that initial drive under even more daunting circumstances.
“The ethanol industry has been proactive and smart and while they lost a vote here, I do believe that before the dust settles, there will remain some subsidies for the ethanol industry and should remain some subsidies,” Dorgan said.