Details of the agreement were sketchy as Democrat members of the committee and the public awaited the release of the conference report. Republican members have been meeting behind closed doors for two months to find compromise positions on the legislation’s tax incentives.

The National Corn Growers Association applauded the release of the Energy Policy Act of 2003 (H.R. 6) conference report containing the 5-billion-gallon Renewable Fuels Standard and an accelerated production schedule of tax incentives.

“This monumental legislation is good for all corn growers by advancing American agriculture,” said NCGA President Dee Vaughan. “NCGA strongly supports the bill’s creation of a nationwide RFS that increases the use of ethanol, derived from corn, to the U.S. fuel supply.

“The RFS will increase American energy independence, protect air and water quality, reduce greenhouse gas emissions, displace foreign oil, and stimulate rural economies.”

Vaughn said the association’s number-one priority in the conference process was to acquire an accelerated fuels schedule that reflects the expansion of the U.S. ethanol industry, he added. The RFS schedule included in the House and Senate bills did not recognize that unprecedented growth.

“We came a long way in getting an accelerated RFS schedule,” he noted. “When we began this process earlier this year the Senate bill required 2.6 billion gallons in 2005; the House bill, 2.7 billion in 2005 and just 2.9 billion in 2007. The conference deal delivered 3.1 billion gallons in 2005, the first year of the RFS, ramping up to 5 billion gallons by 2012. This is a remarkable accomplishment.”

The RFS fuels schedule specifically calls for:

Calendar year: (In billions of gallons)
2005 3.1
2006 3.3
2007 3.5
2008 3.8
2009 4.1
2010 4.4
2011 4.7
2012 5.0

The legislation also includes important renewable fuel tax provisions, according to Vaughn. The Volumetric Ethanol Excise Tax Credit ensures that renewable fuels pay the full amount of user excise taxes levied to the Highway Trust Fund. On average, VEETC will generate more than $2 billion per year in additional HTF revenue for improvements to the nation's transportation infrastructure.

By modifying the method in which federal excise taxes are collected on ethanol-blended fuels, the VEETC generates revenue into the Highway Trust Fund while maintaining an important incentive for the use of domestic, renewable fuels. Because of VEETC, refiners will no longer be limited to the 5.7- to 7.7- to 10-percent-blend levels dictated by the Clean Air Act.

“This flexibility now opens the door for other ethanol fuels such as E85 and E-Diesel. This opens the door for new markets, and that is monumental,” Vaughan added.

Additionally, H.R. 6 modifies the small ethanol producer tax credit to enable cooperatives to pass along the credit to their farmer owners. The bill also provides a new tax incentive for biodiesel that will stimulate new production from both soybeans and other agricultural products, as well as from animal fats, while similarly protecting the Highway Trust Fund.

"This has been a huge NCGA grass roots effort, and we appreciate the hard work and dedication by the Congress,” Vaughan said. “Our grass roots believe HR 6 is a comprehensive energy bill that ensures affordable energy supplies that will benefit not only the U.S. economy but also address agriculture’s need for affordable energy.”

Vaughan adds it is important NCGA’s grass roots continue their efforts and contact their legislators asking them to support the energy bill. They can do so by clicking on the action alert at www.ncga.com.

The tax incentives needed to arrive at those levels were what Iowa Sen. Charles Grassley has been seeking, adding volumetric ethanol excise tax credit language and small ethanol producer tax credit language will be included in the final conference report. House Ways and Means Committee Chairman Bill Thomas reportedly opposed the language.

The legislation also reportedly provides producers of the fuel additive MTBE, which has been credited with polluting the groundwater in some areas, immunity from product liability lawsuits. It also provides a phaseout of MTBE use, which doesn’t end until 2015.

Sen. Charles Schumer, D.-N.Y., has threatened a filibuster of the legislation because of the MTBE provision.

Republican senators from the Northeast, including Sen. Arlen Specter of Pennsylvania, have also indicated they might oppose the bill because of its failure to go far enough in imposing new reliability standards on the northeast power grid.

e-mail: flaws@primediabusiness.com