US lawmakers to block ethanol boost in highway bill


WASHINGTON, Jan 29 (Reuters) - The Republican chairman of the U.S. Senate Finance Committee and its top Democrat will block any attempt to add language boosting U.S. ethanol production to a massive federal highway spending bill, congressional aides said on Thursday.

Some lawmakers want to carve up an energy bill stalled in the Senate and attach a provision that calls for doubling use of ethanol to separate legislation on highway funding likely to be approved by Congress.

Ethanol, made from corn, is an additive for making cleaner-burning gasoline. Midwestern lawmakers from both political parties, as well as the Bush administration, support a boost in ethanol use as it would benefit American farmers.

The Senate Finance Committee is set to vote next week on an estimated $318 billion highway funding bill written by the panel's chairman, Republican Charles Grassley of Iowa. The committee's top Democrat, Max Baucus of Montana, also backs the legislation.

In a briefing with reporters, congressional staff said both Grassley and Baucus would oppose a move by lawmakers to add ethanol production boosting language to the highway measure when the panel votes on the legislation.

The aides said the ethanol language would not be allowed because it is about energy policy, and the highway bill deals with taxes to fund transportation projects.

"I don't think the chairman (Grassley) or the ranking member (Baucus) would entertain adding energy policy... at the highway bill markup," said one staffer.

However, once the bill clears the committee, lawmakers could then try to add language on ethanol while debating the bill on the Senate floor, staff said.

"Any policy positions would not be germane to this (committee) markup. Now what happens on the floor, that's up to the (Senate) leadership," said another aide.

Grassley's proposed legislation does contain language previously worked out by Senate and House leaders that would require both gasoline and ethanol-blended gasoline to contribute 18.4 cents per gallon in federal taxes to the Treasury Department's general fund, which would then be transferred to the Highway Trust Fund.

The proposed highway bill sets the tax to be levied against ethanol. But it does not mandate ethanol production levels like the stalled energy bill, which requires ethanol use to double to 5 billion gallons (19 billion liters) a year by 2012.

The highway legislation also would provide a $1 a gallon fuel-tax credit for biodiesel made from virgin soybean oil and a credit of 50 cents a gallon for biodiesel made by recycling feedstock oils.



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