The federal government has in one form or another provided lucrative subsidies to the corn ethanol industry for more than 30 years, wasting tens of billions of taxpayer dollars in the process. Corn ethanol lobbyists have secured favorable treatment under the tax code, tariff protection from foreign competition, and even a government mandate for its use. While the most expensive taxpayer support – the $6 billion-per-year Volumetric Ethanol Excise Tax Credit (VEETC) – ended in 2011, subsidies and mandates for corn ethanol live on in other parts of the federal government.

Taxpayers continue to subsidize ethanol blender pumps through the federal tax code, payments for annual production through USDA’s Bioenergy Program for Advanced Biofuels, and a mandate for annual production through the federal Renewable Fuel Standard (RFS), among others. Originally sold as a way to achieve energy independence and reduce greenhouse gas emissions, corn ethanol has failed to deliver on all fronts and instead has caused numerous unintended consequences for taxpayers, consumers, and the environment.

Despite the fact that corn ethanol is a mature industry and its own proponents have admitted that federal subsidies are no longer necessary, lobbyists continue to seek more federal handouts. In Sept. 2013, Senator Tom Harkin (D-IA), former Chairman of the Senate Agriculture Committee, introduced S. 1563, a bill to increase taxpayers’ role in subsidizing the installation of ethanol blender pumps, storage tanks, and biofuels pipelines. Since ethanol is more corrosive than gasoline, special infrastructure is necessary to dispense blends of ethanol higher than 15 percent (E15). However, because E15 and other blends such as 85 percent ethanol (E85) are not competitive with gasoline prices in most parts of the U.S., gasoline station owners have been reluctant to install expensive new infrastructure to sell them. Small engine, automotive, and other manufacturers have also warned that the use of E15 in small engines and older vehicles will result in voided warranties and product liability issues. Nonetheless, ethanol backers are attempting to further prop up the corn ethanol industry at the expense of taxpayers.

Total Political Donations and Lobbying Expenditures by Corn Ethanol Industry

Organizations and companies lobbying for special treatment of corn ethanol include well-known names such as Archer Daniels Midland, Cargill, POET LLC, and the American Farm Bureau. (Please see the Appendix for a full description of the lobbying entities listed in this fact sheet). These groups use their connections, revolving door lobbyists (those who previously worked for a Member of Congress but currently lobby for the ethanol industry), and huge lobbying expenditures and political contributions to increase the market share of corn ethanol. These well-connected individuals and powerful groups lobby for expanded subsidies and favorable policies in the federal tax code and energy and farm bills. Understanding this complicated nexus is the first step in helping ensure policymaker decisions are based on merit, not muscle.

Table 1 lists total political action committee (PAC) donations to federal candidates by corn ethanol industry organizations over the past six years while Table 2 lists the top 20 recipients of these PAC donations, mostly chairmen of committees with jurisdiction over the RFS or other biofuels subsidies. Table 3 includes lobbying expenditures from 2007-2013 by many of the same organizations. Please note that all information in the following tables was obtained from the Center for Responsive Politics.

Top Individual Contributions from Corn Ethanol Lobbyists

Corn ethanol lobbyists influence lawmakers’ decisions not only through individual meetings, media campaigns, and letters, but also through individual political contributions from registered lobbyists. During the 2009-2010 and 2011-2012 election cycles, registered ethanol lobbyists donated over $10 million to political action committees (PACs) (note that these tables highlight individual donations from lobbyists while the tables above list PAC donations from organizations); nearly two-thirds went to Democratic candidates, another third benefited Republicans, and just two percent was dispensed to nonpartisan PACs or other groups. The top ten individual contributors (which lobby on biofuels issues) to political candidates and other organizations are listed in Table 4; recipients then dispense funds separately to run ads or support specific political candidates. Eight of the top ten individuals are revolving door lobbyists, and at least one – Vic Fazio – is a former member of Congress. Recipients are separated into three groups:  (1) Table 5:  Members of Congress who serve on committees with jurisdiction over energy and farm legislation (which contain various corn ethanol subsidies); (2) Table 6:  those who serve on other committees or in leadership positions; and (3) Table 7:  PACs not affiliated with individual political candidates such as the Democratic Senatorial Campaign Committee and the National Republican Senatorial Committee.

Web of Influence

Biofuels lobbyists influence Congressional and administrative decision making in numerous ways. Some specific examples of this complex web of influence include:

(1) In Sept. 2013, Sen. Harkin (D-IA) introduced the Biofuels Market Expansion Act of 2013 which would boost subsidies for the mature corn ethanol industry. The bill, cosponsored by Sens. Amy Klobuchar (D-MN), Tim Johnson (D-SD), and Al Franken (D-MN), would increase subsidies for ethanol blender pumps and storage tanks and create new federal supports for ethanol pipelines.

• Magellan Midstream Partners, a pipeline company that has worked with POET, the largest U.S. corn ethanol producer, to lobby for billions in federal subsidies for a new ethanol pipeline, donated $5,500 to Sen. Harkin during the 2008 and 2010 election cycles.  From 2009-12, additional donations of $1,000 each came from Archer Daniels Midland (ADM), one of the largest ethanol producers in the U.S., and Amaizing Energy, another corn ethanol producer.
• From 2009-14, Sen. Klobuchar received $15,000 from POET LLC; $5,000 from Growth Energy, a lobbying group representing POET’s corn ethanol refineries; $1,000 from the Renewable Fuels PAC, which is associated with the Renewable Fuels Association, one of the largest corn ethanol lobbying groups; $6,250 from the Minnesota and National Corn Growers Associations, which lobby for expanded corn ethanol subsidies; and $5,000 from ADM.
• Sen. Johnson received $2,500 from POET LLC in 2012.
• Sen. Franken received $6,000 from POET LLC from 2010-14.

(2) In 2013, Rep. Schock (R-IL) successfully added an amendment to the House farm bill (that was ultimately included in the final 2014 farm bill) that allows farmers to receive new crop insurance subsidies for growing pennycress, a weed being tested for use in biodiesel production. In 2009, Schock met with USDA officials to devise short- and long-term plans to obtain insurance coverage for pennycress.  He also secured a $500,000 earmark in FY10 for BioFuels Manufacturers of Illinois (BMI), a Peoria “Demonstration Plant for Biodiesel Fuels from Low-Impact Crops,” which uses pennycress as a feedstock in its production process. BMI contracted with the agribusiness GROWMARK, Inc. “to market and distribute its biodiesel products, including pennycress.”

• Rep. Schock is one of the largest recipients of PAC donations from ADM, which is affiliated with Growmark; he received political contributions worth $24,500 from ADM during the 2008-2014 election cycles.  Schock also received $2,000 from the National Biodiesel Board in 2012.

(3) Sens. Roberts (R-KS) and Donnelly (D-IN) obtained support for the inclusion of new crop insurance subsidies for biomass and sweet sorghum in the 2014 farm bill, crops which will ultimately be used in biofuels production.  The Kansas Grain Sorghum Producers Association and the National Sorghum Producers met with Sen. Roberts, former Ranking Member on the Senate Agriculture Committee, prior to consideration of the 2013 bill. Taxpayer-subsidized crop insurance for these types of biomass will now receive priority status despite a recent USDA report that deemed insurance for certain biofuels feedstocks infeasible.

(4) In 2012, USDA approved a special crop insurance policy to allow a new type of corn to receive federal subsidies. This high amylase corn, also known as Enogen, was developed by Syngenta for use in corn ethanol production. Syngenta AG spent $1.15 million in 2012 lobbying Congress, USDA, and other government agencies on this and other similar policy issues.

Conclusion

After more than 30 years of federal support, it’s time taxpayers stop subsidizing the corn ethanol industry. Corn ethanol lobbyists are working behind the scenes to increase their share of federal subsidies through the tax code, USDA, and Department of Energy programs and to increase the number of gallons of corn ethanol that can count toward the federal RFS mandate. With a nearly $17 trillion national debt, taxpayers cannot afford yet another year of taxpayer subsidies for the mature corn ethanol industry.

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