Contact: Steve Hansen (Director of Communications) (202) 225-7749
Email: Steve.Hansen@mail.house.gov
Justin
Harclerode (Deputy Director of Communications) (202) 226-8767
Email: Justin.Harclerod@mail.house.gov
To: National
Desk/Transportation Reporter
July 29, 2002
Transportation Committee Leaders Urge Energy Conferees To
Address Ethanol Provision’s Impact On Highway Trust Fund
Senate Version Of Energy Bill Will Cost Trust Fund An Estimated $4
Billion Per Year By 2012
Washington, D.C. – The bipartisan leadership of the House Transportation and Infrastructure Committee on Friday last week sent a letter to energy bill conferees urging them to address the shortfalls to the Highway Trust Fund that would result from the inclusion of language mandating a significant increase in the amount of ethanol to be used in motor fuels by 2012.
The letter states, “While there are important benefits of alternative fuel use that warrant continued federal attention, these benefits should not come at the expense of the nation’s critical surface transportation infrastructure network.”
Ethanol blended fuels are partially exempt from the federal tax on gasoline, and 2.5 cents of the tax received on each gallon of ethanol-blended fuel is transferred to the General Fund instead of the Highway Trust Fund. Thus, the total loss to the Trust Fund resulting from ethanol blend fuels versus gasoline is 7.8 cents per gallon. The Senate version of the energy bill, which mandates a boost in ethanol use to five billion gallons, will cost the Highway Trust Fund an estimated $4 billion per year by 2012.
“The Highway Trust Fund is user-fee based and utilized to benefit the nation’s vital transportation infrastructure system,” the letter states.
“The continued dilution of federal highway user fee revenue from ethanol’s tax treatment will severely impair our ability to address the vast highway and transit needs of all states and districts in the next highway bill.”
The letter was sent by:
July 26, 2002
Dear Energy Conferees:
As you work to reconcile the House and Senate versions of national energy policy legislation, we urge you to rectify sections of the federal tax code dealing with ethanol fuels that have a secondary effect of substantially short changing federal surface transportation investment.
While there are important benefits of alternative fuel use that warrant continued federal attention, these benefits should not come at the expense of the nation’s critical surface transportation infrastructure network. Due to ethanol’s federal tax incentive, purchasers of gasohol (a fuel mix of ethanol and gasoline) contribute less to the maintenance and improvement of the nation’s highway and transit systems than do purchasers of gasoline. The tax code also directs 2.5 cents per gallon of the user fee paid on a gallon of gasohol be deposited in the federal general fund, rather than the Highway Trust Fund. Currently, the combined effect of these separate policies results in well over $1 billion per year in foregone Highway Trust Fund revenues.
The Senate version of the energy bill includes a provision that would establish a Renewable Fuel Standard (RFS) to mandate five billion gallons of ethanol to be used in U.S. motor fuels by 2012. The RFS is estimated to increase the revenue loss of the Highway Trust Fund to almost $4 billion per year by 2012. Without a change in the tax treatment of ethanol fuels to rectify both the federal tax incentive and the gasohol user fee’s general fund contribution, the RFS would clearly make a grave situation worse.
As the Transportation and Infrastructure Committee prepares to reauthorize the Transportation Equity Act for the 21st Century next year, the availability of federal transportation resources will be a significant challenge. The continued dilution of federal highway user fee revenue from ethanol’s tax treatment will severely impair our ability to address the vast highway and transit needs of all states and districts in the next highway bill.
This issue is also about fairness. The Highway Trust Fund is user-fee based and utilized to benefit the nation’s vital transportation infrastructure system. The cars and trucks that use our highways and bridges create the same wear and tear regardless of the fuel they burn. As such, the Highway Trust Fund should receive equal compensation from all motor fuel use.
The energy bill conference has a historic opportunity to formally acknowledge the nexus between federal energy and transportation policy by ending the false choice between alternative fuels and meeting the nation’s transportation requirements. We, therefore, urge you to ensure the energy conference report fully compensates the Highway Trust Fund for all highway system use.
We look forward to working with you to address this critical issue this year.
Sincerely,
Don Young, Chairman, Transportation Committee
James L. Oberstar,
Committee Ranking Member
Thomas E. Petri, Chairman Highways and Transit
Subcommittee
Robert A. Borski, Subcommittee Ranking Member
Sherwood L. Boehlert, R-NY Nick J. Rahall, II, D-WV
Howard Coble,
R-NC
William O. Lipinski, D-IL
John J. Duncan, Jr.,
R-TN Peter A. Defazio,
D-OR
Wayne T. Gilchrest, R-MD Bob
Clement, D-TN
Stephen Horn,
R-CA
Jerry F. Costello, D-IL
John L. Mica,
R-FL
Eleanor Holmes Norton, D-DC
Jack Quinn,
R-NY
Jerrold Nadler, D-NY
Steven C. LaTourette, R-OH
Robert Menendez, D-NJ
Sue W. Kelly,
R-NY
Corrine Brown, D-FL
Richard H. Baker,
R-LA James A.
Barcia, D-MI
Robert W. Ney,
R-OH
Eddie Bernice Johnson, D-TX
Richard W. Pombo,
R-CA Frank Mascara, D-PA
Jim
DeMint,
R-SC
Gene Taylor, D-MS
Johnny Isakson,
R-GA
Juanita Millender-McDonald, D-CA
Robin Hayes,
R-NC
Elijah E. Cummings, D-MD
Rob Simmons,
R-CT
Earl Blumenauer, D-OR
Mike Rogers,
R-MI
Max Sandlin, D-TX
Shelley Moore Capito, R-WV Ellen O.
Tauscher, D-CA
Henry E. Brown, Jr.,
R-SC Bill Pascrell, Jr., D-NJ
Brian D. Kerns,
R-IN
Tim Holden, D-PA
Dennis R. Rehberg,
R-MT Nick Lampson, D-TX
Todd
Russell Platts, R-PA John Elias
Baldacci, D-ME
Mike Ferguson,
R-NJ
Marion Berry, D-AR
Sam Graves,
R-MO
Brian Baird, D-WA
John Abney Culberson, R-TX Shelley Berkley,
D-NV
Bill Shuster,
R-PA
Jim Matheson, D-UT
John Boozman,
R-AR
Michael M. Honda, D-CA
John Sullivan,
R-OK
Rick Larsen, D-WA
Michael E. Capuano, D-MA
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