Senators Supporting Ethanol Subsidies Reap Riches From Corn Interests

Editor’s note: A version of this OpenSecrets Blog story appeared in the Des Moines Register on Jan. 2.

In habitually partisan Washington, D.C., a bipartisan group of senators late last month helped extend contentious federal tax provisions designed to aid domestic ethanol production.

The senators mostly shared common ground on two fronts: geography and contributions from the political action committees of ethanol producers, high-profile ethanol promoters and the leading industry groups for corn, a Center for Responsive Politics analysis indicates.

This bipartisan group of 15 senators signed a letter in late November demanding an extension of U.S. ethanol subsidies, and they have received notable campaign contributions during the past six years from pro-ethanol companies and interest groups. 

These senators each collected, on average, $5,000 from bioengineering and agricultural chemical company Monsanto, $4,100 from farming giant Archer Daniels Midland, $1,600 from the National Corn Growers Association, $1,200 from ethanol producer POET LLC and $200 a piece from Growth Energy and the Iowa Renewable Fuels Association. (You may download a spreadsheet showing the Center’s calculations of these totals and the itemized totals for all senators signing either letter here: EthanolMoney2010.xls)

The leading Republican behind the letter was Sen. Chuck Grassley (R-Iowa), who argued in the pro-ethanol missive that “allowing the provisions to expire or remain expired would threaten jobs, harm the environment, weaken our renewable fuel industries and increase our dependence on foreign oil.” (Letter available as a pdf file here, via the Washington Post.)

Since January 2005, Grassley’s political committees have received about $36,000 from the PACs of the Monsanto, POET LLC, Archer Daniels Midland, the National Corn Growers Association, Growth Energy and the Iowa Renewable Fuels Association, according to research by the Center for Responsive Politics. Because senators run for re-election every six years, using data for six-year periods gives a more complete — and more accurate — picture of what interests are bankrolling a senator.

Grassley’s office told OpenSecrets Blog that campaign contributions from ethanol supporters do not influence the senator’s thinking on the issue.

“Sen. Grassley’s campaign committee takes contributions that are legal and have no strings attached,” Beth Levine, Grassley’s press secretary, told OpenSecrets Blog. “Sen. Grassley fights for ethanol because it’s good for our national security, it’s good for our environment, and it’s good for good-paying jobs.”

Sens. Kit Bond (R-Mo.), Tom Harkin (D-Iowa) and Ben Nelson (D-Neb.), who all signed onto Grassley’s letter, have each received at least $20,000 to their campaign committees and leadership PACs from these same ethanol-supporting political action committees since January 2005, according to the Center’s research.

And Sens. John Thune (R-S.D.) and Kent Conrad (D-N.D.), who likewise signed the pro-ethanol letter, each received between $10,000 and $15,000 from these interests as well.

Among all pro-ethanol letter-signers, only Sen. Sam Brownback (R-Kan.) collected no money from any of these six companies and trade groups. (Brownback is retiring from the Senate in January, having been elected governor of Kansas.) 

Like Grassley, Nelson stressed the economic benefits of ethanol in his home state as the reason for his support for the tax provisions.

“Sen. Nelson supports the extension of the ethanol tax credit because it will promote renewable energy, jobs and economic development in Nebraska, the number two corn-producing and number two ethanol-producing state in the country,” Jake Thompson, Nelson’s communications director, told OpenSecrets Blog. “That’s why he wants the ethanol tax credit extended, not because of campaign contributions from either supporters or opponents of ethanol.”

A separate letter deeming the extension of the ethanol subsidies “fiscally irresponsible and environmentally unwise” was also recently produced by a different bipartisan group of senators. Major ethanol-supporting interests, however, doled out only scant amounts of campaign money in the last six years to these 17 lawmakers.

The only beneficiary of the National Corn Growers Association’s PAC to sign the anti-ethanol letter was Sen. Robert Bennett (R-Utah), who is retiring after being defeated by conservative Republican Party activists in Utah earlier this year. Bennett received $1,000 in 2008. 

Sen. Barbara Boxer (D-Calif.) was the only beneficiary of Archer Daniel Midlands’ PAC cash to sign onto the letter opposing the extension of the ethanol tax provisions. She’s raised $3,000 from Archer Daniels Midland’s PAC since 2008.

None of the anti-ethanol letter-signers have raised any money from the Iowa Renewable Fuels Association, Growth Energy and POET LLC in the last six years, according to the Center’s research.

Meanwhile, five of the 17 lawmakers who signed letter urging the expiration of the ethanol tax provisions have received relatively meager donations from Monsanto — totaling $12,000 — in the last six years: Sens. Richard Burr (R-N.C.), Tom Coburn (R-Okla.), Jon Kyl (R-Ariz.), Mike Enzi (R-Wy.), Boxer and Bennett.

Frederick Boehmke, an associate professor of political science at the University of Iowa, said the disparity in cash from ethanol supporters between senators in each camp is telling.

“Groups look for members who are predisposed to support their positions,” Boehmke told OpenSecrets Blog. “They are usually targeting people who are predisposed to support their positions and trying to get them to devote some energy to helping them out.”

And if a politician bucks a supporter by a stance they take? Boehmke said there is some political risk for lawmakers, but also the flexibility to be independent and make up their own minds.

“They run the risk of not receiving support from that group in the future,” he said. “But members of Congress usually aren’t going to sell their vote for $5,000, the legal limit of what a PAC can give.”

During the past six year, most of the 17 senators who signed the anti-ethanol subsidy letter have received significant campaign contributions from key organizations who themselves publicly opposed the ethanol subsidy extension.

For example, the Grocery Manufacturers Association has spread $41,500 to eight of these 17 senators during the past six years, with Susan Collins (R-Maine), Mark Warner (D-Va.), Burr, Enzi and Bennett each receiving at least $5,500.

The American Meat Institute and National Chicken Council have each donated $17,500 and $13,000, respectively, to six of the 17 senators.

The oil and gas industry – another outspoken critic of ethanol subsidies and one of the most powerful political forces in Washington – has likewise generously donated to the political campaigns of a number of these senators.

Burr, for one, has received $191,500 from people and PACs associated with the industry during the past six years. For Bennett, it’s $157,200, and Kyl, $145,000.

At stake this month for ethanol supporters was a 54 cent-per-gallon tariff on ethanol imports, and a 45 cent-per-gallon tax credit for blending ethanol into gasoline, known as the Volumetric Ethanol Excise Tax Credit.

Both measures would have expired at the year’s end but are now extended through December 2011 as part of the tax relief and unemployment insurance extension legislation that President Barack Obama signed into law on Friday.

In addition to building relationships with federal lawmakers through campaign contributions, companies and special interests supporting ethanol subsidies are this year spending millions of dollars to lobby the federal government.

Between January and September, Monsanto, which bioengineers corn designed to produce the most ethanol per acre, has also spent $6.6 million on federal lobbying efforts, according to the Center’s research. Archer Daniels Midlands, a leading producer of ethanol and biodiesel, meanwhile, spent $1 million on its lobbying efforts.

Ethanol producers Growth Energy and POET LLC have spent $1.2 million and $700,000, respectively, on lobbying this year, according to the Center’s research.

The National Corn Growers Association, meanwhile, has spent $390,000 on lobbying this year.

The Iowa Renewable Fuels Association, another trade group, does not currently hire federal lobbyists. 

As the fight about these tax incentives continue in 2011, officials at ethanol-producing companies such as POET LLC and Growth Energy hope they will continue to win supporters — regardless of party lines and regardless of geography.

“We think in the near future support will broaden beyond Midwest,” said Nathan Schock, director of public relations at South Dakota-based POET LLC.

“There is abundant cellulose in every state,” Schock continued, highlighting his company’s push to produce cellulosic ethanol, which can be made from corncobs, grasses and other plants not exclusive to the Midwest.

In the meantime, ethanol supporters will continue to raise their political profile within an energy sector that has long been dominated by big-spending oil and natural gas interests. And they will continue to use campaign contributions as part of this outreach.

“Like every industry, we support candidates who understand and support our issues,” Schock told OpenSecrets Blog.

His peer at Nebraska-based Growth Energy agreed.

“Growth Energy’s political support has been directed toward those lawmakers who have demonstrated their commitment to renewable fuels, like ethanol, and rural America,” Chris Thorne, Growth Energy’s director of public affairs, told OpenSecrets Blog. 

“Ethanol could never match our political opponents dollar for dollar,” Thorne continued. “Big Oil and Big Food flood Washington, D.C., with lobbyists, paid media and campaign donations. But even while we fight above our weight class, we can win the debate because the facts are on our side.”

But a novel — even bizarre — coalition of special interest groups may also factor into the future of domestic ethanol subsidies. 

Although unsuccessful this year, 60 advocacy groups from across the ideological spectrum united to oppose ethanol subsidies, criticizing them as wasteful. These detractors included Democratic-aligned activist group MoveOn.org, Public Citizen, the Sierra Club, the American Bankers Association, the National Taxpayers Union, the libertarian Competitive Enterprise Institute and Tea Party-aligned FreedomWorks. 

This anti-ethanol subsidy letter marked the first occasion — and perhaps, not the last — that adversaries MoveOn.org and FreedomWorks had cooperated on an issue.