On July 7, Senator Dianne Feinstein (D-CA) announced that she had reached an agreement with Senators Amy Klobuchar (D-MN) and John Thune (R-SD) to repeal the nearly $6 billion annual ethanol subsidy and end the tariff on foreign ethanol by the end of July, 2011.
According to Feinstein's news release (and a parallel statement from Senators Klobuchar and Thune), the agreed-to changes consist of:
... Repeal of the Code Sec. 6426(b) 45¢-per-gallon ethanol blender credit on July 31, 2011 (under current law, the credit terminates for any sale, use, or removal for any period after Dec. 31, 2011).
... Expiration of the 45¢-per-gallon tariff on ethanol imports on July 31, 2011.
... Three-year extension of the Code Sec. 40 tax credit for cellulosic biofuel production (currently set to expire at the end of 2012), with annual caps on gallons, and modification to include promising fuels from algae.
... Extension of tax credits for alternative fueling infrastructure, including electricity charging stations and natural gas fueling stations, through 2014.
... Extension of the small-producer tax credit through the end of 2012 (currently set to expire at the end of this year), with a reduction in the per-gallon credit.
Observation: Political observers doubtless will point to the agreement as proof that Republicans are willing to consider revenue raisers in the current debate over deficit reduction and the debt ceiling.
Observation: It's not clear whether the ethanol agreement will be taken up by Congress as stand-alone legislation or whether it will be attached to another bill.