Prepared Floor Statement of U.S. Senator Chuck Grassley

Opposition to Coburn Amendment

Wednesday, March 30, 2011

Mr. President, I'd like to express my strong opposition to amendment #220 offered by Senator Coburn.  Senator Coburn's amendment would raise the tax on domestic energy production by repealing an incentive for the use of homegrown ethanol.

I'm astonished that given our current situation, there are some who would prefer less domestic energy production.  With conflicts in the Middle East and crude oil more than $100 a barrel, we should be on the same side.  We should all be on the side of more domestically produced energy.  The tremendous cost of America's dependence on foreign oil has never been more clear.

In light of this threat, we should have an energy policy of "all of the above."  I support drilling here, and drilling now.  I support renewable energy.  I support conservation.  And, I support nuclear energy.  It's counterproductive for senators from Big Oil country to single out energy that comes from American agriculture.  I didn't pick this fight.  I support energy from all sources.  I support traditional oil and gas.  And so do American taxpayers with tax incentives, for an industry that's 100 years old.

So, the attack on homegrown energy is really remarkable.  We shouldn't be fighting each other over domestic energy sources.  We should be fighting OPEC and foreign dictators and oil sheiks that hold our economy hostage.

The author of the amendment has argued that the production of clean, homegrown ethanol is fiscally irresponsible.  It's important to remember that the incentive exists to help the producers of ethanol compete with the oil industry.  And remember, the oil industry has been well supported by the federal treasury for more than a century.  President Obama, in his budget request for 2012, has advocated repealing a dozen or so subsidies to big oil.  He's argued that a century-old industry no longer needs tax breaks.  With oil prices at one-hundred dollars a barrel and record profits being made, some could certainly question why this industry needs any taxpayer subsidies at all.  President Obama's proposal would repeal about $44 billion in oil and gas subsidies over 10 years.

I'd like to remind my colleagues of a debate we had last summer on an amendment offered by Senator Sanders.  The amendment he offered would have, among other things, repealed about $35 billion in tax subsidies enjoyed by the oil and gas industry.  Opponents of the Sanders amendment argued that repealing the oil and gas subsidies would reduce domestic energy production and drive up our dependence on foreign oil.  Opponents also argued that it would cost U.S. jobs, and increase prices at the pump for consumers.

I tend to agreed with these arguments.  All of my Republican colleagues and more than one-third of Democrats did as well.  But, a repeal of the ethanol tax incentive is a tax increase that will surely be passed on to American consumers.  Repealing incentives for ethanol would have the same exact result.

I know that removing incentives for oil and gas will have the same impact as removing incentives for ethanol.  We'll get less domestically produced ethanol.  It will cost U.S. jobs.  It will increase our dependence on foreign oil.  It will increase prices at the pump for American consumers.  Mr. President, we're already dependent on foreign sources for more than 60 percent of our oil needs.  Why do my colleagues want to increase our foreign energy dependence when we can produce it here a home?

So, I'd like to ask my colleagues who voted against repealing oil and gas subsidies but support repealing incentives for renewable fuels:  why the inconsistency?  Where are the amendments from fiscal conservatives and deficit hawks to repeal the oil and gas subsidies?  The fact is, it's intellectually inconsistent to say that increasing taxes on ethanol is justified, but that it's irresponsible to do so on oil and gas production.  If tax incentives lead to more domestic energy production and good paying jobs, why are only incentives for oil and gas important?

It's even more ridiculous to claim that the 30 year-old ethanol industry is mature and thus no longer needs government support, while the century old oil industry still receives $35 billion in taxpayer dollars.  Regardless, I don't believe we should be raising taxes on any type of energy production or on any individual, particularly during this weak economy.

The senator from Oklahoma insists that because the renewable fuel is required to be used, it doesn't need an incentive.  But, with oil prices at $100 a barrel, oil companies are doing everything they can to extract more oil from the ground. There isn't a mandate to use oil, but it has a 100-year monopoly on our transportation infrastructure.  When there is little competition to oil and it's enormously profitable, wouldn't he argue that the necessary incentives exist to produce it without additional taxpayer support?  Oil essentially has a mandate today.  The economics of oil production are clearly in favor of the producers. Why do they need taxpayer support?

It's also important to understand the hidden cost of our dependence on foreign oil.  A peer-reviewed paper published in 2010 concluded that "....$27 to $138 billion dollars is spent annually by the U.S. military for protection of Middle Eastern maritime oil transit routes and oil infrastructure, with an average of $84 billion a year."  Mr. President, this is $84 billion in American treasure spent on the defense of shipping lanes to quench our thirst for foreign oil.  It's not reflected in the price at the pump.  It's a hidden cost.

Milton Copulos, an advisor to President Ronald Reagan and a veteran of the Heritage Foundation, testified before Congress in 2006 on this issue.  He testified that the hidden cost of imported oil is equivalent to adding $8.35 to the price of a gallon of gasoline from the Persian Gulf.  There is no hidden U.S. military cost attributable to homegrown ethanol.

Let's have the debate on ethanol.  But, let's debate it in the context of a comprehensive energy plan.  This debate should include the subsidies for all energy production. Don't single out ethanol.

Nearly every type of energy gets some market distorting subsidy from the federal government.  An honest energy debate should include ethanol, oil, natural gas, nuclear, hydropower, wind, solar, and biomass.  It's hypocritical to put our economic and national security at risk by targeting ethanol, while disregarding the subsidies for all other energy sources.  Repealing the ethanol tax incentive will raise taxes on producers, blenders and ultimately consumers of renewable fuel.  This amendment is a gas tax increase of over five cents a gallon at the pump.

I just don't see the logic in arguing for a gas tax increase when we have so many Americans unemployed or underemployed and struggling just to get by.  I know we all agree that we cannot and should not allow job-killing tax hikes during this time of economic uncertainty.  Unfortunately, those members who have called for ending the ethanol incentive have directly contradicted this pledge because a lapse in the credit will raise taxes, cost over 100,000 U.S. jobs at a time of near nine-percent unemployment, and increase our dependence on foreign oil.

The taxpayer watchdog group, Americans for Tax Reform, considers a repeal of this incentive to be a tax hike.  Americans for Tax Reform states, "Repealing the ethanol credit is a corporate income tax increase."  I agree with them.

Now is not the time to impose a gas tax hike on the American people.  Now is not the time to send pink slips to ethanol related jobs.  Ethanol currently accounts for 10 percent of our transportation fuel.  A study concluded that the ethanol industry contributed $8.4 billion to the federal treasury in 2009 -- $3.4 billion more than the ethanol incentive.  Today, the industry supports 400,000 U.S. jobs.  That's why I support a homegrown, renewable fuels industry.

I'd like to conclude by asking my colleagues: If we allow the tax incentive to lapse, from where should we import an additional 10 percent of our oil?  Should we rely on Middle Eastern oil sheiks, or Hugo Chavez?  I'd prefer we support our renewable fuel producers based right here at home, rather than send them a pink slip.  I'd prefer we decrease our dependence on Hugo Chavez, not increase it.  And I certainly don't support raising the tax on gasoline during this weak economy.

WASHINGTON - Friday, March 11, 2011 - Senator Chuck Grassley today congratulated four Iowa high school students for winning 1^st and 2^nd prizes in C-SPAN's national 2011 StudentCam competition.  The honors were announced by C-SPAN on Wednesday.

Matthew Wicks, a junior at Aplington-Parkersburg High School, won a 1^st prize, including a $3,000 award, for his documentary titled "After the Storm," about the role of the Federal Emergency Management Agency in helping Parkersburg recover from the tornado that hit the community in May 2008.

Three juniors at Cedar Falls High School, Sara Gabriele, Jarek Bakken and Daniel Yehieli, won 2^nd prize, including $1,500, for their video titled "The Price Tag of the American Dream," about education.

Nationwide, C-SPAN recognized one grand prize winner, two 1st prize winners, eight 2^nd prize winners, 16 3^rd prize winners and 48 honorable mentions in this year's competition.  There were 1,481 entries total, according to C-SPAN.  In its seventh year, the StudentCam competition invites middle school and high school students to produce five-to-eight minute documentaries.  This year, the topic was "Washington, D.C., through my lens."  Information about all of the winners is at www.c-span.org/studentcam.  The winning entries can be viewed there

Grassley was interviewed online, via Skype, for both of the Iowa documentaries that won prizes this week.  "I really enjoyed the opportunity to talk with the students and see their enthusiasm and energy for gaining a better understanding of public policy and its impact on the lives of Americans," Grassley said.  "It's wonderful for all of us in Iowa to see these students gain national recognition and from an organization like C-SPAN, which has enhanced the process of representative government by making government more accessible."

C-SPAN said it plans to air the top 27 videos from the competition, one a day, starting April 1, at 5:50 am (CT), followed by an interview with the winning student at 7:30 am (CT) on "Washington Journal," which is C-SPAN's morning call-in program.

-30-

The Iowa Department of Transportation will use the funds to implement and enforce occupant protection programs to reduce deaths and injuries from riding unrestrained or improperly restrained in motor vehicles.

According to the Department of Transportation, the National Highway Traffic Safety Administration was established by the Highway Safety Act of 1970 to carry out safety programs previously administered by the National Highway Safety Bureau.  The agency is charged with improving motor vehicle and highway safety.

-30-

Prepared Floor Statement of Senator Chuck Grassley

S. 23, The America Invents Act

Monday, February 28, 2011

Mr. President, at this time I want to speak in support of S. 23, the America Invents Act.  I appreciate all the hard work that Chairman Leahy, Senator Hatch, Senator Sessions, Senator Kyl and others have put into this bipartisan bill.

Over the past 5 or so years that the Senate Judiciary Committee has been considering comprehensive patent reform, Chairman Leahy has engaged Senators on both sides of the aisle as well as a wide range of groups.  His efforts have been pivotal in bringing together diverse views and crafting a reasonable compromise bill.  In fact, the bill is supported by a large number of industries and other stakeholders from the United States patent community.  I commend the leadership of Chairman Leahy, as well as the leadership of Senator Hatch, for getting us to where we are now.

Intellectual property rights are extremely important to our nation's economy.  An effective and efficient patent system will help promote innovation and technological advancements in America, and make life better for us all.  An effective and efficient patent system also will help provide a stimulus for businesses and generate new jobs.

Everyone agrees - we need a well functioning Patent and Trademark Office so that it can complete its work in a timely manner.  We should find ways to help the Patent and Trademark Office speed up the patent application process and eliminate the current backlog it is experiencing.  We should reduce costs and decrease abusive litigation, and improve certainty in the patent process and strengthen patent quality.

The America Invents Act will help do all these things.  The bipartisan bill before us will update and upgrade the United States patent system.  It will enhance transparency and patent quality.   And, it will ensure that the Patent and Trademark Office has the tools and funding to cut its backlog and process patent applications more quickly.  The improvements to the patent system contained in our bill will help spur economic prosperity and job creation.  I'm pleased to support it.

Specifically, the bill would improve patent quality by establishing the opportunity for third parties to submit prior art and other information related to a pending application for consideration by a patent examiner.  By allowing prior art to be submitted earlier in the process and explained to the Office, patent examiners will be able to issue higher quality patents.

The bill would create a "first window" post-grant opposition proceeding open for 9 months after the grant of a patent.  This would allow the Patent and Trademark Office to weed out patents that shouldn't have been issued in the first place.  This new post grant review process - which was recommended in a 2004 Report issued by the National Academy of Sciences - would enable early challenges to patents, but also protect the rights of inventors and patent owners against endless litigation.  The reason we want to ensure that the Patent and Trademark Office issues high quality patents is to incentivize investment in truly innovative technological advances and provide more certainty for investors in these inventions.

In addition, the bill would improve the current inter partes administrative process for challenging the validity of a patent.  It would establish an adversarial inter partes review, with a higher threshold for initiating a proceeding and procedural safeguards to prevent a challenger from using the process to harass patent owners.  It also would include a strengthened estoppel standard to prevent petitioners from raising in a subsequent challenge the same patent issues that

were raised or reasonably could have been raised in a prior challenge.  The bill would significantly reduce the ability to use post-grant procedures for abusive serial challenges to patents.  These new procedures would also provide faster, less costly alternatives to civil litigation to challenge patents.

The bill would institute a gate keeping role for the court to assess the legal basis for damages and jury instructions.  This would provide more certainty in damages calculation and promote uniformity and fairness.  The bill also would transition the United States to a first-inventor to file system, simplifying the application process and coordinating it with our trading partners.  This change will reduce costs and help improve the competitiveness of American inventors abroad.

Further, the bill would provide fee setting authority for the Patent Trademark Office Director to ensure that the Patent and Trademark Office is properly funded and can reduce its current backlog of patent applications.

The bill also would mandate a reduction of fees by 50% for small entities and 75% for micro-entities.

I want to particularly thank Chairman Leahy for working with me and Senator Baucus on a provision that would curtail patents on tax strategies.  These patents encumber the ability of taxpayers and their advisors to use the tax law freely, interfering with the voluntary tax compliance system.  Tax strategy patents undermine the fairness of the Federal tax system by removing from the public domain ways to satisfy a taxpayer's legal obligations.  If firms or individuals hold patents for these strategies, some taxpayers could face fees simply for complying with the tax code.  Moreover, tax patents provide windfalls to lawyers and patent holders by granting them exclusive rights to use tax loopholes, which could provide some businesses with an unfair advantage.

Our provision would ensure that all taxpayers will have equal access to strategies to comply with the tax code.

This provision was carefully drafted with the help of the Patent and Trademark Office not to cover software preparation and other software, tools or systems used to prepare tax or information returns or manage taxpayer's finances.

In conclusion, the America Invents Act will protect inventors' rights and encourage innovation and investment in our economy.  The bill will improve transparency and third party participation in the patent application review process.  This, in turn, will strengthen patent quality and result in more fairness for both patent holders and patent challengers.  The bill will institute beneficial changes to the patent process to curb litigation abuses and improve certainty for investors and innovators.  It will help companies do business more efficiently on an international basis.

The bill also will enhance operations of the Patent and Trademark Office with administrative reforms and will give the Office fee setting authority to reduce backlogs and better manage its business.

I'm pleased to support this hard fought bipartisan legislation, and I urge my colleagues to support it as well.

-30-