San Diego Union-Tribune

June 13, 2001

A-1

   Politics played a major role in ethanol decision
     Air quality was just one factor Bush used in his calculations

By Dana Wilkie and Dori Meinert 
COPLEY NEWS SERVICE 

WASHINGTON -- When the U.S. Environmental Protection Agency
announced yesterday that refiners must add ethanol to much of California's gasoline, it may have seemed the decision was about cleaner air, protecting America's health, and the future of the country's children.

In fact, air quality was only one factor that went into the Bush administration's calculation -- and perhaps not even the most significant one.

Those who lobbied for the decision apparently convinced the president that it was wiser to appease Midwest farmers than Texas oil companies, and more prudent to befriend lawmakers who could steer his programs through Congress than California voters who resoundingly rejected him in last year's election.

"I think Bush recognizes ... that ethanol is the magic pill for a lot of things," said Rep. Ray LaHood, a Republican from Illinois, the state that leads the nation in the production of ethanol.

Federal law requires refiners to add oxygen products to fuel to help it burn more cleanly. But in California, Democratic Gov. Gray Davis ordered that MTBE -- methyl tertiary butyl ether, an oxygen additive that had tainted water supplies -- be entirely banned after 2002. That would leave gasoline refiners to meet the federal requirement with ethanol, which is made with corn.

Because California would need about 580 million gallons of ethanol every year to comply with the law, this was good news to the Midwest's struggling corn growers. But Davis wanted Bush to exempt California from the federal requirement because, he argued, refiners had other ways to make gasoline cleaner and adding ethanol would increase costs.

"Their refusal to grant us that waiver will probably cost California consumers 50 cents a gallon in the pump," Davis said yesterday in San Francisco, according to The Associated Press. "It will do nothing to clean up the air, and it is a triumph of politics over good science."

The California Energy Commission estimates that under the best of
circumstances ethanol could add 3 cents to each gallon of gas. But the
commission has said disruptions in the supply of ethanol could cause price spikes of 50 cents per gallon.

The ethanol issue forced Bush to choose between three constituencies -- Midwest farmers who fought the California exemption, the petroleum companies that had trouble meeting the oxygenate requirement and wanted the exemption, and Californians who feared higher gas prices if forced to use ethanol.

In the end, Bush chose farm states, which generally supported him in
November's election. Moreover, one of the nation's major suppliers of corn is Iowa, which Bush lost to Democrat Al Gore by about 5,000 votes. And the president could not afford to cross lawmakers from farm states who had the power to kill his pet projects in Congress.

But California, it seems, was never a top consideration in Bush's ethanol equation, despite repeated pleas from Davis and the state's two senators, Democrats Dianne Feinstein and Barbara Boxer.

Several observers have said that because Bush lost California in last year's election by double digits -- and does not expect to win the state in 2004 -- he feels no obligation to keep California voters or politicians happy.

"He looks at being president of the states he won, not all the states in the country," said Philip Schiliro, chief of staff to Rep. Henry Waxman, the California Democrat who helped write the 1990 Clean Air Act and who fought for the exemption.

Said one Californian involved in the ethanol negotiations: "If you've got to throw the Midwest a bone, whose bone is better to throw to them than one of California's?"

Farm groups and other ethanol producers lobbied aggressively against the California exemption. They spent half a million dollars on scientific analyses to support their arguments. Members of the National Corn Growers Association met EPA chief Christie Whitman in mid-March, even though she declined to meet with Chevron representatives and did not return phone calls from Winston Hickox, head of the California Environmental Protection Agency.

The ethanol push had powerful advocates in Congress.

In March, House Speaker Dennis Hastert and Sen. Peter Fitzgerald -- both Illinois Republicans -- accompanied the president aboard Air Force One as he tried to sell his tax package in the Midwest. They used the opportunity to make their case for ethanol.

Bush also could not have ignored other big-time ethanol boosters in the
Senate. They include Tom Daschle, the new majority leader from South Dakota; Dick Durbin, the Illinois Democrat, who is part of the leadership team; and Charles Grassley, the Iowa Republican who formerly chaired the Senate Finance Committee.

"If you're the president and you want to get a big tax bill through, one person you'd better be doggone sure to have on your side is the chairman of the Senate Finance Committee," said one person familiar with the ethanol negotiations.

Money may have played a part, too. One of the biggest ethanol producers, Archer Daniels Midland Corp., contributed more than $500,000 to Republicans during the past two years, including $100,000 to Bush's inauguration.

Ethanol supporters, however, reject the idea that contributions influenced the decision.

After all, the oil and gas industry contributed $1.5 million to Bush's
presidential campaign, according to the Center for Responsive Politics.