Senate ethanol amendment on tax bill in limbo

WASHINGTON (Reuters) - Senate leaders have not decided whether to allow a vote on an amendment to cut the U.S. ethanol tax credit by 20 percent that would be part of a massive tax bill, said Senate aides on Tuesday.

The current 45-cent a gallon tax credit along with other biofuels incentives will expire on December 31 unless the Senate and House of Representatives agree to extend them. The tax bill would extend the subsidies through 2011.

When the Senate convened on Tuesday morning, Majority Leader Harry Reid said the Senate would be able to vote soon on the $858 billion tax-cut package. He did not discuss potential amendments such as Senator Dianne Feinstein's proposal to cut the ethanol credit to 36 cents.

She also would reduce the ethanol import tariff to 36 cents a gallon and a small producer credit to 8 cents. The tariff is 45 cents and the small producer credit is 10 cents at present.

Feinstein's office says it has not been told by leadership if a vote will be allowed on the ethanol amendment. The bill is being considered under a format that allows any senator to block discussion of an amendment.

Other Senate aides and ethanol lobbyists said they had no word if there would be a vote on ethanol incentives.

"We urge the Senate to pass the measure as is and provide America's renewable fuels industry the market stability it needs to continue to expand and incorporate new technologies," said Bob Dinneen, president of the Renewable Fuels Association trade group.

The biofuels provisions now in the tax bill would cost $7 billion, including revival of a $1 a gallon biodiesel tax credit. Feinstein says her amendment would save $2 billion.

(Reporting by Charles Abbott and Tom Doggett; Editing by David Gregorio)