Washington watch: Biodiesel tax issues under consideration in Congress

By | August 03, 2007
In the days leading up to Congress' July 4 District Work Period, the House and Senate considered energy legislation that addressed key tax issues for the biodiesel industry.

An extension of the federal biodiesel tax incentive passed the U.S. House Ways and Means Committee on June 20 as part of H.R. 2776, the Renewable Energy and Energy Conservation Tax Act of 2007. Specifically, the bill:

• Extends the biodiesel tax incentive through Dec. 31, 2010. Under current law, the incentive expires after Dec. 31, 2008.

• Denies the $1 per gallon renewable diesel credit to fuel derived from petroleum coprocessing. This is consistent with the provisions of Reps. Kenny Hulshof and Lloyd Doggett's Responsible Renewable Energy Tax Credit Act of 2007, which is endorsed by the NBB.

• Provides that biodiesel, renewable diesel, ethanol or fuels eligible for the alternative fuels credit must be produced in the United States for use as a fuel in the United States. This would preclude exported biodiesel from claiming the $1 per gallon excise tax credit on a prospective basis. To address so-called "splash-and-dash" transactions, the bill retroactively denies the credits to fuels produced outside the United States for use as a fuel outside the United States. For biodiesel, this would deny credits claimed for "splash-and-dash" transactions retroactive to the creation of the biodiesel tax incentive in the American JOBS Creation Act of 2004.

The Senate Finance Committee approved the Energy Advancement and Investment Act of 2007 on June 19. The bill:

• Extends the biodiesel tax incentive through Dec. 31, 2010.

• Extends the biodiesel small producer credit through Dec. 31, 2012.

• Provides a cap of 60 million gallons per facility for purposes of claiming the $1 per gallon credit that can be claimed for petroleum coprocessed renewable diesel. Beyond 60 million gallons, the credit would be 50 cents per gallon. The bill also extends the renewable diesel tax credit through Dec. 31, 2010.

• Defines biodiesel fuel mixtures and alcohol fuel mixtures, including 99.9 percent blends, as taxable fuels. Under existing Department of the Treasury regulations, 99.9 percent blends are not considered taxable fuels.

• Allows the excise tax credits for biodiesel, alcohol fuels, renewable diesel and alternative fuels to be claimed only on fuels consumed or sold for consumption in the United States.

The full House has not yet considered H.R. 2776, though the bill will likely be considered in the upcoming months. In the Senate, the energy tax package approved by the Finance Committee was offered as an amendment to H.R. 6, the CLEAN (Creating Long-term Energy Alternatives for the Nation) Energy Act of 2007. However, the energy tax package failed to garner the 60 votes required to clear a procedural hurdle, and thus was not included in the energy bill ultimately approved by the U.S. Senate. Despite this, both the Senate leadership and Sen. Max Baucus, chairman of the Senate Finance Committee, have vowed to resurrect the package. The timing of such an effort is to be determined.

NBB position: The NBB strongly supports the provision in both bills that extends the biodiesel tax incentive for two years. The NBB also strongly supports the four-year extension of the small producer tax credit in the Senate Finance package, and the Ways and Means position that petroleum coprocessed renewable diesel should not qualify for the $1 per gallon renewable diesel tax credit.

The NBB is clearly on record as supporting efforts to shut down so-called "splash-and-dash" transactions, which allow foreign-produced fuel to be transshipped through the United States for the sole purpose of claiming the U.S. biodiesel tax incentive. However, the NBB is very concerned and will be working to correct provisions that could put the domestic biodiesel industry at a competitive and economic disadvantage by denying the excise tax credits for domestically produced fuel that is used to meet foreign demand. The NBB is also concerned that the provision in the Senate Finance Committee package that would define all biodiesel blends as taxable fuels could impose an undue regulatory and compliance burden on producers. The NBB's Washington, D.C., office will be working to remedy these problems as the legislative process moves forward.

Petroleum, biodiesel workshops-coming to a state near you
Nine areas of the country will host biodiesel workshops for petroleum distributors, thanks to grants awarded to select Clean Cities Coalitions. These U.S. DOE program coalitions will educate petroleum marketers, fleet managers and other officials about biodiesel fuel quality and ideal management practices.

The Maryland Energy Administration, Clean Cities program and the National Biodiesel Foundation teamed up to award grants to Ohio, New Mexico, South Carolina, Virginia, Philadelphia and Denver. Other areas include Columbia and Willamette, Ore., Puget Sound and the Triangle area in North Carolina. The goal of the seminars and Clean Cities is to increase the use of alternative fuels in metropolitan areas.

The workshops began in July and run through Oct. 31. Some of the grant awardees will present encore workshops. Some scheduled workshops (locations to be announced) are as follows:

New Mexico: Aug. 17
Ohio: Sept. 12 and 13
North Carolina: Sept. 18
Ohio: Sept. 18 and 19
South Carolina: Sept. 19
North Carolina: Oct. 24

For a complete list of workshops, visit www.biodiesel.org/events.

The National Biodiesel Foundation was created to conduct outreach, education, research and demonstrations for the advancement of biodiesel and its coproducts.

NBB staff honored for service
During its June board meeting, the National Biodiesel Board (NBB) recognized three of its trailblazing team members for their leadership and service.

NBB CEO Joe Jobe celebrated his 10th anniversary with the board. He joined the organization as chief financial officer and became the CEO in 1999. Jobe's tireless dedication to the industry has seen it through many developments, including extreme growth and the establishment of a tax incentive for biodiesel blending.

NBB Regulatory Director Scott Hughes and Marc-IV's Alan Weber were recognized for successfully launching the NBB's Washington, D.C., office in 2006. The office has grown to four employees: three from the NBB and one from Marc-IV, which is a consulting group for the biodiesel industry. Hughes and Weber now have a team in place that allows them to transition back to their home-state of Missouri, where they will continue working for NBB.

The next NBB meeting is scheduled for Nov. 12-14 at the L'Enfent Hotel in Washington, D.C.

A destiny to be green
Biodiesel-powered construction equipment is one way Destiny USA is fulfilling its commitment to operate a construction site and new facilities without the use of fossil fuels. The project, a proposed retail and entertainment complex in Syracuse, N.Y., is designed to be the largest facility of its kind to be powered by renewable energy sources.

Construction and related companies are increasingly realizing the health, environmental and energy security benefits of using cleaner-burning biodiesel in construction equipment.

"The Destiny USA project is fully committed to operate 100 percent free of fossil fuels," project founder Robert J. Congel said. "With this project, we will stop talking about our dependence on fossil fuels and instead demonstrate how we can earn our independence. This project will prove the viability of using 100 percent biofuel in all types of equipment, and will educate and challenge other developers in New York and around the country to adopt similar environmentally friendly approaches."

Destiny USA will be a showcase for the world's most advanced technologies and services and a showroom for the latest and best products and brands, according to company officials. Construction officials initially used a B5 biodiesel blend before increasing to B20 and B50. They plan to convert all 18 excavation and site work vehicles to B100. It's expected that nearly 100 different construction vehicles will run on biodiesel, consuming over 10,000 gallons of B100 per month throughout construction.

Other construction users of biodiesel include Earthwise Excavation of Snohomish, Wash.; Turner Construction Company in Washington state; the Tennessee Department of Transportation; the Cherokee Boys Club of Cherokee, N.C.; Manatt's Inc. of Brooklyn, Iowa; and North Bay Construction of Petaluma, Calif.

Visit http://nbb.grassroots.com/07Releases/construction2/ to read more about these organizations and hear what they have to say about biodiesel. More information on the Destiny USA project is available at www.destinyusa.com.

NBPAC offers donation program
It is now easier to give to the National Biodiesel PAC (NBPAC), a political action committee organized to help elect candidates around the country who support and share the ideals of creating a sustainable biodiesel industry. The NBPAC has launched an annual, quarterly or monthly gifting system.

"The biodiesel industry relies on government support as its moves into maturity," said World Energy President and CEO Gene Gebolys, who serves as chair of NBPAC. "Our newly established industry PAC is key to ensuring that our story is told effectively in Washington. With the introduction of regular-payment credit card set-up, making contributions is one step easier. If you haven't given this year, now is the time."

The NBPAC works to make sure that legislation passed in Congress continues to advance the interests of its PAC members by creating industry growth. It will serve as a central coordination entity and voice for political action for the industry. NBPAC's membership is comprised of state, national and international feedstock and feedstock processor organizations, biodiesel suppliers, technology providers, and fuel marketers and distributors.

For more information, contact Heather Grote, (573) 256-7060, hgrote@biodieselpac.org, or visit www.biodieselpac.org. There you can learn how to more conveniently donate to the PAC. Please specify annual, quarterly or monthly payments, if desired.

The regular payment gift amounts can be set up with a credit card. NBPAC accepts federal contributions from individuals, partnerships and other federal committees (committees registered with the Federal Election Commission, such as political action committees) of up to $5,000 per calendar year. Personal or PAC checks should be made payable to "NBPAC" and mailed to: P.O. Box 104554, Jefferson City, MO 65110.

Paid for by NBPAC and not authorized by any candidate or candidates' committee.

Membership has its advantages
National Biodiesel Board (NBB) members have another driving reason to appreciate their membership even more this year-driving a DaimlerChrysler vehicle.

NBB-member companies, employees, retirees and more are now eligible to participate in the DaimlerChrysler Affiliate Rewards-(Designated Corporate Customer) Program. Announced at the National Biodiesel Conference in February, this program is almost ready to go and will allow a significant discount on the purchase or lease of select, new Chrysler, Jeep and Dodge vehicles at the "preferred price." Preferred price is 1 percent below factory invoice plus a $75 administration fee. Final prices could also include consumer incentives available at the time of sale.

This is a great opportunity to purchase one of the company's diesel offerings and use a biodiesel blend. The program includes most hot new products, such as the diesel Jeep Grand Cherokee. Employees or their spouses may purchase or lease two vehicles per calendar year.

As the final details are put in place, the NBB will post instructions on the Members Only Website on how to save big on a new ride. For more information, call the NBB at (800) 841-5849.
 
 
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