New life breathed into biodiesel tax credit on Capitol Hill

By Ron Kotrba | February 28, 2019

Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Oregon, the chairman and ranking member of the Senate Finance Committee, respectively, introduced the Tax Extender and Disaster Relief Act of 2019 on Feb. 28. The legislation would retroactively reinstate the $1 per gallon biodiesel tax credit as of Jan. 1, 2018, through Dec. 31, 2019. Thus far, the important tax credit has been expired for 14 months.

“Biodiesel producers have counted on the credit to secure blending contracts and financing for plant expansions and upgrades,” said Kurt Kovarik, vice president of federal affairs for the National Biodiesel Board. “But they are now facing the longest period of uncertainty ever, as the tax incentive remains expired two full months after the start of the year. The uncertainty is already forcing producers to put plans for facility upgrades and expansions on hold.”

With the introduction of the legislation, the questions for biodiesel producers and blenders now become whether this will make it to a floor vote, and how soon.

Paul Winters, director of public affairs and federal communications with NBB, told Biodiesel Magazine that Grassley and Wyden will be looking for additional cosponsors of the legislation before it moves further.

“It’s important for the House to take action, since bills have to pass both chambers, and the House customarily starts the process for revenue and tax bills,” Winters said. “The Senate legislation is a signal to House leadership that there is urgency to addressing these tax issues.”

Larry Schafer, co-founder, manager and CEO of Playmaker Strategies, is a registered lobbyist who advocates for biodiesel-related policy issues on Capitol Hill on behalf of individual biodiesel clients. He told Biodiesel Magazine that this legislation will not be taken to the Senate Finance Committee yet, but rather it will be put on the Senate calendar.

“Tax bills have to originate in the House Ways and Means Committee,” Schafer said. In March, the House will hold hearings on tax-related issues, including leftovers from the last Congress such as certain aspects of tax reform, according to Schafer. “Then there’ll be a markup of different pieces of legislation they intend to pass,” he said.

One vehicle through which to move the House to a vote on this new tax extenders package is this markup process. Another is the United States-Mexico-Canada Agreement, which also must pass through ways and means in the House and the finance committee in the Senate.

Schafer said the odds of reinstating the tax credit before tax day April 15 is slim but not impossible. Once passed and signed into law, however, Schafer said those eligible to claim the credit can fill out the appropriate forms and the Internal Revenue Service will “cut a check back to the industry” within 60 days. Given the late date of this possible reinstatement, it is likely eligible claimants would have to file amended tax returns for 2018.

Winters said the NBB is urging everyone to call their senators and ask them to cosponsor the legislation.

With plants in every state, the U.S. biodiesel and renewable diesel industry supports more than 60,000 jobs, paying more than $2.5 billion in annual wages and generating more than $11 billion in economic impact. The U.S. biodiesel market has grown from about 100 million gallons in 2005, when the tax incentive was first implemented, to more than 2.6 billion gallons annually since 2016. The biodiesel tax incentive helps producers across the country continue to invest in capacity for future growth.


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