House Scheduled to Consider Energy Tax Legislation

On February 12, 2008, U.S. Representative Charlie Rangel (D-NY), the Chairman of the U.S. House Committee on Ways and Means, unveiled H.R. 5351, the Renewable Energy and Energy Conservation Tax Act of 2008. The package, which is very similar to the energy tax package approved by the House in August, 2007, contains a host of tax incentives designed to promote renewable energy technologies. The cost of the measure is offset with revenue raising measures that impact the oil and gas industry. View the summary of H.R. 5351 provided by the Ways and Means Committee.

Biodiesel Provisions:

H.R. 5351 provides the following changes to the biodiesel tax incentive:

• Extends the biodiesel tax incentive through December 31, 2010. Under current law, the incentive expires after December 31, 2008.
• Extends the renewable diesel credit and the alternative fuels credit through December 31, 2010.
• The provision also modifies Renewable Diesel Credit to provide “uniform treatment of diesel produced from biomass” without regard to feedstock in the following way:

1. Removes requirement that thermal depolymerization process be used.
2. Strikes D396 (home heating oil) as a fuel eligible to receive the renewable diesel credit.
3. Fuel must hit D975 and Section 211 of Clean Air Act.

• Denies $1.00 per gallon renewable diesel credit to fuel derived from petroleum co-processing. This is consistent with the provisions of H.R. 2361, the Doggett/Hulshof bill endorsed by NBB.
• Provides that biodiesel, renewable diesel, ethanol or fuels eligible for the alternative fuels credit must be produced in the U.S. for use as a fuel in the U.S. This would preclude exported biodiesel from claiming the $1.00 per gallon excise tax credit effective December 31, 2008. To address so-called "splash and dash" transactions, the bill retroactively denies the credits to fuels produced outside the U.S. for use as a fuel outside the U.S. For biodiesel, this would deny credits claimed for "splash and dash" transactions retroactive to the creation of the biodiesel tax incentive in the JOBS Act, which was enacted in October, 2004.

Outlook:

The full U.S. House of Representatives is expected to consider H.R. 5351 during the week of February 25, 2008, and the bill is expected to pass in the House. The prospects for the measure in the U.S. Senate remain uncertain. Previous attempts to approve energy tax packages in the Senate have failed to achieve the 60 votes needed to invoke cloture and move to passage due primarily to objections associated with oil and gas revenue raisers. In addition, the Administration has on multiple occasions threatened to veto legislation pending before Congress based on objections to similar tax revenue raisers. NBB DC staff will continue to closely monitor this issue and work with biodiesel supporters in Congress to get an extension of the biodiesel tax incentive enacted into law.

Farm Bill Negotiations Continue

Last year, both the House and Senate approved separate versions of legislation to reauthorize the federal Farm Bill. Efforts in Congress to reconcile the two bills and to craft a package that meets with the approval of the Administration continue. Authorization for the current Farm Bill expires on March 15. The main stumbling block to completion of the Farm Bill continues to be a lack of funding sources that are acceptable to all parties that would make the bill comply with Congress' PAYGO budget requirements.

As part of the process, Congressman Collin Peterson (D-MN), the Chairman of the U.S. House Agriculture Committee, has engaged in discussions with both the Administration and Congressman Bob Goodlatte (R-VA), the senior Republican on the House Agriculture Committee, on crafting the outline of a package that would garner the President's approval. Read a summary of the Peterson compromise Farm Bill proposal. You can also read the following:

Peterson/Goodlatte letter to the U.S. Senate

Peterson/Goodlatte open letter to the parties interested in the Farm Bill.

NBB's top priority for the Farm Bill remains the reauthorization of a CCC Bioenergy Program that provides payments to producers for all gallons produced. NBB will continue to work through the process to advocate for a Bioenergy Program that provides maximum benefit and equity for biodiesel producers.