[Congressional Record Volume 155, Number 198 (Tuesday, December 22, 2009)]
[Senate]
[Pages S13783-S13784]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          BIODIESEL TAX CREDIT

  Mr. GRASSLEY. Mr. President, the biodiesel tax credit will expire on 
December 31, 2009. I am speaking today to set the record straight about 
why the biodiesel tax credit will not be extended before the end of the 
year.
  Some have suggested that Republicans are to blame for not getting the 
biodiesel tax credit extended before the end of the year. This is 
simply inaccurate.
  The bottom line is that the Senate Democratic leadership decided they 
were going to attach the tax extender package to a controversial estate 
tax bill in an attempt to get moderate Democrats and Republicans to 
vote for an estate tax bill that does not provide sufficient estate tax 
relief.
  If the Senate Democratic leadership had not chosen to hold the tax 
extender package hostage in an attempt to force moderate Democrats and 
Republicans to vote for an estate tax bill that lacks support, the tax 
extender package would have easily passed separately.
  The tax extenders bill could have passed as a stand-alone bill easily 
at any time during this whole year. In fact, the Senate Democratic 
leadership could simply bring up a noncontroversial version of the tax 
extenders bill and pass it by unanimous consent like we have done in 
the past. We wouldn't even need to be talking about the tax extenders 
package in relation to the Department of Defense funding bill.
  However, because the Senate Democratic leadership failed to act on 
the tax extenders package this entire year, one of the only legislative 
vehicles left to pass the tax extenders package was the Department of 
Defense funding bill.
  Instead of just adding to the Defense bill a noncontroversial tax 
extenders package that both Republicans and Democrats could agree on, 
the Senate Democratic leadership instead decided that they would also 
try to attach the controversial estate tax bill and a controversial 
increase in the debt limit.
  They could have instead just included a noncontroversial tax 
extenders package with the Defense bill, and it would have easily 
passed. Again, they did not do this because they wanted to use the tax 
extenders package as leverage to get moderate Democrats and Republicans 
to vote for an estate tax bill that lacks support.
  It is also worth noting that there are 60 Senators that caucus with 
the Democrats, so they can pass anything if they vote together. It 
rings hollow to place the blame on Republicans for failing to enact the 
tax extenders package before the end of the year when the Democrats 
hold a supermajority of 60 Senators, an overwhelming majority in the 
House, and the Presidency.
  The House, waiting until the last month of the year, finally passed a 
tax extenders bill. However, the House usually passes an extenders bill 
prior to the last month of the year.
  For example, in 2008 the House passed a tax extenders bill on 
September 26, 2008, and in 2007 the House passed a tax extenders bill 
on November 9, 2007. This year, the House passed an extenders bill that 
they knew the Senate would not accept. And then they left town for the 
year. This is called a dump and run.
  The House dumped a tax extenders bill that they knew the Senate would 
not agree to, and left town before the Senate could have any chance to 
negotiate a tax extenders bill that both the House and Senate could 
agree to.
  The House also had a choice to make regarding whether they wanted to 
pass a tax extenders bill this year by simply attaching a 
noncontroversial version of the tax extenders bill, which both the 
House and Senate could agree on, to the House Department of Defense 
bill, without attaching either the controversial estate tax bill or the 
increase of the debt limit on the Defense bill. However, the House 
chose not to do so.
  Therefore, this should set the record straight. The Democratic 
leadership in the House and the Senate, and not Republicans, are 
responsible for the failure to pass a tax extenders bill before the end 
of this year.
  This failure has very serious consequences to the U.S. biodiesel 
industry, which will grind to a halt as of January 1, 2010. I remind my 
colleagues of the economic challenges faced by this industry. In 2008, 
the biodiesel industry supported more than 52,000 green jobs.
  Because of the downturn in the economy, the biodiesel industry has 
already lost 29,000 green jobs in 2009. The industry is poised to lose 
another 23,000 jobs if nothing is done on the tax incentive or 
regulatory delays at the Environmental Protection Agency.
  So where are these jobs? Some might think they are all in the 
Midwest, but they are not. These green jobs are in 44 of the 50 States. 
I would like to list the 13 largest biodiesel-producing States in the 
country.
  There are 24 facilities in Texas. There are 15 facilities in Iowa. 
There are 6 facilities in Illinois and 6 in Missouri. There are 4 
facilities in Washington. Ohio has 11 facilities. There are 5 
facilities in Indiana. There are 3 facilities each in Mississippi and 
South Carolina. There are 7 facilities in Pennsylvania and 4 in 
Arkansas. New Jersey has 2 facilities. There is 1 facility in North 
Dakota.
  Only 6 of the 50 States do not have some biodiesel production. They 
are Alaska, Delaware, Maine, New Hampshire, Vermont, and Wyoming. The 
other 44 States have some biodiesel presence.
  So workers in 44 States will be negatively affected by the inaction 
of this Congress to extend the tax credit.
  You don't have to take my word for it. On November 25, I received a 
letter from the Iowa Renewable Fuels Association.
  The letter outlined the economic and job ramifications of allowing 
the tax credit to expire, even if it is a short-term expiration. I 
would like to read directly from that letter.
  It states in part:

       Simply put, if the biodiesel tax incentive is allowed to 
     expire--even for a brief period of time--the Iowa biodiesel 
     industry will cease production and many plants will likely 
     not reopen under current ownership.
       If the biodiesel tax incentive expires, biodiesel blends 
     will be priced out of the marketplace and our customers--the 
     oil companies--will stop purchasing biodiesel. In reality, we 
     already cannot book any first quarter sales for next year.
       No retroactive action on the tax credit sometime next year 
     will undo the harm caused by the lost sales and shuttered 
     plants over the holidays.
       Quite frankly, the biodiesel industry is facing shutdowns 
     that would certainly lead to a much longer--and unpaid--
     Christmas break than anticipated for the hundreds of workers 
     at Iowa biodiesel plants.
       But there are long-term impacts potentially even more far-
     reaching. After more than a year of mainly breakeven or 
     negative margins, most of Iowa's biodiesel plants simply do 
     not have the cash reserves to withstand even a two or three 
     month shutdown.
       So, even if the biodiesel blenders' tax credit is 
     retroactively enacted, several of Iowa's biodiesel plants are 
     unlikely to reopen under the current local-ownership. Please 
     do not let the Iowa-owned biodiesel industry disappear on 
     your watch.

  I would ask unanimous consent that the entire letter from the Iowa 
Renewable Fuels Association to which I referred be printed in the 
Record.
  The dire situation reflected in this letter applies to all 173 
biodiesel plants around the country. The expiration of this tax credit 
on December 31, 2009, will affect all 23,000 workers in this green 
energy sector.
  It is unfortunate that we have to be faced with the loss of 23,000 
green jobs because of inaction on the extension of the biodiesel tax 
credit. I hope this explanation makes clear who is responsible for this 
terrible situation.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

[[Page S13784]]

                             Iowa Renewable Fuels Association,

                                                November 25, 2009.
     Hon. Charles E. Grassley,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Grassley: First, thank you for taking the time 
     to meet with Iowa Renewable Fuels Association members on 
     November 17, 2009. At that meeting, we discussed the absolute 
     necessity of extending the biodiesel blenders' tax credit 
     prior to the end of this year. With this letter, we want to 
     reinforce the economic and job ramifications of allowing the 
     tax credit to expire--even for a couple of months.
       As a longtime supporter of Iowa biodiesel, you know that 
     the biodiesel tax incentive, which allows blenders to claim a 
     $1 excise tax credit for each gallon of biodiesel blended 
     with diesel, is set to expire on December 31, 2009. Simply 
     put, if the biodiesel tax incentive is allowed to expire--
     even for a brief period of time--the Iowa biodiesel industry 
     will cease production and many plants will likely not reopen 
     under current ownership.
       With the tax credit, biodiesel blends are very competitive 
     in today's marketplace. However, if the biodiesel tax 
     incentive expires, biodiesel blends will be priced out of the 
     marketplace and our customers--the oil companies--will stop 
     purchasing biodiesel. In reality, we already cannot book any 
     first quarter sales for next year. Therefore, biodiesel 
     plants are unable to purchase feedstocks for the beginning of 
     2010 because there is no guarantee that a market for 
     biodiesel will exist come January 1, 2010. As a result, many 
     plants will likely begin to stop operations in mid-December.
       No ``retroactive'' action on the tax credit sometime next 
     year will undo the harm caused by the lost sales and 
     shuttered plants over the holidays. Quite frankly, the 
     biodiesel industry is facing shutdowns that would certainly 
     lead to a much longer--and unpaid--Christmas break than 
     anticipated for the hundreds of workers at Iowa biodiesel 
     plants.
       That is a prospect that any industry hopes to avoid. But 
     there are long-term impacts potentially even more far-
     reaching. While 2009 has been a rough economic year for many 
     industries, the biodiesel industry has been hit harder than 
     most. In fact, of Iowa's fifteen biodiesel refineries, only 
     nine are currently operating--and most of those at a severely 
     reduced capacity. After more than a year of mainly breakeven 
     or negative margins, most of Iowa's biodiesel plants simply 
     do not have the cash reserves to withstand even a two or 
     three month shutdown.
       So even if the biodiesel blenders' tax credit is 
     retroactively enacted, several of Iowa's biodiesel plants are 
     unlikely to reopen under the current local-ownership. In 
     fact, if recent history from the ethanol industry is any 
     indication, Big Oil companies may swoop in, buy the closed 
     plants for pennies on the dollar and then reopen them as part 
     of their multi-national, vertically-integrated business plan. 
     While this would be better than having the doors of these 
     plants closed for good, keeping these plants in the hands of 
     Iowa investors provides the most benefits to the local 
     communities.
       During our meeting, there was discussion of using a tax 
     extenders package or estate tax bill as a vehicle to extend 
     the biodiesel tax credit this year. That type of decision is 
     best left to you--we just know the extension needs to happen 
     this year. We have also increasingly heard of the need for a 
     ``jobs bill'' this year in response to U.S. unemployment 
     surpassing ten percent. We urge you to consider the extension 
     of the tax credit as part of any ``jobs bill'' that Congress 
     may consider. After all, extending the tax credit--something 
     most people believe will happen ``eventually''--is an easy 
     way to maintain hundreds of jobs in Iowa and thousands around 
     the country. Failure to extend the biodiesel tax credit will 
     undoubtedly add to the jobless rolls.
       We thank you for your support of the Iowa biodiesel 
     industry, and we encourage you to do all you can to ensure 
     that the biodiesel tax incentive is extended as soon as 
     possible. We are not trying to be alarmist. Rather, we want 
     you to have a clear picture of the prospects facing the Iowa 
     biodiesel industry as the tax credit expiration comes closer 
     each day. Please do not let the Iowa-owned biodiesel industry 
     disappear on your watch.
           Sincerely,
                                                       Monte Shaw,
     Executive Director.

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