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Biodiesel Tax Extension Fails in Senate

The Senate rejected the latest attempt by Senator Chuck Grassley, R-Iowa, to extend the dollar per gallon biodiesel blenders credit that lapsed last December.

Grassley failed to get even close to the two-thirds Senate vote needed to suspend regular rules and pass a short-term extension of the expired tax credit. Most Democrats, intent on passing a larger small business lending bill, voted to block Grassley's amendment 41 to 58.

An angry Grassley accused Democrats of playing politics with the biodiesel credit to advance other priorities.

"We just had to pass this health care reform bill before the end of the year because it takes effect by 2014," Grassley said. "We couldn't find a little bit of time to keep 22,000 people employed in the biodiesel industry. So we asked for those consents and we didn't get it, so these workers are laid off because this Democratically-controlled Congress has not extended this tax credit."

The American Soybean Association expressed extreme disappointment and frustration at the failure. ASA says procedural issues and larger partisan political issues unrelated to the biodiesel tax credit have prevented favorable Senate action on the tax credit. ASA believes that extension of the biodiesel tax credit is supported by a majority of Senators who recognize its importance in generating jobs, renewable fuel, a cleaner environment, and positive benefits for farmers and their communities.

ASA president Rob Joslin points out that biodiesel has provided a significant market opportunity for U.S. soybean farmers, as well as jobs and economic development for rural communities. At a time when jobs and renewable energy production are cited as top priorities, it is unacceptable that Congress would fail to extend the biodiesel tax credit.

Grassley accused leadership of destroying a compromise he worked out in February with Finance Chair Max Baucus, D-Mont., to extend the biodiesel credit. But Baucus dismissed Grassley's effort, accusing the Ranking Finance Member of playing games with the small business bill.

But Grassley stressed other tax breaks aren't as time-sensitive as biodiesel, since they are not transactional tax incentives and instead are based on taxable year. With the tax extenders bill stalled, Grassley argued the Senate needs to pass the biodiesel tax credit extension alone.

"It's going to continue to be challenging," said National Biodiesel Board CEO Joe Jobe. "Nothing is going to be easy the closer you get to election and then there are a lot of unknown variables in a lame-duck session."

With elections looming and huge party differences over how to deal with many expiring tax cuts there is no clear path forward on extending biodiesel or any other tax breaks.