Senator Chuck Grassley (R-IA) says he and Senate Finance Committee Chairman Max Baucus (D-MT) have written Senate leaders urging speedy extension of a $1-a-gallon biodiesel tax credit next month.

"Producers need notice that we intend to extend this tax revision so that they can make sound business decisions," Grassley says. "So Senator Baucus and I are sending a letter to Senate leaders that this issue will be addressed as soon as possible in January."

Some biofuel lobbyists say the Senate is likely to do what Grassley is asking when it returns from the holiday recess in January.

When asked if that would make it possible for biodiesel plants to avoid shutting down next month, Grassley said, "I don't think it does. But, of course, our letter is a hope that it will. But you got a situation where things are tight, anyway. And you got a situation -- you got a situation where maybe the cash flow is not so good, and the cash flow is going to dry up."

"And it depends, kind of, upon what the feeling of the people that are loaning money and helping with the cash flow, if they're going to be forbearing then they might make it, but I think you’re going to see a lot of them sold," Grassley says.

Grassley also said that Senator Tom Harkin wasn't telling the whole story when he said recently that Republican delaying tactics in the Senate had prevented the biodiesel tax credit from being added to a defense spending bill.

"Well, what he left out was the fact that the Democrats tied it to the estate tax," Grassley says. "And we weren't prepared to have it tied to the estate tax, because the estate tax was going to take some debate, where the extension of these what we call tax extenders would not take any debate."

"And it's because they were forcing down our throat the estate tax at the same time as these extenders. So that would be a very unfair description of what the parliamentary situation is,” Grassley says.

Grassley also says on the Senate floor Tuesday that “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 biodiesel tax credit has bipartisan support and isn't controversial, Grassley says.

As a result of inaction by Congress, the biodiesel industry, which is already running at low capacity, is likely to lose 23,000 jobs in 44 states, Grassley says.

Senator Chuck Grassley (R-IA) says he and Senate Finance Committee Chairman Max Baucus (D-MT) have written Senate leaders urging speedy extension of a $1-a-gallon biodiesel tax credit next month.