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Grassley hopes for restoring biodiesel tax credit by mid-February

Agriculture.com Staff 01/29/2010 @ 12:59pm

Senator Chuck Grassley said this week that he's working with the Chairman of the Senate Finance Committee, Max Baucus to get a biodiesel tax credit restored as quickly as possible, but that might not be until sometime next month.

"It would be my hope that we would have this to the president by the week we take off for town meeting recesses -- president's holiday," he told Agriculture.com on Tuesday.

Late last year the House of Representatives passed a bill extending several tax credits, including the $1-a-gallon biodiesel credit that helps make the soybean-based fuel competitive with diesel. But the Senate, unable to reach an agreement on the federal estate tax, failed to renew the biodiesel tax credit which expired at the end of 2009.

Grassley, of Iowa, is the top ranking Republican on the Finance Committee and seems to have a good working relationship with Baucus, a conservative Democrat from Montana.

Later, Grassley's press aide, Beth Levine, said in an e-mail message that "Senator Grassley had a long discussion with Senator Baucus about tax extenders, and in particular about the necessity of extending the biodiesel tax credit.

"Senator Grassley emphasized that workers have already been laid off and additional workers will lose their jobs if action is not taken soon," Levine added. "Senator Grassley and Senator Baucus' staff will work together over the next week in an effort to move these important tax extender provisions forward. Unfortunately, extenders, including biodiesel, have been caught up in the majority's kitchen sink approach to putting together a so-called jobs bill, which has slowed everything down. Senator Grassley will continue to push Majority Leader Reid to pursue a more targeted approach that will bring biodiesel and other extenders to a more timely vote on the Senate floor."

Later in the week Senator Tom Harkin (D-IA) said that part of the delay was coming from the Republicans.

"As I understand it, so far the Republicans have not agreed to limit amendments," he said.

Both Harkin and Grassley support renewing the biodiesel tax credit. And, like Grassley, Harkin doesn’t see an immediate fix for the biodiesel industry. When asked when it might be resolved, he said, "probably late February, I just don't know."

That's not good news for the Renewable Energy Group, one of the nation's largest biodiesel makers, based in Ames, Iowa.

Its CEO, Jeff Stroburg, was in Washington this week talking to staffers for both Iowa senators as wells as Senator Dick Durbin (D-IL) and White House staff.

All were very supportive of renewing the tax credit, Stroburg told Agriculture.com after he returned from Washington.

"It seems like there is no organized opposition to this. It seems like we're getting caught in the crossfire," Stroburg said.

In early January REG laid off 21 workers and made graduated pay cuts for most employees. Stroburg took the biggest pay cut, of 20%.

Because of uncertainty over whether the tax credit would be retroactive to the start of 2010, the market for biodiesel has virtually dried up. REG plants are likely to be running at about 15% of capacity in February, Stroburg said.

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