Special interests have successfully lobbied the U.S. Department of Treasury to exploit a loophole in a renewable diesel tax credit law for their own benefit.
“Certain powerful oil companies have managed to get the government to expand the definition of a separate provision that was added into the biodiesel tax credit law late in the legislative process,” said Joe Jobe, CEO of the National Biodiesel Board (NBB). “It’s our belief that this credit was developed to help a specific emerging technology, and not to further subsidize existing petroleum refineries.”
The provision in question allows fuel made from a specific process called thermal de-polymerization (TDP) to qualify for the same dollar-per-gallon incentive that was created for biodiesel produced from agricultural resources. The TDP process is a new technology to turn hazardous wastes, plastics, and food wastes like poultry offal and carcasses into a boiler fuel. Congress never had a chance to debate the provision, but it passed, along with the biodiesel tax incentive extension, in the 2005 Energy Policy Act.
Now the Internal Revenue Service (IRS) has ruled in the oil companies’ favor to expand the TDP definition to include the conventional petroleum refining process. Those companies want to add raw vegetable oils and fats at their existing oil refineries and qualify for the credit.
“This is bad energy policy, bad agricultural policy and bad fiscal policy,” Jobe said. “If Congress lets this stand, our government will be handing over U.S. taxpayer money to some of the richest companies in the world, and it will not provide many of the benefits that the biodiesel tax incentive has given back to America.”
In early April, the U.S. Department of Treasury gave its approval to oil company
requests to expand the definition of “renewable diesel” so that the oil industry can
benefit from the $1-per-gallon tax credit. NBB is communicating to Congress and
media regarding the negative impact of this decision.
“I believe the Treasury Department got this ruling wrong. This was not our intent
when the tax credit was written. We are going to explore available legislative
options to fix this problem.”
– Rep. Kenny Hulshof (R-MO)
In addition, Senator Maria Cantwell (D-WA) said April 19 that she and other members
of Congress will work to overturn Internal Revenue Service Notice. Read the BNA
story here, http://nbb.grassroots.com/DCCapRpt/BNA_CantwellArticle/.
Also, please ask Members of Congress to co-sponsor the House and Senate bills to extend
the biodiesel tax credit. Representatives Earl Pomeroy (D-ND) and Kenny Hulshof
(R-MO), introduced the Renewable Fuels and Energy Independence Promotion Act (H.R.
196) as their first legislation in the 110th Congress, which convened on January 4.
It now has 12 co-sponsors. The legislation would make permanent the federal excise
“blender” tax credit for biodiesel and the Small Agri-Biodiesel Producer Credit.
In March, Senators Blanche Lincoln (D-AR) and Norm Coleman (R-MN) introduced S. 872 to extend the biodiesel tax incentive to 2017. See an updated list of co-sponsors here, http://thomas.loc.gov/.