House Passes Tax Extenders Bill: Biodiesel and Fuel Mixture Credit Extensions Included

House Passes Tax Extenders Bill: Biodiesel and Fuel Mixture Credit Extensions Included

The House on Friday by a narrow margin passed H.R. 4213, extending various unemployment benefits and stimulus programs along with a basket of tax credits that included the biodiesel tax credit and the alternative fuel mixture credit. (House Committee bill summary).

Although both liquid fuel credits expired at the end of 2009, and had been the subject of bills that would have extended the measures, Congressional Democrats insisted that they be included as part of a larger, omnibus package.

Since the expiration of the fuel tax credits many biodiesel plans have been idled or run at minimal capacity.

While the bill extends the $1 per gallon biodiesel tax credit and the $0.50 per gallon alternative fuel tax credit, the bill excludes from the credit alternative fuel derived from biomass.  The carve-out is intended to prevent pulp producers from taking advantage of the “black liquor” tax credit permitted under prior law.

Section 207(d) of the bill amends IRC Section 6426(d) by adding to the exclusion at its end the phrase “biodiesel or any fuel (including lignin, wood residues, or spent pulping liquor) derived from the production of paper or pulp.”  But, because the bill extends Section 6426(d)(F) (which defines alternative fuels to include alternative fuel derived from biomass) the black liquor exclusion would appear to apply only to wood residues derived from the pulping or paper-making process.

While finality will arrive only when (and if) the Senate passes a companion bill and both bills are reconciled, it would appear that the blender credit that previously applied to liquid fuel derived from biomass would be extended through December 31, 2010 and that the exclusion would apply only to paper and pulp producers.  Senate Majority Leader Harry Reid has said that the Senate won’t take up the legislation until June 7, after the Senate returns from the Memorial Day recess.

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