Biodiesel credit, other ag provisions pass House vote

Jun 4, 2010

A jobs and tax-extenders bill that resuscitates the biodiesel tax credit passed the House of Representatives on May 28, but biodiesel producers will still go into June waiting for final action on the credit.

The American Jobs and Closing Tax Loopholes Act has several provisions directly related to agriculture beyond biodiesel, including more than $1.5 billion in disaster aid, the settlement of a long-running USDA discrimination case, and the extension of a subsidy for American cotton shirt manufacturers.

The bill extends the $1 biodiesel and renewable fuel credit to the end of 2010, and makes it retroactive to the beginning of this year. The credit expired last December and industry officials have said the loss of the credit has caused biodiesel plants to idle across the nation and has led to as many as 20,000 people losing their jobs. The tax credit is expected to cost about $624 million this year and another $231 million in 2011, according to Congress’ Joint Committee on Taxation.

Yet, even if approved, biodiesel producers and supporters in the soybean industry will still be fighting to extend the tax credit beyond this year or face a similar battle in 2011.

The overall bill renews more than 70 tax credits, largely on a short-term basis, and provides other job-benefit provisions. It passed the House 215-204 after a week of arguments over the costs of provisions to extend unemployment benefits and to deal with Medicare reimbursements for doctors. After whittling down some provisions and increasing taxes on foreign income, oil companies and hedge fund managers, the bill and its deficits, $60 billion over 10 years, became more palatable for the House to approve.

Despite starting in the House last December, passing the Senate in March, the bill will again go back to the Senate because of changes. So a final vote will not come until after the Senate returns June 7.

Along with the tax credits, the bill also includes more than $1.5 billion in disaster aid for agriculture, a provision added earlier this spring by Senate Agriculture Committee Chairman Blanche Lincoln, D- AR, whose state suffered extensive crop losses last year. The bill provides $1 billion in supplemental direct payments to farmers who suffered a 5 percent production loss in 2009. Along with that, the bill earmarks $300 million for fruit and vegetable farmers, $75 million for poultry producers, $50 million for livestock producers, $42 million for cottonseed disaster assistance, $25 million for fish farmers, and $21 million for a Hawaiian sugarcane cooperative.

“I am proud to use my Agriculture Committee chairmanship to fight for this relief that will protect the 270,000 Arkansas jobs agriculture provides and will give farmers the certainty they need to stay in business,” Lincoln said. “House passage of this legislation is a positive step forward, and this disaster assistance package is now one step away from becoming law. I am disappointed that my Republican colleagues in the Senate blocked passing this legislation quickly before the Memorial Day recess, but Arkansas farmers should rest assured that I will keep up my fight to get this relief into their hands as quickly as possible.”

The bill also contains $4.6 billion to settle both a lawsuit by black farmers against USDA, commonly known as the Pigford case, and a lawsuit by native American tribes against the U.S. Department of Interior over mismanagement of tribal accounts. The Pigford case is expected to take about $1.4 billion to settle claims. Congress put in the 2008 farm bill language that authorized a second Pigford settlement because many farmers did not meet a filing deadline for their claim several years ago. The Obama administration announced a settlement of Pigford in February, pending Congress setting aside funding for it. Secretary of Agriculture Tom Vilsack said last week it’s important that USDA close the Pigford case and move ahead.

The bill also spends $53 million over three years for a cotton trust fund which pays U.S. shirt makers, cotton and yard producers, and funds a cotton promotion program. The trust fund uses revenue collected from tariffs on cotton textile imports. The authority to shift money from tariffs to the fund expired at the end of last year, but would be extended under the bill to the end of 2013. — Chris Clayton, DTN