November 17, 2015

The Honorable Orrin Hatch

Chairman
Committee on Finance
219 Dirksen Senate Office Building
Washington, DC 20510

The Honorable Ron Wyden

Ranking Member
Committee on Finance
219 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Hatch and Ranking Member Wyden:

The undersigned organizations are writing to express concern about changes to the biodiesel and
renewable diesel blenders tax credit the Finance Committee adopted in July as part of legislation
to extend various expired tax benefits. We believe a change of this magnitude requires further
examination by both the Senate and House committees and the opportunity for affected
taxpayers and consumers to inform Senators of the effects of this change. Therefore, we
respectfully ask, that as the Finance Committee works with the House of Representatives on a
final package of tax benefit extensions, the Committee extend the biodiesel and renewable diesel
blenders tax credit in its longstanding form.
Since 2005 there has been a biodiesel and renewable diesel blenders tax credit of $1.00 for each
gallon of biodiesel or renewable diesel used in a qualified mixture. This tax credit, which expired
at the end of 2014, was created to stimulate production and use of biodiesel and renewable
diesel, an agricultural alternative to fossil fuels.
In the Finance Committees July markup, Senator Grassley offered an amendment, co-sponsored
by Senator Cantwell, that would extend the biodiesel and renewable diesel tax credit for two
years but, starting in 2016, convert the credit from one for blenders (those who make biodiesel
mixtures) to one for those who produce biodiesel and renewable diesel. The amendment would
also deny the tax credit to imported biodiesel or renewable diesel.
We believe that any change such as that adopted by the Committee in July should be subject to a
more careful and deliberative process. There has been no Finance Committee hearing or other
opportunity for stakeholders to be heard on this proposed change. Nor has the House Ways and
Means Committee had an opportunity to consider this change.
The Committee should carefully consider the following issues when evaluating such a change:

The increase in the cost of fuels for consumers

The increase in the cost of heating oil

The potential violations of trade agreements, which could result in sanctions

The increase in RIN prices, which could increase fuel prices for consumers

Converting the tax credit to a producers tax credit and denying its availability to imported fuels
will benefit a small group of biodiesel producers and come at the expense of fuel retailers and
consumers.

The biodiesel and renewable diesel tax credits stimulate consumption of these fuels by reducing
fuel prices for the millions of trucks that move two-thirds of the countrys freight. Limiting the
supply and/or availability of biodiesel will severely impact fuel blenders, who have incurred
significant costs to purchase and maintain the equipment to dispense blended fuels.
Additionally, this will result in an increase cost for fuel consumers and the overall nations
consumer who will pay higher prices for the shipment of goods.
There is also significant concern that the provision will limit the amount of supply of biofuels
heating oil into the Northeast this winter. Moreover, the excise tax system in combination with
this change could lead to consumers paying as much as an additional 24 cents per gallon for their
biofuels mixed heating oil this winter.
Finally, converting the tax credit to a domestic production credit may also result in a trade
violation, a concern Senator Grassley acknowledged when he said during markup, [I]f this has
trade implications, as the Senator has indicated through staff, I would be glad to do it, but I
would like to have a vote on this and have it included in the mark and then if there are problems
afterwards, work on that. This trade concern is just another example of why any change to the
longstanding blenders tax credit requires a more deliberative process.
The current blenders credit for biofuels is successfully creating a market for biodiesel and
renewable diesel and building consumer acceptance. Continuing the policy that allows truckers
to share in the value and encourage consumer acceptance of these fuels benefits American
consumers, those who blend those fuels, and those who provide the wide range of feedstocks that
make these fuels. We believe the current blenders credit should be extended in its longstanding
form as was originally intended.
Respectfully,

cc: Committee Members