An extension to the expired biodiesel production tax incentive likely will be part of a jobs package being negotiated by Democratic and Republican leaders. Recall that the biodiesel tax incentive expired Dec. 31. The $1-per-gallon tax incentive is designed to make biodiesel price competitive with conventional diesel fuel and is structured as an excise tax credit that allows the value of the incentive to be recognized immediately in the market price of the biodiesel. Expiration of the tax incentive caused some production to cease and has placed the 23,000 jobs that are currently supported by the domestic biodiesel industry in jeopardy. Some companies already have laid off employees, and this situation is certain to worsen the longer the tax incentive is allowed to lapse, according to the American Soybean Association. 

Finance Chairman Max Baucus (D-Mont.) is still negotiating the details of tax provisions, but said he is close to getting a deal that would have “meaningful” Republican support. Most importantly, the development that this is a must-pass bill is attracting more potential unrelated legislation. 

An agreement on a process to consider estate tax legislation at some point is still in the unclear category, according to Informa's Congressional contacts. Democratic leaders want to avoid a floor fight on the issue and have not yet agreed to a time-certain to consider the measure, as sought by Republicans. Republicans want assurances that House-passed estate tax legislation will be brought up soon in the Senate and that tax provisions aimed at stimulating the economy will be kept separate from spending initiatives being pushed by Democratic leaders. 

The jobs package certainly will include several three-month program renewals, including the extension of the biodiesel production tax incentive, the unemployment benefits and health insurance subsidies for laid-off workers expiring Feb. 28. Another provision would avoid scheduled cuts in the fees Medicare pays physicians. Other programs expiring on Feb. 28 include Small Business Administration loan guarantees, the national flood insurance program and supplemental nutrition assistance program (SNAP), formerly known as food stamps. An extension of surface transportation financing is another possible rider. Also in the mix are extensions of economic stimulus initiatives that give small businesses liberalized expensing rules and provide state and local governments with assistance through a tax credit bond program.

Paying for the package remains under discussion. The House passed an extenders package last year, but its offsets (including a tax hike on venture capitalists) remain controversial. One provision that likely will be included is a curb on paper producers’ ability to claim a tax credit for making “black liquor,” a wood byproduct, according to congressional contacts. 

Senate Majority Leader Harry Reid (D-Nev.) said he would like an initial Senate vote on a jobs package Feb. 8 (likely a procedural vote) and Senate passage before the Presidents Day recess starting Feb. 12.