Prepared Floor Statement of Senator Chuck Grassley
Extension of the Biodiesel Tax Credit
Tuesday, May 4, 2010
Last Tuesday, President Obama traveled to Iowa. He visited counties and towns that have been hit particularly hard by the economic downturn.
While Iowa's average unemployment rate stands at 6.8 percent, Lee County's unemployment rate stands near 11 percent. Wapello County's unemployment rate is at 9.5 percent.
Over 1,000 jobs have been lost in each of the three counties he visited since the recession began.
The visit to Iowa was billed as an effort to highlight the steps taken to achieve long-term growth and prosperity by creating a new, clean energy economy. During his trip, the President visited a Siemens wind blade manufacturing facility in Ft. Madison.
The President touted Iowa's leadership in the production of wind energy. I've had an opportunity to visit and tour the facility myself. It's a great facility.
I recall just a few years ago speaking to the Siemens management when they were looking for a site for their first wind production facility in the United States.
I told the executives at Siemens they wouldn't be disappointed if they chose Ft. Madison for their facility, because Iowans are some of the hardest working and honest people in the county.
I'm particularly proud of the second-in-the-nation status of Iowa's wind production.
I first authored and won enactment of the Wind Production Tax Credit in 1992. This incentive has led to the exponential growth in the production of wind across the country.
It has also helped Iowa to become a leader in the production of wind energy component manufacturing.
The emerging wind industry has created thousands of jobs in recent years in Newton, West Branch, Cedar Rapids, and Ft. Madison.
So, when President Obama says that energy security should be a top priority, I agree with him.
When he says we need to rely more on homegrown fuels and clean energy, I agree with him.
When he says our security and our economy depend on making America more energy independent, I couldn't agree more.
During a subsequent visit to an ethanol facility in Missouri, President Obama stated unequivocally that his administration would ensure the domestic biofuels industry would be successful.
The President and I are in strong agreement that renewable biofuels are a key part of our future.
Unfortunately, I believe President Obama missed an important opportunity to make a push for passage of the biodiesel tax credit.
While the President was in Iowa touting green jobs, this Democratic Congress has in effect sent pink slips to about 18,000 people who depend on the production of biodiesel for their livelihood.
On December 31, 2009, the biodiesel tax credit, which is essential in keeping a young biodiesel industry competitive, expired.
In anticipation of the expiration of the tax credit, Senator Cantwell and I introduced a long-term extension in August of 2009. That bill was never considered last year.
In December, as the expiration loomed, I came to the Senate floor to implore my colleagues to put partisan politics aside and pass a clean extension of the biodiesel tax credit. Without an extension, I knew the industry would come to a grinding halt.
But, for whatever reason, the Democratic leadership in the House and Senate has never considered this extension a priority, and now the industry is experiencing the dire situation that I predicted.
On January 1st of this year, about 23,000 people were employed in the biodiesel industry. Because of the lapse in the credit, nearly every biodiesel facility in the country is idled or operating at a fraction of their capacity.
Nearly all of Iowa's 15 biodiesel refineries have completely halted their operations. This has led to the loss of about 2,000 jobs in Iowa alone.
So, the thousands of jobs created by the wind industry in Iowa have essentially been offset by the thousands of jobs lost in the biodiesel industry.
You don't have to take my word for the dire state of the industry. A $50 million biodiesel facility in Farley, Iowa, announced that they just laid off 23 workers and cut the pay for the rest of the staff.
Renewable Energy Group laid off 9 employees at a facility in Ralston, Iowa, and 13 in Newton, Iowa.
Ironically, the Newton biodiesel facility is a mile down the road from a wind manufacturing facility that President Obama visited on Earth Day last year.
And, during President Obama's trip to Iowa, he was within a few miles of three biodiesel facilities that are idled -- one in Keokuk, one in Washington, and another in Crawfordsville.
According to a press release from the Iowa Renewable Fuels Association, an Iowan affiliated with the biodiesel industry was able to speak to President Obama very briefly following the town hall session in Ottumwa.
Mr. Albin, a vice president with Renewable Energy Group, told President Obama that plants are idled and 90 percent of the biodiesel employees have been laid off as a result of the tax credit lapse.
According to Mr. Albin, President Obama assured him that he would not let the biodiesel industry die. He recalls him saying, "I'm the President and I promise I'll do whatever I can. Look, I'm on your side, but I've got a Congress to deal with."
It seems that even President Obama is frustrated by the lack of action by the Democratic Congressional leadership on this issue.
I'd ask unanimous consent to place the press release in the record at the conclusion of my remarks.
The board president of Western Iowa Energy in Wall Lake, Iowa, recently stated:
"Due to the continued lapse of the biodiesel tax credit, Western Iowa Energy continues to suffer from significantly limited sales and reduced sales forecasts. Due to these market conditions, we have made the difficult decision to idle our facility. Today we are laying off 15 full-time employees. This represents more than 50 percent of our staff."
On February 10th, Senator Baucus and I worked in a bipartisan fashion to develop an $84 billion jobs package that included a one-year extension of several energy tax credits, including the biodiesel tax incentive.
Before the ink was even dry on the paper, Majority Leader Reid scuttled our bipartisan package in favor of a partisan approach. That delayed passage of an extension in the Senate until March.
Now, it's been languishing for six weeks. Where is the urgency?
This Congress jammed through a stimulus bill that spent $800 billion to keep the unemployment rate below 8 percent.
Yet, we can't find the time to pass a simple tax extension that will likely reinstate 20,000 jobs overnight?
We're four months delinquent on our obligation to these biofuels producers, with no endgame in sight. The lack of action on this issue defies logic or common sense.
So, while the Democratic leadership talks about creating green jobs, their action has led to job cuts. Americans are unemployed today because of the action, or more aptly inaction, of the Democratic Congressional leadership.
The United States is more dependent on foreign oil because of the inaction of the Democratic Congress.
Automobiles are producing more pollution because we've essentially eliminated this renewable, cleaner burning biofuel.
Rural economies are being stripped of the economic gain of this value added product.
I urge the Senate to take immediate action to extend this tax incentive and reduce our dependence on foreign oil and save these green jobs.