Tax deal nears as lobbying over renewables intensifies

Source: Geof Koss and George Cahlink, E&E reporters • Posted: Tuesday, April 12, 2016

Senate leaders yesterday said they were close to an agreement for attaching tax breaks, including energy credits, to pending legislation to reauthorize the Federal Aviation Administration.

Senate Finance Chairman Orrin Hatch (R-Utah) said the tax title was nearing completion but declined to discuss the details when asked by reporters late yesterday evening.

“I think it’s pretty close to being done,” he said, adding that the final decision on the proposal, including the timing for its release, was up to Majority Leader Mitch McConnell (R-Ky.).

Finance Committee ranking member Ron Wyden (D-Ore.) said, “We’ve made a lot of headway.” Wyden added that he expected an announcement “shortly” on the deal.

Majority Whip John Cornyn (R-Texas) told E&E Daily that he anticipated a fairly narrow tax package but said negotiations continued.

“I think there’s going to be some controversy associated with it,” he said last night.

Lobbyists yesterday reiterated their belief that the tax portion would include the extension of the 48C investment tax credit for geothermal, combined heat and power, and fuel cells — energy sources that lawmakers left out of last year’s five-year extension for solar.

Lawmakers could push other energy credits that don’t make it into the tax title as amendments to the FAA bill. But Cornyn was unsure about negotiations to that end.

“I just don’t know the answer to that,” he said. “For some people any tax credits are controversial, so it’s going to have to be a balanced package, and we’re not quite there yet.”

Wyden said he believed “very strongly” that renewable energy credits should become part of the FAA bill. Otherwise, he said, congressional inaction could cost jobs at plants and other facilities.

Wyden said negotiators in both parties now agreed it was simply an “oversight” not to include a broader renewable credit in last year’s agreement along with the solar break.

“This should have been done yesterday because this is an omission. It would be one thing if people said it was a deliberate decision, [but] that’s not the case,” he added.

Sen. Bill Nelson (D-Fla.), the top Commerce Committee Democrat, said the FAA portion of the bill was “smooth as glass” but said “wrangling over whose tax is going to get in there” was ongoing at the leadership level.

Focus on House

Opponents of the renewable tax credits are turning their attention to the House, where Rep. Marsha Blackburn (R-Tenn.) is circulating a draft letter to colleagues in opposition.

“Congress took time to consider this issue in December and decided that these renewable energy tax extenders were not in the best interest of the country,” says the draft letter to Transportation Chairman Bill Shuster (R-Pa.) and Ways and Means Chairman Kevin Brady (R-Texas).

“As you consider the reauthorization of the FAA,” the draft letter says, “we urge you not to allow this unrelated legislation to be used as a vehicle to extend expiring tax credits for the renewable energy industry.”

In a conference call with reporters organized by Freedom Partners and Americans for Prosperity, AFP CEO Luke Hilgemann criticized the rush to pile on amendments unrelated to aviation.

“The last time I checked, airplanes weren’t running on solar power,” he said.

Should the renewable provisions make it into the Senate’s bill, groups are hoping to convince the House to pass a “clean” FAA extension, which could push the tax debate into next year, they said.

Lobbying stepped up

Interest groups have rushed to Capitol Hill to press for the inclusion of their pet tax credits in the FAA measure, one of the last bills of the year that provide an opportunity for making changes to the tax code.

Groups representing advanced biofuel manufacturers, petroleum marketers and convenience stores sent a letter to Senate Finance Committee leaders yesterday urging them not to change the current tax credit for biodiesel blenders into one for only domestic biodiesel producers. Ending the credit for blenders would ultimately mean higher prices for consumers, they argued.

“We continue to believe that the existing blenders credit offers the most benefit to the widest array of stakeholders, from small producers of biofuels to truckers and drivers of diesel vehicles, heating oil users and the blenders and marketers, who make the distribution investments,” said the letter.

Signers included the Advanced Biofuels Association, Petroleum Marketers Association of America, National Association of Truck Stop Operators, Society of Independent Gasoline Marketers of America and National Association of Convenience Stores.

The groups made a similar push last year to prevent changes. The credit, established in 2005, has strong backing from senior Finance Committee member Chuck Grassley (R-Iowa) and top Energy and Natural Resources Committee Democrat Maria Cantwell of Washington.

Separately, on Friday, a broad coalition led by the American Institute of Architects sent Senate leaders a letter making the case for a multi-year extension of the Section 179D energy efficiency deduction for commercial and multi-family buildings.

The nearly 100 signatories want the extension to include a bipartisan modification to the incentive that would expand the deduction’s allocation to tribal governments and nonprofit groups — a change that was approved by the Senate Finance Committee last summer.

The coalition also wants to see the credit modified to “better enable retrofits” for private-sector buildings.

The current FAA authorization expires July 15, and both the House and Senate are eager to come up with a long-term plan after the agency has spent the past several months operating under short-term extensions.