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USW Opposes Senate Attempt to Repeal 'Black Liquor' Bio-fuel Tax Credit

Washington, DC, USA, 09 July 2009 -- /PRNewswire-USNewswire/ -- The United Steelworkers (USW) announced today that it has filed comments strongly opposing a Senate Finance Committee staff draft of legislation that if enacted would specifically target the pulp and paper industry for repeal of the alternative fuel tax credit.

The tax credit in question gives users a tax credit for the use of the alternative fuel when it is mixed with very small amounts of taxable motor fuel. The paper industry is the largest industrial user of biofuel in the United States. Last year, the Internal Revenue Service issued a ruling to qualify for the credit, provided companies met strict conditions mandated by the agency.

"This tax credit is encouraging paper companies to make greater use of biofuel, and in the case of one Maine producer, Old Town Fuel & Fiber in Old Town, it's allowing this company to pursue a project to produce jet fuel in addition to pulp," said Leo G. Gerard, USW president. "In addition it is saving thousands of Steelworker and other jobs."

The tax credit began to cause controversy when International Paper and other companies reported the receipt of large tax credits from their use of the biologically based by-product known as "black liquor" to produce in some cases, nearly all of the power that runs their mills.

"This was controversial because no one knew the massive size of the contribution the paper industry is making to increase the use of biofuels," said Jon Geenen, USW vice president, who handles the union's relationships with the paper industry. "Repeal isn't a solution. We believe the paper industry has significant expertise that could help jump start development of the second generation of bio-fuels. We think the tax credit is playing a large role in helping this happen, and we think any new legislation should create targeted incentives to encourage this behavior, not only with chemical pulp mills, but all across the paper industry."

In April, Senate Finance Committee Chair Max Baucus (D-Mont.) and Finance Committee Ranking Member Charles Grassley (R-Iowa) criticized the tax credit and stated they were considering a move to repeal the paper industry's eligibility for the credit. The USW immediately made contact with key senators.

As a result, such key Senate Finance Committee members as Sen. Olympia Snowe (R-Maine), Debbie Stabenow (D-Mich.), Maria Cantwell (D-Wash.), and Blanche Lincoln (D-Ark.) expressed strong support of the tax credit. In May, dozens of rank-and-file USW paperworkers visited Finance Committee members and many other members of the Senate and the House. "We made the point that the tax credit has turned out to be good for both jobs and for America's energy future," said Dan Lawson, USW Local 4-261 vice president, one of the leaders of the group that visited Capitol Hill.

In spite of all this work, on 11 June, Senators Baucus and Grassley issued their staff draft targeting the paper industry for repeal of the tax credit.


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