US Lawmakers Eye Health Bill To Shut Down Tax Break For Paper Cos

House lawmakers may have found an additional $24 billion to help offset the cost of their health-care bill, by blocking pulp and paper makers from using a tax credit for biofuels.

Legislation introduced this week by Rep. Chris Van Hollen, (D., Md.), would prevent such companies as International Paper Co. (IP) and Weyerhaeuser Co. (WY) from claiming a $1.01-per-gallon tax credit for the production of cellulosic biofuels.

Members of the tax-writing Ways and Means Committee are discussing whether to add the biofuels provision to health-care legislation that House leaders want to have a vote on by mid-next week, said Matthew Beck, a committee spokesman.

Paper companies already reaped billions in federal payments this year by claiming an alternative fuels credit for recycling black liquor, a by-product of the paper-making process.

The alternative fuels credit expires at the end of this year, and lawmakers have vowed to ensure that if it is renewed, it will be narrowed so that black liquor is not eligible.

But paper companies have been eyeing a separate credit, for biofuels made from cellulosic feedstocks, that industry analysts have said could yield billions over the next several years.

The provision from Van Hollen would disqualify biofuels that contained certain amounts of water and ash, designed to prevent biofuels from the pulp and paper industry from being eligible.

-By Martin Vaughan, Dow Jones Newswires; 202-862-9244; martin.vaughan@dowjones.com