The issue of "black liquor," a wood pulp byproduct, emerged as a high-profile issue recently in Congress as environmentalists and foreign paper industry representatives have called for the revocation of a refundable tax credit used by paper companies to convert "black liquor" into alternative fuels mixtures. The tax credit, while used legally by paper companies, has been deemed a "loophole" by Senate Finance Chairman Max Baucus (D-MT), as it was not intended originally to benefit the industry and "drains' the Treasury. The paper industry claims the legal tax credit is critical to keeping the domestic industry afloat during a time of economic stress and that revoking it would cost industry jobs and could lead to higher prices for end-users, such as printers. The 50 cents-per-gallon credit is available to firms that mix the alternative fuel with 0.1 percent of a fossil fuel like diesel. Democrat and Republican senators representing paper-producing states are fighting against rescinding the tax credit outright, and are urging the Finance Committee leaders to instead seek modifications that would not impact costs and jobs negatively. Sen. Ron Wyden (D-OR) echoed comments of his colleagues this week when stating, "Pulp and paper has been hammered; the workers are counting on Congress to come through, and we are going to make sure that this is kept until there's an alternative and it protects the workers."

The Government Withholding Relief Coalition (GWRC) recently submitted testimony at an IRS hearing on the proposed regulations to enforce the three percent withholding requirement on government contracts. The regulations will be effective on January 1, 2012, barring Congressional intervention. The American Council of Engineering Companies presented testimony of behalf of the full coalition noting that the law intended to deter tax invasion would: "primarily penalize honest taxpayers by imposing regulatory burdens and creating cash flow problems." At the hearing, the GWRC once again called upon Congress to repeal the withholding requirement before the implementation date.

Rep. Joseph Pitts (R-PA) has reintroduced the Permanent Death Tax Repeal Act, H.R. 1960, a bill to extend the repeal of the estate tax. Estate tax reform passed in 2001 gradually diminishes the tax until it is totally eliminated in 2010. Unfortunately, the legislation sunsets in 2011 and returns the tax to pre-2001 levels. Pitts' legislation would eliminate the sunset provision in order to provide permanent relief. The bill is largely symbolic, as the Democratic House Leadership is not supportive of the sunset.

A provision in the American Recovery and Reinvestment Act, better known as the stimulus bill, temporarily changes for small companies the Net Operating Loss (NOL) carryback period from two years to up to five years. This relief is available to S corporations and sole proprietorships. A small company is defined under this law as having $15 million or less in annual gross receipts. The IRS issued guidance March 16, 2009, www.irs.gov/pub/irs-drop/rp-09-19.pdf, providing advice on the time and manner for electing the extended carryback period. Generally, the election should be made by attaching a statement to the original return for the year in which the NOL arose. However, the IRS has provided transition relief so that if the 2008 return has already been filed, a small company may still make the election by six months after the due date (excluding extensions) for such return. Printing and graphic communications companies should consult tax counsel for further information on how to take advantage of this time-limited relief.

The House Energy and Commerce Committee is busy this week with a series of hearings to consider the 600-page comprehensive energy plan championed by Chairman Henry Waxman (D-CA). In total, four hearings featuring more than 50 witnesses will comment on the plan that addresses clean energy promotion, energy efficiency, and caps on greenhouse gas emissions, among other provisions. Many of the details of the plan remain unsettled and the Congressional Budget Office has yet to issue a cost estimate of the bill. The many witnesses this week include former Vice President Al Gore, who will appear on Friday. Energy and Environment Subcommittee Chairman Edward Markey (D-MA) will begin marking up legislation next week and the full committee plans to pass a bill before the Memorial Day recess. Moderate Democrats on the committee continue to be skeptical of the carbon cap and trade and renewable energy provisions of the bill. Rep. John Dingell (D-MI) characterized a plan to auction off all emissions credits as a "deal-breaker." Regarding the plan to require 25 percent of electricity to be generated from renewable sources, Rep. G.K. Butterfield (D-NC) commented, "Not only is it impractical, it is impossible."

While the House will likely consider a single bill to create carbon cap and trade and promote renewable energy, the Senate is likely to consider separate measures. Senate Energy and Natural Resources Ranking Member Lisa Murkowski (R-AK) is working with Chairman Jeff Bingaman (D-NM) on comprehensive energy legislation that may include a mandate that 20 percent of electricity be generated from renewable sources. Murkowski and committee Republicans would like to see a broader definition of renewable sources that possibly includes nuclear energy. Additionally, Murkowski clearly stated that she would not support an energy bill that contained climate change measures.

The Mail Moves America Coalition had a busy early April defending direct mail from activists pushing do not mail legislation. While the San Francisco Board of Supervisors passed a resolution calling on state and federal legislators to support Do Not Mail legislation, the work of the coalition ensures that the messages about the importance of direct mail to the economy were prominent in debate. The San Francisco Chronicle spoke against Do Not Mail noting the existing choices for consumers. Additionally, Mayor Gavin Newsom returned the resolution unsigned meaning that the city will not officially lobby for Do Not Mail legislation. In New York, activists pushed WNBC to air a story about Do Not Mail campaigns. The broadcast however, featured many of Mail Moves America's messages, including the fact that businesses could shut down because of restrictions on direct mail.

The USPS announced it will institute new "summer sale" pricing in an effort to increase Standard Mail volume. While the details of the plan will be released soon, it is expected that mailers could be offered discounts to increase their typical mail volume from June 15 to September 15. Any proposed sale would need approval by the Postal Rate Commission.

HHS nominee Gov. Kathleen Sebelius (D-KS) was approved by the Senate Finance Committee 15-8 earlier this week. Sebelius' nomination is expected to pass the Senate as early as next week. During President Obama's first cabinet meeting on Monday, the HHS Secretary was the only position left unfilled. Sebelius is expected to help lead Obama's push for health care reform.

A recently released poll from Quinnipiac University shows Sen. Christopher Dodd trailing former Rep. Rob Simmons 50-34 percent. The substantial lead for the possible Republican nominee is further indication that Dodd faces an uphill climb for reelection. This week attention was drawn to Dodd's fundraising when his FEC report showed that almost all listed donors to his campaign came from outside his home state. While the law requires only donations over $200 be reported, the filing listed only five in-state residents as giving to the campaign.

Sen. Norm Coleman (R) has filed an appeal with the Minnesota State Supreme Court after a three-judge panel ruled against including many of the absentee ballots his legal team identified as being incorrectly rejected. Coleman continues to maintain that additional ballots should be included and that some ballots in support of opponent Al Fraken (D) were double-counted or incorrectly included. The State Supreme Court could take a number of weeks to consider the arguments raised by Coleman. Senate Democrats this week were reticent when questioned about an attempt to seat Franken prior to the next court ruling and without an election certificate signed by Gov. Tim Pawlenty (R). The Senate Democratic leadership insisted earlier this year during the Gov. Rod Blagojevich (D-IL)/Sen. Roland Burris (D-IL) debacle that any Senate candidate must first attain state certification prior to being seated.

The race for the 20^th District House seat continues to be undecided as only a few hundred ballots separate James Tedisco (R) and Scott Murphy (D). Murphy leads Tedisco in unofficial results by 365 votes but over 1,000 ballots remain contested. Additional ballots are being counted this week and court challenges could further extend the time before results are made official.

The newest member of the House, Rep. Mike Quigley (D), was sworn in Tuesday. Quigley won the April 7 special election to replace the seat vacated by White House Chief of Staff Rahm Emanuel. The 5^th District covers much of central Chicago and is heavily Democratic.

"Carbon cap and trade is a declaration of economic war on the Midwest by liberals on Capitol Hill."

-Rep. Mike Pence (R-IN)

"I'm very concerned about their unilaterally moving forward. If alphabet agencies can do what they want without regard to what Congress believes, there's something wrong with the system."

-Sen. Ben Nelson (D-NE) on EPA's climate change report