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H.155

Introduced by   Representatives Jewett of Ripton, Grad of Moretown, Sharpe of Bristol and Smith of New Haven

Referred to Committee on

Date:

Subject:  Motor vehicles; agriculture; energy; biodiesel fuel; incentives

Statement of purpose:  This bill proposes to require all diesel fuel sold, offered for sale, distributed, or delivered in the state to contain at least two percent biodiesel fuel by volume.  The diesel fuel used in motors at electric generating plants regulated by the U.S. Nuclear Regulatory Commission shall be exempt from the biodiesel blend requirement.  The secretary of natural resources may establish by rule requirements for implementation of the biodiesel fuel content requirements.  Distributors and users of diesel fuel containing at least 20 percent biodiesel fuel shall receive a 100 percent rebate of the diesel fuel tax in 2008, shall receive a rebate of 10 cents per gallon of the diesel fuel tax paid in 2009, and shall receive a rebate of five cents per gallon of the diesel fuel tax paid in 2010.  The diesel tax rebate for biodiesel fuel shall sunset

December 31, 2010.  Producers of biodiesel fuel shall be eligible for a tax credit of 20 cents per gallon of biodiesel fuel produced.  Similarly, a tax credit of up to 80 percent of capital expenditure shall be available for the cost of equipment necessary to blend biodiesel fuel and petroleum diesel fuel.  Diesel fuel distributors shall also be eligible for partial reimbursement of the capital cost of meeting the biodiesel fuel blend requirement if the requirement is repealed before July 1, 2012.  The agency of agriculture, food and markets shall develop a program focusing on the production and use of biodiesel fuel as an emerging and potentially profitable farm product.  Appropriations are authorized from the general fund for the agency of agriculture, food and markets’ biodiesel fuel program and to hire one full‑time employee to staff the program.  In addition, the bill would require the department of public service to complete a study of the viability of energy production from agricultural crop residues.

AN ACT RELATING TO THE CONTENT OF DIESEL FUEL AND TAX INCENTIVES FOR BIODIESEL FUEL

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  10 V.S.A. § 578 is added to read:

§ 578.  DIESEL FUEL CONTENT

(a)  All diesel fuel sold at retail, offered for sale at retail, distributed, or delivered in Vermont for use by motor vehicles shall contain at least two percent biodiesel fuel by volume.  As used in this section, “biodiesel fuel” means a renewable, biodegradable, mono alkyl ester combustible liquid fuel derived from vegetable oil or animal fat that meets the American Society for Testing and Materials (ASTM) Specification D6751-02 for Biodiesel Fuel (B100) Blend Stock for Distillate Fuels.

(b)  The diesel fuel content requirement of subsection (a) of this section shall not apply to diesel fuel used in motors located at an electric generating plant regulated by the United States Nuclear Regulatory Commission.

(c)  At any reasonable time for the purpose of ascertaining the state of compliance with this section, the secretary or any duly authorized officer, employee, or representative of the secretary may enter and inspect any property, premises, or place on or at which diesel fuel for use by motor vehicles is sold at retail, distributed,k or delivered.  No authorized person shall refuse entry or access to  or interfere with the inspection by the secretary or the authorized representative of the secretary.

(d)  The secretary may establish by rule requirements for the implementation of this section including: a schedule for compliance; standards for diesel fuel composition, including diesel fuel containing greater than two percent biodiesel fuel; standards for the production or manufacture of diesel fuel containing at least two percent biodiesel fuel; and certification of the biodiesel fuel content of diesel fuel.

Sec. 2.  23 V.S.A. § 3002 is amended to read:

§ 3002.  Definitions

For the purposes of this chapter:

(1)  “Commissioner” means the commissioner of motor vehicles or any officer or employee of the department duly authorized by him or her to perform the functions herein mentioned or described;.

(2)  “Dealer” means any person who sells or delivers fuel into the fuel supply tanks of motor vehicles owned or operated by others;.

(3)  “Distributor” means any person who sells or delivers fuel into bulk storage tanks of a dealer or user;.

(4)  “Fuel” means clear diesel fuel that has not been dyed in accordance with 26 U.S.C. § 4082 or section 211(I) of the Clean Air Act and any blend of undyed diesel and other fuel used or a blend of biodiesel fuel and petroleum diesel fuel that contains at least two percent biodiesel fuel by volume suitable for use for the generation of power to proper motor vehicles;.

(5)  “Motor vehicle” means any self-propelled vehicle using fuel on the public highways and registered or required to be registered for operation thereon;.

(6)  “Motor bus” means any motor vehicle with a seating capacity of more than 20 persons;.

(7)  “Motor truck” means a motor vehicle designed primarily for the transportation of property and goods, and not primarily for the transportation of passengers;.

(8)  “Railroad fuel” means diesel fuel and any blend of diesel and other fuel used or suitable for use for the generation of power to propel a railroad train;.

(9)  “Use” means the consumption of fuel by a user to propel motor vehicles on the highways of the state;.

* * *

(11)  “Biodiesel fuel” means a renewable, biodegradable, mono alkyl ester combustible liquid fuel derived from vegetable oil or animal fat which meets the American Society for Testing and Materials (ASTM) Specification

D6751-02 for Biodiesel Fuel (B100) Blend Stock for Distillate Fuels.

(12)  “Petroleum diesel fuel” is a clear combustible liquid fuel derived from crude oil that has not been dyed in accordance with 26 U.S.C. § 4082 or section 211(i) of the Clean Air Act and that meets the sulfur content requirements of the U.S. Environmental Protection Agency under 40 C.F.R. part 80.

Sec. 3.  23 V.S.A. § 3003 is amended to read:

§ 3003.  IMPOSITION OF TAX; EXEMPTIONS

(a)  A tax of 25 cents per gallon, and a fee established pursuant to the provisions of 10 V.S.A. § 1942 of one cent per gallon, is imposed on each gallon of fuel established pursuant to the provisions of 10 V.S.A. § 1942:

(1)  sold or delivered by a distributor; or

(2)  used by a user.

* * *

(f)(1)  Distributors and users of fuel may obtain a rebate of the diesel fuel tax paid on fuel which contained at least 20 percent biodiesel fuel as certified by the secretary of natural resources under section 578 of Title 10 as follows:

(A)  a rebate of 100 percent of the tax paid in 2008;

(B)  a rebate of 10 cents per gallon of the tax paid in 2009; and

(C)  a rebate of five cents per gallon of the tax paid in 2010.

(2)  The commissioner shall prescribe the forms, supporting documentation, deadlines, and other rules for rebate applications under this subsection.

Sec. 4.  32 V.S.A. § 5830e is added to read:

§ 5830e.  BIODIESEL FUEL PRODUCTION; TAX CREDITS

(a)  A taxpayer of this state shall receive a credit against the tax imposed under section 5822 or 5832 of this title for capital expenditures directly and exclusively necessary to acquire or adapt equipment to blend biodiesel fuel as required by section 578 of Title 10.  The credit shall be in the amount of 80 percent of the expenditure in the taxable year for the acquisition or adaptation.  Credit in excess of the taxpayer’s tax liability for the taxable year may be carried forward for credit in the next succeeding three taxable years.

(b)  A taxpayer of this state shall be eligible for a credit against the tax imposed under section 5822 or 5832 of this title for biodiesel fuel production.  The credit shall be in the amount of 20 cents per gallon for up to four million gallons of biodiesel fuel produced and sold in the taxable year.  The taxpayer shall be eligible for the credit only in the first five years of its biodiesel fuel production.  Credit in excess of the taxpayer’s tax liability for the taxable year may be carried forward for credit in the next succeeding three taxable years.

(c)  In this section:

(1)  “Biodiesel fuel” means a renewable, biodegradable, mono alkyl ester combustible liquid fuel derived from vegetable oil or animal fat which meets the American Society for Testing and Materials (ASTM) Specification

D6751-02 for Biodiesel Fuel (B100) Blend Stock for Distillate Fuels.

(2)  “Biodiesel fuel production” is the production or manufacture of biodiesel fuel from waste vegetable oil, virgin plant oil, or animal fat.

(3)  “Petroleum diesel fuel” is a clear combustible liquid fuel derived from crude oil that has not been dyed in accordance with 26 U.S.C. § 4082 or section 211(I) of the Clean Air Act and that meets the sulfur content requirements of the U.S. Environmental Protection Agency under 40 C.F.R. part 80.


Sec. 5.  REIMBURSEMENT OF CAPITAL OUTLAY IN CASE OF REPEAL

If the biodiesel fuel content requirement of section 578 of Title 10 is repealed prior to July 1, 2012, a producer or distributor of diesel fuel containing at least two percent biodiesel blend fuel shall be eligible for partial reimbursement of the capital expenditure necessary to meet the requirement to the extent that the general assembly appropriates funds for this purpose.

Sec. 6.  BIODIESEL FUEL STUDY

The agency of agriculture, food and markets, in collaboration with the University of Vermont center for sustainable agriculture and other interested parties, shall develop an agency program focusing on the production and use of biodiesel fuel as an emerging and potentially profitable farm product.  Annually, on or before January 15, the agency shall submit to the house committee on agriculture, the house committee on natural resources and energy, the senate committee on agriculture, and the senate committee on natural resources and energy a report on the status of the agency biodiesel fuel program.

Sec. 7.  AGRICULTURAL BIOMASS PILOT PROJECT

(a)  The department of public service, in consultation with the agency of agriculture, food and markets and the University of Vermont center for sustainable agriculture, shall conduct a pilot project to analyze the viability of producing electricity and home heating fuel from biomass reduced to pellet form.  The biomass used in the project shall consist of agricultural crop residue from seed and field crops. 

(b)  In conducting the pilot project, the department shall:

(1)  Select up to five farms to receive grants for the purchase, implementation, and testing of technology used to reduce agricultural crop residue to pellet form;

(2)  Grant farms participating in the pilot project $20.00 for each ton of agricultural residue reduced to pellet form;

(3)  Evaluate whether it is technically and economically feasible for farms to produce pellets from agricultural crop residue, including the capital cost of pellet production equipment, the amount of land needed to produce a profitable yield of pellets, transportation costs, labor costs, existing or potential markets for the sale of pellets, and other factors deemed appropriate by the department; and

(4)  Evaluate whether pellets from agricultural crop residue are technically and economically viable as a source of fuel for electric generation or home heating, including the British thermal units (Btus) produced from burning pellets, the amount of pellets necessary for electric generation and home heating, compatibility with home heating systems and electric production facilities, the retail cost of pellets, and any other factors deemed appropriate by the department.

(c)  A committee comprising the commissioner of public service, the secretary of agriculture, food and markets and five members to be selected by the commissioner after receiving nominations from the University of Vermont center for sustainable agriculture is created to monitor and evaluate implementation of the pilot project.

(d)  Annually, on or before January 15, the department shall submit a report on the status of the pilot project to the house committee on agriculture, the house committee on natural resources and energy, the senate committee on agriculture, and the senate committee on natural resources and energy.

Sec. 8.  APPROPRIATIONS

(a)  In addition to any other funds appropriated to the agency of agriculture, food and markets in fiscal year 2006, there is appropriated from the general fund to the agency $65,000.00 in fiscal year 2006 for the purpose of hiring a full-time employee to implement the agency biodiesel program required by Sec. 6 of this act.

(b)  The sum of $200,000.00 is appropriated from the general fund to the agency of agriculture, food and markets for the purpose of implementing the agency biodiesel fuel program required by Sec. 6 of this act, testing the renewable energy potential of new crops and assisting with market development for biodiesel fuel and other agriculturally derived renewable fuel.

(c)  The sum of $300,000.00 is appropriated from the general fund to the department of public service for the purpose of funding the pilot project established under Sec. 7 of this act.

Sec. 9.  EFFECTIVE DATE

(a)  Secs. 1 and 2 of this act (diesel fuel content requirements) shall take effect when the following conditions are met:

(1)  18 months have passed since passage of this act; and

(2)  notice is published in the state register that the annual capacity for production of biodiesel fuel in Vermont exceeds 500,000 gallons.

(b)  23 V.S.A. § 3003(f) (diesel fuel tax rebate) shall take effect January 1, 2008, and is repealed December 31, 2010

(c)  Sec. 4 of this act (biodiesel fuel production tax credits) shall take effect 30 days from passage.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us