Biodiesel state legislative update

By | July 01, 2005
Approximately 150 bills related to biodiesel have been introduced this session in 36 states. Some highlights include the following:

-Arkansas-Provides a 50-cent-per-gallon (cpg) tax credit for biodiesel blended to make up to a B2 blend.
-Illinois-Beginning July 1, owners of vehicles operating on a domestic renewable fuel (which includes B20) are eligible to apply for a fuel cost differential rebate. The rebate program is applicable to fleets and expands the Alternative Fuel Infrastructure Program to include B20 fueling infrastructure. Beginning Jan. 1, 2006, all diesel vehicles owned or operated by the state, county or unit of local government, mass transit agency, or any state college or university must use at least B2 when fueling at a central fueling site where available, unless the engine is designed to operate on higher blends or ultra low sulfur diesel.
-Indiana-Expands state tax credits for biodiesel producers, blenders and retailers. This provides for state agency use of biodiesel blends (B2-B99) whenever possible.
-Kentucky-$1 per gallon state income tax credit for biodiesel producers and blenders enacted.
-Maryland-Establishes a renewable fuel production credit program to create biodiesel production through per-gallon payments to certified biodiesel producers.
-Minnesota-Provides for the study of the feasibility in using biodiesel in commuter rail locomotives.
-Mississippi-Incorporates biodiesel production into the existing ethanol production incentive program. This program makes a per-gallon grant to producers of ethanol and biodiesel.
-Missouri-Makes changes to the Missouri Qualified Biodiesel Producer Incentive program, providing, among other things, the ability for a qualified producer to receive an additional 10-cpg grant for up to 15 million gallons produced beyond 30 million gallons in a fiscal year.
-Montana-Two bills were passed to develope a biodiesel industry in the state. One, a tax credit for fuel distributors and retailers for investments made in blending infrastructure, provides a tax refund to distributors and owners or operators of motor fuel outlets for special fuel taxes paid on biodiesel made from Montana feedstocks (2 cpg for distributors, 1 cpg for retailers). It also removes the provision taxing biodiesel at 85 percent of the special fuel tax rate. Biodiesel is taxed at an equal rate as diesel fuel.

The second bill creates several tax credits and incentives, including an Oilseed Crush Facility Tax Credit and Biodiesel Production Facility Tax Credit. The Biodiesel Production Incentive provides a 10-cpg payment for new production above the previous year for the first three years of production. This bill sunsets in 2010.
-North Dakota-A Biodiesel Production Incentive Fund, partially funded by a new state soybean check-off program, will help create in-state biodiesel production. A tax credit for installation of infrastructure to sell B2 blends and higher, and a sales tax exemption on equipment used to sell B2 blends and higher was also implemented.
-Oklahoma-Provides a 20-cpg income tax credit for production facilities. Credit is applicable for tax years 2005 through 2011. Credits can be accrued for facilities wholly or partially on line before Dec. 31, 2007. Credits may be claimed for 60 months but not later than Dec. 31, 2011. Beginning Jan. 1, 2012, a biodiesel facility shall receive a 3/4-cpg credit for new production for a period not to exceed 36 consecutive months. Biodiesel and B20 are defined as an alternative fuel.
-South Dakota-Tax benefit to assist in the development of production facilities.
-Tennessee-Authorizes Tennessee Department of Transportation (TDOT) to develop public-private partnerships with fuel providers to develop a supply network for biofuels including B20 and E85. Provides authorization for TDOT to establish a grant program to assist in the purchase and installation of storage tanks and dispensing infrastructure at private fueling sites.
-Virginia-Requests a study to be done examining production and use of biodiesel, and to make recommendations to the legislature as to any possible legislation to encourage in-state growth.

-Michigan-A B2 requirement has passed out of the House Agriculture Committee and is pending action by the full House.
-New Hampshire-Authorizes appointment of a committee to examine use of biodiesel as a home heating fuel and vehicle transportation fuel. Requires the committee to report findings and recommendations for legislation by Nov. 1.
-New York-Legislation requiring diesel fuel having sulfur content of 15 parts per million shall not be sold or offered for sale unless it contains biodiesel as its lubrication additive has passed the Assembly and is pending in the Senate.
-Ohio-Comprehensive bill requiring state agency use of alternatively fueled vehicles and alternative fuel (e.g., B20). EPAct credit banking and selling program to help offset incremental costs for state agencies using biodiesel. Established a grant program to help encourage installation of blending, storage and refueling infrastructure.
-Oregon-Provides an income tax credit and corporate excise tax credit for Oregon farmers selling qualifying feedstock to an Oregon biodiesel producer. The credit is equal to 5 cpg of biodiesel produced from the farmer's agricultural product. Provides a carry-forward provision for unused tax credits. Monies from the Clean School Bus Grant Fund may be used by schools for biodiesel pilot projects. It requires state fleets to use alternative fuels to the extent economically feasible in all owned vehicles/equipment, reduces the state motor fuel tax rate for B100 and blends, and provides for a limited refund on fuel use tax for B100.
-California-Provides the ability for EPAct and federal executive order-covered fleets using biodiesel to be in compliance with state air quality rules.
-Wisconsin-Provides for aid to school districts to assist in offsetting costs for using biodiesel in their school buses.

-Minnesota-Expectation that B2 requirement legislation will go into effect this summer, potentially in early August.

For more legislative information, the NBB maintains the most comprehensive biodiesel Web site in the United States at Contact Scott Hughes, regulatory director for the NBB, at [email protected]
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