SB279: Bill Text

LRB-3254/1

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2009 - 2010 LEGISLATURE

2009 Senate BILL 279

August 28, 2009 - Introduced by Joint Legislative Council. Referred to Committee on Rural Issues, Biofuels, and Information Technology.

SB279,2,15 An Act to repeal 66.1103 (2) (k) 18. and 93.46 (3); to renumber and amend 16.956 (2) (c), 93.46 (1) (d) and 560.126 (1); to amend 16.04 (1) (a), 16.956 (3) (a) and (c), 20.115 (4) (c), 20.115 (4) (r), 70.32 (2) (c) 1g., 71.07 (5j) (b), 71.28 (5j) (b), 71.47 (5j) (b), 73.03 (50) (intro.), 93.46 (2) (a), 96.01 (3) and 96.02; and to create 15.137 (6), 16.045 (1) (cm) and (f), 16.045 (4m) and (6), 16.954, 16.956 (1) (bg) and (br), 16.956 (2) (c) 2. and 3., 16.956 (3) (f), 16.956 (4), 20.115 (3) (im), 26.42, 70.32 (2) (c) 1i., 70.32 (2) (c) 1k., 71.07 (5j) (a) 2d., 71.07 (5j) (a) 2m., 71.28 (5j) (a) 2d., 71.28 (5j) (a) 2m., 71.47 (5j) (a) 2d., 71.47 (5j) (a) 2m., 73.0303, 78.005 (13j), 78.01 (2n), 78.07 (5), 93.07 (26), 93.46 (1) (d) 1. to 4., 93.46 (1e), 93.46 (2) (b) 4m. and 5m. and (dm), 93.47, 96.01 (4m), 96.05 (1m), 100.51 (6), 100.60, 168.05 (6), 168.12 (2) and 560.126 (1d) of the statutes; relating to: financial assistance related to bioenergy feedstocks, biorefineries, and conversion to biomass energy; the definition of the term agricultural use for the purpose of determining the assessed value of a parcel of land; requiring a strategic bioenergy feedstock assessment; creation of a bioenergy council; the agricultural and forestry diversification programs; biofuels training assessment; a study of regulatory burdens relating to biofuel production facilities; marketing orders and agreements for bioenergy feedstocks; exempting personal renewable fuel production and use from the motor vehicle fuel tax, the petroleum inspection fee, and business tax registration requirements; an income and franchise tax credit for installing or retrofitting pumps that mix motor vehicle fuels from separate storage tanks; offering gasoline that is not blended with ethanol to motor fuel dealers; state renewable motor vehicle fuels sales goals; required sales of renewable motor vehicle fuels; use of petroleum-based transportation fuels by state vehicles; use of alternative fuels in flex fuel vehicles owned by the state; use of public alternative fuel refueling facilities; duties of the Office of Energy Independence; granting rule-making authority; requiring the exercise of rule-making authority; making appropriations; and providing penalties.

Analysis by the Legislative Reference Bureau

This bill is explained in the Note provided by the Joint Legislative Council in the bill.

This bill will be referred to the Joint Survey Committee on Tax Exemptions for a detailed analysis, which will be printed as an appendix to this bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

Prefatory note: This bill was prepared for the Joint Legislative Council's Special Committee on Domestic Biofuels.

Financial assistance related to biofuels. The bill expands the applicability of relevant state financial assistance programs, to ensure that the programs support the establishment, production, harvest, storage, and transport of bioenergy feedstocks; the conversion of ethanol production plants to biomass energy for process heat; and the development and construction of biorefineries. A "biorefinery" is a facility, including equipment and processes, that converts biomass into fuels and products and may produce electricity.

In particular, the bill clarifies that the industrial revenue bond program applies to all types of biorefineries, including those that produce a fuel other than alcohol. This is accomplished by repealing the statute that lists "alcohol fuel production facilities" as a type of "project" eligible for financing with these bonds and the recognition that other types of currently eligible projects for this financing include "assembling, fabricating, manufacturing, mixing or processing facilities for any products of agriculture, forestry, mining or manufacturer," which includes biorefineries. The bill also specifies that the renewable energy grant and loan program applies to biorefineries, in general, rather than just cellulose ethanol production plants and that the agricultural diversification grant program applies to the development of new forestry products, including alternative fuels. In addition, the bill repeals s. 93.46 (3), as the Department of Agriculture, Trade and Consumer Protection (DATCP) no longer makes agricultural diversification grants under that subsection.

The definition of "agricultural use" for purposes of use value taxation. Under current law, the Department of Revenue (DOR) is required to define the term "agricultural use" for purposes of determining whether the assessed value of a parcel of land should be determined under the use value assessment method. DOR currently defines the term "agricultural use" to exclude "growing short rotation woody trees with a growing and harvesting cycle of ten years or less for pulp or tree stock under NAICS industry 111421." This bill requires DOR to define the term "agricultural use" to include the growing of short rotation woody crops, including poplars and willows, using agronomic practices.

Strategic bioenergy feedstock assessment. The bill directs the Office of Energy Independence (OEI) to coordinate the biennial preparation of a strategic bioenergy feedstock assessment by the specified state agencies. This assessment must examine the current and potential bioenergy feedstocks being produced in Wisconsin, the uses of those feedstocks, as well as the use in the state of bioenergy feedstocks produced in other states, the key factors that influence the supply of and demand for feedstocks produced in the state, and the impacts of the increased use in the state of biomass for energy production. The assessment must also recommend appropriate legislation and changes in the agencies' programs and rules.

Bioenergy advisory council, voluntary best management practices. The bill creates a bioenergy advisory council attached to DATCP and requires the council to report voluntary best management practices for sustainable biomass and biofuels production to agencies and private parties that assist biofuel feedstocks producers and biofuels producers.

The agricultural diversification program. The bill expands the agricultural diversification program administered by DATCP to include the promotion of marketable credits for reducing emissions of greenhouse gases derived from the production of agricultural commodities (also known as carbon offset credits) and of other types of energy made from these commodities in addition to alternative fuels made from agricultural source stocks. The bill creates a comparable forestry diversification program administered by the Department of Natural Resources (DNR). The bill also directs DATCP and DNR to promote these new products in cooperation with and with the assistance of each other and the University of Wisconsin-Extension (UW-Extension).

Biofuels training assessment. The bill requires the UW-Extension, in cooperation with other state entities, to conduct an educational needs assessment related to the production of biofuels and the development and production of feedstocks for the production of biofuels, and to report its findings to the Governor and the Legislature.

Biofuels production facility regulatory review committee. The bill creates a nine-member Biofuels Production Facility Regulatory Review committee, with members appointed by the Governor, to review state and local regulatory burdens related to biofuels production facilities and to report its findings to the Governor and the Legislature.

Marketing orders and agreements for bioenergy feedstocks. Under the "Agricultural Marketing Act" marketing orders or agreements can be issued for agricultural commodities. The purposes of these orders and agreements include promoting orderly and efficient marketing and preventing economic waste by promoting fair methods of competition, uniform grading and classification, and market realization and development. An assessment is levied upon affected producers and handlers to defray the costs associated with a marketing order. This bill designates products used as bioenergy feedstocks, including timber and wood products, as "agricultural commodities" under this Act, thus authorizing the creation of a marketing order or agreement for these feedstocks with the required approval of affected producers of the feedstocks. The bill also requires the secretary of DATCP to periodically assess the development of markets for bioenergy feedstocks and determine whether the issuance of a marketing order or agreement for these products would be appropriate.

Personal renewable fuel production and use. This bill exempts the first 1,000 gallons of renewable fuel produced by a person each year, that the person uses in his or her personal vehicle, from the motor vehicle fuel excise tax, the petroleum inspection fee, and petroleum inspection requirements not required by federal law. The bill also allows a person to produce this renewable fuel without a business tax registration certificate or a motor vehicle fuel tax license.

Income tax credit for blender pumps. Under current law, an "ethanol and biodiesel fuel pump" income tax credit is available for claimants who install or retrofit equipment for dispensing motor vehicle fuel to end-users that dispense fuel consisting of at least 85 percent ethanol or at least 20 percent biodiesel fuel. The amount of the credit is 25 percent of the cost to install or retrofit such equipment but is limited to $5,000 per service station for which the claimant has installed or retrofitted such equipment. This credit is available for taxable years beginning after December 31, 2007, and before January 1, 2018. This bill modifies the definition of fuel subject to this credit and allows this income tax credit to be claimed for the installation or retrofit of equipment that blends fuels from separate storage tanks allowing the end-user to choose the percentage of gasoline-replacement renewable fuel or diesel-replacement renewable fuel in the dispensed fuel.

Required offering of unblended gasoline to motor fuel dealers. This bill requires a motor fuel grantor (grantor) to offer unblended gasoline, suitable for subsequent blending with ethanol and subsequent sale, to any motor fuel dealer (dealer) with which it has a motor fuel dealership agreement (agreement). This bill also prohibits an agreement or contract between a dealer and grantor from requiring the dealer to purchase ethanol from the grantor exclusively. This bill does not prohibit agreements from requiring the subsequent blending of unblended gasoline received by a dealer prior to sale to an end-user, and does not prohibit grantors and dealers from entering into agreements with respect to the transfer of renewable fuels credits under the federal renewable fuels standard.

State renewable motor vehicle fuels sales goals and sales requirements. The bill creates annual sales goals for renewable fuels in this state equaling 110 percent of the state's share of renewable fuel sales required nationally under the federal renewable fuel standard (F-RFS). The bill groups the categories of renewable fuel under the F-RFS into two categories for purposes of the state goals: gasoline-replacement renewable fuels and diesel-replacement renewable fuels. The state's share of renewable fuels under the F-RFS is determined based on the total volume of motor vehicle fuel sold in this state as compared to the total volume of motor vehicle fuel sold nationally over the three years preceding the year for which the calculation is made. Fuels must meet or exceed F-RFS greenhouse gas reduction requirements to be included in state sales calculations.

The bill requires DATCP, in cooperation with and with assistance from Department of Commerce, DOR, and OEI, to collect information needed to determine whether these annual renewable fuels sales goals are met for each year following enactment of this bill. DATCP is also generally required to collect information necessary to assess the cause, and to conduct an assessment, if an annual sales goal is not met, and report its findings to the Legislature and Governor. This assessment must include determinations related to renewable fuels systems and markets, regulatory obstacles, and the effect of potential specific individual sales requirements. If DATCP determines in an assessment that individual sales requirements would likely result in renewable fuel sales that would meet the annual goals, DATCP must require such sales by rule. In addition to annual sales requirements, these rules may include reporting, recordkeeping, or testing requirements, quarterly or monthly sales requirements in certain situations, a credit trading system, procedures for DATCP to temporarily suspend a sales requirement, and fees for the administration and enforcement of the program.

The bill creates a program revenue appropriation to DATCP that funds the administration and enforcement of the renewable fuel program. This appropriation is funded by fees that DATCP establishes by rule as part of the implementation of the program. The bill provides penalties for violations of any renewable fuel program rules adopted by DATCP and for violations of any of the reporting requirements authorized by the bill.

The state as a leader; renewable fuels use in the state fleet. The bill codifies Executive Order #141, relating to increased utilization of renewable fuels and vehicles owned and operated by the State of Wisconsin. In particular, the bill directs DOA to require state agencies to reduce the amount of gasoline and diesel fuels they use that are petroleum-based by specified percentages, requires OEI to promote the use of alternative fuels in flex fuel vehicles owned by the state, and directs OEI and DATCP to cooperatively promote public alternative fuel refueling facilities.

Other duties of the Office of Energy Independence. The bill directs OEI to work on initiatives that have the goals of ensuring that Wisconsin is a national leader in developing biorefineries and advancing the sale and use of intermediate blends of gasoline and biofuels. The bill clarifies that OEI shall serve as the central unit of state government to coordinate the activities of all state agencies in connection with the initiatives specified in the office's enabling statute and that the other state agencies shall assist the office in fulfilling its duties.

SB279, s. 1 Section 1. 15.137 (6) of the statutes is created to read:

SB279,5,5 15.137 (6) Bioenergy council. There is created a bioenergy council which is attached to the department of agriculture, trade and consumer protection under s. 15.03. The secretary of agriculture, trade and consumer protection shall appoint the members of the council, to serve at the pleasure of the secretary.

SB279, s. 2 Section 2. 16.04 (1) (a) of the statutes is amended to read:

SB279,6,6 16.04 (1) (a) Develop uniform state policies and guidelines for vehicle and aircraft acquisition, use, maintenance, recording of operational and other costs, performance evaluation and replacement of vehicles and aircraft. The department shall incorporate the fuel usage requirements under s. 16.045 (4m) in any policies or guidelines developed under this paragraph.

SB279, s. 3 Section 3. 16.045 (1) (cm) and (f) of the statutes are created to read:

SB279,6,10 16.045 (1) (cm) "Flex fuel vehicle" means a vehicle designed to operate on gasoline, a blend of a fuel marketed as gasoline and 85 percent ethanol or a higher percentage of ethanol, or a mixture of gasoline and that blend.

SB279,6,11 (f) "Office" means the office of energy independence.

SB279, s. 4 Section 4. 16.045 (4m) and (6) of the statutes are created to read:

SB279,6,16 16.045 (4m) The department shall require all agencies to collectively reduce the usage of gasoline and diesel fuel in state-owned vehicles that is petroleum-based below the total amount that the agencies used in 2006 by at least the following percentages:

SB279,6,17 (a) For gasoline:

SB279,6,18 1. Twenty percent by 2010.

SB279,6,19 2. Fifty percent by 2015.

SB279,6,20 (b) For diesel fuel:

SB279,6,21 1. Ten percent by 2010.

SB279,6,22 2. Twenty-five percent by 2015.

SB279,6,25 (6) The office shall adopt, revise as necessary, and implement a plan designed to facilitate usage of alternative fuels in the flex fuel vehicles and other vehicles owned by the state. The plan shall ensure all of the following:

SB279,7,2 (a) That all flex fuel vehicles and other vehicles powered by an alternative fuel other than gasohol that are owned by the state are identifiable.

SB279,7,5 (b) That all state employees driving flex fuel vehicles and other vehicles powered by an alternative fuel other than gasohol are made aware of the alternative fuel refueling stations in the vicinity of their route of travel.

SB279,7,7 (c) That all state employees strive to use alternative fuels when operating state flex fuel and diesel-powered vehicles.

SB279, s. 5 Section 5. 16.954 of the statutes is created to read: