"NEW SECTION.  Sec. 1   The legislature finds that it is in the public interest to establish a market for alternative fuels in Washington. The legislature finds that it is in the public interest for the state to play a central role in spurring the market by purchasing an increasing amount of alternative fuels. By requiring a growing percentage of our fuel supply to be renewable biofuel that meets appropriate fuel quality standards, we will reduce our dependence on imports of foreign oil, improve the health and quality of life for Washingtonians, and stimulate the creation of a new industry that benefits our farmers and rural communities. The legislature recognizes that farmers and fuel producers need sufficient time to prepare for successful implementation of this act.

NEW SECTION.  Sec. 2   A new section is added to chapter 19.112 RCW to read as follows:
     (1) Special fuel licensees under chapter 82.38 RCW, other than international fuel tax agreement licensees, special fuel users, and special fuel distributors, shall provide evidence to the department of licensing that at least two percent of the total annual diesel fuel sold or offered for sale in Washington is biodiesel fuel, following the earlier of: (a) November 30, 2008; or (b) when a determination is made by the director, published in the Washington State Register, that feedstock grown in Washington state can satisfy a two-percent requirement. The department of licensing shall establish the reporting schedule.
     (2) Special fuel licensees under chapter 82.38 RCW, other than international fuel tax agreement licensees, special fuel users, and special fuel distributors, shall provide evidence to the department of licensing that at least five percent of total annual diesel fuel sold or offered for sale in Washington is biodiesel fuel, when the director determines, and publishes this determination in the Washington State Register, that both in-state oil seed crushing capacity and feedstock grown in Washington state can satisfy a three-percent requirement.
     (3) The requirements of subsections (1)(b) and (2) of this section shall take effect no sooner than one hundred eighty days after the determination has been published in the Washington State Register.
     (4) The director and the director of licensing shall each adopt rules, in coordination with each other, for enforcing and carrying out the purposes of this section. Rules may address topics included in recommendations of the advisory committee created in section 8 of this act.

NEW SECTION.  Sec. 3   A new section is added to chapter 19.112 RCW to read as follows:
     (1) By December 1, 2008, motor vehicle fuel licensees under chapter 82.36 RCW, other than motor vehicle fuel distributors, shall provide evidence to the department of licensing that gasoline sold or offered for sale in Washington meets at least a two percent standard for the blending of denatured ethanol. The director shall implement this standard by rule adopted no later than December 1, 2007. The biofuels advisory committee created in section 8 of this act shall provide its recommendations to the director no later than June 1, 2007. The rule shall implement the alternative provided under subsection (3) of this section that the director determines will best accomplish the intent of chapter ..., Laws of 2006 (this act).
     (2) If the director of ecology determines that ethanol content greater than two percent will not jeopardize continued attainment of the federal clean air act's national ambient air quality standard for ozone pollution in Washington and the director of agriculture determines that sufficient raw materials are available within Washington to support economical production of ethanol at higher levels, the director of agriculture may require by rule that licensees provide evidence that gasoline sold or offered for sale in Washington meets a standard between two percent and up to a maximum of ten percent of denatured ethanol. Any new rule adopted under this subsection (2) shall take effect no sooner than one hundred eighty days after the rule-making order has been filed with the office of the code reviser.
     (3) The standards under subsections (1) and (2) of this section may be implemented by either of the following methods:
     (a) By a requirement that every unit of gasoline sold or offered for sale in Washington be blended to meet or exceed the standard; or
     (b) By a requirement that the total gasoline volume sold or offered for sale in Washington by the licensee on a monthly, quarterly, or annual basis meets or exceeds the standard.
     (4) The director and the director of licensing shall, in consultation with the director of ecology and in coordination with each other, each adopt rules for enforcing and carrying out the purposes of this section.
     (5) Once adopted, a subsequent rule revising the implementation of the standard to select a different method under subsection (3) of this section shall provide each licensee up to one year to comply with the new implementation method.

NEW SECTION.  Sec. 4   A new section is added to chapter 19.112 RCW to read as follows:
     The director of the department of licensing shall establish rules to ensure that information submitted as required by section 2 or 3 of this act can be combined or aggregated for reporting purposes by the department of licensing without releasing identifying individual company information.

Sec. 5   RCW 19.112.060 and 1990 c 102 s 7 are each amended to read as follows:
     (1)(a) Any person who knowingly violates any provision of this chapter or rules adopted under it is guilty of a misdemeanor and, upon conviction, shall be punished by a fine of not more than one thousand dollars or imprisonment for not more than one year, or both.
     (b) The director shall assess a civil penalty ranging from one hundred dollars to ten thousand dollars per occurrence, giving due consideration to the appropriateness of the penalty with respect to the gravity of the violation, and the history of previous violations. Civil penalties collected under this chapter shall be deposited into the motor vehicle fund.
     (2) The penalties in subsection (1)(a) of this section do not apply to violations of sections 2 and 3 of this act.

NEW SECTION.  Sec. 6   A new section is added to chapter 19.112 RCW to read as follows:
     (1) The director shall adopt rules for maintaining standards for biodiesel fuel or fuel blended with biodiesel fuel by adopting all or part of the standards set forth in the Annual Book of ASTM Standards and supplements, amendments, or revisions thereof, all or part of the standards set forth in the National Institute of Standards and Technology (NIST) Handbook 130, Uniform Laws and Regulations in the areas of legal metrology and engine fuel quality rules, and any supplements, amendments, or revisions thereof, together with applicable federal environmental protection agency standards. If a conflict exists between federal environmental protection agency standards, ASTM standards, or NIST standards, for purposes of uniformity, federal environmental protection agency standards shall take precedence over ASTM and NIST standards. The department of agriculture shall not exceed ASTM standards for diesel.
     (2) The rules adopted under subsection (1) of this section shall be updated to provide for fuel stability standards when national or international fuel stability standards have been adopted.

Sec. 7   RCW 19.112.020 and 1990 c 102 s 3 are each amended to read as follows:
     (1) This chapter shall be administered by the director or his or her authorized agent. For the purpose of administering this chapter, for motor fuel except biodiesel fuel, the standards set forth in the Annual Book of ASTM Standards and supplements thereto, and revisions thereof, are adopted, together with applicable federal environmental protection agency standards. If a conflict exists between federal environmental protection agency standards, ASTM standards, or state standards, for purposes of uniformity, federal environmental protection agency standards shall take precedence over ASTM standards. Any state standards adopted must be consistent with federal environmental protection agency standards and ASTM standards not in conflict with federal environmental protection agency standards.
     (2) The director may establish a fuel testing laboratory or may contract with a laboratory for testing. The director may also adopt rules on false and misleading advertising, labeling and posting of prices, and the standards for, and identity of, motor fuels. The director shall require fuel pumps offering biodiesel and ethanol blends to be identified by a label stating the percentage of biodiesel or ethanol.

NEW SECTION.  Sec. 8   A new section is added to chapter 19.112 RCW to read as follows:
     The director shall establish a biofuels advisory committee to advise the director on implementing or suspending the minimum renewable fuel content requirements. The committee shall advise the director on applicability to all users; logistical, technical, environmental, and economic issues of implementation; enforcement mechanisms; and how the use of renewable fuel blends greater than two percent for ethanol could achieve the goals of section 13(2) of this act. The committee may advise the director on recommended provisions for consideration in the agency's rule making, including items such as lead time, credit trading, recordkeeping, labeling, reporting requirements, confidentiality, and variances. The director shall make recommendations to the legislature and the governor on the implementation or suspension of chapter . . ., Laws of 2006 (this act) by September 1, 2007.

NEW SECTION.  Sec. 9   A new section is added to chapter 28B.31 RCW to read as follows:
     (1) From funds appropriated specifically for this purpose, the Washington State University energy extension program shall provide consumer education and outreach regarding the use of biofuels in transportation, heating, electricity generation, and other applications. These services must be primarily implemented through grants or contracts allocated on a competitive basis to public agencies, nonprofit organizations, and business entities that propose education and outreach programs that further the objectives set forth in subsection (2) of this section.
     (2) The energy extension program and its grant or contract recipients shall make information available to the public regarding:
     (a) The availability of biofuels from retail distributors in their community or nearby communities;
     (b) The processing, refining, and distribution facilities in the state;
     (c) The various types, grades, and blends of biofuels, and their potential uses;
     (d) Obtain information from vehicle and equipment manufacturers and services regarding the use of biofuels and modifications which may improve operation on biofuels, and provide such information on the program's web site;
     (e) The role of the state's agricultural and forest products industries in the supply of biofuel feedstock and the benefits to the state's farm and forest communities of increasing consumer demand for biofuel produced from Washington's farms and forests; and
     (f) The energy security, air quality, and associated benefits to the entire state of increasing biofuel uses.
     (3) The energy extension program shall provide technical assistance to public and private entities whose transportation fleet managers seek to increase the use of biofuels in their fleets.
     (4) The energy extension program must provide information to consumers and producers of renewable energy, including state and federal tax incentives for renewable energy production, sources of technical assistance in the installation of production facilities, information regarding applicable permitting and licensing requirements for such facilities, and information regarding utility acquisition of generation from renewable energy facilities.
     (5) The energy extension program shall consult with the departments of agriculture, ecology, and community, trade, and economic development to maximize the effectiveness of its consumer education and outreach activities.
     (6) The energy extension program shall endeavor to provide information throughout the state, but may award individual grants for activities in regional areas of the state.
     (7) The energy extension program shall begin program design and initial implementation of this section in fiscal year 2007, and fully implement the grant program and provision of information to consumers and producers beginning in fiscal year 2008.

Sec. 10   RCW 43.19.642 and 2003 c 17 s 2 are each amended to read as follows:
     (1) All state agencies are encouraged to use a fuel blend of twenty percent biodiesel and eighty percent petroleum diesel for use in diesel-powered vehicles and equipment.
     (2) Effective June 1, 2006, for agencies complying with the ultra-low sulfur diesel mandate of the United States environmental protection agency for on-highway diesel fuel, agencies shall use biodiesel as an additive to ultra-low sulfur diesel for lubricity, provided that the use of a lubricity additive is warranted and that the use of biodiesel is comparable in performance and cost with other available lubricity additives. The amount of biodiesel added to the ultra-low sulfur diesel fuel shall be not less than two percent.
     (3) Effective June 1, 2009, state agencies are required to use a minimum of twenty percent biodiesel as compared to total volume of all diesel purchases made by the agencies for the operation of the agencies' diesel-powered vehicles and construction equipment.
     (4) All state agencies using biodiesel fuel shall, beginning on July 1, 2006, file quarterly reports with the department of general administration documenting any problems encountered with the use of the fuel and a description of how the problems were resolved.

NEW SECTION.  Sec. 11   A new section is added to chapter 43.19 RCW to read as follows:
     (1) The department of general administration must assist state agencies seeking to meet the biodiesel fuel mandates in RCW 43.19.642 by coordinating the purchase and delivery of biodiesel if requested by any state agency. The department may use long-term contracts of up to ten years, when purchasing from in-state suppliers who use predominantly in-state feedstock, to secure a sufficient and stable supply of biodiesel for use by state agencies.
     (2) The department shall compile and analyze the reports submitted under RCW 43.19.642(4) and report its findings and recommendations to the governor and legislature within sixty days from the end of each reporting period. The governor shall consider these reports in determining whether to temporarily suspend minimum renewable fuel content requirements as authorized under section 12 of this act.

NEW SECTION.  Sec. 12   A new section is added to chapter 19.112 RCW to read as follows:
     (1) The governor, by executive order, may suspend all or portions of the minimum renewable fuel content requirements in section 2 or 3 of this act, or both, based on a determination that such requirements are temporarily technically or economically infeasible.
     (2) If the governor has issued an executive order suspending all or a portion of section 2 of this act, the governor, by executive order, may suspend all or a portion of RCW 43.19.642 (2) or (3).

NEW SECTION.  Sec. 13   A new section is added to chapter 19.112 RCW to read as follows:
     (1) By November 30, 2008, the director shall determine whether the state's diesel fuel supply is comprised of at least ten percent biodiesel made predominantly from Washington feedstock, and whether the goals of section 2 of this act have been achieved.
     (2) By November 30, 2008, the director shall determine whether the state's gasoline fuel supply is comprised of at least twenty percent ethanol made predominantly from Washington feedstock, without jeopardizing continued attainment of the federal clean air act's national ambient air quality standard for ozone pollution, and whether the goals of section 3 of this act have been achieved.
     (3) By December 1, 2008, the director shall notify the governor and the legislature of the findings in subsections (1) and (2) of this section.
     (4) If the findings from the director indicate that the goals of subsection (1) or (2) of this section, or both, have been achieved, then the governor shall issue an executive order declaring that subsection (1) or (2) of this section, or both, are no longer applicable.

NEW SECTION.  Sec. 14   A new section is added to chapter 19.112 RCW to read as follows:
     (1) If either or both of the goals in section 13 of this act are not achieved by November 30, 2008, the director shall monitor the state's diesel and gasoline fuel supply until such time as those goals, or either of them, is met.
     (2) The director shall report to the governor and the legislature regarding the goals in section 13 of this act by November 30th of the year in which a goal is met.
     (3) Following notification under this section that a goal has been met, the governor shall prepare executive request legislation repealing section 2 or 3 of this act, or both, as applicable.

Sec. 15   RCW 19.112.010 and 1991 c 145 s 1 are each amended to read as follows:
     ((As used in this chapter:)) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Biodiesel fuel" means a mono alkyl ester of long chain fatty acids derived from vegetable oils or animal fats for use in compression-ignition engines and that meets national or international fuel standards.
     (2) "Diesel" means special fuel as defined in RCW 82.38.020, and diesel fuel dyed in accordance with the regulations in 26 C.F.R. Sec. 48.4082-1T as of October 24, 2005.
     (3) "Director" means the director of agriculture.
     (4) "Motor fuel" means any liquid product used for the generation of power in an internal combustion engine used for the propulsion of a motor vehicle upon the highways of this state, and any biodiesel fuel. Motor fuels containing ethanol may be marketed if either (a) the base motor fuel meets the applicable standards before the addition of the ethanol or (b) the resultant blend meets the applicable standards after the addition of the ethanol.
     (((2) "Director" means the director of agriculture.))

NEW SECTION.  Sec. 16   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected."