Brief Description: Developing minimum renewable fuel content requirements and fuel quality standards in an alternative fuels market.

Sponsors: Senate Committee on Water, Energy & Environment (originally sponsored by Senators Rasmussen, Poulsen, Kline, McCaslin, Brown, Oke, Schmidt, Swecker, Finkbeiner and Kohl-Welles; by request of Governor Gregoire).

Hearing Date: 2/16/06

Staff: Scott Richards (786-7156).

Background:

Renewable Fuel Standard
A Renewable Fuel Standard (RFS) requires that a certain percentage of motor fuel be obtained from renewable sources, such as ethanol or biodiesel. Currently, five states including California, Ohio, Hawaii, Minnesota and Montana have either a RFS or have passed legislation to use biofuels on a state level.

Biodiesel
Biodiesel is a non-petroleum diesel fuel produced from renewable resources such as vegetable oils, animal fats, and recycled cooking oils. It can be blended at any percentage with petroleum diesel or used as a pure product (neat diesel). Like petroleum diesel, biodiesel operates in compression-ignition engines. According to the United States Department of Energy, biodiesel blends of up to 20 percent biodiesel can be used in nearly all diesel equipment with little or no engine modifications. Higher blends can also be used in many engines built since 1994 with little or no engine modification.

Ethanol
Ethanol may be produced from a variety of feedstocks such as corn, wheat, barley, potatoes, sugarcane and the cellulose of straw and trees. In the United States, the majority of ethanol is made from corn. The most common blends are:

• E10 - 10 percent ethanol and 90 percent unleaded gasoline. The E10 is approved for use in any make or model of vehicle sold in the U.S. In 2004, about one-third of America's gasoline was blended with ethanol, most in this 10 percent variety.
• E85 - 85 percent ethanol and 15 percent unleaded gasoline. The E85 blend is an alternative fuel for use in flexible fuel vehicles (FFVs). The FFVs are designed to run on a variety of mixtures of unleaded gasoline and an alcohol fuel (usually ethanol). Currently more than four million FFVs are on roads in the United States. When E85 is not available, FFVs can operate on gasoline or any ethanol blend up to 85 percent.

National Institute for Standards and Technology
The National Institute for Standards and Technology (NIST) is a non-regulatory federal agency within the U.S. Commerce Department's Technology Administration. The NIST mission is to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life. The NIST has a statutory responsibility to promote "cooperation with the states in securing uniformity of weights and measures laws and methods of inspection."

Annually, the NIST publishes the Uniform Laws and Regulations in the Areas of Legal Metrology and Engine Fuel Quality (Handbook 130). The purpose of Uniform Laws and Regulations such as Handbook 130 is to achieve, to the maximum extent possible, standardization in weights and measures laws and regulations among the various states and local jurisdictions in order to facilitate trade between the states, permit fair competition among businesses, and provide uniform and sufficient protection to all consumers in commercial weights and measures practices.

ASTM International
The ASTM International is composed of more than 132 technical standards writing committees. Together, they have published more than 9,100 standard specifications, tests, practices, guides, and definitions for materials, products, systems, and services. The ASTM International has published standards dealing with metals, flammability, chemical products, lubricants, fossil fuels, textiles, paint, plastics, rubber, pipe, forensic sciences, electronics, energy, medical devices and countless other topics.

United States Environmental Protection Agency
The United States Environmental Protection Agency's (EPA) Biodiesel Emissions Analysis Program quantifies the air pollution emission effects of biodiesel for diesel engines that have not been specifically modified to operate on biodiesel. The program examined the emission impacts of biodiesel and biodiesel/diesel blends for both regulated and unregulated pollutants, as well as fuel economy.

Special Fuel
Special fuel means and includes all combustible gases and liquids suitable for the generation of power for propulsion of motor vehicles, except that it does not include motor vehicle fuel nor does it include dyed special fuel as defined by federal regulations, unless the use is in violation of state law.

International Fuel Tax Agreement
According to the International Fuel Tax Association, the International Fuel Tax Agreement (Agreement) is a multi-jurisdictional fuel use tax collection agreement. The purpose of the Agreement is to promote and encourage the fullest and most efficient possible use of the highway system by making uniform the administration of motor fuels use taxation laws with respect to qualified motor vehicles operated in multiple member jurisdictions.

Current State Efforts to Promote Biodiesel
All state agencies are encouraged to use a fuel blend of 20 percent biodiesel and 80 percent
petroleum diesel for use in diesel-powered vehicles and equipment.

Effective June 1, 2006, for agencies complying with the ultra-low sulfur diesel mandate of the
EPA for on-highway diesel fuel, agencies must use biodiesel as an additive to ultra-low sulfur
diesel for lubricity. The amount of biodiesel added to the ultra-low sulfur diesel fuel must be
not less than 2 percent.

The Governor's Executive Order 05-01 requires state agencies to use a 20 percent biodiesel
blend by September 1, 2009. The order also encourages the agencies to use a 5 percent blend
as soon as practicable.

Summary of Bill:

Biodiesel
Special fuel licensees must provide proof to the Department of Licensing that at least 2 percent of total sales are biodiesel fuel sales when the Director of Agriculture determines that feedstock grown in Washington can satisfy a 2 percent requirement, or the date November 30, 2008, has passed. When the Director of Agriculture determines that both in-state oil seed crushing capacity and feedstock grown in Washington can satisfy a 3 percent requirement, special fuel licensees must provide proof to the Department of Licensing that at least 5 percent of total sales are biodiesel fuel sales. International fuel tax agreement licensees and special fuel distributors are exempt from both the 2 and 5 percent requirement.

Ethanol
All gasoline sold or offered for sale in Washington shall contain at least 2 percent denatured ethanol by volume beginning December 1, 2008.

If the Director of Ecology determines that ethanol content greater than 2 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 all gasoline sold or offered for sale in Washington shall contain up to a maximum of 10 percent of denatured ethanol by volume.

Development of Rules
The Director of Agriculture shall adopt rules for enforcing and carrying out content requirements for biodiesel and ethanol.

Fuel Quality Standards
The Director of Agriculture 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 American ASTM Standards and supplements, amendments, or revisions of the standards set forth in the Handbook 130 and Uniform Laws and Regulations together with applicable federal EPA standards.

If a conflict exists between federal EPA standards, ASTM standards, or NIST standards, for purposes of uniformity, federal EPA standards shall take precedence over ASTM and NIST standards. The Department of Agriculture shall not exceed ASTM standards for diesel.

Fuel Testing
The Director of Agriculture may establish a fuel testing laboratory or may contract with a laboratory for testing and may adopt rules on false and misleading advertising, labeling and posting of prices, and the standards for, and identity of, motor fuels.

Labeling
The Director of Agriculture shall require the label on fuel pumps to reflect the percentage of biodiesel or ethanol.

Biofuels Advisory Committee
The Director of Agriculture shall establish the Biofuels Advisory Committee (Committee) to advise the Director of Agriculture on implementing or suspending the minimum renewable fuel content requirements. The Committee shall advise the Director of Agriculture on applicability to all users; logistical, technical, and economic issues of implementation; and how the use of renewable fuel blends greater than 2 percent could achieve the goals of this act. The Director of Agriculture will make recommendations to the Legislature and the Governor on the implementation or suspension of this act by September 1, 2007.

State Agencies Minimum Renewable Fuel Requirement
Effective June 1, 2009, all state agencies are required to use a minimum of 20 percent biodiesel as compared to total volume of all diesel purchases made by the agency for the operation of its diesel-powered vehicles and construction equipment.

The Department of General Administration (GA) must assist state agencies seeking to meet the biodiesel fuel mandates by coordinating the purchase and delivery of biodiesel if requested by any state agency. The GA may use long-term contracts of up to 10 years to secure a sufficient and stable supply of biodiesel for use by state agencies.

All state agencies using biodiesel fuel must, beginning on July 1, 2006, file quarterly reports with the GA documenting any problems encountered with the use of the fuel and a description of how the problems were resolved. The GA must compile and analyze these reports and report its findings and recommendations to the Governor and Legislature within 30 days from the end of each reporting period. The Governor must consider these reports in determining whether to temporarily suspend the statewide minimum renewable fuel content standards.

Definition of Diesel
"Diesel" fuel is defined for the purposed of this act to mean special fuel and dyed special fuel.

Suspension of Minimum Fuel Requirement
The Governor may suspend all or portions of the minimum renewable fuel content requirements of this act, or both, based on a determination that such requirements are temporarily technically or economically infeasible.

Goals of Legislation Achieved
Once it has been determined by the Director of Agriculture that the goals of the act have been achieved, the Governor shall issue an executive order stating goals of this act are no longer applicable and shall request the Legislature to repeal one or both of the minimum fuel standards.

Appropriation: None.

Fiscal Note: Available on substitute bill. Fiscal note for engrossed substitute requested on February 13, 2006.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.