HOUSE BILL REPORT
ESSB 6508
As Reported by House Committee On:
Technology, Energy & Communications
Title: An act relating to developing minimum renewable fuel content requirements and fuel quality standards.
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).
Brief History:
Technology, Energy & Communications: 2/16/06, 2/21/06 [DPA].
Brief Summary of Engrossed Substitute Bill (As Amended by House Committee) |
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HOUSE COMMITTEE ON TECHNOLOGY, ENERGY & COMMUNICATIONS
Majority Report: Do pass as amended. Signed by 7 members: Representatives Morris, Chair; Kilmer, Vice Chair; Ericks, Hudgins, P. Sullivan, Takko and Wallace.
Minority Report: Do not pass. Signed by 3 members: Representatives Haler, Assistant Ranking Minority Member; Hankins and Nixon.
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 U.S. 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 U.S., the majority of ethanol is made
from corn. The most common blends are:
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 Amended 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 the Department 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 the
Department 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. Applicable special fuel licensees are
allowed six months to provide evidence that at least 5 percent of total sales are biodiesel fuel
sales.
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 the Department 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 the
Department of Agriculture determines that sufficient raw materials are available within
Washington to support economical production of ethanol at higher levels, the Director of the
Department 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.
Six months are allowed to meet the 10 percent ethanol requirement.
Development of Rules
The Director of the Department of Agriculture shall adopt, by rule, standards for motor fuel
as well as standards for biodiesel fuel or fuel blended with biodiesel fuel.
Fuel Quality Standards
The Director of the Department 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 the Department 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 the Department of Agriculture shall require the label on fuel pumps to reflect
the percentage of biodiesel or ethanol.
Biofuels Advisory Committee
The Director of the Department of Agriculture shall establish the Biofuels Advisory
Committee (Committee) to advise the Director of the Department of Agriculture on
implementing or suspending the minimum renewable fuel content requirements. The
Committee shall advise the Director of the Department of Agriculture on applicability to all
users; logistical, technical, and economic issues of implementation including the potential for
credit trading, compliance and enforcement provisions, and tracking and reporting
requirements; and how the use of renewable fuel blends greater than 2 percent could achieve
the goals of this act. The Director of the Department 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 vessels, 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 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 purpose 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
If, by November 30, 2008, the Director of the Department of Agriculture determines that the
state's diesel fuel supply is comprised of at least 10 percent biodiesel made predominantly
from Washington feedstock, and the goals of this act have been achieved, the Governor and
Legislature must be notified. Upon notification, the Governor must suspend the applicability
of the minimum fuel content requirements by executive order.
If, by November 30, 2008, the Director of the Department of Agriculture determines that the
state's gasoline fuel supply is comprised of at least 20 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 the goals of this act
have been achieved, the Governor and Legislature must be notified. Upon notification, the
Governor must suspend the applicability of the minimum fuel content requirements by
executive order.
After November 30, 2008, if the Director of the Department of Agriculture determines the
goals of the act have been accomplished notice must be given to the Governor and
Legislature. The Governor must then prepare executive request legislation repealing the
applicable minimum fuel content requirement.
Amended Bill Compared to Engrossed Substitute Bill:
Special fuel licensees are allowed six months to provide evidence to the Department of
Licensing that at least 5 percent of total annual diesel fuel sales are biodiesel fuel sales when
the Director of the Department of Agriculture determines that both in-state oil seed crushing
capacity and feedstock grown in Washington State can satisfy a 3 percent requirement. The
engrossed substitute bill did not specify how long special fuel licensees had to comply.
Six months is provided to meet the new minimum content requirement of 10 percent ethanol
by volume.
The Director of the Department of Agriculture shall adopt, by rule, standards for motor fuel
as well as standards for biodiesel fuel or fuel blended with biodiesel fuel. Motor fuel
standards were excluded in the engrossed substitute bill.
The Biofuels Advisory Committee has the additional responsibilities of advising on the
implementation of credit trading, compliance and enforcement, and tracking and reporting
requirements.
Diesel-powered vessels operated by the state are to contribute to meeting the minimum 20
percent biodiesel fuel content requirement for state agencies.
The Director of the Department of Agriculture shall determine whether the state's gasoline is
comprised of at least 20 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. The engrossed substitute bill required 5 percent ethanol made predominantly
from Washington feedstock.
Appropriation: None.
Fiscal Note: Available.
Effective Date of Amended Bill: The bill takes effect 90 days after adjournment of session in which bill is passed.
Testimony For: (In support) To improve the state economy, it is important to buy
Washington products. With this bill, there is an opportunity to build two industries: biodiesel
production and oil seed feedstocks. Tying biodiesel production to Washington grown
feedstock is important for the Washington agricultural economy. This bill helps Washington
farmers. Alternative fuel development is a local economic development, an environmental
and a national security issue. There is an overwhelming, growing consensus that it is time to
work towards energy independence. Biodiesel production is an answer to the President's call
to make our country more energy independent. Biodiesel is safer for the environment. This
bill will provide for significant industrial job creation and economic development. There is
the potential to site a number of ethanol facilities in the state. The minimum fuel content
requirement helps develop stable fuel markets. A stable market assists biofuel producers and
manufacturers when seeking capital for investments to make the case that buyers exist for
their products.
(With concerns) There are no assurances that engine manufacturers will honor warranties.
Biodiesel needs to be certified for quality. There are a lot of question that need to be
answered before implementing this bill such as, where the certification for biodiesel fuel
quality will occur and which agency will ensure quality. This is a step in the right direction
but will not fix all critical issues for agriculture. Mandates may not be the best policy to
achieve the goals of the legislation.
Testimony Against: Diesel engine manufacturers for the trucking industry are concerned about the use of biodiesel fuel. There are three main concerns of the trucking industry: engine warranty, fuel mileage and the manufacturing and storage of biodiesel. There are unknown long-term maintenance costs associated with biodiesel. The trucking industry is concerned about possible fuel price increases in the state. It is important to make sure that manufacturers of biodiesel fuel have enough liability insurance for fuel quality issues. There should be one federal biodiesel standard not a number of state standards. Washington should focus on state fleets first to allow time to work out the problems associated with delivery, performance and consumer acceptance. The Washington State Ferry system should be included in provisions related to a state minimum renewable fuel content requirement. The ferry system is a large user of diesel and can help drive the market. It should be made clear that biodiesel refiners must meet the ASTM standards. There should be a volumetric approach to ethanol rather than blended approach. There should be partial cost recovery of capital expenses if the state repeals the legislation at some point. An incentives based approach is better than a mandate. Commercial fishing vessels would need to be exempt from this legislation due to safety concerns.
Persons Testifying: (In support) Senator Rasmussen, prime sponsor; Linda Graham,
Spokane County Conservation District; John Stuhlmiller, Washington Farm Bureau; John
Plaza, Seattle Biodiesel; Rich Feldman, Apollo Alliance; KC Golden, Climate Solutions;
Kevin Raymond, Washington Biodiesel; Matt Steuerwalt, Governor's Office; and Bill
Warren, Columbia Blue Mountain Farm Bureau.
(With concerns) Duke Schaub, Associated General Contractors of Washington; Rick
Wickman, Columbia River Steamship Operators Association; Jim Jesernig, Washington
Association of Conservation Districts; Charlie Brown, Washington Oil Marketers
Association; and Ed Owens, Coalition of Coastal Fisheries.
(Opposed) Larry Pursley, Washington Trucking Association; Greg Hanon, Western States
Petroleum Association; Dan Riley, Tesoro; Chris McCabe, Association of Washington
Businesses; and Randy Ray, Pacific Seafood Processors Association.