BILL REQ. #:  S-2889.2 

Read first time .   Referred to .

     AN ACT Relating to creating a biofuel economic development grant program; adding a new section to chapter 15.04 RCW; adding a new section to chapter 82.04 RCW; and providing an expiration date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   A new section is added to chapter 15.04 RCW to read as follows:
     (1) Biofuel economic development grant programs may be created under this section. The purpose of a biofuel economic development grant program is to encourage the production of feedstock grown in Washington and to maintain biofuel infrastructure in the state.
     (2) A biofuel producer, agricultural cooperative, or both may opt to administer a biofuel economic development grant program under this section, which in addition to any other requirements of this section, must meet the following:
     (a) Program grant funding may only be granted to eligible farmers;
     (b) Grant funds must be paid to eligible farmers as follows:
     (i) Two cents per pound for oil seed;
     (ii) Twenty-five cents per bushel for grains, including corn; and
     (iii) Eighty-four cents per ton of sugar beets;
     (c) An itemized statement must be provided to all eligible farmers who receive a grant under this section by the biofuel producer or agricultural cooperative administering the grant, that separately states the amount paid, which is attributable to the market rate of the agricultural product sold and the amount paid, which is attributable to the biofuel economic development grant program.
     (3) If the agricultural product is sold to the biofuel producer by an agricultural cooperative:
     (a) And the biofuel producer opts to administer a biofuel economic development grant program, the biofuel producer and the cooperative may enter into an agreement to each receive fifty percent of any tax credit amount received under section 2 of this act;
     (b) And the biofuel producer opts not to administer a biofuel economic development grant program, only the agricultural cooperative is eligible to administer the program under this section and only the agricultural cooperative is eligible to receive the tax credit under section 2 of this act.
     (4) The definitions in this subsection apply to this section unless the context clearly requires otherwise.
     (a) "Eligible farmer" means a farmer, as defined in RCW 82.04.213, who is subject to an agreement for the calendar year with a biofuel producer or agricultural cooperative to sell an agricultural product, which is grown in the state of Washington.
     (b) "Biofuel producer" means a person who operates a facility for the production of ethanol, biodiesel, or both from agricultural products.
     (c) "Agricultural cooperative" means a cooperative organization of farmers, as defined in RCW 82.04.213, which has a valid agreement with a biofuel producer, for the calendar year in which the cooperative or biofuel producer administers a biofuel economic development grant program under this section, for the purpose of selling agricultural products received from an eligible farmer to a biofuel producer.
     (d) "Agricultural product" means oil seed, a product of grain cultivation, including corn, or sugar beets.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.04 RCW to read as follows:
     (1) Subject to the limits and provisions of this section, a credit is authorized against the tax otherwise due under this chapter for persons engaged in the activity of administering a biofuel economic development grant program, as provided in section 1 of this act.
     (2) Persons engaged in the activity of administering a biofuel economic development grant program are eligible for a tax credit against taxes due under this chapter, which is equal to one hundred percent of the amount of biofuel economic development grants paid by the person in a calendar year.
     (3) Any amount received by a person as a tax credit under subsection (2) of this section must be used during the calendar year in which the tax credit or refund was received for the sole purpose of funding biofuel economic development grants under section 1 of this act.
     (4) The maximum credit that may be earned for each calendar year under subsection (2) of this section for a person is limited to the lesser of:
     (a) Two hundred thousand dollars; or
     (b) The amount of tax due under this chapter.
     (5) No application is necessary for the tax credit. The person must keep records necessary for the department to verify eligibility under this section. These records include information establishing that the grant recipients are eligible farmers, as defined under section 1 of this act. For the purposes of this section, a bill of lading is sufficient evidence for a person receiving a tax credit under this section to establish that the agricultural product of a grant recipient is grown in Washington state.
     (6) If at any time the department finds that a person is not eligible for a tax credit under this section, the amount of taxes for which a credit has been used is immediately due. The department shall assess interest, but not penalties, on the credited taxes for which the person is not eligible. The interest shall be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, shall be assessed retroactively to the date the tax credit was taken, and shall accrue until the taxes for which a credit has been used are repaid.
     (7) The definitions in section 1 of this act apply to this section.

NEW SECTION.  Sec. 3   This act expires December 1, 2009.