Senate Bill 1272-Second Edition

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2007

S 2

SENATE BILL 1272

House Committee Substitute Favorable 7/27/07

Short Title: Promote Use of Biofuels.		(Public)
Sponsors:
Referred to:

March 26, 2007

A BILL TO BE ENTITLED

AN ACT to: (1) Provide a tax credit for producers of biodiesel that meets certain quality standards; (2) exempt biodiesel that is produced by an individual for personal use in a private passenger vehicle from the motor fuel excise tax; and (3) DESIGNATE the department of agriculture and consumer services as the lead agency in matters pertaining to biofuel.

The General Assembly of North Carolina enacts:

SECTION 1. G.S. 105-129.16F reads as rewritten:

"§ 105-129.16F. (Effective for taxable years beginning on or after January 1, 2008, and repealed for taxable years beginning on or after January 1, 2010) Credit for biodiesel producers.

(a) Credit. - A biodiesel provider that produces at least 100,000 gallons of biodiesel during the taxable year is allowed a credit equal to the per gallon excise tax the producer paid under Article 36C of this Chapter on the biodiesel. ~~For the purposes of this section, "biodiesel" is liquid fuel derived in whole from agricultural products, animal fats, or wastes from agricultural products or animal fats.~~ The credit does not apply to tax paid on diesel fuel included in a biodiesel blend. The credit may not exceed five hundred thousand dollars ($500,000) and is subject to the limitations of G.S. 105-129.17.

(b) Sunset. - This section is repealed for taxable years beginning on or after January 1, 2010.

(1) ASTM. - The American Society for Testing and Materials.

(2) Biodiesel. - Fuel that meets both of the following conditions:

a. The definition of biodiesel as defined in G.S. 105-449.60.

b. The agricultural products, animal fats, or wastes from these products or fats that are used to produce the fuel must meet the requirements of ASTM D-6751.

(3) Biodiesel provider. - Has the same meaning as in G.S. 105-449.60."

SECTION 2. G.S. 105-449.88 is amended by adding a new subdivision to read:

"§ 105-449.88. Exemptions from the excise tax.

The excise tax on motor fuel does not apply to the following:

(1) Motor fuel removed, by transport truck or another means of transfer outside the terminal transfer system, from a terminal for export, if the motor fuel is removed by a licensed distributor or a licensed exporter and the supplier of the motor fuel collects tax on it at the rate of the motor fuel's destination state.

(1a) Motor fuel removed by transport truck from a terminal for export if the motor fuel is removed by a licensed distributor or licensed exporter, the supplier that is the position holder for the motor fuel sells the motor fuel to another supplier as the motor fuel crosses the terminal rack, the purchasing supplier or its customer receives the motor fuel at the terminal rack for export, and the supplier that is the position holder collects tax on the motor fuel at the rate of the motor fuel's destination state.

(2) Motor fuel sold to the federal government for its use.

(3) Motor fuel sold to the State for its use.

(4) Motor fuel sold to a local board of education for use in the public school system.

(5) Diesel that is kerosene and is sold to an airport.

(6) Motor fuel sold to a charter school for use for charter school purposes.

(7) Motor fuel sold to a community college for use for community college purposes.

(8) Motor fuel sold to a county or a municipal corporation for its use.

(9) Biodiesel that meets both the following conditions:

a. Is derived in whole from vegetable cooking oil discarded by a restaurant after use.

b. Is produced by an individual for use in a private passenger vehicle registered in that individual's name pursuant to Chapter 20 of the General Statutes. For the purposes of this subdivision, the term 'private passenger vehicle' has the same meaning as in G.S. 20-4.01."

SECTION 3. Chapter 119 of the General Statutes is amended by adding a new Article to read:

"Article 3A.

"Regulation of Biofuels.

"§ 119-47.1. Legislative findings and purpose.

The General Assembly finds and declares that it is in the best interests of the citizens of North Carolina to promote and encourage the development of biofuel resources in the State in order to augment motor fuel supplies. The General Assembly further finds and declares that it is in the best interests of the citizens of North Carolina that biofuels meet recognized standards that will ensure that these fuels are compatible with motor vehicle manufacturer's specifications in order to protect consumers and thereby increase reliance upon and demand for biofuels.

"§ 119-47.2. Definitions.

In addition to the definitions in G.S. 105-449.60, the following definitions shall apply as used in this Article:

(1) 'Commissioner' means the Commissioner of Agriculture.

(2) 'Department' means the Department of Agriculture and Consumer Resources.

(3) 'Biofuel' means a fuel that is made or derived from organic substances, that meets the American Society for Testing and Materials (ASTM) standards for use in motor vehicles, and that is sold commercially.

"§ 119-47.3. Lead agency; powers and duties.

(a) For purposes of this Article, biofuels are considered agricultural products. For this reason and because the Department of Agriculture and Consumer Services has historically been responsible for the inspection of gasoline and oil, the Department of Agriculture and Consumer Services is designated as the lead agency in matters pertaining to biofuel.

(b) The Department shall have the following powers and duties:

(1) To provide producers of biofuel with information related to and assistance in obtaining permits for the production of biofuel.

(2) To promote investment in the production of biofuels and biofuel-related facilities in order to expand biofuel production and refinery capacity in the State.

(3) To work cooperatively with federal and State agencies to develop and implement policies and procedures that facilitate the production of biofuel in the State.

(4) To develop and implement a regulatory program for biofuel production for biofuels and biofuels components other than blends of biofuel and fuel as derived from petroleum.

(5) To develop and implement a regulatory program to ensure that commercially-produced biofuel meets ASTM standards for use in motor vehicles.

(6) To create and maintain an Internet site to inform the public about the permitting, tax, and other requirements associated with biofuel production and inspection.

"§ 119-47.4. Regulation of ethanol and other alcohols used as motor fuels.

(a) The Department of Agriculture and Consumer Services shall develop and implement a program to regulate the production and sale of ethanol and other alcohols used as a motor fuel in the State. The Commissioner shall adopt rules for the registration of facilities for the production and sale of ethanol used as motor fuel. The Commissioner shall adopt rules governing manufacture, possession, transportation, purchase, and sale of ethanol and other alcohols used as a motor fuel in the State. The authority of the Commissioner and the Department under this section is limited to ethanol and other alcohols that are produced and used as a motor fuel.

(b) Ethanol and other alcohols that are to be used as a motor fuel are exempt from regulation by the Alcoholic Beverage Control Commission.

"§ 119-47.5. Violation is a misdemeanor.

A person who violates this Article or a rule adopted by the Commissioner pursuant to this Article is guilty of a Class 1 misdemeanor."

SECTION 4. Section 1 of this act becomes effective for taxes imposed for taxable years beginning on or after 1 January 2007. Section 2 becomes effective 1 October 2007. The remainder of this act is effective when it becomes law, and Section 3 of this act applies to offenses committed on or after that date.