2006 State Legislation…

                                          2006 State Legislation Highlights

Highlights of 2006 State Legislation Through May 25, 2006

   ·   The National Biodiesel Board is currently tracking more than 160 pieces of
       biodiesel legislation at the state level
   ·   The bills includes incentives, use requirements, point of taxation
       clarification, authorization of studies, state fleet use requirements,
       biodiesel promotion, and others
   ·   Below are some examples of bills under consideration or have been
       adopted into law in various states.

Arizona
SB 1346
Sen. Huppenthal
Awaiting Governor's signature
Use of Biodiesel to Meet Alt. Fuel Vehicle Purchase Mandates - This bill allows for
a fuel purchase equivalency for biodiesel at one vehicle equivalent for every
450 gallons of neat biodiesel or 2,250 gallons of diesel fuel substitute. The bill also
adds property that is used specifically to produce biodiesel fuel to qualify as a
Class 6 Property, for purposes of taxation. Currently, Class 6 property is assessed
at a 5 percent assessment ratio.

Arkansas
HB 1002A
Rep. Petrus
Signed by Gov. Huckabee 04/10/2006
Tax Refund for Biodiesel Fuel Suppliers ­ provides for an excise-tax refund of 50
cents for each gallon of B100 that is used to produce any biodiesel mixture.
Refund is limited to first 2 percent of total gallons of biodiesel blended.

California
Executive Order
Issued by Gov. Schwarzenegger 04/25/2006
Executive Order that, among other things, establishes a target for the state of
California to produce and use a minimum of 20 percent of its biofuels within
California by 2010, 40 percent by 2020, and 75 percent by 2050. Biofuels
includes both ethanol and biodiesel. In addition, the E.O. urges CARB to
consider as part of its rulemaking the most flexible possible use of biofuels, which
includes its Rulemaking to Update the Predictive Model and Specification for
Reformulated Gasoline
                                          2006 State Legislation Highlights
Colorado
SB 3
Sen. Kester
Signed by Gov. Owens 03/31/200
Use of Biofuels in State Buildings ­ The life-cycle cost analysis performed for each
major facility will now include the use of biofuel to provide supplemental or
exclusive heating, power, or both for the major facility. The cost analysis
regarding the use of biofuel must consider stranded utility costs. Definition of
biofuel includes biodiesel.

SB 16
Sen. Entz
Signed by Gov. Owens 03/31/2006
Use of Biodiesel in State Fleets ­ Requires all state vehicles be fueled with B20, by
Jan. 1 2007, subject to availability and so long as the price is no greater than 10
cents more per gallon than regular diesel fuel. Law goes into effect July 1, 2006.

Georgia
SB 636
Signed by Gov. Perdue on 04/28/006
Defines biodiesel according to ASTM D 6751. It also makes it illegal to sell,
purchase or blend biodiesel unless it meets this definition.

Hawaii
HB 2175
Rep. Say
Signed by Gov. Lingle 05/12/2006
State Fleet Use ­ State agencies with diesel fuel purchases are directed to
evaluate a purchase preference for biodiesel blends. Also allows agencies that
use biodiesel fuel to offset their vehicle purchase requirements at the rate of
one vehicle for each 450 gallons of neat biodiesel fuel used. Defines neat
biodiesel fuel as B100 by volume.

Indiana
HB 1285
Rep. Heim
Study on Use of Biodiesel ­ Requires Environmental Quality Service Council to
study, among other things, the feasibility of requiring motor vehicles sold in
Indiana to meet standards for B20 use.
                                         2006 State Legislation Highlights
SB 353
Sen. Weatherwas
Signed by Gov. Daniels 03/21/2006
Tax Credits for Biodiesel Production, Blending & Retail Sales - Increases the
maximum amount of credits that may be granted for biodiesel production,
biodiesel blending, and ethanol production and indicates that the Indiana
economic development corporation may grant a credit that is less than the
maximum permissible statutory credit. Extends the tax credit for the retail sale of
blended biodiesel to 2010.

Kansas
SB 388
Signed by Gov. Sebelius 04/18/2006
Establishes the Kansas Qualified Biodiesel Fuel Producer Incentive Fund (KQBPIF),
which will provide qualified biodiesel producers a $.30/gallon production
incentive for each gallon of biodiesel sold by the producer. A "Kansas qualified
biodiesel fuel producer" is any producer of biodiesel fuel whose principal place
of business and facility for the production of biodiesel are located within the
state of Kansas. The Fund is to be administered by the state Dept. of Revenue.
Program begins April 1, 2007 with an authorized transfer of $437,500. Beginning
July 1, 2007, and quarterly thereafter, $875,000 will be made available to the
KQBPIF. The program expires July 1, 2016.

Maryland
SB 54
Sen. Giannetti
Signed by Gov. Ehrlich 05/16/2006
State Fleet Biodiesel Use - Requiring the State to ensure that, in fiscal year 2008
and in each subsequent fiscal year, at least 50 percent of vehicles using diesel
fuel in the State vehicle fleet use a blend of fuel that is at least 5 percent
biodiesel fuel.

Mississippi
SB 2942
Sen. Lee
Signed by Gov. Barbour 04/24/2006
Creates a Study Committee on the Potential Use of Biodiesel Fuel, effective July
1, 2006. The study committee will study the need for mandated use of biodiesel
and the benefits accruing to agriculture and the environment. The committee
shall report to the Legislature no later than January 2, 2007.
                                         2006 State Legislation Highlights

New York
Bill A11331
Assemblyman Tonko
Signed by Gov. Pataki 05/21/2006
Residential Bioheat Tax Credit. A tax credit for bioheat in residential heating
applications will provide one cent ($0.01) per percent of biodiesel per gallon of
bioheat with a cap at the B20 level. For example, B5 will be eligible for a five
cents per gallon New York State income tax credit, and B20 will be eligible for a
20 cent per gallon tax credit. Higher percentage blends, if used, will receive 20
cents per gallon. Effective July 1, 2006, through June 30, 2007.

SB 6460
Budget Bill
Vetoed by Gov. Pataki
This bill provided, among other things, a Biofuel Production Credit. Biodiesel is
defined as a biofuel and eligible under the program. The bill provided for a
$.15/gallon after the first 40,000 gallons is produced in a tax year. Credits are
capped at $2.5MM per taxpayer/tax year/plant for up to no more than four
consecutive taxable years per biofuel plant.

Virginia
HB 680
Del. Wittman
Signed by Gov. Kaine 04/06/2006
Establishes a Biofuels Production Fund and Grant Incentive Program. The
Program offers grants to producers of neat biofuels, which includes B100. To be
eligible for a grant the producer must produce in excess of 10 million gallons of
neat biofuels within the Commonwealth in a calendar year using feedstock
originating domestically within the United States. The producer must
commence eligible sales on or after January 1, 2007, and pre-existing producers
are only eligible if their production increases over prior calendar year levels by
at least 10 million gallons of neat biofuels. Producers that qualify for a grant
under the program may be granted $0.10 per gallon for neat biofuels produced
in the given calendar year. If moneys in the fund are not sufficient to pay all
qualified applicants, disbursements from the Fund shall be made on a pro-rata
basis. The Program and Fund would expire on December 31, 2016. The
payment of grants is subject to an appropriation to the fund.
                                          2006 State Legislation Highlights

Washington
SB 6386
Sen. Prentice
Signed by Gov. Gregoire 03/30/2006
Biofuels Education Fund ­ $98,000 appropriated for FY 2007 is provided solely to
establish a biofuels consumer education and outreach program at the
Washington State University extension energy program.

SB 6508
Sen. Rasmussen
Signed by Gov. Gregoire 03/30/2006
B2 Requirement ­Requires 2 percent of diesel sold in the state to be biodiesel
starting Dec. 1, 2008, or when feedstock grown in the state can satisfy the 2
percent requirement; requirement to increase to 5 percent when certain
triggers are met (in state crush capacity, grown feedstocks).


OTHER HIGHLIGHTS

   ·   Tax Exemptions, Credits or Rebates ­ AZ, CA, HI, IA, IL, IN, KS, KY, MA, MD,
       NE, NH, NJ, NY, OK, SC, SD, VA, WA
             At least 19 states considering some form of tax reform to encourage
             use and/or production of biodiesel.

   ·   State Fleets ­ AZ, CO, HI, IL, MI, MO, MS, TN, VA, WA
             At least 10 states considering some form of mandate or
             encouragement to use biodiesel in fleets.

   ·   B2/B5 Mandates ­ CA, KS, LA, MO, MS, VA
             At least 6 states considering some form of biodiesel mandate for the
             state diesel pool.

   ·   Infrastructure ­ IA, IL, KS, NE
              At least 4 states considering legislation to improve their state's
              infrastructure to improve access to biodiesel.

   ·   Miscellaneous Incentives ­ CT, HI, KS, MN, MO, NY, PA, VT, WA
             At least 9 states considering legislation that offer various other
             incentives for biodiesel use and/or production such as issuance of
             state bonds, use of public lands for oilseed production, conversion
             allowance programs and grants.
                                         2006 State Legislation Highlights

   ·   Schools and Buses ­ CT, GA, IA, MS
            At least 4 states are considering legislation that offer incentives to
            schools and school districts for purchase of biodiesel fuel for school
            buses.

Note: This document is not intended to be an exhaustive list of biodiesel-related
bills under consideration in the states. New bills are continually being
introduced in the state legislatures. Every effort is made to track all bills under
consideration and are maintained for NBB members at the Members' web site.

For more information: The National Biodiesel Board maintains the most
comprehensive biodiesel Web site in the US at www.biodiesel.org. Contact
Scott Hughes, Director of Governmental Affairs for the National Biodiesel Board
at shughes@biodiesel.org or Josh Zahn at jzahn@sbcglobal.net.

May 2006