Report Title:

Renewable Energy; Biodiesel Fuel; Ban Grease from Landfills

Description:

Requires biodiesel fuels to be used in state fleets. Establishes a biodiesel fuel revolving fund. Allows for the delivery of biodiesel to state harbors. Reduces harbor fees for alternative fuel vessels. Exempts biodiesel from the state fuel tax law. Bans grease from landfills. Appropriates funds. (SD1)

 

THE SENATE

S.B. NO.

1239

TWENTY-SECOND LEGISLATURE, 2003

S.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to energy.

 

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

PART I

SECTION 1. The legislature finds that biodiesel is becoming a mainstream alternative fuel. In the past decade, according to the National Biodiesel Board, it has gone from a nearly non-existent market position to use in more than one hundred major fleets. Biodiesel is used in trucking, public transit, school districts, agriculture, public utilities, and military fleets.

Biodiesel is made from soybean oil and other vegetable oils and from animal fats. To produce biodiesel, the fat or oil is reacted with an alcohol, such as methanol, in the presence of a catalyst, such as sodium. The catalyst typically is recovered for re-use.

The legislature further finds that much of biodiesel's growth followed its addition to the short list of alternative fuels eligible for the kind of alternative fuel vehicle acquisition credits first defined by the Energy Policy Act of 1992, also known as the "EPAct." Effective in January 2001, the Biodiesel Fuel Use Credit Final Rule (CFR 4901.11.1) allows covered fleets to earn these credits through the purchase of biodiesel fuel, for use in blends of twenty per cent biodiesel and eighty per cent petroleum diesel (called "B20") or higher.

The EPAct applies to federal, state, and alternative fuel provider fleets. Biodiesel use by state and fuel provider fleets multiplied more than sixfold between 1999 and 2000. The main reason for biodiesel's success is its logical fit in the nation's portfolio of transportation fuels. Biodiesel can be blended in any proportion with petroleum diesel. B20 is one common blend. Pure unblended biodiesel is called B100, or "neat fuel." Covered fleet operators can meet up to half of their alternative fuel vehicle acquisition requirements using biodiesel. One credit is earned through every four hundred fifty gallons of B100 (or 2,250 gallons of B20) purchased.

Biodiesel blends may require minor changes to existing fueling infrastructure. They are commonly stored in standard tanks used otherwise for petroleum diesel. Engines running on B20 generally need no modifications. But blends with higher biodiesel content are more likely to require modifications, particularly to the fuel system.

Using biodiesel in a conventional diesel engine can reduce unburned hydrocarbons, carbon monoxide, and particulate matter. A 1998 life-cycle analysis by the U.S. Department of Agriculture and Department of Energy showed a seventy-eight per cent reduction in carbon dioxide emissions from B100 compared to petroleum diesel. Acid rain-causing sulfur oxides and sulfates, components of conventional diesel, can also be reduced significantly. But emissions of nitrogen oxides tend to show a slight increase.

Among other drawbacks, pure biodiesel can cause rubber and other components to fail, so some engine modifications may be necessary to use pure biodiesel in existing engines. There is often a reduction in fuel economy and power for pure biodiesel, varying among different engines. And because it is not widely available, biodiesel is currently more expensive than petroleum diesel.

Fluctuating oil prices have pushed interest in biodiesel to levels greater than expected. Even private businesses unaffected by EPAct have switched from petroleum diesel, motivated by a desire to reduce foreign energy dependence.

In its share of the overall market for domestic transportation diesel fuel, biodiesel is still small, accounting for less than one-tenth of one per cent. But annual production has grown rapidly, from five million gallons in 2000 to an estimated twenty million gallons in 2001. Future growth could be substantial, but is difficult to quantify in part because biodiesel's success in the marketplace is so recent.

Most biodiesel users are fleets, but growth in demand by individual users has spawned several publicly accessible fueling stations nationwide. Biodiesel now is produced in nine plants nationwide, with approximately fourteen more in development or under construction, setting the stage for increased use in the future.

The purpose of this part is to encourage the use of biodiesel fuel in Hawaii as an important source of renewable energy by providing for the following:

(1) Requiring biodiesel fuel in state government motor vehicles. This part establishes a biodiesel fuel revolving fund for this purpose;

(2) Encouraging the use of biodiesel in the marine industry. The legislature finds that biodiesel spills are completely biodegradable, most commercial vessels use diesel fuel and require no modification, and biodiesel fuel is safer to handle and healthier for crew members and passengers. This part:

(A) Allows for the delivery and fueling of biodiesel to all state harbors;

(B) Allows the installation of biodiesel fuel pumps to all state harbors; and

(3) Exempting biodiesel fuel from the fuel tax law to lower the cost of biodiesel for the entire State and encourage the use of clean fuel.

SECTION 2. Chapter 105, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§105- Biodiesel fuel revolving fund; use of biodiesel fuel in government motor vehicles. (a) A biodiesel fuel revolving fund is created in the state treasury, which shall be administered by the department of accounting and general services.

(b) The revolving fund shall consist of moneys received from:

(1) The sale of EPAct credits banked by the department;

(2) Moneys appropriated by the legislature;

(3) Any other moneys obtained or accepted by the department for deposit in the fund; and

(4) Earnings or interest on moneys deposited in the fund.

(c) Moneys in the fund shall be used by the department for the purchase of biodiesel fuel for use in government motor vehicles.

(d) The department shall submit an annual report to the legislature no later than twenty days before the convening of each regular session regarding the expenditures made from the fund during the preceding fiscal year.

(e) A state government motor vehicle operating on biodiesel fuel shall be affixed with a visible sticker that notifies the public that the motor vehicle uses biodiesel fuel.

(f) For the purposes of this section:

"Biodiesel fuel" means a renewable, biodegradable, mono alkyl ester combustible liquid fuel derived from agricultural plant oils or animal fats that meets American Society for Testing and Materials Specification for Biodiesel Fuel Blend Stock for Distillate Fuels and is suitable for blending with petroleum-based diesel fuel for use in diesel engines.

"EPAct credit" means a credit issued pursuant to the federal Energy Policy Act, 42 U.S.C. §13201 et seq."

SECTION 3. Chapter 266, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§266- Delivery of biodiesel fuel to harbors; installation of biodiesel fuel pumps. (a) Notwithstanding any law to the contrary, the department, by rules adopted pursuant to chapter 91, shall:

(1) Allow for the delivery of biodiesel fuel to all harbors; and

(2) Provide for the installation of biodiesel fuel pumps at all harbors.

(b) As used in this section, "biodiesel fuel" means a renewable, biodegradable, mono alkyl ester combustible liquid fuel derived from agricultural plant oils or animal fats that meets American Society for Testing and Materials Specification for Biodiesel Fuel Blend Stock for Distillate Fuels and is suitable for blending with petroleum-based diesel fuel for use in diesel engines."

SECTION 4. Chapter 243, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§243- Biodiesel fuel; exemption. Notwithstanding any law to the contrary, no tax shall be imposed under this chapter for any biodiesel fuel of blends equal to or more than twenty per cent biodiesel, that is refined, manufactured, produced, compounded, sold, or used in this State."

SECTION 5. Section 243-1, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Biodiesel fuel" means a renewable, biodegradable, mono alkyl ester combustible liquid fuel derived from agricultural plant oils or animal fats that meets American Society for Testing and Materials Specification for Biodiesel Fuel Blend Stock for Distillate Fuels and is suitable for blending with petroleum-based diesel fuel for use in diesel engines."

2. By amending the definition of "alternative fuel" to read:

""Alternative fuel" means: methanol, denatured ethanol, and other alcohols; mixtures containing eighty-five per cent or more by volume of methanol, denatured ethanol, and other alcohols with gasoline or other fuels; natural gas; liquefied petroleum gas; hydrogen; coal-derived liquid fuels; [biodiesel; mixtures containing twenty per cent or more by volume of biodiesel with diesel or other fuels;] fuels (other than alcohol) derived from biological materials; and any other fuel that is substantially not a petroleum product and that the governor determines would yield substantial energy security benefits or substantial environmental benefits."

SECTION 6. Section 243-4, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The tax shall not be collected in respect to any benzol, benzene, toluol, xylol, or alternative fuel sold for use other than for operating internal combustion engines. With respect to these products, other than alternative fuels, the department by rule shall provide for the reporting and payment of the tax and for the keeping of records in respect thereto, in such manner as to collect, for each gallon of such product sold for use in internal combustion engines for the generation of power, or so used, the same tax or taxes as apply to each gallon of diesel oil. With respect to alternative fuels, the only tax collected shall be that provided in paragraphs (1), (2), and (3) of this subsection. This subsection shall not apply to aviation fuel sold for use in or used for airplanes.

(1) Every distributor of any alternative fuel for operation of an internal combustion engine shall pay a license tax to the department of 1 cent for each gallon of such alternative fuel sold or used by the distributor.

(2) Every distributor, in addition to the tax required under paragraph (1) of this subsection, shall pay a license tax to the department for each gallon of alternative fuel sold or used by the distributor for operating a motor vehicle or motor vehicles upon the public highways of the State at a rate proportional to that of the rates applicable to diesel oil in subsection (b), rounded to the nearest one-tenth of a cent, as follows:

(A) Ethanol, 0.29 times the rate for diesel;

(B) Methanol, 0.22 times the rate for diesel;

[(C) Biodiesel, 0.50 times the rate for diesel;

(D)] (C) Liquefied petroleum gas, 0.33 times the rate for diesel; and

[(E)] (D) For other alternative fuels, the rate shall be based on the energy content of the fuels as compared to diesel fuel, using a lower heating value of one hundred thirty thousand British thermal units per gallon as a standard for diesel, so that the tax rate, on an energy content basis, is equal to half the rate for diesel fuel.

The taxes so paid shall be paid into the state treasury and deposited in special funds or paid over in the same manner as provided in subsection (b) in respect of the tax on diesel oil.

(3) If any user of alternative fuel furnishes to the distributor a certificate, in such form as the department shall prescribe, or the distributor who uses alternative fuel signs such certificate, certifying that the alternative fuel is for use in operating a motor vehicle or motor vehicles in areas other than upon the public highways of the State, the tax as provided by paragraphs (1) and (2) of this section shall not be applicable; provided that no certificate shall be required if the alternative fuel is used for fuel and heating purposes in the home. In the event a certificate is not or cannot be furnished and the alternative fuel is in fact used for operating an internal combustion engine or operating a motor vehicle or motor vehicles in areas other than upon the public highways of the State, the user thereof may obtain a refund of all taxes thereon imposed by such paragraphs. The department shall adopt rules to administer the refunding of such taxes imposed."

PART II

SECTION 7. The legislature finds that, historically, Hawaii's primary solid waste management option has been disposal in landfills. However, with shortages of landfill sites and stricter federal government regulations requiring a significant upgrading of waste disposal facilities, there is an urgent need to find alternatives to relieve some of the pressure on each island's landfills. One way to reduce the amount of waste going to Hawaii's landfills is to recycle cooking grease.

The legislature finds that restaurants and other food service businesses generate tons of cooking oil, grease, and food wastes every day. If this waste is not managed properly, it may cause major environmental problems. Much of the waste is in solid form and can be safely packaged and placed in the trash. However, liquid waste containing oil and grease dumped directly into the sewer can block the system and cause wastewater to back up into restaurants, causing a health hazard.

Greasy wastewater can be managed by installing and properly maintaining grease traps, which capture the oil and grease from the flow of wastewater by slowing down the flow of hot greasy water and allowing it to cool. As it cools, the grease and oil separate out of the water and float to the top of the trap. The cooler water continues to flow down the drain pipe to the sewer while baffles prevent the accumulated grease and oil from flowing out of the grease trap.

Grease traps require periodic maintenance because untrapped oil and grease in the wastewater decreases pipe capacity over time and eventually will cause the pipe to clog. Piping systems without grease traps need to be cleaned more often and some piping may have to be replaced sooner than otherwise expected. Excessive grease sent to a wastewater treatment plant can also overload their system and cause the facility to exceed its allowable discharge limits.

The legislature further finds that sending grease trap waste to a rendering plant, rather than a solid waste landfill, is the preferred disposal option because it is processed back into useful products rather than land disposed. The legislature further finds that recycling grease trap waste can significantly reduce the amount of waste going to Hawaii's landfills. Accordingly, the purpose of this part is to ban grease and grease traps from Hawaii's landfills, and to require the department of health to review permanent alternatives for processing grease and ways to encourage recycling to reduce the amount of waste sent to Hawaii's landfills.

SECTION 8. Chapter 342H, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§342H- Grease and grease traps prohibited from landfills. Notwithstanding any law to the contrary, no person may dispose of any grease or grease trap in any solid waste or sanitary landfill in this State. Any person who violates this section shall be subject to the penalties provided in section 342H-9."

SECTION 9. The department of health shall:

(1) Review permanent alternatives for processing grease and grease traps, including sending grease trap waste to rendering or other processing plants, rather than to solid waste landfills;

(2) Review ways to encourage the recycling of grease and grease traps to reduce the amount of waste sent to Hawaii's landfills;

(3) Examine the feasibility of constructing rendering or other processing plants for the disposal of grease in the counties of Kauai and Hawaii; and

(4) Report findings and recommendations, including any proposed implementing legislation, to the legislature no later than twenty days before the convening of the regular session of 2004.

SECTION 10. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect on July 1, 2003; provided that section 8 shall take effect six months after the issuance of the last certificate of occupancy of all the biodiesel processing plants of all counties.