Prefatory note: This bill was prepared for the Joint Legislative Council's Special
Committee on Domestic Biofuels.

Financial assistance related to biofuels. The bill expands the applicability of
relevant state financial assistance programs, to ensure that the programs support the
establishment, production, harvest, storage, and transport of bioenergy feedstocks; the

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conversion of ethanol production plants to biomass energy for process heat; and the
development and construction of biorefineries. A "biorefinery" is a facility, including
equipment and processes, that converts biomass into fuels and products and may produce
electricity.

In particular, the bill clarifies that the industrial revenue bond program applies to
all types of biorefineries, including those that produce a fuel other than alcohol. This is
accomplished by repealing the statute that lists "alcohol fuel production facilities" as a
type of "project" eligible for financing with these bonds and the recognition that other
types of currently eligible projects for this financing include "assembling, fabricating,
manufacturing, mixing or processing facilities for any products of agriculture, forestry,
mining or manufacturer," which includes biorefineries. The bill also specifies that the
renewable energy grant and loan program applies to biorefineries, in general, rather than
just cellulose ethanol production plants and that the agricultural diversification grant
program applies to the development of new forestry products, including alternative fuels.
In addition, the bill repeals s. 93.46 (3), as the Department of Agriculture, Trade and
Consumer Protection (DATCP) no longer makes agricultural diversification grants under
that subsection.

The definition of "agricultural use" for purposes of use value taxation.
Under current law, the Department of Revenue (DOR) is required to define the term
"agricultural use" for purposes of determining whether the assessed value of a parcel of
land should be determined under the use value assessment method. DOR currently
defines the term "agricultural use" to exclude "growing short rotation woody trees with
a growing and harvesting cycle of ten years or less for pulp or tree stock under NAICS
industry 111421." This bill requires DOR to define the term "agricultural use" to include
the growing of short rotation woody crops, including poplars and willows, using
agronomic practices.

Strategic bioenergy feedstock assessment. The bill directs the Office of
Energy Independence (OEI) to coordinate the biennial preparation of a strategic
bioenergy feedstock assessment by the specified state agencies. This assessment must
examine the current and potential bioenergy feedstocks being produced in Wisconsin, the
uses of those feedstocks, as well as the use in the state of bioenergy feedstocks produced
in other states, the key factors that influence the supply of and demand for feedstocks
produced in the state, and the impacts of the increased use in the state of biomass for
energy production. The assessment must also recommend appropriate legislation and
changes in the agencies' programs and rules.

Bioenergy advisory council, voluntary best management practices. The
bill creates a bioenergy advisory council attached to DATCP and requires the council to
report voluntary best management practices for sustainable biomass and biofuels
production to agencies and private parties that assist biofuel feedstocks producers and
biofuels producers.

The agricultural diversification program. The bill expands the agricultural
diversification program administered by DATCP to include the promotion of marketable
credits for reducing emissions of greenhouse gases derived from the production of
agricultural commodities (also known as carbon offset credits) and of other types of
energy made from these commodities in addition to alternative fuels made from
agricultural source stocks. The bill creates a comparable forestry diversification program
administered by the Department of Natural Resources (DNR). The bill also directs
DATCP and DNR to promote these new products in cooperation with and with the
assistance of each other and the University of Wisconsin-Extension (UW-Extension).

Biofuels training assessment. The bill requires the UW-Extension, in
cooperation with other state entities, to conduct an educational needs assessment related

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to the production of biofuels and the development and production of feedstocks for the
production of biofuels, and to report its findings to the Governor and the Legislature.

Biofuels production facility regulatory review committee. The bill creates
a nine-member Biofuels Production Facility Regulatory Review committee, with
members appointed by the Governor, to review state and local regulatory burdens related
to biofuels production facilities and to report its findings to the Governor and the
Legislature.

Marketing orders and agreements for bioenergy feedstocks. Under the
"Agricultural Marketing Act" marketing orders or agreements can be issued for
agricultural commodities. The purposes of these orders and agreements include
promoting orderly and efficient marketing and preventing economic waste by promoting
fair methods of competition, uniform grading and classification, and market realization
and development. An assessment is levied upon affected producers and handlers to
defray the costs associated with a marketing order. This bill designates products used
as bioenergy feedstocks, including timber and wood products, as "agricultural
commodities" under this Act, thus authorizing the creation of a marketing order or
agreement for these feedstocks with the required approval of affected producers of the
feedstocks. The bill also requires the secretary of DATCP to periodically assess the
development of markets for bioenergy feedstocks and determine whether the issuance of
a marketing order or agreement for these products would be appropriate.

Personal renewable fuel production and use. This bill exempts the first 1,000
gallons of renewable fuel produced by a person each year, that the person uses in his or
her personal vehicle, from the motor vehicle fuel excise tax, the petroleum inspection fee,
and petroleum inspection requirements not required by federal law. The bill also allows
a person to produce this renewable fuel without a business tax registration certificate or
a motor vehicle fuel tax license.

Income tax credit for blender pumps. Under current law, an "ethanol and
biodiesel fuel pump" income tax credit is available for claimants who install or retrofit
equipment for dispensing motor vehicle fuel to end-users that dispense fuel consisting
of at least 85 percent ethanol or at least 20 percent biodiesel fuel. The amount of the credit
is 25 percent of the cost to install or retrofit such equipment but is limited to $5,000 per
service station for which the claimant has installed or retrofitted such equipment. This
credit is available for taxable years beginning after December 31, 2007, and before
January 1, 2018. This bill modifies the definition of fuel subject to this credit and allows
this income tax credit to be claimed for the installation or retrofit of equipment that
blends fuels from separate storage tanks allowing the end-user to choose the percentage
of gasoline-replacement renewable fuel or diesel-replacement renewable fuel in the
dispensed fuel.

Required offering of unblended gasoline to motor fuel dealers. This bill
requires a motor fuel grantor (grantor) to offer unblended gasoline, suitable for
subsequent blending with ethanol and subsequent sale, to any motor fuel dealer (dealer)
with which it has a motor fuel dealership agreement (agreement). This bill also prohibits
an agreement or contract between a dealer and grantor from requiring the dealer to
purchase ethanol from the grantor exclusively. This bill does not prohibit agreements
from requiring the subsequent blending of unblended gasoline received by a dealer prior
to sale to an end-user, and does not prohibit grantors and dealers from entering into
agreements with respect to the transfer of renewable fuels credits under the federal
renewable fuels standard.

State renewable motor vehicle fuels sales goals and sales requirements.
The bill creates annual sales goals for renewable fuels in this state equaling 110 percent
of the state's share of renewable fuel sales required nationally under the federal
renewable fuel standard (F-RFS). The bill groups the categories of renewable fuel under

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the F-RFS into two categories for purposes of the state goals: gasoline-replacement
renewable fuels and diesel-replacement renewable fuels. The state's share of renewable
fuels under the F-RFS is determined based on the total volume of motor vehicle fuel sold
in this state as compared to the total volume of motor vehicle fuel sold nationally over the
three years preceding the year for which the calculation is made. Fuels must meet or
exceed F-RFS greenhouse gas reduction requirements to be included in state sales
calculations.

The bill requires DATCP, in cooperation with and with assistance from
Department of Commerce, DOR, and OEI, to collect information needed to determine
whether these annual renewable fuels sales goals are met for each year following
enactment of this bill. DATCP is also generally required to collect information necessary
to assess the cause, and to conduct an assessment, if an annual sales goal is not met, and
report its findings to the Legislature and Governor. This assessment must include
determinations related to renewable fuels systems and markets, regulatory obstacles,
and the effect of potential specific individual sales requirements. If DATCP determines
in an assessment that individual sales requirements would likely result in renewable fuel
sales that would meet the annual goals, DATCP must require such sales by rule. In
addition to annual sales requirements, these rules may include reporting, recordkeeping,
or testing requirements, quarterly or monthly sales requirements in certain situations,
a credit trading system, procedures for DATCP to temporarily suspend a sales
requirement, and fees for the administration and enforcement of the program.

The bill creates a program revenue appropriation to DATCP that funds the
administration and enforcement of the renewable fuel program. This appropriation is
funded by fees that DATCP establishes by rule as part of the implementation of the
program. The bill provides penalties for violations of any renewable fuel program rules
adopted by DATCP and for violations of any of the reporting requirements authorized by
the bill.

The state as a leader; renewable fuels use in the state fleet. The bill codifies
Executive Order #141, relating to increased utilization of renewable fuels and vehicles
owned and operated by the State of Wisconsin. In particular, the bill directs DOA to
require state agencies to reduce the amount of gasoline and diesel fuels they use that are
petroleum-based by specified percentages, requires OEI to promote the use of alternative
fuels in flex fuel vehicles owned by the state, and directs OEI and DATCP to cooperatively
promote public alternative fuel refueling facilities.

Other duties of the Office of Energy Independence. The bill directs OEI to
work on initiatives that have the goals of ensuring that Wisconsin is a national leader in
developing biorefineries and advancing the sale and use of intermediate blends of
gasoline and biofuels. The bill clarifies that OEI shall serve as the central unit of state
government to coordinate the activities of all state agencies in connection with the
initiatives specified in the office's enabling statute and that the other state agencies shall
assist the office in fulfilling its duties.