SRC-MWN H.B. 788 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 788
By: Swinford (Sponsor Unknown)
Natural Resources
5/11/2001
Engrossed


DIGEST AND PURPOSE 

Methyl Tertiary Butyl Ether (MTBE) is a gasoline additive that has
contributed to lower ozone levels but constitutes a threat to water
supplies and public health, causing several states to ban MTBE. A viable
oxygenate alternative is ethanol. The use of nontoxic ethanol could help
to: preserve clean water, maintain clean air achievements in ozone
non-attainment areas, contribute to rural economic development, and provide
an additional market for feedgrain producers. To promote ethanol use,
several states have instituted producer payments which range from $0.20 to
$0.40 per gallon. While a payment of less than $0.20 could keep Texas grain
ethanol in production, a higher producer incentive encourages ethanol
production from alternative sources, and places Texas producers in a better
position from which to compete with out-of-state producers who also receive
payments. H.B. 788 establishes producer incentives for the production of
ethanol and biodiesel. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Department of Agriculture
in SECTION 1 (Section 16.002, Agriculture Code) of this bill.  

SECTION BY SECTION ANALYSIS

H.B. 788 amends the Agriculture Code to require the Department of
Agriculture (department) to provide by rule for the distribution, no less
often than quarterly, of grant funds to producers of fuel ethanol and
biodiesel as an incentive for the development of the fuel ethanol and
biodiesel industry. The bill provides that to be eligible for a grant, a
producer must apply to the department for the registration of the plant.
The bill sets forth qualification requirements for the plant and requires
the department to register all qualified plants. The bill provides that,
until the 10th anniversary of the date production of the plant begins, a
producer is entitled to receive 20 cents for each gallon of fuel ethanol or
biodiesel produced in the plant. The bill establishes the fuel ethanol and
biodiesel production account, composed of money transferred by the
legislature from the general revenue fund. The bill requires a producer to
report monthly to the department and prohibits a producer from receiving
grants for more than 15 million gallons of fuel at any one registered plant
in each fiscal year. A producer who fails to submit a report is ineligible
to receive a grant for the period in which the report was not filed. If the
department determines that the amount of money credited to the account is
not sufficient to distribute the full amount of grant funds to eligible
producers for a fiscal year, the department is required to proportionately
reduce the amount of each grant for each gallon of fuel ethanol or
biodiesel produced as necessary to continue the incentive program during
the remainder of the fiscal year.  

Effective date: upon passage or September 1, 2001.