NOTE: As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature. The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.
The most recent FIR
version (in HTML & Adobe PDF formats) is available on the Legislative
Website. The Adobe PDF version includes
all attachments, whereas the HTML version does not. Previously issued FIRs and attachments may be
obtained from the LFC in
SPONSOR: |
Garcia, MP |
DATE TYPED: |
|
HB |
587/aHENRC |
||
SHORT TITLE: |
Definition of Alternative Fuel |
SB |
|
||||
|
ANALYST: |
Reynolds-Forte |
|||||
REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
Indeterminate |
Indeterminate |
Recurring |
State
Road Fund |
|
Indeterminate |
Indeterminate |
Recurring |
Local
Governments |
|
|
|
|
|
(Parenthesis ( ) Indicate Revenue Decreases)
Conflicts with HB193 and HB70 as amended.
Responses
Received From
Energy
Minerals and Natural Resources Department
NM
Department of Agriculture
State
Highway and Transportation Department
Synopsis
of HENRC
Amendment
The House Energy and Natural Resources Committee amendment to HB587 changes the definition of ethanol, methanol and biodiesel from the original bill. The amendment references the American society for testing and materials and req uires that ethanol and methanol blends meet these standards in order to be defined as alternative fuel for the Alternative Fuel Tax Act. The amendment also changes the definition for biodiesel requiring that it contain twenty percent B100 blend stock of biodiesel meeting the American society for testing and materials.
Fiscal
Impact of HENRC Amendment to HB587
The amendment will not change the fiscal impact, as it is
impossible to estimate how much alternative fuel will be used based on this new
definition. Based on the amendment, the
Highway and Transportation Department does note that ethanol and methanol may be used in “flexible-fuel” vehicles, and 20%
biodiesel mixtures can be used in any unmodified diesel engine. The number of alternative fuel vehicles may
grow considerably given a 6-to-7 cent per gallon tax advantage, although the
price to produce these alternative fuels may offset the tax advantage in the
ultimate price paid by the consumer.
The fiscal impact
on the State Road Fund is minimal for the ethanol and methanol component since
the Road Fund receives 13 cents per gallon from gasoline tax and 12 cents per
gallon from alternative fuels tax. Local
governments would realize the majority of any revenue loss associated with
increased use of ethanol and methanol.
A larger impact
would be associated with biodiesel mixtures.
The Road Fund receives 16 cents per gallon from special fuel tax, but
only 12 cents per gallon from alternative fuel tax. The Local Governments Road Fund would lose
its 2 cent per gallon share of special fuel tax on volumes of biodiesel and its
0.5 cent share on ethanol, methanol and biodiesel from the Petroleum Products
Loading Fee (PPL Fee). The Department is
not aware of any extensive use of these fuels in
Technical Issues of HENRC Amendment
The
1)The bill should
include Section
2) Section 7-16A-2 NMSA
1978 should be included in the bill, and a reference added in Subsection N to
specify that biodiesel mixtures that qualify as “alternative fuel” for purposes
of the Alternative Fuel Tax Act are an exception to the definition of “special
fuel”.
The amendment defines biodiesel as containing “twenty percent B100 materials”—should this be at least twenty percent B100 materials? If a mixture contains twenty-one percent, it would not qualify as alternative fuel under the amended definition.
The closing reference to “B100, blend stock for distillate fuels”, in the amendment seems to be repetitive.
Synopsis
of Original Bill
House Bill 587 amends
the definition section of the Alternative Fuel Tax Act in order to redefine
alternative fuel. This amended
definition differs from the existing definition in that it adds two new fuel
mixtures:
1. A fuel mixture containing not less than
seventy percent ethanol or methanol and,
2. A fuel mixture containing not less than
twenty percent biodiesel or vegetable oil and deletes one current fuel mixture (a
water-phased hydrocarbon fuel emulsion).
HB587 has a
FISCAL IMPLICATIONS
Current law provides that alternative fuel be
taxed at twelve cents per gallon instead of the seventeen cents per gallon for
gasoline and eighteen cents per gallon for diesel. HB587 extends the twelve-cent tax rate to the
two additional fuel mixtures effective
The revenues from the gasoline, diesel and
alternative fuel taxes are distributed to the state road fund and the counties
and municipalities. HB 587 could have a
negative impact on the revenues to these funds dependant upon the amount of
ethanol, methanol or biodiesel sold which meets the new definition. It is impossible to estimate an amount at
this time.
CONFLICT
HB587 conflicts with HB193 and HB70 as amended. Both HB193 and HB70/a alternative fuel definitions requires a fuel mixture containing not less than eighty-five percent ethanol or methanol; HB587 a fuel mixture containing not less than seventy percent ethanol or methanol.
The
NM Department of Agriculture notes that
the new
definition of “alternative fuel” conflicts with state fuel specifications as
identified in the Petroleum Products Standards Act Chapter 57, Article 19, and
Sections 25 through 37 NMSA 1978. Title
19, Chapter 15, Part 104 Standard Specifications/Modifications for Petroleum
Products.
OTHER SUBSTANTIVE ISSUES
The Energy, Minerals
and Natural Resources Department believes that enactment of HB587 would
directly support the Energy Conservation and Management Division’s alternative
transportation program and its goals of reducing our dependence on foreign oil
and improving air quality.
PRF/prr:yr:njw