2006 Senate Bill 1078 (Authorize tax subsidy for certain alternative energy facilities)

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Public Act 270 of 2006

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Introduced by Sen. Bruce Patterson (R) on February 23, 2006, to authorize the establishment of up to 10 tax-free "renaissance zones" for "renewable energy facilities," that would use "a system that creates energy from a process using residues from corn, soybeans, wood, paper products industries, and food production and processing; trees and grasses grown specifically to be used as energy crops; and gaseous fuels produced from solid biomass, animal wastes, municipal wastes, or landfills".
- Referred to the Senate Technology and Energy Committee on February 23, 2006.
  - Reported in the Senate on March 30, 2006, with the recommendation that the substitute (S-3) be adopted and that the bill then pass.
- Substitute offered in the Senate on April 19, 2006, to replace the previous version of the bill with one that also extends the tax breaks to facilities that create energy from photovoltaic cells or windmills. The substitute passed in the Senate by voice vote on April 19, 2006.
- Amendment offered by Sen. Liz Brater (D) on April 20, 2006, to prohibit the producers of agricultural crop-based ethanol from distributing the byproducts of its distilling process (the "mash") as feed to concentrated animal feeding operations (CAFOs). The amendment failed in the Senate by voice vote on April 20, 2006.
Passed in the Senate (37 to 0) on April 20, 2006, to authorize the establishment of up to 10 tax-free "renaissance zones" that provide substantial tax breaks for "renewable energy facilities," defined as a system that creates energy from a process using residue from agricultural products, forest products, paper products industries, and food production and processing; trees and grasses grown specifically to be used as energy crops; and gaseous fuels produced from solid biomass, animal waste, a wind conversion device, photovoltaic cells, or landfills. [Vote Details and Comments]
Received in the House on April 25, 2006.
- Referred to the House Agriculture Committee on April 25, 2006.
  - Reported in the House on May 24, 2006, with the recommendation that the substitute (H-1) be adopted and that the bill then pass.
- Substitute offered in the House on June 21, 2006, to replace the previous version of the bill with one that revises various details, but does not change its substance. This version was subsequently superceded by another substitute with more changes. The substitute failed in the House by voice vote on June 21, 2006.
- Substitute offered by Rep. Neal Nitz (R) on June 21, 2006, to replace the previous version of the bill with one that does not contain the definition of "renewable energy" facilities eligible for the tax break, because this is now in House Bill 5752. The substitute passed in the House by voice vote on June 21, 2006.
Passed in the House (104 to 0) on June 21, 2006, to authorize the establishment of up to 10 tax-free "renaissance zones" that provide substantial tax breaks for "renewable energy facilities," defined as a system that creates energy from a process using residue from agricultural products, forest products, paper products industries, and food production and processing; trees and grasses grown specifically to be used as energy crops; and gaseous fuels produced from solid biomass, animal waste, a wind conversion device, photovoltaic cells, or landfills. [Vote Details and Comments]
Received in the Senate on June 22, 2006.
Passed in the Senate (37 to 0) on June 27, 2006, to concur with the House-passed version of the bill. [Vote Details and Comments]
Signed by Gov. Jennifer Granholm on July 7, 2006.

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1) Sen. Patterson's "journal statement" [by Admin003 on April 22, 2006]
Senator Patterson's statement is as follows:

I noted that the previous speaker used the dreaded "P" word--profits. Colleagues, we are faced with a conundrum. Amendment No.1 may be well-intentioned, but it will be at best one that has unintended consequences.

If we all want to break free of fossil fuel dependence and its deleterious health effects, then we must seek out and embrace alternative fuels and energy created by application of cutting-edge technology. The Governor of our great state said so just this week.

If we want to reduce the demands on supplies of motoring fuels and, consequently, lessen fuel cost spikes, and if we are serious about improving our economy and cultivating the environment for good jobs to flourish, then we must make choices and we must make sound decisions.

The amendment being offered creates a choice. Each of us must now decide. We can't have it both ways. Leadership hangs in the balance; so does Michigan's future hang in the balance.

Adopt this amendment and the practical effect is that we will be unable to create ethanol in this state, period. The basic component--grain--would not be made available by the growers. Is that what is desired? Ethanol is cleaner. It is environmentally preferable. A vote for this amendment is a vote against clean air. The unintended consequence of this amendment is to gut a fledging effort that is essential to Michigan's future. Our state-specific economy malaise will continue, and our hopes for vitality will dissipate. I know that the research team with whom I have been working and consulting with the University of Michigan will be very disappointed if this amendment is adopted.

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2) Sen. Van Woerkom's "journal statement" [by Admin003 on April 22, 2006]
Senator Van Woerkom's statement is as follows:

I want to reiterate what the previous speaker has said. If we are not able to appropriately get rid of the byproduct, we are going to increase the cost of ethanol. I think that one of the problems we may face in the marketplace is cost. People will move toward ethanol if the cost is competitive or if the cost is lower than what the cost of their unleaded gas might be.

I think this is a very real problem and we have to do what we can in order to help limit the cost on this thing. Another issue, of course, is going to be what are we going to do with all of this byproduct. It creates mountains of byproduct and to have a ready market for that here in the state of Michigan is a real plus for us. We don't have to worry about carting this stuff off to a landfill. We don't have to worry about throwing it on a field somewhere. We can use this byproduct within the dairy industry or within the beef industry. So I think that that is a double plus for agriculture in the state of Michigan. I urge you to defeat this amendment.

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3) Sen. Brater's "journal statement" [by Admin003 on April 22, 2006]
Senator Brater's statement is as follows:

I'm rising to call attention to an aspect of this package which is very technical, very complicated, very hard to understand, and I think very important to call to the attention of the members and the public. That is, the connection between ethanol and factory farms.

The bill before us provides for ten renaissance zones for renewable energy facilities. I support the promotion of alternative energies. They present an opportunity to reduce the harm we are doing to the environment compared to the conventional fuels we use today. Ethanol, in particular, has gotten a lot of attention. Earlier this week, a flex-fuel vehicle that runs on E85--85 percent ethanol and 15 percent gasoline--was presented to the state in front of the Capitol.

Governor Granholm has been promoting the use of ethanol and noting that four additional ethanol plants around the state will soon be built to join the current facility in Caro. There are many positive aspects to ethanol and E85. It emits fewer greenhouse gases, such as carbon dioxide, and is higher in horsepower-generating octane than typical gasoline.

However, there are good and bad ways to produce ethanol. Something must be done if the corn of the actual vegetable part of the corn is used to produced the ethanol. Something must be done with the corn mash that's left over from the distilling process, which is called distillers grain. Distillers grain is often used as a feed for livestock because it is cheap and is higher in protein than plain corn. But with so many new ethanol facilities coming online, there will be a huge increase in the amount of distillers grain available, and there will be a motivation on the part of ethanol producers to look for a cost-efficient and sometimes even profit-making end use of this by product. Factory farms with their huge numbers of animals concentrated in one place are an ideal consumer of this corn mash. As you may know, factory farms are very bad for the environment, for human health, for the well-being of neighboring farmers, and we are working hard--some of us--to try and regulate the pollution and waste that is coming out of these factory farms.

We in the Legislature should not be promoting ventures that harm our state's natural resources. That is why I am offering this amendment which says that a renaissance zone for a renewable energy facility cannot sell or distribute any of its by-product, water, or residue, including, but not limited to, distillers grain to a CAFO. We should be exploring the possibility of other productive uses for this mash or, indeed, looking for use of other plant products for the production of ethanol. Efforts are underway to study the feasibility of drying the distillers grain and shipping it overseas to be used as a high-protein corn meal for people in poor countries. That's a good idea. These are the kind of efforts we should be promoting, but not those that hurt the environment.

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