In this subtitle the following words have the meanings indicated. “Biodiesel” means an alternative motor fuel produced from a renewable resource such as vegetable oil or animal fat. “Ethanol” means fermented ethyl alcohol derived from agricultural or forest products. “Small grains” means a winter grain crop. “Small grains” includes wheat, rye, triticale, oats, and hulled or hull–less barley.

This subtitle authorizes credits for the production of: Ethanol that: Satisfies the American Society for Testing and Materials Specifications D 4806-88; and Is denatured as specified in 27 C.F.R. Parts 20 and 21; and Biodiesel that satisfies the American Society for Testing and Materials D 6751.

To be eligible for credits under this subtitle, an ethanol or biodiesel producer shall apply to the Department for certification on an application provided by the Department. An applicant shall show in the application to the satisfaction of the Department: That the applicant will construct or operate a facility capable of producing ethanol or biodiesel; That the applicant will invest or has invested substantial resources in the State in connection with the facility; That the facility will constitute a permanent fixture in the State; For an ethanol production facility, information demonstrating: The production capacity of the facility; and The quantity and availability of small grains and other suitable agricultural products in the vicinity of the production facility that may be used by the facility; For a biodiesel production facility, information demonstrating: The production capacity of the facility; and The quantity and availability of soybean oil and other suitable bio–based oils in the vicinity of the production facility that may be used by the facility; Information demonstrating: The availability and cost of energy sufficient to operate the facility; The availability of sufficient water and waste disposal systems for the facility; The availability of sufficient labor and a qualified site manager for the facility; and That the facility will meet all State and federal environmental standards; Any proposed marketing agreements for the ethanol or biodiesel products; A plan to give farmers in the State the opportunity to invest in the facility; and That the applicant will meet any other requirement established by the Department. The Department shall: Review each application submitted under this subtitle; Approve or deny the application within 60 days of receipt of the application; and For an approved application, certify the producer as eligible for a credit in an amount that is: Based on the production capacity of the facility, as determined by the Board; and Consistent with subsection (d) of this section. The Department may not certify ethanol production credits for more than a total of 15,000,000 gallons per calendar year, of which at least 10,000,000 gallons shall be produced from small grains. The Department may not certify biodiesel production credits for more than a total of 5,000,000 gallons per calendar year, of which at least 2,000,000 gallons shall be from soybean oil produced: In a facility that began operating after December 31, 2004; or Under the expanded capacity of a facility, the expansion of which occurred after December 31, 2004. If eligible, a producer may apply to the Department for certification for additional credits if the producer increases the production capacity of the facility. If a facility does not achieve its certified production capacity for 2 consecutive years, the Department may revise the stated production capacity of the facility and the corresponding credit certification of the producer to reflect actual production. An application submitted to the Department under this section is not subject to disclosure under the Maryland Public Information Act.

The Department may pay credits as calculated under this section to certified producers of ethanol or biodiesel in the State for ethanol or biodiesel produced on or after December 31, 2007. For the purposes of this subtitle, a person that holds a controlling interest in more than one ethanol production facility is considered to be a single ethanol producer. For the purposes of this subtitle, a person that holds a controlling interest in more than one biodiesel production facility is considered to be a single biodiesel producer. For an ethanol producer, a credit may not exceed the maximum amount certified by the Department and shall be: 20 cents per gallon of ethanol produced from small grains; and 5 cents per gallon of ethanol produced from other agricultural products. For a biodiesel producer, a credit may not exceed the maximum amount certified by the Department and shall be: 20 cents per gallon of biodiesel produced from soybean oil produced: In a facility that began operating after December 31, 2004; or Under the expanded capacity of a facility, the expansion of which occurred after December 31, 2004; and 5 cents per gallon of biodiesel produced from other feedstock, including soybean oil produced in a facility that began operating on or before December 31, 2004. The Department may not pay a credit for ethanol or biodiesel produced after December 31, 2017.

After February 1, 2008, to receive a credit payment a certified ethanol or biodiesel producer shall file a claim with the Department by the end of January, April, July, and October of each year. A claim filed under this section shall state: The producer’s total ethanol production in the State during the previous quarter, categorized by ethanol produced from small grains and ethanol produced from other agricultural products; or The producer’s total biodiesel production in Maryland during the previous quarter, categorized by biodiesel produced from: Soybean oil produced in a facility that began operating after December 31, 2004, or under the expanded capacity of a facility, the expansion of which occurred after December 31, 2004; and Other feedstock, including soybean oil produced in a facility that began operating on or before December 31, 2004; The location of the producer; The average number of Maryland citizens employed by the producer in the previous quarter; For an ethanol producer, the number of bushels of Maryland–grown small grains and other agricultural commodities used by the producer in the previous quarter; or For a biodiesel producer, the number of gallons of Maryland–produced soybean oil and other bio–based oils used by the producer in the previous quarter; and Any other information that the Department requires. A claim filed under this section shall be reviewed by an independent certified public accountant with respect to, as appropriate: The total ethanol production; The breakdown between ethanol produced from small grains and ethanol produced from other agricultural products; The total biodiesel production; and The breakdown between biodiesel produced from: Soybean oil produced in a facility that began operating after December 31, 2004, or under the expanded capacity of a facility, the expansion of which occurred after December 31, 2004; and Other feedstock, including soybean oil produced in a facility that began operating on or before December 31, 2004. A claim submitted to the Department under this section is not subject to disclosure under the Maryland Public Information Act.

For fiscal year 2008 and each succeeding fiscal year, the Governor shall include sufficient funds in the State budget to implement this subtitle. To implement this subtitle, the Department: Shall maximize the use of federal funds or matching programs to the extent possible; and May solicit and accept grants or donations from State, local, or private entities.