H.F. _____ Section 1. FINDINGS AND PURPOSE OF THE ACT —— SUSTAINABLE 1 BIODIESEL INITIATIVE. 2 1. The general assembly finds and declares that access to 3 affordable energy has become essential to the functioning of 4 modern economies. However, the uneven distribution of energy 5 supplies among countries and the critical need for energy has 6 created significant vulnerabilities to this nation. Threats to 7 national energy security include the political instability of 8 several energy producing countries, the manipulation of energy 9 supplies, the competition over energy sources, and attacks upon 10 energy supply infrastructure. 11 2. The purpose of this Act is to accomplish the vital 12 goals of promoting sustainable biodiesel that will demonstrate 13 environmental stewardship across its life cycle by maximizing 14 a net energy balance, minimizing negative impacts on natural 15 ecosystems, both globally and locally, and adding value to 16 Iowa commodities; creating wealth; and enhancing the entire 17 community of energy stakeholders. 18 Sec. 2. Section 15G.201A, Code Supplement 2009, is amended 19 to read as follows: 20 15G.201A Classification Designation of renewable fuel. 21 For purposes of this subchapter, ethanol blended fuel and 22 biodiesel fuel shall be classified designated in the same 23 manner as provided in section 214A.2. 24 Sec. 3. Section 15G.202, subsection 2, unnumbered paragraph 25 1, Code 2009, is amended to read as follows: 26 The infrastructure board shall be composed of eleven members 27 who shall be appointed by the governor as follows: 28 Sec. 4. Section 15G.202, subsection 2, paragraph c, 29 unnumbered paragraph 1, Code 2009, is amended to read as 30 follows: 31 Nine persons Persons based on nominations made by the 32 titular heads of all of the following: 33 Sec. 5. Section 15G.202, subsection 2, paragraph c, 34 subparagraph (4), Code 2009, is amended by striking the 35 -1- LSB 6221HC (9) 83 da/rj 1/ 6

H.F. _____ subparagraph. 1 Sec. 6. Section 15G.202, subsection 8, Code 2009, is amended 2 to read as follows: 3 8. Six A majority of members of the infrastructure board 4 constitute a quorum and the affirmative vote of a majority of 5 the members present is necessary for any substantive action 6 to be taken by the infrastructure board. The majority shall 7 not include any member who has a conflict of interest and 8 a statement by a member that the member has a conflict of 9 interest is conclusive for this purpose. A vacancy in the 10 membership does not impair the duties of the infrastructure 11 board. 12 Sec. 7. Section 15G.203, subsection 1, paragraph a, 13 subparagraph (1), subparagraph division (b), Code Supplement 14 2009, is amended to read as follows: 15 (b) Store, blend, Blend and dispense motor fuel from a motor 16 fuel blender pump, as required in this subparagraph division. 17 The ethanol infrastructure must provide for the storage of 18 ethanol or ethanol blended gasoline, or for blending ethanol 19 with gasoline. The ethanol infrastructure must at least 20 include a motor fuel blender pump which dispenses different 21 classifications designations of ethanol blended gasoline and 22 allows E-85 gasoline to be dispensed at all times that the 23 blender pump is operating. 24 Sec. 8. Section 15G.203, subsection 1, paragraph a, 25 subparagraph (2), Code Supplement 2009, is amended to read as 26 follows: 27 (2) Biodiesel infrastructure shall be designed and used 28 exclusively to do any of the following: 29 (a) Store and dispense biodiesel or biodiesel blended fuel 30 designated B-6 or higher . 31 (b) Blend or dispense biodiesel fuel from a motor fuel 32 blender pump which dispenses different designations of 33 biodiesel fuel designated B-6 or higher to be dispensed at all 34 times that the blender pump is operating . 35 -2- LSB 6221HC (9) 83 da/rj 2/ 6

H.F. _____ Sec. 9. Section 15G.204, subsection 3, paragraph a, 1 subparagraph (1), Code 2009, is amended to read as follows: 2 (1) For improvements to store, blend, or dispense biodiesel 3 fuel from B-2 B-5 or higher but not as high as B-99, fifty 4 percent of the actual cost of making the improvements or fifty 5 thousand dollars, whichever is less. 6 Sec. 10. Section 214A.2, subsection 4, paragraph b, 7 subparagraph (2), Code Supplement 2009, is amended by striking 8 the subparagraph. 9 Sec. 11. NEW SECTION . 214A.2C Standard for diesel fuel —— 10 biodiesel required. 11 A retail dealer shall not advertise for sale or sell diesel 12 fuel in this state, unless it is biodiesel fuel designated as 13 B-5 or higher as specified in section 214A.2. 14 Sec. 12. NEW SECTION . 214A.2D Standard for diesel fuel —— 15 exceptions. 16 1. Section 214A.2C does not apply to diesel fuel used to 17 power any of the following: 18 a. (1) A motor located at an electric generating plant 19 regulated by the United States nuclear regulatory commission. 20 (2) This paragraph “a” is repealed thirty days after the 21 United States nuclear regulatory commission approves the use of 22 biodiesel fuel designated as B-5 or higher in motors located at 23 electric generating plants that it regulates. 24 b. A railroad locomotive. 25 c. A vehicle used primarily on the grounds of a public 26 airport. 27 d. A motor used to temporarily generate power due to 28 peak demand for electricity or a disruption in the delivery 29 of electricity or natural gas until the delivery of the 30 electricity or natural gas may be resumed. 31 2. Section 214A.2C does not apply during a period that the 32 governor issues a biodiesel suspension order. 33 a. The biodiesel suspension order must include a 34 determination by the governor that any of the following exists: 35 -3- LSB 6221HC (9) 83 da/rj 3/ 6

H.F. _____ (1) A lack of infrastructure in this state necessary to 1 support the retail sale of biodiesel fuel designated as B-5 or 2 higher. 3 (2) A significant shortage of biodiesel fuel designated as 4 B-5 or higher in this state available for retail sale in this 5 state. 6 (3) A systemic market change in the supplies or prices of 7 biodiesel fuel designated B-5 or higher causing a material 8 economic hardship to the state. 9 b. The biodiesel suspension order may reduce the biodiesel 10 fuel designation otherwise required by section 214A.2C during 11 the period of the suspension. The biodiesel suspension order 12 may apply to the entire state or to specific counties named in 13 the biodiesel suspension order. 14 c. The biodiesel suspension order shall take effect on the 15 date of the order’s publication in the Iowa administrative 16 bulletin unless the biodiesel suspension order specifies a 17 later date. The biodiesel suspension order shall terminate on 18 a date certain as specified in the biodiesel suspension order. 19 Sec. 13. EXISTING INVENTORIES OF DIESEL FUEL. 20 1. a. Notwithstanding section 214A.2C, diesel fuel 21 inventories, stored at a retail motor fuel site as defined in 22 section 214A.1, existing on the effective date of this Act, may 23 continue to be sold and dispensed. 24 b. Paragraph “a” shall not apply once all diesel fuel 25 inventories existing at a retail motor fuel site as defined in 26 section 214A.1, on the effective date of this Act, have been 27 sold or dispensed. 28 2. Nothing in this section authorizes a retail dealer to 29 acquire diesel fuel other than biodiesel fuel designated B-5 or 30 higher as provided in section 214A.2 on or after the effective 31 date of this Act. 32 Sec. 14. RULES. The department of agriculture and land 33 stewardship shall adopt rules to implement the provisions of 34 sections 214A.2C and 214A.2D, as enacted in this Act, and the 35 -4- LSB 6221HC (9) 83 da/rj 4/ 6

H.F. _____ rules shall be effective January 1, 2012. 1 Sec. 15. EFFECTIVE DATES. The following provision or 2 provisions of this Act take effect as follows: 3 1. Except as provided in subsection 2, this Act takes effect 4 January 1, 2012. 5 2. The amendments in this Act to sections 15G.201A and 6 15G.202, take effect July 1, 2010. 7 3. The section of this Act requiring the department of 8 agriculture and land stewardship to adopt rules to implement 9 sections 214A.2C and 214A.2D as enacted in this Act, takes 10 effect July 1, 2010. 11 EXPLANATION 12 GENERAL. This bill amends provisions relating to the 13 promotion and use of renewable fuel, and particularly biodiesel 14 fuel, derived from vegetable oils or animal fats that meet 15 standards adopted by the department of agriculture and land 16 stewardship (Code section 214A.2). 17 RENEWABLE FUEL INFRASTRUCTURE BOARD. The bill eliminates 18 a person representing the Iowa motor truck association as a 19 member of the renewable fuel infrastructure board. The board, 20 created within the department of economic development, is 21 responsible for promoting renewable fuels by awarding financial 22 incentives for the installation of infrastructure at retail 23 motor fuel sites (Code section 15G.203) and biodiesel terminal 24 facilities (Code section 15G.204). 25 BIODIESEL FUEL STANDARD. This bill applies to the 26 retail sale of diesel fuel as regulated by the department of 27 agriculture and land stewardship under Code chapter 214A. 28 Biodiesel fuel is designated by “B-xx” where “xx” is the 29 volume percent of biodiesel by volume (Code section 214A.2). 30 Currently, all biodiesel fuel must be at least B-1 (Code 31 section 214A.2). The bill increases that designation to B-5, 32 and prohibits a retail dealer from advertising for sale or 33 selling diesel fuel unless it is biodiesel fuel. It also 34 provides for a number of exceptions, including for motors 35 -5- LSB 6221HC (9) 83 da/rj 5/ 6

H.F. _____ located at an electric generating plant regulated by the 1 nuclear regulatory commission, locomotives, vehicles primarily 2 used on the grounds of a public airport, and a motor used to 3 temporarily generate power due to a disruption in the supply 4 of electricity or natural gas. The bill provides that the 5 governor may issue a suspension order to adjust the biodiesel 6 blended fuel designation under any of three circumstances: 7 (1) a lack of infrastructure necessary to support its retail 8 sale, (2) a significant shortage of biodiesel fuel supplies in 9 this state, or (3) a systemic market change causing material 10 economic hardship to the state. The suspension order may apply 11 to all or part of the state. 12 RULEMAKING. The bill requires the department of agriculture 13 and land stewardship to adopt rules in order to implement the 14 biodiesel fuel requirements. 15 EFFECTIVE DATE. Generally, the bill takes effect on January 16 1, 2012, except for provisions relating to the membership 17 of the renewable fuel infrastructure board and departmental 18 authorization to adopt rules required to implement the bill, 19 which take effect on July 1, 2010. 20 -6- LSB 6221HC (9) 83 da/rj 6/ 6