Senate File 2103 - Introduced SENATE FILE 2103 BY KIBBIE A BILL FOR An Act relating to excise taxes imposed upon special fuel, 1 including biodiesel fuel and diesel fuel used in the 2 production of biodiesel blended fuel. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5213SS (6) 83 da/rj

S.F. 2103 Section 1. Section 452A.2, Code 2009, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 9A. “Diesel fuel” means the same as defined 3 in section 214A.1. 4 Sec. 2. Section 452A.2, subsection 29, Code 2009, is amended 5 to read as follows: 6 29. “Nonterminal storage facility” means a facility where 7 motor fuel or special fuel, other than liquefied petroleum 8 gas, is stored that is not supplied by a pipeline or a marine 9 vessel. “Nonterminal storage facility” includes a facility that 10 manufactures products such as ethanol as defined in section 11 214A.1 , biofuel, blend stocks, or additives which may be used 12 as motor fuel or special fuel, other than liquefied petroleum 13 gas, for operating motor vehicles or aircraft. 14 Sec. 3. Section 452A.3, subsection 3, Code Supplement 2009, 15 is amended to read as follows: 16 3. a. For the privilege of operating motor vehicles or 17 aircraft in this state, there is imposed an excise tax on the 18 use of special fuel in a motor vehicle or aircraft. 19 (1) The tax rate on special fuel for diesel engines of motor 20 vehicles is twenty-two and one-half cents per gallon. The tax 21 rate on biodiesel fuel for diesel engines of motor vehicles 22 shall be determined on a volume basis with the gross metered 23 gallons adjusted in volume to sixty degrees Fahrenheit. 24 (2) The rate of tax on special fuel for aircraft is three 25 cents per gallon. 26 (3) On all other special fuel, unless otherwise specified in 27 this section, the per gallon rate is the same as the motor fuel 28 tax. 29 b. Indelible dye meeting United States environmental 30 protection agency and internal revenue service regulations 31 must be added to special fuel before or upon withdrawal at a 32 terminal or refinery rack for that special fuel to be exempt 33 from tax and the dyed special fuel may be used only for an 34 exempt purpose. 35 -1- LSB 5213SS (6) 83 da/rj 1/ 3

S.F. 2103 Sec. 4. Section 452A.17, subsection 1, paragraph a, Code 1 Supplement 2009, is amended by adding the following new 2 subparagraph: 3 NEW SUBPARAGRAPH . (11) Diesel fuel used by a nonterminal 4 storage facility to blend with biodiesel to produce biodiesel 5 blended fuel, if the biodiesel blended fuel is distributed 6 to a blender licensed pursuant to section 452A.6 who is also 7 required to pay the excise tax on that same diesel fuel. 8 Sec. 5. Section 452A.86, Code 2009, is amended to read as 9 follows: 10 452A.86 Method of determining gallonage. 11 1. The exclusive method of determining gallonage of 12 any purchases or sales of motor fuel, undyed special fuel, 13 compressed natural gas, or liquefied petroleum gas as defined 14 in this chapter and distillate fuels shall be on a gross 15 volume basis. A temperature-adjusted or other method shall 16 not be used, except as it applies to biodiesel fuel, liquefied 17 petroleum gas and , or the sale or exchange of petroleum 18 products between petroleum refiners. All invoices, bills of 19 lading, or other records of sale or purchase and all returns 20 or records required to be made, kept, and maintained by a 21 supplier, restrictive supplier, importer, exporter, blender, 22 or compressed natural gas or liquefied petroleum gas dealer or 23 user shall be made, kept, and maintained on the gross volume 24 basis. 25 2. For purposes of this section, “distillate fuels” means 26 any fuel oil, gas oil, topped crude oil, or other petroleum 27 oils derived by refining or processing crude oil or unfinished 28 oils which have a boiling range at atmospheric pressure which 29 falls completely or in part between five hundred fifty and 30 twelve hundred degrees Fahrenheit. 31 EXPLANATION 32 CALCULATING THE EXCISE TAX IMPOSED ON BIODIESEL FUEL. This 33 bill applies to the excise tax imposed on biodiesel fuel, which 34 includes biodiesel and biodiesel blended with diesel fuel, from 35 -2- LSB 5213SS (6) 83 da/rj 2/ 3

S.F. 2103 B-1 to B-100 (see generally Code sections 214A.1 and 214A.2). 1 Generally, an excise tax is imposed on each gallon of motor 2 fuel, including biodiesel fuel (Code section 452A.3) on a 3 gross volume basis without adjustment (Code section 452A.86). 4 The bill does not directly change the excise tax imposed on 5 biodiesel fuel, but changes how the gallonage is calculated 6 at the meter, by requiring that the excise tax be assessed 7 after adjusting the biodiesel’s fuel temperature to 60 degrees 8 Fahrenheit. 9 REFUND OF EXCISE TAX PAID ON DIESEL FUEL PAID BY NONTERMINAL 10 STORAGE FACILITIES. A person who manufactures a biofuel, 11 including ethanol or biodiesel for distribution, is classified 12 as a nonterminal storage facility (Code section 452A.2). A 13 nonterminal storage facility is required to pay an excise 14 tax on diesel fuel used in producing biodiesel blended fuel. 15 The bill provides that the nonterminal storage facility is 16 entitled to a refund of the excise tax paid on diesel fuel if 17 the biodiesel blended fuel is distributed to a licensed blender 18 (Code section 452A.6) who must pay the excise tax on that same 19 diesel fuel. 20 -3- LSB 5213SS (6) 83 da/rj 3/ 3