SF 2107 (LSB 5250XS (21) 83)

SENATE FILE 2107

BY  KIBBIE

A BILL FOR

An Act relating to motor fuel by establishing standards for the sale of such fuel, eliminating tax credits, and making penalties applicable.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 214A.1, Code 2009, is amended by adding the following new subsection:
   NEW SUBSECTION.  23A.  “Unblended gasoline” means gasoline other than any of the following:
   a.  Standard ethanol blended gasoline.
   b.  E-85 gasoline.
    Sec. 2.  Section 214A.2, subsection 3, paragraph b, subparagraph (4), Code Supplement 2009, is amended by striking the subparagraph and inserting in lieu thereof the following:
   (4)  (a)  For standard ethanol blended gasoline, it must be classified as a type of ethanol blended gasoline that meets all of the following requirements:
   (i)  It contains the highest volume of ethanol authorized by the United States environmental protection agency.
   (ii)  It meets the requirements for ethanol blended gasoline as provided in this section.
   (b)  The department shall publish a new classification for standard ethanol blended gasoline in the Iowa administrative bulletin as provided in section 17A.6 as soon as practicable. The new classification shall designate the volume percent of ethanol in the ethanol blended gasoline according to its designation as provided in this section. The new classification for standard ethanol blended gasoline shall take effect not earlier than sixty days after the date of publication. The secretary shall notify the Iowa Code editor by letter of the new classification.
   (c)  (i)  Notwithstanding subparagraph division (b), the classification for standard ethanol blended gasoline is E-9 or E-10, until the date that a new classification for standard ethanol blended gasoline is first published in the Iowa administrative bulletin as provided in that subparagraph division.
   (ii)  This subparagraph division (c) is repealed on the date that the first new classification for standard ethanol blended gasoline is first published in the Iowa administrative bulletin as provided in subparagraph division (b).
    Sec. 3.  NEW SECTION.  214A.2C  Gasoline advertised, sold, or dispensed by a retail dealer —— ethanol blend requirement and exceptions —— applicability.
   1.  Except as otherwise provided in this section, a retail dealer shall not advertise, sell, or dispense unblended gasoline in this state.
   2.  A retail dealer may advertise, sell, or dispense unblended gasoline in this state if all of the following apply:
   a.  The unblended gasoline is used to operate a motor which powers a qualified motor vehicle which is any one of the following:
   (1)  An aircraft as defined in section 328.1.
   (2)  A motor vehicle used exclusively for motor sports, including on a raceway, if the motor vehicle cannot operate on a highway as provided in chapter 321 or rules adopted by the state department of transportation.
   (3)  An antique vehicle registered under section 321.115.
   (4)  A snowmobile as defined in section 321G.1.
   (5)  An all-terrain vehicle as defined in section 321I.1.
   (6)  A watercraft as defined in section 462A.2.
   (7)  A lawnmower or other implement powered by a small motor.
   b.  The retail dealer does not use more than one metered pump located at a retail motor fuel site to advertise, sell, or dispense unblended gasoline.
   3.  A retail dealer may advertise, sell, or dispense unblended gasoline at a retail motor fuel site owned or operated by the retail dealer pursuant to a waiver issued by the department to the retail dealer.
   a.  The department shall only issue a waiver to a retail dealer after approving an application submitted to the department by the retail dealer in a manner and according to procedures required by the department which application demonstrates that the retail dealer is not able to reasonably obtain ethanol blended gasoline for sale at the retail motor fuel site.
   b.  A waiver issued under this subsection expires six months from the date of issuance. However, a retail dealer who has been issued a waiver may apply for and be issued any number of subsequent waivers.
   4.  a.  A retail dealer may advertise, sell, or dispense unblended gasoline at a retail motor fuel site owned or operated by the retail dealer without restriction as otherwise provided in this section until January 1, 2011.
   b.  This subsection is repealed on January 1, 2011.
    Sec. 4.  Section 214A.3, Code Supplement 2009, is amended by adding the following new subsection:
   NEW SUBSECTION.  3.  A retail dealer who advertises the sale of gasoline that is not ethanol blended gasoline shall refer to the gasoline as unblended gasoline.
    Sec. 5.  Section 214A.16, Code Supplement 2009, is amended to read as follows:
   214A.16  Notice of renewable biodiesel fuel or unblended gasoline —— decal.
   1.  a.  If ethanol blended gasoline is sold from a motor fuel pump a motor fuel pump dispenses unblended gasoline, the motor fuel pump shall have affixed a decal identifying the ethanol blended gasoline motor fuel as unblended gasoline. If the motor fuel pump dispenses ethanol blended gasoline classified as higher than standard ethanol blended gasoline pursuant to section 214A.2, the decal shall contain the following notice:  “FOR FLEXIBLE FUEL VEHICLES ONLY” identify the ethanol blended gasoline as for flexible fuel vehicles only.
   b.  If biodiesel fuel is sold from a motor fuel pump, the motor fuel pump shall have affixed a decal identifying the biodiesel fuel as provided in 16 C.F.R. pt. 306.
   2.  The design and location of the decal shall be prescribed by rules adopted by the department. A decal identifying a renewable biodiesel fuel shall be consistent with standards adopted pursuant to section 159A.6. The department may approve an application to place a decal in a special location on a pump or container or use a decal with special lettering or colors, if the decal appears clear and conspicuous to the consumer. The application shall be made in writing pursuant to procedures adopted by the department.
    Sec. 6.  Section 422.11N, subsection 9, Code 2009, is amended to read as follows:
   9.  This section is repealed on January 1, 2021 2011.
    Sec. 7.  Section 422.11O, subsection 5, Code 2009, is amended by striking the subsection.
    Sec. 8.  Section 422.33, subsection 11A, paragraph c, Code Supplement 2009, is amended to read as follows:
   c.  This subsection is repealed on January 1, 2021 2011.
    Sec. 9.  2006 Iowa Acts, chapter 1142, section 49, subsection 2, as amended by 2006 Iowa Acts, chapter 1175, section 17, is amended to read as follows:
   2.  For a retail dealer who may claim an ethanol promotion tax credit under section 422.11N or 422.33, subsection 11A, as enacted in this Act, in calendar year 2020 2010 and whose tax year ends prior to after December 31, 2020 2010, the retail dealer may continue to claim the tax credit in only for that part of the retail dealer’s following tax year ending on December 31, 2010. In that case, the tax credit shall be calculated in the same manner as provided in section 422.11N or 422.33, subsection 11A, as enacted in this Act, for the remaining period beginning on the first day of the retail dealer’s new tax year until December 31, 2020. For that remaining period, the tax credit shall be calculated in the same manner as a retail dealer whose tax year began on the previous January 1 and who is calculating the tax credit on December 31, 2020.
EXPLANATION
   REGULATION OF ETHANOL BLENDED GASOLINE. This bill amends Code chapter 214A, which provides authority to the department of agriculture and land stewardship (department) to regulate the sale of motor fuel, including renewable fuel such as ethanol blended gasoline. Code section 214A.2 provides for different types of gasoline and establishes standards or specifications for gasoline in conformance with federal law and specifically regulations promulgated by the Unites States environmental protection agency (EPA), and in part based on standards published by the American society for testing and materials (A.S.T.M.) international. The Code section provides that standard ethanol blended gasoline is classified by its percent volume of ethanol, referred to as “E-xx” where “xx” designates the percentage (e.g., E-10).
   INCREASING THE PERCENTAGE OF ETHANOL IN STANDARD ETHANOL BLENDED GASOLINE. The bill increases the ethanol percentage required to be blended in standard ethanol blended gasoline. Currently, standard ethanol blended gasoline used to power vehicles other than flexible fuel vehicles is classified as E-9 or E-10 in conformance with EPA regulations. The bill provides that if the EPA allows a higher percentage (e.g., E-15), the department must change the classification of standard ethanol blended gasoline to conform with the higher percentage, so long as the gasoline complies with other state specifications including A.S.T.M. international requirements. The department must publish the new classification in the Iowa administrative bulletin and it takes effect 60 days later. Until that time, the current E-9 or E-10 classification applies.
   ETHANOL BLENDED GASOLINE REQUIREMENT. The bill creates a new requirement that a retail dealer cannot advertise, sell, or dispense gasoline other than ethanol blended gasoline; either standard ethanol blended gasoline or so-called E-85 gasoline. Gasoline which does not contain the requisite percentage of ethanol is referred to as “unblended gasoline”.
   EXCEPTIONS. Notwithstanding the prohibition, the bill allows a retail dealer to continue to advertise, sell, or dispense unblended gasoline in limited circumstances. First, the prohibition does not apply to gasoline used to operate aircraft, or motor vehicles involved exclusively in motor sports events. The requirement also does not apply to gasoline for use in certain vehicles such as antique vehicles, snowmobiles, all-terrain vehicles, watercraft, and small motors. The bill prohibits a retail dealer from using more than one metered pump to dispense unblended gasoline. Second, the prohibition does not apply to a retail dealer who has been issued a waiver by the department because the retail dealer has not been able to reasonably obtain ethanol blended gasoline for sale at the retail motor fuel site. The waiver expires six months from the date of issuance. However, a retail dealer who has been issued a waiver may apply for any number of subsequent waivers. Third, a retail dealer may continue to advertise, sell, or dispense unblended gasoline from one or more metered pumps located at a retail motor fuel site until January 1, 2011.
   ADVERTISING. The bill provides that a retail dealer must affix a decal on each metered pump which dispenses unblended gasoline, notifying the public of its designation and any restricted use. The bill eliminates a requirement that a metered pump dispensing ethanol blended gasoline be affixed with a decal.
   APPLICABLE PENALTIES. Code section 214A.11 provides that a person who violates a provision of Code chapter 214A is guilty of a serious misdemeanor, and that each day that a continuing violation occurs is considered a separate offense. A serious misdemeanor is punishable by confinement for no more than one year and a fine of at least $315 but not more than $1,875. The Code section also provides that in lieu of seeking a prosecution, the state may proceed against the person by initiating an alternative civil enforcement action as a contested case proceeding by the department under Code chapter 17A or as a civil judicial proceeding by the attorney general upon referral by the department. The applicable civil penalty is at least $100 but not more than $1,000 for each violation. Each day that a continuing violation occurs shall be considered a separate offense.
   ELIMINATION OF TAX CREDITS. During the 2006 Legislative Session, the general assembly enacted H.F. 2754 (2006 Iowa Acts, chapter 1142) creating two new tax credits: (1) the ethanol promotion tax credit, and (2) the E-85 gasoline promotion tax credit. That statute in addition to subsequent enactments provides for the terms of the tax credits which may be claimed by retail dealers. The ethanol promotion tax credit expires on December 31, 2010 (see 2006 Iowa Acts, chapter 1175), but provides an extension for persons who have tax years beginning after January 1. The bill eliminates the tax credit on January 1, 2011, when the new sales requirement takes effect, and does not allow the extension period for retail dealers whose fiscal year does not begin on January 1. The bill also eliminates a provision affecting the E-85 gasoline promotion tax credit which allows a retail dealer to claim both tax credits based on the same ethanol gallonage.