Senate File 2382 - Introduced SENATE FILE 2382 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SF 2103) A BILL FOR An Act relating to fuel, including standards for biodiesel 1 blended fuel, and excise taxes imposed upon special fuel, 2 including biodiesel fuel and diesel fuel used in the 3 production of biodiesel blended fuel. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5213SV (3) 83 da/rj

S.F. 2382 Section 1. Section 214A.2, subsection 4, paragraph b, 1 Code Supplement 2009, is amended by adding the following new 2 subparagraph: 3 NEW SUBPARAGRAPH . (4) Biodiesel blended fuel designated as 4 from B-6 through B-20 must conform to A.S.T.M. international 5 specification D7467 or a successor A.S.T.M. international 6 specification as established by rules adopted by the 7 department. 8 Sec. 2. Section 452A.2, Code 2009, is amended by adding the 9 following new subsections: 10 NEW SUBSECTION . 3A. “Biodiesel producer” means a person who 11 produces at least one hundred thousand gallons of biodiesel on 12 a calendar year basis from a production facility and which is 13 required to be licensed pursuant to this division. 14 NEW SUBSECTION . 9A. “Diesel fuel” means the same as defined 15 in section 214A.1. 16 Sec. 3. Section 452A.2, subsection 29, Code 2009, is amended 17 to read as follows: 18 29. “Nonterminal storage facility” means a facility where 19 motor fuel or special fuel, other than liquefied petroleum 20 gas, is stored that is not supplied by a pipeline or a marine 21 vessel. “Nonterminal storage facility” includes a facility that 22 manufactures products such as ethanol as defined in section 23 214A.1 , biofuel, blend stocks, or additives which may be used 24 as motor fuel or special fuel, other than liquefied petroleum 25 gas, for operating motor vehicles or aircraft. 26 Sec. 4. Section 452A.3, subsection 3, Code Supplement 2009, 27 is amended to read as follows: 28 3. a. For the privilege of operating motor vehicles or 29 aircraft in this state, there is imposed an excise tax on the 30 use of special fuel in a motor vehicle or aircraft. 31 (1) The tax rate on special fuel for diesel engines of motor 32 vehicles is twenty-two and one-half cents per gallon. The tax 33 rate on biodiesel fuel for diesel engines of motor vehicles 34 shall be determined on a gross volume basis by all persons 35 -1- LSB 5213SV (3) 83 da/rj 1/ 4

S.F. 2382 except a biodiesel producer. A biodiesel producer shall remit 1 the tax on a volume basis with the gross metered gallons 2 adjusted to sixty degrees Fahrenheit. 3 (2) The rate of tax on special fuel for aircraft is three 4 cents per gallon. 5 (3) On all other special fuel, unless otherwise specified in 6 this section, the per gallon rate is the same as the motor fuel 7 tax. 8 b. Indelible dye meeting United States environmental 9 protection agency and internal revenue service regulations 10 must be added to special fuel before or upon withdrawal at a 11 terminal or refinery rack for that special fuel to be exempt 12 from tax and the dyed special fuel may be used only for an 13 exempt purpose. 14 Sec. 5. Section 452A.17, subsection 1, paragraph a, Code 15 Supplement 2009, is amended by adding the following new 16 subparagraph: 17 NEW SUBPARAGRAPH . (11) Diesel fuel used by a nonterminal 18 storage facility to blend with biodiesel to produce biodiesel 19 blended fuel, if the biodiesel blended fuel is distributed 20 to a blender licensed pursuant to section 452A.6 who is also 21 required to pay the excise tax on that same diesel fuel. 22 Sec. 6. Section 452A.86, Code 2009, is amended to read as 23 follows: 24 452A.86 Method of determining gallonage. 25 1. The exclusive method of determining gallonage of 26 any purchases or sales of motor fuel, undyed special fuel, 27 compressed natural gas, or liquefied petroleum gas as defined 28 in this chapter and distillate fuels shall be on a gross 29 volume basis. A temperature-adjusted or other method shall 30 not be used, except as it applies to biodiesel sold by a 31 biodiesel producer, liquefied petroleum gas and , or the sale 32 or exchange of petroleum products between petroleum refiners. 33 All invoices, bills of lading, or other records of sale or 34 purchase and all returns or records required to be made, 35 -2- LSB 5213SV (3) 83 da/rj 2/ 4

S.F. 2382 kept, and maintained by a supplier, restrictive supplier, 1 importer, exporter, blender, or compressed natural gas or 2 liquefied petroleum gas dealer or user shall be made, kept, and 3 maintained on the gross volume basis. 4 2. For purposes of this section, “distillate fuels” means 5 any fuel oil, gas oil, topped crude oil, or other petroleum 6 oils derived by refining or processing crude oil or unfinished 7 oils which have a boiling range at atmospheric pressure which 8 falls completely or in part between five hundred fifty and 9 twelve hundred degrees Fahrenheit. 10 EXPLANATION 11 GENERAL. This bill relates to fuel and specifically 12 biodiesel fuel which includes 100 percent biodiesel and 13 biodiesel fuel blended with diesel fuel. It amends provisions 14 in Code chapter 214A which regulates the content of biodiesel 15 blended fuel and Code chapter 452A which provides for an excise 16 tax imposed upon biodiesel fuel. 17 SPECIFICATIONS. The bill adopts A.S.T.M. specification 18 D7467 for biodiesel blended fuel containing between six to 20 19 percent biodiesel, referred to as B-6 through B-20. (Code 20 section 214A.2). 21 BIODIESEL PRODUCERS —— EXCISE TAX RATE ON BIODIESEL. The 22 bill applies to a biodiesel producer who is licensed by the 23 department of revenue and who produces at least 100,000 gallons 24 of biodiesel on a calendar year basis. The bill applies to the 25 excise tax imposed on biodiesel sold by a biodiesel producer 26 (see generally Code sections 214A.1 and 214A.2). Generally, an 27 excise tax is imposed on each gallon of motor fuel, including 28 biodiesel fuel (Code section 452A.3) on a gross volume basis 29 without adjustment (Code section 452A.86). The bill does not 30 directly change the excise tax imposed on biodiesel fuel, 31 but changes how the gallonage is calculated at the meter of 32 a biodiesel producer, by requiring that the excise tax be 33 assessed after adjusting the biodiesel’s temperature to 60 34 degrees Fahrenheit. 35 -3- LSB 5213SV (3) 83 da/rj 3/ 4

S.F. 2382 REFUND OF EXCISE TAX PAID ON DIESEL FUEL PAID BY NONTERMINAL 1 STORAGE FACILITIES. A person who manufactures a biofuel, 2 including ethanol or biodiesel for distribution, is classified 3 as a nonterminal storage facility (Code section 452A.2). A 4 nonterminal storage facility is required to pay an excise 5 tax on diesel fuel used in producing biodiesel blended fuel. 6 The bill provides that the nonterminal storage facility is 7 entitled to a refund of the excise tax paid on diesel fuel if 8 the biodiesel blended fuel is distributed to a licensed blender 9 (Code section 452A.6) who must pay the excise tax on that same 10 diesel fuel. 11 -4- LSB 5213SV (3) 83 da/rj 4/ 4