SF 2382 (LSB 5213SV (3) 83)

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 blended fuel, and excise taxes imposed upon special fuel, including biodiesel fuel and diesel fuel used in the production of biodiesel blended fuel.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 214A.2, subsection 4, paragraph b, Code Supplement 2009, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (4)  Biodiesel blended fuel designated as from B-6 through B-20 must conform to A.S.T.M. international specification D7467 or a successor A.S.T.M. international specification as established by rules adopted by the department.
    Sec. 2.  Section 452A.2, Code 2009, is amended by adding the following new subsections:
   NEW SUBSECTION.  3A.  “Biodiesel producer” means a person who produces at least one hundred thousand gallons of biodiesel on a calendar year basis from a production facility and which is required to be licensed pursuant to this division.
   NEW SUBSECTION.  9A.  “Diesel fuel” means the same as defined in section 214A.1.
    Sec. 3.  Section 452A.2, subsection 29, Code 2009, is amended to read as follows:
   29.  “Nonterminal storage facility” means a facility where motor fuel or special fuel, other than liquefied petroleum gas, is stored that is not supplied by a pipeline or a marine vessel. “Nonterminal storage facility” includes a facility that manufactures products such as ethanol as defined in section 214A.1, biofuel, blend stocks, or additives which may be used as motor fuel or special fuel, other than liquefied petroleum gas, for operating motor vehicles or aircraft.
    Sec. 4.  Section 452A.3, subsection 3, Code Supplement 2009, is amended to read as follows:
   3.  a.  For the privilege of operating motor vehicles or aircraft in this state, there is imposed an excise tax on the use of special fuel in a motor vehicle or aircraft.
   (1)  The tax rate on special fuel for diesel engines of motor vehicles is twenty-two and one-half cents per gallon.  The tax rate on biodiesel fuel for diesel engines of motor vehicles shall be determined on a gross volume basis by all persons except a biodiesel producer. A biodiesel producer shall remit the tax on a volume basis with the gross metered gallons adjusted to sixty degrees Fahrenheit.
   (2)  The rate of tax on special fuel for aircraft is three cents per gallon.
   (3)  On all other special fuel, unless otherwise specified in this section, the per gallon rate is the same as the motor fuel tax.
   b.  Indelible dye meeting United States environmental protection agency and internal revenue service regulations must be added to special fuel before or upon withdrawal at a terminal or refinery rack for that special fuel to be exempt from tax and the dyed special fuel may be used only for an exempt purpose.
    Sec. 5.  Section 452A.17, subsection 1, paragraph a, Code Supplement 2009, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (11)  Diesel fuel used by a nonterminal storage facility to blend with biodiesel to produce biodiesel blended fuel, if the biodiesel blended fuel is distributed to a blender licensed pursuant to section 452A.6 who is also required to pay the excise tax on that same diesel fuel.
    Sec. 6.  Section 452A.86, Code 2009, is amended to read as follows:
   452A.86  Method of determining gallonage.
   1.  The exclusive method of determining gallonage of any purchases or sales of motor fuel, undyed special fuel, compressed natural gas, or liquefied petroleum gas as defined in this chapter and distillate fuels shall be on a gross volume basis. A temperature-adjusted or other method shall not be used, except as it applies to biodiesel sold by a biodiesel producer, liquefied petroleum gas and, or the sale or exchange of petroleum products between petroleum refiners. All invoices, bills of lading, or other records of sale or purchase and all returns or records required to be made, kept, and maintained by a supplier, restrictive supplier, importer, exporter, blender, or compressed natural gas or liquefied petroleum gas dealer or user shall be made, kept, and maintained on the gross volume basis.
   2.  For purposes of this section, “distillate fuels” means any fuel oil, gas oil, topped crude oil, or other petroleum oils derived by refining or processing crude oil or unfinished oils which have a boiling range at atmospheric pressure which falls completely or in part between five hundred fifty and twelve hundred degrees Fahrenheit.
EXPLANATION
   GENERAL. This bill relates to fuel and specifically biodiesel fuel which includes 100 percent biodiesel and biodiesel fuel blended with diesel fuel. It amends provisions in Code chapter 214A which regulates the content of biodiesel blended fuel and Code chapter 452A which provides for an excise tax imposed upon biodiesel fuel.
   SPECIFICATIONS. The bill adopts A.S.T.M. specification D7467 for biodiesel blended fuel containing between six to 20 percent biodiesel, referred to as B-6 through B-20. (Code section 214A.2).
   BIODIESEL PRODUCERS —— EXCISE TAX RATE ON BIODIESEL. The bill applies to a biodiesel producer who is licensed by the department of revenue and who produces at least 100,000 gallons of biodiesel on a calendar year basis. The bill applies to the excise tax imposed on biodiesel sold by a biodiesel producer (see generally Code sections 214A.1 and 214A.2). Generally, an excise tax is imposed on each gallon of motor fuel, including biodiesel fuel (Code section 452A.3) on a gross volume basis without adjustment (Code section 452A.86). The bill does not directly change the excise tax imposed on biodiesel fuel, but changes how the gallonage is calculated at the meter of a biodiesel producer, by requiring that the excise tax be assessed after adjusting the biodiesel’s temperature to 60 degrees Fahrenheit.
   REFUND OF EXCISE TAX PAID ON DIESEL FUEL PAID BY NONTERMINAL STORAGE FACILITIES. A person who manufactures a biofuel, including ethanol or biodiesel for distribution, is classified as a nonterminal storage facility (Code section 452A.2). A nonterminal storage facility is required to pay an excise tax on diesel fuel used in producing biodiesel blended fuel. The bill provides that the nonterminal storage facility is entitled to a refund of the excise tax paid on diesel fuel if the biodiesel blended fuel is distributed to a licensed blender (Code section 452A.6) who must pay the excise tax on that same diesel fuel.