Senate File 408 - Introduced SENATE FILE BY COMMITTEE ON TRANSPORTATION (SUCCESSOR TO SF 294) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act providing for motor fuel containing biodiesel, providing 2 for tax credits, making penalties applicable, and including 3 effective date and applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2135SV 83 6 da/rj/14 PAG LIN 1 1 DIVISION I 1 2 BIODIESEL FUEL STANDARD 1 3 Section 1. Section 214A.2, subsection 4, paragraph b, 1 4 subparagraph (2), Code 2009, is amended by striking the 1 5 subparagraph. 1 6 Sec. 2. NEW SECTION. 214A.2C STANDARD FOR DIESEL FUEL == 1 7 BIODIESEL REQUIRED. 1 8 1. A retail dealer shall not advertise for sale or sell 1 9 diesel fuel in this state, unless it is biodiesel fuel. 1 10 2. a. Subsection 1 does not apply to any of the 1 11 following: 1 12 (1) Motors located at an electric generating plant 1 13 regulated by the nuclear regulatory commission. This 1 14 exception shall no longer apply thirty days after the nuclear 1 15 regulatory commission approves the use of biodiesel fuel in 1 16 motors at electric generating plants. 1 17 (2) Railroad locomotives. 1 18 (3) Off=road logging equipment and machinery. 1 19 (4) Vehicles and equipment used exclusively on an aircraft 1 20 landing field. 1 21 b. This subsection is repealed on July 1, 2012. 1 22 Sec. 3. NEW SECTION. 214A.2D STANDARD FOR DIESEL FUEL == 1 23 BIODIESEL DESIGNATIONS. 1 24 1. A retail dealer shall not advertise or sell biodiesel 1 25 blended fuel unless it is designated B=5 or higher as 1 26 specified in section 214A.2. 1 27 2. The biodiesel blended fuel designation provided in 1 28 subsection 1 shall increase in two threshold periods as 1 29 follows: 1 30 a. For the first threshold period, beginning on July 1, 1 31 2012, and ending June 30, 2015, the biodiesel blended fuel 1 32 must be designated B=10 or higher as specified in section 1 33 214A.2. 1 34 b. For the second threshold period, beginning on July 1, 1 35 2015, the biodiesel blended fuel must be designated B=20 or 2 1 higher as specified in section 214A.2. 2 2 3. a. Notwithstanding subsection 2, a retail dealer is 2 3 not required to advertise for sale or sell biodiesel blended 2 4 fuel designated as higher than B=5 during the cold weather 2 5 months beginning November 1 and ending March 31. 2 6 b. The department may issue a cold weather suspension 2 7 order that suspends the application of paragraph "a" during 2 8 some or all of a threshold period and establish one or more 2 9 temporary biodiesel blended fuel designations applicable for 2 10 the period so long as a biodiesel blended fuel designation is 2 11 not less than B=5 and not more than the biodiesel blended fuel 2 12 designation that would otherwise apply during the threshold 2 13 period. The cold weather suspension order shall be published 2 14 in the Iowa administrative bulletin and take effect as 2 15 provided by the department. Prior to issuing the order, the 2 16 department shall consult with the committee. 2 17 4. a. The department may issue a threshold suspension 2 18 order suspending the application of a biodiesel designation 2 19 during a threshold period as provided in subsection 2, if the 2 20 department determines that any of the following apply: 2 21 (1) Less than five percent of the biodiesel blended fuel 2 22 expected to be sold in this state during the applicable 2 23 threshold period will be produced from a nontraditional 2 24 feedstock which is a biological resource other than an 2 25 agricultural resource traditionally grown or raised in the 2 26 state, including but not limited to algae cultivated for 2 27 biofuels production, waste oils, and tallow. 2 28 (2) No specification established by the United States 2 29 environmental protection agency or A.S.T.M. international 2 30 applies to the biodiesel designation required during the 2 31 applicable threshold period. 2 32 b. The threshold suspension order shall apply during some 2 33 or all of a threshold period and may establish one or more 2 34 temporary biodiesel blended fuel designations applicable for 2 35 the period of suspension so long as the temporary biodiesel 3 1 blended fuel designation is not less than B=5 and not more 3 2 than the biodiesel blended fuel designation that would 3 3 otherwise apply during the threshold period. The threshold 3 4 suspension order shall be published in the Iowa administrative 3 5 bulletin and take effect as provided by the department. Prior 3 6 to issuing the threshold suspension order, the department 3 7 shall consult with the committee. 3 8 5. The department may issue a threshold suspension order 3 9 suspending the application of a biodiesel designation for a 3 10 motor under the control of the nuclear regulatory commission 3 11 during a threshold period, if the nuclear regulatory 3 12 commission has not approved the use of the biodiesel 3 13 designation required during that threshold period. The 3 14 threshold suspension order shall be published in the Iowa 3 15 administrative bulletin and take effect as provided by the 3 16 department. Prior to issuing the threshold suspension order, 3 17 the department shall consult with the committee. 3 18 6. The governor may by executive order adjust the 3 19 biodiesel blended fuel designation as provided in this 3 20 section, if the governor determines that there exists a major 3 21 disparity between the price of biodiesel blended fuel and 3 22 diesel fuel, there is a significant shortage of biodiesel fuel 3 23 supplies in this state, or a systemic market change will cause 3 24 material economic hardship to retail dealers who advertise and 3 25 sell biodiesel blended fuel in this state which can be 3 26 alleviated by adjusting the biodiesel blended fuel. The 3 27 adjusted biodiesel blended fuel designation shall not be less 3 28 than B=5 and not more than the biodiesel blended fuel 3 29 designation that would otherwise apply during the applicable 3 30 threshold period. The executive order shall provide for the 3 31 termination of the adjusted biodiesel blended fuel designation 3 32 by a date certain. After the executive order's termination, 3 33 the biodiesel blended fuel designation shall be restored to 3 34 the amount required for the applicable threshold period. 3 35 Sec. 4. EMERGENCY RULES. The department of agriculture 4 1 and land stewardship shall adopt emergency rules under section 4 2 17A.4, subsection 3, and section 17A.5, subsection 2, 4 3 paragraph "b", to implement the provisions of sections 214A.2C 4 4 and 214A.2D, as enacted in this Act, and the rules shall be 4 5 effective July 1, 2009. Any rules adopted in accordance with 4 6 this section shall also be published as a notice of intended 4 7 action as provided in section 17A.4. 4 8 Sec. 5. EFFECTIVE DATE. This division of this Act takes 4 9 effect on July 1, 2009, except for the provisions authorizing 4 10 the department of agriculture and land stewardship to adopt 4 11 emergency rules and to publish a notice of intended action to 4 12 implement the provisions of sections 214A.2C and 214A.2D, as 4 13 enacted in this Act, which, being deemed of immediate 4 14 importance, take effect upon enactment. 4 15 DIVISION II 4 16 BIODIESEL FUEL LABELING 4 17 Sec. 6. Section 214A.2, subsection 5, Code 2009, is 4 18 amended to read as follows: 4 19 5. Ethanol blended gasoline shall be designated E=xx where 4 20 "xx" is the volume percent of ethanol in the ethanol blended 4 21 gasoline and biodiesel blended fuel shall be designated B=xx 4 22 where "xx" is the volume percent of biodiesel. 4 23 Sec. 7. Section 214A.16, subsection 1, Code 2009, is 4 24 amended to read as follows: 4 25 1. a. Ifmotor fuel containing a renewable fuelethanol 4 26 blended gasoline is sold from a motor fuel pump, the pump 4 27 shall have affixed a decal identifying thename of the 4 28 renewable fuelethanol blended gasoline.The decal shall be 4 29 different based on the type of renewable fuel dispensed.If 4 30 the motor fuel pump dispenses ethanol blended gasoline 4 31 classified as higher than standard ethanol blended gasoline 4 32 pursuant to section 214A.2, the decal shall contain the 4 33 following notice: "FOR FLEXIBLE FUEL VEHICLES ONLY". 4 34 b. If biodiesel fuel is sold from a motor fuel pump, the 4 35 pump shall have affixed a decal identifying the biodiesel fuel 5 1 as provided in 16 C.F.R. pt. 306. 5 2 DIVISION III 5 3 BIODIESEL BLENDED FUEL TAX CREDIT 5 4 Sec. 8. Section 422.33, subsection 11C, Code 2009, is 5 5 amended by striking the subsection. 5 6 Sec. 9. 2006 Iowa Acts, chapter 1142, section 49, 5 7 subsection 5, is amended by striking the subsection. 5 8 Sec. 10. Section 422.11P, Code 2009, is repealed. 5 9 Sec. 11. APPLICABILITY. The sections of this division of 5 10 this Act striking section 422.33, subsection 11C, striking 5 11 2006 Iowa Acts, chapter 49, subsection 5, and repealing 5 12 422.11P, apply to a taxpayer claiming a biodiesel tax credit 5 13 for sales of biodiesel blended fuel sold or dispensed on or 5 14 after the effective date of this division of this Act. 5 15 EXPLANATION 5 16 DIVISION I == BIODIESEL FUEL STANDARD. This bill applies 5 17 to the retail sale of diesel fuel as regulated by the 5 18 department of agriculture and land stewardship under Code 5 19 chapter 214A, and specifically biodiesel fuel derived from 5 20 vegetable oils or animal fats that meet departmental standards 5 21 (Code section 214A.2). Biodiesel fuel is designated by "B=xx" 5 22 where "xx" is the volume percent of biodiesel by volume. 5 23 Currently, all biodiesel fuel must be at least B=1 (Code 5 24 section 214A.2). 5 25 A retail dealer is prohibited from advertising for the sale 5 26 or selling diesel fuel unless it is biodiesel fuel. The bill 5 27 provides for a number of exceptions, including for motors 5 28 located at an electric generating plant regulated by the 5 29 nuclear regulatory commission, locomotives, off=road logging 5 30 equipment and machinery, and vehicles and equipment used 5 31 exclusively on an aircraft landing field. 5 32 Under the bill, the lowest designation of biodiesel blended 5 33 fuel that can be marketed is B=5. The bill provides for two 5 34 threshold periods which require that an increasing percentage 5 35 of biodiesel be included in the biodiesel blended fuel. The 6 1 first threshold period, beginning on July 1, 2012, and ending 6 2 June 30, 2015, requires that biodiesel blended fuel must be 6 3 B=10 or higher and the second threshold period beginning on 6 4 July 1, 2015, requires that biodiesel blended fuel be B=20 or 6 5 higher. 6 6 The bill also provides a number of exceptions. First, a 6 7 retail dealer is not required to market biodiesel blended fuel 6 8 designated as higher than B=5 during the cold weather months 6 9 beginning November 1 and ending March 31, unless the 6 10 department issues a cold weather suspension order for some or 6 11 all of those months. The cold weather suspension order may 6 12 establish a temporary biodiesel designation for the period of 6 13 the suspension. Secondly, the department may issue a 6 14 temporary order suspending a threshold period under two 6 15 conditions: (1) less than 5 percent of the biodiesel blended 6 16 fuel expected to be sold in this state during the applicable 6 17 threshold period will be produced from a nontraditional 6 18 feedstock, or (2) no specification established by the United 6 19 States environmental protection agency or A.S.T.M. 6 20 international applies to the biodiesel designation. The 6 21 department may issue a threshold suspension order that applies 6 22 during some or all of a threshold period and may establish one 6 23 or more temporary biodiesel fuel designations applicable for 6 24 the period. The bill also provides that the department may 6 25 suspend the biodiesel fuel standard for motors under the 6 26 control of the nuclear regulatory commission. 6 27 The bill also provides that the governor may by executive 6 28 order adjust the biodiesel blended fuel designation under any 6 29 of three circumstances: (1) a major disparity exists between 6 30 the price of biodiesel blended fuel and diesel fuel; (2) there 6 31 is a significant shortage of biodiesel fuel supplies in this 6 32 state; or (3) a systemic market change will cause material 6 33 economic hardship to retail dealers. The governor must 6 34 establish an adjusted biodiesel blended fuel designation 6 35 during the applicable threshold period. 7 1 EMERGENCY RULEMAKING AND EFFECTIVE DATE. The bill 7 2 authorizes the department of agriculture and land stewardship 7 3 to adopt rules by emergency and by notice of intended action 7 4 in order to implement the biodiesel fuel requirements. The 7 5 provision takes effect upon enactment. 7 6 DIVISION II == BIODIESEL FUEL LABELING. The bill provides 7 7 that a retail dealer who sells biodiesel fuel must affix a 7 8 decal to the motor fuel pump identifying the biodiesel fuel 7 9 when it contains a certain percentage of biodiesel as provided 7 10 by federal law, and specifically the federal trade commission. 7 11 The bill eliminates a state requirement that provides for the 7 12 general labeling of biodiesel fuel sold at motor fuel pumps 7 13 that contain any biodiesel. 7 14 DIVISION III == BIODIESEL BLENDED FUEL TAX CREDIT. The 7 15 bill eliminates provisions for a biodiesel blended fuel tax 7 16 credit available to a retail dealer of biodiesel blended fuel. 7 17 APPLICABLE PENALTIES. A person who violates a provision of 7 18 Code chapter 214A is guilty of a serious misdemeanor with each 7 19 day of a continuing violation consisting of a separate 7 20 offense. The state may also proceed against a person who 7 21 violates the Code chapter by bringing a civil enforcement 7 22 action as a contested case proceeding under Code chapter 17A 7 23 in lieu of a prosecution. A serious misdemeanor is punishable 7 24 by confinement for no more than one year and a fine of at 7 25 least $315 but not more than $1,875. The civil penalty shall 7 26 be for at least $100 but not more than one $1,000 for each 7 27 violation. 7 28 LSB 2135SV 83 7 29 da/rj/14