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  1 21    b.  This subsection is repealed on July 1, 2012.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.  If motor fuel containing a renewable fuel ethanol
  4 26 blended gasoline is sold from a motor fuel pump, the pump
  4 27 shall have affixed a decal identifying the name of the
  4 28 renewable fuel ethanol 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