H.F. 451 DIVISION I 1 REGULATION OF MOTOR FUEL 2 Section 1. Section 214A.1, Code 2011, is amended by adding 3 the following new subsections: 4 NEW SUBSECTION . 11A. “Flexible fuel vehicle” means a motor 5 vehicle which is powered by an engine capable of operating 6 using E-85 gasoline. 7 NEW SUBSECTION . 16A. “Nonblended gasoline” means gasoline 8 other than ethanol blended gasoline. 9 Sec. 2. Section 214A.2, subsection 4, paragraph b, Code 10 2011, is amended by adding the following new subparagraph: 11 NEW SUBPARAGRAPH . (4) Biodiesel blended fuel classified as 12 from B-6 through B-20 must conform to A.S.T.M. international 13 specification D7467 or a successor A.S.T.M. international 14 specification as established by rules adopted by the 15 department. 16 Sec. 3. Section 214A.16, subsection 1, Code 2011, is amended 17 by striking the subsection and inserting in lieu thereof the 18 following: 19 1. A motor fuel pump shall be affixed with a decal 20 identifying the motor fuel that it dispenses, as required in 21 this subsection. 22 a. If the motor fuel is gasoline, the following shall apply: 23 (1) For gasoline not blended with ethanol, the decal shall 24 identify it as nonblended gasoline. 25 (2) For gasoline classified as higher than standard ethanol 26 blended gasoline pursuant to section 214A.2, the decal shall 27 identify it as being for use in flexible fuel vehicles only. 28 b. If the motor fuel is biodiesel fuel, the decal shall 29 identify the biodiesel fuel as provided in 16 C.F.R. pt. 306. 30 Sec. 4. Section 422.11N, subsection 1, paragraph a, Code 31 2011, is amended to read as follows: 32 a. “E-85 gasoline” , “ethanol” , “ethanol blended gasoline” , 33 “gasoline” , “flexible fuel vehicle” , and “retail dealer” mean the 34 same as defined in section 214A.1 . 35 -1- LSB 1832HV (1) 84 da/nh 1/ 6

H.F. 451 Sec. 5. Section 422.11N, subsection 1, paragraph b, Code 1 2011, is amended by striking the paragraph. 2 Sec. 6. Section 452A.2, subsection 18, Code 2011, is amended 3 to read as follows: 4 18. “Flexible fuel vehicle” means a motor vehicle as defined 5 in section 321M.1 which is powered by an engine capable of 6 operating using E-85 gasoline the same as defined in section 7 214A.1 . 8 DIVISION II 9 TAXES IMPOSED UPON BIODIESEL FUEL 10 Sec. 7. Section 452A.2, Code 2011, is amended by adding the 11 following new subsection: 12 NEW SUBSECTION . 9A. “Diesel fuel” means the same as defined 13 in section 214A.1. 14 Sec. 8. Section 452A.2, subsection 29, Code 2011, is amended 15 to read as follows: 16 29. “Nonterminal storage facility” means a facility where 17 motor fuel or special fuel, other than liquefied petroleum 18 gas, is stored that is not supplied by a pipeline or a marine 19 vessel. “Nonterminal storage facility” includes a facility that 20 manufactures products such as ethanol as defined in section 21 214A.1 , biofuel, blend stocks, or additives which may be used 22 as motor fuel or special fuel, other than liquefied petroleum 23 gas, for operating motor vehicles or aircraft. 24 Sec. 9. Section 452A.3, subsection 3, Code 2011, is amended 25 to read as follows: 26 3. a. For the privilege of operating motor vehicles or 27 aircraft in this state, there is imposed an excise tax on the 28 use of special fuel in a motor vehicle or aircraft. 29 (1) The tax rate on special fuel for diesel engines of motor 30 vehicles is twenty-two and one-half cents per gallon. The tax 31 rate on biodiesel for diesel engines of motor vehicles shall 32 be determined on a volume basis with the gross metered gallons 33 adjusted to sixty degrees Fahrenheit. 34 (2) The rate of tax on special fuel for aircraft is three 35 -2- LSB 1832HV (1) 84 da/nh 2/ 6

H.F. 451 cents per gallon. 1 (3) On all other special fuel, unless otherwise specified in 2 this section , the per gallon rate is the same as the motor fuel 3 tax. 4 b. Indelible dye meeting United States environmental 5 protection agency and internal revenue service regulations 6 must be added to special fuel before or upon withdrawal at a 7 terminal or refinery rack for that special fuel to be exempt 8 from tax and the dyed special fuel may be used only for an 9 exempt purpose. 10 Sec. 10. Section 452A.17, subsection 1, paragraph a, Code 11 2011, is amended by adding the following new subparagraph: 12 NEW SUBPARAGRAPH . (11) Diesel fuel used by a nonterminal 13 storage facility to blend with biodiesel to produce biodiesel 14 blended fuel, if the biodiesel blended fuel is distributed 15 to a blender licensed pursuant to section 452A.6 who is also 16 required to pay the excise tax on the same diesel fuel. 17 Sec. 11. Section 452A.86, Code 2011, is amended to read as 18 follows: 19 452A.86 Method of determining gallonage. 20 1. The exclusive method of determining gallonage of 21 any purchases or sales of motor fuel, undyed special fuel, 22 compressed natural gas, or liquefied petroleum gas as defined 23 in this chapter and distillate fuels shall be on a gross volume 24 basis. A temperature-adjusted or other method shall not be 25 used, except as it applies to biodiesel, liquefied petroleum 26 gas , and or the sale or exchange of petroleum products between 27 petroleum refiners. All invoices, bills of lading, or other 28 records of sale or purchase and all returns or records required 29 to be made, kept, and maintained by a supplier, restrictive 30 supplier, importer, exporter, blender, or compressed natural 31 gas or liquefied petroleum gas dealer or user shall be made, 32 kept, and maintained on the gross volume basis. 33 2. For purposes of this section , “distillate fuels” means 34 any fuel oil, gas oil, topped crude oil, or other petroleum 35 -3- LSB 1832HV (1) 84 da/nh 3/ 6

H.F. 451 oils derived by refining or processing crude oil or unfinished 1 oils which have a boiling range at atmospheric pressure which 2 falls completely or in part between five hundred fifty and 3 twelve hundred degrees Fahrenheit. 4 DIVISION III 5 INCOME TAX CREDITS FOR RETAIL DEALERS OF RENEWABLE FUEL 6 Sec. 12. Section 422.11N, subsection 3, Code 2011, is 7 amended by adding the following new paragraph: 8 NEW PARAGRAPH . c. The department has received the retail 9 dealer’s motor fuel gallonage report for the immediately prior 10 determination period beginning January 1 and ending December 11 31, as required in section 452A.33. The report must have been 12 received by the department on or before the report’s due date. 13 If the retail dealer submits the report on a quarterly or 14 monthly basis as provided in that section, the department must 15 have received all such reports by the same due date. 16 Sec. 13. Section 422.11O, subsection 2, Code 2011, is 17 amended by adding the following new paragraph: 18 NEW PARAGRAPH . c. The department has received the retail 19 dealer’s motor fuel gallonage report for the immediately prior 20 determination period beginning January 1 and ending December 21 31, as required in section 452A.33. The report must have been 22 received by the department on or before the report’s due date. 23 If the retail dealer submits the report on a quarterly or 24 monthly basis as provided in that section, the department must 25 have received all such reports by the same due date. 26 Sec. 14. Section 422.11P, subsection 2, paragraph a, Code 27 2011, is amended by adding the following new subparagraph: 28 NEW SUBPARAGRAPH . (4) The department has received the 29 retail dealer’s motor fuel gallonage report for the immediately 30 prior determination period beginning January 1 and ending 31 December 31, as required in section 452A.33. The report 32 must have been received by the department on or before the 33 report’s due date. If the retail dealer submits the report on 34 a quarterly or monthly basis as provided in that section, the 35 -4- LSB 1832HV (1) 84 da/nh 4/ 6

H.F. 451 department must have received all such reports by the same due 1 date. 2 Sec. 15. Section 452A.33, subsection 1, paragraph a, 3 unnumbered paragraph 1, Code 2011, is amended to read as 4 follows: 5 Each retail dealer shall submit a motor fuel gallonage 6 report , detailing its total motor fuel gallonage for a 7 determination period as follows: 8 EXPLANATION 9 GENERAL. This bill amends provisions in a number of Code 10 chapters relating to motor fuel sold in this state, including 11 motor fuel that contains a percentage of a biofuel (biodiesel 12 or ethanol). 13 REGULATION OF MOTOR FUEL. The bill amends several 14 provisions in Code chapter 214A, which regulates the sale 15 of motor fuel by the department of agriculture and land 16 stewardship (DALS). The bill establishes a standard for 17 biodiesel blended fuel based on A.S.T.M. international 18 specifications. It also rewrites a provision that requires 19 that a motor fuel pump be affixed with a decal (label) 20 informing the traveling public whether it is dispensing a motor 21 fuel containing ethanol or biodiesel. It retains the label 22 requirement for a motor fuel pump dispensing E-85 gasoline 23 for flexible fuel vehicles or biodiesel blended fuel for 24 diesel-powered motor vehicles, removes a provision requiring a 25 label for a motor fuel pump dispensing other types of ethanol 26 blended fuel (standard ethanol blended gasoline), and requires 27 a label for a motor fuel pump dispensing gasoline without an 28 ethanol component (nonblended gasoline). 29 EXCISE TAXES IMPOSED UPON BIODIESEL FUEL. The bill amends 30 provisions in Code chapter 452A, which relate to an excise 31 tax imposed upon biodiesel fuel. Generally, an excise tax is 32 imposed on each gallon of motor fuel, including biodiesel fuel 33 (Code section 452A.3) based on a gross volume basis without 34 adjustment (Code section 452A.86). The bill does not directly 35 -5- LSB 1832HV (1) 84 da/nh 5/ 6

H.F. 451 change the excise tax imposed on biodiesel fuel, but changes 1 how the gallonage is calculated at the meter, by requiring that 2 the excise tax be assessed after adjusting the biodiesel’s 3 temperature to 60 degrees Fahrenheit. 4 The bill also provides for a refund of excise taxes paid 5 on diesel fuel by nonterminal storage facilities. A person 6 who manufactures a biofuel, including ethanol or biodiesel for 7 distribution, is classified as a nonterminal storage facility 8 (Code section 452A.2). A nonterminal storage facility is 9 required to pay an excise tax on diesel fuel used in producing 10 biodiesel blended fuel. The bill provides that the nonterminal 11 storage facility is entitled to a refund of the excise tax paid 12 on diesel fuel if the biodiesel blended fuel is distributed 13 to a licensed blender (Code section 452A.6) who must pay the 14 excise tax on that same diesel fuel. 15 INCOME TAX CREDITS FOR RETAIL DEALERS OF MOTOR FUEL WHICH 16 CONTAINS ETHANOL OR BIODIESEL. Code chapter 422 establishes a 17 tax credit for the promotion of ethanol blended gasoline (Code 18 sections 422.11N and 422.33(11A)), E-85 gasoline (Code sections 19 422.11O and 422.33(11B)), and biodiesel blended motor fuel 20 (Code sections 422.11P and 422.33(11C)). The bill provides 21 that in order for a retail dealer to claim a tax credit, it must 22 comply with an existing statute that requires a retail dealer 23 to submit a motor fuel gallonage report (Code section 452A.33) 24 for its latest determination period (calendar year). The 25 report includes the retail dealer’s total gasoline gallonage, 26 ethanol gallonage, ethanol blended gasoline gallonage, E-85 27 gasoline gallonage, diesel gallonage, and biodiesel gallonage 28 for each motor fuel site or other permanent or temporary 29 location owned or operated by the retail dealer. 30 -6- LSB 1832HV (1) 84 da/nh 6/ 6