H.F. 692 DIVISION I 1 RETAIL DEALERS —— MOTOR FUEL STANDARDS 2 Section 1. Section 214A.2, subsection 4, paragraph b, Code 3 2011, is amended by adding the following new subparagraph: 4 NEW SUBPARAGRAPH . (4) Biodiesel blended fuel classified as 5 B-6 or higher but not higher than B-20 must conform to A.S.T.M. 6 international specification D7467 or a successor A.S.T.M. 7 international specification as established by rules adopted by 8 the department. 9 DIVISION II 10 RETAIL DEALERS —— LIABILITY 11 Sec. 2. NEW SECTION . 214A.20 Retail dealers —— limitation 12 on liability. 13 1. A retail dealer is not liable for damages caused by the 14 use of incompatible motor fuel dispensed at the retail dealer’s 15 retail motor fuel site, if all of the following applies: 16 a. The incompatible motor fuel complies with the 17 specifications for a type of motor fuel as provided in section 18 214A.2. 19 b. The incompatible motor fuel is selected by a person other 20 than the retail dealer, including an employee or agent of the 21 retail dealer. 22 c. The incompatible motor fuel is dispensed from a motor 23 fuel pump that correctly labels the type of fuel dispensed. 24 2. For purposes of this section, a motor fuel is 25 incompatible with a motor according to the manufacturer of the 26 motor. 27 DIVISION III 28 RETAIL DEALERS —— ETHANOL PROMOTION TAX CREDIT 29 Sec. 3. Section 422.11N, subsection 1, paragraph a, Code 30 2011, is amended to read as follows: 31 a. “E-85 gasoline” , “ethanol” , “ethanol blended gasoline” , 32 “gasoline” , and “retail dealer” , and “retail motor fuel site” 33 mean the same as defined in section 214A.1 . 34 Sec. 4. Section 422.11N, subsection 3, paragraph a, Code 35 -1- LSB 1861HZ (2) 84 da/rj 1/ 25

H.F. 692 2011, is amended to read as follows: 1 a. The taxpayer is a retail dealer who sells and dispenses 2 ethanol blended gasoline through a motor fuel pump in located 3 at the retail dealer’s retail motor fuel site during the tax 4 year in determination period or parts of the determination 5 periods for which the tax credit is claimed as provided in this 6 section . 7 Sec. 5. Section 422.11N, Code 2011, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 3A. a. When first claiming the tax credit, 10 the retail dealer shall elect to compute and claim the tax 11 credit on a company-wide basis or site-by-site basis in the 12 same manner as provided in section 452A.33. 13 (1) In making a company-wide election, the retail dealer 14 must compute and claim the tax credit based on calculations 15 as provided in this section for all retail motor fuel sites 16 where the retail dealer sells and dispenses motor fuel on a 17 retail basis. The retail dealer shall not claim the tax credit 18 based on a calculation which does not include all such retail 19 motor fuel sites. A retail dealer shall use the company-wide 20 election in order to calculate the retail dealer’s biofuel 21 threshold percentage as provided in subsection 4, paragraph 22 “b” . 23 (2) In making a site-by-site election, the retail dealer 24 must compute and claim the tax credit based on calculations as 25 provided in this section for each retail motor fuel site where 26 the retail dealer sells and dispenses motor fuel on a retail 27 basis. The retail dealer shall not claim the tax credit based 28 on a calculation which includes two or more retail motor fuel 29 sites. Nothing in this subparagraph requires the retail dealer 30 to compute or claim a tax credit for a particular retail motor 31 fuel site. The retail dealer shall not use the site-by-site 32 election in order to calculate the retail dealer’s biofuel 33 threshold percentage as provided in subsection 4, paragraph 34 “b” . 35 -2- LSB 1861HZ (2) 84 da/rj 2/ 25

H.F. 692 b. Once the retail dealer makes an election as provided in 1 paragraph “a” , the retail dealer shall not change the election 2 without the written consent of the department. 3 Sec. 6. Section 422.11N, subsection 4, paragraph d, Code 4 2011, is amended by striking the paragraph. 5 Sec. 7. Section 422.11N, subsection 5, paragraph a, 6 subparagraph (1), Code 2011, is amended to read as follows: 7 (1) For any tax year in which the retail dealer has attained 8 a biofuel threshold percentage for the determination period, 9 the tax credit rate is six and one-half eight cents. 10 Sec. 8. Section 422.11N, subsection 5, paragraph a, 11 subparagraph (2), subparagraph divisions (a) and (b), Code 12 2011, are amended to read as follows: 13 (a) If the retail dealer’s biofuel threshold percentage 14 disparity equals two percent or less, the tax credit rate is 15 four and one-half six cents. 16 (b) If the retail dealer’s biofuel threshold percentage 17 disparity equals more than two percent but not more than four 18 percent, the tax credit rate is as follows: 19 (i) For calendar year 2011, two and one-half cents. 20 (ii) For calendar year 2012 and for each subsequent calendar 21 year, four cents. 22 Sec. 9. Section 422.11N, subsection 6, Code 2011, is amended 23 to read as follows: 24 6. a. A retail dealer is eligible to claim an ethanol 25 promotion tax credit as provided in this section even though 26 the retail dealer claims an one or all of the following related 27 tax credits: 28 (1) The E-85 gasoline promotion tax credit pursuant to 29 section 422.11O . 30 (2) The E-15 plus gasoline promotion tax credit pursuant to 31 section 422.11Y. 32 b. The retail dealer may claim the ethanol promotion tax 33 credit and one or more of the related tax credits as provided 34 in paragraph “a” for the same tax year and for the same ethanol 35 -3- LSB 1861HZ (2) 84 da/rj 3/ 25

H.F. 692 gallonage. 1 Sec. 10. Section 452A.33, subsection 1, paragraph b, Code 2 2011, is amended by striking the paragraph and inserting in 3 lieu thereof the following: 4 b. The report shall include information required in 5 paragraph “a” on a company-wide and site-by-site basis, as 6 required by the department. 7 (1) The information submitted on a company-wide basis shall 8 include the total motor fuel gallonage, including for each 9 classification and subclassification, sold and dispensed by the 10 retail dealer as provided in paragraph “a” for all retail motor 11 fuel sites from which the retail dealer sells and dispenses 12 motor fuel. 13 (2) The information submitted on a site-by-site basis shall 14 include the total motor fuel gallonage, including for each 15 classification and subclassification, sold and dispensed by the 16 retail dealer as provided in paragraph “a” separately for each 17 retail motor fuel site from which the retail dealer sells and 18 dispenses motor fuel. 19 Sec. 11. 2006 Iowa Acts, chapter 1142, section 49, 20 subsection 2, as amended by 2006 Iowa Acts, chapter 1175, 21 section 17, is amended to read as follows: 22 2. For a retail dealer who may claim an ethanol promotion 23 tax credit under section 422.11N or 422.33, subsection 11A, as 24 enacted in this Act and amended in subsequent Acts , in calendar 25 year 2020 and whose tax year ends prior to December 31, 2020, 26 the retail dealer may continue to claim the tax credit in the 27 retail dealer’s following tax year. In that case, the tax 28 credit shall be calculated in the same manner as provided in 29 section 422.11N or 422.33, subsection 11A, as enacted in this 30 Act and amended in subsequent Acts , for the remaining period 31 beginning on the first day of the retail dealer’s new tax year 32 until December 31, 2020. For that remaining period, the tax 33 credit shall be calculated in the same manner as a retail 34 dealer whose tax year began on the previous January 1 and who 35 -4- LSB 1861HZ (2) 84 da/rj 4/ 25

H.F. 692 is calculating the tax credit on December 31, 2020. 1 Sec. 12. ADMINISTRATIVE RULES. The department of revenue 2 may adopt emergency rules under section 17A.4, subsection 3, 3 and section 17A.5, subsection 2, paragraph “b”, to implement 4 the provisions of this division of this Act, and the rules 5 shall be effective immediately upon filing unless a later date 6 is specified in the rules. Any rules adopted in accordance 7 with this section shall also be published as a notice of 8 intended action as provided in section 17A.4. 9 Sec. 13. EFFECTIVE DATE. This division of this Act, and 10 the application of section 422.33, subsection 11A, due to this 11 division of this Act, take effect upon enactment. 12 Sec. 14. APPLICABILITY. This division of this Act applies 13 retroactively to January 1, 2011, including section 422.11N, as 14 amended in this division of this Act, and the application of 15 section 422.33, subsection 11A, due to this division of this 16 Act, applies to tax years beginning on and after January 1, 17 2011. 18 DIVISION IV 19 E-85 GASOLINE PROMOTION TAX CREDIT 20 Sec. 15. Section 422.11O, subsection 2, Code 2011, is 21 amended to read as follows: 22 2. The taxes imposed under this division , less the credits 23 allowed under section 422.12 , shall be reduced by an E-85 24 gasoline promotion tax credit for each tax year that the 25 taxpayer is eligible to claim the tax credit under this 26 subsection . 27 a. In order to be eligible, all of the following must apply: 28 a. (1) The taxpayer is a retail dealer who sells and 29 dispenses E-85 gasoline through a motor fuel pump in located 30 at the retail dealer’s retail motor fuel site during the tax 31 calendar year in or parts of the calendar year for which the 32 tax credit is claimed as provided in this section . 33 b. (2) The retail dealer complies with requirements of the 34 department to administer this section . 35 -5- LSB 1861HZ (2) 84 da/rj 5/ 25

H.F. 692 b. The tax credit shall apply to E-85 gasoline that meets 1 the standards provided in section 214A.2. 2 Sec. 16. Section 422.11O, subsection 3, Code 2011, is 3 amended by striking the subsection and inserting in lieu 4 thereof the following: 5 3. For a retail dealer whose tax year is on a calendar year 6 basis, the retail dealer shall calculate the amount of the tax 7 credit by multiplying a designated rate of sixteen cents by the 8 retail dealer’s total E-85 gasoline gallonage as provided in 9 sections 452A.31 and 452A.32. 10 Sec. 17. Section 422.11O, subsection 5, Code 2011, is 11 amended to read as follows: 12 5. a. A retail dealer is eligible to claim an E-85 gasoline 13 promotion tax credit as provided in this section even though 14 the retail dealer claims an one or all of the following related 15 tax credits: 16 (1) The ethanol promotion tax credit pursuant to section 17 422.11N for the same tax year for the same ethanol gallonage . 18 (2) The E-15 plus gasoline tax credit pursuant to section 19 422.11Y. 20 b. (1) The retail dealer may claim the E-85 gasoline 21 promotion tax credit and one or more of the related tax credits 22 as provided in paragraph “a” for the same tax year. 23 (2) The retail dealer may claim the ethanol promotion 24 tax credit as provided in paragraph “a” for the same ethanol 25 gallonage used to calculate and claim the E-85 gasoline 26 promotion tax credit. 27 Sec. 18. Section 422.11O, subsection 8, Code 2011, is 28 amended to read as follows: 29 8. This section is repealed on January 1, 2021 2018 . 30 Sec. 19. Section 422.33, subsection 11B, paragraph c, Code 31 2011, is amended to read as follows: 32 c. This subsection is repealed on January 1, 2021 2018 . 33 Sec. 20. 2006 Iowa Acts, chapter 1142, section 49, 34 subsection 3, is amended to read as follows: 35 -6- LSB 1861HZ (2) 84 da/rj 6/ 25

H.F. 692 3. For a retail dealer who may claim an E-85 gasoline 1 promotion tax credit under section 422.11O or 422.33, 2 subsection 11B, as enacted in this Act and amended in 3 subsequent Acts , in calendar year 2020 2017 and whose tax 4 year ends prior to December 31, 2020 2017 , the retail dealer 5 may continue to claim the tax credit in the retail dealer’s 6 following tax year. In that case, the tax credit shall be 7 calculated in the same manner as provided in section 422.11O 8 or 422.33, subsection 11B, as enacted in this Act and amended 9 in subsequent Acts , for the remaining period beginning on the 10 first day of the retail dealer’s new tax year until December 11 31, 2020 2017 . For that remaining period, the tax credit shall 12 be calculated in the same manner as a retail dealer whose tax 13 year began on the previous January 1 and who is calculating the 14 tax credit on December 31, 2020 2017 . 15 Sec. 21. ADMINISTRATIVE RULES. The department of revenue 16 may adopt emergency rules under section 17A.4, subsection 3, 17 and section 17A.5, subsection 2, paragraph “b”, to implement 18 the provisions of this division of this Act. Any rules adopted 19 in accordance with this section shall also be published as a 20 notice of intended action as provided in section 17A.4. The 21 department’s rules shall not take effect earlier than July 1, 22 2011. 23 Sec. 22. EFFECTIVE DATES. 24 1. Except as provided in subsection 2, this division of this 25 Act takes effect on July 1, 2011. 26 2. The section of this division of this Act authorizing 27 the department of revenue to adopt rules takes effect upon 28 enactment. 29 3. The section of this division of this Act allowing a 30 retail dealer to compute and claim an E-85 gasoline promotion 31 tax credit in calendar year 2011 for the period beginning 32 January 1, 2011, and ending June 30, 2011, takes effect upon 33 enactment. 34 Sec. 23. FORMER TAX CREDIT AVAILABILITY —— CLAIMS FOR THE 35 -7- LSB 1861HZ (2) 84 da/rj 7/ 25

H.F. 692 2011 CALENDAR YEAR FOR THE PERIOD ENDING JUNE 30, 2011 —— 1 RETROACTIVE APPLICABILITY. 2 1. A retail dealer who is claiming an E-85 gasoline 3 promotion tax credit for the period beginning January 1, 2011, 4 and ending June 30, 2011, shall calculate the tax credit 5 pursuant to section 422.11O or 422.33, subsection 11B, as 6 that section or subsection existed immediately prior to July 7 1, 2011. A retail dealer who is claiming an E-85 gasoline 8 promotion tax credit for the period beginning July 1, 2011, and 9 ending December 31, 2011, shall calculate the tax credit as 10 otherwise provided in this division of this Act. 11 2. This section applies retroactively to January 1, 2011. 12 Sec. 24. APPLICABILITY OF NEW TAX CREDIT. 13 1. Except as provided in subsection 2, section 422.11O, 14 as amended in this division of this Act, and section 422.33, 15 subsection 11B, as amended in this division of this Act and 16 applied due to this division of this Act, apply to tax years 17 beginning on and after January 1, 2012. 18 2. Section 422.11O, as amended in this division of this Act, 19 and section 422.33, subsection 11B, as amended in this division 20 of this Act, and applied due to this division of this Act, 21 apply to that part of a retail dealer’s tax year or tax years 22 occurring during the portion of the calendar year beginning on 23 and after July 1, 2011, and ending on December 31, 2011. In 24 that case, the retail dealer shall calculate the E-85 gasoline 25 promotion tax in the same manner as a retail dealer calculating 26 the tax credit on January 1, 2012. 27 DIVISION V 28 RETAIL DEALERS —— BIODIESEL BLENDED FUEL TAX CREDIT 29 Sec. 25. Section 422.11P, Code 2011, is amended by adding 30 the following new subsection: 31 NEW SUBSECTION . 1A. For purposes of this section, biodiesel 32 blended fuel is classified in the same manner as provided in 33 section 214A.2. 34 Sec. 26. Section 422.11P, subsection 2, Code 2011, is 35 -8- LSB 1861HZ (2) 84 da/rj 8/ 25

H.F. 692 amended to read as follows: 1 2. The taxes imposed under this division , less the credits 2 allowed under section 422.12 , shall be reduced by the amount 3 of the a biodiesel blended fuel tax credit for each tax year 4 that the taxpayer is eligible to claim a tax credit under this 5 subsection . 6 a. In order to be eligible, all of the following must apply: 7 (1) The taxpayer is a retail dealer who sells and dispenses 8 qualifying biodiesel blended fuel through a motor fuel pump 9 located at a the retail dealer’s retail motor fuel site 10 operated by the retail dealer in during the tax calendar year 11 in or parts of the calendar years for which the tax credit is 12 claimed as provided in this section . 13 (2) Of the total gallons of diesel fuel that the retail 14 dealer sells and dispenses through all motor fuel pumps located 15 at a motor fuel site operated by the retail dealer during the 16 retail dealer’s tax year, fifty percent or more is biodiesel 17 blended fuel which meets the requirements of this section . 18 (3) (2) The retail dealer complies with requirements of the 19 department established to administer this section . 20 b. The tax credit shall apply to biodiesel blended fuel 21 formulated with a minimum percentage of two percent by volume 22 of biodiesel, if the formulation classified as provided in this 23 section, if the classification meets the standards provided in 24 section 214A.2 . 25 Sec. 27. Section 422.11P, subsection 3, Code 2011, is 26 amended by striking the subsection and inserting in lieu 27 thereof the following: 28 3. For a retail dealer whose tax year is on a calendar year 29 basis, the retail dealer shall calculate the amount of the tax 30 credit by multiplying a designated rate by the retail dealer’s 31 total biodiesel blended fuel gallonage as provided in section 32 452A.31 which qualifies under this subsection. 33 a. In calendar year 2012, in order to qualify for the tax 34 credit, the biodiesel blended fuel must be classified as B-2 35 -9- LSB 1861HZ (2) 84 da/rj 9/ 25

H.F. 692 or higher. The designated rate for each gallon of qualifying 1 biodiesel blended fuel is three cents. 2 b. In calendar year 2013 and for each subsequent calendar 3 year, in order to qualify for the tax credit, the biodiesel 4 blended fuel must be classified as B-5 or higher. The 5 designated rate for each gallon of qualifying biodiesel blended 6 fuel is five cents. 7 Sec. 28. Section 422.11P, Code 2011, is amended by adding 8 the following new subsection: 9 NEW SUBSECTION . 3A. For a retail dealer whose tax year is 10 not on a calendar year basis, the retail dealer shall calculate 11 the tax credit as follows: 12 a. If a retail dealer has not claimed a tax credit in the 13 retail dealer’s previous tax year, the retail dealer may claim 14 the tax credit in the retail dealer’s current tax year for that 15 period beginning on January 1 of the retail dealer’s previous 16 tax year to the last day of the retail dealer’s previous tax 17 year. For that period the retail dealer shall calculate the 18 tax credit in the same manner as a retail dealer who will 19 calculate the tax credit on December 31 of that calendar year 20 as provided in subsection 3. 21 b. (1) For the period beginning on the first day of the 22 retail dealer’s tax year until December 31, the retail dealer 23 shall calculate the tax credit in the same manner as a retail 24 dealer who calculates the tax credit on that same December 31 25 as provided in subsection 3. 26 (2) For the period beginning on January 1 to the end of the 27 retail dealer’s tax year, the retail dealer shall calculate 28 the tax credit in the same manner as a retail dealer who will 29 calculate the tax credit on the following December 31 as 30 provided in subsection 3. 31 Sec. 29. Section 422.11P, subsection 6, Code 2011, is 32 amended to read as follows: 33 6. This section is repealed January 1, 2012 2018 . 34 Sec. 30. Section 422.33, subsection 11C, paragraphs c and d, 35 -10- LSB 1861HZ (2) 84 da/rj 10/ 25

H.F. 692 Code 2011, are amended to read as follows: 1 c. The tax credit shall be calculated separately for each 2 retail motor fuel site operated by the taxpayer in the same 3 manner as provided in section 422.11P . 4 d. c. This subsection is repealed on January 1, 2012 2018 . 5 Sec. 31. TAX CREDIT AVAILABILITY —— CLAIMS FOR THE 2011 6 CALENDAR YEAR. Nothing in this Act affects a retail dealer’s 7 claiming of a biodiesel blended fuel tax credit as provided in 8 2006 Iowa Acts, chapter 1142, section 49, subsection 5. 9 Sec. 32. TAX CREDIT AVAILABILITY. For a retail dealer who 10 may claim a biodiesel blended fuel promotion tax credit under 11 section 422.11P or 422.33, subsection 11C, as amended in this 12 Act and amended in subsequent Acts, in calendar year 2017, and 13 whose tax year ends prior to December 31, 2017, the retail 14 dealer may continue to claim the tax credit in the retail 15 dealer’s following tax year. In that case, the tax credit 16 shall be calculated in the same manner as provided in section 17 422.11P or 422.33, subsection 11C, as amended in this Act and 18 amended in subsequent Acts, for the remaining period beginning 19 on the first day of the retail dealer’s new tax year until 20 December 31, 2017. For that remaining period, the tax credit 21 shall be calculated in the same manner as a retail dealer whose 22 tax year began on the previous January 1 and who is calculating 23 the tax credit on December 31, 2017. 24 Sec. 33. ADMINISTRATIVE RULES. The department of revenue 25 may adopt rules under chapter 17A prior to the effectiveness 26 and applicability of section 422.11P, and section 422.33, 27 subsection 11C, as amended in this division of this Act, due to 28 this division of this Act. The department’s rules shall not 29 take effect earlier than January 1, 2012. 30 Sec. 34. EFFECTIVE DATES. 31 1. Except as provided in subsection 2, this division of this 32 Act takes effect July 1, 2011. 33 2. a. The section of this division of this Act authorizing 34 the department of revenue to adopt administrative rules takes 35 -11- LSB 1861HZ (2) 84 da/rj 11/ 25

H.F. 692 effect upon enactment. 1 b. The section of this division of this Act which provides 2 for tax credit availability for the 2011 calendar year under 3 2006 Iowa Acts, chapter 1142, section 49, subsection 5, being 4 deemed of immediate importance, takes effect upon enactment. 5 c. Section 422.11P, as amended in this division of this Act, 6 and section 422.33, subsection 11C, as amended in this division 7 of this Act, take effect on January 1, 2012. 8 Sec. 35. APPLICABILITY. Section 422.11P, as amended in this 9 division of this Act, and section 422.33, subsection 11C, as 10 amended in this division of this Act and applied due to this 11 division of this Act, apply to tax years beginning on and after 12 January 1, 2012. 13 DIVISION VI 14 RETAIL DEALERS —— E-15 PLUS GASOLINE TAX CREDIT 15 Sec. 36. NEW SECTION . 422.11Y E-15 plus gasoline promotion 16 tax credit. 17 1. As used in this section, unless the context otherwise 18 requires: 19 a. “E-85 gasoline” , “ethanol” , “gasoline” , “retail dealer” , 20 and “retail motor fuel site” mean the same as defined in section 21 214A.1. 22 b. “Motor fuel pump” means the same as defined in section 23 214.1. 24 c. “Sell” means to sell on a retail basis. 25 d. “Tax credit” means the E-15 plus gasoline tax credit as 26 provided in this section. 27 2. For purposes of this section, ethanol blended gasoline is 28 classified in the same manner as provided in section 214A.2. 29 3. The taxes imposed under this division, less the credits 30 allowed under section 422.12, shall be reduced by the amount 31 of the E-15 plus gasoline tax credit for each tax year that 32 the taxpayer is eligible to claim a tax credit under this 33 subsection. 34 a. In order to be eligible, all of the following must apply: 35 -12- LSB 1861HZ (2) 84 da/rj 12/ 25

H.F. 692 (1) The taxpayer is a retail dealer who sells and dispenses 1 qualifying ethanol blended gasoline through a motor fuel pump 2 located at the retail dealer’s retail motor fuel site during 3 the calendar year or parts of the calendar years for which the 4 tax credit is claimed as provided in this section. 5 (2) The retail dealer complies with requirements of the 6 department established to administer this section. 7 b. The tax credit shall apply to ethanol blended gasoline 8 classified as provided in this section, if the classification 9 meets the standards provided in section 214A.2. 10 4. For a retail dealer whose tax year is on a calendar year 11 basis, the retail dealer shall calculate the amount of the tax 12 credit by multiplying a designated rate by the retail dealer’s 13 total ethanol blended gasoline gallonage as provided in section 14 452A.31 which qualifies under this subsection. 15 a. In order to qualify for the tax credit, the ethanol 16 blended gasoline must be classified as E-15 or higher but not 17 classified as E-85. 18 b. The designated rate of the tax credit is as follows: 19 (1) For calendar year 2012, calendar year 2013, and calendar 20 year 2014, three cents. 21 (2) For calendar year 2015, calendar year 2016, and calendar 22 year 2017, two cents. 23 5. For a retail dealer whose tax year is not on a calendar 24 year basis, the retail dealer shall calculate the tax credit 25 as follows: 26 a. If a retail dealer has not claimed a tax credit in the 27 retail dealer’s previous tax year, the retail dealer may claim 28 the tax credit in the retail dealer’s current tax year for that 29 period beginning on January 1 of the retail dealer’s previous 30 tax year to the last day of the retail dealer’s previous tax 31 year. For that period the retail dealer shall calculate the 32 tax credit in the same manner as a retail dealer who will 33 calculate the tax credit on December 31 of that calendar year 34 as provided in subsection 4. 35 -13- LSB 1861HZ (2) 84 da/rj 13/ 25

H.F. 692 b. (1) For the period beginning on the first day of the 1 retail dealer’s tax year until December 31, the retail dealer 2 shall calculate the tax credit in the same manner as a retail 3 dealer who calculates the tax credit on that same December 31 4 as provided in subsection 4. 5 (2) For the period beginning on January 1 to the end of the 6 retail dealer’s tax year, the retail dealer shall calculate 7 the tax credit in the same manner as a retail dealer who will 8 calculate the tax credit on the following December 31 as 9 provided in subsection 4. 10 6. a. A retail dealer is eligible to claim an E-15 plus 11 gasoline promotion tax credit as provided in this section even 12 though the retail dealer claims one or all of the following 13 related tax credits: 14 (1) The ethanol promotion tax credit pursuant to section 15 422.11N. 16 (2) The E-85 gasoline promotion tax credit pursuant to 17 section 422.11O. 18 b. (1) The retail dealer may claim the E-15 plus gasoline 19 promotion tax credit and one or more of the related tax credits 20 as provided in paragraph “a” for the same tax year. 21 (2) The retail dealer may claim the ethanol promotion 22 tax credit as provided in paragraph “a” for the same ethanol 23 gallonage used to calculate and claim the E-15 plus gasoline 24 tax credit. 25 7. Any credit in excess of the retail dealer’s tax liability 26 shall be refunded. In lieu of claiming a refund, the retail 27 dealer may elect to have the overpayment shown on the retail 28 dealer’s final, completed return credited to the tax liability 29 for the following tax year. 30 8. An individual may claim the tax credit allowed a 31 partnership, limited liability company, S corporation, estate, 32 or trust electing to have the income taxed directly to the 33 individual. The amount claimed by the individual shall be 34 based upon the pro rata share of the individual’s earnings of a 35 -14- LSB 1861HZ (2) 84 da/rj 14/ 25

H.F. 692 partnership, limited liability company, S corporation, estate, 1 or trust. 2 9. This section is repealed on January 1, 2018. 3 Sec. 37. Section 422.33, Code 2011, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 11D. The taxes imposed under this division 6 shall be reduced by an E-15 plus gasoline promotion tax credit 7 for each tax year that the taxpayer is eligible to claim the 8 tax credit under this subsection. 9 a. The taxpayer shall claim the tax credit in the same 10 manner as provided in section 422.11Y. The taxpayer may claim 11 the tax credit according to the same requirements, for the same 12 amount, and calculated in the same manner, as provided for the 13 E-15 plus gasoline promotion tax credit pursuant to section 14 422.11Y. 15 b. Any E-15 plus gasoline promotion tax credit which is in 16 excess of the taxpayer’s tax liability shall be refunded or may 17 be shown on the taxpayer’s final, completed return credited to 18 the tax liability for the following tax year in the same manner 19 as provided in section 422.11Y. 20 c. This subsection is repealed on January 1, 2018. 21 Sec. 38. TAX CREDIT AVAILABILITY. For a retail dealer who 22 may claim an E-15 plus gasoline promotion tax credit under 23 section 422.11Y or 422.33, subsection 11D, as enacted in this 24 Act and amended in subsequent Acts, in calendar year 2017, and 25 whose tax year ends prior to December 31, 2017, the retail 26 dealer may continue to claim the tax credit in the retail 27 dealer’s following tax year. In that case, the tax credit 28 shall be calculated in the same manner as provided in section 29 422.11Y or 422.33, subsection 11D, as enacted in this Act and 30 amended in subsequent Acts, for the remaining period beginning 31 on the first day of the retail dealer’s new tax year until 32 December 31, 2017. For that remaining period, the tax credit 33 shall be calculated in the same manner as a retail dealer whose 34 tax year began on the previous January 1 and who is calculating 35 -15- LSB 1861HZ (2) 84 da/rj 15/ 25

H.F. 692 the tax credit on December 31, 2017. 1 Sec. 39. ADMINISTRATIVE RULES. The department of revenue 2 may adopt rules under chapter 17A prior to the effectiveness 3 and applicability of section 422.11Y, as enacted in this 4 division of this Act, and section 422.33, subsection 11D, as 5 enacted in this division of this Act and applied due to this 6 division of this Act. The department’s rules shall not take 7 effect earlier than January 1, 2012. 8 Sec. 40. EFFECTIVE DATES. 9 1. Except as provided in subsection 2, this division of this 10 Act takes effect July 1, 2011. 11 2. a. The section of this division of this Act authorizing 12 the department of revenue to adopt administrative rules takes 13 effect upon enactment. 14 b. Section 422.11Y, as enacted in this division of this Act, 15 and section 422.33, subsection 11D, as enacted in this division 16 of this Act, take effect January 1, 2012. 17 Sec. 41. APPLICABILITY. Section 422.11Y, as enacted in this 18 division of this Act, and section 422.33, subsection 11D, as 19 enacted in this division of this Act and applied due to this 20 division of this Act, apply to tax years beginning on and after 21 January 1, 2012. 22 DIVISION VII 23 RENEWABLE FUEL INFRASTRUCTURE —— APPROPRIATION —— 24 TRANSFER OF AUTHORITY FROM 25 DEPARTMENT OF ECONOMIC DEVELOPMENT TO DEPARTMENT OF AGRICULTURE 26 AND LAND STEWARDSHIP 27 Sec. 42. Section 15.104, subsection 8, paragraph j, Code 28 2011, is amended by striking the paragraph. 29 Sec. 43. Section 15G.201, subsection 2, Code 2011, is 30 amended to read as follows: 31 2. “Department” means the Iowa department of economic 32 development created in section 15.105 department of agriculture 33 and land stewardship . 34 Sec. 44. Section 15G.202, subsection 2, paragraph c, 35 -16- LSB 1861HZ (2) 84 da/rj 16/ 25

H.F. 692 subparagraph (4), Code 2011, is amended to read as follows: 1 (4) The Iowa motor truck association biodiesel board . 2 Sec. 45. Section 15G.205, subsection 4, paragraph c, Code 3 2011, is amended to read as follows: 4 c. Notwithstanding section 8.33 , unencumbered and 5 unobligated moneys remaining in the infrastructure fund at the 6 close of each fiscal year shall not revert but shall remain 7 available in the infrastructure fund for expenditure for the 8 same purposes until the end of the fiscal year that begins July 9 1, 2011, at which time the unencumbered and unobligated moneys 10 remaining shall revert to the funds from which appropriated . 11 Sec. 46. Section 159.20, subsection 1, paragraph j, Code 12 2011, is amended to read as follows: 13 j. Provide for the promotion and expansion of renewable 14 fuels and coproducts, by doing all of the following: 15 j. (1) Assist the office of renewable fuels and coproducts 16 in administering the provisions of chapter 159A , subchapter I . 17 (2) Assist the renewable fuel infrastructure board, provide 18 for the administration of the renewable fuel infrastructure 19 programs, and provide for the management of the renewable fuel 20 infrastructure fund, as provided in chapter 159A, subchapter 21 II. 22 Sec. 47. Section 159A.2, unnumbered paragraph 1, Code 2011, 23 is amended to read as follows: 24 As used in this chapter subchapter , unless the context 25 otherwise requires: 26 Sec. 48. Section 321.145, subsection 2, paragraph a, Code 27 2011, is amended to read as follows: 28 a. Four Moneys shall be deposited into and credited to the 29 following funds: 30 (1) First, three million two five hundred fifty thousand 31 dollars per quarter shall be deposited into and credited to 32 the Iowa comprehensive petroleum underground storage tank 33 fund created in section 455G.3 , and the moneys so deposited 34 are a continuing appropriation for expenditure under chapter 35 -17- LSB 1861HZ (2) 84 da/rj 17/ 25

H.F. 692 455G , and moneys so appropriated shall not be used for other 1 purposes. 2 (2) Second, seven hundred fifty thousand dollars per 3 quarter shall be deposited into and credited to the renewable 4 fuel infrastructure fund created in section 15G.205, and 5 the moneys so deposited are a continuing appropriation for 6 expenditure under chapter 15G, subchapter II, and moneys so 7 appropriated shall not be used for other purposes. 8 Sec. 49. TRANSITIONAL PROVISIONS —— ADMINISTRATIVE 9 RULES. The rules adopted by the department of economic 10 development as codified in 261 IAC, chapters 311 through 11 314, shall continue in full force and effect until amended, 12 repealed, or supplemented by affirmative action of the 13 department of agriculture and land stewardship. 14 Sec. 50. TRANSITIONAL PROVISIONS —— EMERGENCY 15 ADMINISTRATIVE RULEMAKING. The department of agriculture and 16 land stewardship may adopt emergency rules under section 17A.4, 17 subsection 3, and section 17A.5, subsection 2, paragraph “b”, 18 to implement the provisions of this division of this Act, and 19 the rules shall be effective July 1, 2011, unless a later date 20 is specified in the rules. Any rules adopted in accordance 21 with this section shall also be published as a notice of 22 intended action as provided in section 17A.4. 23 Sec. 51. TRANSITIONAL PROVISIONS —— ADMINISTRATIVE HEARINGS 24 OR COURT PROCEEDINGS. An administrative hearing or court 25 proceeding arising out of an enforcement action under chapter 26 15G pending on July 1, 2011, shall not be affected due to 27 this division of this Act. Any cause of action or statute 28 of limitations relating to an action taken by the department 29 of economic development shall not be affected as a result 30 of this division of this Act and such cause or statute of 31 limitation shall apply to the department of agriculture and 32 land stewardship. 33 Sec. 52. TRANSITIONAL PROVISIONS —— REPLACEMENT ITEMS. A 34 replacement item, including but not limited to logos, 35 -18- LSB 1861HZ (2) 84 da/rj 18/ 25

H.F. 692 stationery, or insignia, that is made due to the effect of 1 this division of this Act shall be done as part of the normal 2 replacement cycle for such item. 3 Sec. 53. TRANSITIONAL PROVISIONS —— TRANSFER OF RECORDS. 4 1. The department of economic development shall provide the 5 department of agriculture and land stewardship with records 6 necessary to administer and enforce chapter 15G, subchapter 7 II, including sections of the subchapter amended by this Act, 8 and rules adopted by the department of economic development 9 pursuant to that subchapter. 10 2. The transfer described in subsection 1, shall be 11 accomplished by June 15, 2011, unless the department of 12 economic development and the department of agriculture and land 13 stewardship agree to a different date in 2011. 14 Sec. 54. TRANSITIONAL PROVISIONS —— OUTSTANDING CONTRACTS. 15 1. The department of economic development shall assign 16 and the department of agriculture and land stewardship 17 shall assume all outstanding cost-share agreements executed 18 by the department of economic development pursuant to the 19 renewable fuel infrastructure program for retail motor fuel 20 sites as provided in section 15G.203 and the renewable fuel 21 infrastructure program for biodiesel terminal facilities as 22 provided in section 15G.204. 23 2. The assignment and assumption of the cost-share 24 agreements described in subsection 1 shall be effective on July 25 1, 2011, unless the department of economic development and 26 the department of agriculture and land stewardship agree to a 27 different date in 2011. 28 Sec. 55. TRANSITIONAL PROVISIONS —— RENEWABLE FUEL 29 INFRASTRUCTURE BOARD. The department of economic development 30 and the department of agriculture and land stewardship shall 31 jointly consult with the renewable fuel infrastructure board 32 as created in section 15G.202, as amended by this Act, when 33 effectuating the transitional provisions of this division of 34 this Act. 35 -19- LSB 1861HZ (2) 84 da/rj 19/ 25

H.F. 692 Sec. 56. TRANSFER OF SECTIONS. Chapter 15G, subchapter 1 II, is transferred to chapter 159A, new subchapter III. 2 Chapter 159A, subchapter I, shall include section 159A.1, Code 3 2011. Chapter 159A, subchapter II, shall include all of the 4 following: section 159A.2, Code 2011, as amended by this Act; 5 and sections 159A.3 through 159A.8, Code 2011. Chapter 159A, 6 subchapter III, shall include all of the following: sections 7 15G.201, 15G.201A, and 15G.202, Code 2011, as amended by this 8 Act; sections 15G.203 and 15G.204, Code 2011; section 15G.205, 9 Code 2011, as amended by this Act; and section 15G.206, Code 10 2011. The Code editor shall correct internal references as 11 necessary, including references in section 321.145, subsection 12 2, paragraph “a”, as amended in this division of this Act. 13 Sec. 57. EFFECTIVE DATES. 14 1. Except as provided in subsection 2, this division of this 15 Act takes effect on July 1, 2011. 16 2. a. The section of this division of this Act amending 17 section 15G.202, subsection 2, paragraph c, subparagraph (4), 18 takes effect upon enactment. 19 b. The section of this division of this Act amending 20 section 15G.205, subsection 4, paragraph c, takes effect upon 21 enactment. 22 c. The sections of this division of this Act which include 23 transitional provisions to accomplish the transfer of powers 24 and duties of the department of economic development to the 25 department of agriculture and land stewardship, being deemed 26 of immediate importance, take effect upon enactment. As used 27 in this paragraph, such transitional provisions are limited to 28 those uncodified sections of this division of this Act which 29 provide for the transfer of powers and duties by the department 30 of economic development associated with chapter 15G, subchapter 31 II, including those sections in subchapter II as amended or 32 transferred to chapter 159A by this Act. 33 EXPLANATION 34 GENERAL. This bill provides for the regulation and 35 -20- LSB 1861HZ (2) 84 da/rj 20/ 25

H.F. 692 promotion of renewable fuels, including ethanol used in the 1 formulation of gasoline containing various percentages of 2 fuel grade alcohol and biodiesel used in the formulation of 3 diesel fuel containing various percentages of oils or fats. 4 Renewable fuel is classified according to those designations. 5 For example, E-10 contains between 9 and 10 percent ethanol, 6 E-15 contains at least 15 percent ethanol but is not classified 7 as E-85. E-85 contains between 70 and 85 percent ethanol, 8 B-2 contains 2 percent biodiesel, and B-5 contains 5 percent 9 biodiesel (Code section 214A.2). The bill concerns retail 10 dealers of renewable fuels (persons selling a renewable fuel 11 on a retail basis). The bill addresses the following state 12 agencies: the department of agriculture and land stewardship 13 (DALS), the department of revenue (DOR), and the department of 14 economic development (DED). 15 RETAIL DEALERS —— MOTOR FUEL STANDARDS. DALS regulates 16 standards for motor fuel based on specifications promulgated 17 by A.S.T.M. international (Code section 214A.2). The bill 18 provides a new standard for biodiesel blended fuel classified 19 from B-6 to B-20 based on A.S.T.M. international specification 20 D7467. 21 RETAIL DEALERS —— LIABILITY. The bill provides that a 22 retail dealer regulated under Code chapter 214A is not liable 23 for damages caused to a motor by the use of an incompatible 24 motor fuel (e.g., the use of E-85 gasoline in a conventional 25 gasoline-powered motor). The bar against liability depends 26 upon the satisfaction of certain conditions: (1) the motor 27 fuel must meet legal specifications, (2) the retail dealer 28 cannot have selected it for use in the motor, and (3) the 29 dispensing pump must be correctly labeled. 30 RETAIL DEALERS —— TAX CREDITS. The bill amends a number of 31 existing tax credits and creates a new tax credit for retail 32 dealers who sell and dispense renewable fuel. Generally, a tax 33 credit is calculated on a calendar year basis regardless of 34 whether the tax credit is claimed on a retail dealer’s calendar 35 -21- LSB 1861HZ (2) 84 da/rj 21/ 25

H.F. 692 year or noncalendar year’s tax return. The tax credits apply 1 to individual and corporate tax filers. 2 ETHANOL PROMOTION TAX CREDIT. The bill amends the ethanol 3 promotion tax credit (Code sections 422.11N and 422.33, 4 subsection 11A). The tax credit is calculated and claimed on 5 100 percent ethanol used in ethanol blended gasoline sold and 6 dispensed by a retail dealer as ethanol blended gasoline. 7 Under current law, the tax credit rate depends upon the 8 retail dealer’s total ethanol gallonage plus the retail 9 dealer’s total biodiesel gallonage (referred to as the retail 10 dealer’s biofuel distribution percentage). There are two 11 tax credit schedules based on the dealer’s biofuel threshold 12 percentage: the first schedule applies to retail dealers who 13 sell and distribute more than 200,000 gallons of motor fuel in 14 a calendar year (determination period) and the second schedule 15 applies to retail dealers who sell 200,000 gallons or less of 16 motor fuel in the same determination period. The tax credit is 17 eliminated on January 1, 2021. 18 The bill adjusts the tax credit rates for retail dealers who 19 either meet or do not attain the applicable biofuel threshold 20 percentage for a determination period. A disparity occurs 21 when a retail dealer’s disparity equals 2 percent or less or 22 equals more than 2 percent but not more than 4 percent. In 23 calendar year 2011, the tax credit rate is increased from 6.5 24 to 8 cents for a determination period in which the retail 25 dealer attains the biofuel threshold percentage. In calendar 26 year 2011, the tax credit rate for a disparity of 2 percent 27 or less is increased from 4.5 to 6 cents. In 2011, the tax 28 credit rate for a disparity of more than 2 percent but not more 29 than 4 percent remains at 2.5 cents and in 2012, the tax credit 30 rate for such disparity is increased to 4 cents. The bill also 31 allows a retail dealer to calculate the tax credit based on a 32 site-by-site basis (each individual motor fuel site operated by 33 a retail dealer) or a company-wide basis (all motor fuel sites 34 operated by a retail dealer) assuming that the retail dealer’s 35 -22- LSB 1861HZ (2) 84 da/rj 22/ 25

H.F. 692 biofuel threshold percentage is calculated on a company-wide 1 basis. The bill also amends provisions requiring retail 2 dealers to report motor fuel gallonage to DOR, by specifically 3 recognizing site-by-site or company-wide reporting. The 4 provisions are retroactively applicable to January 1, 2011. 5 E-85 GASOLINE PROMOTION TAX CREDIT. The bill amends the 6 E-85 promotion tax credit (Code sections 422.11O and 422.33, 7 subsection 11B) based on the total gallons of E-85 gasoline 8 sold and dispensed by the retail dealer. The bill eliminates 9 the current declining tax credit rate schedule allowing for 25 10 cents per gallon of E-85 gasoline in calendar year 2006 to 1 11 cent in calendar year 2020, and fixes the tax credit rate at a 12 constant 16 cents for each calendar year until the end of 2017. 13 The new rate takes effect July 1, 2011. It applies to tax years 14 beginning on and after that date. 15 RETAIL DEALERS —— BIODIESEL BLENDED FUEL TAX CREDIT. The 16 bill amends the biodiesel blended fuel tax credit based on the 17 total gallons of biodiesel blended fuel sold and dispensed 18 (Code sections 422.11P and 422.33, subsection 11C). Currently, 19 the tax credit is multiplied by taking a constant (designated) 20 rate multiplied by the number of gallons of B-2 or higher sold 21 and dispensed. The tax credit is due to expire at the end of 22 calendar year 2011. 23 The bill eliminates an eligibility requirement specifying 24 that of all gallons of diesel fuel sold and dispensed by a 25 retail dealer, 50 percent or more must be biodiesel blended 26 fuel. It establishes a tax credit rate for calendar year 2012 27 based on whether the retail dealer sold or dispensed is B-2 or 28 higher. The designated rate is 3 cents. Beginning in calendar 29 year 2013, the tax credit rate is only calculated on B-5 and 30 higher. The tax credit rate for each gallon of B-5 or higher is 31 5 cents. The tax credit is extended until the end of calendar 32 year 2017. 33 E-15 PLUS GASOLINE PROMOTION TAX CREDIT. The bill creates 34 an E-15 plus gasoline promotion tax credit which is calculated 35 -23- LSB 1861HZ (2) 84 da/rj 23/ 25

H.F. 692 on the total gallons of ethanol blended gasoline, classified 1 as E-15 and higher but not E-85, sold and dispensed by a retail 2 dealer (new Code sections 422.11Y and 422.33, subsection 11D). 3 The amount of the tax credit equals a constant (designated) 4 rate multiplied by the total number of gallons of E-15 or 5 higher sold and dispensed by the retail dealer. A designated 6 rate of 3 cents applies for calendar years 2012 through 2014 7 and a designated rate of 2 cents applies for calendar years 8 2015 through 2017. The tax credit expires at the end of 9 calendar year 2017. 10 RENEWABLE FUEL INFRASTRUCTURE. The bill amends provisions 11 which establish a renewable fuel infrastructure board 12 (Code section 15G.202) which includes members representing 13 agricultural producers, petroleum refiners, petroleum 14 marketers, petroleum equipment contractors, the trucking 15 industry, insurers, and the renewable fuels industry. The 16 board is housed within DED. The board, with assistance 17 from DED, is responsible for administering two programs: 18 the renewable fuel infrastructure program for retail motor 19 fuel sites (Code section 15G.203) and the renewable fuel 20 infrastructure program for biodiesel terminal facilities (Code 21 section 15G.204). The programs are supported by a renewable 22 fuel infrastructure fund (Code section 15G.205). 23 The bill replaces a board member representing the Iowa 24 motor truck association with a member representing the Iowa 25 biodiesel board. The bill eliminates a provision that requires 26 the reversion of moneys credited to the infrastructure fund to 27 their originating sources, including the Iowa comprehensive 28 petroleum underground storage tank fund (2006 Iowa Acts, 29 ch. 1175). The bill appropriates moneys from certain fees 30 associated with motor vehicles that are currently appropriated 31 to the Iowa comprehensive petroleum underground storage tank 32 fund (Code section 455G.3), to the infrastructure fund. The 33 bill also transfers administration of the programs and the fund 34 to DALS, and includes a number of transitional provisions to 35 -24- LSB 1861HZ (2) 84 da/rj 24/ 25