HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON AGRICULTURE BILL BY CHAIRPERSON SWEENEY)

A BILL FOR

An Act relating to motor fuel, including ethanol blended gasoline and biodiesel or biodiesel blended motor fuel, by providing for regulation and taxes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

REGULATION OF MOTOR FUEL
   Section 1.  Section 214A.1, Code 2011, is amended by adding the following new subsections:
   NEW SUBSECTION.  11A.  “Flexible fuel vehicle” means a motor vehicle which is powered by an engine capable of operating using E-85 gasoline.
   NEW SUBSECTION.  16A.  “Nonblended gasoline” means gasoline other than ethanol blended gasoline.
   Sec. 2.  Section 214A.2, subsection 4, paragraph b, Code 2011, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (4)  Biodiesel blended fuel classified 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. 3.  Section 214A.16, subsection 1, Code 2011, is amended by striking the subsection and inserting in lieu thereof the following:
   1.  A motor fuel pump shall be affixed with a decal identifying the motor fuel that it dispenses, as required in this subsection.
   a.  If the motor fuel is gasoline, the following shall apply:
   (1)  For gasoline not blended with ethanol, the decal shall identify it as nonblended gasoline.
   (2)  For gasoline classified as higher than standard ethanol blended gasoline pursuant to section 214A.2, the decal shall identify it as being for use in flexible fuel vehicles only.
   b.  If the motor fuel is biodiesel fuel, the decal shall identify the biodiesel fuel as provided in 16 C.F.R. pt. 306.
   Sec. 4.  Section 422.11N, subsection 1, paragraph a, Code 2011, is amended to read as follows:
   a.  “E-85 gasoline”, “ethanol”, “ethanol blended gasoline”, “gasoline”, “flexible fuel vehicle”, and“retail dealer” mean the same as defined in section 214A.1.
   Sec. 5.  Section 422.11N, subsection 1, paragraph b, Code 2011, is amended by striking the paragraph.
   Sec. 6.  Section 452A.2, subsection 18, Code 2011, is amended to read as follows:
   18.  “Flexible fuel vehicle” means a motor vehicle as defined in section 321M.1 which is powered by an engine capable of operating using E-85 gasoline the same as defined in section 214A.1.

DIVISION II

TAXES IMPOSED UPON BIODIESEL FUEL
   Sec. 7.  Section 452A.2, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  9A.  “Diesel fuel” means the same as defined in section 214A.1.
   Sec. 8.  Section 452A.2, subsection 29, Code 2011, 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 asethanol 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. 9.  Section 452A.3, subsection 3, Code 2011, 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 for diesel engines of motor vehicles shall be determined 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. 10.  Section 452A.17, subsection 1, paragraph a, Code 2011, 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 the same diesel fuel.
   Sec. 11.  Section 452A.86, Code 2011, 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, 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.

DIVISION III

INCOME TAX CREDITS FOR RETAIL DEALERS OF RENEWABLE FUEL
   Sec. 12.  Section 422.11N, subsection 3, Code 2011, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  The department has received the retail dealer’s motor fuel gallonage report for the immediately prior determination period beginning January 1 and ending December 31, as required in section 452A.33. The report must have been received by the department on or before the report’s due date. If the retail dealer submits the report on a quarterly or monthly basis as provided in that section, the department must have received all such reports by the same due date. 
   Sec. 13.  Section 422.11O, subsection 2, Code 2011, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  The department has received the retail dealer’s motor fuel gallonage report for the immediately prior determination period beginning January 1 and ending December 31, as required in section 452A.33. The report must have been received by the department on or before the report’s due date. If the retail dealer submits the report on a quarterly or monthly basis as provided in that section, the department must have received all such reports by the same due date. 
   Sec. 14.  Section 422.11P, subsection 2, paragraph a, Code 2011, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (4)  The department has received the retail dealer’s motor fuel gallonage report for the immediately prior determination period beginning January 1 and ending December 31, as required in section 452A.33. The report must have been received by the department on or before the report’s due date. If the retail dealer submits the report on a quarterly or monthly basis as provided in that section, the department must have received all such reports by the same due date. 
   Sec. 15.  Section 452A.33, subsection 1, paragraph a, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   Each retail dealer shall submit a motor fuel gallonage report, detailing its total motor fuel gallonage for a determination period as follows:
EXPLANATION
   GENERAL. This bill amends provisions in a number of Code chapters relating to motor fuel sold in this state, including motor fuel that contains a percentage of a biofuel (biodiesel or ethanol).
   REGULATION OF MOTOR FUEL. The bill amends several provisions in Code chapter 214A, which regulates the sale of motor fuel by the department of agriculture and land stewardship (DALS). The bill establishes a standard for biodiesel blended fuel based on A.S.T.M. international specifications. It also rewrites a provision that requires that a motor fuel pump be affixed with a decal (label) informing the traveling public whether it is dispensing a motor fuel containing ethanol or biodiesel. It retains the label requirement for a motor fuel pump dispensing E-85 gasoline for flexible fuel vehicles or biodiesel blended fuel for diesel-powered motor vehicles, removes a provision requiring a label for a motor fuel pump dispensing other types of ethanol blended fuel (standard ethanol blended gasoline), and requires a label for a motor fuel pump dispensing gasoline without an ethanol component (nonblended gasoline). 
   EXCISE TAXES IMPOSED UPON BIODIESEL FUEL. The bill amends provisions in Code chapter 452A, which relate to an excise tax imposed upon biodiesel fuel. Generally, an excise tax is imposed on each gallon of motor fuel, including biodiesel fuel (Code section 452A.3) based 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, by requiring that the excise tax be assessed after adjusting the biodiesel’s temperature to 60 degrees Fahrenheit.
   The bill also provides for a refund of excise taxes paid on diesel fuel 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.
   INCOME TAX CREDITS FOR RETAIL DEALERS OF MOTOR FUEL WHICH CONTAINS ETHANOL OR BIODIESEL. Code chapter 422 establishes a tax credit for the promotion of ethanol blended gasoline (Code sections 422.11N and 422.33(11A)), E-85 gasoline (Code sections 422.11O and 422.33(11B)), and biodiesel blended motor fuel (Code sections 422.11P and 422.33(11C)). The bill provides that in order for a retail dealer to claim a tax credit, it must comply with an existing statute that requires a retail dealer to submit a motor fuel gallonage report (Code section 452A.33) for its latest determination period (calendar year). The report includes the retail dealer’s total gasoline gallonage, ethanol gallonage, ethanol blended gasoline gallonage, E-85 gasoline gallonage, diesel gallonage, and biodiesel gallonage for each motor fuel site or other permanent or temporary location owned or operated by the retail dealer.