Senate File 496 - Introduced SENATE FILE 496 BY COMMITTEE ON AGRICULTURE (SUCCESSOR TO SSB 1148) (COMPANION TO HF 545 BY COMMITTEE ON AGRICULTURE) A BILL FOR An Act relating to the promotion of biodiesel fuel, by 1 providing for tax credits to retail dealers and payments to 2 biodiesel producers, making an appropriation, providing a 3 penalty and including effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1834SV (2) 84 da/rj

S.F. 496 DIVISION I 1 BIODIESEL BLENDED FUEL TAX CREDIT 2 Section 1. Section 422.11P, Code 2011, is amended by adding 3 the following new subsection: 4 NEW SUBSECTION . 1A. For purposes of this section, biodiesel 5 fuel shall be classified in the same manner as provided in 6 section 214A.2. 7 Sec. 2. Section 422.11P, subsection 2, paragraph a, 8 subparagraph (2), Code 2011, is amended by striking the 9 subparagraph. 10 Sec. 3. Section 422.11P, subsection 2, paragraph b, Code 11 2011, is amended to read as follows: 12 b. The tax credit shall apply to biodiesel blended fuel 13 formulated with a minimum percentage of two percent by volume 14 of biodiesel classified as B-5 or higher , if the formulation 15 biodiesel blended fuel meets the standards provided in 16 requirements for that classification as provided in section 17 214A.2 . 18 Sec. 4. Section 422.11P, subsection 3, Code 2011, is amended 19 to read as follows: 20 3. a. The tax credit shall be calculated separately for 21 each retail motor fuel site operated by the retail dealer. 22 b. The amount of the tax credit is three cents a designated 23 amount multiplied by the total number of gallons of biodiesel 24 blended fuel sold and dispensed by the retail dealer through 25 all motor fuel pumps located at a retail motor fuel site 26 operated by the retail dealer during the retail dealer’s tax 27 year. The designated amount is as follows: 28 a. For biodiesel blended fuel classified as B-5 or higher 29 but not higher than B-9, two cents. 30 b. For biodiesel blended fuel classified as B-10 or higher 31 but not higher than B-99, four cents. 32 Sec. 5. Section 422.11P, subsection 6, Code 2011, is amended 33 to read as follows: 34 6. This section is repealed January 1, 2012 2015 . 35 -1- LSB 1834SV (2) 84 da/rj 1/ 5

S.F. 496 Sec. 6. Section 422.33, subsection 11C, paragraph c, Code 1 2011, is amended by striking the paragraph. 2 Sec. 7. Section 422.33, subsection 11C, paragraph d, Code 3 2011, is amended to read as follows: 4 d. This subsection is repealed on January 1, 2012 2015 . 5 Sec. 8. FUTURE APPLICABILITY DATE. Section 422.11P and 6 section 422.33, as amended by this Act, shall apply to tax 7 years beginning on or after January 1, 2012. 8 Sec. 9. TAX CREDIT AVAILABILITY UNDER PRIOR LAW. A retail 9 dealer who could claim a biodiesel blended fuel tax credit 10 under section 422.11P or 422.33, subsection 11C, as that 11 section or subsection exists on June 30, 2011, may continue 12 to claim the tax credit for biodiesel blended fuel sold and 13 dispensed by the retail dealer until December 31, 2011, as 14 provided in that section or subsection. 15 Sec. 10. 2006 Iowa Acts, chapter 1142, section 49, 16 subsection 5, is amended to read as follows: 17 5. For This subsection applies to a retail dealer who 18 may claim a biodiesel blended fuel tax credit under section 19 422.11P or 422.33, subsection 11C, as enacted in this Act or 20 as subsequently amended , in calendar year 2011 2014 and whose 21 tax year ends prior to December 31, 2011, the 2014. The retail 22 dealer may continue to claim the tax credit in the retail 23 dealer’s following tax year. In that case, the tax credit 24 shall be calculated in the same manner as provided in section 25 422.11P or 422.33, subsection 11C, as enacted in this Act 26 that section or subsection exists on December 31, 2014 , for 27 the remaining period beginning on the first day of the retail 28 dealer’s new tax year until December 31, 2011 2014 . For that 29 remaining period, the tax credit shall be calculated in the 30 same manner as a retail dealer whose tax year began on the 31 previous January 1 and who is calculating the tax credit on 32 December 31, 2011 2014 . 33 Sec. 11. EFFECTIVE DATE. This division of this Act takes 34 effect January 1, 2012. 35 -2- LSB 1834SV (2) 84 da/rj 2/ 5

S.F. 496 DIVISION II 1 BIODIESEL PRODUCTION PAYMENT 2 Sec. 12. Section 422.7, Code 2011, is amended by adding the 3 following new subsection: 4 NEW SUBSECTION . 54. Subtract, to the extent included, the 5 amount of any biodiesel production payment provided pursuant 6 to section 422.132. 7 Sec. 13. Section 422.35, Code 2011, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 25. Subtract, to the extent included, the 10 amount of any biodiesel production payment provided pursuant 11 to section 422.132. 12 Sec. 14. NEW SECTION . 422.131 Definitions. 13 As used in this division, unless the context otherwise 14 requires: 15 1. “Biodiesel” and “biodiesel blended fuel” means the same 16 as defined in section 214A.1. 17 2. “Biodiesel producer” means a person engaged in the 18 manufacturing of biodiesel who has registered with the United 19 States environmental protection agency as a manufacturer 20 according to the requirements in 40 C.F.R. § 79.4. 21 Sec. 15. NEW SECTION . 422.132 Biodiesel production payment. 22 1. A biodiesel producer may receive a biodiesel production 23 payment by doing all of the following: 24 a. Producing biodiesel for use in biodiesel blended fuel. 25 b. Complying with the requirements of this section and rules 26 adopted by the department pursuant to this section. 27 2. The amount of the biodiesel production payment shall be 28 calculated by multiplying a designated rate by the total number 29 of gallons of biodiesel produced by the biodiesel producer 30 in this state during each quarter of a calendar year. The 31 designated rate shall be as follows: 32 a. For the calendar year 2012, three cents. 33 b. For the calendar year 2013, three cents. 34 c. For the calendar year 2014, two cents. 35 -3- LSB 1834SV (2) 84 da/rj 3/ 5

S.F. 496 3. To receive a biodiesel production payment, the biodiesel 1 producer must file a claim for each quarterly period of a 2 calendar year as required by rules adopted by the department 3 and on forms prescribed by the department. The claim must be 4 filed on or before the last day of the month following the 5 close of the quarterly period. 6 4. There is appropriated from moneys in the general fund of 7 the state, which are not otherwise obligated or encumbered, an 8 amount sufficient to provide biodiesel production payments to 9 biodiesel producers as provided in this section. 10 Sec. 16. NEW SECTION . 422.133 Penalty. 11 A person fraudulently claiming a payment in excess of the 12 entitled amount of a biodiesel production payment is guilty of 13 a serious misdemeanor. 14 Sec. 17. NEW SECTION . 422.134 Repeal. 15 This division is repealed on January 1, 2015. 16 Sec. 18. DIRECTIONS TO CODE EDITOR. The Code editor shall 17 codify sections 422.131 and 422.132 as a new division in 18 chapter 422. 19 Sec. 19. EFFECTIVE DATE. This division of this Act is 20 effective on January 1, 2012. 21 EXPLANATION 22 GENERAL. This bill provides for the promotion of biodiesel 23 used in the manufacture of motor fuel which is a blend of 24 diesel fuel and biodiesel (biodiesel blended fuel). Biodiesel 25 fuel is designated B-xx where “xx” is the volume percent of 26 biodiesel (Code section 214A.2). For example, all biodiesel 27 blended fuel must be classified as B-1 or higher, meaning at 28 least 1 percent of biodiesel blended fuel by volume must be 29 biodiesel. The provisions of the bill are administered by the 30 department of revenue. 31 The bill includes two divisions. First, the bill amends 32 current provisions which establish a biodiesel blended fuel 33 tax credit for retail dealers, and second, the bill provides 34 payments to biodiesel producers. 35 -4- LSB 1834SV (2) 84 da/rj 4/ 5

S.F. 496 DIVISION I —— BIODIESEL BLENDED FUEL TAX CREDIT. Under 1 current law a retail dealer who sells and dispenses diesel fuel 2 from a motor fuel pump is eligible for a biodiesel blended fuel 3 tax credit. The tax credit is multiplied by taking a constant 4 rate of 3 cents multiplied by the number of gallons of B-2 or 5 higher sold and dispensed. The tax credit is due to expire on 6 January 1, 2012. 7 The bill eliminates an eligibility requirement specifying 8 that the retail dealer of diesel fuel must sell and dispense 9 50 percent or more biodiesel blended fuel during the tax year. 10 It increases the minimum biodiesel classification from B-2 to 11 B-5. The amount of the tax credit is changed depending upon 12 the classification. The designated rate for B-5 to B-9 is 2 13 cents and the designated rate for B-10 to B-99 is 4 cents. The 14 tax credit’s expiration date is extended to January 1, 2015. 15 DIVISION II —— BIODIESEL PRODUCTION PAYMENT. The bill 16 creates a program to pay biodiesel producers for production. 17 The amount of the payment is calculated by multiplying a 18 designated rate by the total number of gallons of biodiesel 19 produced during each quarter of a calendar year, beginning 20 in calendar year 2012 and ending in calendar year 2014. The 21 bill appropriates moneys from the general fund of the state to 22 finance the payments. The program terminates on January 1, 23 2015. A person fraudulently claiming a payment in excess of 24 the entitled amount of a biodiesel production payment is guilty 25 of a serious misdemeanor. A serious misdemeanor is punishable 26 by confinement for no more than one year and a fine of at least 27 $315 but not more than $1,875. 28 -5- LSB 1834SV (2) 84 da/rj 5/ 5