Senate Study Bill 1174 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON AGRICULTURE BILL BY CHAIRPERSON SENG) A BILL FOR An Act relating to motor fuel, including ethanol and biodiesel 1 used in the formulation of motor fuel, by providing for 2 related infrastructure, tax credits, and appropriations, and 3 including effective date and applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2723SC (4) 84 da/nh

S.F. _____ 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 2723SC (4) 84 da/nh 1/ 14

S.F. _____ 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 LIMITING LIABILITY OF 10 RETAIL DEALERS 11 Sec. 7. NEW SECTION . 214A.20 Retail dealers —— limitation 12 on liability. 13 1. A retail dealer is not liable for damages caused to a 14 motor by the use of incompatible motor fuel dispensed at the 15 retail dealer’s retail motor fuel site, if all of the following 16 applies: 17 a. The incompatible motor fuel complies with the 18 specifications for a type of motor fuel as provided in section 19 214A.2. 20 b. The incompatible motor fuel is selected by a person other 21 than the retail dealer, including an employee or agent of the 22 retail dealer. 23 c. The incompatible motor fuel is dispensed from a motor 24 fuel pump that correctly labels the type of fuel dispensed. 25 2. For purposes of this section, a motor fuel is 26 incompatible with a motor according to the manufacturer of the 27 motor. 28 DIVISION III 29 INFRASTRUCTURE 30 Sec. 8. Section 15G.205, subsection 4, paragraph c, Code 31 2011, is amended to read as follows: 32 c. Notwithstanding section 8.33 , unencumbered and 33 unobligated moneys remaining in the infrastructure fund at the 34 close of each fiscal year shall not revert but shall remain 35 -2- LSB 2723SC (4) 84 da/nh 2/ 14

S.F. _____ available in the infrastructure fund for expenditure for the 1 same purposes until the end of the fiscal year that begins July 2 1, 2011, at which time the unencumbered and unobligated moneys 3 remaining shall revert to the funds from which appropriated 4 provided in this section . 5 Sec. 9. NEW SECTION . 15G.207 Motor fuel blender pump 6 installation project. 7 1. A motor fuel blender pump installation project is 8 established in the department under the direction of the 9 renewable fuel infrastructure board created pursuant to section 10 15G.202. 11 2. Notwithstanding sections 15G.203, 15G.204, and 15G.205, 12 or any other provision to the contrary, the department of 13 economic development shall support the project by using all 14 available moneys deposited in the renewable fuel infrastructure 15 fund to award financial incentives to retail dealers as 16 provided in this section. All moneys in the fund which are not 17 otherwise obligated or unencumbered on the effective date of 18 this Act are available for the purposes of this section. 19 3. The project shall be administered by the department and 20 moneys shall be awarded by the board in the same manner as the 21 renewable fuel infrastructure program for retail motor fuel 22 sites as provided in section 15G.203. 23 4. The purpose of the project is to improve retail motor 24 fuel sites located in this state by installing motor fuel 25 blender pumps capable of dispensing different classifications 26 of ethanol blended gasoline or capable of dispensing different 27 classifications of biodiesel blended fuel. The improvements 28 may include installing, replacing, or converting related 29 infrastructure used to store, blend, or dispense ethanol 30 blended fuel or biodiesel blended fuel from a motor fuel 31 blender pump. A motor fuel blender pump dispensing ethanol 32 blended gasoline under the project must dispense different 33 classifications of ethanol blended gasoline, including E-15 34 gasoline to be dispensed at all times that the blender pump is 35 -3- LSB 2723SC (4) 84 da/nh 3/ 14

S.F. _____ operating. Nothing in this section prevents the installation 1 of a blender pump which is also capable of dispensing E-85 2 gasoline. 3 5. The renewable fuel infrastructure board shall submit a 4 report to the general assembly not later than January 1 of each 5 year of the project, including findings regarding the progress 6 of the project. 7 6. This section is repealed on July 1, 2014. 8 Sec. 10. EFFECTIVE UPON ENACTMENT. This division of this 9 Act, being deemed of immediate importance, takes effect upon 10 enactment. 11 DIVISION IV 12 ETHANOL BLENDED GASOLINE 13 TAX CREDIT 14 Sec. 11. Section 2.48, subsection 3, paragraph d, 15 subparagraph (5), Code 2011, is amended to read as follows: 16 (5) The ethanol E-15 promotion tax credits available under 17 section 422.11N . 18 Sec. 12. Section 422.11N, subsection 1, paragraph f, Code 19 2011, is amended to read as follows: 20 f. “Tax credit” means the ethanol E-15 promotion tax credit 21 as provided in this section . 22 Sec. 13. Section 422.11N, subsection 3, Code 2011, is 23 amended to read as follows: 24 3. The taxes imposed under this division , less the tax 25 credits allowed under section 422.12 , shall be reduced by an 26 ethanol E-15 gasoline promotion tax credit for each tax year 27 that the taxpayer is eligible to claim the tax credit under 28 this section . In order to be eligible, all of the following 29 must apply: 30 a. The taxpayer is a retail dealer who sells and dispenses 31 ethanol blended gasoline designated as E-15 or higher pursuant 32 to section 214A.2 through a motor fuel pump in the tax year in 33 which the tax credit is claimed. 34 b. The retail dealer complies with requirements of the 35 -4- LSB 2723SC (4) 84 da/nh 4/ 14

S.F. _____ department to administer this section . 1 Sec. 14. Section 422.11N, subsection 4, paragraph d, Code 2 2011, is amended by striking the paragraph. 3 Sec. 15. Section 422.11N, subsection 5, paragraph a, 4 unnumbered paragraph 1, Code 2011, is amended to read as 5 follows: 6 For a retail dealer whose tax year is the same as a 7 determination period beginning on January 1 and ending on 8 December 31, the retail dealer’s tax credit is calculated by 9 multiplying the retail dealer’s total ethanol gallonage from 10 ethanol blended gasoline designated as E-15 or higher, pursuant 11 to section 214A.2, by a tax credit rate, which may be adjusted 12 based on the retail dealer’s biofuel threshold percentage 13 disparity. The tax credit rate is as follows: 14 Sec. 16. Section 422.11N, subsection 5, paragraph a, 15 subparagraph (1), Code 2011, is amended to read as follows: 16 (1) For any tax year in which the retail dealer has attained 17 a biofuel threshold percentage for the determination period, 18 the tax credit rate is six sixteen and one-half cents. 19 Sec. 17. Section 422.11N, subsection 5, paragraph a, 20 subparagraph (2), subparagraph divisions (a) and (b), Code 21 2011, are amended to read as follows: 22 (a) If the retail dealer’s biofuel threshold percentage 23 disparity equals two percent or less, the tax credit rate is 24 four fourteen and one-half cents. 25 (b) If the retail dealer’s biofuel threshold percentage 26 disparity equals more than two percent but not more than four 27 percent, the tax credit rate is two twelve and one-half cents. 28 Sec. 18. Section 422.11N, subsection 6, Code 2011, is 29 amended to read as follows: 30 6. A retail dealer is eligible to claim an ethanol E-15 31 gasoline promotion tax credit as provided in this section even 32 though the retail dealer claims an E-85 gasoline promotion tax 33 credit pursuant to section 422.11O for the same tax year and 34 for the same ethanol gallonage. 35 -5- LSB 2723SC (4) 84 da/nh 5/ 14

S.F. _____ Sec. 19. Section 422.11O, subsection 5, Code 2011, is 1 amended to read as follows: 2 5. A retail dealer is eligible to claim an E-85 gasoline 3 promotion tax credit as provided in this section even though 4 the retail dealer claims an ethanol E-15 gasoline promotion tax 5 credit pursuant to section 422.11N for the same tax year for 6 the same ethanol gallonage. 7 Sec. 20. Section 422.33, subsection 11A, unnumbered 8 paragraph 1, Code 2011, is amended to read as follows: 9 The taxes imposed under this division shall be reduced by 10 an ethanol E-15 promotion tax credit for each tax year that 11 the taxpayer is eligible to claim the tax credit under this 12 subsection . 13 Sec. 21. Section 422.33, subsection 11A, paragraphs a and b, 14 Code 2011, are amended to read as follows: 15 a. The taxpayer shall claim the tax credit in the same 16 manner as provided in section 422.11N . The taxpayer may claim 17 the tax credit according to the same requirements, for the same 18 amount, and calculated in the same manner, as provided for the 19 ethanol E-15 promotion tax credit pursuant to section 422.11N . 20 b. Any ethanol E-15 promotion tax credit which is in excess 21 of the taxpayer’s tax liability shall be refunded or may be 22 shown on the taxpayer’s final, completed return credited to the 23 tax liability for the following tax year in the same manner as 24 provided in section 422.11N . 25 Sec. 22. Section 452A.31, subsection 2, paragraph a, 26 subparagraph (1), Code 2011, is amended to read as follows: 27 (1) The total ethanol blended gasoline gallonage which 28 is the retail dealer’s total number of gallons of ethanol 29 blended gasoline and which includes any subclassification 30 required by the department. However, the total ethanol blended 31 gasoline gallonage must at least include all of the following 32 subclassifications: 33 (a) The total E-xx E-10 gasoline gallonage which is the 34 total number of gallons of ethanol blended gasoline other than 35 -6- LSB 2723SC (4) 84 da/nh 6/ 14

S.F. _____ E-85 gasoline designated as E-9 or E-10 . 1 (b) The total E-15 gasoline gallonage which is the total 2 number of gallons of ethanol blended gasoline designated as 3 E-11 to E-15. 4 (c) The total E-85 flexible fuel gasoline gallonage which 5 is the total number of gallons of ethanol blended gasoline 6 designated as E-16 to E-85 gasoline . 7 Sec. 23. Section 452A.31, subsection 4, paragraph a, 8 subparagraph (1), Code 2011, is amended by striking the 9 subparagraph and inserting in lieu thereof the following: 10 (1) The aggregate ethanol blended gasoline gallonage which 11 is the aggregate total number of gallons of ethanol blended 12 gasoline and which includes the aggregate ethanol blended 13 gasoline gallonage for each subclassification provided for in 14 subsection 2. 15 Sec. 24. NEW SECTION . 452A.34 Classification of ethanol 16 blended fuel. 17 For purposes of this division, ethanol blended fuel shall be 18 classified in the same manner as provided in section 214A.2. 19 Sec. 25. 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 E-15 23 promotion tax credit under section 422.11N or 422.33, 24 subsection 11A, as enacted in this Act and amended in 25 subsequent Acts , in calendar year 2020 and whose tax year ends 26 prior to December 31, 2020, the retail dealer may continue to 27 claim the tax credit in the retail dealer’s following tax year. 28 In that case, the tax credit shall be calculated in the same 29 manner as provided in section 422.11N or 422.33, subsection 30 11A, as enacted in this Act and amended in subsequent Acts , 31 for the remaining period beginning on the first day of the 32 retail dealer’s new tax year until December 31, 2020. For 33 that remaining period, the tax credit shall be calculated in 34 the same manner as a retail dealer whose tax year began on the 35 -7- LSB 2723SC (4) 84 da/nh 7/ 14

S.F. _____ previous January 1 and who is calculating the tax credit on 1 December 31, 2020. 2 Sec. 26. EFFECTIVE DATE. This division of this Act takes 3 effect January 1, 2012. 4 Sec. 27. APPLICABILITY. The sections of this division 5 of this Act amending section 422.11N and section 422.33, 6 subsection 11A, and the section of this division of this Act 7 amending 2006 Iowa Acts, chapter 1142, section 49, subsection 8 2, as amended by 2006 Iowa Acts, chapter 1175, section 17, 9 apply to tax years beginning on or after January 1, 2012. 10 DIVISION V 11 TAXES IMPOSED UPON BIODIESEL FUEL 12 Sec. 28. Section 452A.2, Code 2011, is amended by adding the 13 following new subsection: 14 NEW SUBSECTION . 9A. “Diesel fuel” means the same as defined 15 in section 214A.1. 16 Sec. 29. Section 452A.2, subsection 29, Code 2011, is 17 amended to read as follows: 18 29. “Nonterminal storage facility” means a facility where 19 motor fuel or special fuel, other than liquefied petroleum 20 gas, is stored that is not supplied by a pipeline or a marine 21 vessel. “Nonterminal storage facility” includes a facility that 22 manufactures products such as ethanol as defined in section 23 214A.1 , biofuel, blend stocks, or additives which may be used 24 as motor fuel or special fuel, other than liquefied petroleum 25 gas, for operating motor vehicles or aircraft. 26 Sec. 30. Section 452A.3, subsection 3, Code 2011, is amended 27 to read as follows: 28 3. a. For the privilege of operating motor vehicles or 29 aircraft in this state, there is imposed an excise tax on the 30 use of special fuel in a motor vehicle or aircraft. 31 (1) The tax rate on special fuel for diesel engines of motor 32 vehicles is twenty-two and one-half cents per gallon. The tax 33 rate on biodiesel for diesel engines of motor vehicles shall 34 be determined on a volume basis with the gross metered gallons 35 -8- LSB 2723SC (4) 84 da/nh 8/ 14

S.F. _____ adjusted to sixty degrees Fahrenheit. 1 (2) The rate of tax on special fuel for aircraft is three 2 cents per gallon. 3 (3) On all other special fuel, unless otherwise specified in 4 this section , the per gallon rate is the same as the motor fuel 5 tax. 6 b. Indelible dye meeting United States environmental 7 protection agency and internal revenue service regulations 8 must be added to special fuel before or upon withdrawal at a 9 terminal or refinery rack for that special fuel to be exempt 10 from tax and the dyed special fuel may be used only for an 11 exempt purpose. 12 Sec. 31. Section 452A.17, subsection 1, paragraph a, Code 13 2011, is amended by adding the following new subparagraph: 14 NEW SUBPARAGRAPH . (11) Diesel fuel used by a nonterminal 15 storage facility to blend with biodiesel to produce biodiesel 16 blended fuel, if the biodiesel blended fuel is distributed 17 to a blender licensed pursuant to section 452A.6 who is also 18 required to pay the excise tax on the same diesel fuel. 19 Sec. 32. Section 452A.86, Code 2011, is amended to read as 20 follows: 21 452A.86 Method of determining gallonage. 22 1. The exclusive method of determining gallonage of 23 any purchases or sales of motor fuel, undyed special fuel, 24 compressed natural gas, or liquefied petroleum gas as defined 25 in this chapter and distillate fuels shall be on a gross volume 26 basis. A temperature-adjusted or other method shall not be 27 used, except as it applies to biodiesel, liquefied petroleum 28 gas , and or the sale or exchange of petroleum products between 29 petroleum refiners. All invoices, bills of lading, or other 30 records of sale or purchase and all returns or records required 31 to be made, kept, and maintained by a supplier, restrictive 32 supplier, importer, exporter, blender, or compressed natural 33 gas or liquefied petroleum gas dealer or user shall be made, 34 kept, and maintained on the gross volume basis. 35 -9- LSB 2723SC (4) 84 da/nh 9/ 14

S.F. _____ 2. For purposes of this section , “distillate fuels” means 1 any fuel oil, gas oil, topped crude oil, or other petroleum 2 oils derived by refining or processing crude oil or unfinished 3 oils which have a boiling range at atmospheric pressure which 4 falls completely or in part between five hundred fifty and 5 twelve hundred degrees Fahrenheit. 6 DIVISION VI 7 INCOME TAX CREDITS FOR RETAIL 8 DEALERS OF RENEWABLE FUEL 9 Sec. 33. Section 422.11N, subsection 3, Code 2011, is 10 amended by adding the following new paragraph: 11 NEW PARAGRAPH . c. The department has received the retail 12 dealer’s motor fuel gallonage report for the immediately prior 13 determination period beginning January 1 and ending December 14 31, as required in section 452A.33. The report must have been 15 received by the department on or before the report’s due date. 16 If the retail dealer submits the report on a quarterly or 17 monthly basis as provided in that section, the department must 18 have received all such reports by the same due date. 19 Sec. 34. Section 422.11O, subsection 2, Code 2011, is 20 amended by adding the following new paragraph: 21 NEW PARAGRAPH . c. The department has received the retail 22 dealer’s motor fuel gallonage report for the immediately prior 23 determination period beginning January 1 and ending December 24 31, as required in section 452A.33. The report must have been 25 received by the department on or before the report’s due date. 26 If the retail dealer submits the report on a quarterly or 27 monthly basis as provided in that section, the department must 28 have received all such reports by the same due date. 29 Sec. 35. Section 422.11P, subsection 2, paragraph a, Code 30 2011, is amended by adding the following new subparagraph: 31 NEW SUBPARAGRAPH . (4) The department has received the 32 retail dealer’s motor fuel gallonage report for the immediately 33 prior determination period beginning January 1 and ending 34 December 31, as required in section 452A.33. The report 35 -10- LSB 2723SC (4) 84 da/nh 10/ 14

S.F. _____ must have been received by the department on or before the 1 report’s due date. If the retail dealer submits the report on 2 a quarterly or monthly basis as provided in that section, the 3 department must have received all such reports by the same due 4 date. 5 Sec. 36. Section 452A.33, subsection 1, paragraph a, 6 unnumbered paragraph 1, Code 2011, is amended to read as 7 follows: 8 Each retail dealer shall submit a motor fuel gallonage 9 report , detailing its total motor fuel gallonage for a 10 determination period as follows: 11 EXPLANATION 12 GENERALLY. This bill relates to motor fuel regulated by the 13 department of agriculture and land stewardship (DALS) pursuant 14 to Code chapter 214A and classified according to the percentage 15 of biofuel blended into the motor fuel (e.g., E-10 means a 16 gallon of gasoline containing 10 percent ethanol and B-5 means 17 a gallon of diesel fuel containing 5 percent biodiesel). Both 18 ethanol blended gasoline and biodiesel blended fuel are subject 19 to promotional programs and tax incentives. 20 GENERAL —— REGULATION OF MOTOR FUEL. The bill amends 21 several provisions in Code chapter 214A, which regulates the 22 sale of motor fuel by DALS. The bill establishes a standard 23 for biodiesel blended fuel based on A.S.T.M. international 24 specifications. It also rewrites a provision that requires 25 that a motor fuel pump be affixed with a decal (label) 26 informing the traveling public whether it is dispensing a motor 27 fuel containing ethanol or biodiesel. It retains the label 28 requirement for a motor fuel pump dispensing E-85 gasoline 29 for flexible fuel vehicles or biodiesel blended fuel for 30 diesel-powered motor vehicles, removes a provision requiring a 31 label for a motor fuel pump dispensing other types of ethanol 32 blended fuel (standard ethanol blended gasoline), and requires 33 a label for a motor fuel pump dispensing gasoline without an 34 ethanol component (nonblended gasoline). 35 -11- LSB 2723SC (4) 84 da/nh 11/ 14

S.F. _____ LIMITING LIABILITY OF RETAIL DEALERS. The bill amends 1 Code chapter 214A, which provides for motor fuel, including 2 gasoline or ethanol blended gasoline, E-85 gasoline, diesel 3 fuel, and biodiesel fuel. The bill provides that a retail 4 dealer is not liable for damages caused to a motor by the use 5 of an incompatible motor fuel (e.g., the use of E-85 gasoline 6 in a conventional gasoline-powered motor). The bar against 7 liability depends upon the satisfaction of certain conditions: 8 (1) the motor fuel must meet legal specifications, (2) the 9 retail dealer cannot have selected it for use in the motor, and 10 (3) the dispensing pump must be correctly labeled. 11 INFRASTRUCTURE. The bill suspends the operation of two 12 current programs providing incentives for the installation of 13 renewable fuel infrastructure. The programs are supported from 14 moneys deposited in the renewable fuel infrastructure fund. 15 The bill provides that the department of economic development 16 and the renewable fuel infrastructure board must use all 17 available moneys deposited in the fund to award financial 18 incentives to retail dealers participating in a project to 19 install infrastructure associated with dispensing renewable 20 fuel from motor fuel blender pumps. The board must report to 21 the general assembly regarding the project. The project is 22 eliminated on July 1, 2014. 23 The bill eliminates a provision which provides that moneys 24 in the fund revert at the end of the fiscal year beginning July 25 1, 2011. 26 This division of the bill takes effect upon enactment. 27 ETHANOL BLENDED GASOLINE TAX CREDIT AND REPORTING. The bill 28 amends the ethanol promotion tax credit which is calculated 29 separately for each retail motor fuel site from which the 30 retail dealer sells and dispenses ethanol blended gasoline 31 (Code sections 422.11N and 422.33, subsection 11A). The tax 32 credit rate depends upon the number of gallons of ethanol 33 blended gasoline and biodiesel blended fuel that a retail 34 dealer sold throughout a calendar year (referred to as a 35 -12- LSB 2723SC (4) 84 da/nh 12/ 14

S.F. _____ determination period). The amount of the tax credit depends 1 upon whether the retail dealer met that biofuel threshold. 2 This bill renames the tax credit as the E-15 promotion tax 3 credit, and provides that the tax credit applies only to those 4 gallons of ethanol that are part of ethanol blended gasoline 5 designated as E-15 or higher. It also allows a retail dealer 6 filing a tax return on a noncalendar year basis to claim the 7 tax credit. The tax credit is eliminated on January 1, 2021. 8 The bill also amends reporting requirements by retail 9 dealers and the department of revenue. A retail dealer’s 10 report calculates the total motor fuel gallonage, and further 11 divides that number based on a number of classifications 12 depending upon the type of motor fuel sold, including ethanol 13 blended gasoline gallonage. The department then calculates 14 the aggregate total for the motor fuel gallonage including by 15 classification for the determination period. The bill revises 16 the reporting classifications for ethanol blended gasoline, 17 by including subclassifications for E-9 and E-10, E-11 to 18 E-15, and E-16 to E-85. It provides that the department may 19 establish additional subclassifications. 20 This division of the bill is effective on January 1, 2012, 21 and tax credit provisions are applicable to the tax years 22 beginning on or after that date. 23 EXCISE TAXES IMPOSED UPON BIODIESEL FUEL. The bill amends 24 provisions in Code chapter 452A which relate to an excise tax 25 imposed upon biodiesel fuel. Generally, an excise tax is 26 imposed on each gallon of motor fuel, including biodiesel fuel 27 (Code section 452A.3) based on a gross volume basis without 28 adjustment (Code section 452A.86). The bill does not directly 29 change the excise tax imposed on biodiesel fuel, but changes 30 how the gallonage is calculated at the meter, by requiring that 31 the excise tax be assessed after adjusting the biodiesel’s 32 temperature to 60 degrees Fahrenheit. 33 The bill also provides for a refund of excise taxes paid 34 on diesel fuel by nonterminal storage facilities. A person 35 -13- LSB 2723SC (4) 84 da/nh 13/ 14

S.F. _____ who manufactures a biofuel, including ethanol or biodiesel for 1 distribution, is classified as a nonterminal storage facility 2 (Code section 452A.2). A nonterminal storage facility is 3 required to pay an excise tax on diesel fuel used in producing 4 biodiesel blended fuel. The bill provides that the nonterminal 5 storage facility is entitled to a refund of the excise tax paid 6 on diesel fuel if the biodiesel blended fuel is distributed 7 to a licensed blender (Code section 452A.6) who must pay the 8 excise tax on that same diesel fuel. 9 INCOME TAX CREDITS FOR RETAIL DEALERS OF MOTOR FUEL WHICH 10 CONTAINS ETHANOL OR BIODIESEL. Code chapter 422 establishes a 11 tax credit for the promotion of ethanol blended gasoline (Code 12 sections 422.11N and 422.33(11A)), E-85 gasoline (Code sections 13 422.11O and 422.33(11B)), and biodiesel blended motor fuel 14 (Code sections 422.11P and 422.33(11C)). The bill provides 15 that in order for a retail dealer to claim a tax credit, it must 16 comply with an existing statute that requires a retail dealer 17 submit a motor fuel gallonage report (Code section 452A.33) for 18 its latest determination period (calendar year). The report 19 includes the retail dealer’s total gasoline gallonage, ethanol 20 gallonage, ethanol blended gasoline gallonage, E-85 gasoline 21 gallonage, diesel gallonage, and biodiesel gallonage for each 22 motor fuel site or other permanent or temporary location owned 23 or operated by the retail dealer. 24 -14- LSB 2723SC (4) 84 da/nh 14/ 14