House File 640 - Introduced HOUSE FILE 640 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 597) (SUCCESSOR TO HF 376) A BILL FOR An Act relating to liquids which are flammable or combustible, 1 by providing for the storage, marketing, and distribution of 2 such liquids, providing for the marketing and distribution 3 of liquids classified as motor fuel, including a 4 conventional blendstock for oxygenate blending, and blended 5 and unblended gasoline and diesel fuel, providing for 6 liability, and including fees and penalties. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 2132HZ (4) 85 da/nh

H.F. 640 DIVISION I 1 MOTOR FUEL MARKETING 2 Section 1. Section 214A.1, Code 2013, is amended by adding 3 the following new subsections: 4 NEW SUBSECTION . 8A. “Distributor” means the same as defined 5 in section 452A.2. 6 NEW SUBSECTION . 12A. “Marketer” means a dealer, 7 distributor, nonrefiner biofuel manufacturer, or supplier. 8 NEW SUBSECTION . 16A. “Nonrefiner biofuel manufacturer” 9 means the same as defined in section 452A.2. 10 NEW SUBSECTION . 18A. “Pipeline company” means the same as 11 defined in section 479B.2. 12 NEW SUBSECTION . 18B. “Refiner” means a person engaged in 13 the refining of crude oil to produce motor fuel, and includes 14 any affiliate of such person. 15 NEW SUBSECTION . 23A. “Supplier” means the same as defined 16 in section 452A.2. 17 NEW SUBSECTION . 23B. “Terminal” means the same as defined 18 in section 452A.2. 19 NEW SUBSECTION . 23C. “Terminal operator” means the same as 20 defined in section 452A.2. 21 NEW SUBSECTION . 23D. “Terminal owner” means the same as 22 defined in section 452A.2. 23 Sec. 2. Section 214A.20, subsection 1, unnumbered paragraph 24 1, Code 2013, is amended to read as follows: 25 A retail dealer or other marketer, pipeline company, 26 refiner, terminal operator, or terminal owner is not liable for 27 damages caused by the use of incompatible motor fuel dispensed 28 for use in an engine at the retail dealer’s retail motor fuel 29 site, if all of the following applies: 30 Sec. 3. Section 214A.20, Code 2013, is amended by adding the 31 following new subsection: 32 NEW SUBSECTION . 1A. A manufacturer of an engine, or the 33 manufacturer of a motor vehicle which includes an engine, is 34 not liable for damages caused to the engine or motor vehicle by 35 -1- LSB 2132HZ (4) 85 da/nh 1/ 8

H.F. 640 the use of incompatible motor fuel. 1 Sec. 4. Section 214A.20, subsection 2, Code 2013, is amended 2 to read as follows: 3 2. For purposes of this section , a motor fuel is 4 incompatible with a an engine or motor vehicle according to the 5 manufacturer of the engine or motor vehicle . 6 Sec. 5. Section 452A.2, Code 2013, is amended by adding the 7 following new subsections: 8 NEW SUBSECTION . 6A. “Conventional blendstock for oxygenate 9 blending” means one or more motor fuel components intended for 10 blending with an oxygenate or oxygenates to produce gasoline. 11 NEW SUBSECTION . 9A. “Diesel fuel” or “diesel” means diesel 12 fuel as defined in section 214A.1. 13 NEW SUBSECTION . 28A. “Nonrefiner biofuel manufacturer” 14 means an entity that produces, manufactures, or refines 15 biofuel and does not directly or through a related entity 16 refine, blend, import, or produce a conventional blendstock for 17 oxygenate blending, gasoline, or diesel fuel. 18 NEW SUBSECTION . 30A. “Refiner” means a person engaged in 19 the refining of crude oil to produce motor fuel or special 20 fuel, and includes any affiliate of such person. 21 NEW SUBSECTION . 37A. “Terminal owner” means a person who 22 holds a legal interest or equitable interest in a terminal. 23 Sec. 6. NEW SECTION . 452A.6A Right of distributors and 24 dealers to blend conventional blendstock for oxygenate blending, 25 gasoline, or diesel fuel using a biofuel. 26 1. a. A dealer or distributor may blend a conventional 27 blendstock for oxygenate blending, gasoline, or diesel fuel 28 using the appropriate biofuel, or sell unblended or blended 29 gasoline or diesel fuel on any premises in this state. 30 b. Paragraph “a” does not apply to the extent that the use 31 of the premises is restricted by federal, state, or local law. 32 2. A refiner, supplier, terminal operator, or terminal 33 owner who in the ordinary course of business sells or 34 transports a conventional blendstock for oxygenate blending, 35 -2- LSB 2132HZ (4) 85 da/nh 2/ 8

H.F. 640 gasoline unblended or blended with a biofuel, or diesel fuel 1 unblended or blended with a biofuel shall not refuse to sell 2 or transport to a distributor or dealer any conventional 3 blendstock for oxygenate blending, unblended gasoline, 4 or unblended diesel fuel at the terminal, based on the 5 distributor’s or dealer’s intent to use the conventional 6 blendstock for oxygenate blending, or blend the gasoline or 7 diesel fuel with a biofuel. 8 3. This section shall not be construed to do any of the 9 following: 10 a. Prohibit a distributor or dealer from purchasing, 11 selling or transporting a conventional blendstock for oxygenate 12 blending, gasoline that has not been blended with a biofuel, or 13 diesel fuel that has not been blended with a biofuel. 14 b. Affect the blender’s license requirements under section 15 452A.6. 16 c. Prohibit a dealer or distributor from leaving a terminal 17 with a conventional blendstock for oxygenate blending, gasoline 18 that has not been blended with a biofuel, or diesel fuel that 19 has not been blended with a biofuel. 20 d. Require a nonrefiner biofuel manufacturer to offer or 21 sell a conventional blendstock for oxygenate blending, gasoline 22 that has not been blended with a biofuel, or diesel fuel that 23 has not been blended with a biofuel. 24 4. A refiner, supplier, terminal operator, or terminal 25 owner who violates this section is subject to a civil penalty 26 of not more than ten thousand dollars per violation. Each day 27 that a violation continues is deemed a separate offense. 28 DIVISION II 29 STORAGE TANKS 30 Sec. 7. Section 101.21, subsection 1, paragraphs a through 31 c, Code 2013, are amended to read as follows: 32 a. Aboveground tanks of An aboveground tank which complies 33 with any of the following: 34 (1) Has one thousand one hundred gallons or less capacity. 35 -3- LSB 2132HZ (4) 85 da/nh 3/ 8

H.F. 640 (2) Stores flammable liquids on a farm located outside the 1 limits of a city, if the aboveground tank has two thousand 2 gallons or less capacity. 3 (3) Stores combustible liquids on a farm located outside 4 the limits of a city, if the aboveground tank has five thousand 5 gallons or less capacity. 6 b. Tanks A tank used for storing heating oil for consumptive 7 use on the premises where stored. 8 c. Underground An underground storage tanks tank as defined 9 by section 455B.471 . 10 Sec. 8. Section 101.21, Code 2013, is amended by adding the 11 following new subsection: 12 NEW SUBSECTION . 1A. a. “Farm” means land and associated 13 improvements used to produce agricultural commodities, if at 14 least one thousand dollars is annually generated from the sale 15 of the agricultural commodities. 16 b. As used in paragraph “a” , “commodities” means crops 17 as defined in section 202.1 or animals as defined in section 18 459.102. 19 Sec. 9. Section 101.22, subsections 4 through 8, Code 2013, 20 are amended to read as follows: 21 4. The registration notice of the owner or operator to 22 the state fire marshal under subsections 1 through 3 shall 23 be accompanied by an annual fee of ten twenty dollars for 24 each tank included in the notice. All moneys collected 25 shall be retained by the department of public safety and are 26 appropriated for the use of the state fire marshal. The annual 27 renewal fee applies to all owners or operators who file a 28 registration notice with the state fire marshal pursuant to 29 subsections 1 through 3 . 30 5. A person who deposits flammable or combustible liquid 31 in an aboveground flammable or combustible liquid storage 32 tank shall notify the owner or operator in writing of the 33 notification requirements of this section . 34 6. A person who sells or constructs a tank intended to be 35 -4- LSB 2132HZ (4) 85 da/nh 4/ 8

H.F. 640 used as an aboveground storage tank shall notify the purchaser 1 of the tank in writing of the notification requirements of this 2 section applicable to the purchaser. 3 7. 6. It is unlawful to deposit flammable or combustible 4 liquid in An owner or operator shall register an aboveground 5 flammable or combustible liquid storage tank which has not been 6 registered pursuant to subsections 1 through 4 . 7 8. 7. The state fire marshal shall furnish the owner or 8 operator of an aboveground flammable or combustible liquid 9 storage tank with a registration tag for each aboveground 10 flammable or combustible liquid storage tank registered with 11 the state fire marshal. 12 a. The owner or operator shall affix the tag to the fill 13 pipe of each registered aboveground flammable or combustible 14 liquid storage tank. 15 b. A person who conveys or deposits flammable or combustible 16 liquid shall inspect the aboveground flammable or combustible 17 liquid storage tank to determine the existence or absence of 18 the registration tag. If a registration tag is not affixed to 19 the aboveground flammable or combustible liquid storage tank 20 fill pipe, the person conveying or depositing the flammable or 21 combustible liquid may deposit the flammable or combustible 22 liquid in the unregistered tank. However, only one deposit 23 is allowed into the unregistered tank, the person making the 24 deposit shall provide the owner or operator of the tank with 25 another notice as required by subsection 5 , and the person 26 shall provide the owner or operator with an aboveground 27 flammable or combustible liquid storage tank registration form. 28 c. It is the owner or operator’s duty to comply with 29 registration requirements. 30 8. A late registration penalty of twenty-five dollars 31 is imposed in addition to the registration fee for a tank 32 registered after the required date. 33 EXPLANATION 34 GENERAL. This bill relates to liquids which are flammable 35 -5- LSB 2132HZ (4) 85 da/nh 5/ 8

H.F. 640 or combustible, by providing for the storage, marketing, and 1 distribution of such liquids. It provides for the marketing 2 and distribution of liquids classified as motor fuel and 3 components of motor fuel. 4 CLASSIFICATIONS OF MOTOR FUEL AND ITS COMPONENTS. Motor 5 fuel includes gasoline and diesel fuel (sometimes referred to 6 as a special fuel). Gasoline may be blended with an oxygenate, 7 including ethanol (alcohol) or biodiesel (soybean oil), by a 8 person referred to as a blender. Both ethanol and biodiesel 9 are referred to as biofuel (Code sections 214A.1 and 452A.2). 10 A biofuel is manufactured by a nonrefiner biofuel manufacturer. 11 Gasoline must contain an octane level of at least 87 (Code 12 section 214A.2). The bill classifies a conventional blendstock 13 for oxygenate blending (herein referred to as a blendstock) 14 as a component of motor fuel intended for blending with an 15 oxygenate and would include gasoline containing an octane level 16 of less than 87. Thus, a blender could blend a blendstock with 17 ethanol in order to achieve the minimum octane level. 18 MOTOR FUEL MARKETING. Motor fuel (e.g., gasoline) and 19 special fuel (e.g., diesel fuel) is produced by a refiner and 20 moved into this state via a pipeline or marine vessel to a 21 terminal where in turn the fuel is withdrawn by a supplier and 22 then purchased and transported by a distributor and ultimately 23 a dealer who sells the fuel at retail. The bill provides for 24 the distribution and sale of motor fuel by marketers (dealers, 25 distributors, nonrefiner biofuel manufacturers, and suppliers) 26 as well as refiners and terminals, including terminal operators 27 and terminal owners. 28 LIABILITY PROTECTION. In 2011, the general assembly enacted 29 SF 531, which provided that a retail dealer is not liable 30 for damages caused by the use of incompatible motor fuel 31 dispensed at the retail dealer’s motor fuel site under certain 32 conditions. The incompatible motor fuel must comply with the 33 specifications for that type of motor fuel (ASTM international 34 specifications), it must be selected by a person other than 35 -6- LSB 2132HZ (4) 85 da/nh 6/ 8

H.F. 640 the retail dealer, and it must be dispensed from a motor fuel 1 pump that correctly labels the type of fuel dispensed (Code 2 section 214A.20). The bill extends such protection against 3 liability to other marketers, pipeline companies, refiners, 4 terminal operators, and terminal owners. It also provides that 5 a manufacturer of an engine or the manufacturer of a motor 6 vehicle is not liable for damages caused to the engine or motor 7 vehicle by the use of incompatible motor fuel. 8 RIGHT OF A DEALER OR DISTRIBUTOR TO BLEND MOTOR FUEL. 9 The bill provides that a dealer or distributor may blend a 10 blendstock, gasoline, or diesel fuel using the appropriate 11 biofuel, or sell unblended or blended gasoline or diesel fuel 12 on any premises in this state, so long as it does not violate a 13 restriction imposed under federal, state, or local law (e.g., 14 trespass or land use laws). 15 RIGHT OF A DEALER OR DISTRIBUTOR TO PURCHASE AND RECEIVE 16 MOTOR FUEL. The bill provides that a refiner, supplier, 17 terminal operator, or terminal owner who in the ordinary course 18 of business sells or transports a blendstock or gasoline or 19 diesel fuel which is unblended or blended with a biofuel cannot 20 refuse to sell or transport any blendstock, unblended gasoline, 21 or unblended diesel fuel to a distributor or dealer based on 22 the distributor’s or dealer’s intent to use the blendstock, or 23 blend the gasoline or diesel fuel with a biofuel. The bill 24 does not require a nonrefiner biofuel manufacturer to offer 25 or sell a blendstock, gasoline that has not been blended with 26 a biofuel, or diesel fuel that has not been blended with a 27 biofuel. 28 CIVIL PENALTIES. A refiner, supplier, terminal operator, or 29 terminal owner who violates a provision regulating a dealer’s 30 or distributor’s right to blend or to purchase and receive a 31 blendstock, gasoline unblended or blended with a biofuel, or 32 diesel fuel unblended or blended with a biofuel is subject to a 33 civil penalty of not more than $10,000 per violation, with each 34 day that a violation continues deemed a separate offense. 35 -7- LSB 2132HZ (4) 85 da/nh 7/ 8

H.F. 640 ABOVEGROUND STORAGE TANKS. The bill amends provisions which 1 require the state fire marshal to regulate one or a combination 2 of tanks and associated infrastructure used to store flammable 3 or combustible liquid (Code sections 101.21 and 101.22). 4 The provision exempts tanks having 1,100 gallons or less of 5 capacity. The bill creates two other exceptions, including 6 an exception for a tank which stores flammable liquids on a 7 farm located outside the limits of a city, if the aboveground 8 tank has 2,000 gallons or less capacity and for a tank that 9 stores combustible liquids on a farm located outside the limits 10 of a city, if the aboveground tank has 5,000 gallons or less 11 capacity. 12 NOTICE AND FEES. The bill amends a provision that requires 13 the owner or operator of a storage tank to notify the state 14 fire marshal of facts relating to the existence and operation 15 of the storage tank (Code section 101.22). The bill increases 16 the attendant fee from $10 to $20 for each tank included in the 17 notice. 18 REGISTRATION AND ASSOCIATED TAGS. The bill amends a 19 provision which requires an owner or operator to register a 20 storage tank and requires the state fire marshal to furnish 21 a registration tag to affix to a storage tank’s pipe. The 22 bill eliminates requirements that a person who conveys or 23 deposits flammable or combustible liquid must notify the owner 24 or operator of the notification requirements and inspect the 25 storage tank to determine whether the registration tag has been 26 affixed. 27 PENALTY. A person who violates a registration or tagging 28 requirement is subject to a civil penalty not to exceed $100 29 for each day that a violation continues, not to exceed $1,000 30 (Code section 101.26). 31 -8- LSB 2132HZ (4) 85 da/nh 8/ 8