S.F. _____ Section 1. Section 452A.3, subsections 1, 2, 3, 4, 5, and 6, 1 Code 2019, are amended to read as follows: 2 1. Except as otherwise provided in this section and in this 3 subchapter , until June 30, 2020, this subsection shall apply 4 to the excise tax imposed on each gallon of motor fuel used for 5 any purpose for the privilege of operating motor vehicles in 6 this state. 7 a. An excise tax of thirty cents is imposed on each gallon 8 of motor fuel other than ethanol blended gasoline classified 9 as E-15 or higher. 10 a. b. The rate of the excise tax on ethanol blended 11 gasoline classified as E-15 or higher shall be based on the 12 number of gallons of ethanol blended gasoline classified 13 as E-15 or higher that is are distributed in this state as 14 expressed as a percentage of the number of gallons of motor 15 fuel distributed in this state, which is referred to as the 16 distribution percentage. For purposes of this subsection 17 paragraph , only ethanol blended gasoline and nonblended 18 gasoline, not including aviation gasoline, shall be used in 19 determining the percentage basis for the excise tax. The 20 department shall determine the percentage basis for each 21 determination period beginning January 1 and ending December 22 31. The rate for the excise tax shall apply for the period 23 beginning July 1 and ending June 30 following the end of the 24 determination period. The rate of the excise tax on each 25 gallon of ethanol blended gasoline classified as E-15 or higher 26 shall be as follows: 27 b. The rate for the excise tax shall be as follows: 28 (1) If the distribution percentage is not greater than fifty 29 ten percent, the rate shall be twenty-nine twenty-four cents 30 for ethanol blended gasoline and thirty cents for motor fuel 31 other than ethanol blended gasoline . 32 (2) If the distribution percentage is greater than fifty 33 ten percent but not greater than fifty-five twelve percent, the 34 rate shall be twenty-nine twenty-four and five-tenths cents for 35 -1- LSB 2747XC (6) 88 ns/jh 1/ 10

S.F. _____ ethanol blended gasoline and thirty and one-tenth cents for 1 motor fuel other than ethanol blended gasoline . 2 (3) If the distribution percentage is greater than 3 fifty-five twelve percent but not greater than sixty fourteen 4 percent, the rate shall be twenty-nine twenty-five cents for 5 ethanol blended gasoline and thirty and three-tenths cents for 6 motor fuel other than ethanol blended gasoline . 7 (4) If the distribution percentage is greater than sixty 8 fourteen percent but not greater than sixty-five sixteen 9 percent, the rate shall be twenty-nine twenty-five and 10 five-tenths cents for ethanol blended gasoline and thirty and 11 five-tenths cents for motor fuel other than ethanol blended 12 gasoline . 13 (5) If the distribution percentage is greater than 14 sixty-five sixteen percent but not greater than seventy 15 eighteen percent, the rate shall be twenty-nine twenty-six 16 cents for ethanol blended gasoline and thirty and seven-tenths 17 cents for motor fuel other than ethanol blended gasoline . 18 (6) If the distribution percentage is greater than 19 seventy eighteen percent but not greater than seventy-five 20 twenty percent, the rate shall be twenty-nine twenty-six and 21 five-tenths cents for ethanol blended gasoline and thirty-one 22 cents for motor fuel other than ethanol blended gasoline . 23 (7) If the distribution percentage is greater than 24 seventy-five twenty percent but not greater than eighty 25 twenty-two percent, the rate shall be twenty-nine and 26 three-tenths twenty-seven cents for ethanol blended gasoline 27 and thirty and eight-tenths cents for motor fuel other than 28 ethanol blended gasoline . 29 (8) If the distribution percentage is greater than eighty 30 twenty-two percent but not greater than eighty-five twenty-six 31 percent, the rate shall be twenty-nine twenty-seven and 32 five-tenths cents for ethanol blended gasoline and thirty and 33 seven-tenths cents for motor fuel other than ethanol blended 34 gasoline . 35 -2- LSB 2747XC (6) 88 ns/jh 2/ 10

S.F. _____ (9) If the distribution percentage is greater than 1 eighty-five twenty-six percent but not greater than ninety 2 thirty-five percent, the rate shall be twenty-nine and 3 seven-tenths twenty-eight cents for ethanol blended gasoline 4 and thirty and four-tenths cents for motor fuel other than 5 ethanol blended gasoline . 6 (10) If the distribution percentage is greater than ninety 7 thirty-five percent but not greater than ninety-five forty-five 8 percent, the rate shall be twenty-nine and nine-tenths 9 twenty-eight and five-tenths cents for ethanol blended gasoline 10 and thirty and one-tenth cents for motor fuel other than 11 ethanol blended gasoline . 12 (11) If the distribution percentage is greater than 13 ninety-five forty-five percent but not greater than sixty-five 14 percent , the rate shall be thirty twenty-nine cents for ethanol 15 blended gasoline and thirty cents for motor fuel other than 16 ethanol blended gasoline . 17 (12) If the distribution percentage is greater than 18 sixty-five percent but not greater than eighty-five percent, 19 the rate shall be twenty-nine and two-tenths cents. 20 (13) If the distribution percentage is greater than 21 eighty-five percent but not greater than ninety-five percent, 22 the rate shall be twenty-nine and five-tenths cents. 23 (14) If the distribution percentage is greater than 24 ninety-five percent, the rate shall be thirty cents. 25 c. The provisions of paragraph “b” and subsection 6 26 3 , paragraph “a” , subparagraph (2), shall be subject to 27 legislative review at least every six five years. The review 28 shall be based upon a fuel distribution percentage formula 29 status report containing the recommendations of a legislative 30 interim committee appointed to conduct a review of the fuel 31 distribution percentage formulas, to be prepared with the 32 assistance of the department of revenue in association 33 with the department of transportation. The report shall 34 include recommendations for changes or revisions to the 35 -3- LSB 2747XC (6) 88 ns/jh 3/ 10

S.F. _____ fuel distribution percentage formulas based upon advances 1 in technology, fuel use trends, and fuel price fluctuations 2 observed during the preceding six-year five-year interval; an 3 analysis of the operation of the fuel distribution percentage 4 formulas during the preceding six-year five-year interval; and 5 a summary of issues that have arisen since the previous review 6 and potential approaches for resolution of those issues. The 7 first such report shall be submitted to the general assembly 8 no later than January 1, 2020 2025 , with subsequent reports 9 developed and submitted by January 1 at least every sixth fifth 10 year thereafter. 11 2. Except as otherwise provided in this section and in this 12 subchapter , after June 30, 2020, an excise tax of thirty cents 13 is imposed on each gallon of motor fuel used for any purpose 14 for the privilege of operating motor vehicles in this state. 15 3. An excise tax of seventeen cents is imposed on each 16 gallon of E-85 gasoline, subject to the determination provided 17 in subsection 4. 18 4. The rate of the excise tax on E-85 gasoline imposed in 19 subsection 3 shall be determined based on the number of gallons 20 of E-85 gasoline that are distributed in this state during the 21 previous calendar year. The department shall determine the 22 actual tax paid for E-85 gasoline for each period beginning 23 January 1 and ending December 31. The amount of the tax paid on 24 E-85 gasoline during the past calendar year shall be compared 25 to the amount of tax on E-85 gasoline that would have been paid 26 using the tax rate for gasoline imposed in subsection 1 or 27 2 and a difference shall be established. If this difference 28 is equal to or greater than twenty-five thousand dollars, the 29 tax rate for E-85 gasoline for the period beginning July 1 30 following the end of the determination period shall be the rate 31 in effect as stated in subsection 1 or 2. 32 5. 2. For the privilege of operating aircraft in this 33 state , an excise tax of eight cents per gallon is imposed on 34 the use of all aviation gasoline. 35 -4- LSB 2747XC (6) 88 ns/jh 4/ 10

S.F. _____ 6. 3. a. For the privilege of operating motor vehicles or 1 aircraft in this state, there is imposed an excise tax on the 2 use of special fuel in a motor vehicle or aircraft. 3 (1) Except as otherwise provided in this section and in 4 this subchapter , for the period ending June 30, 2015, and for 5 the period beginning July 1, 2020, and thereafter, the rate 6 of the excise tax rate on each gallon of special fuel for 7 diesel engines of motor vehicles used for any purpose for the 8 privilege of operating motor vehicles in this state , other 9 than biodiesel blended fuel classified as B-11 or higher, is 10 thirty-two and five-tenths cents per gallon. 11 (2) Except as otherwise provided in this section and in this 12 subchapter , for the period beginning July 1, 2015, and ending 13 June 30, 2020, this subparagraph shall apply to the excise tax 14 imposed on each gallon of special fuel for diesel engines of 15 motor vehicles biodiesel blended fuel classified as B-11 or 16 higher used for any purpose for the privilege of operating 17 motor vehicles in this state. The rate of the excise tax 18 shall be based on the number of gallons of biodiesel blended 19 fuel classified as B-11 or higher that is distributed in this 20 state as expressed as a percentage of the number of gallons of 21 special fuel for diesel engines of motor vehicles distributed 22 in this state, which is referred to as the distribution 23 percentage. The department shall determine the percentage 24 basis for each determination period beginning January 1 and 25 ending December 31. The rate for of the excise tax shall apply 26 for the period beginning July 1 and ending June 30 following 27 the end of the determination period. The rate for of the 28 excise tax on each gallon of biodiesel blended fuel classified 29 as B-11 or higher shall be as follows: 30 (a) If the distribution percentage is not greater than fifty 31 percent, the rate shall be twenty-nine and five-tenths cents 32 for biodiesel blended fuel classified as B-11 or higher and 33 thirty-two and five-tenths cents for special fuel for diesel 34 engines of motor vehicles other than biodiesel blended fuel 35 -5- LSB 2747XC (6) 88 ns/jh 5/ 10

S.F. _____ classified as B-11 or higher . 1 (b) If the distribution percentage is greater than fifty 2 percent but not greater than fifty-five percent, the rate 3 shall be twenty-nine and eight-tenths cents for biodiesel 4 blended fuel classified as B-11 or higher and thirty-two and 5 five-tenths cents for special fuel for diesel engines of motor 6 vehicles other than biodiesel blended fuel classified as B-11 7 or higher . 8 (c) If the distribution percentage is greater than 9 fifty-five percent but not greater than sixty percent, the rate 10 shall be thirty and one-tenth cents for biodiesel blended fuel 11 classified as B-11 or higher and thirty-two and five-tenths 12 cents for special fuel for diesel engines of motor vehicles 13 other than biodiesel blended fuel classified as B-11 or higher . 14 (d) If the distribution percentage is greater than sixty 15 percent but not greater than sixty-five percent, the rate shall 16 be thirty and four-tenths cents for biodiesel blended fuel 17 classified as B-11 or higher and thirty-two and five-tenths 18 cents for special fuel for diesel engines of motor vehicles 19 other than biodiesel blended fuel classified as B-11 or higher . 20 (e) If the distribution percentage is greater than 21 sixty-five percent but not greater than seventy percent, the 22 rate shall be thirty and seven-tenths cents for biodiesel 23 blended fuel classified as B-11 or higher and thirty-two and 24 five-tenths cents for special fuel for diesel engines of motor 25 vehicles other than biodiesel blended fuel classified as B-11 26 or higher . 27 (f) If the distribution percentage is greater than seventy 28 percent but not greater than seventy-five percent, the rate 29 shall be thirty-one cents for biodiesel blended fuel classified 30 as B-11 or higher and thirty-two and five-tenths cents for 31 special fuel for diesel engines of motor vehicles other than 32 biodiesel blended fuel classified as B-11 or higher . 33 (g) If the distribution percentage is greater than 34 seventy-five percent but not greater than eighty percent, the 35 -6- LSB 2747XC (6) 88 ns/jh 6/ 10

S.F. _____ rate shall be thirty-one and three-tenths cents for biodiesel 1 blended fuel classified as B-11 or higher and thirty-two and 2 five-tenths cents for special fuel for diesel engines of motor 3 vehicles other than biodiesel blended fuel classified as B-11 4 or higher . 5 (h) If the distribution percentage is greater than eighty 6 percent but not greater than eighty-five percent, the rate 7 shall be thirty-one and six-tenths cents for biodiesel 8 blended fuel classified as B-11 or higher and thirty-two and 9 five-tenths cents for special fuel for diesel engines of motor 10 vehicles other than biodiesel blended fuel classified as B-11 11 or higher . 12 (i) If the distribution percentage is greater than 13 eighty-five percent but not greater than ninety percent, the 14 rate shall be thirty-one and nine-tenths cents for biodiesel 15 blended fuel classified as B-11 or higher and thirty-two and 16 five-tenths cents for special fuel for diesel engines of motor 17 vehicles other than biodiesel blended fuel classified as B-11 18 or higher . 19 (j) If the distribution percentage is greater than ninety 20 percent but not greater than ninety-five percent, the rate 21 shall be thirty-two and two-tenths cents for biodiesel 22 blended fuel classified as B-11 or higher and thirty-two and 23 five-tenths cents for special fuel for diesel engines of motor 24 vehicles other than biodiesel blended fuel classified as B-11 25 or higher . 26 (k) If the distribution percentage is greater than 27 ninety-five percent, the rate shall be thirty-two and 28 five-tenths cents for biodiesel blended fuel classified as B-11 29 or higher and thirty-two and five-tenths cents for special 30 fuel for diesel engines of motor vehicles other than biodiesel 31 blended fuel classified as B-11 or higher . 32 (3) The rate of the excise tax on special fuel for aircraft 33 is five cents per gallon. 34 (4) On all other special fuel, unless otherwise specified in 35 -7- LSB 2747XC (6) 88 ns/jh 7/ 10

S.F. _____ this section , the per gallon rate of the excise tax is the same 1 as the motor fuel tax under subsection 1 . 2 b. Indelible dye meeting United States environmental 3 protection agency and internal revenue service regulations must 4 be added to fuel before or upon withdrawal at a terminal or 5 refinery rack for that fuel to be exempt from tax and the dyed 6 fuel may be used only for an exempt purpose. 7 Sec. 2. Section 452A.31, subsection 2, paragraph a, 8 subparagraph (1), Code 2019, is amended by adding the following 9 new subparagraph division: 10 NEW SUBPARAGRAPH DIVISION . (c) The total E-15 gasoline 11 gallonage which is the total number of gallons of ethanol 12 blended gasoline classified as E-15 or higher, including E-85 13 gasoline. 14 Sec. 3. Section 452A.31, subsection 3, paragraph a, Code 15 2019, is amended by adding the following new subparagraph: 16 NEW SUBPARAGRAPH . (1A) The total B-11 gallonage which 17 is the total number of gallons of biodiesel blended fuel 18 classified as B-11 or higher. 19 Sec. 4. Section 452A.31, subsection 4, paragraph a, 20 subparagraph (1), Code 2019, is amended by adding the following 21 new subparagraph division: 22 NEW SUBPARAGRAPH DIVISION . (c) The aggregate E-15 gasoline 23 gallonage which is the aggregate total number of gallons 24 of ethanol blended gasoline classified as E-15 or higher, 25 including E-85 gasoline. 26 Sec. 5. Section 452A.31, subsection 5, paragraph a, Code 27 2019, is amended by adding the following new subparagraph: 28 NEW SUBPARAGRAPH . (1A) The aggregate B-11 gallonage which 29 is the aggregate total number of gallons of biodiesel blended 30 fuel classified as B-11 or higher. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill relates to the excise taxes on motor fuel and 35 -8- LSB 2747XC (6) 88 ns/jh 8/ 10

S.F. _____ certain special fuel. 1 Under current law, until June 30, 2020, the per-gallon 2 excise tax on ethanol blended gasoline is up to 2 cents less 3 than the per-gallon excise tax on other motor fuel, based on 4 the distribution percentage of the fuels. After June 30, 2020, 5 the per-gallon excise tax on ethanol blended gasoline and other 6 motor fuel is 30 cents. The bill instead imposes a per-gallon 7 excise tax of 30 cents on motor fuel other than ethanol blended 8 gasoline classified as E-15 or higher. The bill imposes a 9 per-gallon excise tax on ethanol blended gasoline classified as 10 E-15 or higher that is up to 6 cents less than the per-gallon 11 excise tax on other motor fuel, based on the distribution 12 percentage of the fuels. If the distribution percentage is 13 greater than 95 percent, the per-gallon excise tax on motor 14 fuel other than ethanol blended gasoline classified as E-15 or 15 higher is equal to the per-gallon excise tax on ethanol blended 16 gasoline classified as E-15 or higher. 17 Current law provides for legislative review of the fuel 18 distribution percentage formulas at least every six years, 19 with the first report due no later than January 1, 2020. The 20 bill instead provides for legislative review of the fuel 21 distribution percentage formulas at least every five years, 22 with the first report due no later than January 1, 2025. 23 Under current law, the per-gallon excise tax on E-85 24 gasoline is up to 14 cents less than the per-gallon excise tax 25 on other motor fuel, depending on the amount of excise tax 26 paid on E-85 gasoline during the past calendar year and the 27 amount of the excise tax on other motor fuel. The bill strikes 28 the provisions relating to the per-gallon excise tax on E-85 29 gasoline. 30 Under current law, until June 30, 2020, the per-gallon 31 excise tax on biodiesel blended fuel classified as B-11 or 32 higher is up to 3 cents less than the per-gallon excise tax 33 on other special fuel for diesel engines of motor vehicles, 34 based on the distribution percentage of the fuels. After June 35 -9- LSB 2747XC (6) 88 ns/jh 9/ 10

S.F. _____ 30, 2020, the per-gallon excise tax on biodiesel blended fuel 1 classified as B-11 or higher and other special fuel for diesel 2 engines of motor vehicles is 32.5 cents. The bill strikes the 3 date on which the per-gallon excise tax on biodiesel blended 4 fuel classified as B-11 or higher and other special fuel for 5 diesel engines of motor vehicles will both become 32.5 cents. 6 Therefore, under the bill, the per-gallon excise tax on special 7 fuel for diesel engines of motor vehicles other than biodiesel 8 blended fuel classified as B-11 or higher is 32.5 cents. The 9 per-gallon excise tax on biodiesel blended fuel classified as 10 B-11 or higher is up to 3 cents less than the per-gallon excise 11 tax on other special fuel for diesel engines of motor vehicles, 12 based on the distribution percentage of the fuels. 13 The bill creates reporting classifications under Code 14 section 452A.31 for ethanol blended gasoline classified as 15 E-15 or higher and biodiesel blended fuel classified as B-11 16 or higher for purposes of gallonage reports submitted to the 17 department of revenue pursuant to Code section 452A.33. 18 By operation of law, to the extent the excise tax on E-85 19 gasoline and ethanol blended gasoline classified as lower than 20 E-15 is increased more than 0.5 cents per gallon, the inventory 21 tax set forth in Code section 452A.85 applies. 22 -10- LSB 2747XC (6) 88 ns/jh 10/ 10