House File 640 - Reprinted HOUSE FILE 640 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 597) (SUCCESSOR TO HF 376) (As Amended and Passed by the House May 2, 2013 ) 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, extending the period for determining the rates 7 of the motor fuel tax based on calculating the distribution 8 of ethanol blended gasoline and other motor fuel, including 9 fees and penalties, and including effective date provisions. 10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 11 HF 640 (5) 85 da/nh/md

H.F. 640 DIVISION I 1 LEGISLATIVE INTENT 2 Section 1. USE OF RENEWABLE FUELS. The general assembly 3 finds and declares all of the following: 4 1. This state and the United States have demonstrated a 5 commitment to a long term policy of increasing the production, 6 distribution, and use of clean renewable fuels according to a 7 renewable fuel standard, sometimes referred to as “RFS2”, by 8 encouraging the increased domestic production and utilization 9 of renewable fuels, which includes total renewable biofuels 10 such as ethanol, advanced biofuels, cellulosic and agricultural 11 waste-based biofuels, and biomass-based biodiesel. 12 2. Renewable fuels have become increasingly important 13 to this state and its economy including by providing jobs 14 and strengthening rural communities, and have proven to be 15 economically viable for consumers in this state and throughout 16 the midwest. 17 DIVISION II 18 MOTOR FUEL MARKETING 19 Sec. 2. Section 214A.1, Code 2013, is amended by adding the 20 following new subsections: 21 NEW SUBSECTION . 8A. “Distributor” means the same as defined 22 in section 452A.2. 23 NEW SUBSECTION . 12A. “Marketer” means a dealer, 24 distributor, nonrefiner biofuel manufacturer, or supplier. 25 NEW SUBSECTION . 16A. “Nonrefiner biofuel manufacturer” 26 means the same as defined in section 452A.2. 27 NEW SUBSECTION . 18A. “Pipeline company” means the same as 28 defined in section 479B.2. 29 NEW SUBSECTION . 18B. “Refiner” means a person engaged in 30 the refining of crude oil to produce motor fuel, and includes 31 any affiliate of such person. 32 NEW SUBSECTION . 23A. “Supplier” means the same as defined 33 in section 452A.2. 34 NEW SUBSECTION . 23B. “Terminal” means the same as defined 35 -1- HF 640 (5) 85 da/nh/md 1/ 8

H.F. 640 in section 452A.2. 1 NEW SUBSECTION . 23C. “Terminal operator” means the same as 2 defined in section 452A.2. 3 NEW SUBSECTION . 23D. “Terminal owner” means the same as 4 defined in section 452A.2. 5 Sec. 3. Section 214A.20, subsection 1, unnumbered paragraph 6 1, Code 2013, is amended to read as follows: 7 A retail dealer or other marketer, pipeline company, 8 refiner, terminal operator, or terminal owner is not liable for 9 damages caused by the use of incompatible motor fuel dispensed 10 at the retail dealer’s retail motor fuel site, if all of the 11 following applies: 12 Sec. 4. Section 323.1, Code 2013, is amended by adding the 13 following new subsections: 14 NEW SUBSECTION . 01. “Blender pump” means a motor fuel 15 blender pump as defined in section 214.1 that dispenses motor 16 fuel or special fuel in a manner required pursuant to chapters 17 214 and 214A. 18 NEW SUBSECTION . 7A. “Motor fuel pump” means the same as 19 defined in section 214.1 that dispenses motor fuel or special 20 fuel in a manner that complies with standards set forth in 21 chapters 214 and 214A. 22 NEW SUBSECTION . 7B. “Refiner” means a person engaged in the 23 refining of crude oil to produce motor fuel or special fuel, 24 and includes any affiliate of such person. 25 NEW SUBSECTION . 7C. “Renewable fuel” means the same as 26 defined in section 214A.1 that complies with standards set 27 forth in section 214A.2. 28 NEW SUBSECTION . 11. “Storage tank” means a motor fuel 29 storage tank as defined in section 214.1, including an 30 underground storage tank subject to regulation under chapter 31 455G. 32 NEW SUBSECTION . 12. “Supplier” means the same as defined 33 in section 452A.2. 34 Sec. 5. NEW SECTION . 323.4A Use of renewable fuel. 35 -2- HF 640 (5) 85 da/nh/md 2/ 8

H.F. 640 1. A supply agreement or other document executed by a 1 distributor or dealer and a refiner or supplier on or after 2 the effective date of this Act shall not contain a provision 3 restricting the distributor or dealer from doing any of the 4 following: 5 a. Installing, converting, or operating a storage tank, a 6 motor fuel pump, or a blender pump located on the distributor’s 7 or dealer’s retail premises for use in storing or dispensing 8 renewable fuel. However, this paragraph does not apply to a 9 dealer whose retail premises are leased from the distributor 10 or franchiser. 11 b. Using a motor fuel pump to dispense ethanol blended 12 gasoline, including gasoline with a specified blend or a range 13 of blends under chapter 214A, if the motor fuel pump meets all 14 applicable federal and state requirements and is approved as 15 required by the state fire marshal for dispensing the specified 16 blend or range of blends, including as provided in section 17 455G.31. 18 c. Purchasing, selling, or dispensing motor fuel or special 19 fuel that is a renewable fuel from a source other than the 20 refiner or supplier if the refiner or supplier does not provide 21 motor fuel or special fuel that is a renewable fuel for sale by 22 the distributor or dealer. 23 2. This section does not apply to any activity that 24 constitutes mislabeling, misbranding, willful adulteration, or 25 other trademark violation by the dealer. 26 Sec. 6. Section 452A.2, Code 2013, is amended by adding the 27 following new subsections: 28 NEW SUBSECTION . 6A. “Conventional blendstock for oxygenate 29 blending” means one or more motor fuel components intended for 30 blending with an oxygenate or oxygenates to produce gasoline. 31 NEW SUBSECTION . 9A. “Diesel fuel” or “diesel” means diesel 32 fuel as defined in section 214A.1. 33 NEW SUBSECTION . 28A. “Nonrefiner biofuel manufacturer” 34 means an entity that produces, manufactures, or refines 35 -3- HF 640 (5) 85 da/nh/md 3/ 8

H.F. 640 biofuel and does not directly or through a related entity 1 refine, blend, import, or produce a conventional blendstock for 2 oxygenate blending, gasoline, or diesel fuel. 3 NEW SUBSECTION . 30A. “Refiner” means a person engaged in 4 the refining of crude oil to produce motor fuel or special 5 fuel, and includes any affiliate of such person. 6 NEW SUBSECTION . 37A. “Terminal owner” means a person who 7 holds a legal interest or equitable interest in a terminal. 8 Sec. 7. NEW SECTION . 452A.6A Right of distributors and 9 dealers to blend conventional blendstock for oxygenate blending, 10 gasoline, or diesel fuel using a biofuel. 11 1. a. A dealer or distributor may blend a conventional 12 blendstock for oxygenate blending, gasoline, or diesel fuel 13 using the appropriate biofuel, or sell unblended or blended 14 gasoline or diesel fuel on any premises in this state. 15 b. Paragraph “a” does not apply to the extent that the use 16 of the premises is restricted by federal, state, or local law. 17 2. A refiner, supplier, terminal operator, or terminal 18 owner who in the ordinary course of business sells or 19 transports a conventional blendstock for oxygenate blending, 20 gasoline unblended or blended with a biofuel, or diesel fuel 21 unblended or blended with a biofuel shall not refuse to sell 22 or transport to a distributor or dealer any conventional 23 blendstock for oxygenate blending, unblended gasoline, or 24 unblended diesel fuel that is at the terminal, based on the 25 distributor’s or dealer’s intent to use the conventional 26 blendstock for oxygenate blending, or blend the gasoline or 27 diesel fuel with a biofuel. 28 3. This section shall not be construed to do any of the 29 following: 30 a. Prohibit a distributor or dealer from purchasing, 31 selling or transporting a conventional blendstock for oxygenate 32 blending, gasoline that has not been blended with a biofuel, or 33 diesel fuel that has not been blended with a biofuel. 34 b. Affect the blender’s license requirements under section 35 -4- HF 640 (5) 85 da/nh/md 4/ 8

H.F. 640 452A.6. 1 c. Prohibit a dealer or distributor from leaving a terminal 2 with a conventional blendstock for oxygenate blending, gasoline 3 that has not been blended with a biofuel, or diesel fuel that 4 has not been blended with a biofuel. 5 d. Require a nonrefiner biofuel manufacturer to offer or 6 sell a conventional blendstock for oxygenate blending, gasoline 7 that has not been blended with a biofuel, or diesel fuel that 8 has not been blended with a biofuel. 9 4. A refiner, supplier, terminal operator, or terminal 10 owner who violates this section is subject to a civil penalty 11 of not more than ten thousand dollars per violation. Each day 12 that a violation continues is deemed a separate offense. 13 DIVISION III 14 STORAGE TANKS 15 Sec. 8. Section 101.21, subsection 1, paragraphs a through 16 c, Code 2013, are amended to read as follows: 17 a. Aboveground tanks of An aboveground tank which complies 18 with any of the following: 19 (1) Has one thousand one hundred gallons or less capacity. 20 (2) Stores flammable liquids on a farm located outside the 21 limits of a city, if the aboveground tank has two thousand 22 gallons or less capacity. 23 (3) Stores combustible liquids on a farm located outside 24 the limits of a city, if the aboveground tank has five thousand 25 gallons or less capacity. 26 b. Tanks A tank used for storing heating oil for consumptive 27 use on the premises where stored. 28 c. Underground An underground storage tanks tank as defined 29 by section 455B.471 . 30 Sec. 9. Section 101.21, Code 2013, is amended by adding the 31 following new subsection: 32 NEW SUBSECTION . 1A. a. “Farm” means land and associated 33 improvements used to produce agricultural commodities, if at 34 least one thousand dollars is annually generated from the sale 35 -5- HF 640 (5) 85 da/nh/md 5/ 8

H.F. 640 of the agricultural commodities. 1 b. As used in paragraph “a” , “commodities” means crops 2 as defined in section 202.1 or animals as defined in section 3 459.102. 4 Sec. 10. Section 101.22, subsections 4 through 8, Code 2013, 5 are amended to read as follows: 6 4. The registration notice of the owner or operator to 7 the state fire marshal under subsections 1 through 3 shall 8 be accompanied by an annual fee of ten twenty dollars for 9 each tank included in the notice. All moneys collected 10 shall be retained by the department of public safety and are 11 appropriated for the use of the state fire marshal. The annual 12 renewal fee applies to all owners or operators who file a 13 registration notice with the state fire marshal pursuant to 14 subsections 1 through 3 . 15 5. A person who deposits flammable or combustible liquid 16 in an aboveground flammable or combustible liquid storage 17 tank shall notify the owner or operator in writing of the 18 notification requirements of this section . 19 6. A person who sells or constructs a tank intended to be 20 used as an aboveground storage tank shall notify the purchaser 21 of the tank in writing of the notification requirements of this 22 section applicable to the purchaser. 23 7. 6. It is unlawful to deposit flammable or combustible 24 liquid in An owner or operator shall register an aboveground 25 flammable or combustible liquid storage tank which has not been 26 registered pursuant to subsections 1 through 4 . 27 8. 7. The state fire marshal shall furnish the owner or 28 operator of an aboveground flammable or combustible liquid 29 storage tank with a registration tag for each aboveground 30 flammable or combustible liquid storage tank registered with 31 the state fire marshal. 32 a. The owner or operator shall affix the tag to the fill 33 pipe of each registered aboveground flammable or combustible 34 liquid storage tank. 35 -6- HF 640 (5) 85 da/nh/md 6/ 8

H.F. 640 b. A person who conveys or deposits flammable or combustible 1 liquid shall inspect the aboveground flammable or combustible 2 liquid storage tank to determine the existence or absence of 3 the registration tag. If a registration tag is not affixed to 4 the aboveground flammable or combustible liquid storage tank 5 fill pipe, the person conveying or depositing the flammable or 6 combustible liquid may deposit the flammable or combustible 7 liquid in the unregistered tank. However, only one deposit 8 is allowed into the unregistered tank, the person making the 9 deposit shall provide the owner or operator of the tank with 10 another notice as required by subsection 5 , and the person 11 shall provide the owner or operator with an aboveground 12 flammable or combustible liquid storage tank registration form. 13 c. It is the owner or operator’s duty to comply with 14 registration requirements. 15 8. A late registration penalty of twenty-five dollars 16 is imposed in addition to the registration fee for a tank 17 registered after the required date. 18 DIVISION IV 19 FUEL TAX 20 Sec. 11. Section 452A.3, subsection 1, unnumbered paragraph 21 1, Code 2013, is amended to read as follows: 22 Except as otherwise provided in this section and in this 23 division , until June 30, 2013 2014 , this subsection shall apply 24 to the excise tax imposed on each gallon of motor fuel used for 25 any purpose for the privilege of operating motor vehicles in 26 this state. 27 Sec. 12. Section 452A.3, subsection 1A, Code 2013, is 28 amended to read as follows: 29 1A. Except as otherwise provided in this section and in this 30 division , after June 30, 2013 2014 , an excise tax of twenty 31 cents is imposed on each gallon of motor fuel used for any 32 purpose for the privilege of operating motor vehicles in this 33 state. 34 Sec. 13. EFFECTIVE UPON ENACTMENT. This division of this 35 -7- HF 640 (5) 85 da/nh/md 7/ 8