Text: HSB586            Text: HSB588


House Study Bill 587

HOUSE FILE BY (PROPOSED COMMITTEE ON AGRICULTURE BILL BY CHAIRPERSON DRAKE) Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to the formulation of motor fuel, by providing 2 for renewable fuel including ethanol blended fuel and 3 biodiesel blended fuel, providing incentives for 4 infrastructure used to store and dispense renewable fuel, 5 income tax credits, and an appropriation, providing penalties, 6 making penalties applicable, and providing an applicability 7 date. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 5701HC 81 10 da/je/5 PAG LIN 1 1 DIVISION I 1 2 ESTABLISHMENT OF RENEWABLE FUEL STANDARDS 1 3 Section 1. PETROLEUM REPLACEMENT GOAL. It is the goal of 1 4 this state that by January 1, 2021, ethanol will replace 1 5 twenty percent of all petroleum used in the formulation of 1 6 gasoline. 1 7 Sec. 2. Section 214A.1, Code 2005, is amended by adding 1 8 the following new subsections: 1 9 NEW SUBSECTION. 0A. "Advertise" means to present a 1 10 commercial message in any medium, including but not limited to 1 11 print, radio, television, sign, display, label, tag, or 1 12 articulation. 1 13 NEW SUBSECTION. 1A. "B=2 biodiesel blended fuel" means 1 14 biodiesel blended fuel formulated with a minimum percentage of 1 15 two percent by volume of biodiesel, if the formulation meets 1 16 the standards provided in section 214A.2. 1 17 NEW SUBSECTION. 1B. "B=5 biodiesel blended fuel" means 1 18 biodiesel blended fuel formulated with a minimum percentage of 1 19 five percent by volume of biodiesel, if the formulation meets 1 20 the standards provided in section 214A.2. 1 21 NEW SUBSECTION. 1C. "B=20 biodiesel blended fuel" means 1 22 biodiesel blended fuel formulated with a minimum percentage of 1 23 twenty percent by volume of biodiesel, if the formulation 1 24 meets the standards provided in section 214A.2. 1 25 NEW SUBSECTION. 1D. "Biodiesel" means a combustible 1 26 liquid comprised of mono=alkyl esters of long=chain fatty 1 27 acids which is all of the following: 1 28 a. A renewable fuel which is a motor fuel capable of 1 29 powering diesel engines or aircraft engines. 1 30 b. Processed from natural oils or fats derived from crops 1 31 such as soybeans, vegetables, or animals. 1 32 c. Meets departmental specifications for that type of 1 33 motor fuel as provided in section 214A.2. 1 34 NEW SUBSECTION. 1E. "Biodiesel blended fuel" means a 1 35 formulation of diesel fuel which is a liquid petroleum product 2 1 blended with biodiesel, if the formulation meets departmental 2 2 standards as provided in section 214A.2. 2 3 NEW SUBSECTION. 1F. "Committee" means the renewable fuels 2 4 and coproducts advisory committee established pursuant to 2 5 section 159A.4. 2 6 NEW SUBSECTION. 1G. "Dealer" means a wholesale dealer or 2 7 retail dealer. 2 8 NEW SUBSECTION. 1H. "Diesel fuel" means any liquid 2 9 product prepared, advertised, offered for sale, or sold for 2 10 use as, or commonly and commercially used as, motor fuel for 2 11 use in an internal combustion engine and ignited by pressure 2 12 without the presence of an electric spark, and which meets the 2 13 specifications provided in section 214A.2. 2 14 NEW SUBSECTION. 1I. "E=85 gasoline" means ethanol blended 2 15 gasoline formulated with a minimum percentage of between 2 16 seventy=five and eighty=five percent by volume of ethanol, if 2 17 the formulation meets the standards provided in section 2 18 214A.2. 2 19 NEW SUBSECTION. 1J. "Ethanol" means ethyl alcohol that is 2 20 denatured as required in 23 C.F.R., pts. 20 and 21, for use as 2 21 an oxygenate in gasoline. 2 22 NEW SUBSECTION. 1K. "Ethanol blended gasoline" means a 2 23 formulation of gasoline which is a liquid petroleum product 2 24 blended with ethanol, if the formulation meets the standards 2 25 provided in section 214A.2. 2 26 NEW SUBSECTION. 1L. "Gasoline" means any liquid product 2 27 prepared, advertised, offered for sale or sold for use as, or 2 28 commonly and commercially used as, motor fuel for use in a 2 29 spark=ignition, internal combustion engine, and which meets 2 30 the specifications provided in section 214A.2. 2 31 NEW SUBSECTION. 2A. "Motor fuel pump" means the same as 2 32 defined in section 214.1. 2 33 NEW SUBSECTION. 5A. "Renewable fuel" means a combustible 2 34 liquid derived from grain starch, oilseed, animal fat, or 2 35 other biomass; or produced from a biogas source, including any 3 1 nonfossilized decaying organic matter which is capable of 3 2 powering machinery, including but not limited to an engine or 3 3 power plant. Renewable fuel includes but is not limited to 3 4 ethanol blended gasoline, biodiesel, or biodiesel blended fuel 3 5 meeting the standards provided in section 214A.2. 3 6 NEW SUBSECTION. 5B. "Renewable fuel producer" means a 3 7 person engaged in the production of any of the following: 3 8 a. Ethanol for use as a distillate in ethanol blended 3 9 gasoline. 3 10 b. Biodiesel for use as a motor fuel or as a distillate in 3 11 biodiesel blended fuel. 3 12 NEW SUBSECTION. 7A. "Service station" means each 3 13 geographic location in this state where a retail dealer sells 3 14 and dispenses motor fuel on a retail basis. 3 15 Sec. 3. Section 214A.1, subsection 2, Code 2005, is 3 16 amended to read as follows: 3 17 2. "Motor vehicle fuel" means a substance or combination 3 18 of substances which is intended to be or is capable of being 3 19 used for the purpose of propelling or running by combustion 3 20 any of operating an internal combustion engine, including but 3 21 not limited to a motor vehicle, and is kept for sale or sold 3 22 for that purpose. The products commonly known as kerosene and 3 23 distillate or petroleum products of lower gravity (Baume 3 24 scale), when not used to propel a motor vehicle or for 3 25 compounding or combining with a motor vehicle fuel, are exempt 3 26 from this chapter except as provided in section 214A.2A. 3 27 Sec. 4. Section 214A.1, subsections 6 and 8, Code 2005, 3 28 are amended by striking the subsections and inserting in lieu 3 29 thereof the following: 3 30 6. "Retail dealer" means a person who operates a place of 3 31 business where motor fuel is stored and dispensed from a motor 3 32 fuel pump for sale on a retail basis, including a service 3 33 station or mobile location. 3 34 8. "Wholesale dealer" means a person, other than a retail 3 35 dealer, who operates a place of business where motor fuel is 4 1 stored and dispensed for sale in this state, including a 4 2 permanent or mobile location. 4 3 Sec. 5. NEW SECTION. 214A.1A PRODUCTION STANDARDS == 4 4 ACCREDITATION. 4 5 A quality standards program for renewable fuel producers is 4 6 established. A renewable fuel producer shall not sell 4 7 biodiesel or biodiesel blended fuel in this state, and a 4 8 dealer shall not purchase biodiesel or biodiesel blended fuel 4 9 from a renewable fuel manufacturer, unless the renewable fuel 4 10 producer is accredited as required under the program. The 4 11 department, in consultation with the committee, shall certify 4 12 an accreditation service to administer the program. The 4 13 accreditation service shall perform a formal review and audit 4 14 of the capacity and commitment of the renewable fuel producer 4 15 to produce or market biodiesel or biodiesel blended fuel in a 4 16 manner and according to procedures that meet the program 4 17 standards for quality, including A.S.T.M. international 4 18 specifications and requirements for the storage, sampling, 4 19 testing, blending, shipping, and distribution of biodiesel and 4 20 biodiesel blended fuel as established by the accreditation 4 21 service. 4 22 Sec. 6. Section 214A.2, subsection 1, Code 2005, is 4 23 amended to read as follows: 4 24 1. The secretary department shall adopt rules pursuant to 4 25 chapter 17A for carrying out this chapter. The rules may 4 26 include, but are not limited to, specifications relating to 4 27 motor fuel or oxygenate octane enhancers, including but not 4 28 limited to renewable fuel such as ethanol blended gasoline, 4 29 biodiesel, biodiesel blended fuel, and motor fuel components 4 30 such as an oxygenate or other additive. In the interest of 4 31 uniformity, the secretary department shall adopt by reference 4 32 or otherwise other specifications relating to tests and 4 33 standards for motor fuel or oxygenate octane enhancers 4 34 including renewable fuel and motor fuel components, 4 35 established by the United States environmental protection 5 1 agency or A.S.T.M. (American society for testing and 5 2 materials) international, unless the secretary determines 5 3 those specifications are inconsistent with this chapter or are 5 4 not appropriate to the conditions which exist in this state. 5 5 In adopting standards for a renewable fuel, the department 5 6 shall consult with the committee. 5 7 Sec. 7. Section 214A.2, Code 2005, is amended by adding 5 8 the following new subsection: 5 9 NEW SUBSECTION. 2A. a. For motor fuel advertised for 5 10 sale or sold as gasoline by a dealer, the motor fuel must meet 5 11 registration requirements for that type of motor fuel and its 5 12 additives established by the United States environmental 5 13 protection agency including as provided under 42 U.S.C. } 5 14 7545. 5 15 b. If the motor fuel is advertised for sale or sold as 5 16 ethanol blended gasoline, the motor fuel must comply with 5 17 departmental standards which to every extent feasible shall 5 18 comply with specifications for ethanol blended gasoline 5 19 adopted by A.S.T.M. international. For ethanol blended 5 20 gasoline all of the following shall apply: 5 21 (1) For ethanol blended gasoline other than E=85 gasoline, 5 22 at least ten percent of the gasoline by volume must be 5 23 ethanol. 5 24 (2) For E=85 gasoline all of the following must apply: 5 25 (a) From the first day of April until the last day of 5 26 October, at least eighty=five percent of the gasoline by 5 27 volume must be ethanol. 5 28 (b) From the first day of November until the last day of 5 29 March, at least seventy=five percent of the gasoline by volume 5 30 must be ethanol. 5 31 (3) In calculating the percentage of ethanol required for 5 32 the formulation of ethanol blended gasoline fuel, a percentage 5 33 of a denaturant or contaminants permitted in the ethanol 5 34 blended gasoline may be excluded as provided by rules adopted 5 35 by the department. 6 1 Sec. 8. Section 214A.2, subsection 3, Code 2005, is 6 2 amended by striking the subsection and inserting in lieu 6 3 thereof the following: 6 4 3. a. For motor fuel advertised for sale or sold as 6 5 biodiesel or biodiesel blended fuel by a dealer, the motor 6 6 fuel must meet registration requirements for that type of 6 7 motor fuel and its additives established by the United States 6 8 environmental protection agency including as provided under 42 6 9 U.S.C. } 7545. 6 10 b. Biodiesel shall be produced by a renewable fuel 6 11 producer accredited pursuant to the quality standards program 6 12 for renewable fuel producers as provided in section 214A.1A. 6 13 c. The motor fuel must comply with departmental standards 6 14 which to every extent feasible shall comply with 6 15 specifications adopted by A.S.T.M. international for biodiesel 6 16 or biodiesel blended fuel. 6 17 (1) The department shall adopt standards for biodiesel 6 18 blended fuel, including B=2 biodiesel blended fuel, B=5 6 19 biodiesel blended fuel, and B=20 biodiesel blended fuel. At 6 20 least two percent of biodiesel blended fuel by volume must be 6 21 biodiesel. 6 22 (2) In calculating the percentage of biodiesel required 6 23 for the formulation of biodiesel blended fuel, a percentage of 6 24 a denaturant or contaminants permitted in the biodiesel 6 25 blended fuel may be excluded as provided by rules adopted by 6 26 the department. 6 27 Sec. 9. Section 214A.2A, Code 2005, is amended to read as 6 28 follows: 6 29 214A.2A KEROSENE LABELING. 6 30 1. Fuel which is sold or is kept, offered, or exposed for 6 31 sale as kerosene shall be labeled as kerosene. The label 6 32 shall include the word "kerosene" and a designation as either 6 33 "K1" or "K2", and shall indicate that the kerosene is in 6 34 compliance with the standard specification adopted by the 6 35 A.S.T.M. in international specification D=3699 (1982). 7 1 2. A product commonly known as kerosene and distillate or 7 2 a petroleum product of lower gravity (Baume scale), when not 7 3 used to propel a motor vehicle or for compounding or combining 7 4 with a motor fuel, are exempt from this chapter except as 7 5 provided in this section. 7 6 Sec. 10. Section 214A.3, Code 2005, is amended to read as 7 7 follows: 7 8 214A.3 FALSE REPRESENTATIONS ADVERTISING. 7 9 A person for purposes of selling shall not falsely 7 10 represent do any of the following: 7 11 1. Falsely advertise the quality or kind of any motor 7 12 vehicle fuel or an oxygenate octane enhancer or add which may 7 13 be added to motor fuel. 7 14 2. Falsely advertise that a motor fuel is a renewable 7 15 fuel. 7 16 a. The person shall not advertise the sale of motor fuel 7 17 using the letter "E" followed by a number, such as "E=10" or 7 18 "E=85", or use the term "ethanol", "ethanol blend", or use any 7 19 derivative, plural, or compound of any such term unless the 7 20 motor fuel meets the standards provided in section 214A.2. 7 21 b. The person shall not advertise the sale of motor fuel 7 22 using the letter "B" followed by a number, such as "B=2", "B= 7 23 5", or "B=20", or use the term "biodiesel", "biodiesel blend", 7 24 or use any derivative, plural, or compound of any such term 7 25 unless the motor fuel meets the standards provided in section 7 26 214A.2. 7 27 3. Add a coloring matter thereto to motor vehicle fuel for 7 28 the purpose of misleading the public as to its quality. 7 29 DIVISION II 7 30 RENEWABLE FUEL INFRASTRUCTURE 7 31 Sec. 11. Section 455G.2, Code Supplement 2005, is amended 7 32 by adding the following new subsections: 7 33 NEW SUBSECTION. 3A. "Biodiesel" and "biodiesel blended 7 34 fuel" mean the same as defined in section 214A.1. 7 35 NEW SUBSECTION. 8A. "Department" means the department of 8 1 natural resources created in section 455A.2. 8 2 NEW SUBSECTION. 10A. "E=85 gasoline", "gasoline", "motor 8 3 fuel", "motor fuel pump", "retail dealer", and "service 8 4 station" mean the same as defined in section 214A.1. 8 5 NEW SUBSECTION. 15A. "Motor fuel storage and dispensing 8 6 infrastructure" or "infrastructure" means a tank and motor 8 7 fuel pumps necessary to keep and dispense motor fuel at a 8 8 service station, including but not limited to all associated 8 9 equipment, dispensers, pumps, pipes, hoses, tubes, lines, 8 10 fittings, valves, filters, seals, and covers. 8 11 SUBCHAPTER III 8 12 RENEWABLE FUEL INFRASTRUCTURE 8 13 Sec. 12. NEW SECTION. 455G.31 APPROPRIATION. 8 14 1. For each fiscal year of the period beginning July 1, 8 15 2006, and ending June 30, 2009, there is appropriated from the 8 16 healthy Iowans tobacco trust created in section 12.65 to the 8 17 renewable fuel infrastructure fund created in section 455G.32 8 18 seven hundred fifty thousand dollars. 8 19 2. This section is repealed July 1, 2009. 8 20 Sec. 13. NEW SECTION. 455G.32 RENEWABLE FUEL 8 21 INFRASTRUCTURE FUND. 8 22 1. A renewable fuel infrastructure fund is created in the 8 23 state treasury under the control of the department. The fund 8 24 is separate from the general fund of the state. 8 25 2. Moneys in the renewable fuel infrastructure fund are 8 26 appropriated to the department exclusively to support the 8 27 renewable fuel infrastructure program as provided in 455G.33. 8 28 a. Of the unobligated and unencumbered balance in the fund 8 29 on July 1 of a fiscal year and moneys appropriated to the fund 8 30 for that fiscal year, the department shall not use more than 8 31 one percent of that amount to pay for the department's 8 32 administrative expenses necessary to administer the program. 8 33 b. Moneys in the fund shall not be transferred, used, 8 34 obligated, appropriated, or otherwise encumbered except as 8 35 necessary to administer the program. 9 1 3. a. Payments of interest, repayments of moneys loaned, 9 2 and the recaptures of moneys awarded pursuant to the program 9 3 shall be deposited in the renewable fuel infrastructure fund. 9 4 b. Notwithstanding section 8.33, any unexpended balance in 9 5 the fund at the end of the fiscal year shall be retained in 9 6 the fund. 9 7 c. Notwithstanding section 12C.7, subsection 2, interest, 9 8 earnings on investments, or time deposits of the moneys in the 9 9 fund shall be credited to the fund. 9 10 Sec. 14. NEW SECTION. 455G.33 RENEWABLE FUEL 9 11 INFRASTRUCTURE PROGRAM. 9 12 The department, in cooperation with the board, shall 9 13 establish and administer a renewable fuel infrastructure 9 14 program as follows: 9 15 1. The purpose of the program is to improve a service 9 16 station by installing, replacing, or converting motor fuel 9 17 storage and dispensing infrastructure. The infrastructure 9 18 must be designed and shall be used exclusively to store and 9 19 dispense E=85 gasoline, biodiesel, or biodiesel blended fuel 9 20 on the premises of service stations operated by retail 9 21 dealers. 9 22 2. The department shall award financial incentives to a 9 23 person participating in the program. In order to be eligible 9 24 to participate in the program all of the following must apply: 9 25 a. The person must be an owner or operator of the service 9 26 station. 9 27 b. The person must apply to the department in a manner and 9 28 according to procedures required by the department. The 9 29 application must contain all information required by the 9 30 department and shall at least include all of the following: 9 31 (1) The name of the person and the address of the service 9 32 station to be improved. 9 33 (2) A detailed description of the infrastructure to be 9 34 installed, replaced, or converted, including but not limited 9 35 to the model number of each installed, replaced, or converted 10 1 motor fuel storage tank if available. 10 2 (3) A statement describing how the service station is to 10 3 be improved, the total estimated cost of the planned 10 4 improvement, and the date when the infrastructure will be 10 5 first used to store and dispense the renewable fuel. 10 6 (4) A statement certifying that the infrastructure shall 10 7 not be used to store or dispense motor fuel other than E=85 10 8 gasoline, biodiesel, or biodiesel blended fuel, unless granted 10 9 a waiver by the department pursuant to this section. 10 10 3. A service station which is improved using financial 10 11 incentives must comply with federal and state standards 10 12 governing new or upgraded motor fuel storage tanks used to 10 13 store and dispense the renewable fuel. A site classified as a 10 14 no further action site pursuant to a certificate issued by the 10 15 department under section 455B.474 shall retain its 10 16 classification following modifications necessary to store and 10 17 dispense the renewable fuel and the owner or operator shall 10 18 not be required to perform a new site assessment unless the 10 19 site causes a clear, present, and impending danger to the 10 20 public health or the environment. 10 21 4. a. For the period beginning July 1, 2006, and ending 10 22 June 30, 2009, the department shall distribute financial 10 23 incentives to improve service stations located within each of 10 24 the six geographic regions described in section 173.4A. 10 25 b. The department shall not install, replace, or convert 10 26 infrastructure associated with more than one motor fuel 10 27 storage tank or motor fuel pump located at the same service 10 28 station. 10 29 5. The department's award of financial incentives to a 10 30 participating person shall be in the form of an interest=free 10 31 loan. 10 32 a. In order to participate in the program an eligible 10 33 person must execute a cost=share agreement with the department 10 34 in which the person contributes a percentage of the total 10 35 costs related to improving the service station. The financial 11 1 incentives awarded to the participating person shall not 11 2 exceed thirty percent of the estimated cost of making the 11 3 improvements or thirty percent of the actual cost of making 11 4 the improvements, whichever is less. 11 5 b. The department shall not award more than thirty 11 6 thousand dollars to improve a service station. The department 11 7 may make multiple awards to make improvements to a service 11 8 station so long as the total amount of the awards in all years 11 9 is not more than thirty thousand dollars. 11 10 c. A participating person shall not use the infrastructure 11 11 to store or dispense motor fuel other than E=85 gasoline, 11 12 biodiesel, or biodiesel blended fuel unless one of the 11 13 following applies: 11 14 (1) The participating person is granted a waiver by the 11 15 department. The participating person shall store or dispense 11 16 the motor fuel according to the terms and conditions of the 11 17 waiver. 11 18 (2) The department is immediately repaid the total amount 11 19 of moneys awarded to the participating person together with a 11 20 monetary penalty equal to twenty=five percent of that awarded 11 21 amount. 11 22 d. A participating person who acts in violation of an 11 23 agreement executed with the department pursuant to this 11 24 section is subject to a civil penalty of not more than one 11 25 thousand dollars a day for each day of the violation. The 11 26 civil penalty shall be deposited into the general fund of the 11 27 state. 11 28 DIVISION III 11 29 RENEWABLE FUEL TAX CREDIT FOR RETAIL DEALERS 11 30 Sec. 15. Section 422.11C, subsection 1, paragraphs a 11 31 through g, Code 2005, are amended by striking the paragraphs 11 32 and inserting in lieu thereof the following: 11 33 a. "E=85 gasoline", "ethanol blended gasoline", 11 34 "gasoline", "retail dealer", and "service station" mean the 11 35 same as defined in section 214A.1. 12 1 b. "Motor fuel pump" means the same as motor vehicle fuel 12 2 pump as defined in section 214.1. 12 3 c. "Sell" means to sell on a retail basis. 12 4 d. "Tax credit" means the designated ethanol blended 12 5 gasoline tax credit as provided in this section. 12 6 Sec. 16. Section 422.11C, subsection 2, paragraph b, Code 12 7 2005, is amended to read as follows: 12 8 b. The taxpayer operates at least one service station at 12 9 which more than sixty percent of the total gallons of gasoline 12 10 sold and dispensed through one or more metered motor fuel 12 11 pumps by the taxpayer in the tax year is ethanol blended 12 12 gasoline. 12 13 Sec. 17. Section 422.11C, subsection 3, Code 2005, is 12 14 amended to read as follows: 12 15 3. The tax credit shall be calculated separately for each 12 16 service station site operated by the taxpayer. The amount of 12 17 the tax credit for each eligible service station is two and 12 18 one=half cents multiplied by the total number of gallons of 12 19 ethanol blended gasoline sold and dispensed through all 12 20 metered motor fuel pumps located at that service station 12 21 during the tax year in excess of sixty percent of all gasoline 12 22 sold and dispensed through metered motor fuel pumps at that 12 23 service station during the tax year. 12 24 Sec. 18. NEW SECTION. 422.11M E=85 GASOLINE TAX CREDIT. 12 25 1. As used in this section, unless the context otherwise 12 26 requires: 12 27 a. "E=85 gasoline", "retail dealer", and "service station" 12 28 mean the same as defined in section 214A.1. 12 29 b. "Motor fuel pump" means the same as defined in section 12 30 214A.1. 12 31 c. "Sell" means to sell on a retail basis. 12 32 d. "Tax credit" means an E=85 gasoline tax credit as 12 33 provided in this section. 12 34 2. For the tax year beginning January 1, 2007, the 12 35 designated rate for the tax credit is twenty cents. After 13 1 that the department shall determine the designated rate based 13 2 on an annual distribution amount which is the total number of 13 3 gallons of E=85 gasoline that have been sold and distributed 13 4 from all motor fuel pumps located at all service stations for 13 5 a determination period beginning on July 1 and ending June 30. 13 6 The first determination period begins July 1, 2006, and ends 13 7 June 30, 2007. The last determination period begins July 1, 13 8 2009, and ends June 30, 2010. At the end of a determination 13 9 period, the department shall calculate the aggregate 13 10 distribution amount which combines the annual distribution 13 11 amount for that determination period with the annual 13 12 distribution amount for each previous determination period. 13 13 a. If at the end of a determination period the aggregate 13 14 distribution amount is three and one half million gallons of 13 15 E=85 gasoline or less, the designated rate for the following 13 16 tax year is twenty cents. 13 17 b. If at the end of a determination period the aggregate 13 18 distribution amount is three and one=half million gallons of 13 19 E=85 gasoline or more but less than five and one=half million 13 20 gallons of E=85 gasoline, the designated rate for the 13 21 following tax year is fifteen cents. 13 22 c. If at the end of a determination period the aggregate 13 23 distribution amount is five and one=half million gallons of E= 13 24 85 gasoline or more but less than seven and one=half million 13 25 gallons of E=85 gasoline, the designated rate for the 13 26 following tax year is ten cents. 13 27 3. The taxes imposed under this division, less the credits 13 28 allowed under sections 422.12 and 422.12B, shall be reduced by 13 29 the amount of the E=85 gasoline tax credit for each tax year 13 30 that the taxpayer is eligible to claim under this section. 13 31 a. In order to be eligible, all of the following must 13 32 apply: 13 33 (1) The taxpayer is a retail dealer who owns or operates 13 34 at least one service station at which E=85 gasoline is sold 13 35 and dispensed through a motor fuel pump in the tax year in 14 1 which the tax credit is claimed. 14 2 (2) The taxpayer complies with requirements of the 14 3 department established to administer this section. 14 4 b. The tax credit shall be calculated for each service 14 5 station owned or operated by the taxpayer in the tax year in 14 6 which the tax credit is claimed. The amount of the tax credit 14 7 is calculated by multiplying the designated rate by the total 14 8 number of gallons of E=85 gasoline sold and dispensed through 14 9 all motor fuel pumps located at that service station during 14 10 the tax year. 14 11 4. Any credit in excess of the taxpayer's tax liability 14 12 shall be refunded. In lieu of claiming a refund, the taxpayer 14 13 may elect to have the overpayment shown on the taxpayer's 14 14 final, completed return credited to the tax liability for the 14 15 following tax year. 14 16 5. An individual may claim the tax credit allowed a 14 17 partnership, limited liability company, S corporation, estate, 14 18 or trust electing to have the income taxed directly to the 14 19 individual. The amount claimed by the individual shall be 14 20 based upon the pro rata share of the individual's earnings of 14 21 the partnership, limited liability company, S corporation, 14 22 estate, or trust. 14 23 6. This section is repealed on the earliest of the 14 24 following dates: 14 25 a. July 1 following the end of a determination period in 14 26 which the department determines that the aggregate 14 27 distribution amount is seven and one=half million gallons of 14 28 E=85 gasoline or more as provided in this section. The 14 29 department shall notify the Code editor in writing of the 14 30 aggregate distribution amount and include a citation to this 14 31 section and section 422.33. 14 32 b. July 1, 2012. 14 33 Sec. 19. NEW SECTION. 422.11N BIODIESEL BLENDED FUEL TAX 14 34 CREDIT. 14 35 1. As used in this section, unless the context otherwise 15 1 requires: 15 2 a. "Biodiesel blended fuel", "diesel fuel", "retail 15 3 dealer", and "service station" mean the same as defined in 15 4 section 214A.1. 15 5 b. "Motor fuel pump" means the same as defined in section 15 6 214.1. 15 7 c. "Sell" means to sell on a retail basis. 15 8 d. "Tax credit" means a biodiesel blended fuel tax credit 15 9 as provided in this section. 15 10 2. The taxes imposed under this division, less the credits 15 11 allowed under sections 422.12 and 422.12B, shall be reduced by 15 12 the amount of the biodiesel blended fuel tax credit for each 15 13 tax year that the taxpayer is eligible to claim under this 15 14 subsection. 15 15 a. In order to be eligible, all of the following must 15 16 apply: 15 17 (1) The taxpayer is a retail dealer who owns or operates 15 18 at least one service station at which biodiesel blended fuel 15 19 is sold and dispensed through a motor fuel pump in the tax 15 20 year in which the tax credit is claimed. 15 21 (2) The taxpayer complies with requirements of the 15 22 department established to administer this section. 15 23 b. The tax credit shall be calculated for each service 15 24 station owned or operated by the taxpayer in the tax year in 15 25 which the tax credit is claimed. The tax credit shall apply 15 26 to biodiesel blended fuel formulated with a minimum percentage 15 27 of two percent by volume of biodiesel, if the formulation 15 28 meets the standards provided in section 214A.2. The amount of 15 29 the tax credit is calculated by multiplying a designated rate 15 30 by the total number of gallons of biodiesel blended fuel sold 15 31 and dispensed through all motor fuel pumps located at that 15 32 service station during the tax year. The designated rate is 15 33 as follows: 15 34 (1) Three cents per gallon of biodiesel for all gallons of 15 35 biodiesel blended fuel which is fifty percent or more but less 16 1 than sixty percent of all diesel fuel sold and dispensed 16 2 through the motor fuel pumps at the service station. 16 3 (2) Four cents per gallon of biodiesel for all gallons of 16 4 biodiesel blended fuel which is sixty percent or more but less 16 5 than seventy percent of all diesel fuel sold and dispensed 16 6 through the motor fuel pumps at the service station. 16 7 (3) Five cents per gallon of biodiesel for all gallons of 16 8 biodiesel blended fuel which is seventy percent or more of all 16 9 diesel fuel sold and dispensed through the motor fuel pumps at 16 10 the service station. 16 11 3. Any credit in excess of the taxpayer's tax liability 16 12 shall be refunded. In lieu of claiming a refund, the taxpayer 16 13 may elect to have the overpayment shown on the taxpayer's 16 14 final, completed return credited to the tax liability for the 16 15 following tax year. 16 16 4. An individual may claim the tax credit allowed a 16 17 partnership, limited liability company, S corporation, estate, 16 18 or trust electing to have the income taxed directly to the 16 19 individual. The amount claimed by the individual shall be 16 20 based upon the pro rata share of the individual's earnings of 16 21 the partnership, limited liability company, S corporation, 16 22 estate, or trust. 16 23 5. This section is repealed January 1, 2012. 16 24 Sec. 20. Section 422.33, subsection 11, paragraph a, 16 25 subparagraph (1), Code Supplement 2005, is amended to read as 16 26 follows: 16 27 (1) "Ethanol "E=85 gasoline", "ethanol blended gasoline", 16 28 "gasoline", "metered pump", "motor fuel pump", "retail 16 29 dealer", "sell", and "service station" mean the same as 16 30 defined in section 422.11C. 16 31 Sec. 21. Section 422.33, subsection 11, paragraph b, 16 32 subparagraph (2), Code Supplement 2005, is amended to read as 16 33 follows: 16 34 (2) The taxpayer operates at least one service station at 16 35 which more than sixty percent of the total gallons of gasoline 17 1 sold and dispensed through one or more metered motor fuel 17 2 pumps by the taxpayer is ethanol blended gasoline. 17 3 Sec. 22. Section 422.33, subsection 11, paragraph c, Code 17 4 Supplement 2005, is amended to read as follows: 17 5 c. (1) The tax credit shall be calculated separately for 17 6 each service station site operated by the taxpayer. 17 7 (2) The amount of the tax credit for each eligible service 17 8 station is two and one=half cents multiplied by the total 17 9 number of gallons of ethanol blended gasoline sold and 17 10 dispensed through all metered motor fuel pumps located at that 17 11 service station during the tax year in excess of sixty percent 17 12 of all gasoline sold and dispensed through metered motor fuel 17 13 pumps at that service station during the tax year. 17 14 (3) The tax credit is not allowed for E=85 gasoline if the 17 15 taxpayer claims an E=85 gasoline tax credit as provided in 17 16 this subsection for the same tax year that the taxpayer may 17 17 claim an ethanol blended gasoline tax credit as provided in 17 18 this section. 17 19 Sec. 23. Section 422.33, Code Supplement 2005, is amended 17 20 by adding the following new subsection. 17 21 NEW SUBSECTION. 11A. The taxes imposed under this 17 22 division shall be reduced by an E=85 gasoline tax credit for 17 23 each tax year that the taxpayer is eligible to claim the tax 17 24 credit under this subsection. 17 25 a. The department shall determine the designated rate for 17 26 the tax credit in the same manner as provided in section 17 27 422.11M. The taxpayer may claim the E=85 gasoline tax credit 17 28 according to the same requirements, for the same amount, and 17 29 calculated in the same manner, as provided for the E=85 17 30 gasoline tax credit pursuant to section 422.11M. 17 31 b. Any E=85 gasoline tax credit which is in excess of the 17 32 taxpayer's tax liability shall be refunded or may be shown on 17 33 the taxpayer's final, completed return credited to the tax 17 34 liability for the following tax year in the same manner as 17 35 provided in section 422.11M. 18 1 c. This subsection is repealed on the same date as section 18 2 422.11M is repealed. 18 3 Sec. 24. Section 422.33, Code Supplement 2005, is amended 18 4 by adding the following new subsection. 18 5 NEW SUBSECTION. 11B. The taxes imposed under this 18 6 division shall be reduced by a biodiesel blended fuel tax 18 7 credit for each tax year that the taxpayer is eligible to 18 8 claim the tax credit under this subsection. 18 9 a. The taxpayer may claim the biodiesel blended fuel tax 18 10 credit according to the same requirements, for the same 18 11 amount, and calculated in the same manner, as provided for the 18 12 biodiesel blended fuel tax credit pursuant to section 422.11N. 18 13 b. Any biodiesel blended fuel tax credit which is in 18 14 excess of the taxpayer's tax liability shall be refunded or 18 15 may be shown on the taxpayer's final, completed return 18 16 credited to the tax liability for the following tax year in 18 17 the same manner as provided in section 422.11N. 18 18 c. This subsection is repealed January 1, 2012. 18 19 Sec. 25. APPLICABILITY DATE. Sections 422.11M and 18 20 422.11N, as enacted in this Act, and section 422.33, 18 21 subsections 11A and 11B, as enacted in this Act, apply to tax 18 22 years beginning on or after January 1, 2007. 18 23 DIVISION IV 18 24 COORDINATING PROVISIONS == GOVERNMENT VEHICLES 18 25 Sec. 26. Section 8A.362, subsection 3, Code 2005, is 18 26 amended to read as follows: 18 27 3. a. The director shall provide for a record system for 18 28 the keeping of records of the total number of miles state= 18 29 owned motor vehicles are driven and the per=mile cost of 18 30 operation of each motor vehicle. Every state officer or 18 31 employee shall keep a record book to be furnished by the 18 32 director in which the officer or employee shall enter all 18 33 purchases of gasoline, lubricating oil, grease, and other 18 34 incidental expense in the operation of the motor vehicle 18 35 assigned to the officer or employee, giving the quantity and 19 1 price of each purchase, including the cost and nature of all 19 2 repairs on the motor vehicle. Each operator of a state=owned 19 3 motor vehicle shall promptly prepare a report at the end of 19 4 each month on forms furnished by the director and forwarded to 19 5 the director, giving the information the director may request 19 6 in the report. Each month the director shall compile the 19 7 costs and mileage of state=owned motor vehicles from the 19 8 reports and keep a cost history for each motor vehicle and the 19 9 costs shall be reduced to a cost=per=mile basis for each motor 19 10 vehicle. The director shall call to the attention of an 19 11 elected official or the head of any state agency to which a 19 12 motor vehicle has been assigned any evidence of the 19 13 mishandling or misuse of a state=owned motor vehicle which is 19 14 called to the director's attention. 19 15 b. A motor vehicle operated under this subsection shall 19 16 not operate on gasoline other than ethanol blended gasoline 19 17 blended with at least ten percent ethanol as defined in 19 18 section 214A.1, unless under emergency circumstances. A 19 19 state=issued credit card used to purchase gasoline shall not 19 20 be valid to purchase gasoline other than ethanol blended 19 21 gasoline blended with at least ten percent ethanol, if 19 22 commercially available. The motor vehicle shall also be 19 23 affixed with a brightly visible sticker which notifies the 19 24 traveling public that the motor vehicle is being operated on 19 25 ethanol blended gasoline blended with ethanol. However, the 19 26 sticker is not required to be affixed to an unmarked vehicle 19 27 used for purposes of providing law enforcement or security. 19 28 Sec. 27. Section 8A.362, subsection 5, paragraph a, 19 29 subparagraphs (1) and (2), Code 2005, are amended to read as 19 30 follows: 19 31 (1) A fuel blended with not more than fifteen percent E=85 19 32 gasoline and at least eighty=five percent ethanol as defined 19 33 in section 214A.1. 19 34 (2) A B=20 biodiesel blended fuel which is a mixture of 19 35 diesel fuel and processed soybean oil as defined in section 20 1 214A.1. At least twenty percent of the mixed fuel by volume 20 2 must be processed soybean oil. 20 3 Sec. 28. Section 216B.3, subsection 16, paragraph a, Code 20 4 2005, is amended to read as follows: 20 5 a. A motor vehicle purchased by the commission shall not 20 6 operate on gasoline other than ethanol blended gasoline 20 7 blended with at least ten percent ethanol. A state issued 20 8 credit card used to purchase gasoline shall not be valid to 20 9 purchase gasoline other than ethanol blended gasoline blended 20 10 with at least ten percent ethanol. The motor vehicle shall 20 11 also be affixed with a brightly visible sticker which notifies 20 12 the traveling public that the motor vehicle is being operated 20 13 on ethanol blended gasoline blended with ethanol. However, 20 14 the sticker is not required to be affixed to an unmarked 20 15 vehicle used for purposes of providing law enforcement or 20 16 security. 20 17 Sec. 29. Section 216B.3, subsection 16, paragraph b, 20 18 subparagraph (1), subparagraph subdivisions (a) and (b), Code 20 19 2005, are amended to read as follows: 20 20 (a) A fuel blended with not more than fifteen percent E=85 20 21 gasoline and at least eighty=five percent ethanol as defined 20 22 in section 214A.1. 20 23 (b) A B=20 biodiesel blended fuel which is a mixture of 20 24 diesel fuel and processed soybean oil as defined in section 20 25 214A.1. At least twenty percent of the mixed fuel by volume 20 26 must be processed soybean oil. 20 27 Sec. 30. Section 260C.19A, subsection 1, Code 2005, is 20 28 amended to read as follows: 20 29 1. A motor vehicle purchased by or used under the 20 30 direction of the board of directors to provide services to a 20 31 merged area shall not operate on gasoline other than ethanol 20 32 blended gasoline blended with at least ten percent ethanol as 20 33 defined in section 214A.1. The motor vehicle shall also be 20 34 affixed with a brightly visible sticker which notifies the 20 35 traveling public that the motor vehicle is being operated on 21 1 ethanol blended gasoline blended with ethanol. However, the 21 2 sticker is not required to be affixed to an unmarked vehicle 21 3 used for purposes of providing law enforcement or security. 21 4 Sec. 31. Section 260C.19A, subsection 2, paragraph a, 21 5 subparagraphs (1) and (2), Code 2005, are amended to read as 21 6 follows: 21 7 (1) A fuel blended with not more than fifteen percent E=85 21 8 gasoline and at least eighty=five percent ethanol as defined 21 9 in section 214A.1. 21 10 (2) A B=20 biodiesel blended fuel which is a mixture of 21 11 diesel fuel and processed soybean oil as defined in section 21 12 214A.1. At least twenty percent of the mixed fuel by volume 21 13 must be processed soybean oil. 21 14 Sec. 32. Section 262.25A, subsection 2, Code 2005, is 21 15 amended to read as follows: 21 16 2. A motor vehicle purchased by the institutions shall not 21 17 operate on gasoline other than gasoline blended with at least 21 18 ten percent ethanol. A state=issued credit card used to 21 19 purchase gasoline shall not be valid to purchase gasoline 21 20 other than ethanol blended gasoline blended with at least ten 21 21 percent ethanol as defined in section 214A.1. The motor 21 22 vehicle shall also be affixed with a brightly visible sticker 21 23 which notifies the traveling public that the motor vehicle is 21 24 being operated on ethanol blended gasoline blended with 21 25 ethanol. However, the sticker is not required to be affixed 21 26 to an unmarked vehicle used for purposes of providing law 21 27 enforcement or security. 21 28 Sec. 33. Section 262.25A, subsection 3, paragraph a, 21 29 subparagraphs (1) and (2), Code 2005, are amended to read as 21 30 follows: 21 31 (1) A fuel blended with not more than fifteen percent E=85 21 32 gasoline and at least eighty=five percent ethanol as defined 21 33 in section 214A.1. 21 34 (2) A B=20 biodiesel blended fuel which is a mixture of 21 35 processed soybean oil and diesel fuel as defined in section 22 1 214A.1. At least twenty percent of the fuel by volume must be 22 2 processed soybean oil. 22 3 Sec. 34. Section 279.34, Code 2005, is amended to read as 22 4 follows: 22 5 279.34 MOTOR VEHICLES REQUIRED TO OPERATE ON ETHANOL= 22 6 BLENDED ETHANOL BLENDED GASOLINE. 22 7 A motor vehicle purchased by or used under the direction of 22 8 the board of directors to provide services to a school 22 9 corporation shall not, on or after January 1, 1993, operate on 22 10 gasoline other than ethanol blended gasoline blended with at 22 11 least ten percent ethanol. The motor vehicle shall also be 22 12 affixed with a brightly visible sticker which notifies the 22 13 traveling public that the motor vehicle is being operated on 22 14 ethanol blended gasoline blended with ethanol. However, the 22 15 sticker is not required to be affixed to an unmarked vehicle 22 16 used for purposes of providing law enforcement or security. 22 17 Sec. 35. Section 307.21, subsection 4, paragraph d, Code 22 18 2005, is amended to read as follows: 22 19 d. A motor vehicle purchased by the administrator shall 22 20 not operate on gasoline other than ethanol blended gasoline 22 21 blended with at least ten percent ethanol as defined in 22 22 section 214A.1. A state=issued credit card used to purchase 22 23 gasoline shall not be valid to purchase gasoline other than 22 24 ethanol blended gasoline blended with at least ten percent 22 25 ethanol. The motor vehicle shall also be affixed with a 22 26 brightly visible sticker which notifies the traveling public 22 27 that the motor vehicle is being operated on ethanol blended 22 28 gasoline blended with ethanol. However, the sticker is not 22 29 required to be affixed to an unmarked vehicle used for 22 30 purposes of providing law enforcement or security. 22 31 Sec. 36. Section 307.21, subsection 5, paragraph a, 22 32 subparagraphs (1) and (2), Code 2005, are amended to read as 22 33 follows: 22 34 (1) A fuel blended with not more than fifteen percent E=85 22 35 gasoline and at least eighty=five percent ethanol as defined 23 1 in section 214A.1. 23 2 (2) A B=20 biodiesel blended fuel which is a mixture of 23 3 processed soybean oil and diesel fuel as defined in section 23 4 214A.1. At least twenty percent of the fuel by volume must be 23 5 processed soybean oil. 23 6 Sec. 37. Section 331.908, Code 2005, is amended to read as 23 7 follows: 23 8 331.908 MOTOR VEHICLES REQUIRED TO OPERATE ON ETHANOL= 23 9 BLENDED ETHANOL BLENDED GASOLINE. 23 10 A motor vehicle purchased or used by a county to provide 23 11 county services shall not, on or after January 1, 1993, 23 12 operate on gasoline other than ethanol blended gasoline 23 13 blended with at least ten percent ethanol as defined in 23 14 section 214A.1. The motor vehicle shall also be affixed with 23 15 a brightly visible sticker which notifies the traveling public 23 16 that the motor vehicle is being operated on ethanol blended 23 17 gasoline blended with ethanol. However, the sticker is not 23 18 required to be affixed to an unmarked vehicle used for 23 19 purposes of providing law enforcement or security. 23 20 Sec. 38. Section 364.20, Code 2005, is amended to read as 23 21 follows: 23 22 364.20 MOTOR VEHICLES REQUIRED TO OPERATE ON ETHANOL= 23 23 BLENDED ETHANOL BLENDED GASOLINE. 23 24 A motor vehicle purchased or used by a city to provide city 23 25 services shall not, on or after January 1, 1993, operate on 23 26 gasoline other than ethanol blended gasoline blended with at 23 27 least ten percent ethanol as defined in section 214A.1. The 23 28 motor vehicle shall also be affixed with a brightly visible 23 29 sticker which notifies the traveling public that the motor 23 30 vehicle is being operated on ethanol blended gasoline blended 23 31 with ethanol. However, the sticker is not required to be 23 32 affixed to an unmarked vehicle used for purposes of providing 23 33 law enforcement or security. 23 34 Sec. 39. Section 904.312A, subsection 1, Code 2005, is 23 35 amended to read as follows: 24 1 1. A motor vehicle purchased by the department shall not 24 2 operate on gasoline other than ethanol blended gasoline 24 3 blended with at least ten percent ethanol as defined in 24 4 section 214A.1. A state=issued credit card used to purchase 24 5 gasoline shall not be valid to purchase gasoline other than 24 6 ethanol blended gasoline blended with at least ten percent 24 7 ethanol. The motor vehicle shall also be affixed with a 24 8 brightly visible sticker which notifies the traveling public 24 9 that the motor vehicle is being operated on ethanol blended 24 10 gasoline blended with ethanol. However, the sticker is not 24 11 required to be affixed to an unmarked vehicle used for 24 12 purposes of providing law enforcement or security. 24 13 Sec. 40. Section 904.312A, subsection 2, paragraph a, 24 14 subparagraphs (1) and (2), Code 2005, are amended to read as 24 15 follows: 24 16 (1) A fuel blended with not more than fifteen percent E=85 24 17 gasoline and at least eighty=five percent ethanol as defined 24 18 in section 214A.1. 24 19 (2) A B=20 biodiesel blended fuel which is a mixture of 24 20 diesel fuel and processed soybean oil as defined in section 24 21 214A.1. At least twenty percent of the mixed fuel by volume 24 22 must be processed soybean oil. 24 23 DIVISION V 24 24 COORDINATING PROVISIONS == MISCELLANEOUS 24 25 Sec. 41. Section 15.401, Code Supplement 2005, is amended 24 26 to read as follows: 24 27 15.401 E=85 BLENDED GASOLINE RENEWABLE FUELS. 24 28 1. As used in this section, unless the context otherwise 24 29 requires, "biodiesel", "biodiesel blended fuel", "E=85 24 30 gasoline" and "service station" mean the same as defined in 24 31 section 214A.1. 24 32 2. The department shall provide a cost=share program for 24 33 financial incentives for the installation or conversion of 24 34 infrastructure used by service stations to do all of the 24 35 following: 25 1 a. sell Sell and dispense E=85 blended gasoline and for 25 2 the installation or conversion of. 25 3 b. Install or convert infrastructure required to establish 25 4 on=site and off=site terminal facilities that store biodiesel 25 5 or biodiesel blended fuel for distribution to service 25 6 stations. 25 7 3. The department shall provide for an addition of at 25 8 least thirty new or converted E=85 gasoline retail outlets and 25 9 four new or converted on=site or off=site terminal facilities 25 10 with a maximum expenditure of three hundred twenty=five 25 11 thousand dollars per year for the fiscal period beginning July 25 12 1, 2005, and ending June 30, 2008. The department may provide 25 13 for the marketing of these products in conjunction with this 25 14 infrastructure program. 25 15 Sec. 42. Section 159A.2, Code 2005, is amended by adding 25 16 the following new subsections: 25 17 NEW SUBSECTION. 0A. "Biodiesel" and "biodiesel blended 25 18 fuel" mean the same as defined in section 214A.1. 25 19 NEW SUBSECTION. 3A. "Department" means the department of 25 20 agriculture and land stewardship. 25 21 NEW SUBSECTION. 3B. "Ethanol blended gasoline" means the 25 22 same as defined in section 214A.1. 25 23 Sec. 43. Section 159A.2, subsection 6, Code 2005, is 25 24 amended by striking the subsection and inserting in lieu 25 25 thereof the following: 25 26 6. "Renewable fuel" means the same as defined in section 25 27 214A.1. 25 28 Sec. 44. Section 159A.2, subsection 8, Code 2005, is 25 29 amended by striking the subsection. 25 30 Sec. 45. Section 159A.3, subsection 3, Code 2005, is 25 31 amended to read as follows: 25 32 3. a. A chief purpose of the office is to further the 25 33 production and consumption of ethanol fuel blended gasoline in 25 34 this state. The office shall be the primary state agency 25 35 charged with the responsibility to promote public consumption 26 1 of ethanol fuel blended gasoline. 26 2 b. The office shall promote the production and consumption 26 3 of soydiesel fuel biodiesel and biodiesel blended fuel in this 26 4 state. 26 5 Sec. 46. Section 214A.19, subsection 1, unnumbered 26 6 paragraph 1, Code 2005, is amended to read as follows: 26 7 The department of natural resources, conditioned upon the 26 8 availability of funds, is authorized to award demonstration 26 9 grants to persons who purchase vehicles which operate on 26 10 alternative fuels, including but not limited to, high blend 26 11 ethanol E=85 gasoline, biodiesel, compressed natural gas, 26 12 electricity, solar energy, or hydrogen. A grant shall be for 26 13 the purpose of conducting research connected with the fuel or 26 14 the vehicle, and not for the purchase of the vehicle itself, 26 15 except that the money may be used for the purchase of the 26 16 vehicle if all of the following conditions are satisfied: 26 17 Sec. 47. Section 307.20, Code 2005, is amended to read as 26 18 follows: 26 19 307.20 BIODIESEL AND BIODIESEL BLENDED FUEL REVOLVING 26 20 FUND. 26 21 1. A biodiesel and biodiesel blended fuel revolving fund 26 22 is created in the state treasury. The biodiesel and biodiesel 26 23 blended fuel revolving fund shall be administered by the 26 24 department and shall consist of moneys received from the sale 26 25 of EPAct credits banked by the department on April 19, 2001, 26 26 moneys appropriated by the general assembly, and any other 26 27 moneys obtained or accepted by the department for deposit in 26 28 the fund. Moneys in the fund are appropriated to and shall be 26 29 used by the department for the purchase of biodiesel and 26 30 biodiesel blended fuel for use in department vehicles. The 26 31 department shall submit an annual report not later than 26 32 January 31 to the members of the general assembly and the 26 33 legislative services agency, of the expenditures made from the 26 34 fund during the preceding fiscal year. Section 8.33 does not 26 35 apply to any moneys in the fund and, notwithstanding section 27 1 12C.7, subsection 2, earnings or interest on moneys deposited 27 2 in the fund shall be credited to the fund. 27 3 2. A department departmental motor vehicle operating on 27 4 using biodiesel or biodiesel blended fuel shall be affixed 27 5 with a brightly visible sticker that notifies the traveling 27 6 public that the motor vehicle uses biodiesel blended fuel. 27 7 3. For purposes of this section the following definitions 27 8 apply: 27 9 a. "Biodiesel "Biodiesel" and "biodiesel blended fuel" 27 10 means soydiesel fuel mean the same as defined in section 27 11 159A.2 214A.1. 27 12 b. "EPAct credit" means a credit issued pursuant to the 27 13 federal Energy Policy Act (EPAct), 42 U.S.C. } 13201 et seq. 27 14 Sec. 48. Section 452A.2, subsection 2, Code Supplement 27 15 2005, is amended by striking the subsection and inserting in 27 16 lieu thereof the following: 27 17 2. "Biodiesel" and "biodiesel blended fuel" mean the same 27 18 as defined in section 214A.1. 27 19 Sec. 49. Section 452A.2, subsection 3, Code Supplement 27 20 2005, is amended to read as follows: 27 21 3. "Blender" means a person who owns and blends alcohol 27 22 ethanol with gasoline to produce ethanol blended gasoline and 27 23 blends the product at a nonterminal location. The blender 27 24 person is not restricted to blending alcohol ethanol with 27 25 gasoline. Products blended with gasoline other than grain 27 26 alcohol ethanol are taxed as gasoline. "Blender" also means a 27 27 person blending two or more special fuel products at a 27 28 nonterminal location where the tax has not been paid on all of 27 29 the products blended. This blend is taxed as a special fuel. 27 30 Sec. 50. Section 452A.2, Code Supplement 2005, is amended 27 31 by adding the following new subsection: 27 32 NEW SUBSECTION. 9A. "E=85 gasoline" means the same as 27 33 defined in section 214A.1. 27 34 Sec. 51. Section 452A.2, subsection 11, Code Supplement 27 35 2005, is amended to read as follows: 28 1 11. "Ethanol blended gasoline" means motor fuel containing 28 2 at least ten percent alcohol distilled from cereal grains the 28 3 same as defined in section 214A.1. 28 4 Sec. 52. Section 452A.2, subsection 19, unnumbered 28 5 paragraph 1, Code Supplement 2005, is amended to read as 28 6 follows: 28 7 "Motor fuel" means both motor fuel as defined in section 28 8 214A.1 and includes all of the following: 28 9 Sec. 53. Section 452A.2, subsection 21, Code Supplement 28 10 2005, is amended to read as follows: 28 11 21. "Nonterminal storage facility" means a facility where 28 12 motor fuel or special fuel, other than liquefied petroleum 28 13 gas, is stored that is not supplied by a pipeline or a marine 28 14 vessel. "Nonterminal storage facility" includes a facility 28 15 that manufactures products such as alcohol ethanol as defined 28 16 in section 214A.1, biofuel, blend stocks, or additives which 28 17 may be used as motor fuel or special fuel, other than 28 18 liquefied petroleum gas, for operating motor vehicles or 28 19 aircraft. 28 20 Sec. 54. Section 452A.3, subsection 1B, Code Supplement 28 21 2005, is amended to read as follows: 28 22 1B. An excise tax of seventeen cents is imposed on each 28 23 gallon of E=85 gasoline, which contains at least eighty=five 28 24 percent denatured alcohol by volume from the first day of 28 25 April until the last day of October or seventy percent 28 26 denatured alcohol from the first day of November until the 28 27 last day of March, used for the privilege of operating motor 28 28 vehicles in this state as defined in section 214A.1, subject 28 29 to the determination provided in subsection 1C. 28 30 Sec. 55. Section 452A.6, Code 2005, is amended to read as 28 31 follows: 28 32 452A.6 ETHANOL BLENDED GASOLINE AND OTHER PRODUCTS == 28 33 BLENDER'S LICENSE. 28 34 1. a. A person other than a supplier, restrictive 28 35 supplier, or importer licensed under this division, who blends 29 1 gasoline with alcohol distilled from cereal grains so that the 29 2 blend contains at least ten percent alcohol distilled from 29 3 cereal grains ethanol as defined in section 214A.1 in order to 29 4 formulate ethanol blended gasoline, shall obtain a blender's 29 5 license. 29 6 b. A person who blends two or more special fuel products 29 7 or sells one hundred percent biofuel shall obtain a blender's 29 8 license. 29 9 2. The A blender's license shall be obtained by following 29 10 the procedure under section 452A.4 and the blender's license 29 11 is subject to the same restrictions as contained in that 29 12 section. 29 13 3. A blender required to obtain a license pursuant to this 29 14 section shall maintain records as required by section 452A.10 29 15 as to motor fuel, alcohol ethanol, ethanol blended gasoline, 29 16 and special fuels. 29 17 DIVISION VI 29 18 CHANGE OF TERMS 29 19 Sec. 56. CHANGE OF TERMS. 29 20 1. Sections 8A.362, 101.21, 159A.4, 214.1, 214.11, 214A.1, 29 21 214A.2, 214A.4, 214A.5, 214A.7, 214A.8, 214A.9, 214A.10, 29 22 214A.16, 214A.17, 214A.18, 306C.11, 312.1, 321.40, 321.56, 29 23 423.14, 452A.63, 452A.66, and 452A.78, Code 2005, are amended 29 24 by striking from the provisions the words "motor vehicle fuel" 29 25 and inserting the following: "motor fuel". 29 26 2. Sections 214.1, 214.3, 214.9, 214.11, and 214A.16, Code 29 27 2005, are amended by striking the words "motor vehicle fuel 29 28 pump" or "motor vehicle fuel pumps" and inserting the 29 29 following: "motor fuel pump" or "motor fuel pumps". 29 30 3. Sections 159A.3 and 214A.17, Code 2005, are amended by 29 31 striking from the provisions the words "oxygenate octane 29 32 enhancers" and inserting the following: "oxygenates". 29 33 4. Sections 214A.1, 214A.4, 214A.5, 214A.7, 214A.8, and 29 34 214A.10, Code 2005, are amended by striking from the 29 35 provisions the words "oxygenate octane enhancer" and inserting 30 1 the following: "oxygenate". 30 2 EXPLANATION 30 3 BACKGROUND. The general assembly has enacted a number of 30 4 Acts which have promoted the production and consumption of 30 5 ethanol blended gasoline. 30 6 In 1991, the general assembly enacted S.F. 545 (1991 Iowa 30 7 Acts, ch. 254), which requires that state and local government 30 8 vehicles operate using ethanol blended gasoline and provides 30 9 that a state=issued credit card can only be used to purchase 30 10 ethanol blended gasoline. The provisions state that ethanol 30 11 blended gasoline must contain at least 10 percent ethanol. 30 12 In 1994, the general assembly enacted H.F. 2337 (1994 Iowa 30 13 Acts, chapter 1119), which requires that of all new passenger 30 14 vehicles and light pickup trucks purchased by the department 30 15 of administrative services, other state agencies, and 30 16 community colleges, a minimum of 10 percent of those motor 30 17 vehicles must be equipped with engines which utilize 30 18 alternative fuels (referred to as alternative methods of 30 19 propulsion), including a flexible fuel (E=85 gasoline or 30 20 biodiesel blended gasoline). The alternative fuel 30 21 requirements do not apply to motor vehicles purchased and 30 22 directly used for law enforcement or purchased and used for 30 23 off=road maintenance work or to pull loaded trailers. 30 24 In 2001, the general assembly enacted H.F. 716 (2001 Iowa 30 25 Acts, ch. 123), which created a tax credit for retail dealers 30 26 of gasoline who sell ethanol blended gasoline (containing at 30 27 least 10 percent alcohol). The tax credit applies to both 30 28 taxpayers filing as individuals under Code section 422.11C and 30 29 businesses under Code section 422.33. Specifically, the Act 30 30 provided a tax credit for a retail dealer who operates at 30 31 least one service station at which more than 60 percent of the 30 32 total gallons of gasoline sold by the retail dealer is ethanol 30 33 blended gasoline. 30 34 The Act also amended provisions in Code section 452A.3 that 30 35 provide for an excise tax on each gallon of motor fuel sold in 31 1 the state. Under the Act, until June 30, 2007, the rates for 31 2 unblended and blended motor fuel are adjusted each year based 31 3 on the number of gallons of ethanol blended gasoline that are 31 4 distributed in this state as expressed as a percentage of the 31 5 total number of gallons of motor fuel distributed in this 31 6 state. 31 7 In 2005, the general assembly enacted H.F. 868 (2005 Iowa 31 8 Acts, ch. 150) imposing a special rate of 17 cents on each 31 9 gallon of E=85 gasoline (a blend containing a minimum of 31 10 between 75 and 85 percent alcohol depending on the season) if 31 11 certain conditions were met. The Act requires the department 31 12 of revenue to compare the amount of moneys actually collected 31 13 using the special 17 cents rate with the amount of moneys that 31 14 would have been collected if the adjusted rate applied. If 31 15 the difference is equal to or greater than $25,000, the tax 31 16 rate beginning the next year is at the adjusted rate. 31 17 DIVISION I == ESTABLISHMENT OF RENEWABLE FUEL STANDARDS. 31 18 This division amends Code chapter 214A, which provides 31 19 authority to the department of agriculture and land 31 20 stewardship to regulate the sale of motor fuel. 31 21 The division amends Code section 214A.1 by providing a 31 22 number of definitions for "biodiesel", "biodiesel blended 31 23 fuel", "ethanol", "ethanol blended gasoline", and "E=85 31 24 gasoline". The division establishes a quality standards 31 25 program for renewable fuel producers. It provides that a 31 26 renewable fuel producer is prohibited from selling biodiesel 31 27 or biodiesel blended fuel in this state, and a dealer is 31 28 prohibited from purchasing biodiesel or biodiesel blended fuel 31 29 from a renewable fuel producer, unless the renewable fuel 31 30 producer is accredited under the terms and conditions of the 31 31 program. Under the program, an accreditation service 31 32 appointed by the department performs a formal review and audit 31 33 of the capacity and commitment of the renewable fuel producer 31 34 to produce or market biodiesel or biodiesel blended fuel in a 31 35 manner and according to procedures that meet the program 32 1 standards for quality. 32 2 The division amends Code section 214A.2, which provides for 32 3 different types of motor fuel and establishes standards or 32 4 specifications for motor fuel. The division amends the 32 5 section to require that ethanol blended gasoline contain a 32 6 blend of at least 10 percent ethanol (the so called "E=10" 32 7 standard). It designates gasoline with a minimum seasonal 32 8 blend of between 75 and 85 percent or more ethanol as E=85 32 9 blended gasoline based on current law (see Code Supplement 32 10 section 452A.3). 32 11 The division establishes similar standards for biodiesel 32 12 and biodiesel blended fuel. It requires that biodiesel 32 13 blended fuel contain at least 2 percent biodiesel by volume. 32 14 It prohibits any person from falsely advertising motor fuel, 32 15 including renewable fuel, and specifically, ethanol blended 32 16 gasoline and biodiesel blended gasoline. Code section 214A.11 32 17 provides that any person violating the provisions of Code 32 18 chapter 214A is guilty of a simple misdemeanor. A simple 32 19 misdemeanor is punishable by confinement for no more than 30 32 20 days or a fine of at least $50, but not more than $500, or by 32 21 both. 32 22 DIVISION II == RENEWABLE FUEL INFRASTRUCTURE. This 32 23 division establishes a renewable fuel infrastructure 32 24 initiative. It appropriates moneys from the healthy Iowans 32 25 tobacco trust to a renewable fuel infrastructure fund which is 32 26 under the control of the department of natural resources. 32 27 Moneys in the fund are appropriated to the department 32 28 exclusively to support a renewable fuel infrastructure program 32 29 as created in the division, including costs necessary to 32 30 administer the program. The department must cooperate with 32 31 the Iowa comprehensive petroleum underground storage tank fund 32 32 board in carrying out the program. 32 33 The purpose of the program is to improve a service station 32 34 by installing, replacing, or converting motor fuel storage and 32 35 dispensing infrastructure which is designed and used 33 1 exclusively to store and dispense E=85 gasoline, biodiesel, or 33 2 biodiesel blended fuel on a retail basis. The division 33 3 includes eligibility requirements for a person to participate 33 4 in the program. The department must distribute financial 33 5 incentives to improve service stations located throughout the 33 6 state. The financial incentives must be in the form of an 33 7 interest=free loan. In order to participate in the program an 33 8 eligible person must execute a cost=share agreement with the 33 9 department in which the person contributes a percentage of the 33 10 total costs related to improving the service station. A 33 11 participating person who acts in violation of a cost=share 33 12 agreement with the department is subject to a civil penalty of 33 13 not more than $1,000 a day for each day of the violation. 33 14 DIVISION III == RENEWABLE FUEL TAX CREDIT FOR RETAIL 33 15 DEALERS. This division amends tax credit provisions in Code 33 16 chapter 422 to provide that a retail dealer who sells E=85 33 17 gasoline is eligible to receive a tax credit. The tax credit 33 18 applies to taxpayers filing as individuals or businesses. The 33 19 amount of the tax credit is a designated rate multiplied by 33 20 the total number of gallons of E=85 gasoline sold and 33 21 dispensed through all motor fuel pumps operated at each of the 33 22 taxpayer's service stations during the tax year. The 33 23 designated rate ranges from 10 cents to 20 cents depending 33 24 upon the number of E=85 gasoline gallons sold on a statewide 33 25 basis. 33 26 The division also provides that a retail dealer who sells 33 27 biodiesel blended fuel is also eligible to receive a tax 33 28 credit with similar requirements that apply to a retail dealer 33 29 who sells ethanol blended gasoline (E=10 gasoline). In this 33 30 case, the amount is based on each gallon of biodiesel sold and 33 31 dispensed by the retail dealer and ranges from 3 to 5 cents 33 32 depending upon the percentage of biodiesel blended fuel sold 33 33 when compared to the total amount of diesel fuel sold. 33 34 The E=85 gasoline and biodiesel blended fuel tax credits 33 35 are not available after December 31, 2011. 34 1 The provisions in division III which provide a tax credit 34 2 to retail dealers selling E=85 gasoline and biodiesel blended 34 3 fuel apply to tax years beginning on or after January 1, 2007, 34 4 and are repealed on January 1, 2012. 34 5 DIVISION IV == COORDINATING PROVISIONS == GOVERNMENT 34 6 VEHICLES. This division amends the provisions that require 34 7 state and local government vehicles to operate using ethanol 34 8 blended gasoline. It also amends similar provisions which 34 9 require state agencies to purchase flexible fuel vehicles. 34 10 The division standardizes the language and refers to common 34 11 definitions as created in the division amending Code section 34 12 214A.1 and related standards created in the division amending 34 13 Code section 214A.2. 34 14 DIVISION V == COORDINATING PROVISIONS == MISCELLANEOUS. A 34 15 number of provisions in the Code refer to alcohol or ethanol 34 16 blended gasoline, including E=85 gasoline, and soydiesel or 34 17 biofuel. This division standardizes the language and refers 34 18 to common definitions as created in the division amending Code 34 19 section 214A.1 and related standards created in the division 34 20 amending Code section 214A.2. 34 21 DIVISION VI == CHANGE IN TERMS. This division amends a 34 22 number of provisions by changing the term "oxygenate octane 34 23 enhancer" to "oxygenate", "motor vehicle fuel" to "motor 34 24 fuel", and "motor vehicle fuel pump" to "motor fuel pump" for 34 25 purposes of consistency in chapters throughout the Code, but 34 26 in particular in Code chapters 214A and 452A. 34 27 LSB 5701HC 81 34 28 da:rj/je/5
Text: HSB586            Text: HSB588