Agriculture Committee – Week 5, 2022

February 9, 2022 Senate Staff Agriculture Committee, Blog, Votes 0

COMMITTEE ACTION:

HF 2128 – Biofuels access standards, tax credits and infrastructure grants

HF 2128 is the Governor’s biofuels proposal. It has four main components:

  1. Establishes requirements for fuel retailers to offer E-15 for sale and providing waivers from this requirement for certain retailers.
  2. Makes a number of changes to the Renewable Fuel Infrastructure Grant Program.
  3. Adjusts existing biofuels tax credit programs to encourage the sale of higher biofuel blends by retailers.
  4. Requires the use of the highest appropriate blend of biofuels for vehicles owned and operated by state agencies.

Division I – E-15 Access

Retailer E-15 sales requirements

  • A retailer must advertise for sale and sell E‐15 gasoline from a minimum number of qualifying motor fuel dispensers. If a retailer has only one qualifying fuel dispenser, the retailer must dispense E‐15 from that fuel dispenser. If there is more than one qualified fuel dispenser, the retailer must dispense E‐15 from at least 50% of the fuel dispensers.
  • Retailers must comply with this standard for fuel tanks installed after January 1, 2023, or by 2026 for existing installed tanks.
  • Retailers may sell non-E-15 gasoline from one or more dispensing units at a nonqualifying motor fuel dispenser including:
    • Aviation fuel
    • Diesel fuel
    • Kerosene fuel
    • A dispenser that is part of a tank vehicle that does not dispense fuel on the retailer premises
    • A commercial marina
    • As part of an “excusable event,” which includes fuel infrastructure maintenance, repair, installation or replacement activities.
  • The bill also grants the Department of Agriculture (IDALS) the authority to suspend, revoke or not renew the license of a motor fuel retail dealer for not following the requirements of the bill.

Governor authority to suspend E-15 standard

  • The Governor also has the authority to temporarily suspend the E-15 standard on January 1, 2023, based on a finding of inadequate supply, economic hardship for consumers, or the lack of E-15 capable storage and dispensing infrastructure. The suspension will be in effect for a year, unless there is a shorter time period stated in the order.

Retailer Waivers by Secretary of Agriculture

  • The Secretary shall waive the E‐15 Access Standard based on the incompatibility of retailer infrastructure to store and dispense E‐15 gasoline.
  • Class 1 Waivers shall be issued based on the age and style of tanks that have been installed. This waiver applies to all tanks installed prior to 1986, double-walled fiberglass tanks installed prior to 1992 and single-walled fiberglass tanks installed before 1997.
  • Class 2 Waivers shall be issued based on the estimated cost of improving the infrastructure to be compatible with E‐15. If the total estimated cost to improve the site exceeds the base amount that allows a retailer to receive the total amount of financial incentives through the Renewable Fuels Infrastructure Program.
  • These waivers are repealed January 1, 2041.

Division II – Motor fuel infrastructure

The bill also requires that new motor fuel storage and dispensing infrastructure equipment installed after the enactment of the bill be capable of storing or dispensing E-85 or higher blended gasoline.

Division III – Renewable fuel use by state motor vehicles

This division of the bill eliminates current law that requires all vehicles owned and operated by a state agency to use only biofuel-blended motor fuel. The bill proposes requiring motor fuel used to power a state vehicle to be the highest blended classification available for that vehicle, outside of an emergency situation. State entities must revise their bidding procedures to account for the purchase of vehicles powered by biodiesel blended fuel B-20 or higher.

The bill also requires an annual report by the Department of Administrative Services (DAS) to the Governor and Legislature regarding state vehicles powered by motor fuel by type of fuel the vehicle is capable of using and gallons of renewable fuel purchased.

Divisions IV-VI  – Tax credits and motor fuel taxes

This division extends and modifies existing tax credit incentives for motor fuel retailers. These include:

  • E-85 promotion tax credit – The bill extends the existing tax credit by three years, up to January 1, 2028. This tax credit is equal to 16 cents per gallon of E-85 blended fuel sold.
  • Biodiesel blended fuel tax credit – The bill extends the tax credit by three years, up to January 1, 2028, but also modifies the tax credit to apply to higher biodiesel blends.
    • Current structure: B-5 blended biodiesel receives a 3.5 cent per gallon tax credit. B-11 receives a 5.5 cent per gallon tax credit.
    • Proposed structure: B-11 blended biodiesel would receive a 5 cent per gallon tax credit, B-20 blended biodiesel would be 7 cents per gallon, and B-30 blended biodiesel at 10 cents per gallon.
  • E-15 plus promotion tax credit – The bill extends the existing tax credit by one years, up to January 1, 2026, and removes the special “summer” period that provided a 10 cent per gallon tax credit for E-15 blended gasoline instead of the standard 3 cents per gallon during the rest of the year. The tax credit would be 9 cents per gallon year-round.
  • All credits are extended and modified for corporate income taxes as well as individual income taxes.
  • Biodiesel Production Tax Credit – The bill extends the existing tax credit for biodiesel production by three years.
  • The bill also extends the existing differential motor fuel excise tax rate for higher blended biofuels by four years to 2030.

Division VII – Motor fuel infrastructure

The bill makes changes to the existing financial incentives program for motor fuel infrastructure under the Renewable Fuels Infrastructure Board (RFIB).

  • The program will prioritize existing sites where the owner’s portion of the cost is not high enough to receive a Class 2 waiver from the Secretary of Agriculture.
  • The incentives will only be used for dispensing E-85 or higher and storing E-100 or E-85 blended fuel or biodiesel infrastructure for storage of B-20 blended biodiesel or B-100, as well as dispensing or blending B-20 blended biodiesel or higher.
    [2/8: Short Form]

SF 2110 – Hemp acreage

SF 2110 removes the cap on number of hemp acres that a farmer can plant. Under current law, this cap was to be lifted in 2023.
[2/8: short form]

SSB 3095 – IDALS department bill

SSB 3095 is the Iowa Department of Agriculture and Land Stewardship (IDALS) department bill. It creates the Choose Iowa Program to label Iowa-grown or produced products. It allows IDALS to accept/deny applicants who want to use the Choose Iowa logo/label. In addition, it gives IDALS authority to charge an annual fee to use the Choose Iowa logo/label and establish standards around use of the logo/label. Finally, it establishes a fund for fee revenue to be deposited. Fee revenue will support Choose Iowa programming.

In the remainder of the bill, it:

  • Updates petroleum standards (ASTM) references to correct style.
  • Updates definition of “biodiesel” to most accurate technical description.
  • Updates ability for department to adopt standards/specifications by reference.
  • Specifies premium gasoline as 91 octane, codifying industry standard.
  • Removes unnecessary directive aimed toward EPA on E10+ fuel.
  • Biodiesel blended fuel must contain at least 5% biodiesel (same as ethanol).
  • E85 classification update to technical specification of 68-83% ethanol.
  • Singles out biofuels by name (ethanol, biodiesel and biobutanol).
  • Removes requirement for state mandated ethanol label.
  • Removes requirement for EPA mandated ethanol label.
  • Removes requirement for state mandated biodiesel label.
    [2/8: short form]

SSB 3051 – Butcher training

SSB 3051 codifies the exemption from licensure for personal use to provide butchery training to others on site. Meat/poultry must be for private use, and not sold.
[2/8: short form]