Sierrans:

The following is the summary of minutes from the October 6, 1999, Interim Legislative Study Committee on Oxygenate Enhancers. I though you might be interested.

Lyle Krewson
Sierra Lobbyist

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BRIEFINGS ON RECENT MEETINGS

INCREASING USE OF MOTOR OXYGENATE ENHANCERS STUDY COMMITTEE
October 6, 1999

Background. The Legislative Council established the Increasing Use of Motor Oxygenate Enhancers Study Committee during the 1999 Legislative Interim to study issues and make recommendations relating to the sale, use, and health and environmental effects of oxygenate enhancers contained in motor fuel. The study is required to include both ethanol and methyl tertiary butyl ether (MT.BE).

Overview. The meeting was held in the LeMars Convention Center. The Committee conducted preliminary business, heard testimony, and adopted recommendations.

Petroleum Marketers. Mr. Ron Marr, Managing Director of the Petroleum Marketers of Iowa, and Ms. Dawn Carlson, Vice President of Member and Government Relations of the Petroleum Marketers of Iowa, discussed how retail dealers establish prices for motor vehicle fuel. Ms. Carlson described a promotional effort by retail dealers to increase the public's awareness of ethanol blended fuels.

Oxygenate Enhancers. Mr. Paul Argyropoulous, fuel specialist representing the American Petroleum Institute, discussed the use of oxygenate enhancers, including ethanol, in motor vehicle fuel in order to meet federal environmental standards. Mr. Argyropoulous explained how the contents of motor vehicle fuel differ in geographic locations of the country, based on performance needs and the availability of certain oxygenate enhancers. He recommended that environmental standards be reached based on performance standards rather than on "mandating" particular fuel ingredients.

Pricing Trends. Mr. David Reynolds, Sr. Legislative Analyst of the Legislative Fiscal Bureau, discussed the pricing of ethanol blended gasoline in Minnesota. He noted that pricing appears to follow national trends for motor vehicle fuel generally.

Discussion. The Committee discussed a number of issues, including the pricing of motor vehicle fuels, the extent to which tax incentives are passed along to consumers, the environmental benefits of using ethanol versus methyl tertiary butyl ether (MTBE), and the economic impact of using ethanol blended gasoline.

Recommendations. The Committee considered a number of proposals, including all of the following:

1.      Representative Frevert proposed that the General Assembly establish a motor vehicle fuel standard requiring that, with limited exceptions, motor vehicle fuel contain three- and five-tenths percent oxygen by weight. The proposal was defeated by the Committee.
2.      Co-chairperson Klemme proposed that the General Assembly pass a resolution requesting that the United States Congress not eliminate the oxygenate requirement in the Clean Air Act and that Congress and the Environmental Protection Agency cooperate in order to implement effective requirements. The proposal was approved by the Committee.
3.      Co-chairperson Bartz proposed that a provision contained in Senate File 400 considered in 1999 by the General Assembly be approved. The provision would amend Iowa Code section 15.333, which provides for tax credits for eligible businesses. Specifically, the provision would provide that if an eligible business provides for the manufacturing of agricultural commodities into value-added agricultural products, the business may elect to fully transfer its investment tax credit to another taxpayer of the state who is a direct participant in the project. The proposal was approved by the Committee.
4.      Co-chairperson Bartz proposed that the remainder of the provisions in Senate File 400 considered in the 1999 General Assembly be approved. The provisions would amend Code chapter 214A by prohibiting a person from offering for sale gasoline other than oxygenated gasoline on a retail basis. According to the bill, oxygenated gasoline would be required to have an oxygen content of at least three- and five-tenths percent by weight. The provisions would eliminate the special tax rate of 19 cents currently assessed on ethanol blended gasoline. The provisions would also amend Code chapter 455G by requiring the Iowa Comprehensive Petroleum Underground Storage Tank Fund Board to establish a program to reimburse the owner or operator of a site for costs necessary to store and dispense oxygenated gasoline. The proposal was not approved by the Committee.
5.      Co-chairperson Bartz proposed that the General Assembly enact legislation that would establish a 10 cent differential tax rate between ethanol blended gasoline and conventional gasoline as set by a commission established in the legislation. According to Co-chairperson Bartz, the legislation would also prohibit a retail dealer or wholesale dealer from selling ethanol blended gasoline for more than the required differential price. A dealer who sells gasoline in violation of the legislation would be subject to a two cent penalty for every one cent that the dealer sold the ethanol blended gasoline above the required differential price. The proposal was approved by the Committee.
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Lyle R. Krewson
6403 Aurora Avenue #3
Des Moines, IA 50322-2862
515/276-8947
515/276-3965 - Fax

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County: Polk County, Iowa
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