1.1                          A bill for an act
  1.2             relating to alternative transportation fuels; 
  1.3             eliminating alternative fuel vehicle permits and 
  1.4             providing for refunds of fees paid for unused portions 
  1.5             of permits; specifying excise taxes for certain 
  1.6             gasoline and special fuel; amending Minnesota Statutes 
  1.7             1994, sections 216C.01, subdivisions 1a and 1b; 
  1.8             296.01, subdivisions 30, 34, and by adding 
  1.9             subdivisions; 296.02, subdivisions 1, 1a, and 1b; 
  1.10            296.025, subdivisions 1, 1a, and by adding a 
  1.11            subdivision; and 296.0261, by adding a subdivision; 
  1.12            repealing Minnesota Statutes 1994, section 296.0261, 
  1.13            subdivisions 1, 2, 3, 4, 5, 6, 7, 8, and 9. 
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15     Section 1.  Minnesota Statutes 1994, section 216C.01, 
  1.16  subdivision 1a, is amended to read: 
  1.17     Subd. 1a.  [ALTERNATIVE FUEL.] "Alternative fuel" means 
  1.18  natural gas; liquefied petroleum gas; hydrogen; coal-derived 
  1.19  liquefied fuels; electricity; methanol, denatured ethanol, and 
  1.20  other alcohols; mixtures containing 85 percent or more, or other 
  1.21  percentage as may be set by regulation by the Secretary of the 
  1.22  United States Department of Energy, by volume of methanol, 
  1.23  denatured ethanol, and other alcohols with gasoline or other 
  1.24  fuels; fuels other than alcohol that are derived from biological 
  1.25  materials; and other fuel that the Secretary of the United 
  1.26  States Department of Energy determines by regulation to be an 
  1.27  alternative fuel within the meaning of section 301(2) of the 
  1.28  National Energy Policy Act of 1992 and intended for use in motor 
  1.29  vehicles. 
  2.1      Sec. 2.  Minnesota Statutes 1994, section 216C.01, 
  2.2   subdivision 1b, is amended to read: 
  2.3      Subd. 1b.  [ALTERNATIVE FUEL VEHICLE.] "Alternative fuel 
  2.4   vehicle" means a dedicated, flexible, or a dual-fuel vehicle 
  2.5   operated primarily on an alternative fuel. 
  2.6      Sec. 3.  Minnesota Statutes 1994, section 296.01, 
  2.7   subdivision 30, is amended to read: 
  2.8      Subd. 30.  [PETROLEUM PRODUCTS.] "Petroleum products" means 
  2.9   all of the products defined in subdivisions 2, 7, 8, 10, 13, 14, 
  2.10  15c, and 17 to 22, and 24b. 
  2.11     Sec. 4.  Minnesota Statutes 1994, section 296.01, 
  2.12  subdivision 34, is amended to read: 
  2.13     Subd. 34.  [SPECIAL FUEL.] "Special fuel" means (1) all 
  2.14  combustible gases and liquid petroleum products or substitutes 
  2.15  therefor including clear diesel fuel, except gasoline, gasoline 
  2.16  blended with ethanol, and agricultural alcohol gasoline which 
  2.17  are delivered into the supply tank of a licensed motor vehicle 
  2.18  or into storage tanks maintained by an owner or operator of a 
  2.19  licensed motor vehicle as a source of supply for such vehicle; 
  2.20  (2) all combustible gases and liquid petroleum products or 
  2.21  substitutes therefor, except gasoline, gasoline blended with 
  2.22  ethanol, and agricultural alcohol gasoline, when delivered to a 
  2.23  licensed special fuel dealer or to the retail service station 
  2.24  storage of a distributor who has elected to pay the special fuel 
  2.25  excise tax as provided in section 296.12, subdivision 3; (3) all 
  2.26  combustible gases and liquid petroleum products or substitutes 
  2.27  therefor, except gasoline, which are used as aviation fuel; or 
  2.28  (4) dyed fuel that is being used illegally in a licensed motor 
  2.29  vehicle.  
  2.30     Sec. 5.  Minnesota Statutes 1994, section 296.01, is 
  2.31  amended by adding a subdivision to read: 
  2.32     Subd. 5.  [ALTERNATIVE FUEL VEHICLE.] "Alternative fuel 
  2.33  vehicle" means a dedicated, flexible, or dual-fuel vehicle 
  2.34  operated primarily on alternative transportation fuel. 
  2.35     Sec. 6.  Minnesota Statutes 1994, section 296.01, is 
  2.36  amended by adding a subdivision to read: 
  3.1      Subd. 11a.  [COMPRESSED NATURAL GAS.] "Compressed natural 
  3.2   gas" or CNG means natural gas, primarily methane, condensed 
  3.3   under high pressure and stored in specially designed storage 
  3.4   tanks at between 2,000 and 3,600 pounds per square inch.  For 
  3.5   purposes of this chapter, the energy content of CNG will be 
  3.6   considered to be 1,000 BTUs per cubic foot. 
  3.7      Sec. 7.  Minnesota Statutes 1994, section 296.01, is 
  3.8   amended by adding a subdivision to read: 
  3.9      Subd. 15c.  [E85.] "E85" means a petroleum product that is 
  3.10  a blend of agriculturally derived denatured ethanol and gasoline 
  3.11  that typically contains 85 percent ethanol by volume, but at a 
  3.12  minimum must contain at least 60 percent ethanol by volume.  For 
  3.13  the purposes of this chapter, the energy content of E85 will be 
  3.14  considered to be 82,000 BTUs per gallon. 
  3.15     Sec. 8.  Minnesota Statutes 1994, section 296.01, is 
  3.16  amended by adding a subdivision to read: 
  3.17     Subd. 23a.  [LIQUEFIED NATURAL GAS.] "Liquefied natural gas"
  3.18  or LNG means natural gas, primarily methane, which has been 
  3.19  condensed through a cryogenic cooling process and is stored in 
  3.20  special pressurized and insulated storage tanks.  For purposes 
  3.21  of this chapter, the energy content of LNG will be considered to 
  3.22  be 69,000 BTUs per gallon. 
  3.23     Sec. 9.  Minnesota Statutes 1994, section 296.01, is 
  3.24  amended by adding a subdivision to read: 
  3.25     Subd. 23b.  [LIQUEFIED PETROLEUM GAS.] "Liquefied petroleum 
  3.26  gas" or LPG or propane means a product made of short hydrocarbon 
  3.27  chains and containing primarily propane and butane that is 
  3.28  stored in specialized tanks at moderate pressure.  For purposes 
  3.29  of this chapter, the energy content of LPG or propane will be 
  3.30  considered to be 86,000 BTUs per gallon. 
  3.31     Sec. 10.  Minnesota Statutes 1994, section 296.01, is 
  3.32  amended by adding a subdivision to read: 
  3.33     Subd. 24b.  [M85.] "M85" means a petroleum product that is 
  3.34  a liquid fuel blend of methanol and gasoline that contains at 
  3.35  least 85 percent methanol by volume.  For the purposes of this 
  3.36  chapter, the energy content of M85 will be considered to be 
  4.1   65,000 BTUs per gallon. 
  4.2      Sec. 11.  Minnesota Statutes 1994, section 296.02, 
  4.3   subdivision 1, is amended to read: 
  4.4      Subdivision 1.  [TAX IMPOSED; EXCEPTION FOR QUALIFIED 
  4.5   SERVICE STATION.] There is imposed an excise tax on gasoline, 
  4.6   gasoline blended with ethanol, and agricultural alcohol 
  4.7   gasoline, used in producing and generating power for propelling 
  4.8   motor vehicles used on the public highways of this state.  For 
  4.9   purposes of this section, gasoline is defined in section 296.01, 
  4.10  subdivisions 10, 15b, 18, 19, 20, and 24a.  This tax is payable 
  4.11  at the times, in the manner, and by persons specified in this 
  4.12  chapter.  The tax is payable at the rate specified in 
  4.13  subdivision 1b, subject to the exceptions and reductions 
  4.14  specified in this section.  
  4.15     (a) Notwithstanding any other provision of law to the 
  4.16  contrary, the tax imposed on special fuel sold by a qualified 
  4.17  service station may not exceed, or the tax on gasoline delivered 
  4.18  to a qualified service station must be reduced to, a rate not 
  4.19  more than three cents per gallon above the state tax rate 
  4.20  imposed on such products sold by a service station in a 
  4.21  contiguous state located within the distance indicated in clause 
  4.22  (b).  
  4.23     (b) A "qualifying service station" means a service station 
  4.24  located within 7.5 miles, measured by the shortest route by 
  4.25  public road, from a service station selling like product in the 
  4.26  contiguous state.  
  4.27     (c) A qualified service station shall be allowed a credit 
  4.28  by the supplier or distributor, or both, for the amount of 
  4.29  reduction computed in accordance with clause (a).  
  4.30     A qualified service station, before receiving the credit, 
  4.31  shall be registered with the commissioner of revenue.  
  4.32     Sec. 12.  Minnesota Statutes 1994, section 296.02, 
  4.33  subdivision 1a, is amended to read: 
  4.34     Subd. 1a.  [TRANSIT SYSTEMS AND ALTERNATIVE FUELS EXEMPT.] 
  4.35  The provisions of subdivision 1 do not apply to (1) gasoline 
  4.36  purchased by a transit system or transit provider receiving 
  5.1   financial assistance or reimbursement under section 174.24, 
  5.2   256B.0625, subdivision 17, or 473.384 or (2) sales of compressed 
  5.3   natural gas or propane for use in vehicles displaying a valid 
  5.4   annual alternate fuel permit.  
  5.5      Sec. 13.  Minnesota Statutes 1994, section 296.02, 
  5.6   subdivision 1b, is amended to read: 
  5.7      Subd. 1b.  [RATES IMPOSED.] The gasoline excise tax is 
  5.8   imposed at the following rate rates: 
  5.9      (1) E85 is taxed at the rate of 14.2 cents per gallon; 
  5.10     (2) M85 is taxed at the rate of 11.4 cents per gallon; and 
  5.11     (3) For the period on and after May 1, 1988, All other 
  5.12  gasoline is taxed at the rate of 20 cents per gallon.  
  5.13     Sec. 14.  Minnesota Statutes 1994, section 296.025, 
  5.14  subdivision 1, is amended to read: 
  5.15     Subdivision 1.  [TAX IMPOSED.] There is hereby imposed an 
  5.16  excise tax of the same rate per gallon as the gasoline excise 
  5.17  tax on all special fuel at the rates specified in subdivision 1b.
  5.18  For clear diesel fuel, the tax is imposed on the first 
  5.19  distributor who received the product in Minnesota.  For dyed 
  5.20  fuel being used illegally in a licensed motor vehicle, the tax 
  5.21  is imposed on the owner or operator of the motor vehicle, or in 
  5.22  some instances, on the dealer who supplied the fuel.  For dyed 
  5.23  fuel used in a motor vehicle but subject to a federal exemption, 
  5.24  although no federal tax may be imposed, the fuel is subject to 
  5.25  the state tax.  For other fuels, including jet fuel, propane, 
  5.26  and compressed natural gas, the tax is imposed on the 
  5.27  distributor, special fuel dealer, or bulk purchaser.  This tax 
  5.28  is payable at the time and in the manner specified in this 
  5.29  chapter.  For purposes of this section, "owner or operator" 
  5.30  means the operation of licensed motor vehicles, whether loaded 
  5.31  or empty, whether for compensation or not for compensation, and 
  5.32  whether owned by or leased to the motor carrier who operates 
  5.33  them or causes them to be operated. 
  5.34     Sec. 15.  Minnesota Statutes 1994, section 296.025, 
  5.35  subdivision 1a, is amended to read: 
  5.36     Subd. 1a.  [TRANSIT SYSTEMS AND ALTERNATIVE FUELS EXEMPT.] 
  6.1   The provisions of subdivision 1 do not apply to (1) special fuel 
  6.2   purchased by a transit system or transit provider receiving 
  6.3   financial assistance or reimbursement under section 174.24, 
  6.4   256B.0625, subdivision 17, or 473.384 or (2) sales of compressed 
  6.5   natural gas or propane for use in vehicles displaying a valid 
  6.6   annual alternate fuel permit.  
  6.7      Sec. 16.  Minnesota Statutes 1994, section 296.025, is 
  6.8   amended by adding a subdivision to read: 
  6.9      Subd. 1b.  [TAX RATES.] The special fuel excise tax is 
  6.10  imposed at the following rates: 
  6.11     (1) Liquefied petroleum gas or propane is taxed at the rate 
  6.12  of 15 cents per gallon. 
  6.13     (2) Liquefied natural gas is taxed at the rate of 12 cents 
  6.14  per gallon. 
  6.15     (3) Compressed natural gas is taxed at the rate of $1.739 
  6.16  per thousand cubic feet; or 20 cents per gasoline equivalent, as 
  6.17  defined by the National Conference on Weights and Measures, 
  6.18  which is 5.66 pounds of natural gas. 
  6.19     (4) All other special fuel is taxed at the same rate as the 
  6.20  gasoline excise tax. 
  6.21     Sec. 17.  Minnesota Statutes 1994, section 296.0261, is 
  6.22  amended by adding a subdivision to read: 
  6.23     Subd. 10.  [CREDIT; REFUNDS.] (a) A purchaser of an 
  6.24  alternative fuel vehicle permit under subdivisions 1 to 9, prior 
  6.25  to July 1, 1995, shall receive a credit for the unused portion 
  6.26  of the permit fee.  The amount of the credit shall be equal to 
  6.27  the original permit fee and prorated to the number of months 
  6.28  from July 1, 1995, until the expiration date of the permit.  The 
  6.29  credit shall reduce the amount of the vehicle's annual motor 
  6.30  vehicle registration tax as calculated under section 168.013.  
  6.31  The credit shall be applied to the first motor vehicle 
  6.32  registration tax payable after July 1, 1995. 
  6.33     (b) If the amount of the credit calculated under paragraph 
  6.34  (a) exceeds the amount of motor vehicle registration tax due, 
  6.35  the registrar shall pay to the vehicle owner a cash refund equal 
  6.36  to the difference between the motor vehicle registration tax and 
  7.1   the credit due. 
  7.2      Sec. 18.  [REPEALER.] 
  7.3      Minnesota Statutes 1994, section 296.0261, subdivisions 1, 
  7.4   2, 3, 4, 5, 6, 7, 8, and 9, are repealed. 
  7.5      Sec. 19.  [EFFECTIVE DATE.] 
  7.6      Sections 1 to 18 are effective July 1, 1995.