1.1                          A bill for an act 
  1.2             relating to motor fuels; requiring that diesel fuel 
  1.3             sold for state vehicles contain a minimum of five 
  1.4             percent biodiesel fuel oil by volume; requiring 
  1.5             demonstration projects, studies, and reports; amending 
  1.6             Minnesota Statutes 2000, sections 296A.01, by adding a 
  1.7             subdivision; 296A.08, subdivision 1; proposing coding 
  1.8             for new law in Minnesota Statutes, chapter 239. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  [239.77] [BIODIESEL MANDATE FOR GOVERNMENT 
  1.11  VEHICLES.] 
  1.12     Subdivision 1.  [BIODIESEL FUEL OIL DEFINED.] "Biodiesel 
  1.13  fuel oil" means a biodegradable, combustible liquid fuel derived 
  1.14  from vegetable oils or animal fats that meets ASTM 
  1.15  specifications PS 121-99 and is suitable for blending with 
  1.16  diesel fuel oil for use in internal combustion diesel engines. 
  1.17     Subd. 2.  [STATE VEHICLE MANDATE.] On or after July 1, 
  1.18  2002, all diesel fuel consumed in Minnesota in internal 
  1.19  combustion engines in vehicles owned or operated by the state of 
  1.20  Minnesota must contain at least five percent biodiesel fuel by 
  1.21  volume. 
  1.22     Subd. 3.  [MONITOR AND REPORT.] The commissioner of 
  1.23  transportation, in consultation with the commissioners of the 
  1.24  pollution control agency, administration, and agriculture, shall 
  1.25  monitor the performance of vehicles under subdivision 2 and 
  1.26  report to the legislative committees with jurisdiction over 
  1.27  transportation, environment, and state government policy and 
  2.1   finance no later than January 1, 2004.  The report must assess 
  2.2   the operating costs, operational performance, and environmental 
  2.3   impact of the mandate under subdivision 2. 
  2.4      Sec. 2.  [239.775] [PRIVATE SECTOR BIODIESEL FUEL OIL 
  2.5   DEMONSTRATION PROJECTS.] 
  2.6      The commissioner of transportation shall consult with 
  2.7   representatives of the trucking, rail, utility, waste-hauling, 
  2.8   mining, timber, agriculture, and passenger transit industries to 
  2.9   develop protocols for biodiesel fuel demonstration projects.  
  2.10  The commissioner shall report to the legislative committees with 
  2.11  jurisdiction over transportation, environment, and state 
  2.12  government policy and finance no later than January 1, 2002, on 
  2.13  the cost, feasibility, and desirability of conducting biodiesel 
  2.14  field demonstration projects. 
  2.15     Sec. 3.  Minnesota Statutes 2000, section 296A.01, is 
  2.16  amended by adding a subdivision to read: 
  2.17     Subd. 51.  [BIODIESEL FUEL OIL.] "Biodiesel fuel oil" has 
  2.18  the meaning given in section 239.77, subdivision 1. 
  2.19     Sec. 4.  Minnesota Statutes 2000, section 296A.08, 
  2.20  subdivision 1, is amended to read: 
  2.21     Subdivision 1.  [TAX IMPOSED.] There is imposed an excise 
  2.22  tax on all special fuel at the rates specified in subdivision 
  2.23  2.  For purposes of this section, "owner or operator" means the 
  2.24  operation of licensed motor vehicles, whether loaded or empty, 
  2.25  whether for compensation or not for compensation, and whether 
  2.26  owned by or leased to the motor carrier who operates them or 
  2.27  causes them to be operated. 
  2.28     (a) For undyed diesel fuel, biodiesel fuel oil, and undyed 
  2.29  kerosene, the tax is imposed on the first licensed distributor 
  2.30  who received the product in Minnesota. 
  2.31     (b) For dyed fuel being used illegally in a licensed motor 
  2.32  vehicle, the tax is imposed on the owner or operator of the 
  2.33  motor vehicle. 
  2.34     (c) For dyed fuel used in a motor vehicle but subject to a 
  2.35  federal exemption, although no federal tax may be imposed, the 
  2.36  owner or operator of the vehicle is liable for the state tax. 
  3.1      (d) For other fuels, including jet fuel, propane, and 
  3.2   compressed natural gas, the tax is imposed on the distributor, 
  3.3   special fuel dealer, or bulk purchaser. 
  3.4      (e) Any person delivering special fuel on which the excise 
  3.5   tax has not previously been paid, into the supply tank of an 
  3.6   aircraft or a licensed motor vehicle shall report such delivery 
  3.7   and shall pay, or collect and pay the excise tax on the special 
  3.8   fuel so delivered to the commissioner. 
  3.9      Sec. 5.  [BIODIESEL SUPPLY AND DISTRIBUTION REPORT.] 
  3.10     By February 15 in 2002 and 2003, the commissioner of 
  3.11  agriculture, in consultation with the commissioners of 
  3.12  transportation and commerce, shall report to the legislative 
  3.13  committees with jurisdiction over agriculture and transportation 
  3.14  policy on (1) the production and distribution of biodiesel fuel 
  3.15  oil in Minnesota, (2) the adequacy of biodiesel fuel oil 
  3.16  supplies, and (3) the distribution system to achieve the 
  3.17  requirement in Minnesota Statutes, section 239.77.