SB-1079, As Passed Senate, April 20, 2006

SUBSTITUTE FOR

SENATE BILL NO. 1079

     A bill to amend 1984 PA 44, entitled

"Motor fuels quality act,"

by amending sections 2, 3, 4a, 5, 6, and 7 (MCL 290.642, 290.643,

290.644a, 290.645, 290.646, and 290.647), sections 2 and 7 as

amended by 1993 PA 236, sections 3 and 5 as amended by 2002 PA 13,

section 4a as amended by 2002 PA 425, and section 6 as amended by

2004 PA 278.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 2. As used in this act:

     (a) "Additive" means any substance in gasoline other than

gasoline but does not include approved blending components, other

than lead, sodium, and phosphate components, introduced at

refineries or terminals as octane or product quality enhancers in

quantities of less than 1% of volume.

     (b) "American society for testing and materials" means an

international nonprofit scientific and educational society devoted

to the promotion of knowledge of the materials of engineering and

the standardization of specification and methods of testing.

     (c) "Antiknock index" or "AKI" means an index number arrived

at by adding the motor octane number and the research octane

number, then dividing by 2.

(d) "Biodiesel" means a fuel composed of mono-alkyl esters of

long chain fatty acids derived from vegetable oils or animal fats,

and, in accordance with standards specified by the American society

for testing and materials, designated B100, and meeting the

requirements of D-6751, as approved by the department.

     (e) "Biodiesel blend" means a fuel comprised of a blend of

biodiesel fuel with petroleum-based diesel fuel, suitable for use

as a fuel in a compression-ignition internal combustion diesel

engine.

(f)  (d)  "Blender" means a person who as an individual or

through his or her agent adds an oxygenate to a gasoline.

(g)  (e)  "Bulk purchaser-end user" means a person who is an

ultimate consumer of gasoline and receives delivery of gasoline

into a storage tank of at least 550-gallon capacity substantially

under his or her control.

(h)  (f)  "CARB" means the California air resources board.

(i)  (g)  "Delivery vessel" means a tank truck, tank equipped

trailer, or a similar vessel used for the delivery of gasoline to a

dispensing facility.

(j)  (h)  "Department" means the department of agriculture.

(k) "Diesel fuel" means any liquid other than gasoline that is

suitable for use as a fuel or a component of a fuel in a

compression-ignition internal combustion diesel engine.

(l)  (i)  "Director" means the director of the department of

agriculture or his or her authorized representative.

(m)  (j)  "Dispensing facility" means a site used for vehicle

gasoline refueling that is located in an area of this state that

has been designated as ozone nonattainment and classified as

moderate, serious, severe, or extreme by the E.P.A. pursuant to 40

C.F.R. CFR section 81.323, November 6, 1991. Dispensing facility

does not include a facility used exclusively for the refueling of

aircraft, watercraft, or vehicles that are designed for

agricultural purposes and used exclusively in agricultural

operations.

(n)  (k)  "Dispensing unit" means a device designed for the

delivery of gasoline in which 1 nozzle equates to 1 dispensing

unit.

(o)  (l)  "Distributor" means a person who purchases,

transports, or stores or causes the transportation or storage of

gasoline at any point between a gasoline refinery and a retail

outlet or bulk purchaser-end user facility.

(p)  (m)  "E.P.A." means the United States environmental

protection agency.

(q)  (n)  "Gasoline" means  any fuel sold in this state that

is  a volatile mixture of liquid hydrocarbons generally containing

small amount of additives suitable for use in spark-ignition

internal combustion engines, and commonly or commercially known or

sold as gasoline.

     (r) "Hydrogen fuel" means a substance containing the chemical

formula H₂ that exists as a colorless, odorless, and highly

flammable gas except at low cryogenic temperatures or when highly

compressed that is gaseous or liquefied and suitable for use in a

fuel cell or hydrogen fuel vehicle.

(s)  (o)  "Leak" means liquid or vapor loss from the gasoline

dispensing system or stage I or stage II vapor-recovery system as

determined by visual inspection or functional testing.

(t)  (p)  "Modification" means any change, removal, or

addition, other than an identical replacement, of any component

contained within a stage I or stage II vapor-recovery system. The

resultant modification must constitute an approved vapor-recovery

system.

(u)  (q)  "Motor octane number" or "MON" means a knock

characteristic of gasoline determined by use of standard procedures

on a motor engine.

(v)  (r)  "Operator" means a person who owns, leases,

operates, manages, supervises, or controls, directly or indirectly,

a gasoline-dispensing facility.

(w)  (s)  "Oxygenate" means an oxygen-containing, ashless,

organic compound, such as alcohol or ether, that may be used as

fuel or fuel supplement.

(x)  (t)  "Person" means an individual, sole proprietorship,

partnership, corporation, association, or other legal entity.

(y)  (u)  "Refiner" means a person who owns, leases, operates,

controls, or supervises a refinery.

(z)  (v)  "Refinery" means a plant at which gasoline or diesel

fuel is produced.

(aa)  (w)  "Research octane number" or "RON" means a knock

characteristic of gasoline determined by use of standard procedures

on a research engine.

(bb)  (x)  "Retail dealer" means a person who owns, leases,

operates, controls, or supervises a retail outlet.

(cc)  (y)  "Retail outlet" means an establishment at which

gasoline  motor fuel is sold or offered for sale to the public.

(dd)  (z)  "Rule" means a rule promulgated pursuant to the

administrative procedures act of 1969,  Act No. 306 of the Public

Acts of 1969, being sections 24.201 to 24.328 of the Michigan

Compiled Laws 1969 PA 306, MCL 24.201 to 24.328.

(ee)  (aa)  "Stage I vapor-recovery system" means a vapor

tight collection system that is approved by the department and is

designed to capture the gasoline vapors displaced during delivery

into a stationary storage tank and to return not less than 90% of

the displaced vapors to the delivery vessel.

(ff)  (bb)  "Stage II vapor-recovery system" means a gasoline-

dispensing system approved by the department that prevents 95% or

more of the volatile organic compounds from being emitted during

gasoline refueling.

     Sec. 3. (1) The director shall establish standards pursuant to

this act to ensure the purity and quality of gasoline and diesel

fuel sold or offered for sale in this state.

     (2) The director shall establish standards for the amount and

type of additives allowed to be included in gasoline and diesel

fuel.

     (3) The director shall establish standards for the grading of

gasoline, including, but not limited to, subregular with a minimum

85 AKI, regular with a minimum 87 AKI and a minimum 82 MON,

midgrade 88 with a minimum 88 AKI and a minimum 82 MON, midgrade 89

with a minimum 89 AKI and a minimum 83 MON, premium with a minimum

90 AKI, premium 91 with a minimum 91 AKI, premium 92 with a minimum

92 AKI, premium 93 with a minimum 93 AKI, and premium 94 with a

minimum 94 AKI.

     (4) The director shall establish standards for Reid vapor

pressure as specified by the American society for testing and

materials, except as otherwise required to conform to federal or

state law. The director shall establish the Reid vapor pressure as

9.0 pounds per square inch (psi) for retail outlets during the

period beginning June 1 through September 15 of each year, except

for dispensing facilities where the director shall establish the

Reid vapor pressure as 7.8 psi in the year 1996 and thereafter. As

used in this subsection and section 10d, "Reid vapor pressure"

means the vapor pressure of gasoline or gasoline oxygenate blend as

determined by ASTM test method D323, standard test method for vapor

pressure of petroleum products (Reid method) or test method D4953,

standard test method for vapor pressure of gasoline and gasoline

oxygenate blends (dry method).

     (5) In establishing additive and grading standards the

director shall adopt the latest standards for gasoline established

by the American society for testing and materials and shall adopt

the latest standards for gasoline established by federal law or

regulation. The standards established by the director shall not

prohibit a gasoline blend that is permitted by a valid waiver

granted by the United States environmental protection agency

pursuant to the fuel or fuel additive waiver in section 211(f)(4)

of part A of title II of the clean air act,  chapter 360, 81 Stat.

502,  42  U.S.C. USC 7545, and the ethanol waiver of 1.0 psi in

section 211(h)(4) of part A of title II of the clean air act,

chapter 360, 81 Stat. 502,  42  U.S.C. USC 7545, if the gasoline

blend meets all of the conditions set forth in the waiver.

Beginning June 1, 2003, the director shall not permit the use of

the additive methyl tertiary butyl ether (MTBE) in this state.  The

director, in consultation with the department of environmental

quality, shall determine if the additive is likely to cause harmful

effects on the environment or public health within the state. By

June 1, 2002, the director, in consultation with the director of

the department of environmental quality, shall review the status of

the use of MTBE in this state. The review shall include the

following:

     (a) The amount of the additive methyl tertiary butyl ether

(MTBE) currently in use in gasoline in this state.

     (b) An estimate of the amount of MTBE that is imported in

gasoline transported into this state from other states or

countries.

     (c) Recommendations as to whether the June 1, 2003 prohibition

can be achieved and, if not, determine a more feasible date.

     (d) Any other information considered appropriate.

(6) The director shall establish standards pursuant to this

act to ensure the purity and quality of diesel fuel sold or offered

for sale in this state.

     (7) Any firm offering hydrogen fuel for sale in this state

shall first register with and obtain approval from the department.

Registration shall include a complete list of the fuel

specifications the product is to meet and the sites where the

product is offered for sale to the general public.

(8)  (6)  Standards established pursuant to this section shall

be by rules promulgated pursuant to the administrative procedures

act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

     Sec. 4a. (1) A storage tank at a retail outlet shall be

periodically tested by the retail dealer to insure that the tank

does not have water or water-alcohol at the bottom of that tank in

an amount greater than 2 inches. If there is more than 2 inches of

water or water-alcohol at the bottom of the storage tank, gasoline,

diesel fuel, biodiesel, or biodiesel blend shall not be sold to a

consumer from that tank until the water or water-alcohol level is

reduced to a level of less than 2 inches.

     (2) Adequate testing supplies, as determined by the

department, shall be maintained at the retail outlet and shall also

be made available to the department to determine the water or

water-alcohol level in the storage tank.

     Sec. 5. (1) Except as provided by federal law or regulation,

in the manufacture of gasoline, diesel fuel, or hydrogen fuel at

any refinery in this state, a refiner shall not manufacture

gasoline, diesel fuel, or hydrogen fuel at a refinery in this state

unless the gasoline, diesel fuel, or hydrogen fuel meets the

requirements in section 3. Except as provided by federal law or

regulation, a blender shall not blend gasoline unless the finished

blend meets the requirements in section 3.

     (2) Except as provided by federal law or regulation, a

distributor shall not sell or transfer to any distributor, retail

dealer, or bulk purchaser-end user any gasoline, diesel fuel,

biodiesel, biodiesel blend, or hydrogen fuel unless that gasoline,

diesel fuel, biodiesel, biodiesel blend, or hydrogen fuel meets the

requirements in section 3 and is suitable for its intended purpose.

     (3) A carrier or an employee or agent of a carrier, whether

operating under contract or tariff, shall not cause gasoline,

diesel fuel, biodiesel, biodiesel blend, or hydrogen fuel tendered

to the carrier for shipment or transfer to another carrier,

distributor, or retail dealer to fail to comply, at the time of

delivery, with the requirements in section 3.

     (4) A person shall not knowingly sell, dispense, or offer for

sale gasoline, diesel fuel, biodiesel, biodiesel blend, or hydrogen

fuel unless that gasoline, diesel fuel, biodiesel, biodiesel blend,

or hydrogen fuel meets the requirements in section 3.

     (5) A refiner or distributor shall not transfer, sell,

dispense, or offer gasoline, diesel fuel, biodiesel, biodiesel

blend, or hydrogen fuel for sale in this state to a distributor

unless the refiner or distributor indicates on each bill, invoice,

or other instrument evidencing a delivery of gasoline, the name of

the wholesale distributor who received delivery of the gasoline,

diesel fuel, biodiesel, biodiesel blend, or hydrogen fuel.

     (6) A distributor or refiner shall not transfer, sell,

dispense, or offer gasoline, diesel fuel, biodiesel, biodiesel

blend, or hydrogen fuel for sale in this state to a retail dealer

unless the  distributor indicates on each bill, invoice, or other

instrument evidencing a delivery of gasoline, the name and license

number issued  retail dealer has a valid retail outlet license

pursuant to this act.  , of the retail dealer who received delivery

of the gasoline.

     (7) A bill, invoice, or other instrument evidencing a delivery

of gasoline diesel fuel, biodiesel, biodiesel blend, or hydrogen

fuel issued by a refiner or distributor for deliveries of gasoline

to purchasers who are not required to hold a license issued

pursuant to the motor fuel tax act, 2000 PA 403, MCL 207.1001 to

207.1170, or this act shall clearly indicate the name and address

and other information necessary to identify the purchaser of the

gasoline, diesel fuel, biodiesel, biodiesel blend, or hydrogen

fuel.

     (8) A bill, invoice, or other instrument evidencing a delivery

of gasoline required by subsection (5), (6), or (7) shall include a

guarantee that the gasoline delivered meets the requirements in

section 3 and shall indicate the concentration range of alcohol in

the gasoline, except for alcohols or ethers that have a molecular

weight greater than ethanol and are not mixed with methanol or

ethanol, or both, and shall indicate the possible presence, without

regard to concentration range, of any alcohols or ethers that have

a molecular weight greater than ethanol and are not mixed with

methanol or ethanol, or both.

     (9) A refiner, distributor, bulk purchaser-end user, or retail

dealer shall not transfer, sell, dispense, or offer gasoline,

diesel fuel, biodiesel, or biodiesel blend for sale unless that

gasoline, diesel fuel, biodiesel, or biodiesel blend is visibly

free of undissolved water, sediments, and other suspended matter

and the gasoline is clear and bright at an ambient temperature or

70 degrees Fahrenheit, whichever is greater.

     (10) A person who violates this section or rules promulgated

under this section is liable for a civil fine not to exceed

$10,000.00 for each day of the continuance of the violation. A

civil fine ordered pursuant to this section shall be submitted to

the state treasurer for deposit in the gasoline inspection and

testing fund created by section 8.

     Sec. 6. (1) Before a distributor or retail dealer engages in

transferring, selling, dispensing, or offering for sale gasoline,

diesel fuel, biodiesel, biodiesel blend, or hydrogen fuel in this

state, the distributor or retail dealer shall obtain a license from

the department for each retail outlet operated by that person. In

administering the licensing under this section, the department may

attempt to coordinate the licensing with the licensing applicable

to gasoline administered by the department of treasury pursuant to

the motor fuel tax act, 2000 PA 403, MCL 207.1001 to 207.1170, and

the general sales tax act, 1933 PA 167, MCL 205.51 to 205.78.

     (2) A license expires annually on November 30 unless renewed

before December 1 of each year or unless suspended, denied, or

revoked by the department.

     (3) The fee for a license is $15.00 for each year or portion

of a year through July 31, 2002, $50.00 for each year or portion of

a year through July 31, 2003, $75.00 for each year or portion of a

year through July 31, 2004, and $100.00 beginning August 1, 2004

and each year or portion of a year thereafter. A license shall not

be issued or renewed until the fee and any administrative fines

issued under section 10a have been paid. A hearing is not required

before the refusal to issue or renew a license under this

subsection. Fees collected shall be deposited in the gasoline

inspection and testing fund.

     (4) An application for a license shall be made to the

department upon a form furnished by the department. The completed

form shall contain the information requested by the department and

shall be accompanied by the fee specified in subsection (3).

     (5) The director may suspend, deny, or revoke a license issued

pursuant to this act for failure to comply with the requirements

provided for in section 3, for failure to provide notice as

provided in section 4, for violating section 31 of the weights and

measures act of 1964, 1964 PA 283, MCL 290.631, if that violation

occurs at any of the licensee's retail outlets and involves the

transferring, selling, dispensing, or the offering for sale of

gasoline in this state, or for otherwise failing to comply with

this act or a rule promulgated under this act or an order issued

under this act.

     (6) This section does not apply until June 29, 1985.

     (7) If a person licensed under this act is convicted of a

willful violation under section 31 of the weights and measures act

of 1964, 1964 PA 283, MCL 290.631, any license issued pursuant to

this act shall be revoked for 2 years.

     (8) A suspension, revocation, or denial of a license of a

person who is an individual shall result in the suspension,

revocation, or denial of any other license held or applied for by

that individual under this act. The license of a corporation,

partnership, or other association shall be suspended when a license

or license application of a partner, trustee, director, or officer,

member, or a person exercising control of the corporation,

partnership, or other association is suspended, revoked, or denied.

The suspension shall remain in force until the director determines

that the disability created by the suspension, revocation, or

denial has been removed.

     (9) Except as otherwise provided in subsection (3), beginning

on  the effective date of the amendatory act that added this

subsection  July 23, 2004, the department shall issue an initial or

renewal license not later than 120 days after the applicant files a

completed application. If the application is considered incomplete

by the department, the department shall notify the applicant in

writing or make notification electronically available within 40

days after receipt of the incomplete application, describing the

deficiency and requesting the additional information. The 120-day

period is tolled upon notification by the department of a

deficiency until the date all of the information requested during

the 40-day period is received by the department. Requests for new

or additional information by the department that fall outside the

40-day period do not toll the 120-day period. The determination of

the completeness of an application does not operate as an approval

of the application for the license and does not confer eligibility

of an applicant determined otherwise ineligible for issuance of a

license.

     (10) If the department does not issue or deny a license within

120 days after the receipt of a completed application, the

department shall return the license fee and shall reduce the

license fee for the applicant's next renewal application, if any,

by 15%. The failure to issue a license within the time required

under this subsection does not allow the department to otherwise

delay the processing of the application, and that application, upon

completion, shall be placed in sequence with other completed

applications received at that same time. The department shall not

discriminate against an applicant in the processing of an

application based on the fact that the application fee was refunded

or discounted under this subsection.

     (11) Beginning October 1, 2005, the director of the department

shall submit a report by December 1 of each year to the standing

committees and appropriations subcommittees of the senate and house

of representatives concerned with motor fuel quality issues. The

director shall include all of the following information in the

report concerning the preceding fiscal year:

     (a) The number of initial and renewal applications the

department received and completed within the 120-day time period

described in subsection (9).

     (b) The number of applications denied.

     (c) The number of applications not issued within the 120-day

period and the amount of money returned to licensees and

registrants under subsection (10).

     (12) Before a blender engages in the transferring, selling,

dispensing, or offering for sale blended gasoline in this state,

the blender shall register the finished product with the department

and provide to the department test results as the department

considers necessary. If the product does not comply with the

requirements of section 3, the blender shall provide the department

with a written list of the business names and addresses to whom the

blended product is sold.

     (13) As used in this section, "completed application" means an

application complete on its face and submitted with any applicable

licensing fees as well as any other information, records, approval,

security, or similar item required by law or rule from a local unit

of government, a federal agency, or a private entity but not from

another department or agency of the state of Michigan.

     Sec. 7. (1) The director shall establish a gasoline, diesel

fuel, biodiesel, and biodiesel blend inspection, investigation, and

testing program. The purpose of the inspection, investigation, and

testing program is to determine whether gasoline, diesel fuel,

biodiesel, and biodiesel blend transferred, sold, dispensed, or

offered for sale in this state  meets  meet the requirements

provided in this act, to sample, to investigate allegations of

fraud, to inspect and investigate violations of the weights and

measures act,  of 1964, Act No. 283 of the Public Acts of 1964,

being sections 290.601 to 290.634 of the Michigan Compiled Laws

1964 PA 283, MCL 290.601 to 290.634, and whether notice required by

section 4 is provided. The program shall provide for a regular

system of monitoring gasoline, diesel fuel, biodiesel, and

biodiesel blend sold or offered for sale in this state. The

department shall implement the inspection, investigation, and

testing program as provided in subsection (8). The expenses of

operating the program shall be paid from money in the gasoline

inspection and testing fund created in section 8.

     (2) As part of the inspection and testing program the director

shall maintain a 24-hour toll free consumer hot line to receive

consumer complaints regarding vapor-recovery systems and the purity

and quality of gasoline sold or offered for sale in this state.

     (3) If the director has reason to believe a violation of

section 5 or rules promulgated under section 5 has occurred, the

director may require a refiner, distributor, storage facility,

blender, bulk purchaser-end user, or retail dealer to provide to

the department the original documents pertaining to the receipt,

transfer, delivery, storage, or sale of gasoline, diesel fuel,

biodiesel, biodiesel blend, or hydrogen fuel and to allow the

original documents to remain in the possession of the department.

If original documents remain in the possession of the department

and the documents are necessary for conducting business, the

department shall provide copies of the documents to the refiner,

distributor, blender, bulk purchaser-end user, or retail dealer

upon request. A refiner, distributor, bulk purchaser-end user,

blender, or retail dealer shall preserve information regarding the

receipt, transfer, delivery, storage, or sale of gasoline,

including loading tickets, bills of lading, drop tickets, meter

tickets, invoices, sales reports, and billings, for 3 years. A

retail outlet shall retain on its premises the original drop

tickets, bills of lading, and invoices for 1 month before transfer

to another location.  unless the storage location is easily

accessible from the retail outlet and the original records are

delivered to the retail outlet for receipt by the department within

24 hours after a written request for the records has been given to

the retail outlet.

     (4) The director, upon presentation of appropriate

credentials, may do all of the following:

     (a) Enter upon or through any retail outlet, bulk purchaser-

end user facility, dispensing facility, or the premises or property

of any refiner or distributor.

     (b) Make inspections, take samples, and conduct tests during

any hours the business is operating.

     (c) Examine records during normal business hours to determine

compliance with this act.

     (5) In addition to the powers provided in this act, the

director has all the powers to enforce this act that the director

has under the weights and measures act,  of 1964, Act No. 283 of

the Public Acts of 1964, being sections 290.601 to 290.634 of the

Michigan Compiled Laws  1964 PA 283, MCL 290.601 to 290.634.

     (6) The director may transmit any information obtained

pursuant to the inspection and testing program to any other agency

of this state if the information will assist the other agency to

carry out any of the agency's regulatory functions or

responsibilities related to the transfer, sale, dispensing, or

offering of gasoline for sale in this state.

     (7) The director may promulgate rules for the purpose of

implementing and enforcing this act.

     (8) The department shall implement the inspection and testing

program provided in subsection (1) as follows:

     (a) Inspection and testing for standards regarding lead,

alcohol, free water, and sediments within 90 days after the

effective date of this act.

     (b) Inspection and testing for any other standards by March

29, 1987.