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The Biofuels and Gasoline Tax Amendment Act

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S.M. 2003, c. 5

Bill 2, 2nd Session, 38th Legislature

The Biofuels and Gasoline Tax Amendment Act

(Assented to December 4, 2003)

WHEREAS it is in Manitoba's economic and environmental interests to encourage and support the production and use of cleaner fuels, such as ethanol and other biofuels;

THEREFORE HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

PART 1

DEFINITIONS

Definitions

1           The following definitions apply in this Act.

"denatured ethanol" means a solution that meets prescribed specifications and contains ethanol derived from biomass materials. (« éthanol dénaturé »)

"fuel supplier" means

(a) a collector under The Gasoline Tax Act; and

(b) a deputy collector under that Act who purchases gasoline for resale from a person other than a collector. (« fournisseur de carburant »)

"gasohol" means a blend of gasoline and denatured ethanol that meets prescribed specifications. (« gazohol »)

"gasohol sales mandate" means the prescribed level of gasohol sales that a fuel supplier must meet to avoid a financial penalty under section 7. (« quota des ventes de gazohol »)

"licence" means a licence issued under this Act to manufacture denatured ethanol. (« licence »)

"minister", except where it refers to the Minister of Finance, means the minister appointed by the Lieutenant Governor in Council to administer this Act. (« ministre »)

"person" includes a partnership. (« personne »)

"prescribed" means prescribed by regulation under this Act.

PART 2 ETHANOL–GASOLINE PROGRAM

Purpose

2           The purpose of this Part and the tax preference provided by The Gasoline Tax Act for the purchase of gasohol is to encourage and support the production of denatured ethanol and consumption of gasohol in Manitoba.

MANUFACTURE AND SALE OF DENATURED ETHANOL

Denatured ethanol to be sold to authorized blender

3           No person shall sell denatured ethanol for blending with gasoline in Manitoba except to a person authorized under The Gasoline Tax Act to blend it with gasoline.

Licence required to manufacture denatured ethanol

4(1)        No person shall manufacture denatured ethanol in Manitoba unless the person holds a valid licence issued by the minister.

Minister may issue licence and enter into agreements

4(2)        The minister may issue a licence authorizing a person to manufacture denatured ethanol in Manitoba.  The minister may also, with the approval of the Lieutenant Governor in Council, enter into one or more agreements with the person

(a) setting out terms and conditions that apply to the licence; and

(b) dealing with any other matter relating to the manufacture of denatured ethanol in Manitoba.

Licence not transferable

4(3)        A licence is not transferable.

Minister may suspend or cancel licence

5(1)        The minister may suspend or cancel the licence of a person who

(a) commits an offence under this Act, or under any other law relating to the person's business; or

(b) fails to comply with this Act or the regulations, with any other law relating to the person's business, or with an order or agreement made under this Act or a licence issued under it.

Minister may assess penalty

5(2)        If the holder of a licence fails to comply with the licence or an agreement made under this Act, the minister may, in addition to or instead of suspending or cancelling the licence, assess a penalty in accordance with the regulations.

Notice of proposed action

5(3)        Before suspending or cancelling a licence under subsection (1) or assessing a penalty under subsection (2), the minister must

(a) notify the holder of the licence in writing of the proposed action and the reason for it; and

(b) allow the holder at least 30 days to show why the proposed action should not be taken.

Records and reporting

6(1)        The holder of a licence must

(a) keep records and report to the minister in accordance with the regulations;

(b) make those records available for inspection, examination and audit under this Act; and

(c) if the records are not made available in Manitoba, pay to the minister the amount assessed by the minister for expenses necessarily incurred in inspecting, examining or auditing the records at the place where they are kept.

Order as to records

6(2)        If the minister considers the licence holder's records to be inadequate for the purposes of this Act, the minister may, by written order, direct the licence holder as to how they are to be kept.  The licence holder must then keep records as directed.

GASOHOL SALES MANDATE

Penalty for shortfall in gasohol sales

7(1)        A fuel supplier whose gasohol sales for a reporting year beginning after August 31, 2005, do not meet the prescribed level must pay a penalty to the Minister of Finance on the shortfall.

Calculation and payment of penalty

7(2)        The shortfall and penalty are to be calculated in accordance with the regulations.  The fuel supplier must report the shortfall and remit the penalty in accordance with the regulations.

Records and reporting

8(1)        A fuel supplier must

(a) keep records and report to the Minister of Finance in accordance with the regulations;

(b) make those records available for inspection, examination and audit under this Act; and

(c) if the records are not made available in Manitoba, pay to the Minister of Finance the amount assessed by that minister for expenses necessarily incurred in inspecting, examining or auditing the records at the place where they are kept.

Order as to records

8(2)        If the Minister of Finance considers the fuel supplier's records to be inadequate for the purposes of this Act, he or she may, by written order, direct the fuel supplier as to how they are to be kept.  The fuel supplier must then keep records as directed.

Unreported shortfall in gasohol sales

9(1)        If after an audit or inspection it appears to the director under The Gasoline Tax Act that a fuel supplier has an unreported shortfall in gasohol sales or has failed to remit a penalty under section 7, the director must notify the minister of the shortfall or failure to remit.

Notice of assessment

9(2)        When notified of the shortfall or failure to remit, the minister may issue a notice of assessment to the fuel supplier. The notice must set out

(a) the director's determination of the shortfall, which may be based on an estimate if the fuel supplier's records are incomplete;

(b) the amount of the penalty under section 7 that remains unpaid; and

(c) the interest accrued on that penalty from the day it was due until the day of the assessment.

Objection

9(3)        The fuel supplier may object to the assessment by filing a notice of objection with the minister within 60 days after receiving the notice of assessment.  The notice of objection must set out the relevant facts and the reasons for the objection.

Minister to rescind, vary or affirm assessment

9(4)        Upon receipt of a notice of objection, the minister must

(a) reconsider the assessment in light of the objection; and

(b) by written notice to the fuel supplier, affirm, set aside or vary the assessment.

Appeal to Court of Queen's Bench

9(5)        Within 60 days after receiving the notice of the minister's decision, the fuel supplier may appeal the assessment, as varied or affirmed by the minister, to the Court of Queen's Bench by filing a notice of appeal.

Notice of appeal

9(6)        The notice of appeal must set out the relevant facts and the grounds for the appeal, and the fuel supplier must serve a copy of it on the minister within seven days after filing it in the court.

Onus

9(7)        In an appeal to the court, the onus is on the fuel supplier to disprove the assessment.

Powers of court

9(8)        After hearing the evidence adduced by the fuel supplier and the minister, the court may

(a) affirm, set aside or vary the assessment; and

(b) make any order as to costs that it considers appropriate.

PART 3

ADMINISTRATION AND ENFORCEMENT

Debt

10(1)       Each of the following amounts is deemed to be a debt due to the government by the person liable to pay it:

(a) a penalty assessed under subsection 5(2);

(b) the expenses assessed under clause 6(1)(c) or 8(1)(c) in respect of the examination of records not made available for audit in Manitoba;

(c) a penalty payable under section 7 in respect of a shortfall in gasohol sales, whether or not it has been assessed under section 9.

Interest

10(2)       The debt bears interest, as prescribed by regulation under The Financial Administration Act, from the day it is due until the day it is paid.

Certificate of debt

10(3)       The Minister of Finance may issue a certificate as to the amount of the debt and the applicable rate of interest, and may file the certificate in the Court of Queen's Bench.  Once filed, it may be enforced against the person liable to pay it as a judgment of the court in favour of the Crown in right of Manitoba.

Additional powers to enforce payment of debt

10(4)       Sections 16 to 18 of The Gasoline Tax Act also apply, with necessary changes, to the collection of the debt.

Audit

11          The Minister of Finance or the minister may audit or inspect the records of a fuel supplier or manufacturer of denatured ethanol, or may cause such an audit or inspection to be made.

Inspectors

12          The Minister of Finance or the minister may designate persons as inspectors for the purposes of this Act and may issue inspector identification cards to those persons.  Every peace officer is also an inspector for the purposes of this Act.

Power of entry

13(1)       For the purposes stated in subsection (2), an inspector may at any reasonable time enter

(a) business premises occupied by a person involved

(i) in manufacturing, buying or selling denatured ethanol or blending it with gasoline, or

(ii) in storing, transporting or selling gasoline or any blend of gasoline and denatured ethanol in Manitoba; or

(b) other premises where the person's business records are kept.

Purposes of entry

13(2)       The purposes for which an inspector may enter premises under this section are as follows:

(a) to determine compliance with this Act, the regulations, and the terms or conditions of a licence or an agreement made under this Act;

(b) to inspect, audit or examine records required to be kept under this Act or the regulations, or under the terms or conditions of a licence or an agreement made under this Act;

(c) to ascertain how much denatured ethanol is on hand, and how much has been manufactured, bought or sold by the person, and from whom it was bought and to whom it was sold;

(d) to ascertain how much of any type of gasoline-based fuel is on hand, and how much has been bought or sold by the person, and from whom it was purchased and to whom it was sold.

Identification card

13(3)       An inspector who is not a peace officer must show his or her inspector identification card if requested to do so during an inspection.

Assistance to inspector

13(4)       The owner or person in charge of the premises or the relevant records must give the inspector all reasonable assistance to enable the inspector to carry out his or her duties, and must furnish the inspector with any information that the inspector reasonably requires.

Right to take samples

13(5)       An inspector may examine and take samples of fuel on any premises that the inspector is allowed to enter under this section, including fuel in any tank, container or other receptacle.

Access to digital records and copier

13(6)       In carrying out an inspection under this section, the inspector may

(a) require the owner or person in charge of the premises or the relevant records to produce for inspection a computer printout of relevant records stored in digital form; and

(b) use copying equipment at the place of inspection to make copies of records.

Inspector may remove records to make copies

13(7)       An inspector who is not able to make copies of records at the place of inspection may remove them to make copies.  The inspector must make the copies as soon as practicable and return the original records to the person or place from which they were removed.

No entry of residence without consent or warrant

14(1)       Subsection 13(1) does not permit an inspector to enter a dwelling occupied as a residence without the consent of the occupier.  But an inspector may enter such a dwelling under the authority of a warrant issued under subsection (2).

Warrant to enter residence

14(2)       Upon being satisfied by information on oath that premises occupied as a residence contain records that there are reasonable grounds to believe are relevant to a matter referred to in subsection 13(2), a justice may issue a warrant authorizing a person named in the warrant to enter the premises for the purposes set out in that subsection.

Warrant to enter and seize

15          A justice who is satisfied by information on oath that there are reasonable grounds to believe that

(a) an offence under this Act is being or has been committed; and

(b) something that affords evidence of the offence is to be found in a building, receptacle, vehicle, or place in the province;

may at any time, and when necessary on application without notice, issue a warrant authorizing an inspector and any other persons named in the warrant, with such peace officers as are required to assist, to enter and search the building, receptacle, vehicle, or place for the thing and to seize and retain it for production in any court proceedings.

Written demand for records

16(1)       The minister, the Minister of Finance, or an inspector may serve a written demand on a person, including a director, officer or employee of a corporation, requiring the person to produce for audit, inspection or examination any records in the person's control or possession that relate to a matter referred to in subsection 13(2).

Person to comply

16(2)       The person served with the demand must comply with it within the time specified in the demand.

Copies as evidence

17          A document certified by the minister, the Minister of Finance, or an inspector to be a copy of a record obtained under this Part

(a) is admissible in evidence without proof of the office or signature of the person purporting to have made the certificate; and

(b) has the same probative force as the original record.

Offences

18(1)       A person commits an offence who

(a) makes, or assents to or participates or acquiesces in the making of,

(i) a false or misleading statement in an application, report or other document provided to a public officer under this Act or the regulations, or

(ii) a false or misleading entry in or record required to be kept under this Act or the regulations;

(b) destroys, mutilates, alters or fails to keep a record required to be kept under this Act or the regulations;

(c) fails to provide a record or report as required under this Act or the regulations;

(d) obstructs or interferes with, or attempts to obstruct or interfere with, a person acting or attempting to act under the authority of this Act or the regulations;

(e) manufactures or sells denatured ethanol in contravention of this Act;

(f) falsely represents a product as denatured ethanol or gasohol;

(g) fails to pay a penalty assessed under subsection 5(2) or section 9.

Penalty

18(2)       Every person who is guilty of an offence under subsection (1) is liable on summary conviction

(a) in the case of an individual, to a fine of not more than $10,000.; and

(b) in the case of a corporation, to a fine of not more than $50,000.

Directors and officers

18(3)       If a corporation commits an offence under subsection (1), a director or officer of the corporation who authorized, permitted or acquiesced in the commission of the offence is also guilty of the offence and is liable on summary conviction to a fine of not more than $10,000., whether or not the corporation has been prosecuted or convicted.

PART 4

MISCELLANEOUS

Regulations by L.G. in C.

19(1)       The Lieutenant Governor in Council may make regulations

(a) defining "gasoline" and any other term that is used but not defined in this Act;

(b) prescribing specifications for denatured ethanol and for gasohol;

(c) respecting penalties that may be assessed under subsection 5(2);

(d) prescribing reporting and recordkeeping requirements for persons licensed to manufacture denatured ethanol and for fuel suppliers;

(e) prescribing the level of gasohol sales, as a proportion of a fuel supplier's total sales of gasoline-based fuel, that the supplier must meet to avoid a penalty under section 7;

(f) for the purposes of the gasohol sales mandate,

(i) prescribing the reporting year,

(ii) prescribing the method of calculating a shortfall in gasohol sales and the penalty payable in respect of a shortfall, and

(iii) respecting the remittance of the penalty;

(g) respecting the disclosure and use of information collected in the administration and enforcement of this Act;

(h) respecting any matter the Lieutenant Governor in Council considers necessary or desirable to carry out the purposes of this Act.

Regulation re gasohol sales mandate

19(2)       The proportion prescribed under clause (1)(e) cannot exceed 85% before September 1, 2007.

C.C.S.M. c. G40 amended

20(1)       This section amends The Gasoline Tax Act.

20(2)       Section 1 is amended

(a) in the definition "bulk gasoline", by striking out ", aircraft gasoline or gasohol";

(b) by repealing the definition "denatured alcohol";

(c) by replacing the definition "gasohol" with the following:

"gasohol" means a blend of gasoline and denatured ethanol that meets the specifications prescribed for gasohol under The Biofuels Act; (« gazohol »)

(d) by adding the following definitions:

"denatured ethanol" means a solution that contains ethanol derived from biomass materials and meets the specifications prescribed for denatured ethanol under The Biofuels Act; (« éthanol dénaturé »)

"Manitoba gasohol" means gasohol that contains no denatured ethanol manufactured outside of Manitoba; (« gazohol manitobain »)

20(3)       Subsection 2(1) is amended

(a) by striking out "or" at the end of clause (c); and

(b) by repealing clause (d).

20(4)       Subsections 2(6) and (7) are repealed.

20(5)        Subsection 2(11) is amended by adding "or clause (23)(a), as the case may be," after "subsection (1)".

20(6)        Clause 2(18)(c) is amended by adding "or clause (23)(a)" after "subsection (1)".

20(7)        Clause 2(19)(c) is amended by adding "or clause (23)(a)" after "subsection (1)".

20(8)        Clause 2(21.1)(b) is amended by adding "or clause (23)(b)" after "subsection (5)".

20(9)       Clause 2(23)(a) is amended by striking out "or gasohol".

20(10)      Subsection 2(24) is replaced with the following:

Tax reduction for Manitoba gasohol

2(24)       The tax otherwise payable under subsection (1) or clause (23)(a) on a purchase of Manitoba gasohol shall be reduced as follows:

(a) for a purchase before September 2007, by $0.02 per litre;

(b) for a purchase after August 2007 and before September 2010, by $0.015 per litre;

(c) for a purchase after August 2010 and before September 2013, by $0.01 per litre.

20(11)       Subsection 2(25) is amended by striking out everything after "date on" and substituting "which subsection (23) ceases to have effect".

20(12)      Subsection 2(26) is repealed.

20(13)      Subsection 4(1) is amended by striking out "or gasohol".

20(14)       Subsection 4(5) is replaced with the following:

Importer to have permit and keep records

4(5)        A person who imports into Manitoba denatured ethanol for blending with gasoline for sale as gasohol

(a) must obtain a permit for that purpose from the minister;

(b) must keep records and submit returns of information in accordance with the regulations; and

(c) must not sell the denatured ethanol to a person other than a collector.

20(15)       Subsection 4(6) is repealed.

20(16)       Subsection 4(8) is replaced with the following:

Application for licence or permit

4(8)        Every person desiring a licence or permit under this Act must apply for it to the minister, in a form authorized by the minister.

20(17)       Subsection 4(9) is repealed.

20(18)       Subsection 5(4) is replaced with the following:

Permit to blend non-taxable product with gasoline

5(4)        No person shall blend a product of petroleum not subject to tax under this Act with gasoline in Manitoba unless the person

(a) holds a subsisting permit issued for that purpose by the minister;

(b) is a refiner with a subsisting licence referred to in subsection 4(3); or

(c) is exempt by regulation from this requirement for a permit.

Permit to blend denatured ethanol

5(4.1)      No person shall blend denatured ethanol with gasoline in Manitoba unless

(a) the person

(i) is a collector with a subsisting permit issued for that purpose by the minister, or

(ii) is a refiner with a subsisting licence referred to in subsection 4(3),

and the blending is done in accordance with the regulations; or

(b) the person is exempt by regulation from this requirement for a permit.

20(19)      Subsections 15(1), (2), (3) and (4) are amended by striking out "or gasohol" wherever it occurs.

20(20)      Subsection 19(2) is replaced with the following:

Dealer to keep records

19(2)       Every dealer must keep records of purchases and sales of gasoline in accordance with the regulations.

20(21)       Subsection 31(1) is amended by striking out "and not under subsection 2(1)" and substituting "or clause 2(23)(b)".

20(22)      Subsection 32(2) is amended in the section heading and in the subsection by striking out "alcohol" and substituting "ethanol".

20(23)      Section 39 is amended

(a) in clause (w), by striking out everything after "records to be kept by" and substituting "importers of denatured ethanol for use in the production of gasohol";

(b) in clause (x), by striking out everything after "dealers"; and

(c) by adding the following after clause (gg):

(hh) respecting the blending of denatured ethanol with gasoline.

C.C.S.M. reference

21          This Act may be cited as The Biofuels Act and referred to as chapter B40 of the Continuing Consolidation of the Statutes of Manitoba.

Coming into force

22          This Act comes into force on a day to be fixed by proclamation.