New rules regarding. January 2012

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1 New rules regarding Biodiesel Blends in Texas January 2012

2 1. Texas Tax Policy Labeling Rules 2. TxLED Texas Low Emission Diesel 3. TERP Funding 4. State Fleets Alternative Fuel Purchasing Regulation

3 Motor Fuel Tax Policy Comptroller of Public Accounts Title34 Texas Admin. Code Exempts Biodiesel from the diesel fuel tax Volume must be disclosed on invoices, storage tanks and retail pumps, and customer receipts. Previously required reporting of volume in gallons to the nearest 10 th of one percent or 10 th of one gallon.

4 Stakeholder process included NBB, BCOT, TXOGA, Texas Petroleum Marketers, and the Convenience Store Association: Effective August 24, 2010 Rule changed to allow retail pumps and customer receipts to be rounded to the nearest 5%. Effective August 1, 2011 Rule now provides alternative labeling requirements for sales & tax reporting. Volume may be rounded to the nearest whole percentage or whole gallon.

5 Easier for all obligated parties to receive the tax exemption for biodiesel blends. Simplified reporting will lead to increased biodiesel blending in Texas. No impact on the tax collected by the State.

6 Program Began in Oct counties 2006 TCEQ Guidelines defined biodiesel as an additive Industry requested a one year delay in implementation to allow for emissions testing. Dec TCEQ approved B5 blends as an Alternative Diesel Formulation without additives. B20 blends with additives approved after March 2008.

7 Three additives were approved by TCEQ for B6-B20 blends. Blends above B20 were not allowed. Blenders are required to register as TxLED Producers with TCEQ and report all blending and additive use. TCEQ initiated Rule changes in July 2011.

8 Stakeholder process again initiated in July by NBB, BCOT, TXOGA, TX Petroleum Marketers, and the Convenience Store Association. 1. Texas Stakeholders obligated to meet RFS2 requirements. 2. California i (CARB) Regulatory Guidance Policy issued October 2011 regarding biodiesel. 3. The biodiesel NOx impact is insignificant and literally un-measureable at these levels when blended with TxLED compliant fuels.

9 Biodiesel blenders will no longer be considered TxLED producers or subject to TxLED reporting requirements. Biodiesel blends will be deemed TxLED compliant if: 1. The petroleum diesel portion of the blend is TxLED compliant; and 2. The biodiesel blendstock meets the B100 ASTM D D975 containing up to 5% of biodiesel will need to be additized as 100% diesel, unless the content of biodiesel in the blend can be labeled and recorded (ie B2).

10 Coupled with the Federal RFS2 requirements of 1 billion gallons in 2012 and 1.28 billion gallons in 2013 This change is expected to have large This change is expected to have large impacts on the biodiesel market in Texas.

11 TCEQ proposes to make other changes to the TxLED program in March 2012: They will be removing the option for new TCEQ- approved testing for Alternative Diesel Formulations. They will grandfather in all currently approved additives or formulations.

12 Funding for new diesel vehicles Funding for NOx and PM reduction devices Funding for Low Income Vehicle Repair Funding for the Clean Fleet Program 2011 SB 20 introduced d changes: Funding for Natural Gas vehicles Funding for Natural Gas Infrastructure Funding for Alternative Fuel Infrastructure

13 Rule EN - Alternative Fueling Facilities Program criteria and prioritizing for funding alternative fuel infrastructure. (Up to $500,000 or 50% of costs) TERP program comments have been submitted and a final hearing held 12/15/11. Program will be available sometime in 2012.

14 Required by Sept applies to all State Fleets with 15 or more vehicles: Fleet shall consist of 50% alternative fuel vehicles. Vehicles must use alternative fuel 80% of the time. Reporting must be available to legislature in Exceptions: If the vehicles or fuels are not available. If the department can show an incremental cost.

15 Spent the first year putting together the reporting mechanism for fleet managers. Did not report as directed in January Now promises that a report will be produced for the 2013 Biennium for the 2013 Biennium.

16 Contact: Christine Herbert NBB Texas Regulatory Liaison Good Company Assoc. 515 Congress Avenue - Suite 1510 Austin, TX

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