New rules regarding Biodiesel Blends in TexasBiodiesel Blends in Texas

January 2012

1. Texas Tax Policy – Labeling Rules2. TxLED – Texas Low Emission Diesel3. TERP Fundingg4. State Fleets Alternative Fuel

Purchasing Regulationg g

Motor Fuel Tax PolicyC ll f blComptroller of Public Accounts Title34 Texas Admin. Code §3.443

Exempts Biodiesel from the diesel fuel taxVolume must be disclosed on invoices, ,storage tanks and retail pumps, and customer receipts.Previously required reporting of volume inPreviously required reporting of volume in gallons to the nearest 10th of one percent or 10th of one gallon.

Stakeholder process included NBB, BCOT, TXOGA T P t l M k t d thTXOGA , 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%to the nearest 5%.

Effective August 1, 2011 – Rule now provides alternative labeling requirements for sales & taxalternative labeling requirements for sales & tax reporting. Volume may be rounded to the nearest whole percentage or whole gallon.

Easier for all obligated parties to receive the tax exemption for biodiesel blends.

Simplified reporting will lead to increased biodiesel blending in Texasbiodiesel blending in Texas.

No impact on the tax collected by the State.No impact on the tax collected by the State.

Program Began in Oct. 2005 – 110 counties2006 – TCEQ “Guidelines” defined biodiesel as an additive.2007 – Industry requested a one year delay in implementation to allow for emissions testingimplementation to allow for emissions testing. Dec. 2007 – TCEQ approved B5 blends as an Alternative Diesel Formulation without additives.B20 blends with additives approved after March 2008.

Three additives were approved by TCEQ for B6-B20 blends.

Bl d b B20 ll dBlends above B20 were not allowed.

Blenders are required to register as “TxLEDBlenders are required to register as TxLEDProducers” with TCEQ and report all blending and additive use.and additive use.

TCEQ initiated Rule changes in July 2011.Q g J y

Stakeholder process again initiated in July by NBB, BCOT TXOGA TX P l M k d hBCOT, TXOGA , TX Petroleum Marketers, and the Convenience Store Association.

1. Texas Stakeholders obligated to meet RFS2 requirements.C lif i (CARB) R l G id P li2. California (CARB) Regulatory Guidance Policy issued October 2011 regarding biodiesel.

3. The biodiesel NOx impact is insignificant and3. The biodiesel NOx impact is insignificant and literally un-measureable at these levels when blended with TxLED compliant fuels.

Biodiesel blenders will no longer be considered TxLEDproducers or subject to TxLED reporting requirements.

Biodiesel blends will be deemed TxLED compliant if:Biodiesel blends will be deemed TxLED compliant if:1. The petroleum diesel portion of the blend is TxLED

compliant; and2 Th bi di l bl d t k t th B100 ASTM D2. The biodiesel blendstock meets the B100 ASTM D-

6751.3. 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).

Coupled with the Federal RFS2 requirements of 1 billion gallons in 2012 and 1.28 billion

ll i 2013gallons in 2013…

This change is expected to have largeThis change is expected to have large impacts on the biodiesel market in Texas.

TCEQ proposes to make other changes t th T LED i M h 2012to the TxLED program in March 2012:

They will be removing the option for new TCEQ-y g p Qapproved testing for Alternative Diesel Formulations.

They will grandfather in all currently approved additives or formulations.

Funding for new diesel vehiclesFunding for NOx and PM reduction devicesFunding for Low Income Vehicle RepairFunding for the Clean Fleet Program

2011 SB 20 i t d d h2011 – SB 20 introduced changes:Funding for Natural Gas vehiclesFunding for Natural Gas InfrastructureFunding for Natural Gas InfrastructureFunding for Alternative Fuel Infrastructure

Rule 2011-052-114-EN - Alternative Fueling Facilities Program – criteria and prioritizing for funding alternative fuel infrastructurefor 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. Programand a final hearing held 12/15/11. Program will be available sometime in 2012.

Required by Sept. 2010 – applies to all State Fleets with 15 or more vehicles:

Fleet shall consist of 50% alternative fuel vehiclesFleet shall consist of 50% alternative fuel vehicles.Vehicles must use alternative fuel 80% of the time.Reporting must be available to legislature in 2011.p g g 0

Exceptions:If the vehicles or fuels are not available.If the department can show an incremental cost.

Spent the first year putting together the reporting mechanism for fleet managers.

Did not report as directed in January 2011.

Now promises that a report will be produced for the 2013 Bienniumfor the 2013 Biennium.

Contact:

Christine HerbertNBB Texas Regulatory Liaison

Good Company AssocGood Company Assoc.515 Congress Avenue - Suite 1510

Austin, TX 78701Austin, TX 78701512-279-0752