(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
  (1) Water-based diesel fuel--a combination of water, petroleum diesel fuel, emulsifier, and seasonal additives (when necessary) into an emulsion that is suitable or used for the propulsion of a diesel-powered motor vehicle.
  (2) Fuel grade ethanol--denatured ethanol meeting the requirements of American Society for Testing and Materials (ASTM) D-4806 used for blending with motor fuel.
  (3) Biodiesel--a fuel that:
    (A) meets the registration requirements for fuel or fuel additives established by the United States Environmental Agency under Section 211 of the Federal Clean Air Act (42 U.S.C. Section 7545);
    (B) is mono-alkyl esters of long chain fatty acids derived from vegetable oils and animal fats;
    (C) meets the requirements of ASTM D-6751;
    (D) is intended for use in engines that are designed to run on conventional, petroleum-derived diesel fuel; and
    (E) is derived from agricultural products, vegetable oils, recycled greases, biomass, or animal fats or the wastes of those products or fats.
  (4) Biodiesel blend--a blend of biodiesel meeting the requirements of paragraph (3) of this subsection, with petroleum based diesel fuel.
  (5) Renewable diesel--a fuel that:
    (A) meets the registration requirements for fuel or fuel additives established by the United States Environmental Agency under Section 211 of the Federal Clean Air Act (42 U.S.C. Section 7545);
    (B) is a hydrocarbon;
    (C) meets the requirements of ASTM D-975;
    (D) is intended for use in engines that are designed to run on conventional, petroleum-derived diesel fuel; and
    (E) is derived from agricultural products, vegetable oils, recycled greases, biomass, or animal fats or the wastes of those products or fats.
  (6) Renewable diesel blend--a blend of renewable diesel fuel meeting the requirements of paragraph (5) of this subsection, with petroleum based diesel fuel. A renewable diesel blend may also be identified as a biomass-based diesel blend.
(b) Diesel fuel tax exception. The tax imposed on diesel fuel pursuant to Tax Code, §162.201, does not apply to biodiesel, renewable diesel or to the volume of water, fuel grade ethanol, biodiesel or renewable diesel that is blended with taxable petroleum based diesel fuel when the finished product meets the certification requirements of subsection (f) of this section and is clearly identified on the sales invoice, storage tank, and retail pump, as required by subsection (c), (d), or (e) of this section. The tax imposed pursuant to Tax Code, §162.201, applies to the petroleum-based component of a renewable diesel blend that is the result of co-processing a renewable diesel feedstock with a petroleum-based feedstock in the same facility or refinery processing unit. The portion of the resulting co-processed product that is exempt from the tax imposed pursuant to Tax Code, §162.201, as a renewable diesel is equal to the volume of renewable diesel used as a feedstock. The tax exemption on biodiesel, renewable diesel or to the volume of water, fuel grade ethanol, biodiesel or renewable diesel that is blended with taxable petroleum based diesel fuel provided by Tax Code, §162.204, should be documented in each transaction so that the exemption is passed to the person ultimately using or consuming the diesel fuel.
(c) Invoice documentation.
  (1) The volume of biodiesel or renewable diesel must be identified on the sales invoice on each sales transaction, and must continue to be identified on sales invoices until the product is sold to the ultimate consumer.
  (2) The volume of water, fuel grade ethanol, biodiesel, or renewable diesel that is combined with taxable petroleum based diesel fuel must be identified on the sales invoice on each sales transaction after the water, fuel grade ethanol, biodiesel, or renewable diesel is first blended with taxable petroleum based diesel fuel, and must continue to be identified on sales invoices until the blended product is sold to the ultimate consumer.
  (3) A sales invoice must:
    (A) identify a water-based diesel fuel, ethanol blended diesel fuel, biodiesel, renewable diesel, biodiesel blend, or renewable diesel blend by a commonly accepted commercial or industry name for the product being sold. For example, B100 for biodiesel or B20 for a biodiesel blend containing 80% taxable petroleum diesel fuel and 20% biodiesel;
    (B) list the volume in gallons (rounded to the nearest whole gallon) or the percentage (rounded to the nearest whole percentage; for example 1.4% becomes 1.0% and 1.5% becomes 2.0%) of the blended product that is water, fuel grade ethanol, biodiesel, or renewable diesel;
    (C) list the volume in gallons (rounded to the nearest whole gallon) or the percentage (rounded to the nearest whole percentage) of the blended product that is taxable petroleum based diesel fuel. Taxable diesel fuel includes emulsifiers and additives, but not water, fuel grade ethanol, biodiesel, or renewable diesel; and
    (D) list the basis of calculating the tax (if a taxable sale) as either $0.20 for each gallon of taxable petroleum based diesel fuel in the blended product or a ratable tax rate based on the percent of taxable petroleum based diesel in the blended product. For example, the invoice for the sale of 100 gallons that is a blend of 20% biodiesel and 80% taxable diesel fuel may list: state diesel fuel tax of $0.20 per gallon on 80 gallons taxable diesel fuel and no state tax on 20 gallons biodiesel, or state diesel fuel tax of $0.16 per gallon on 100 gallons of biodiesel blend.
(d) Notice required on storage tank and retail pump.
  (1) A notice must be posted in a conspicuous location on each storage tank and retail pump from which biodiesel or renewable diesel is stored or sold. The notice must identify the product by the common industry or commercial name. For example, B100 for biodiesel.
  (2) A notice must be posted in a conspicuous location on each storage tank located outside the bulk terminal/transfer system and retail pump from which a blend product is stored or sold from the time that the water, fuel grade ethanol, biodiesel, or renewable diesel is first blended with taxable petroleum based diesel fuel until the blended product is sold to the ultimate consumer. The notice must identify the blended product by the common industry or commercial name, and state the volume percentage (rounded to the nearest whole percentage) of water, fuel grade ethanol, biodiesel, or renewable diesel that is blended with petroleum diesel fuel. For example, "B5 - 5.0% Biodiesel", or similar wording, for a 5.0% biodiesel blend.
(e) As an alternative to subsections (c) and (d) of this section, a dealer dispensing a biodiesel blend or renewable diesel blend at a retail location to the ultimate consumer may elect to identify on the storage tank, retail pump and sales invoice the blended product sold in the following manner:
  (1) blends containing a total percentage of up to 5.0% biodiesel or renewable diesel by volume may be identified as "Contains Up To 5.0% Biodiesel or Renewable Diesel" or similar wording. Each component that is biodiesel or renewable diesel is added together to determine the total percentage. The sales invoice must list the basis for collecting the state tax as though the blended product sold is a 5.0% blend. For example, a blended product that contains 2.0% biodiesel and 2.0% renewable diesel has a total blend percentage of 4.0% and may be identified on the retail pump as "Contains Up To 5.0% Biodiesel or Renewable Diesel", or similar wording, and identified on the sales invoice with the statement "Contains up to 5.0% biodiesel or renewable diesel - state diesel tax $0.19 per gallon", or similar wording;
  (2) blends containing a total percentage greater than 5.0% biodiesel or renewable diesel by volume but no more than 10% biodiesel or renewable diesel by volume may be identified as "Contains Up To 10% Biodiesel or Renewable Diesel" or similar wording. Each component that is biodiesel and renewable diesel is added together to determine the total percentage. The sales invoice must list the basis for collecting the state tax as though the blended product sold is a 10% blend. For example, a blend that contains 2.0% biodiesel and 5.0% renewable diesel has a total blend of 7.0% and may be identified on the retail pump as "Contains Up To 10% Biodiesel or Renewable Diesel", or similar wording, and identified on the sales invoice with the statement "Contains up to 10% biodiesel or renewable diesel - state diesel tax $0.18 per gallon", or similar wording;
Cont'd...