80R7361 CBH/BEF-F
 
  By: Swinford H.B. No. 1931
 
 
 
   
 
 
A BILL TO BE ENTITLED
AN ACT
relating to the production and taxation of renewable diesel fuel.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
       SECTION 1.  The heading to Chapter 16, Agriculture Code, is
amended to read as follows:
CHAPTER 16. FUEL ETHANOL, [AND] BIODIESEL, AND RENEWABLE
DIESEL PRODUCTION INCENTIVE PROGRAM
       SECTION 2.  Section 16.001, Agriculture Code, is amended by
amending Subdivisions (1) and (6) and adding Subdivision (7) to
read as follows:
             (1)  "Account" means the fuel ethanol, [and] biodiesel,
and renewable diesel production account.
             (6)  "Producer" means a person who operates a fuel
ethanol, [or] biodiesel, or renewable diesel plant in this state.
             (7)  "Renewable diesel" means a hydrocarbon that:
                   (A)  is derived from vegetable oils, rendered
animal fats, renewable lipids, other biomass, or a combination of
those ingredients; and
                   (B)  as produced, or when blended with other
diesel fuel components, meets the requirements of:
                         (i)  ASTM D-975; or
                         (ii)  Texas Low Emission Diesel.
       SECTION 3.  Sections 16.002(a) and (b), Agriculture Code,
are amended to read as follows:
       (a)  To be eligible for a grant for fuel ethanol, [or]
biodiesel, or renewable diesel produced in a plant, a producer must
apply to the office for the registration of the plant. A producer
may apply for the registration of more than one plant.
       (b)  An application for the registration of a plant must show
to the satisfaction of the office that:
             (1)  the plant is capable of producing fuel ethanol,
[or] biodiesel, or renewable diesel;
             (2)  the producer has made a substantial investment of
resources in this state in connection with the plant; and
             (3)  the plant constitutes a permanent fixture in this
state.
       SECTION 4.  Section 16.003(a), Agriculture Code, is amended
to read as follows:
       (a)  On or before the fifth day of each month, a producer
shall report to the office on:
             (1)  the number of gallons of fuel ethanol, [or]
biodiesel, or renewable diesel produced at each registered plant
operated by the producer during the preceding month;
             (2)  the number of gallons of fuel ethanol, [or]
biodiesel, or renewable diesel imported into this state by the
producer during the preceding month;
             (3)  the number of gallons of fuel ethanol, [or]
biodiesel, or renewable diesel sold or blended with motor fuels by
the producer during the preceding month; and
             (4)  the total value of agricultural products consumed
in each registered plant operated by the producer during the
preceding month.
       SECTION 5.  The heading to Section 16.004, Agriculture Code,
is amended to read as follows:
       Sec. 16.004.  FUEL ETHANOL, [AND] BIODIESEL, AND RENEWABLE
DIESEL PRODUCTION ACCOUNT.
       SECTION 6.  Section 16.004(a), Agriculture Code, is amended
to read as follows:
       (a)  The [fuel ethanol and biodiesel production] account is
an account in the general revenue fund that may be appropriated only
to the office for the purposes of this chapter, including the making
of grants under this chapter.
       SECTION 7.  The heading to Section 16.005, Agriculture Code,
is amended to read as follows:
       Sec. 16.005.  FEE ON FUEL ETHANOL, [AND] BIODIESEL, AND
RENEWABLE DIESEL PRODUCTION.
       SECTION 8.  Sections 16.005(a), (b), and (d), Agriculture
Code, are amended to read as follows:
       (a)  The office shall impose a fee on each producer in an
amount equal to 3.2 cents for each gallon of fuel ethanol, [or]
biodiesel, or renewable diesel produced in each registered plant
operated by the producer.
       (b)  For each fiscal year, the office may not impose fees on a
producer for more than 18 million gallons of fuel ethanol, [or]
biodiesel, or renewable diesel produced at any one registered
plant.
       (d)  The office may not impose fees on a producer for fuel
ethanol, [or] biodiesel, or renewable diesel produced at a
registered plant after the 10th anniversary of the date production
from the plant begins.
       SECTION 9.  Section 16.006, Agriculture Code, is amended to
read as follows:
       Sec. 16.006.  FUEL ETHANOL, [AND] BIODIESEL, AND RENEWABLE
DIESEL GRANTS.  (a)  The office, after consultation with the
department, shall make grants to producers as an incentive for the
development of the fuel ethanol, [and] biodiesel, and renewable
diesel industry and agricultural production in this state.
       (b)  A producer is entitled to receive from the account 20
cents for each gallon of fuel ethanol, [or] biodiesel, or renewable
diesel produced in each registered plant operated by the producer
until the 10th anniversary of the date production from the plant
begins.
       (c)  For each fiscal year a producer may not receive grants
for more than 18 million gallons of fuel ethanol, [or] biodiesel, or
renewable diesel produced at any one registered plant.
       (d)  The office by rule shall provide for the distribution of
grant funds under this chapter to producers. The office shall make
grants not less often than quarterly.
       (e)  If the office determines that the amount of money
credited to the account is not sufficient to distribute the full
amount of grant funds to eligible producers as provided by this
chapter for a fiscal year, the office shall proportionately reduce
the amount of each grant for each gallon of fuel ethanol, [or]
biodiesel, or renewable diesel produced as necessary to continue
the incentive program during the remainder of the fiscal year.
       SECTION 10.  Section 162.001, Tax Code, is amended by
amending Subdivision (19) and adding Subdivision (53-a) to read as
follows:
             (19)  "Diesel fuel" means kerosene or another liquid,
or a combination of liquids blended together, that is suitable for
or used for the propulsion of diesel-powered motor vehicles. The
term includes products commonly referred to as kerosene, light
cycle oil, #1 diesel fuel, #2 diesel fuel, dyed or undyed diesel
fuel, aviation jet fuel, renewable diesel, biodiesel, distillate
fuel, cutter stock, or heating oil, but does not include gasoline,
aviation gasoline, or liquefied gas.
             (53-a)  "Renewable diesel" means a motor fuel or
mixture of motor fuels that is comprised of hydrocarbons and that
is:
                   (A)  derived wholly or partly from agricultural
products, vegetable oils, recycled greases, biomass, or animal
fats, or the wastes of those products or fats; and
                   (B)  advertised, offered for sale, suitable for
use, or used as a motor fuel in an internal combustion engine.
       SECTION 11.  Section 162.204(a), Tax Code, is amended to
read as follows:
       (a)  The tax imposed by this subchapter does not apply to:
             (1)  diesel fuel sold to the United States for its
exclusive use, provided that the exemption does not apply to diesel
fuel sold or delivered to a person operating under a contract with
the United States;
             (2)  diesel fuel sold to a public school district in
this state for the district's exclusive use;
             (3)  diesel fuel sold to a commercial transportation
company that provides public school transportation services to a
school district under Section 34.008, Education Code, and that uses
the diesel fuel only to provide those services;
             (4)  diesel fuel exported by either a licensed supplier
or a licensed exporter from this state to any other state, provided
that:
                   (A)  for diesel fuel in a situation described by
Subsection (d), the bill of lading indicates the destination state
and the supplier collects the destination state tax; or
                   (B)  for diesel fuel in a situation described by
Subsection (e), the bill of lading indicates the destination state,
the diesel fuel is subsequently exported, and the exporter is
licensed in the destination state to pay that state's tax and has an
exporter's license issued under this subchapter;
             (5)  diesel fuel moved by truck or railcar between
licensed suppliers or licensed permissive suppliers and in which
the diesel fuel removed from the first terminal comes to rest in the
second terminal, provided that the removal from the second terminal
rack is subject to the tax imposed by this subchapter;
             (6)  diesel fuel delivered or sold into a storage
facility of a licensed aviation fuel dealer from which the diesel
fuel will be delivered solely into the fuel supply tanks of aircraft
or aircraft servicing equipment, or sold from one licensed aviation
fuel dealer to another licensed aviation fuel dealer who will
deliver the diesel fuel exclusively into the fuel supply tanks of
aircraft or aircraft servicing equipment;
             (7)  diesel fuel exported to a foreign country if the
bill of lading indicates the foreign destination and the fuel is
actually exported to the foreign country;
             (8)  dyed diesel fuel sold or delivered by a supplier to
another supplier and dyed diesel fuel sold or delivered by a
supplier or distributor into the bulk storage facility of a dyed
diesel fuel bonded user or to a purchaser who provides a signed
statement as provided by Section 162.206;
             (9)  the volume of water, fuel ethanol, renewable
diesel, biodiesel, or mixtures thereof that are blended together
with taxable diesel fuel when the finished product sold or used is
clearly identified on the retail pump, storage tank, and sales
invoice as a combination of diesel fuel and water, fuel ethanol,
renewable diesel, biodiesel, or mixtures thereof;
             (10)  dyed diesel fuel sold by a supplier or permissive
supplier to a distributor, or by a distributor to another
distributor;
             (11)  dyed diesel fuel delivered by a license holder
into the fuel supply tanks of railway engines, motorboats, or
refrigeration units or other stationary equipment powered by a
separate motor from a separate fuel supply tank;
             (12)  dyed kerosene when delivered by a supplier,
distributor, or importer into a storage facility at a retail
business from which all deliveries are exclusively for heating,
cooking, lighting, or similar nonhighway use; or
             (13)  diesel fuel used by a person, other than a
political subdivision, who owns, controls, operates, or manages a
commercial motor vehicle as defined by Section 548.001,
Transportation Code, if the fuel:
                   (A)  is delivered exclusively into the fuel supply
tank of the commercial motor vehicle; and
                   (B)  is used exclusively to transport passengers
for compensation or hire between points in this state on a fixed
route or schedule.
       SECTION 12.  The change in law made by this Act does not
affect tax liability accruing before the effective date of this
Act. That liability continues in effect as if this Act had not been
enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
the liability for those taxes.
       SECTION 13.  This Act takes effect September 1, 2007.