# Prop. Treas. Reg. § 48.6426-1: Renewable and alternative fuels; explanation of terms. Proposed regulation, not in force. REG-155087-05, 73 FR 43890, published 2008-07-29 . Interprets 26 U.S.C. § 6426. Par. 20. Sections 48.6426-1 through 48.6426-7 are added to read as follows: (a) Overview. This section provides an explanation of terms for purposes of the credits allowed by sections 34 and 6426 and the payments allowed by section 6427(e). The definition of alcohol in paragraph (c) of this section is also applicable for purposes of the credits allowed by section 40. The definitions of biodiesel and renewable diesel in paragraph (b) of this section are also applicable for purposes of the credits allowed by section 40A. (b) Explanation of terms. Agri-biodiesel means biodiesel derived solely from virgin oils. Virgin oils include virgin vegetable oils from the sources listed in section 40A(d)(2), as well as virgin oils not listed, such as palm oil and fish oil. Biodiesel produced from a feedstock that includes any recycled oils (such as recycled cooking oils) is not agri-biodiesel because it is not derived solely from virgin oils. Alcohol is defined in paragraph (c) of this section. Alcohol fuel mixture means a mixture of alcohol and taxable fuel that contains at least 0.1 percent (by volume) of taxable fuel. Alternative fuel means, except as otherwise provided in the following sentence, liquefied petroleum gas, P Series Fuels (as defined by the Secretary of Energy under 42 U.S.C. 13211(2)), compressed or liquefied natural gas, liquefied hydrogen, any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, and liquid fuel derived from biomass (as defined in section 45K(c)(3)). The term does not include ethanol, methanol, biodiesel, or renewable diesel. Alternative fuel mixture means a mixture of alternative fuel and taxable fuel that contains at least 0.1 percent (by volume) of taxable fuel. Alternative fueler means a person that— (1) Is an alternative fueler (unmixed fuel); or (2) Produces alternative fuel mixtures for sale or use in its trade or business. Alternative fueler (unmixed fuel) with respect to any alternative fuel that is sold for use or used as a fuel in a motor vehicle or motorboat is— (1) In the case of alternative fuel on which tax is imposed by section 4041(a)(2) or (3), the person liable for such tax (determined in the case of compressed natural gas after the application of § 48.4041-21 and in the case of any other alternative fuel after the application of rules similar to the rules of §§ 48.4041-3 and 48.4041-5); (2) In the case of alternative fuel that is not described in paragraph (1) or (3) of this definition, the person that would be so liable for such tax but for the application of an exemption provided by section 4041(a)(3)(B), (b), (f), (g), or (h); and (3) In the case of liquefied natural gas (LNG) that is sold in bulk for the exclusive use of a State that provides the written waiver described in § 48.6426-6(c)(4) and is delivered into a bulk supply tank that can only fuel motor vehicles and motorboats of the State, the person that sells the alternative fuel to the State. Biodiesel means biodiesel as defined in section 40A(d)(1). Biodiesel may be produced either within or outside the United States. Fuel meets the Environmental Protection Agency (EPA) registration requirements described in section 40A(d)(1)(A) if the EPA does not require the fuel to be registered. Biodiesel mixture means a mixture of biodiesel and diesel fuel that contains at least at least 0.1 percent (by volume) of diesel fuel. The kerosene in a biodiesel mixture is not included in either the overall volume of the mixture or the volume of diesel fuel in the mixture for purposes of determining whether the biodiesel mixture satisfies the 0.1 percent requirement. The diesel fuel in a biodiesel mixture may be dyed or undyed. See, however, section 6715 for the penalty for willful alteration of the strength or composition of any dye in dyed fuel and § 48.6715-1 for related rules. Commingled biodiesel means biodiesel that is held by— (1) Its producer in a storage tank at a time when the tank is used only for the storage of biodiesel and is used to store both biodiesel (other than agri-biodiesel) and agri-biodiesel; or (2) A person other than its producer in a storage tank at a time when the tank is used only for the storage of biodiesel and is used to store biodiesel to which more than a single Certificate for Biodiesel applies. Commingled renewable diesel means renewable diesel held by a person other than its producer in a storage tank at a time when the tank is used only for the storage of renewable diesel and is used to store renewable diesel to which more than a single Certificate for Renewable Diesel applies. Mixture means an alcohol fuel mixture, a biodiesel mixture, a renewable diesel mixture, or an alternative fuel mixture. Mixture producer is the person that has title to the mixture immediately after it is created. Motor vehicle has the meaning given to the term by § 48.4041-8(c). Thus, for example, the term includes forklift trucks used to carry loads at industrial plants and warehouses. Producer means the person that produces alcohol, biodiesel, or renewable diesel. Registered biodiesel producer means a biodiesel producer that is registered under section 4101 as a producer of biodiesel. Registered renewable diesel producer means a renewable diesel producer that is registered under section 4101 as a producer of renewable diesel. Renewable diesel means renewable diesel as defined in section 40A(f)(3). For this purpose, a fuel meets the Environmental Protection Agency's (EPA's) registration requirements described in section 40A(f)(3)(A) if the EPA does not require the fuel to be registered or if diesel fuel coproduced from renewable diesel and petroleum feedstocks is registered. Renewable diesel may be produced either within or outside the United States. Renewable diesel mixture is defined in paragraph (d) of this section. Reseller means, with respect to any biodiesel or renewable diesel, a person that buys and subsequently sells such fuel without using the fuel to produce a biodiesel or renewable diesel mixture. Thermal depolymerization process means, for purposes of the definition of renewable diesel in section 40A(f)(3), a process for the reduction of complex organic materials through the use of pressure and heat to decompose long chain polymers of hydrogen, oxygen, and carbon into short-chain petroleum hydrocarbons with a maximum length of around 18 carbons. A process may qualify as thermal depolymerization even if catalysts are used in the process. Use as a fuel is defined in paragraph (e) of this section. (c) Alcohol; definition —(1) In general. Except as otherwise provided in this paragraph (c), alcohol means any alcohol, including methanol and ethanol, that is not a derivative product of petroleum, natural gas, or coal (including peat). Thus, for example, the term does not include an ethanol by-product produced from a derivative of petroleum or natural gas. However, the term does include alcohol made from renewable resources, such as agricultural or forestry products. The term also includes alcohol made from urban wastes, such as methanol made from methane gas formed at waste disposal sites. (2) Source of the alcohol. Alcohol may be produced either within or outside the United States. (3) Proof and denaturants. Except for purposes of section 40, alcohol does not include alcohol with a proof of less than 190 degrees (determined without regard to added denaturants). For purposes of section 40, alcohol does not include alcohol with a proof of less than 150 degrees (determined without regard to added denaturants). If alcohol includes impurities or denaturants, the volume of alcohol is determined under the following rules: (i) Except for purposes of section 40, the volume of alcohol includes the volume of any impurities (other than added denaturants and any fuel with which the alcohol is mixed) that reduce the purity of the alcohol to not less than 190 proof (determined without regard to added denaturants and any fuel with which the alcohol is mixed). (ii) For purposes of section 40, the volume of alcohol includes the volume of any impurities (other than added denaturants and any fuel with which the alcohol is mixed) that reduce the purity of the alcohol to not less than 150 proof (determined without regard to added denaturants and any fuel with which the alcohol is mixed). (iii) The volume of alcohol includes the volume of any approved denaturants that reduce the purity of the alcohol, but only to the extent that the volume of the approved denaturants does not exceed five percent of the unadjusted volume of the alcohol. The unadjusted volume of the alcohol is determined for this purpose by including in unadjusted volume the approved denaturants and the impurities included in volume under paragraph (c)(3)(i) or (ii) of this section. If the volume of the approved denaturants exceeds five percent of the unadjusted volume of the alcohol, the excess over five percent is not considered alcohol. (iv) For purposes of this paragraph (c)(3), approved denaturants are any denaturants (including gasoline and other nonalcohol fuel denaturants) that reduce the purity of the alcohol and are added to such alcohol under a formula approved by the Secretary. (4) ETBE. Ethyl tertiary butyl ether (ETBE) and other ethers produced from alcohol are treated as alcohol. The ether is treated as alcohol of the same type as the alcohol used to produce the ether and the volume of alcohol resulting from such treatment is the volume of alcohol of such type with an energy content equal to the energy content of the ether. (d) Renewable diesel mixture; definition —(1) In general.Renewable diesel mixture means— (i) A mixture of renewable diesel and diesel fuel (other than renewable diesel) that contains at least 0.1 percent (by volume) of diesel fuel (other than renewable diesel); and (ii) Fuel produced from biomass (as defined in section 45K(c)(3)) and petroleum feedstocks using a thermal depolymerization process if such fuel has been registered by the Environmental Protection Agency (EPA) under section 211 of the Clean Air Act (42 U.S.C. 7545) and meets the requirements of ASTM D975 or D396. (2) Special rules. The kerosene in a renewable diesel mixture is not included in either the overall volume of the mixture or the volume of diesel fuel in the mixture for purposes of determining whether the renewable diesel mixture satisfies the 0.1 percent requirement. The diesel fuel in the renewable diesel mixture may be dyed or undyed. See, however, section 6715 for the penalty for willful alteration of the strength or composition of any dye in dyed fuel and § 48.6715-1 for related rules. For availability for ASTM specifications, see § 48.4081-1(d). (e) Use as a fuel; definitions —(1) A mixture is used as a fuel when it is consumed in the production of energy. Thus, for example, a mixture is used as a fuel when it is consumed in an internal combustion engine to power a vehicle or in a furnace to produce heat. However, a mixture that is destroyed in a fire or other casualty loss is not used as a fuel. (2) A mixture is sold for use as a fuel if the producer sells the fuel and has reason to believe that the mixture will be used as a fuel by either the producer's buyer or any later buyer of the mixture. (3) Alternative fuel (not in a mixture) is sold for use or used as a fuel in a motor vehicle or motorboat when the alternative fueler (unmixed fuel) with respect to the fuel delivers it into the fuel supply tank of a motor vehicle or motorboat or sells it in bulk for use by the buyer as a fuel in a motor vehicle or motorboat. (f) Other definitions. For the definitions of taxable fuel and diesel fuel, see § 48.4081-1. (g) Effective/applicability date. This section is applicable on and after the date these regulations are published as final regulations in the Federal Register .