§ 301-b. Exemptions. The following gallonage otherwise includable in
the measure of the tax imposed by section three hundred one-a of this
article on a petroleum business shall be exempt from the measure of tax
on such petroleum business:

(a) Products. (1) Kerosene sold or used by a petroleum business which
is registered under article twelve-A of this chapter as a distributor of
diesel motor fuel so long as (i) such product has not been blended or
mixed with any other product constituting diesel motor fuel or motor
fuel or a residual petroleum product and (ii) such product is not used
by the petroleum business as fuel to operate a motor vehicle or sold by
such petroleum business to a consumer for use as fuel to operate a motor
vehicle.

(2) Kero-jet fuel (i) sold by a petroleum business which is registered
under article twelve-A of this chapter as a distributor of diesel motor
fuel to a consumer for use exclusively as jet aircraft fuel or to a
petroleum business registered under such article twelve-A as a
"distributor of kero-jet fuel only" where such fixed base operator is
engaged solely in making or offering to make retail sales not in bulk of
kero-jet fuel directly into the fuel tank of an airplane for the purpose
of operating such airplane, (ii) used by a petroleum business,
registered under article twelve-A of this chapter as a distributor of
diesel motor fuel, exclusively as jet aircraft fuel, or (iii) sold at
retail not in bulk by a petroleum business registered under article
twelve-A of this chapter as a "distributor of kero-jet fuel only" where
such fuel is delivered directly into the fuel tank of a jet airplane for
use in the operation of such airplane.

(3) Aviation gasoline, meeting the specifications set forth in
American Standard Testing Material Specification D910 or Military
Specification MIL-G-5572, which is imported or caused to be imported
into this state by a petroleum business which is registered under
article twelve-A of this chapter as a distributor of motor fuel or
produced, refined, manufactured or compounded in this state by such a
petroleum business.

(4) Residual petroleum product sold by a petroleum business registered
under this article as a residual petroleum product business if such
product is sold by such petroleum business to a consumer for use
exclusively as bunker fuel for vessels or if such product is used by
such petroleum business exclusively as bunker fuel in its own vessels.

(5) Liquefied petroleum gases, such as butane, ethane or propane.

* (6) E85 imported or caused to be imported into this state or
produced, refined, manufactured or compounded in this state by a
petroleum business registered under article twelve-A of this chapter, as
a distributor of motor fuel, and then sold by such petroleum business
and delivered to a filling station and placed in a storage tank of such
filling station for such E85 to be dispensed directly into a motor
vehicle for use in the operation of such vehicle.

* NB Repealed September 1, 2026

* (7)(i) Partial B20 exemption. B20 imported or caused to be imported
into this state or produced, refined, manufactured or compounded in this
state by a petroleum business registered under article twelve-A of this
chapter, as a distributor of diesel motor fuel, and then sold by such
petroleum business.

(ii) Calculation of partial exemption. The amount of the partial
exemption under this paragraph shall be determined by multiplying the
quantity of B20 times twenty percent of the applicable taxes otherwise
imposed by this article on such fuel.

* NB Repealed September 1, 2026

* (8) CNG or hydrogen.

* NB Repealed September 1, 2026

(b) Export. (1) Motor fuel imported or caused to be imported into this
state or produced, refined, manufactured or compounded in this state by
a petroleum business registered under article twelve-A of this chapter,
as a distributor of motor fuel, where

(A) such petroleum business or the immediate purchaser of such motor
fuel exports such motor fuel from this state for sale or use outside the
state,

(B) such petroleum business or such purchaser, as the case may be,
exporting such fuel is duly registered with or licensed by the taxing
authorities of the state to which such fuel is exported as a distributor
or a dealer in the product being so exported,

(C) in connection with the exportation, such fuel was immediately
shipped to an identified facility in the state to which such fuel is
exported, and

(D) the rules and regulations of the commissioner of taxation and
finance relating to evidentiary requirements are complied with.

(2) Highway diesel motor fuel imported or caused to be imported into
this state or produced, refined, manufactured or compounded in this
state by a petroleum business registered under article twelve-A of this
chapter, as a distributor of diesel motor fuel, which is sold by such
petroleum business to a purchaser who then exports such highway diesel
motor fuel from this state for sale or use outside the state where

(A) such purchaser exporting such fuel is duly registered with or
licensed by the taxing authorities of the state to which such fuel is
exported as a distributor or a dealer in the product being so exported,

(B) in connection with the exportation, such fuel was immediately
shipped to an identified facility in the state to which such fuel is
exported, and

(C) the rules and regulations of the commissioner relating to
evidentiary requirements are complied with.

(3) For the purpose of this article, "export" from this state shall in
no event be construed to include motor fuel or diesel motor fuel taken
out of this state in the fuel tank connected with the engine of a motor
vehicle or any conveyance and consumed in the operation thereof outside
of this state.

(c) Sales to New York state and the federal government. (1) Motor fuel
imported or caused to be imported into this state or produced, refined,
manufactured or compounded in this state by a petroleum business
registered under article twelve-A of this chapter, as a distributor of
motor fuel, and then sold by such petroleum business to an organization
described in paragraph one or two of subdivision (a) of section eleven
hundred sixteen of this chapter where such motor fuel is used by such
organization for its own use or consumption.

(2) Highway diesel motor fuel imported or caused to be imported into
this state or produced, refined, manufactured or compounded by a
petroleum business registered under article twelve-A of this chapter, as
a distributor of diesel motor fuel, and then sold by such petroleum
business to an organization described in paragraph one or two of
subdivision (a) of section eleven hundred sixteen of this chapter where
such highway diesel motor fuel is used by such organization for its own
use or consumption.

(3) Non-highway Diesel motor fuel sold by a petroleum business
registered under article twelve-A of this chapter as a distributor of
diesel motor fuel to an organization described in paragraph one or two
of subdivision (a) of section eleven hundred sixteen of this chapter
where such non-highway diesel motor fuel is used by such organization
for its own use or consumption.

(4) Residual petroleum product sold by a petroleum business registered
under this article as a residual petroleum product business to an
organization described in paragraph one or two of subdivision (a) of
section eleven hundred sixteen of this chapter where such product is
used by such organization for its own use or consumption.

(d) Sales to consumers for heating purposes. (1) Total residential
heating exemption. Non-highway diesel motor fuel sold by a petroleum
business registered under article twelve-A of this chapter as a
distributor of diesel motor fuel or residual petroleum product sold by a
petroleum business registered under this article as a residual petroleum
product business to the consumer exclusively for residential heating
purposes only if such non-highway diesel motor fuel is delivered into a
storage tank which is not equipped with a hose or other apparatus by
which such fuel can be dispensed into the fuel tank of a motor vehicle
and such storage tank is attached to the heating unit burning such fuel.

(2) Partial non-residential heating exemption. (A) Non-highway diesel
motor fuel sold by a petroleum business registered under article
twelve-A of this chapter as a distributor of diesel motor fuel or
residual petroleum product sold by a petroleum business registered under
this article as a residual petroleum product business to the consumer
exclusively for heating, other than residential heating purposes only if
such non-highway diesel motor fuel is delivered into a storage tank
which is not equipped with a hose or other apparatus by which such fuel
can be dispensed into the fuel tank of a motor vehicle and such storage
tank is attached to the heating unit burning such fuel

(B) Calculation of partial exemption. The partial exemption under this
paragraph shall be determined by multiplying the quantity of non-highway
diesel motor fuel and residual petroleum product eligible for the
exemption times the sum of the then current rate of the supplemental tax
imposed by section three hundred one-j of this article and forty-six
percent of the then current rate of the tax imposed by section three
hundred one-a of this article, with respect to the specific non-highway
diesel motor fuel or residual petroleum product rate, as the case may
be.

(e) Sales of highway diesel motor fuel, qualified biodiesel,
non-highway diesel motor fuel and residual petroleum product to
registered distributors of diesel motor fuel and registered residual
petroleum product businesses.

(1) The sale of previously untaxed highway diesel motor fuel by a
person registered under article twelve-A of this chapter as a
distributor of diesel motor fuel to a person registered under such
article twelve-A as a distributor of diesel motor fuel where the highway
diesel motor fuel is either: (A) being delivered by pipeline, railcar,
barge, tanker or other vessel to a terminal, the operator of which
terminal is registered under section two hundred eighty-three-b of this
chapter, or (B) within such a terminal where it has been so delivered.
Provided, however, that the exemption set forth in this paragraph shall
not apply to any highway diesel motor fuel if it is removed from a
terminal, other than by pipeline, barge, tanker or other vessel.

(2) Qualified biodiesel and non-highway diesel motor fuel sold by a
person registered under article twelve-A of this chapter as a
distributor of diesel motor fuel to a person registered under such
article twelve-A as a distributor of diesel motor fuel where such sale
is not a retail sale or a sale that involves a delivery at a filling
station or into a repository equipped with a hose or other apparatus by
which such qualified biodiesel or non-highway diesel motor fuel can be
dispensed into the fuel tank of a motor vehicle.

(3) Residual petroleum product sold by a person registered under this
article as a residual petroleum product business to a person registered
under this article as a residual petroleum product business where such
sale is not a retail sale. Provided, however, that the commissioner may
require such documentary proof to qualify for any exemption provided in
this section as the commissioner deems appropriate, including the
expansion of any certifications required pursuant to section two hundred
eighty-five-a or two hundred eighty-five-b of this chapter to cover the
taxes imposed by this article.

(4) "Qualified biodiesel" means such term as defined in subdivision
twenty-three of section two hundred eighty-two of this chapter.

(f) Utilities. (1) Residual petroleum product and non-highway diesel
motor fuel sold to an electric corporation, as described in subdivision
(a) of section three hundred one-d of this article, which is registered
with the department as a petroleum business tax direct pay permittee,
and used by such electric corporation to fuel generators for the purpose
of manufacturing or producing electricity where such electric
corporation provides a copy of a direct pay permit authorized and issued
by the commissioner, to the petroleum business making such sale. If so
registered, such corporation shall be a taxpayer under this article and
(i) such electric corporation shall file a return monthly and pay the
applicable tax under this article, after the application of allowable
credits, on all such purchases directly to the commissioner, (ii) such
electric corporation shall be subject to all of the provisions of this
article relating to the responsibilities and liabilities of taxpayers
under this article with respect to such residual petroleum product and
non-highway diesel motor fuel.

(2) If a direct payment permit is granted, its use shall be subject to
conditions specified by the commissioner and the payment of tax on all
product purchased pursuant to the permit shall be made directly to the
commissioner by the permit holder. The commissioner may suspend or
cancel a direct payment permit for any of the grounds for suspending or
cancelling a registration pursuant to section three hundred two of this
article and the notice and hearing provisions applicable under such
section three hundred two of this article shall apply to the suspension
and cancellation of direct payment permits.

(3) A sale to an electric corporation authorized to issue direct
payment permits which furnishes a direct payment permit in proper form
shall, with respect to the seller, not be subject to tax under this
article unless such electric corporation's direct payment permit has
been suspended or cancelled by the commissioner and the commissioner has
provided petroleum businesses with information identifying persons whose
direct payment permits have been suspended or cancelled or such seller
has been provided information that the purchaser's direct payment permit
has been cancelled or suspended. Where a seller accepts a direct payment
permit from a person whose direct payment permit has been suspended or
cancelled, and the commissioner has provided petroleum businesses with
information identifying those persons whose direct payment permits have
been suspended or cancelled or where the seller has been provided
information that the purchaser's direct payment permit has been
suspended or cancelled, such sale shall be subject to tax at the full
applicable rate.

(g) Sales or uses of non-highway diesel motor fuel and residual
petroleum product for farm production. Non-highway Diesel motor fuel or
residual petroleum product sold to or used by a consumer who purchases
or uses such non-highway Diesel motor fuel or product for use or
consumption directly and exclusively in the production for sale of
tangible personal property by farming, but only if all such non-highway
Diesel motor fuel or product is delivered on the farm site and is
consumed other than on the public highways of this state (except for the
use of the public highway to reach adjacent farmlands).

(h) Exemption for certain not-for-profit organizations. There shall be
exempt from the measure of the petroleum business tax imposed by section
three hundred one-a of this article a sale or use of residual petroleum
product, or non-highway diesel motor fuel to or by an organization which
has qualified under paragraph four or five of subdivision (a) of section
eleven hundred sixteen of this chapter where such non-highway diesel
motor fuel or residual petroleum product is exclusively for use and
consumption by such organization, but only if all of such non-highway
diesel motor fuel or product is consumed other than on the public
highways of this state. Provided, however, this exemption shall in no
event apply to a sale of non-highway diesel motor fuel which involves a
delivery at a filling station or into a repository which is equipped
with a hose or other apparatus by which such non-highway Diesel motor
fuel can be dispensed into the fuel tank of a motor vehicle and all
deliveries hereunder shall be made to the premises occupied by the
qualifying organization and used by such organization in furtherance of
the exempt purposes of such organization. Provided, however, that the
commissioner shall require such documentary proof to qualify for any
exemption provided herein as the commissioner deems appropriate.
Provided, further, the distributor selling such non-highway Diesel motor
fuel and product shall separately report on its return the gallonage
sold during the reporting period exempt from tax under the provisions of
this subdivision and provide such other information with respect to such
sales as the commissioner deems appropriate to prevent evasion.

(i) Exemption for passenger commuter ferries. A use by a passenger
commuter ferry of non-highway diesel motor fuel or residual petroleum
product where such non-highway diesel motor fuel or residual petroleum
product was used and consumed by a passenger commuter ferry exclusively
in providing mass transportation service. Provided, that the
commissioner shall require such documentary proof to qualify for any
exemption provided hereunder as the commissioner deems appropriate.

(j) Exemption for tugboats and towboats. The use by a tugboat or
towboat of motor fuel, diesel motor fuel, or residual petroleum product.
Provided, that the commissioner shall require such documentary proof to
qualify for any exemption provided hereunder as the commissioner deems
appropriate.