What did the 2011 Kansas Legislature change for biodiesel and ethanol fuel producer incentives?

Plain-English summary

Kansas Notice 11-02 (June 24, 2011) highlights two motor fuel bills enacted by the 2011 Legislature.

House Bill 2014 (effective June 9, 2011):

• Section 29(a) -- transfers $124,265 from the Kansas qualified biodiesel fuel producer incentive fund to the state economic development initiatives fund.
• Section 188 -- continues the Kansas Qualified Biodiesel Fuel Producer Incentive at $50,000 per quarter, deposited on July 1 and October 1, 2011 and January 1 and April 1, 2012.
• Section 189 -- continues to "not" fund the Kansas Retail Dealers Incentive for renewable fuels and biodiesel through June 30, 2013.

House Bill 2122 (effective July 1, 2011):

• Section 2(2)-(3) -- reduces the Kansas Qualified Agricultural Ethyl Alcohol Producer Incentive to $.035 per gallon sold.
• Section 2(4) -- for a producer who commences cellulosic alcohol production on or after July 1, 2012, the amount is $.035 per gallon sold to an alcohol blender if the producer has sold at least 5,000,000 gallons; no producer may receive the incentive for more than 15,000,000 gallons, and it does not apply to producers making alcohol from grain.
• Section 3 -- the incentive expires July 1, 2018.

The notice states it highlights only portions of the bills and points readers to the Kansas Legislature's website for full text.

What this means for you

Biodiesel producers

• The producer incentive continues at $50,000 per quarter on the listed 2011-2012 deposit dates.

Renewable-fuel retailers

• The Kansas Retail Dealers Incentive remained unfunded through June 30, 2013.

Ethanol and cellulosic alcohol producers

• The agricultural ethyl alcohol producer incentive is reduced to $.035 per gallon; cellulosic producers starting on or after July 1, 2012 can earn $.035 per gallon subject to the 5,000,000-gallon threshold and 15,000,000-gallon cap, and the incentive expires July 1, 2018.

Common questions

Is the biodiesel producer incentive still funded? Yes -- $50,000 per quarter on the July 1 and October 1, 2011 and January 1 and April 1, 2012 dates.

Is the retail dealers incentive funded? No -- HB 2014 continued to leave it unfunded through June 30, 2013.

What is the ethanol producer incentive now? $.035 per gallon sold, reduced by HB 2122.

When does the alcohol producer incentive expire? July 1, 2018.

Citations and references

• House Bill 2014 (2011), Sections 29(a), 188, 189 -- biodiesel fund transfer, continued producer incentive, and still-unfunded retail dealers incentive through June 30, 2013.
• House Bill 2122 (2011), Sections 2 and 3 -- reduced agricultural ethyl alcohol producer incentive ($.035/gallon), cellulosic alcohol terms, and July 1, 2018 expiration.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 11-02

Original ruling text

Division of Taxation phone: 785-368-8222
915 SW Harrison St. fax: 785-296-4993
Topeka, KS 66612 www.ksrevenue.org

Nick Jordan, Secretary Sam Brownback, Governor
Steve Stotts, Director of Taxation

                                                NOTICE 11-02

                                   2011 Motor Fuel Legislative Update

The following Bills were enacted by the 2011 Legislature:

House Bill 2014
This bill was effective June 9, 2011, upon publication in the Kansas Register. A summarization of the bill is as
follows:

Section 29 (a) indicates that the director of accounts and reports shall transfer $124,265 from the Kansas qualified
biodiesel fuel producer incentive fund of the department of revenue to the state economic development initiatives fund.

Section 188 continues to fund the Kansas Qualified Biodiesel Fuel Producer Incentive. $50,000 per quarter will
continue to be deposited on July 1 and October 1, 2011 and January 1 and April 1, 2012.

Section 189 continues to 'not' fund the Kansas Retail Dealers Incentive for renewable fuels and biodiesel through June
30, 2013.

House Bill 2122
This bill is effective July 1, 2011. A summarization of the bill is as follows:

Section 2 (2) and (3) reduces the Kansas Qualified Agricultural Ethyl Alcohol Producer Incentive to $.035 per gallon sold.

Section 2 (4) indicates that any producer who commences cellulosic alcohol production on or after July 1, 2012, the
amount shall be $.035 for each gallon of agricultural ethyl alcohol sold by such producer to an alcohol blender, if such
producer has sold at least 5,000,000 gallons. No producer shall receive the production incentive pursuant to this subsection
for more than 15,000,000 gallons sold. This provision shall not apply to producers who commence alcohol production
from grain.

Section 3 indicates the incentive shall expire on July 1, 2018.

This notice highlights only portions of the bills. For a detailed, full text copy of each bill, please visit the Kansas
Legislature's website at www.kslegislature.org.

                                         TAXPAYER ASSISTANCE

To obtain additional copies of this or any other notice call the Kansas Department of Revenue's voice mail forms
request line at 785-296-4937 or download them from our web site: www.ksrevenue.org. If you have any questions
about this notice, please contact our Motor Fuel Tax Unit.

                                       Motor Fuel Tax Correspondence
                                        Docking State Office Building
                                            915 SW Harrison St.
                                          Topeka, KS 66625-8000
                                            Tele: (785) 368-8222
                                             Fax: (785) 296-4993

Notice 11-02
June 24, 2011