Montana Incentives and Laws

Last Updated June 2009

Montana is the home of the Yellowstone-Teton Clean Energy Coalition (www.yellowstonetetoncleanenergy.org). Coordinator contact information is listed in the Points of Contact section.

State Incentives

Renewable Energy Property Tax Incentive

Property tax rate abatements are available for new investments in facilities that manufacture, research, or develop products related to biodiesel, biomass, biogas, coal-to-liquid fuels, ethanol, pipelines carrying "clean" products, renewable energy manufacturing plants, and research and development equipment for renewable energy. These incentives last for 15 years after facility start-up or the related equipment is purchased. The total time of the qualifying period may not exceed 19 years. (Reference Montana Code Annotated 15-24-3111)

Ethanol Production Incentive

Montana based ethanol producers are entitled to a tax incentive of $0.20 per gallon of ethanol solely produced from Montana agricultural products, or if the ethanol was produced from non-Montana agricultural products when Montana products were unavailable. The amount of the tax incentive for each gallon is reduced proportionately, based upon the amount of agricultural or wood products not produced in Montana that are used in the production of the ethanol. The tax incentive is available to a facility for the first six years from the date that production begins. Ethanol eligible for the incentive must be blended with gasoline for sale as ethanol-blended gasoline in Montana, exported from Montana for sale as ethanol-blended gasoline, or used in the production of ethyl tertiary butyl ether for use in reformulated gasoline. An ethanol distributor is not eligible to receive the tax incentive unless at least 20% of Montana product is used to produce ethanol at the facility in the first year of production, 25% of Montana product is used the second year, and the amount of Montana product used each year thereafter must increase by 10% annually. (Reference Montana Code Annotated 15-70-522)

Biodiesel Blending Tax Credit

A tax credit is available to businesses and individuals for up to 15% of the cost of qualified equipment used for storing or blending biodiesel with petroleum diesel for sale. The amount of the credit may not exceed $52,500 for a special fuel distributor and $7,500 for an owner or operator of a motor fuel outlet. The credit can be claimed in the two tax years before the year in which the taxpayer begins blending biodiesel for fuel or sale. (Reference Montana Code Annotated 15-32-703)

Biodiesel Production Facility Tax Credit

A tax credit is available to businesses and individuals for up to 15% of the cost of constructing and equipping a facility to be used for biodiesel or bio-lubricant production. The credit must be claimed in the tax year in which the facility begins production, and the facility must be in operation before January 1, 2015. Additionally, a tax credit is available for property used primarily to crush oilseed crops for purposes of biodiesel production. (Reference and Montana Code Annotated 15-32-701 and 15-32-702)

Biodiesel Production Incentive

A tax incentive is available to biodiesel producers during the first three years of production in the amount of $0.10 per gallon for each gallon of increased production over the previous year. For the purposes of this incentive, the production year begins July 1. This tax incentive is available until July 1, 2010. (Reference Montana Code Annotated 15-70-601)

Biodiesel Tax Refund

A licensed distributor who pays the special fuel tax on biodiesel may claim a refund equal to $0.02 per gallon of biodiesel sold during the previous quarter if the biodiesel is created entirely from biodiesel components produced in Montana. The owner or operator of a retail motor fuel outlet may claim a refund equal to $0.01 per gallon of biodiesel purchased from a licensed distributor if the biodiesel is created entirely from biodiesel components produced in Montana. (Reference Montana Code Annotated 15-70-369)

Alternative Fuel Vehicle (AFV) Conversion Tax Credit

An income tax credit is available to businesses or individuals for up to 50% of the equipment and labor costs for converting vehicles to operate using alternative fuels. Qualified alternative fuels are compressed and liquefied natural gas, liquefied petroleum gas, hydrogen, electricity, and fuel containing at least 85% ethanol or methanol. A maximum credit of $500 is available for the conversion of vehicles with a Gross Vehicle Weight Rating (GVWR) of 10,000 pounds (lbs.) or less and $1,000 for vehicles with a GVWR of more than 10,000 lbs. The credit must be applied in the year the conversion is made, and the seller of an alternative fuel may not receive a credit for converting their own vehicles to operate on the alternative fuel they sell. (Reference Montana Code Annotated 15-30-164)

State Laws and Regulations

Biodiesel Tax Exemption

Biodiesel produced from waste vegetable oil feedstock after June 30, 2009, is exempt from the state special fuel tax. (Reference House Bill 416, 2009, and Montana Code Annotated 15-70-301 and 15-70-321)

Fuel-Efficient Vehicle Acquisition Requirements

All vehicles purchased for state agency use must meet or exceed the current federal Corporate Average Fuel Economy standard, and agencies must develop and implement programs to reduce fuel consumption in agency vehicles. Certain state vehicles are exempt from these requirements. (Reference Montana Code Annotated 2-17-416)

Medium-Speed Electric Vehicle Access to Roadways

A medium-speed electric vehicle, which has a maximum speed of 35 miles per hour (mph), a gross vehicle weight of 5,000 pounds or less, and is in compliance with Title 49 of the Code of Federal Regulations, part 565, may only be operated on a highway for which the posted speed limit does not exceed 45 mph. A medium-speed electric vehicle must be treated as a light vehicle for purposes of titling and registration. (Reference Senate Bill 72, 2009, and Montana Code Annotated 61-1-101)

Ethanol Fuel Blend Use Requirement

State government agencies and universities owning or operating motor vehicles capable of burning ethanol-blended gasoline must take all reasonable steps to ensure that the operators of those vehicles use ethanol-blended gasoline to operate the vehicles if ethanol-blended gasoline is commercially available within the operating area of the vehicle and competitively priced as compared to conventional gasoline. (Reference Montana Code Annotated 2-17-414)

Biofuels Promotion

In support of the "25 x 25" initiative to increase production of renewable energy by the agricultural community, the Montana legislature supports the development of a broad spectrum of renewable energy resources, including biofuels, with the goal of agriculture providing 25% of the total energy consumed in the United States by the year 2025. (Reference House Joint Resolution 6, 2007)

Ethanol Blend Mandate

All gasoline sold to consumers for use in motor vehicles operating on public roads must be blended with 10% by volume, agriculturally derived, denatured ethanol, within one year after the Montana Department of Transportation has certified that the state has produced 40 million gallons of ethanol and has maintained that level of production on an annualized basis for at least three months. If the production of ethanol in Montana drops below 20 million gallons on an annualized basis, the 10% blend requirement does not apply. All gasoline sold as E10 may not contain more than trace amounts of the additive methyl tertiary butyl ether. (Reference Montana Code Annotated 82-15-121)

Alternative Fuel Promotion

The state of Montana encourages the use of alternative fuels and fuel blends to the extent that doing so produces environmental and economic benefits to the citizens of Montana. The state legislature recommends several guidelines for the development of a state alternative fuels policy, including the following: 1) encourage the use of self-sufficient markets; 2) any state alternative fuels program should have measurable benefits and be communicated to the public; 3) state and local governments should be encouraged to set an example with their vehicle fleets by using alternative fuels and fuel blends. The state also encourages production of alternative fuels and fuel blends. (Reference Montana Code Annotated 90-4-1011)

Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) Tax

Retail sales for CNG and LPG used to operate vehicles are subject to a modified tax based on energy content. (Reference Montana Code Annotated 15-70-711)

Compressed Natural Gas (CNG) or Liquefied Petroleum Gas (LPG) License

A person may not act as a CNG or LPG dealer unless the person holds a valid CNG or LPG dealer's license issued by the Montana Department of Transportation. (Reference Montana Code Annotated 15-70-702)

Utilities/Private Incentives

There are currently no known utility or private incentives offered in Montana.

Points of Contact:

NAME/EMAIL/TITLE	AGENCY	PHONE/FAX
Philip Cameron Clean Cities Coordinator	Yellowstone-Teton Clean Energy Coalition	Phone:(307) 413-1971 Fax:
Kay Kelly Project Manager	U.S. Department of Energy, Golden Office	Phone:(303) 275-6037 Fax:
Howard Haines Bioenergy Program Manager & Clean Diesel	Montana Department of Environmental Quality, Energy & Pollution Prevention Bureau	Phone:(406) 841-5252 Fax:(406) 841-5091
Anna Friend Transportation Operations Specialist	U.S. General Services Administration	Phone:(303) 236-7221 Fax:(303) 236-7590