North Dakota Incentives and Laws

Last Updated June 2009

North Dakota is the home of the Red River Valley/Winnipeg Manitoba Clean Cities Coalition (www.cleanairchoice.org/cities/rrv.cfm). Coordinator contact information is listed in the Points of Contact section.

State Incentives

Biofuels Infrastructure Grants

Cost-share grants of up to $5,000 per fueling pump are available to motor fuel retailers who install qualified biofuel blender pumps and associated equipment at retail locations. A qualified ethanol retail blender pump must meet the following criteria: 1) dispense a blend of gasoline and ethanol in the ratio selected by the purchaser; 2) is manufactured to an industry standard and carries a warranty for compatibility with dispenser components and storage and piping systems; 3) has at least four hoses and dispenses either a blend of 10% ethanol or the minimum blend percentage approved for all vehicles by the U.S. Environmental Protection Agency, a blend of at least 20% ethanol, and E85; and 4) complies with all alternative fuel, biofuel, and flexible fuel requirements established by law. A qualified biodiesel retail blender pump must dispense varying blends of biodiesel and diesel fuels in the ratio selected by the purchaser, and comply with all alternative fuel, biofuel, and flexible fuel requirements established by law. This incentive is effective through November 30, 2010. (Reference Senate Bill 2228, 2009, and North Dakota Century Code 17-80)

Biofuels Loan Program

The Biofuels Partnership in Assisting Community Expansion ((PACE) Loan Program provides an interest buy down of 5% below the note rate to the following: biodiesel and ethanol production facilities; livestock operations feeding byproducts produced at a biodiesel or ethanol facility; and grain handling facilities which provide storage of grain used in biofuels production. Qualified ethanol and biodiesel production facilities must be located in North Dakota and ownership must consist of agricultural producers holding at least 10% of the ownership interest in the facility or residents of the state owning at least 50% of the facility. A biodiesel production facility may receive up to $500,000 of interest buy down and must produce biodegradable, combustible, liquid fuel that is derived from vegetable oil or animal fat and is suitable for blending with diesel fuel for use in internal combustion diesel engines. An ethanol production facility may receive up to $500,000 of interest buy down and must produce agriculturally-derived denatured ethanol that is suitable for blending with a petroleum product for use in internal combustion engines. Loan terms vary based on the project type, and recipients of Biofuels PACE loans are not eligible for regular PACE loans. (Reference North Dakota Century Code 17-03)

Biodiesel Blender Tax Credit

A licensed fuel supplier who blends biodiesel into diesel fuel is entitled to an income tax credit in the amount of $0.05 per gallon of biodiesel blended fuel comprised of at least 5% biodiesel. The biodiesel fuel must meet ASTM specifications. The tax credit may not exceed the taxpayer's liability for the taxable year and each year's unused credit amount may be carried forward for up to five taxable years. (Reference North Dakota Century Code 57-38-01.22)

Biodiesel Sales Equipment Tax Credit

A corporate income tax credit is available in the amount of 10% per year, for up to five years, of a qualified retailer's direct costs incurred to adapt or add equipment to a facility that enables a facility to sell diesel fuel containing at least 2% biodiesel by volume. Eligible direct costs must have been incurred after December 31, 2004, and a taxpayer is limited to $50,000 in the cumulative amount of credits for all taxable years. The biodiesel fuel must meet ASTM specifications. (Reference North Dakota Century Code 57-38-01.23)

Biodiesel Production and Blending Equipment Tax Credit

A corporate income tax credit is available in the amount of 10% per year, for up to five years, of a qualified producer or blender's direct costs incurred to add equipment to retrofit an existing facility or construct a new facility in the state for the purpose of producing or blending diesel fuel containing at least 2% biodiesel by volume. Eligible direct costs must have been incurred after December 31, 2002, and a taxpayer is limited to $250,000 in the cumulative amount of credits for all taxable years. The biodiesel fuel must meet ASTM specifications. (Reference North Dakota Century Code 57-38-30.6)

Ethanol Production Incentive

Qualified ethanol producers are eligible for quarterly incentive payments based on the number of gallons produced during adverse times. If an ethanol production facility was in operation in North Dakota before July 1, 1995, it is eligible to receive incentive payments only if that facility increases its production by the lesser of ten million gallons or 50% of its production capacity during any 12-month period beginning on or after July 1, 2005. The incentive amount is based on the average North Dakota wholesale ethanol price for the preceding quarter and the average North Dakota corn price for the preceding quarter. A single eligible facility may not receive more than $1.6 million per year nor more than $10 million in incentive payments over the life of the facility. (Reference North Dakota Century Code 17-02)

Point of Contact

Andrea Pfennig
Program Administrator
North Dakota Department of Commerce, Office of Renewable Energy and Energy Efficiency
Phone (701) 328-2687
ahpfennig@nd.gov
http://www.communityservices.nd.gov/energy/ethanol-production-incentive/

State Laws and Regulations

Authorization to Provide Advanced Biofuel Incentives

The North Dakota Industrial Commission is authorized to provide incentives to support research and development projects and obtain matching grants for projects involving advanced and sugar-based biofuel. Advanced biofuel is defined as fuel derived from renewable biomass and includes biofuel derived from cellulose, hemicellulose, or lignin; biofuel derived from sugar and starch other than ethanol derived from corn kernel starch; biofuel derived from waste material, including crop residue, other vegetative waste material, animal waste, food waste, and yard waste; diesel-equivalent fuel derived from renewable biomass, including vegetable oil and animal fat; biogas, including landfill gas and sewage waste treatment gas, produced through the conversion of organic matter from renewable biomass; butanol or other alcohols produced through the conversion of organic matter from renewable biomass; and other fuel derived from cellulosic biomass. (Reference Senate Bill 2129, 2009, and North Dakota Century Code 17-08)

Regional Biofuels Corridor

North Dakota has joined Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, South Dakota, and Wisconsin in adopting a cooperative initiative under the Energy Security and Climate Stewardship Platform Plan (Platform) (PDF 2MB). Download Adobe Reader. The Platform establishes a regional biofuels corridor program and directs state transportation, agriculture, and regulatory officials to develop a system of coordinated signage across the Midwest for biofuels and advanced transportation fuels and to collaborate to create regional E85 corridors. The program requires standardized fuel product coding at fueling stations as well as increased education for retailers about converting existing fueling infrastructure to dispense E85.

Alternative Fuel Labeling Requirement

Alternative fuels must be labeled at the retail dispensing unit with the price, name, and main components of the alternative fuel or alternative fuel blend. The labeling must follow established labeling specifications for petroleum-based fuels. A producer of alternative fuels may provide a label promoting the benefits of the alternative fuel if the label meets the requirements specified. Alternative fuel is defined as a fuel used in an engine or vehicle other than a petroleum-based fuel. Alcohol fuel blends containing at least 1% of alcohol by volume must also be clearly labeled at the dispenser and on any price advertisements. (Reference North Dakota Century Code 19-10-03.1 and 19-10-03.3)

Alternative Fuel Tax Rates

A special excise tax rate of 2% is imposed on the sale of liquefied petroleum gas and a tax of $0.04 per gallon is imposed on all sales special fuels, including compressed natural gas. (Reference North Dakota Century Code 57-43.2-02 and 57-43.2-03)

Biodiesel Equipment Tax Exemption

Equipment sold to a facility that enables the facility to sell diesel fuel containing at least 2% biodiesel is exempt from sales tax. The biodiesel fuel must meet ASTM specifications. (Reference North Dakota Century Code 57-39.2-04)

Hydrogen Fuel Tax Exemption

The sale of hydrogen fuel to power an internal combustion engine or fuel cell is exempt from the state sales tax. This exemption is effective through June 30, 2010. (Reference North Dakota Century Code 57-43.2-02.4)

Renewable Fuels Promotion

Recognizing that biofuels such as ethanol and biodiesel will be an important part of the state's energy economy and advanced research in biofuels production from biomass will be critical to the long-term viability of biofuels, the North Dakota Legislature adopts the goal that 25% of the nation's energy consumption will come from renewable sources by the year 2025. (Reference North Dakota Century Code 17-01-01)

Low-Speed Vehicle Access to Roadways

A low-speed vehicle is defined as a four-wheeled vehicle that is able to attain a speed of up to 25 miles per hour (mph) but not less than 20 miles per hour (mph). Low-speed vehicles may not operate on roads with posted speed limits greater than 35 mph, except to cross the road at a speed of up to 25 mph. (Reference House Bill 1082, 2009, and North Dakota Century Code 39-29.1 and 57-40.3-01)

Utilities/Private Incentives

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

Points of Contact:

NAME/EMAIL/TITLE	AGENCY	PHONE/FAX
Valerie Kummer Clean Cities Coordinator	Red River Valley/Winnipeg Manitoba Clean Cities Coalition	Phone:(701) 223-5613 or (800) 252-6325 Fax:(701) 223-5727
Kay Kelly Project Manager	U.S. Department of Energy, Golden Office	Phone:(303) 275-6037 Fax:
Andrea Pfennig Program Administrator	North Dakota Department of Commerce, Office of Renewable Energy and Energy Efficiency	Phone:(701) 328-2687 Fax:
Joe Murphy State Energy Program Administrator	North Dakota Department of Commerce	Phone:(701) 328-5300 Fax:(701) 328-5320
Anna Friend Transportation Operations Specialist	U.S. General Services Administration	Phone:(303) 236-7221 Fax:(303) 236-7590