North Dakota Incentives and Laws

Last Updated November 2008

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 Loan Program

The Biofuels Partnership in Assisting Community Expansion (PACE) Loan Program provides a 5% interest buy down to the following: biodiesel and ethanol production facilities; livestock operations feeding byproducts of a biodiesel or ethanol facility; biofuels retailers for refueling infrastructure installation; 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. Recipients of Biofuels PACE loans are not eligible for regular PACE loans. (Reference North Dakota Century Code 6-09.17-02 through 6-09.17-04)

Point of Contact

Bank of North Dakota
Phone (701) 328-5672 or (800) 472-2166 x5672
http://www.banknd.com/ls/ls_commercial5.jsp

Biodiesel Blender Tax Credit

A licensed fuel supplier who blends biodiesel into fuel is entitled to an income tax credit in the amount of $0.05 per gallon of biodiesel 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

The state of North Dakota offers a five-year corporate income tax credit for equipment that enables a facility to sell diesel fuel containing at least 2% biodiesel by volume. The tax credit is worth up to 10% per year, for up to five years, of the biodiesel seller's direct costs incurred after December 31, 2004, to adapt or add equipment to a facility. The credit 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 Equipment Tax Credit

A corporate income tax credit is available in the amount of 10% per year for five years of the taxpayer's direct costs incurred to adapt or add equipment to retrofit an existing facility or adapt a new facility in the state for the purpose of producing or blending diesel fuel containing at least 2% biodiesel fuel 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

The ethanol production incentive fund provides an incentive of $0.40 per gallon for ethanol produced and sold in North Dakota. An ethanol plant that was operational before July 1, 1995, with a production capacity of less than 15 million gallons is eligible for up to $900,000 in production incentives during the 2005-07 biennium. An ethanol plant that was operational before July 1, 1995, and produced 15 million gallons or more in the previous fiscal year may receive up to $450,000 in production incentives during the 2005-07 biennium. Payment will be provided on a quarterly basis based on: a) the average North Dakota price per bushel of corn received by farmers during the quarter; and b) the average North Dakota rack price per gallon of ethanol during the quarter. The cumulative state ethanol payment amount received by any single ethanol production facility may not exceed $10,000,000. (Reference North Dakota Century Code 17-02-01, 17-02-03, and 17-02-05)

State Laws and Regulations

Regional Biofuels Corridor

North Dakota has joined Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, South Dakota, and Wisconsin in adopting a cooperative initiative under the 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. The state transportation, agriculture, and regulatory officials were required to report their corridor implementation plans to the Midwest Governors Association by April 1, 2008.

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. (Reference North Dakota Century Code 19-10-03.3)

Biodiesel and E85 Definitions

For taxation purposes, E85 is defined as a blend of agriculturally derived denatured ethanol and gasoline or natural gasoline that typically contains 85% ethanol by volume, but at minimum must contain 60% ethanol by volume and, if produced for use as motor fuel, must comply with ASTM specification D5798-96. Biodiesel (B100) is defined as a fuel comprised of mono alkyl esters of long chain fatty acids derived from vegetable oil or animal fats that meets ASTM specification D6751. (Reference Senate Bill 2087, 2007, and North Dakota Century Code 57-43.1-01 and 57-43.2.01)

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 of diesel fuel and other special fuels previously exempted. (Reference House Bill 1348, 2007, and 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 through June 20, 2009. The biodiesel fuel must meet ASTM specifications. (Reference North Dakota Century Code 57-39.2-04)

Hydrogen 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)

Biofuels Research and Promotion

The North Dakota Board of Education is encouraged to establish or name a biomass energy center (Center) at an institution to conduct research and provide education and technical assistance related to biomass production, harvesting, transportation, and conversion. In addition, the Center will work to identify and evaluate incentives for cellulosic ethanol production and biomass energy through the state legislature or at the federal level, such as providing payment for producers to grow dedicated bio-energy crops or to supplement equipment, harvesting, and transportation costs. (Reference Senate Bill 2288, 2007)

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. Additionally, the Legislature supports the North Dakota energy corridor initiative to increase funding for research development and commercialization of hydrogen fuel cells and biofuels produced from biomass for long-term viability. (Reference House Concurrent Resolution 3020, 2007, and North Dakota Century Code 17-01-01)

Utilities/Private Incentives

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

Points of Contact:

NAME/EMAIL	AGENCY	TITLE	PHONE/FAX
Valerie Kummer vkummer@lungnd.org	Red River Valley/Winnipeg Manitoba Clean Cities Coalition	Clean Cities Coordinator	Phone: (701) 223-5613 or (800) 252-6325 Fax: (701) 223-5727
Kay Kelly kay.kelly@go.doe.gov	U.S. Department of Energy, Golden Office	Project Manager	Phone: (303) 275-6037 Fax:
Joe Murphy jmurphy@nd.gov	North Dakota Department of Commerce	State Energy Program Administrator	Phone: (701) 328-5300 Fax: (701) 328-5320
	Bank of North Dakota		Phone: (701) 328-5672 or (800) 472-2166 x5672 Fax:
Anna Friend anna.friend@gsa.gov	U.S. General Services Administration	Transportation Operations Specialist	Phone: (303) 236-7221 Fax: (303) 236-7590