Arkansas Laws and Incentives

Listed below are the summaries of all current Arkansas laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

State Incentives

Compressed Natural Gas School Buses Grant and Loan Pilot Program

A pilot program will provide grants to four public school districts to purchase 10 compressed natural gas (CNG) school buses each during fiscal years 2014 and 2015. Each congressional district in the state may have one public school district participating in the program, and any school district in the state may apply to participate. In addition to the grants, each school district participating in the pilot program may borrow up to $1.5 million through the Arkansas Revolving Loan Fund for the purchase of additional CNG school buses. To participate in the program, each school district must either have access to a CNG fueling station or agree to construct a new public-access fueling station. (Reference Arkansas Code 6-19-128 and 6-20-803)

Idle Reduction Technology Loans

The Arkansas Department of Environmental Quality (ADEQ) provides small business loans at 80% of the current prime interest rate to institute pollution control and prevention measures. Idle reduction technologies for heavy-duty trucking applications are eligible. The maximum loan amount is $45,000, with a $65,000 lifetime maximum for one business. An eligible business must employ 100 individuals or less and demonstrate proof of profitability and the ability to repay the loan. For more information, including a loan application, see the ADEQ Environmental Loans for Small Businesses website.

Alternative Fuel Vehicle and Infrastructure Rebate Program

The Arkansas Energy Office, a division of the Arkansas Economic Development Commission, administers the Arkansas Gaseous Fuels Vehicle Rebate Program (Program), funded by the Clean-Burning Motor Fuel Development Fund. The Program provides 50% of the conversion or incremental cost, up to $4,500, specifically for compressed natural gas (CNG), liquefied natural gas (LNG), or liquefied petroleum gas (propane) vehicle purchases or conversions. CNG must be delivered to a vehicle at 3,000 pounds per square inch and metered on a gasoline gallon equivalent (GGE) or diesel gallon equivalent (DGE) basis. One GGE of CNG is equal to 5.66 pounds (lbs.) and one DGE of LNG is equal to 6.22 lbs. The Arkansas Energy Office reviews and processes vehicle rebate applications on a first-come, first-served basis. Rebates are also available for CNG, LNG, and propane fueling stations in the amount of 75% of qualifying costs, up to $400,000. The Program is currently closed and no funding is available (verified July 2015). (Reference Arkansas Code 15-10-901 to 15-10-904 and 19-5-1249)

Laws and Regulations

Alternative Fuel Vehicle Conversion

Any individual or company who converts a vehicle to operate on an alternative fuel must report the conversion to the Arkansas Department of Finance and Administration (DFA) within 10 days of the conversion. An owner or operator who fails to report such a conversion may be subject to a penalty. For more information, including reporting forms, see the DFA website. (Reference Arkansas Code 26-56-315 and 26-62-214)

Liquefied Natural Gas (LNG) and Propane Tax and User Permit

LNG and liquefied petroleum gas (propane) used as motor fuel are taxed on a per vehicle basis through an annual flat fee special fuel user's permit. The fee is based on the vehicle's gross vehicle weight rating. For each vehicle fueled by LNG or propane, the vehicle owner must apply for and obtain a liquefied gas special fuel user's permit from the Arkansas Department of Finance and Administration (DFA). For more information, including fees and applications, see the DFA website. (Reference Arkansas Code 26-56-102, 26-56-301 and 26-56-304)

Alternative Fuels Tax and Reporting

Excise taxes on alternative fuels are imposed on a gasoline gallon equivalent (GGE) basis. The tax rate for each alternative fuel type is based on the number of motor vehicles licensed in the state that use the specific fuel, not including vehicles the federal government owns or leases. The Arkansas Department of Finance and Administration (DFA) and the Arkansas State Highways and Transportation Department must prepare an annual report with the number of alternative fuel vehicles licensed in the state and the tax revenue generated. The DFA must establish the annual tax rate by April 1st. Alternative fuel taxes must be paid by licensed alternative fuel suppliers for product dispensed, sold to a dealer or user, or used in a motor vehicle owned or operated by the alternative fuel supplier. Alternative fuel suppliers must prepare a monthly report on the number of GGEs of alternative fuels sold and possess a sufficient number of credits (also known as sales tickets) to cover the alternative fuel sales tax. (Reference Arkansas Code 19-6-301, 26-56-502, 26-56-601, and 26-62-201 through 262-62-209)

Personal Use Biofuel Reporting

Taxpayers producing and using biodiesel and ethanol for personal use must report the total gallons of fuel produced by year and the portion of fuel used on-road and off-road to the Arkansas Department of Finance and Administration (DFA). Taxpayers must then submit a tax payment for the portion of biodiesel and ethanol used for on-road purposes. For more information, including instructions and forms, see the DFA website. (Reference Arkansas Code 15-4-2802)

Natural Gas Metering

Individuals who use natural gas for residential or other tax-free purposes may not use natural gas in motor vehicles unless the natural gas is obtained through a separate meter the alternative fuels supplier installed for such purposes. (Reference Arkansas Code 26-62-203)

Alternative Fuel Definition and Specifications

Alternative fuels include biofuel, ethanol, methanol, hydrogen, coal-derived liquid fuels, electricity, natural gas, propane gas, or a synthetic transportation fuel. Biofuel is defined as a renewable, biodegradable, combustible liquid or gaseous fuel derived from biomass or other renewable resources that can be used as transportation fuel, combustion fuel, or refinery feedstock and that meets ASTM specifications and federal quality requirements for each category or grade of fuel. Biofuel includes biodiesel or renewable diesel, renewable gasoline, renewable jet fuel and naphtha, biocrude, biogas, and other renewable, biodegradable, mono alkyl ester combustible fuel derived from biomass. Ethanol is ethyl alcohol derived from biomass that meets ASTM D4806-04a and federal quality requirements. Synthetic transportation fuel is a liquid fuel produced from biomass by a gasification process or other refining process that meets any applicable state or federal environmental requirement. (Reference Arkansas Code 15-13-102 and 26-62-102)

Biodiesel Use Requirement

All diesel-powered motor vehicles, light trucks, and equipment owned or leased by a state agency must operate using diesel fuel that contains a minimum of 2% biodiesel (B2). For the purpose of this requirement, biodiesel includes renewable diesel and other renewable, biodegradable mono alkyl ester combustible fuel derived from biomass. Waivers to the B2 requirement for state agency vehicles may be granted if the fuel is not available in certain geographic areas, the fuel price is at least $0.15 more per gallon then the petroleum equivalent, or compliance with the standard is not otherwise economically feasible. (Reference Arkansas Code 15-13-101, 15-13-102, and 15-13-202 to 15-13-205)

Low-Speed Vehicle Definition

A low-speed vehicle is defined as a four wheeled vehicle that has a maximum speed greater than 20 miles per hour (mph) but not more than 25 mph and has a gross vehicle weight rating less than 3,000 pounds. (Reference Arkansas Code 23-112-103)