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

Alternative Fuel Grants and Rebates

The Arkansas Alternative Fuels Development Program (Program) provides grants to alternative fuel producers, feedstock processors, and alternative fuel distributors. Producers may be eligible to receive $0.20 per gallon of alternative fuels produced, not to exceed $2 million. Feedstock processors may be eligible to receive up to $3 million or 50% of the project cost, whichever is less, for the construction, modification, alteration, or retrofitting of a feedstock processing facility that is located and operated in Arkansas. Alternative fuel distributors may be eligible to receive up to $300,000 or 50% of the project cost, whichever is less, for assisting with the distribution and storage of alternative fuels or alternative fuel mixtures at distribution facilities that are located and operated in Arkansas. Alternative fuels include biofuel, ethanol, compressed natural gas, or a synthetic transportation fuel.

The Program also provides rebates for the cost of converting diesel or gasoline vehicles to dedicated or bi-fuel natural gas or propane vehicles. The rebate amount is 75% of the conversion system and incremental conversion costs and is determined by the gross vehicle weight rating (GVWR) as shown in the table below.

GVWRRebate Amount
0-8,500 lbs.$5,000
8,501-14,000 lbs.$8,000
14,001-26,000 lbs.$20,000
Over 26,000 lbs.$32,000

A public entity, company, organization, or affiliate may receive up to $50,000 per fiscal year for conversion costs. Other restrictions and requirements may apply. For more information, see the Arkansas Agriculture Department Programs page.

The Arkansas Agriculture Department must prepare and submit an annual progress report to the governor and the legislative council to include the amount and purpose of each rebate, the total amount expended by the rebate recipient for conversion costs, and the results produced or the progress made in converting conventional vehicles to operate on natural gas or propane.

(Reference Arkansas Code 15-13-101, 15-13-102, 15-13-301 to 15-13-306, and 19-6-809)

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 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 (AFV) 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. 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. Applications for infrastructure rebates must be submitted to the Arkansas Energy Office by February 27, 2015. The Program is open through June 30, 2015, or until funding is expended. For more information, see the Gaseous Fuels Rebate Program website. (Reference Arkansas Code 15-10-901 to 15-10-904 and 19-5-1249)

Laws and Regulations

Alternative Fuel Vehicle (AFV) 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 within 10 days of the conversion. An owner or operator who fails to report such a conversion may be subject to a penalty. (Reference Arkansas Code 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. (Reference Arkansas Code 26-56-301 and 26-56-304)

Alternative Fuels Tax

Excise taxes on alternative fuels are imposed on a gasoline gallon equivalent 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. (Reference Arkansas Code 26-62-201)

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, compressed 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 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)

Natural Gas Vehicle (NGV) Production Support and Procurement

In 2012, Arkansas joined Colorado, Kentucky, Louisiana, Maine, Mississippi, New Mexico, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming in signing a memorandum of understanding (MOU) to stimulate the production and demand for original equipment manufacturer (OEM) NGVs. The MOU aims to encourage OEMs to offer functional and affordable light- and medium-duty NGVs, aggregate state vehicle procurement through a joint request for proposals (RFP), boost private investment in natural gas fueling infrastructure, and encourage greater coordination between state and local agencies. In July 2012, National Association of State Procurement Officials coordinated the solicitation of a joint RFP, which the Oklahoma Department of Central Services (DCS) issued on behalf of the MOU signatories, as well as additional states. As a result, state fleets have access to more affordable NGVs through dealerships now included in state vehicle purchasing bids. For more information, including awarded vehicles by state and vehicle purchase information for state fleets, see the DCS Statewide Contract for NGVs solicitation page.

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 cents 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)