2023 Montana Code Annotated › Title 15. Taxation › Chapter 70. Gasoline and Vehicle Fuels Taxes › Part 5. Ethanol Tax Incentive and Administration › 15-70-522. Tax incentive for production of ethanol -- rules

15-70-522. Tax incentive for production of ethanol -- rules.
(1) (a) If the ethanol is produced in Montana from Montana agricultural products, including Montana wood or wood products, or if the ethanol is produced from non-Montana agricultural products when Montana products are not available, there is a tax incentive payable to ethanol distributors for distilling ethanol that:
(i) is to be blended with gasoline for sale as ethanol-blended gasoline in Montana;
(ii) was exported from Montana to be blended with gasoline for sale as ethanol-blended gasoline; or
(iii) is to be used in the production of ethyl butyl ether for use in reformulated gasoline.
(b) Payment must be made by the department out of the amount collected under 15-70-403.
(2) Except as provided in subsections (3) and (4), the tax incentive on each gallon of ethanol distilled in accordance with subsection (1) is 20 cents a gallon for each gallon that is 100% produced from Montana products, with the amount of the tax incentive for each gallon reduced proportionately, based on the amount of agricultural or wood products not produced in Montana that is used in the production of the ethanol. The tax incentive is available to a facility for the first 6 years from the date that the facility begins production. The facility shall file a business plan with the department at least 2 years before the estimated beginning date of production. After the initial business plan is filed, the facility shall provide the department with quarterly updates regarding any changes to the business plan.
(3) Regardless of the ethanol tax incentive provided in subsection (2):
(a) the total payments made for the incentive under this part may not exceed $6 million in any consecutive 12-month period;
(b) a plant or facility is not eligible to receive the tax incentive unless the facility paid the standard prevailing rate of wages for heavy construction, as provided in 18-2-414, during the construction phase; and
(c) an ethanol distributor is not eligible to receive the tax incentive unless at least:
(i) 20% Montana product is used to produce ethanol at the facility in the first year of production;
(ii) 25% Montana product is used to produce ethanol at the facility in the second year of production;
(iii) 35% Montana product is used to produce ethanol at the facility in the third year of production;
(iv) 45% Montana product is used to produce ethanol at the facility in the fourth year of production;
(v) 55% Montana product is used to produce ethanol at the facility in the fifth year of production; and
(vi) 65% Montana product is used to produce ethanol at the facility in the sixth year of production.
(4) (a) An ethanol distributor may not receive tax incentive payments under subsection (2) that exceed $2 million in any consecutive 12-month period. Subject to subsections (5) and (6), an ethanol distributor may receive tax incentive payments commencing the first quarter after a facility begins production. The distributor shall report its production to the department pursuant to 15-70-410.
(b) The distributor's report must include:
(i) the total number of gallons produced for the month;
(ii) the total amount of products purchased for the production of ethanol;
(iii) the percentage of the total amount of products purchased that are Montana products; and
(iv) other information that the department determines is necessary.
(5) (a) A plant shall apply for the incentive payment by submitting an application to the department when the plant has proof of commitment from lenders to finance the plant. Subject to subsection (5)(b), the department shall respond to the applicant with approval of the application within 45 days of receipt of the application, after confirming the lending commitment. Upon approval of the application, the department shall enter into a contract with the plant that ensures the state's commitment to pay incentive payments to qualifying ethanol plants.
(b) If the department is not able to confirm a lending commitment, the department shall deny the application.
(6) After the department has verified production, the application provisions of subsection (5) are met, and the plant owner presents proof of financing, the department shall begin payments of the ethanol tax incentives based on actual production according to the terms of subsections (2) and (4).
(7) The department shall adopt rules necessary to carry out the provisions of this section. The department shall coordinate and request information and input from the ethanol production industry as a part of the rulemaking process and shall follow the procedures provided in Title 2, chapter 4.
History: En. Sec. 9, Ch. 649, L. 1983; amd. Sec. 3, Ch. 697, L. 1985; amd. Sec. 1, Ch. 593, L. 1989; amd. Sec. 8, Ch. 512, L. 1991; amd. Sec. 2, Ch. 723, L. 1991; amd. Sec. 1, Ch. 592, L. 1993; amd. Sec. 1, Ch. 510, L. 1997; amd. Sec. 1, Ch. 532, L. 2001; amd. Sec. 1, Ch. 535, L. 2003; amd. Sec. 6, Ch. 452, L. 2005; amd. Sec. 15, Ch. 100, L. 2007; amd. Sec. 10, Ch. 277, L. 2009; amd. Sec. 32, Ch. 220, L. 2015.