Kentucky Administrative Regulations › Title 302 - DEPARTMENT OF AGRICULTURE › Chapter 4 - Agriculture Tax Credits › Section 302 KAR 4:010 - Renewable Chemical Production Program

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO: KRS Chapter 13B, 246.700
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				246.700(1)(a) requires the
				Department of Agriculture to promulgate administrative regulations to create
				and administer a renewable chemical production program.
				KRS
				246.700(7) requires the
				department to cooperate with the Department of Revenue to authorize tax credits
				for eligible companies producing renewable chemicals.
				KRS
				246.700(4)(a) authorizes the
				department to impose a nonrefundable compliance cost fee of $500, collected by
				the department at the time a business applies for participation in the program.
				This administrative regulation establishes requirements for renewable
				chemicals, creation of jobs or investment of new capital related to renewable
				chemical production, and reporting requirements for eligible companies.
Section 1. Definitions.
(1) "Base employment" means the number of
			 full-time employees employed on the day prior to the work start date of the new
			 employees filling the earliest new jobs identified on the application. For
			 applications from businesses involved in mergers, acquisitions, or federal tax
			 identification number changes, base employment may be adjusted by the
			 department, based on data presented.
(2) "Biobased content percentage" means, with
			 respect to any renewable chemical, the amount, expressed as a percentage, of
			 renewable organic material present as determined by testing representative
			 samples using the American Society for Testing and Materials standard
			 D6866.
(3) "Biomass feedstock"
			 means agricultural crop and process residues, wood and forest residues, energy
			 crops, sugar, polysaccharide, crude glycerin, lignin, fat, grease, or oil
			 derived from a plant or animal, or a protein capable of being converted to a
			 building block chemical by means of a biological or chemical conversion
			 process.
(4) "Building block
			 chemical" means a molecule converted from biomass feedstock as a first product
			 or a secondarily derived product that can be further refined into a
			 higher-value chemical, material, or consumer product, such as high-purity
			 glycerol, oleic acid, lauric acid, methanoic or formic acid, arabonic acid,
			 erythonic acid, glyceric acid, glycolic acid, lactic acid, 3-hydroxypropionate,
			 propionic acid, malonic acid, serine, succinic acid, fumaric acid, malic acid,
			 aspartic acid, 3-hydroxybutyrolactone, acetoin, threonine, itaconic acid,
			 furfural, levulinic acid, glutamic acid, xylonic acid, xylaric acid, xylitol,
			 arabitol, citric acid, aconitic acid, 5-hydroxymethylfurfural, lysine, gluconic
			 acid, glucaric acid, sorbitol, gallic acid, ferulic acid, hydroxyalkanoic
			 acids, 1 nonfuel butanol, nonfuel ethanol, biomass derived carbons, bio-oil, or
			 constituent polymer repeating units, or additional molecules as may be approved
			 by the department after a request and review process, in accordance with
			 Section 6 of this administrative regulation.
(5) "Commissioner" means the Commissioner of
			 Agriculture;
(6) "Crude glycerin"
			 means glycerin with a purity level below ninety-five (95) percent.
(7) "Date of Eligibility" means the date that
			 a business first qualified as an eligible business by organizing, expanding, or
			 locating in Kentucky on or after July 1, 2020, and:
(a) Filling new jobs; or
(b) Acquiring tangible capital assets as a
			 result of substantial new capital investment.
(8) "Department" means the Kentucky
			 Department of Agriculture.
(9)
			 "Food additive" means a building block chemical that is not primarily consumed
			 as food but which, when combined with other components, improves the taste,
			 appearance, odor, texture, or nutritional content of food. The Department shall
			 determine whether or not a building block chemical is primarily consumed as
			 food, based on data presented.
(10)
			 "Full-time employee" means a person employed for at least an average of
			 thirty-five (35) hours per week and subject to the state tax imposed by
			 KRS
			 141.020.
(11) "High-purity glycerol" means glycerol
			 with a purity level of ninety-five (95) percent or higher.
(12) "New Jobs" means at least two (2)
			 positions added for the purpose of producing renewable chemicals that are
			 filled by a full-time employee and that increases the total employment of the
			 eligible business above its base employment.
(13) "Preliminary Tax Credit" means the
			 dollar amount of tax credit certified by the department for an eligible
			 business.
(14) "Renewable Chemical"
			 means a building block chemical with a biobased content percentage of at least
			 fifty (50) percent, except for a chemical sold or used for the production of
			 food, feed, or fuel. "Renewable chemical" includes:
(a) Cellulosic ethanol, starch ethanol, or
			 other ethanol derived from biomass feedstock, fatty acid methyl esters, or
			 butanol, but only to the extent that these molecules are produced and sold for
			 uses other than food, feed, or fuel;
(b) A building block chemical that can be a
			 food additive as long as the building block chemical is not primarily consumed
			 as food and is also sold for uses other than food; and
(c) Supplements, vitamins, nutraceuticals,
			 and pharmaceuticals, but only to the extent that these molecules do not provide
			 caloric value so as to be considered sustenance as food or feed.
(15) "Substantial Amount of New
			 Capital" means the investment, after July 1, 2020, by an eligible business of
			 at least $5,000 in tangible capital assets used directly in the production of
			 renewable chemicals.
(16) "Sugar"
			 means the organic compounds produced from dedicated crops as well as derived
			 from starches, cellulose, and hemiceluloses, including: glucose, fructose,
			 xylose, arabinose, lactose, and sucrose.