Montana E85 Laws and Incentives
State Incentives
Renewable Energy Property Tax Incentive
Property tax rate abatements of up to 3% are available for new investments in facilities that manufacture, research, or develop products related to biodiesel, biomass, biogas, coal-to-liquid fuels, ethanol, pipelines carrying "clean" products, renewable energy manufacturing plants, and research and development equipment for renewable energy. These incentives last for 15 years after facility start-up, with up to four additional years for construction. (Reference House Bill 3, 2007 Special Session)
Ethanol Production Incentive
Montana based ethanol producers are entitled to a tax incentive of $0.20 per gallon of ethanol solely produced from Montana agricultural products, or if the ethanol was produced from non-Montana agricultural products when Montana products were unavailable. The amount of the tax incentive for each gallon is reduced proportionately, based upon the amount of agricultural or wood products not produced in Montana that are used in the production of the ethanol. The tax incentive is available to a facility for the first six years from the date that production begins. Ethanol eligible for the incentive must be blended with gasoline for sale as ethanol-blended gasoline in Montana, exported from Montana for sale as ethanol-blended gasoline, or used in the production of ethyl tertiary butyl ether for use in reformulated gasoline.An ethanol distributor is not eligible to receive the tax incentive unless at least 20% of Montana product is used to produce ethanol at the facility in the first year of production, 25% of Montana product is used the second year, and the amount of Montana product used each year thereafter must increase by 10% annually. (Reference Montana Code Annotated 15-70-522)
Alternative Fuel Vehicle (AFV) Conversion Tax Credit
An income tax credit is available to businesses or individuals for up to 50% of the equipment and labor costs for converting vehicles to operate on alternative fuels. The maximum credit is $500 for the conversion of vehicles of 10,000 pounds (lbs.) or less Gross Vehicle Weight Rating (GVWR) and $1,000 for vehicles over 10,000 lbs. GVWR. The credit must be applied in the year the conversion is made, and the seller of an alternative fuel may not receive a credit for converting their own vehicles to operate on the alternative fuel they sell. (Reference Montana Code Annotated 15-30-164)
Tax Reduction for Ethanol Blends
A state road tax reduction of 15%, as compared to the tax on gasoline, is available to consumers for using ethanol-blended fuel. This incentive will be available until the Montana renewable fuels standard is in effect. Ethanol-blended fuel is defined as a gasoline that is blended with denatured ethanol. (Reference House Bill 176, 2007, and Montana Code Annotated 15-70-201 and 15-70-204)
State Laws and Regulations
Ethanol Fuel Blend Use Requirement
State government agencies and universities owning or operating motor vehicles capable of burning ethanol-blended fuel gasoline must take all reasonable steps to ensure that the operators of those vehicles use ethanol-blended gasoline to operate the vehicles if ethanol-blended gasoline is commercially available within the operating area of the vehicle and is priced competitively with the motor vehicle fuel gasoline. (Reference Montana Code Annotated 2-17-414)
Biofuels Promotion
In support of the "25 x 25" initiative to increase production of renewable energy by the agricultural community, the Montana legislatures call for the development of a broad spectrum of renewable energy resources, including biofuels, with the goal of agriculture providing 25% of the total energy consumed in the United States by the year 2025. (Reference House Joint Resolution 6, 2007)
Ethanol Blend Mandate
All gasoline sold to consumers for use in motor vehicles operating on public roads must be blended with 10%, by volume, of agriculturally derived, denatured ethanol, within one year after the Montana Department of Transportation has certified that the state has produced 40 million gallons of ethanol and has maintained that level of production on an annualized basis for at least 3 months. If the production of ethanol in Montana drops below 20 million gallons on an annualized basis, the 10% blend requirement does not apply. All gasoline sold as E10 may not contain more than trace amounts of the additive methyl tertiary butyl ether. (Reference Montana Code Annotated 82-15-121)
Alternative Fuel Promotion
The state of Montana encourages the use of alternative fuels and fuel blends to the extent that doing so produces environmental and economic benefits to the citizens of Montana. The state legislature recommends several guidelines for the development of a state alternative fuels policy, including the following: 1) encourage the use of self-sufficient markets; 2) any state alternative fuels program should have measurable benefits and communicated to the public; 3) state and local governments should be encouraged to set an example with their vehicle fleets in the use of alternative fuels and fuel blends. The state also encourages production of alternative fuels and fuel blends. (Reference Montana Code Annotated 90-4-1011)
