HB 2012 — Substitute for HB 2012 by Committee on Agriculture and Natural Resources - Establishing the ethanol grant program fund and transferring an amount of not to exceed $5,000,000 from the state general fund to the ethanol grant program fund each July 1 beginning in 2026.

Session of 2025 Substitute for HOUSE BILLNo.BILL No.

2012 By Committee ononAgriculture Taxationand RequestedNatural byResources Sandy3-7 Braden on behalf of POET 1-15 AN ACT concerning taxation;agriculture;

relatingestablishing tothe incomeethanol tax;grant program fund;

providingrequiring a tax credit for the salesecretary and distribution of ethanolagriculture blendsto foradminister motorsuch vehiclefund; fuels.

5transferring Bean itamount enactedof bynot to exceed $5,000,000 from the Legislaturestate ofgeneral fund to the Stateethanol ofgrant Kansas:program fund on July 1, 2026, and each July 1 thereafter;

Sectionestablishing 1. (a) For taxable years 2026 through 2031, there shall be allowed a credit against the tax liability imposed under the Kansas income tax act for a retail dealer that sells higher ethanol blendgrant atprogram; such retail dealer's retail service station or a distributor that sells higher ethanol blend directly to the final user located in this state.

Theallowing amountapproved ofretailers theto creditreceive shalla equalreimbursement $0.05grant per gallon of higher ethanol blend sold by the retail dealer and dispensed through metered pumps at the retail dealer's retail service station or by a distributorrate directlyof not to theexceed final$.05 userper locatedgallon inof thishigher stateethanol duringblend thesold; tax year for which the tax credit is claimed.

(b) Anysetting unuseda credit$500,000 amountscap mayper befiscal carried forward for up to five taxable years immediately following the taxable year for whicheach theapproved creditsretailer; were allowed.

Therequiring creditthe shallsecretary notto beprorate refundable.the total amount of grant moneys distributed to each approved retailer if the total amount of the approved grants for a fiscal year exceeds the amount transferred;

(c) Theabolishing totalthe amountethanol ofgrant taxprogram creditsfund issuedon pursuantSeptember to1, this2030. section shall not exceed $5,000,000 per tax year.

(d) AsBe usedit inenacted thisby section:the Legislature of the State of Kansas:

(1) "Distributor"Section means1. (a)As aused person, firm or corporation doing business in this statesection: that:

(A) Produces,(1) "Higher refines,ethanol blends,blend" compoundsmeans ora manufacturesfuel capable of being dispensed directly into motor fuel;vehicle fuel tanks for consumption that is comprised of at least 15% but not more than 85% ethanol;

(B) imports(2) "motor vehicle" means a motor fuelvehicle intoas thedefined state;by K.S.A.

or8- (C) is126, engagedand inamendments distributionthereto, ofthat motoris fuel.required to be registered pursuant to K.S.A.

(2) "Higher8-126 ethanolet blend"seq., meansand aamendments fuelthereto; capable of being dispensed directly into motor vehicle fuel tanks for consumption that is comprised of at least 15% but not more than 85% ethanol.

(3) "Retail(3) "person" dealer" means a natural person, firmassociation, orpartnership, corporationlimited doingpartnership, businesslimited inliability thiscompany state that owns or operatescorporation; a retail service station in this state.

(4) "Retail(4) "retailer" service station" means a locationperson inthat thisengages statein fromthe whichbusiness higherof ethanolselling blendmotor isfuels sold to the generalend publicuser andat isretail dispensedservice directlystations; into motor vehicle fuel tanks for consumption.

HBand 2012(5) "retail 2service Sec.station" means a location in this state from which higher ethanol blend is sold to the general public and is dispensed directly into motor vehicle fuel tanks for consumption.

(b) There is hereby established in the state treasury the ethanol grant program fund.

The secretary of agriculture shall administer the ethanol grant program fund.All moneys credited to the ethanol grant program fund shall be expended or transferred only for the purposes and in the manner provided by this section.

All expenditures from the ethanol grant program fund shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the secretary for the financing of grants in an amount of not to exceed Sub HB 2012 2 $5,000,000 on an annual basis, including an amount of not to exceed $50,000 to cover expenses for the administration of the fund.

(c) (1) On July 1, 2026, and each July 1 thereafter, or as soon thereafter each such date as moneys are available, the director of accounts and reports shall, subject to the provisions of paragraph (2), transfer an amount of not to exceed $5,000,000 from the state general fund to the ethanol grant program fund.

(2) If, upon the date of transfer, the ethanol grant program fund has a remaining balance, the annual transfer amount shall be reduced by the amount of such remaining balance as certified to the director of accounts and reports by the secretary in consultation with the director of the budget.

At the same time that such certification is submitted to the director of accounts and reports, a copy of such certification shall be submitted to the director of legislative research.

(d) (1) There is hereby established the ethanol grant program within the Kansas department of agriculture.

Such program shall be administered by the secretary of agriculture.

(2) Each year during the month of July, a retailer may submit an application to the secretary for reimbursement grants.

Such application shall be in a form and manner approved by the secretary.

(3) Any such application shall:

(A) Include a report of the total number of gallons of higher ethanol blend sold by such retailer during the preceding fiscal year;

and (B) be signed and verified by oath or affirmation that the contents of such application are accurate.

Such signature and verification shall be made by the retailer or a person authorized by the retailer to sign and verify the application.

(4) If the secretary finds, after notice and hearing conducted in accordance with the provisions of the Kansas administrative procedure act, that the retailer has fraudulently or deceptively obtained or attempted to obtain a grant reimbursement pursuant to this section, the secretary shall require the retailer to repay the entire amount of the grant reimbursement that was fraudulently or deceptively received.

Such repayment shall be in addition to any civil or criminal penalty otherwise allowed by law.

(5) Each August, starting in August 2026, the secretary shall compare the retailer's reported sales of higher ethanol blend over the last two fiscal years.

(6) (A) To the extent that an applicant's report of sales for the latter fiscal year shows an increase of sales from the former fiscal year, the secretary shall approve a lump sum reimbursement grant for such applicant at a rate of not to exceed $.05 per gallon of higher ethanol blend that is sold in excess of the former fiscal year.

(B) No retailer shall be approved in any fiscal year for a Sub HB 2012 3 reimbursement grant that exceeds $500,000.

(7) On August 31, 2026, and each August 31 thereafter, the secretary shall disburse any such approved reimbursement grant in a lump sum to the applicant.

(8) The secretary shall establish a reimbursement grant rate each fiscal year and such rate shall be the same rate for all approved applicants.