A bipartisan group of Arkansas legislators – to include representatives from Northwest Arkansas and the Fort Smith area – are supporting legislation creating a 10-cent per gallon fuel production tax credit designed to help Arkansas based companies compete with alternative fuel producers in other states.
Sen. David Wyatt, D-Batesville, and Rep. James McLean, D-Batesville, filed the legislation on Monday (Mar. 11) according to a press release from the Arkansas Advanced Energy Association (AAEA).
SB 933 essentially helps support operations of two alternative fuel companies based in Batesville and Crossett. The legislation would amend the Arkansas Alternative Fuels Development Program by adding the 10 cents per gallon tax credit on alternative fuels produced in Arkansas.
Batesville-based FutureFuel Chemical Co. produces a biodiesel product using soybean oil, beef tallow and pork lard. The facility is capable of producing 59 million gallons of fuel a year. The company, according to its website, employs more than 400.
Pinnacle was founded in 2006 and produces about 10 million gallons of biodiesel a year.
“Sen. Wyatt and Rep. McLean, represent an area of the state where the biofuels industry supplies hundreds of jobs,” the AAEA said in a statement. “However, because neighboring states like Missouri, Mississippi and Texas are providing generous state incentives to their biofuels producers, Arkansas producers like FutureFuel Chemical Co. of Batesville and Pinnacle Biofuels of Crossett are losing production contracts to competitors in those states.”
The bill would also provide for rebates to cover the costs of converting “diesel-powered and gasoline-powered school buses into dedicated or bi-fuel compressed natural gas school buses.”
If approved, the law would be effective beginning Jan. 1, 2014. The Arkansas Department of Finance and Administration and the Arkansas Agriculture Department would develop the rules related to program implementation.
AAEA said the bill would be a “prudent investment in job growth in the Arkansas Delta, which is home to all Arkansas alternative fuel producers and where the unemployment rate is routinely more than a full percentage higher than the state average.”
Mississippi, noted the AAEA statement, provides a production tax credit of 20 cents per gallon for alternative fuels. Texas exempts biodiesel from the state tax on diesel fuel while Oklahoma, Kansas, Missouri, Iowa, Illinois, and Kentucky all provide significant incentives for biodiesel production.
"If we had received a ten cents per gallon tax credit over the last several years of doing business, it could have made the difference in being able to produce and keep employees working on a steady basis," Brad Dobson, plant manager at Pinnacle Biofuels, said in the AAEA statement. "Bordering states with production credits are causing Arkansas producers like Pinnacle to lose revenue and jobs. It is very important to our company and the surrounding area to get this legislation passed."
Other sponsors of the bill include Reps. Justin Harris, R-West Fork, and Stephanie Malone, R-Fort Smith.