Arkansas 2025 Regular Session

Arkansas Senate Bill SB568 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		Stricken language would be deleted from and underlined language would be added to present law.
2		-	Act 1012 of the Regular Session
3		-	JLL284 04-09-2025 13:43:52 JLL284
4		-
5		-	State of Arkansas As Engrossed: S4/1/25 S4/8/25 S4/9/25 1
	2	+	JLL284 03/26/2025 3:39:49 PM JLL284
	3	+	State of Arkansas 1
6	4		95th General Assembly A Bill 2
7	5		Regular Session, 2025 SENATE BILL 568 3
8	6		4
9	7		By: Senators Crowell, Gilmore, Stone 5
10	8		By: Representatives Jean, Andrews, Dalby, Henley, M. Shepherd 6
11	9		7
12	10		For An Act To Be Entitled 8
13	11		AN ACT TO AMEND THE LAW CONCERNING THE TAXES 9
14	12		APPLICABLE TO LITHIUM EXTRACTION AND DEVELOPMENT; TO 10
15	13		INCLUDE ELECTRONIC WASTE IN THE DEFINITION OF "SOLID 11
16	14		WASTE" FOR PURPOSES OF THE SALES AND USE TAX 12
17	15		EXEMPTION FOR WASTE REDUCTION, REUSE, OR RECYCLING 13
18	16		EQUIPMENT; TO PROVIDE A SALES AND USE TAX EXEMPTION 14
19	17		FOR LITHIUM RESOURCE DEVELOPMENT; TO AMEND THE LAW 15
20		-	CONCERNING THE SEVERANCE TAX ON LITHIUM; AND FOR 16
21		-	OTHER PURPOSES. 17
22		-	18
23		-	19
24		-	Subtitle 20
25		-	TO AMEND THE LAW CONCERNING THE TAXES 21
26		-	APPLICABLE TO LITHIUM EXTRACTION AND 22
27		-	DEVELOPMENT; TO PROVIDE A SALES AND USE 23
28		-	TAX EXEMPTION FOR LITHIUM RESOURCE 24
29		-	DEVELOPMENT; AND TO AMEND THE LAW 25
30		-	CONCERNING THE SEVERANCE TAX ON LITHIUM. 26
31		-	27
32		-	BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 28
33		-	29
34		-	SECTION 1. Arkansas Code § 19 -6-301(61) and (62), concerning the 30
35		-	enumeration of special revenues, are amended to read as follows: 31
36		-	(61) Brine taxes imposed upon all brine produced in the state 32
37		-	for the purpose of bromine or lithium extraction, as enacted by Acts 1979, 33
38		-	No. 759, and all laws amendatory thereto, § 26 -58-301; 34
39		-	(62) Oil and Gas Commission fees, including oil assessments, gas 35
40		-	assessments in excess of four and one -half (4½) mills each fiscal year until 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
41		-
42		-	2 04-09-2025 13:43:52 JLL284
43		-
44		-
45		-	July 1, 2023, under § 15 -71-107(b)(2)(A)(i), drilling permits, permits for 1
46		-	plugging wells, and permits for each salt water well, all as enacted by Acts 2
47		-	1939, No. 105, and all laws amendatory thereto, §§ 15 -71-101 — 15-71-112, 15-3
48		-	72-101 — 15-72-110, 15-72-205, 15-72-212, 15-72-216, 15-72-301 — 15-72-324, 4
49		-	and 15-72-401 — 15-72-407, and the portion of taxes levied on salt water used 5
50		-	in bromine or lithium production, as enacted by Acts 1947, No. 136, and all 6
51		-	laws amendatory thereto, § 26 -58-111(9); 7
52		-	8
53		-	SECTION 2. Arkansas Code § 26 -51-506(b)(15), concerning the 9
54		-	definitions to be used with respect to the income tax credit for waste 10
55		-	reduction, reuse, or recycling equipment, is amended to read as follows: 11
56		-	(15) “Solid waste” means all putrescible and nonputrescible 12
57		-	wastes in solid or semisolid form, including, but not limited to, yard or 13
58		-	food waste, waste glass, waste metals, waste plastics, wastepapers, waste 14
59		-	paperboard, electronic waste, lithium -ion battery cells and battery packs, 15
60		-	and all other solid or semisolid wastes resulting from industrial, 16
61		-	commercial, agricultural, community, and residential activities; 17
62		-	18
63		-	SECTION 3. Arkansas Code Title 26, Chapter 52, Subchapter 4, is 19
64		-	amended to add an additional section to read as follows: 20
65		-	26-52-457. Lithium resources development — Definitions. 21
66		-	(a) As used in this section: 22
67		-	(1) "Direct compensation" means wages, salaries, bonuses, and 23
68		-	commissions; 24
69		-	(2) "Eligible facility costs" means expenditures for the 25
70		-	development, acquisition, construction, expansion, renovation, refurbishment, 26
71		-	maintenance, and operation of a qualified facility, including without 27
72		-	limitation costs incurred for land, buildings, site improvements, permitting, 28
73		-	facility lease payments, site characterization and assessment, engineering, 29
74		-	and design used directly and exclusively for a qualified facility; 30
75		-	(3) "Facility" means a tract or adjacent tracts of land in the 31
76		-	state and any structures and tangible personal property contained on the land 32
77		-	that are for the operation of a lithium, cathode, anode, lithium battery, and 33
78		-	grid storage facility or are directly engaged in the processing, refining, 34
79		-	conversion, manufacturing, and recycling of lithium or lithium products; 35
80		-	(4) "Indirect compensation" means actual costs incurred for: 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
81		-
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83		-
84		-
85		-	(A) Health, life, and disability insurance coverage; 1
86		-	(B) Retirement benefits, including without limitation 2
87		-	pensions, annuities, and matching retirement fund contributions; and 3
88		-	(C) Moving, relocation, and housing benefits; 4
89		-	(5)(A) "Lithium, cathode, anode, lithium battery, and grid 5
90		-	storage facility equipment" means equipment and related services whether 6
91		-	purchased or leased for immediate use or stored for future use in this state 7
92		-	and other enabling machinery, equipment, software, and hardware purchased or 8
93		-	leased for the further processing, development, refinement, conversion, 9
94		-	manufacturing, or recycling of lithium, cathode, anode, lithium battery, and 10
95		-	grid storage products. 11
96		-	(B) "Lithium, cathode, anode, lithium battery, and grid 12
97		-	storage facility equipment" includes without limitation: 13
98		-	(i) Equipment and materials used for: 14
99		-	(a) The direct processing, refining, 15
100		-	conversion, manufacturing, or recycling of lithium or lithium products, 16
101		-	including without limitation lithium hydroxide and lithium carbonate; 17
102		-	(b) The development or manufacturing of 18
103		-	cathode facilities and cathode active materials, anode facilities and anode 19
104		-	active materials, grid storage facilities and electrolytes, separator 20
105		-	facilities, or lithium battery recycling facilities; 21
106		-	(c) Equipment and input materials used in the 22
107		-	operation of a qualified facility, including without limitation a component 23
108		-	part, installation, refreshment, replacement, or upgrade of a qualified 24
109		-	facility whether or not the property is affixed to or incorporated into real 25
110		-	property; 26
111		-	(d) Equipment necessary for the 27
112		-	transformation, generation, distribution, storage, or management of 28
113		-	electricity that is required to operate equipment of a qualified facility, 29
114		-	including without limitation any substation, generator, uninterruptible 30
115		-	energy equipment, supply, conduit, fuel piping and storage, cabling, duct 31
116		-	bank, switch, switchboard, battery bank or energy storage system, testing 32
117		-	equipment, and backup generator; and 33
118		-	(e) Water conservation systems, including 34
119		-	without limitation a mechanism that is designed to collect, conserve, and 35
120		-	reuse water; and 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
121		-
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123		-
124		-
125		-	(ii) Labor services to install, repair, service, 1
126		-	alter, fabricate, or maintain equipment and materials described in 2
127		-	subdivision (a)(5)(B)(i) of this section; 3
128		-	(6) "Qualified facility" means one (1) or more facilities, 4
129		-	including any addition to or expansion of a facility, owned or operated by a 5
130		-	qualified firm that: 6
131		-	(A) Creates a qualified investment of at least one hundred 7
132		-	million dollars ($100,000,000) within the state no later than ten (10) years 8
133		-	after the start of construction of the facility; 9
134		-	(B) Annually pays total direct compensation and indirect 10
135		-	compensation of at least three million dollars ($3,000,000) to employees 11
136		-	within the state over the two (2) calendar years following the calendar year 12
137		-	in which the facility commences operations; and 13
138		-	(C) Has received a positive cost -benefit analysis from the 14
139		-	Arkansas Economic Development Commission for the facility; 15
140		-	(7) "Qualified firm" means a for -profit business establishment 16
141		-	that is: 17
142		-	(A) Subject to state income, sales, and property taxes; 18
143		-	(B) The owner or operator of a facility; 19
144		-	(C) Engaged in developing lithium, cathode, anode, lithium 20
145		-	battery, and grid storage facility equipment; and 21
146		-	(8) "Qualified investment" means, with respect to a qualified 22
147		-	facility, the aggregate, nonduplicative, eligible facility costs expended by 23
148		-	a qualified firm in the state. 24
149		-	(b)(1) The gross receipts or gross proceeds derived from the purchase 25
150		-	or sale of the following are exempt from the gross receipts tax levied by 26
151		-	this chapter and the compensating use tax levied by the Arkansas Compensating 27
152		-	Tax Act of 1949, § 26 -53-101 et seq.: 28
153		-	(A) Lithium, cathode, anode, lithium battery, and grid storage 29
154		-	facility equipment; 30
155		-	(B) Services purchased for the purpose of and in conjunction 31
156		-	with developing, acquiring, constructing, expanding, renovating, 32
157		-	refurbishing, and operating a qualified facility; 33
158		-	(C) Electricity used by a qualified facility; and 34
159		-	(D) Equipment, materials, and products for the further 35
160		-	processing of materials used in manufacturing lithium, cathode, anode, 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
161		-
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163		-
164		-
165		-	lithium battery, and grid storage facility equipment in the state. 1
166		-	(2) Equipment, materials, products, land, and services 2
167		-	purchased, leased, or rented for the extraction of salt water are 3
168		-	specifically excluded from the exemption provided under subdivision (b)(1) of 4
169		-	this section. 5
170		-	(c)(1) To claim the exemption provided under this section, a qualified 6
171		-	firm shall submit an application for a qualified facility to the Department 7
172		-	of Finance and Administration. 8
173		-	(2) A qualified firm is eligible for the exemption provided 9
174		-	under this section upon the creation of a minimum qualified investment of at 10
175		-	least one hundred million dollars ($100,000,000), if the qualified investment 11
176		-	is created no later than ten (10) years after the start of construction of 12
177		-	the qualified facility that is the subject of the application submitted under 13
178		-	this subsection. 14
179		-	(3)(A) Within thirty (30) days after receiving a completed 15
180		-	application under this subsection, the department shall grant or deny the 16
181		-	application in whole or in part. 17
182		-	(B) If an application submitted under this subsection is 18
183		-	denied as incomplete and the qualified firm submitting the application 19
184		-	provides the additional information or documentation required by the 20
185		-	department or otherwise completes its application within thirty (30) days of 21
186		-	the notice of denial, the application shall be considered completed as of the 22
187		-	original date of submission. 23
188		-	(C) If an application submitted under this subsection is 24
189		-	denied as incomplete and the qualified firm submitting the application fails 25
190		-	to provide the information or documentation required by the department or 26
191		-	complete its application within thirty (30) days of the notice of denial, the 27
192		-	application shall remain denied and may be resubmitted in full with a new 28
193		-	submission date. 29
194		-	(D) If an application submitted under this subsection is 30
195		-	complete and meets the requirements of this section, the department shall 31
196		-	approve the application and certify that the qualified facility is eligible 32
197		-	for the exemption provided under this section. 33
198		-	(4) Once an application is approved under this subsection: 34
199		-	(A) The department shall transmit an approved financial 35
200		-	incentive certificate to the qualified firm; and 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
201		-
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203		-
204		-
205		-	(B) The exemption provided under this section may be 1
206		-	claimed by the qualified facility. 2
207		-	(d) Upon confirmation that the minimum qualified investment required 3
208		-	under subdivision (a)(6)(A) of this section has been met, the department 4
209		-	shall issue a rebate to the qualified firm for any state sales or use tax 5
210		-	paid on the eligible facility costs used to determine the minimum qualified 6
211		-	investment. 7
212		-	(e) After receiving an approved financial incentive certificate from 8
213		-	the department under subdivision (c)(4)(A) of this section, a qualified firm 9
214		-	shall certify annually, for each calendar year in which the qualified firm is 10
215		-	subject to the compensation requirement provided in subdivision (a)(6)(B) of 11
216		-	this section, the aggregate annualized compensation at the qualified facility 12
217		-	for the calendar year. 13
218		-	(f) An approved financial incentive certificate transmitted under 14
219		-	subdivision (c)(4)(A) of this section shall be revoked if: 15
220		-	(1) The qualified facility ceases operations within ten (10) 16
221		-	years of the commencement of construction; 17
222		-	(2) The qualified facility fails to meet the qualified 18
223		-	investment requirement under subdivision (a)(6)(A) of this section; or 19
224		-	(3) The aggregate annualized compensation of a qualified 20
225		-	facility falls below the required aggregate compensation stated in 21
226		-	subdivision (a)(6)(B) of this section. 22
227		-	23
228		-	SECTION 4. Arkansas Code § 26 -58-111(9), concerning the rate of the 24
229		-	severance tax, is amended to read as follows: 25
230		-	(9) On salt water whose naturally dissolved components, or 26
231		-	solutes, are used as source raw materials for bromine , lithium, and other 27
232		-	products derived from the same salt water used in the bromine or lithium 28
233		-	production, two dollars and forty -five cents ($2.45) per one thousand (1,000) 29
234		-	barrels, forty-two thousand United States gallons (42,000 U.S. gals.); and 30
235		-	31
236		-	SECTION 5. Arkansas Code § 26 -58-124(a), concerning distribution of 32
237		-	the severance tax, is amended to read as follows: 33
238		-	(a) All taxes, penalties, and costs collected by the Secretary of the 34
239		-	Department of Finance and Administration under the provisions of this 35
240		-	subchapter, except for the taxes, penalties, and costs collected on natural 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
241		-
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243		-
244		-
245		-	gas and salt water, shall be deposited into the State Treasury to the credit 1
246		-	of the State Apportionment Fund. 2
247		-	3
248		-	SECTION 6. Arkansas Code § 26 -58-124, concerning distribution of the 4
249		-	severance tax, is amended to add an additional subsection to read as follows: 5
250		-	(d) All taxes, penalties, and costs collected by the secretary on salt 6
251		-	water shall be deposited into the State Treasury as follows: 7
252		-	(1) The Treasurer of State shall allocate the first three 8
253		-	hundred twenty-five thousand dollars ($325,000) collected each fiscal year in 9
254		-	the following manner on or before the fifth of the month next following the 10
255		-	month during which funds under this subsection are received by the Treasurer 11
256		-	of State: 12
257		-	(A) Forty-five cents (45¢) of the fee levied per one 13
258		-	thousand (1,000) barrels shall be deposited and credited as provided in § 26 -14
259		-	58-125; and 15
260		-	(B) Of the amount remaining after the allocation under 16
261		-	subdivision (d)(1)(A) of this section: 17
262		-	(i) Three percent (3%) shall be allocated to the 18
263		-	General Revenue Fund Account of the State Apportionment Fund to be used for 19
264		-	defraying the necessary expenses of the state government; and 20
265		-	(ii) Ninety-seven percent (97%) shall be allocated 21
266		-	as follows: 22
267		-	(a) Seventy-five percent (75%) shall be 23
268		-	general revenues and shall be allocated to the various State Treasury funds 24
269		-	participating in general revenues in the respective proportions to each as 25
270		-	provided by and to be used for the respective purposes set forth in the 26
271		-	Revenue Stabilization Law, § 19 -5-101 et seq.; and 27
272		-	(b) Twenty-five percent (25%) shall be special 28
273		-	revenues and shall be allocated to the County Aid Fund; and 29
274		-	(2) The Treasurer of State shall allocate funds collected each 30
275		-	fiscal year in excess of three hundred twenty -five thousand dollars 31
276		-	($325,000) in the following manner on or before the fifth of the month next 32
277		-	following the month during which funds under this subsection are received by 33
278		-	the Treasurer of State: 34
279		-	(A) Forty-five cents (45¢) of the fee levied per one 35
280		-	thousand (1,000) barrels shall be deposited and credited as provided in § 26 -36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
281		-
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283		-
284		-
285		-	58-125; and 1
286		-	(B) Of the amount remaining after the allocation under 2
287		-	subdivision (d)(2)(A) of this section: 3
288		-	(i) Three percent (3%) shall be allocated to the 4
289		-	General Revenue Fund Account of the State Apportionment Fund to be used for 5
290		-	defraying the necessary expenses of the state government; and 6
291		-	(ii)(a) Ninety-seven percent (97%) shall be special 7
292		-	revenues and shall be allocated to the County Aid Fund. 8
293		-	(b) On or before the tenth of the month 9
294		-	following the end of each calendar quarter, the Treasurer of State shall 10
295		-	remit by state warrants to the various county treasurers all funds under 11
296		-	subdivision (d)(2)(B)(ii)(a) of this section then received by him or her 12
297		-	during the quarterly period and transferred to the County Aid Fund in the 13
298		-	proportions of the funds as between the respective counties that, as 14
299		-	certified by the secretary to the Treasurer of State, the salt water 15
300		-	severance tax produced from each respective county bears to the total of the 16
301		-	taxes produced from all counties. 17
302		-	(c) Upon receipt of any taxes under 18
303		-	subdivision (d)(2)(B)(ii)(b) of this section, each county treasurer shall 19
304		-	credit the entire amount to the county road fund for use for the same 20
305		-	purposes as other moneys credited to the county road fund. 21
306		-	22
307		-	SECTION 7. Arkansas Code § 26 -58-301(b)(1), concerning the tax levied for 23
308		-	the benefit of the Arkansas Museum of Natural Resources Fund, is amended to 24
309		-	read as follows: 25
310		-	(b)(1) There is levied upon all brine produced in the state for the 26
311		-	purpose of bromine or lithium extraction a tax of twenty cents (20¢) per one 27
312		-	thousand (1,000) barrels. 28
313		-	29
314		-	SECTION 8. Arkansas Code § 26-58-302(b)(1), concerning the additional 30
315		-	tax levied for the benefit of the Arkansas Museum of Natural Resources Fund, 31
316		-	is amended to read as follows: 32
317		-	(b)(1) There is levied a tax of ten cents (10¢) per one thousand 33
318		-	(1,000) barrels on all brine produced in this state for the purpose of 34
319		-	bromine or lithium extraction. 35
320		-	36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
321		-
322		-	9 04-09-2025 13:43:52 JLL284
323		-
324		-
325		-	SECTION 9. EFFECTIVE DATE. Sections 1-8 of this act are effective on 1
326		-	and after October 1, 2025. 2
327		-	3
328		-	/s/Crowell 4
329		-	5
330		-	6
331		-	APPROVED: 4/22/25 7
332		-	8
333		-	9
334		-	10
335		-	11
336		-	12
337		-	13
338		-	14
339		-	15
340		-	16
341		-	17
342		-	18
	18	+	CONCERNING THE SEVERANCE TAX ON LITHIUM; TO PROVIDE 16
	19	+	AN EXEMPTION FROM THE SEVERANCE TAX FOR LITHIUM 17
	20	+	EXTRACTION; AND FOR OTHER PURPOSES. 18
343	21		19
344	22		20
345		-	21
346		-	22
347		-	23
	23	+	Subtitle 21
	24	+	TO AMEND THE LAW CONCERNING THE TAXES 22
	25	+	APPLICABLE TO LITHIUM EXTRACTION AND 23
	26	+	DEVELOPMENT; TO PROVIDE A SALES AND USE 24
	27	+	TAX EXEMPTION FOR LITHIUM RESOURCE 25
	28	+	DEVELOPMENT; AND TO AMEND THE LAW 26
	29	+	CONCERNING THE SEVERANCE TAX ON LITHIUM. 27
	30	+	28
	31	+	BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 29
	32	+	30
	33	+	SECTION 1. Arkansas Code § 19 -6-301(61) and (62), concerning the 31
	34	+	enumeration of special revenues, are amended to read as follows: 32
	35	+	(61) Brine taxes imposed upon all brine produced in the state 33
	36	+	for the purpose of bromine or lithium extraction, as enacted by Acts 1979, 34
	37	+	No. 759, and all laws amendatory thereto, § 26 -58-301; 35
	38	+	(62) Oil and Gas Commission fees, including oil assessments, gas 36 SB568
	39	+
	40	+	2 03/26/2025 3:39:49 PM JLL284
	41	+	assessments in excess of four and one -half (4½) mills each fiscal year until 1
	42	+	July 1, 2023, under § 15 -71-107(b)(2)(A)(i), drilling permits, permits for 2
	43	+	plugging wells, and permits for each salt water well, all as enacted by Acts 3
	44	+	1939, No. 105, and all laws amendatory thereto, §§ 15 -71-101 — 15-71-112, 15-4
	45	+	72-101 — 15-72-110, 15-72-205, 15-72-212, 15-72-216, 15-72-301 — 15-72-324, 5
	46	+	and 15-72-401 — 15-72-407, and the portion of taxes levied on salt water used 6
	47	+	in bromine or lithium production, as enacted by Acts 1947, No. 136, and all 7
	48	+	laws amendatory thereto, § 26 -58-111(9); 8
	49	+	9
	50	+	SECTION 2. Arkansas Code § 26 -51-506(b)(15), concerning the 10
	51	+	definitions to be used with respect to the income tax credit for waste 11
	52	+	reduction, reuse, or recycling equipment, is amended to read as follows: 12
	53	+	(15) “Solid waste” means all putrescible and nonputrescible 13
	54	+	wastes in solid or semisolid form, including, but not limited to, yard or 14
	55	+	food waste, waste glass, waste metals, waste plastics, wastepapers, waste 15
	56	+	paperboard, electronic waste, lithium -ion battery cells and battery packs, 16
	57	+	and all other solid or semisolid wastes resulting from industrial, 17
	58	+	commercial, agricultural, community, and residential activities; 18
	59	+	19
	60	+	SECTION 3. Arkansas Code Title 26, Chapter 52, Subchapter 4, is 20
	61	+	amended to add an additional section to read as follows: 21
	62	+	26-52-457. Lithium resources development — Definitions. 22
	63	+	(a) As used in this section: 23
	64	+	(1) "Eligible facility costs" means expenditures for the 24
	65	+	development, acquisition, construction, expansion, renovation, refurbishment, 25
	66	+	maintenance, and operation of a qualified facility, including without 26
	67	+	limitation costs incurred for land, buildings, site improvements, permitting, 27
	68	+	lease payments, site characterization and assessment, engineering, and design 28
	69	+	used directly and exclusively for a qualified facility; 29
	70	+	(2) "Facility" means a tract or adjacent tracts of land in the 30
	71	+	state and any structures and tangible personal property contained on the land 31
	72	+	that are for the operation of a lithium, cathode, anode, lithium battery, and 32
	73	+	grid storage facility or are directly engaged in the extraction, processing, 33
	74	+	refining, conversion, manufacturing, and recycling of lithium or lithium 34
	75	+	products; 35
	76	+	(3)(A) "Lithium, cathode, anode, lithium battery, and grid 36 SB568
	77	+
	78	+	3 03/26/2025 3:39:49 PM JLL284
	79	+	storage facility equipment" means equipment and related services whether 1
	80	+	purchased or leased for immediate use or stored for future use in this state 2
	81	+	and other enabling machinery, equipment, software, and hardware purchased or 3
	82	+	leased for the further extraction, processing, development, refinement, 4
	83	+	conversion, manufacturing, or recycling of lithium, cathode, anode, lithium 5
	84	+	battery, and grid storage products. 6
	85	+	(B) "Lithium, cathode, anode, lithium battery, and grid 7
	86	+	storage facility equipment" includes without limitation: 8
	87	+	(i) Equipment and materials used for: 9
	88	+	(a) The direct extraction, processing, 10
	89	+	refining, conversion, manufacturing, or recycling of lithium or lithium 11
	90	+	products, including without limitation lithium hydroxide and lithium 12
	91	+	carbonate; 13
	92	+	(b) The development or manufacturing of 14
	93	+	cathode facilities and cathode active materials, anode facilities and anode 15
	94	+	active materials, grid storage facilities and electrolytes, separator 16
	95	+	facilities, or lithium battery recycling facilities; 17
	96	+	(c) Equipment and input materials used in the 18
	97	+	operation of a qualified facility, including without limitation a component 19
	98	+	part, installation, refreshment, replacement, or upgrade of a qualified 20
	99	+	facility whether or not the property is affixed to or incorporated into real 21
	100	+	property; 22
	101	+	(d) Equipment necessary for the 23
	102	+	transformation, generation, distribution, storage, or management of 24
	103	+	electricity that is required to operate equipment of a qualified facility, 25
	104	+	including without limitation any substation, generator, uninterruptible 26
	105	+	energy equipment, supply, conduit, fuel piping and storage, cabling, duct 27
	106	+	bank, switch, switchboard, battery bank or energy storage system, testing 28
	107	+	equipment, and backup generator; and 29
	108	+	(e) Water conservation systems, including 30
	109	+	without limitation a mechanism that is designed to collect, conserve, and 31
	110	+	reuse water; and 32
	111	+	(ii) Labor services to install, repair, service, 33
	112	+	alter, fabricate, or maintain equipment and materials described in 34
	113	+	subdivision (a)(3)(B)(i) of this section; 35
	114	+	(4) "Qualified facility" means one (1) or more facilities, 36 SB568
	115	+
	116	+	4 03/26/2025 3:39:49 PM JLL284
	117	+	including any addition to or expansion of a facility, owned or operated by a 1
	118	+	qualified firm that: 2
	119	+	(A) Creates a qualified investment of at least one hundred 3
	120	+	million dollars ($100,000,000) within the state no later than ten (10) years 4
	121	+	after the start of construction of the facility; 5
	122	+	(B) Directly or indirectly pays an aggregate annualized 6
	123	+	compensation of at least two million dollars ($2,000,000) to employees within 7
	124	+	the state over the two (2) calendar years following the calendar year in 8
	125	+	which the facility commences operations; and 9
	126	+	(C) Has received a positive cost -benefit analysis from the 10
	127	+	Arkansas Economic Development Commission for the facility; 11
	128	+	(5) "Qualified firm" means a for -profit business establishment 12
	129	+	that is: 13
	130	+	(A) Subject to state income, sales, and property taxes; 14
	131	+	(B) The owner or operator of a facility; 15
	132	+	(C) Engaged in developing lithium, cathode, anode, lithium 16
	133	+	battery, and grid storage facility equipment; and 17
	134	+	(6) "Qualified investment" means, with respect to a qualified 18
	135	+	facility, the aggregate, nonduplicative, eligible facility costs expended by 19
	136	+	a qualified firm in the state. 20
	137	+	(b) The gross receipts or gross proceeds derived from the purchase or 21
	138	+	sale of the following are exempt from the gross receipts tax levied by this 22
	139	+	chapter and the compensating use tax levied by the Arkansas Compensating Tax 23
	140	+	Act of 1949, § 26-53-101 et seq.: 24
	141	+	(1) Lithium, cathode, anode, lithium battery, and grid storage 25
	142	+	facility equipment; 26
	143	+	(2) Services purchased for the purpose of and in conjunction 27
	144	+	with developing, acquiring, constructing, expanding, renovating, 28
	145	+	refurbishing, and operating a qualified facility; 29
	146	+	(3) Electricity used by a qualified facility; and 30
	147	+	(4) Equipment, materials, and products for the further 31
	148	+	processing of materials used in manufacturing lithium, cathode, anode, 32
	149	+	lithium battery, and grid storage facility equipment in the state. 33
	150	+	(c)(1) To claim the exemption provided under this section, a qualified 34
	151	+	firm shall submit an application for a qualified facility to the Department 35
	152	+	of Finance and Administration. 36 SB568
	153	+
	154	+	5 03/26/2025 3:39:49 PM JLL284
	155	+	(2) A qualified firm is eligible for the exemption provided 1
	156	+	under this section upon the creation of a minimum qualified investment of at 2
	157	+	least one hundred million dollars ($100,000,000), if the qualified investment 3
	158	+	is created no later than ten (10) years after the start of construction of 4
	159	+	the qualified facility that is the subject of the application submitted under 5
	160	+	this subsection. 6
	161	+	(3)(A) Within thirty (30) days after receiving a completed 7
	162	+	application under this subsection, the department shall grant or deny the 8
	163	+	application in whole or in part. 9
	164	+	(B) If an application submitted under this subsection is 10
	165	+	denied as incomplete and the qualified firm submitting the application 11
	166	+	provides the additional information or documentation required by the 12
	167	+	department or otherwise completes its application within thirty (30) days of 13
	168	+	the notice of denial, the application shall be considered completed as of the 14
	169	+	original date of submission. 15
	170	+	(C) If an application submitted under this subsection is 16
	171	+	denied as incomplete and the qualified firm submitting the application fails 17
	172	+	to provide the information or documentation required by the department or 18
	173	+	complete its application within thirty (30) days of the notice of denial, the 19
	174	+	application shall remain denied and may be resubmitted in full with a new 20
	175	+	submission date. 21
	176	+	(D) If an application submitted under this subsection is 22
	177	+	complete and meets the requirements of this section, the department shall 23
	178	+	approve the application and certify that the qualified facility is eligible 24
	179	+	for the exemption provided under this section. 25
	180	+	(4) Once an application is approved under this subsection: 26
	181	+	(A) The department shall transmit an approved financial 27
	182	+	incentive certificate to the qualified firm; and 28
	183	+	(B) The exemption provided under this section may be 29
	184	+	claimed by the qualified facility. 30
	185	+	(d) Upon confirmation that the minimum qualified investment required 31
	186	+	under subdivision (a)(4)(A) of this section has been met, the department 32
	187	+	shall issue a rebate to the qualified firm for any sales or use tax paid on 33
	188	+	the eligible facility costs used to determine the minimum qualified 34
	189	+	investment. 35
	190	+	(e)(1) After receiving an approved financial incentive certificate 36 SB568
	191	+
	192	+	6 03/26/2025 3:39:49 PM JLL284
	193	+	from the department under subdivision (c)(4)(A) of this section, a qualified 1
	194	+	firm shall certify annually, for each calendar year in which the qualified 2
	195	+	firm is subject to the compensation requirement provided in subdivision 3
	196	+	(a)(4)(B) of this section, the aggregate annualized compensation at the 4
	197	+	qualified facility for the calendar year. 5
	198	+	(2) Data reported to the department under this subsection shall 6
	199	+	be used only to determine eligibility for the exemption provided under this 7
	200	+	section. 8
	201	+	(f) An approved financial incentive certificate transmitted under 9
	202	+	subdivision (c)(4)(A) of this section shall be revoked if: 10
	203	+	(1) The qualified facility ceases operations within ten (10) 11
	204	+	years of the commencement of construction; 12
	205	+	(2) The qualified facility fails to meet the qualified 13
	206	+	investment requirement under subdivision (a)(4)(A) of this section; or 14
	207	+	(3) The aggregate annualized compensation of a qualified 15
	208	+	facility falls below the required aggregate compensation stated in 16
	209	+	subdivision (a)(4)(B) of this section. 17
	210	+	18
	211	+	SECTION 4. Arkansas Code § 26 -58-111(9), concerning the rate of the 19
	212	+	severance tax, is amended to read as follows: 20
	213	+	(9) On salt water whose naturally dissolved components, or 21
	214	+	solutes, are used as source raw materials for bromine , lithium, and other 22
	215	+	products derived from the same salt water used in the bromine or lithium 23
	216	+	production, two dollars and forty -five cents ($2.45) per one thousand (1,000) 24
	217	+	barrels, forty-two thousand United States gallons (42,000 U.S. gals.); and 25
	218	+	26
	219	+	SECTION 5. Arkansas Code § 26 -58-124(a), concerning distribution of 27
	220	+	the severance tax, is amended to read as follows: 28
	221	+	(a) All taxes, penalties, and costs collected by the Secretary of the 29
	222	+	Department of Finance and Administration under the provisions of this 30
	223	+	subchapter, except for the taxes, penalties, and costs collected on natural 31
	224	+	gas and salt water, shall be deposited into the State Treasury to the credit 32
	225	+	of the State Apportionment Fund. 33
	226	+	34
	227	+	SECTION 6. Arkansas Code § 26 -58-124, concerning distribution of the 35
	228	+	severance tax, is amended to add an additional subsection to read as follows: 36 SB568
	229	+
	230	+	7 03/26/2025 3:39:49 PM JLL284
	231	+	(d) All taxes, penalties, and costs collected by the secretary on salt 1
	232	+	water shall be deposited into the State Treasury as follows: 2
	233	+	(1) The Treasurer of State shall allocate the first three 3
	234	+	hundred twenty-five thousand dollars ($325,000) collected each fiscal year in 4
	235	+	the following manner on or before the fifth of the month next following the 5
	236	+	month during which funds under this subsection are received by the Treasurer 6
	237	+	of State: 7
	238	+	(A) Forty-five cents (45¢) of the fee levied per one 8
	239	+	thousand (1,000) barrels shall be deposited and credited as provided in § 26 -9
	240	+	58-125; and 10
	241	+	(B) Of the amount remaining after the allocation under 11
	242	+	subdivision (d)(1)(A) of this section: 12
	243	+	(i) Three percent (3%) shall be allocated to the 13
	244	+	General Revenue Fund Account of the State Apportionment Fund to be used for 14
	245	+	defraying the necessary expenses of the state government; and 15
	246	+	(ii) Ninety-seven percent (97%) shall be allocated 16
	247	+	as follows: 17
	248	+	(a) Seventy-five percent (75%) shall be 18
	249	+	general revenues and shall be allocated to the various State Treasury funds 19
	250	+	participating in general revenues in the respective proportions to each as 20
	251	+	provided by and to be used for the respective purposes set forth in the 21
	252	+	Revenue Stabilization Law, § 19 -5-101 et seq.; and 22
	253	+	(b) Twenty-five percent (25%) shall be special 23
	254	+	revenues and shall be allocated to the County Aid Fund; and 24
	255	+	(2) The Treasurer of State shall allocate funds collected each 25
	256	+	fiscal year in excess of three hundred twenty -five thousand dollars 26
	257	+	($325,000) in the following manner on or before the fifth of the month next 27
	258	+	following the month during which funds under this subsection are received by 28
	259	+	the Treasurer of State: 29
	260	+	(A) Forty-five cents (45¢) of the fee levied per one 30
	261	+	thousand (1,000) barrels shall be deposited and credited as provided in § 26 -31
	262	+	58-125; and 32
	263	+	(B) Of the amount remaining after the allocation under 33
	264	+	subdivision (d)(2)(A) of this section: 34
	265	+	(i) Three percent (3%) shall be allocated to the 35
	266	+	General Revenue Fund Account of the State Apportionment Fund to be used for 36 SB568
	267	+
	268	+	8 03/26/2025 3:39:49 PM JLL284
	269	+	defraying the necessary expenses of the state government; and 1
	270	+	(ii)(a) Ninety-seven percent (97%) shall be special 2
	271	+	revenues and shall be allocated to the County Aid Fund. 3
	272	+	(b) On or before the tenth of the month 4
	273	+	following the end of each calendar quarter, the Treasurer of State shall 5
	274	+	remit by state warrants to the various county treasurers all funds under 6
	275	+	subdivision (d)(2)(B)(ii)(a) of this section then received by him or her 7
	276	+	during the quarterly period and transferred to the County Aid Fund in the 8
	277	+	proportions of the funds as between the respective counties that, as 9
	278	+	certified by the secretary to the Treasurer of State, the salt water 10
	279	+	severance tax produced from each respective county bears to the total of the 11
	280	+	taxes produced from all counties. 12
	281	+	(c) Upon receipt of any taxes under 13
	282	+	subdivision (d)(2)(B)(ii)(b) of this section, each county treasurer shall 14
	283	+	credit the entire amount to the county road fund for use for the same 15
	284	+	purposes as other moneys credited to the county road fund. 16
	285	+	17
	286	+	SECTION 7. Arkansas Code § 26 -58-301(b)(1), concerning the tax levied 18
	287	+	for the benefit of the Arkansas Museum of Natural Resources Fund, is amended 19
	288	+	to read as follows: 20
	289	+	(b)(1) There is levied upon all brine produced in the state for the 21
	290	+	purpose of bromine or lithium extraction a tax of twenty cents (20¢) per one 22
	291	+	thousand (1,000) barrels. 23
348	292		24
349		-	25
350		-	26
351		-	27
352		-	28
353		-	29
	293	+	SECTION 8. Arkansas Code § 26 -58-302(b)(1), concerning the additional 25
	294	+	tax levied for the benefit of the Arkansas Museum of Natural Resources Fund, 26
	295	+	is amended to read as follows: 27
	296	+	(b)(1) There is levied a tax of ten cents (10¢) per one thousand 28
	297	+	(1,000) barrels on all brine produced in this state for the purpose of 29
	298	+	bromine or lithium extraction. 30
	299	+	31
	300	+	SECTION 9. DO NOT CODIFY. TEMPORARY LANGUAGE. Severance tax exemption 32
	301	+	for lithium extraction. 33
	302	+	(a)(1) Beginning July 1, 2028, a new brine unit created by a producer 34
	303	+	of natural resources after January 1, 2023, is exempt from the severance tax 35
	304	+	on salt water levied under § 26 -58-111(9). 36 SB568
	305	+
	306	+	9 03/26/2025 3:39:49 PM JLL284
	307	+	(2) For the purposes of this section, a new brine unit created 1
	308	+	by a producer of natural resources does not include: 2
	309	+	(A) A brine production area recognized by the Oil and Gas 3
	310	+	Commission before January 1, 2023; or 4
	311	+	(B) A size reduction or transfer of one (1) or more 5
	312	+	contiguous tracts of a brine production unit or brine expansion unit under 6
	313	+	Acts 2025, No. 254. 7
	314	+	(b)(1) A producer of natural resources claiming the exemption provided 8
	315	+	under this section shall file a report in the form prescribed by the 9
	316	+	Secretary of the Department of Finance and Administration within twenty -five 10
	317	+	(25) days after the end of each month that states: 11
	318	+	(A) The total number of barrels of salt water produced by 12
	319	+	the producer of natural resources; 13
	320	+	(B) The amount of severance tax that would have been due 14
	321	+	on the production of salt water if the producer of natural resources were not 15
	322	+	exempt from the severance tax on salt water under this section; and 16
	323	+	(C) Any other information reasonably required by the 17
	324	+	secretary for the enforcement of Arkansas Code § 26 -58-101 et seq. 18
	325	+	(2) The report required under subdivision (b)(1) of this section 19
	326	+	shall be verified by: 20
	327	+	(A) In the instance of an individual producer of natural 21
	328	+	resources or the primary processor, the producer of natural resources or the 22
	329	+	primary processer; and 23
	330	+	(B) In all other instances: 24
	331	+	(i) A member or officer of the producer of natural 25
	332	+	resources or the primary processor; or 26
	333	+	(ii) The manager of the producer of natural 27
	334	+	resources or the primary processor. 28
	335	+	(c) This section expires June 30, 2033. 29
354	336		30
355		-	31
356		-	32
	337	+	SECTION 10. EFFECTIVE DATE. Sections 1 -8 of this act are effective on 31
	338	+	and after October 1, 2025. 32
357	339		33
358	340		34
359	341		35
360	342		36