SESSION OF 2025
SUPPLEMENTAL NOTE ON SUBSTITUTE FOR HOUSE
BILL NO. 2012
As Recommended by House Committee on
Agriculture and Natural Resources
Brief*
Sub. for HB 2012 would establish the Ethanol Grant
Program Fund (Grant Fund) to provide reimbursement grants
to retailers of higher ethanol blend fuels, establish the Ethanol
Grant Program (Grant Program), and require the Secretary of
Agriculture (Secretary) to administer the Ethanol Grant
Program.
Definitions
The bill would define the terms “motor vehicle” and
“person” and the following terms:
●“Higher ethanol blend” would mean fuel with 15
percent to 85 percent ethanol, capable of being
dispensed directly into motor vehicle fuel tanks;
●“Retailer” would mean a person who engages in
the business of selling motor fuels to the end user
at a retail service station; and
●“Retail service station” would mean a location in
Kansas from which higher ethanol blend is sold to
the general public and is dispensed directly into
motor vehicle fuel tanks for consumption.
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
https://klrd.gov/ Ethanol Grant Program Fund
The bill would establish the Grant Fund in the State
Treasury and would require, on July 1, 2026, and each July 1
thereafter, or as soon as the moneys are available, a transfer
of $5.0 million from the State General Fund (SGF) to the
Grant Fund. The Grant Fund would be administered by the
Secretary.
The bill would cap the annual expenditures from the
Grant Fund at an amount not to exceed $5.0 million, including
no more than $50,000 that could be used to cover
administration costs.
On the date of the annual transfer, the bill would require
the transfer amount to be decreased by the amount of the
remaining balance in the Grant Fund. This amount would be
certified to the Director of Accounts and Reports by the
Secretary in consultation with the Director of the Budget. The
bill would require the certification to be submitted to the
Director of Legislative Research.
Ethanol Grant Program
The bill would establish the Grant Program in the
Kansas Department of Agriculture (KDA) and require the
Secretary to administer the Grant Program.
Reimbursement Grants for Retailers
The bill would authorize a retailer to submit an
application to the Secretary for reimbursement grants during
July of each fiscal year.
The application would be in a form and manner
approved by the Secretary and would:
2- 2012 ●Include a report of the total number of gallons of
higher ethanol blend sold by the retailer during the
preceding fiscal year; and
●Be signed and verified by oath or affirmation that
the contents of the application are accurate; the
signature and verification would be required to be
made by the retailer or by a person authorized by
the retailer to sign and verify the application.
Fraud or Deception in Receiving Grants
The bill specifies that if the Secretary finds, after notice
and hearing conducted in accordance with the Kansas
Administrative Procedure Act, that the retailer fraudulently or
deceptively obtained or attempted to obtain a grant from the
Grant Program, the Secretary would require the retailer to
repay the entire amount of the grant reimbursement that was
received. The repayment would be in addition to any civil or
criminal penalty otherwise allowed by law.
Lump Sum Reimbursement Grant
The bill would require that each August, starting in
August 2026, the Secretary would compare the retailer’s
reported sales of higher ethanol blend over the last two fiscal
years. When the report of an applicant’s sales for the latter
fiscal year shows an increase of sales from the former fiscal
year, the Secretary would approve a lump sum
reimbursement grant for the applicant at a rate to not exceed
$0.05 per gallon of higher ethanol blend sold in excess of the
former fiscal year. The bill would state that no retailer in any
fiscal year would be approved for a reimbursement grant
exceeding $500,000.
The bill would require the Secretary to distribute the
approved lump sum reimbursement grants beginning on
August 31, 2026, and every August 31 thereafter. The
reimbursement grant rate established by the Secretary for
3- 2012 each fiscal year would be the same for all approved
applicants.
If the total amount of approved reimbursement grants
exceeds the total amount transferred to the Grant Fund, the
Secretary would be required to prorate the reimbursement
grant rate accordingly so that the amount disbursed would not
exceed the total amount transferred to the Grant Fund.
Sunset
The provisions of the bill would sunset on September 1,
2030, upon which the Director of Accounts and Reports would
transfer any remaining moneys in the Grant Fund to the SGF
and transfer all liabilities of the Grant Fund to be imposed on
the SGF.
Background
The bill was introduced by the House Committee on
Taxation at the request of a representative of POET Biofuels.
House Committee on Taxation
In the House Committee hearing on January 27, 2025,
proponent testimony was provided by Representative
Rahjes and representatives of Fuel True; ICM, Inc.; Jump
Start Stores, Inc.; Kansas Corn Growers Association; Kansas
Soybean Association; POET Biofuels; Renew Kansas
Biofuels Association; and a private citizen who farms in
Republic County. The proponents generally discussed the
benefits of promoting the use of higher ethanol blend fuel.
Written-only proponent testimony was provided by
representatives of Clean Fuels Alliance America; Growth
Energy; Kansas Cooperative Council; Kansas Farm Bureau;
Kansas Sorghum Producers; Western Plains Energy, LLC;
and a private citizen.
4- 2012 No other testimony was provided.
On January 30, 2025, the bill was withdrawn from the
House Committee on Taxation and referred to the House
Committee on Agriculture and Natural Resources.
House Committee on Agriculture and Natural Resources
In the House Committee hearing on February 13, 2025,
proponent testimony was provided by representatives of
Kansas Corn Growers Association; Jump Start Stores, Inc.;
POET Biofuels; and Renew Kansas Biofuels Association. The
proponents generally stated that higher ethanol blend fuel
would decrease the price for end-user consumers and the bill
would promote investment of infrastructure needed to sell this
type of fuel to allow more consumers to obtain access to it.
Written-only proponent testimony was provided by
representatives of Kansas Cooperative Council; Jump Start
Stores, Inc.; ICM, Inc.; Kansas Farm Bureau; Growth Energy;
Fuel True Independent Energy and Convenience; and the
Kansas Association of Counties.
No other testimony was provided.
On March 6, 2025, the House Committee amended the
bill to:
●Change a tax credit for higher ethanol blends to a
reimbursement grant program for higher ethanol
blends; and
●Remove higher ethanol blend distributors from the
bill.
The House Committee recommended a substitute bill be
passed.
Fiscal Information
5- 2012 According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Kansas Department
of Revenue (KDOR) indicates that it does not have data on
retail sales of qualifying higher ethanol blend fuel to
accurately estimate the fiscal effect of the bill. If the new
credit is fully utilized, the bill would reduce State General
Fund (SGF) revenues by $5.0 million per tax year beginning
in tax year 2026 or FY 2027.
KDOR indicates that the bill would require $219,111
from the SGF in FY 2026 to implement the bill and to modify
the automated tax system. The bill would require KDOR to
hire 1.00 new Customer Service Representative FTE position
to answer questions from taxpayers. KDOR estimates that
ongoing expenses for salaries and wages for the 1.00 new
FTE position would total $72,182 from the State General
Fund in FY 2027. The required programming for this bill by
itself would be performed by existing staff of KDOR. In
addition, if the combined effect of implementing this bill and
other enacted legislation exceeds KDOR’s programming
resources, or if the time for implementing the changes is too
short, additional expenditures for outside contract
programmer services beyond KDOR’s current budget may be
required. Any fiscal effect associated with enactment of HB
2012 is not reflected in The FY 2026 Governor’s Budget
Report.
Ethanol Grant Program Fund; Ethanol Grant Program; higher ethanol blend fuel
6- 2012