North Dakota Laws and Incentives

Listed below are the summaries of all current North Dakota laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

State Incentives

Biodiesel and Renewable Diesel Blender Tax Credit

A licensed fuel supplier who blends biodiesel or renewable diesel with diesel fuel may claim an income tax credit of $0.05 per gallon for fuel containing at least 5% biodiesel or renewable diesel. The biodiesel or renewable diesel fuel must meet the applicable ASTM specifications. The tax credit may not exceed the taxpayer's liability for the taxable year and each year's unused credit amount may be carried forward for up to five taxable years. (Reference North Dakota Century Code 57-38-01.22 and 57-43.2-01)

Biodiesel and Renewable Diesel Sales Equipment Tax Credit

Qualified retailers may be eligible for a corporate income tax credit of 10% of the direct costs incurred to adapt or add equipment to a facility so that it may sell diesel fuel containing at least 2% biodiesel or renewable diesel. A retailer may only claim the credit for up to five years and is limited to $50,000 in cumulative credits for all taxable years. The biodiesel or renewable diesel must meet applicable ASTM specifications. (Reference North Dakota Century Code 57-38-01.23 and 57-43.2-01)

Biodiesel and Renewable Production and Blending Equipment Tax Credit

Qualified producers or blenders may be eligible for a corporate income tax credit of 10% of the direct costs incurred to add equipment to retrofit an existing facility or construct a new facility in the state for the purpose of producing or blending diesel fuel containing at least 2% biodiesel or renewable diesel. A taxpayer may only claim the credit for up to five years and is limited to $250,000 in cumulative credits for all taxable years. The biodiesel or renewable diesel must meet applicable ASTM specifications. (Reference North Dakota Century Code 57-38-30.6 and 57-43.2-01)

Biofuel Loan Program

The Biofuels Partnership in Assisting Community Expansion (PACE) Loan Program provides an interest buy down of up to 5% below the note rate to biodiesel, ethanol, or renewable diesel production facilities; livestock operations feeding by-products produced at a biodiesel, ethanol, or renewable diesel facility; and grain handling facilities which provide storage of grain used in biofuels production. Qualified biodiesel, ethanol, and renewable diesel production facilities located in North Dakota may receive up to $500,000 of interest buy down for the purchase, construction, or expansion of a production facility, or the purchase or installation of equipment at the facility.

A biodiesel production facility must produce fuel that is comprised of mono-alkyl esters of long chain fatty acids derived from vegetable oil or animal fats and that meets ASTM specification D6751. An ethanol production facility must produce agriculturally-derived denatured ethanol that is suitable for blending with a petroleum product for use in internal combustion engines. A renewable diesel production facility must produce fuel from renewable resources that meets applicable ASTM specifications. Loan terms vary based on the project type, and recipients of Biofuels PACE loans are not eligible for regular PACE loans. For more information, see the Biofuels PACE Program website.

(Reference North Dakota Century Code 17-03 and 57-43.2-01)

Agriculturally-Derived Fuel Production Facility Loan Guarantees

The Bank of North Dakota offers loan guarantees for eligible entities constructing facilities using biomass for agriculturally-derived fuel production. The total value of loan guarantees under this program may not exceed $25 million at any one time. Additional restrictions apply. (Reference North Dakota Century Code 6-09.7-01 and 6-09.7-09)

Ethanol Production Incentive

The Ethanol Production Incentive provides qualified ethanol producers with quarterly payments based on production volume during times when ethanol prices are unusually low and/or corn prices are unusually high. If an ethanol production facility was in operation in North Dakota before July 1, 1995, it is eligible to receive incentive payments if that facility increases its production by 10 million gallons or 50% of its production capacity, whichever is less, during any 12-month period. The incentive amount is based on the average North Dakota wholesale ethanol price for the preceding quarter and the average North Dakota corn price for the preceding quarter. The total cumulative incentive available to all eligible producers in any single year is $1.6 million. A single eligible facility may not receive payments for longer than 10 years or more than $10 million in incentive payments over the life of the facility. For more information, see the North Dakota Department of Commerce Ethanol Production Incentive website. (Reference North Dakota Century Code 17-02)

Point of Contact
Lori Nitsch
Grants and Contracts Officer
North Dakota Department of Commerce
Phone: (701) 328-2693
lnitsch@nd.gov

Advanced Biofuel Incentives

The North Dakota Industrial Commission's Renewable Energy Program provides matching grants and other forms of assistance to support research and development projects involving advanced and sugar-based biofuel. Advanced biofuel is defined as fuel derived from renewable biomass and includes biofuel derived from cellulose, hemicellulose, or lignin; biofuel derived from sugar and starch other than ethanol derived from corn kernel starch; biofuel derived from waste material, including crop residue, other vegetative waste material, animal waste, food waste, and yard waste; diesel-equivalent fuel derived from renewable biomass, including vegetable oil and animal fat; biogas, including landfill gas and sewage waste treatment gas, produced through the conversion of organic matter from renewable biomass; butanol or other alcohols produced through the conversion of organic matter from renewable biomass; and other fuel derived from cellulosic biomass. For more information, see the Renewable Energy Program website. (Reference North Dakota Century Code 54-63-03)

Laws and Regulations

Alternative Fuel Labeling Requirements

Alternative fuel retailers must label retail dispensing units with the price, name, and main components of the alternative fuel or alternative fuel blend being sold. The labeling must follow established labeling specifications for petroleum-based fuels. An alternative fuel producer may provide the retailer with a label promoting the benefits of the alternative fuel if the label meets the specified requirements. Alternative fuel is defined as a fuel used in an engine or vehicle other than a petroleum-based fuel, including biodiesel and renewable diesel. Alcohol fuel blends containing at least 1% of alcohol by volume must also be clearly labeled at the dispenser and on any price advertisements. (Reference North Dakota Century Code 19-10-03.1 and 19-10-03.3)

Biodiesel and Renewable Diesel Definitions

Biodiesel is defined as a fuel that is comprised of mono-alkyl esters of long chain fatty acids derived from vegetable oil or animal fats and that meets ASTM D6751. Renewable diesel is defined as a fuel produced from non-fossil renewable resources, including agricultural or silvicultural plants, animal fats, residue, and waste generated from the production, processing, and marketing of agricultural products, silvicultural products, and other renewable resources. Renewable diesel must meet applicable ASTM specifications. (Reference North Dakota Century Code 57-43.2-01)

Alternative Fuel Tax Rates

A special excise tax rate of 2% is imposed on the sale of propane and an excise tax of $0.23 per gallon is imposed on all special fuels sales and deliveries, including compressed natural gas (CNG) and liquefied natural gas (LNG). One gallon of special fuel is equal to 120 cubic feet of CNG or 1.7 gallons of LNG. Retailers must obtain a license from the Office of the State Tax Commissioner to sell special fuels. Exceptions apply. (Reference North Dakota Century Code 57-43.2-02 through 57-43.2-05)

Renewable Fuels Promotion

Recognizing that biofuels such as ethanol and biodiesel will be an important part of the state's energy economy and advanced research in biofuels production from biomass will be critical to the long-term viability of biofuels, the North Dakota Legislature adopted the goal that 25% of the nation's energy consumption will come from renewable sources by the year 2025. (Reference North Dakota Century Code 17-01-01)

Low-Speed Vehicle Access to Roadways

A low-speed vehicle is defined as a four-wheeled vehicle that can reach speeds of at least 20 miles per hour (mph) but not more than 25 mph. Low-speed vehicles may not operate on roads with posted speed limits greater than 35 mph, except to cross such roads. Low-speed vehicles must be registered with the state; vehicles owned and used by the federal government, the state, or another state are exempt from registration fees. (Reference North Dakota Century Code 39-29.1)

Experimental Vehicle Definition and Requirements

A vehicle weighing 6,000 pounds or less that is primarily powered by a source other than a combustion engine may be considered an experimental vehicle. A driver may not operate an experimental vehicle unless it is registered as such with the North Dakota Department of Transportation. An experimental vehicle must be equipped with certain safety features and may not operate on a state highway unless it is accompanied by a chase vehicle following at a safe driving distance. Additional requirements and restrictions apply. (Reference North Dakota Century Code 39-10.3)

Autonomous Vehicle (AV) Study

The North Dakota Department of Transportation (DOT) will work with the AV technology industry to study the use of vehicles equipped with automated driving systems on state highways and the data the vehicles store or gather. The study will include a review of current laws dealing with licensing, registration, insurance, data ownership, and inspection and how they should apply to autonomous vehicles. The DOT will report its findings to the legislature in 2019. (Reference House Bill 1202, 2017)