House committee approves amended bill creating ethanol grant program to promote higher-ethanol blends

The Kansas House Committee on Agriculture voted to pass House Bill 2012, as amended, creating an Ethanol Grant Program to incentivize retail sales of higher-ethanol motor fuel blends (15% ethanol or greater).

Representative Kyle Hamilton, committee staff, outlined the substitute language that converts an income tax credit into a grant fund administered by the Kansas Department of Agriculture. "The Ethanol Grant Program Fund would be administered by the secretary of agriculture," Hamilton said, and he explained the mechanics: a retailer may apply in July of each fiscal year with a verified report of gallons of higher-ethanol blends sold in the preceding fiscal year; grants would reimburse retailers up to 5¢ per gallon on the increase in higher-blend gallons sold between two fiscal years, subject to a $500,000 cap per retailer and an overall program ceiling of up to $5,000,000 per year.

Representative Gardner, who sponsored the amendment, described the incentive intent: the grant is intended to help retailers offset the cost of infrastructure such as blender pumps or to pass savings to consumers. "If you sell a million gallons of higher blend fuel at 5¢, that'd be $50,000 which would be probably in the neighborhood of about half of the cost of installing a blender pump," Gardner said.

Under the bill’s mechanics, the program would begin with applications submitted in summer 2025 and grants first disbursed in 2026 based on year-over-year increases. If total approved grants in a fiscal year exceed the amount transferred into the fund, the secretary must prorate the reimbursement rate so total disbursements do not exceed the available funds. The substitute bill sets an administrative allowance of up to $50,000 from the fund for department expenses and expires Sept. 1, 2030.

Committee members debated scope and likely uptake. Representative Lehi asked whether all retailers are eligible; Hamilton said retailers that apply and are approved by the secretary would be eligible. Representative Lehi and others raised questions about whether retailers would pass the subsidy to consumers; Gardner said the program aims to support infrastructure and market growth for higher blends. Representative Mosher noted that of about 2,000 retailers in the state, approximately 150 currently sell higher blends, which committee members cited when discussing likely program reach. Representative Featherston asked about the origin of a $2 million implementation estimate; sponsors said appropriations would determine actual transfers and that Appropriations Committee funding decisions will set final amounts.

Representative Gardner moved his amendment and Representative Roth seconded; the committee adopted the amendment by voice vote. Gardner then moved to pass HB 2012 as amended favorably; the motion was seconded by Representative Neely and the committee passed the bill by voice vote.

The committee record shows the bill will be transferred to appropriation decisions for funding if the legislature proceeds. Committee members and sponsors said they view the program as a five-year, trial approach to expand higher-ethanol fuel availability and support Kansas grain producers and in-state renewable fuel production.