According to a statement released by the governor's office, SB0196 is an act to modify the ethanol production incentive payment, create the ethanol infrastructure incentive fund, appropriate money to encourage the use of ethanol and make transfers into the Ethanol Infrastructure Incentive fund and the Revolving Economic Development & Initiative (REDI) fund.
The ethanol measure--passed [image-nocss] in the legislative session that ended March 11--redirects some money in the next five years from a fund that gives incentive payments to ethanol plants. It shifts $3.5 million into grants to boost ethanol sales, mostly through the installation of blender pumps at gas stations. It also directs $10 million to economic development loans over the five years, said the report.
The ethanol measure was proposed by the governor and officials from the ethanol industry, the report said.
Some of the money now used to give production incentive payments to ethanol plants will be redirected in the next five years to increase ethanol use by motorists and replenish a state economic development loan fund. The money saved would be redirected to economic development loans and grants for blender pumps and other efforts in the next five years.
Daugaard said "demand is pretty high" for the loans and the extra money is needed because nearly all of the economic development program's cash already is loaned or offered in proposals to companies. Lawmakers also approved a proposal by Daugaard to sell surplus state property to raise more money for the economic development loan program.
Under the new law, $3.5 million will be shifted into grants, mostly to install blender pumps at gas stations so people can buy fuel containing higher levels of ethanol, which is distilled largely from corn. Another $10 million, or $2 million a year, will go to the state's REDI, a program that makes low-interest loans to encourage new and expanding businesses to locate in South Dakota.
State law previously set aside $7 million a year for subsidies to ethanol plants, with a lifetime cap of $10 million for each plant, said the report.
The law would reduce incentive payments to ethanol plants to $4 million a year in the 2012 and 2013 budget years and increase them to $4.5 million in 2014 through 2016. The lifetime cap would be cut to nearly $9.7 million per plant. The subsidy would return to $7 million a year in 2017.
Ethanol plants also have seen demand level off for sales of fuel containing 10% ethanol, said AP, but consumption should increase with the Environmental Protection Agency's recent decision to allow cars made in 2001 and later to use E-15, a blend containing 15% ethanol, Daugaard said.
Blender pumps will allow motorists to choose higher blends of ethanol in vehicles designed for those higher blends, he said. "Unless you can find yourself a station with a blender pump to give yourself E-15 or whatever blend you want, it doesn't do you any good to be supportive or interested," he said.
Harry Christianson, a Rapid City lawyer who represented the ethanol industry during the legislative session, said the industry is excited about the changes. "It's an effort to put us in a position where we do not rely on the government so much anymore," he told the news agency.
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