Kentucky Statutes 154.27-020 – Short title — Legislative findings — Purpose of subchapter — Incentives
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(1) This subchapter shall be known as the “Incentives for Energy-related Business
Act.”
(2) The General Assembly hereby finds and declares that it is in the best interest of the Commonwealth to induce the location of innovative energy-related businesses in the Commonwealth in order to advance the public purposes of achieving energy independence, creating new and advanced technologies, creating new jobs and new investment, and creating new sources of tax revenues that but for the inducements to be offered by the authority to approved companies would not exist.
(3) The purpose of this subchapter is to assist the Commonwealth in moving to the forefront of national efforts to achieve energy independence by reducing the Commonwealth’s reliance on imported energy resources, and to become a national leader in emerging industries which use substantial amounts of energy. The provisions of this subchapter seek to accomplish this purpose by providing incentives for companies that, in a carbon capture ready manner, construct, retrofit, or upgrade facilities for the purpose of:
(a) Increasing the production and sale of alternative transportation fuels;
(b) Increasing the production and sale of synthetic natural gas, chemicals, chemical feedstocks, or liquid fuels, from coal, biomass resources, or waste coal through a gasification process;
(c) Increasing the production and sale of energy-efficient alternative fuels;
(d) Generating electricity for sale through alternative methods such as solar power, wind power, biomass resources, landfill methane gas, hydropower, or other similar renewable resources; or
(e) Increasing the usage of electricity in areas which have an abundant supply due to the loss of manufacturing businesses across the state.
(4) To qualify for the incentives provided in this subchapter, the following requirements shall be met:
(a) For an alternative fuel facility or gasification facility that uses oil shale, tar sands, or coal as the primary feedstock, the minimum capital investment shall be one hundred million dollars ($100,000,000);
(b) For an alternative fuel facility or gasification facility that uses biomass resources as the primary feedstock, the minimum capital investment shall be twenty-five million dollars ($25,000,000);
(c) For an energy-efficient alternative fuel facility, the minimum capital investment shall be twenty-five million dollars ($25,000,000);
(d) For an alternative fuel facility located in Kentucky that is newly constructed on or after August 1, 2010, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 1, 2010, and that, after the new construction, retrofit, or upgrade, primarily produces for sale alternative transportation fuels using natural gas or natural gas liquids as the primary feedstock, the minimum capital investment shall be one million dollars ($1,000,000); provided that the authority may approve
a maximum of five (5) projects that meet the requirements of this paragraph;
(e) For a renewable energy facility, the minimum capital investment shall be one million dollars ($1,000,000);
(f) For a carbon dioxide transmission pipeline, the minimum capital investment shall be fifty million dollars ($50,000,000); and
(g) For a cryptocurrency facility, the minimum capital investment shall be one million dollars ($1,000,000).
(5) The incentives under the Incentives for Energy-related Business Act are as follows:
(a) An advance disbursement of post-construction incentives for which an approved company has been approved, the maximum amount of which is based upon the estimated labor component of the total capital investment of the eligible project, and the utilization of Kentucky residents during the construction period as set forth in KRS § 154.27-090;
(b) Sales and use tax incentives of up to one hundred percent (100) of the taxes paid on purchases of tangible personal property made to construct, retrofit, or upgrade an eligible project, including commercial cryptocurrency mining equipment at a facility, as set forth in KRS § 139.517 and KRS § 154.27-070;
(c) Up to eighty percent (80) of the severance taxes paid on the purchase or severance of:
1. Coal that is subject to the tax imposed under KRS § 143.020 and that is specifically used by an alternative fuel facility, energy-efficient alternative fuel facility, or a gasification facility as feedstock for an eligible project, as set forth in KRS § 143.024 and KRS § 154.27-060; or
2. Natural gas or natural gas liquids that are subject to the tax imposed under KRS § 143A.020 and that are specifically used in an alternative fuel facility described in subsection (4)(d) of this section as feedstock for an eligible project, as set forth in KRS § 143A.025 and
154.27-060;
(d) Up to one hundred percent (100) of the Kentucky income tax imposed under KRS § 141.040 or 141.020, and the limited liability entity tax imposed under KRS § 141.0401 on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the eligible project, as set forth in KRS § 141.421 and KRS § 154.27-080; and
(e) Authorization for the approved company to impose a wage assessment of up to four percent (4) of the gross wages of each employee subject to the Kentucky income tax:
1. Whose job was created as a result of the eligible project;
2. Who is employed by the approved company to work at the facility;
and
3. Who is on the payroll of the approved company or an affiliate of the approved company;
as set forth in KRS § 154.27-080.
(6) The maximum recovery from all incentives approved under this subchapter for an eligible project shall not exceed fifty percent (50) of the capital investment in the eligible project.
(7) The incentives available to an approved company shall be negotiated with and approved by the authority.
(8) If a newly constructed facility that qualifies for incentives under this subchapter is later upgraded or retrofitted in a manner that would qualify for incentives under this subchapter, the retrofit or upgrade shall be a separate eligible project, and the minimum investment requirements and carbon capture readiness requirements, if required, shall be met for the retrofit or upgrade to qualify for incentives under this subchapter.
(9) The General Assembly finds that the authorities granted by this subchapter are proper governmental and public purposes for which public moneys may be expended.
Effective:July 1, 2021
History: Amended 2021 Ky. Acts ch. 141, sec. 2, effective July 1, 2021. — Amended 2011 Ky. Acts ch.82, sec.3, effective June 8, 2011. — Amended 2010
Ky. Acts ch. 60, sec. 2, effective July 15, 2010; and ch. 139, sec 3, effective July
15, 2010. — Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 101, effective June 26, 2009. — Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 2, effective August 30, 2007.
Legislative Research Commission Note (7/15/2010). 2010 Ky. Acts ch. 139, sec.
3, amended KRS § 154.27-020 to add a new paragraph (d) to subsection (4) of the statute. This statute was also amended in 2010 Ky. Acts ch. 60, sec. 2, and that amendment added a new paragraph (c) to subsection (4). In codification, the lettering of the former paragraph (4)(c) has been changed to (4)(e) by the Reviser of Statutes under the authority of KRS § 7.136 (1).
Legislative Research Commission Note (8/30/2007). A manifest clerical or typographical error in subsection (5)(a) of this section has been corrected by the Reviser of Statutes during codification pursuant to the authority of KRS § 7.136.
Act.”
Terms Used In Kentucky Statutes 154.27-020
- Alternative fuel facility: means a facility located in Kentucky that is newly constructed on or after August 30, 2007, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 30, 2007, and that, after the new construction, retrofit, or upgrade, primarily produces for sale alternative transportation fuels. See Kentucky Statutes 154.27-010
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Approved company: means a corporation, limited liability company, partnership, registered limited liability partnership, sole proprietorship, business trust, or any other entity approved for incentives for an eligible project. See Kentucky Statutes 154.27-010
- Authority: means the Kentucky Economic Development Finance Authority established by KRS §. See Kentucky Statutes 154.27-010
- Capital investment: means :
1. See Kentucky Statutes 154.27-010 - Carbon capture ready: means planning for or anticipating capture of carbon dioxide in a manner to facilitate continued operation of the facility in compliance with applicable federal requirements. See Kentucky Statutes 154.27-010
- Carbon dioxide transmission pipeline: means the in-state portion of a pipeline, including appurtenant facilities, property rights, and easements, that is used exclusively for the purpose of transporting carbon dioxide to a point of sale, storage, or other carbon management applications. See Kentucky Statutes 154.27-010
- Commonwealth: means the Commonwealth of Kentucky. See Kentucky Statutes 154.27-010
- Company: may extend and be applied to any corporation, company, person, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Construction period: means the period beginning with the activation date of the eligible project and ending on a date set forth in the tax incentive agreement, which shall be no later than five (5) years from the activation date. See Kentucky Statutes 154.27-010
- Cryptocurrency: means a type of virtual currency that utilizes blockchain technology and that:
(a) Can be digitally traded between users. See Kentucky Statutes 154.27-010 - Eligible project: means :
(a) An alternative fuel facility or a gasification facility meeting the investment requirements of KRS §. See Kentucky Statutes 154.27-010 - Energy-efficient alternative fuel facility: means a facility located in Kentucky that is newly constructed on or after August 30, 2010, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 30, 2010, and that, after the new construction, retrofit, or upgrade, will produce for sale energy-efficient alternative fuels. See Kentucky Statutes 154.27-010
- Energy-efficient alternative fuels: means homogeneous fuels that:
(a) Are produced from processes designed to densify feedstock coal, waste coal, or biomass resources. See Kentucky Statutes 154.27-010 - Estimated labor component: means the projected percentage of the total capital investment attributable to labor. See Kentucky Statutes 154.27-010
- Facility: means a single location within the Commonwealth at which machinery and equipment are used:
1. See Kentucky Statutes 154.27-010 - Gasification facility: means a facility located in Kentucky that is newly constructed on or after August 30, 2007, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 30, 2007, and that, after the new construction, retrofit, or upgrade, primarily produces for sale:
1. See Kentucky Statutes 154.27-010 - Gasification process: means a process that converts any carbon-containing material into a synthesis gas composed primarily of carbon monoxide and hydrogen. See Kentucky Statutes 154.27-010
- Personal property: All property that is not real property.
- Post-construction incentives: means the incentives available under KRS
154. See Kentucky Statutes 154.27-010 - Project: includes but is not limited to agribusiness, agricultural or forestry production, harvesting, storage, or processing facilities or equipment. See Kentucky Statutes 154.1-010
- Renewable energy facility: means a facility located in Kentucky that is newly constructed on or after August 30, 2007, or an existing facility located in Kentucky that is retrofitted or upgraded after August 30, 2007, and that, after the new construction, retrofit, or upgrade, utilizes:
(a) Wind power, biomass resources, landfill methane gas, hydropower, or other similar renewable resources to generate electricity in excess of one (1) megawatt for sale to unrelated entities. See Kentucky Statutes 154.27-010 - Retrofit: means a modification or addition to an existing facility that results in the production of a new and different product or services or uses a new or different process to produce the same product or services at the facility. See Kentucky Statutes 154.27-010
- State: means the Commonwealth of Kentucky. See Kentucky Statutes 154.1-010
- Statute: A law passed by a legislature.
- Tax revenues: means any revenues received by the Commonwealth directly or indirectly as a result of the industrial improvement project, including state corporate income taxes, the limited liability entity tax imposed by KRS §. See Kentucky Statutes 154.1-010
- Upgrade: means an investment in an existing facility that results in an increase in the productivity of the facility. See Kentucky Statutes 154.27-010
(2) The General Assembly hereby finds and declares that it is in the best interest of the Commonwealth to induce the location of innovative energy-related businesses in the Commonwealth in order to advance the public purposes of achieving energy independence, creating new and advanced technologies, creating new jobs and new investment, and creating new sources of tax revenues that but for the inducements to be offered by the authority to approved companies would not exist.
(3) The purpose of this subchapter is to assist the Commonwealth in moving to the forefront of national efforts to achieve energy independence by reducing the Commonwealth’s reliance on imported energy resources, and to become a national leader in emerging industries which use substantial amounts of energy. The provisions of this subchapter seek to accomplish this purpose by providing incentives for companies that, in a carbon capture ready manner, construct, retrofit, or upgrade facilities for the purpose of:
(a) Increasing the production and sale of alternative transportation fuels;
(b) Increasing the production and sale of synthetic natural gas, chemicals, chemical feedstocks, or liquid fuels, from coal, biomass resources, or waste coal through a gasification process;
(c) Increasing the production and sale of energy-efficient alternative fuels;
(d) Generating electricity for sale through alternative methods such as solar power, wind power, biomass resources, landfill methane gas, hydropower, or other similar renewable resources; or
(e) Increasing the usage of electricity in areas which have an abundant supply due to the loss of manufacturing businesses across the state.
(4) To qualify for the incentives provided in this subchapter, the following requirements shall be met:
(a) For an alternative fuel facility or gasification facility that uses oil shale, tar sands, or coal as the primary feedstock, the minimum capital investment shall be one hundred million dollars ($100,000,000);
(b) For an alternative fuel facility or gasification facility that uses biomass resources as the primary feedstock, the minimum capital investment shall be twenty-five million dollars ($25,000,000);
(c) For an energy-efficient alternative fuel facility, the minimum capital investment shall be twenty-five million dollars ($25,000,000);
(d) For an alternative fuel facility located in Kentucky that is newly constructed on or after August 1, 2010, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 1, 2010, and that, after the new construction, retrofit, or upgrade, primarily produces for sale alternative transportation fuels using natural gas or natural gas liquids as the primary feedstock, the minimum capital investment shall be one million dollars ($1,000,000); provided that the authority may approve
a maximum of five (5) projects that meet the requirements of this paragraph;
(e) For a renewable energy facility, the minimum capital investment shall be one million dollars ($1,000,000);
(f) For a carbon dioxide transmission pipeline, the minimum capital investment shall be fifty million dollars ($50,000,000); and
(g) For a cryptocurrency facility, the minimum capital investment shall be one million dollars ($1,000,000).
(5) The incentives under the Incentives for Energy-related Business Act are as follows:
(a) An advance disbursement of post-construction incentives for which an approved company has been approved, the maximum amount of which is based upon the estimated labor component of the total capital investment of the eligible project, and the utilization of Kentucky residents during the construction period as set forth in KRS § 154.27-090;
(b) Sales and use tax incentives of up to one hundred percent (100) of the taxes paid on purchases of tangible personal property made to construct, retrofit, or upgrade an eligible project, including commercial cryptocurrency mining equipment at a facility, as set forth in KRS § 139.517 and KRS § 154.27-070;
(c) Up to eighty percent (80) of the severance taxes paid on the purchase or severance of:
1. Coal that is subject to the tax imposed under KRS § 143.020 and that is specifically used by an alternative fuel facility, energy-efficient alternative fuel facility, or a gasification facility as feedstock for an eligible project, as set forth in KRS § 143.024 and KRS § 154.27-060; or
2. Natural gas or natural gas liquids that are subject to the tax imposed under KRS § 143A.020 and that are specifically used in an alternative fuel facility described in subsection (4)(d) of this section as feedstock for an eligible project, as set forth in KRS § 143A.025 and
154.27-060;
(d) Up to one hundred percent (100) of the Kentucky income tax imposed under KRS § 141.040 or 141.020, and the limited liability entity tax imposed under KRS § 141.0401 on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the eligible project, as set forth in KRS § 141.421 and KRS § 154.27-080; and
(e) Authorization for the approved company to impose a wage assessment of up to four percent (4) of the gross wages of each employee subject to the Kentucky income tax:
1. Whose job was created as a result of the eligible project;
2. Who is employed by the approved company to work at the facility;
and
3. Who is on the payroll of the approved company or an affiliate of the approved company;
as set forth in KRS § 154.27-080.
(6) The maximum recovery from all incentives approved under this subchapter for an eligible project shall not exceed fifty percent (50) of the capital investment in the eligible project.
(7) The incentives available to an approved company shall be negotiated with and approved by the authority.
(8) If a newly constructed facility that qualifies for incentives under this subchapter is later upgraded or retrofitted in a manner that would qualify for incentives under this subchapter, the retrofit or upgrade shall be a separate eligible project, and the minimum investment requirements and carbon capture readiness requirements, if required, shall be met for the retrofit or upgrade to qualify for incentives under this subchapter.
(9) The General Assembly finds that the authorities granted by this subchapter are proper governmental and public purposes for which public moneys may be expended.
Effective:July 1, 2021
History: Amended 2021 Ky. Acts ch. 141, sec. 2, effective July 1, 2021. — Amended 2011 Ky. Acts ch.82, sec.3, effective June 8, 2011. — Amended 2010
Ky. Acts ch. 60, sec. 2, effective July 15, 2010; and ch. 139, sec 3, effective July
15, 2010. — Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 101, effective June 26, 2009. — Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 2, effective August 30, 2007.
Legislative Research Commission Note (7/15/2010). 2010 Ky. Acts ch. 139, sec.
3, amended KRS § 154.27-020 to add a new paragraph (d) to subsection (4) of the statute. This statute was also amended in 2010 Ky. Acts ch. 60, sec. 2, and that amendment added a new paragraph (c) to subsection (4). In codification, the lettering of the former paragraph (4)(c) has been changed to (4)(e) by the Reviser of Statutes under the authority of KRS § 7.136 (1).
Legislative Research Commission Note (8/30/2007). A manifest clerical or typographical error in subsection (5)(a) of this section has been corrected by the Reviser of Statutes during codification pursuant to the authority of KRS § 7.136.