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California Modifies CNG and LNG Fuel Tax Rates

The California Board of Equalization (BOE) has issued a notice concerning the implementation of Assembly Bill 1907 (Stats. 2014, Ch. 805), which added language to existing Use Fuel Tax Laws. A.B. 1907 requires CNG sold at retail to the public for use as a motor vehicle fuel be sold in GGEs equivalent to 126.67 cubic feet, or 5.66 pounds. Additionally, the bill requires that LNG be sold in DGEs equal to 6.06 pounds. Beginning January 1, 2015, the new requirement adjusts the tax rate for CNG to 8.87 cents ($0.0887) for each GGE of CNG used. The new requirement also adjusts the tax rate for LNG to 10.17 cents ($0.1017) for each DGE of LNG used. Vendors making retail sales of CNG and/or LNG must begin collecting the adjusted tax rate on January 1, 2015. The bill also requires vendors to place a label on CNG and LNG dispensers indicating “Gasoline gallon equivalent” and “Diesel gallon equivalent,” respectively. Sales of LNG or CNG to users who have paid the annual flat rate tax are not subject to the use fuel tax provided the vehicle has a current flat rate decal attached. For more information on the labeling requirements, contact the California Department of Food and Agriculture, Division of Measurement Standards at www.cdfa.ca.gov/dms. For more information or to download a copy of A.B. 1907, go to www.leginfo.ca.gov.