State Matters

NGV Policy Portal State Profiles
NGVAmerica provides information and analysis on a growing number of states with a series of State Profiles. The State Profiles cover states’ demographics, political and legislative landscapes, transportation profiles, vehicle markets, and energy production. This information provides stakeholders with the up-to-date information needed to make informed decisions within the NGV marketplace. The State Profiles are made available exclusively to NGVAmerica members through the NGV Policy Portal, a comprehensive source of information on natural gas and the NGV industry. Members can access the State Profiles through the NGV Policy Portal Here

The laws and regulations regarding the sale, purchase, and use of natural gas vehicles (NGV) differ from state to state. It is important to understand the specific laws and regulations for the states in which you own and operate an NGV. Important issues to understand include certification requirements, the way in which natural gas motor fuel is taxed, and the numerous incentives available for the purchase or conversion of an NGV or for the construction of related infrastructure.

State Incentives
State governments, as well as many regional and local governments, offer incentives for buying and operating natural gas vehicles. These incentives include tax deductions/credits, reduced license fees, reduced vehicle sale taxes, lower registration fees. Some states, such as California and Arizona, permit certain alternative fuel vehicles to operate in high occupancy vehicle lanes during peak rush-hour periods. These programs may cover all alternative fuel vehicles or may provide incentives for a specific fuel.

Certification Requirements: EPA vs. CARB
U.S. Environmental Protection Agency (EPA) regulations require manufacturers of alternative fuel systems, whether original equipment manufacturer (OEM) or aftermarket conversion systems, to prove that their systems continue to meet emission requirements and do not increase emissions beyond the levels originally prescribed for the vehicle undergoing modification. Most states recognize EPA certified systems. However, California was given special permission to establish its own certification rules for alternative fuel systems through the California Air Resources Board (CARB), which other states have the option of adopting over those of EPA. In regards to converted or upfitted vehicles, CARB states must also undergo the additional step and adopt California rules for aftermarket systems (13 CCR 2030) in order to require aftermarket conversions to be CARB-certified in their state. As such, NGVAmerica does not believe there is any basis for requiring aftermarket conversions to be CARB certified if the state has not also adopted California rules for aftermarket systems. In such cases, EPA systems should be satisfactory.

In March 2011, EPA issued new rules for aftermarket conversion systems. The new rules expand compliance options to include less burdensome demonstration requirements for vehicles. Until September 2013, CARB certification requirements had not been updated since 1995 and were essentially obsolete. Complying with CARB rules were very costly and time consuming, especially for bi-fuel vehicles. The new rules streamline the certification requirements and provide additional flexibility for companies certifying natural gas conversion systems. However, CARB rules for aftermarket systems remain more burdensome than those of EPA.

To read more about EPA certification rules, click here.

To read more about newly issued CARB certification rules, click here.

Below is a map showing EPA states (blue) and CARB states (red). All CARB states require CARB approved OEM systems. However, most CARB states do not require CARB approved aftermarket systems and will accept those approved by EPA.

CARB States
New OEM
Aftermarket Adoption
Arizona
Dropped Out
Dropped Out
California
Yes
Adopted CARB regulations
Connecticut
Yes
Approves use of EPA
Delaware
Yes
Has not adopted CARB regulations
Massachusetts
Yes
Has not adopted CARB regulations but insists on CARB Systems
Maryland
Yes
Adopted CARB regulations;  Approves use of EPA systems
Maine
Yes
Indicated it does not plan to adopt or enforce CARB aftermarket rules
New Jersey
Yes
Approves use of EPA systems
New York
Yes
Approves use of EPA systems
Oregon
Yes
Regulations appear to allow use of EPA systems
Pennsylvania
Yes
Approves use of EPA systems
Rhode Island
Yes
Has not adopted CARB regulations
Vermont
Yes
Has not adopted CARB regulations
Washington
Yes
Regulations appear to allow use of EPA systems

Motor Fuel Tax
Natural gas motor fuel is taxed at different rates from state to state and is dependent on individual states’ tax codes. This is true of all motor fuels. The legislative challenge for natural gas is that there is currently no uniform method of taxing CNG and LNG at the state level. While many states attempt to tax CNG based on what they consider to be a gasoline gallon equivalent (GGE) or diesel gallon equivalent (DGE), only a small number of states currently tax CNG based on the National Conference of Weights and Measurements method for dispensing CNG (i.e., 5.66 pounds of CNG = 1 GGE). The treatment of LNG is even more problematic as few states tax LNG based on its energy content. For the states that tax LNG based on a liquid gallon of LNG, the result is a much higher effective tax rate than diesel or gasoline. A handful of states use a sticker or decal tax system that may be favorable to CNG or LNG vehicles, but retaining the use of sticker or decal taxes as opposed to retail taxes is not compatible with creating a national market for CNG and LNG. NGVAmerica leads a task force that has released model legislation to address the state-level taxation of CNG and LNG.

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