First Substitute H.B. 106

Representative Rosalind J. McGee proposes the following substitute bill:

1 CLEAN AIR AND EFFICIENT VEHICLE TAX
2 INCENTIVES
3 2008 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Rosalind J. McGee
6 Senate Sponsor: Gregory S. Bell
7
8 LONG TITLE
9 General Description:
10 This bill provides a tax credit for new vehicles meeting air quality and fuel economy
11 standards, eliminates the clean fuel certificate, and imposes a fuel tax on compressed
12 natural gas for vehicles.
13 Highlighted Provisions:
14 This bill:
15 . eliminates the clean special fuel tax certificate;
16 . defines terms;
17 . reduces the tax credit available for certain vehicles to the lesser of $2,500 or 35% of
18 the vehicle's purchase price;
19 . provides a tax credit of $750 for a new vehicle meeting air quality and fuel economy
20 standards;
21 . eliminates a provision excluding hybrid electric-gasoline vehicles from the tax
22 credit;
23 . imposes a fuel tax on the purchase of compressed natural gas for vehicles; and
24 . makes technical changes.
25 Monies Appropriated in this Bill:

26 None
27 Other Special Clauses:
28 This bill takes effect on January 1, 2009.
29 Utah Code Sections Affected:
30 AMENDS:
31 41-1a-418, as last amended by Laws of Utah 2007, Chapters 173, 217, and 325
32 41-6a-1508, as renumbered and amended by Laws of Utah 2005, Chapter 2
33 59-7-605, as last amended by Laws of Utah 2007, Chapter 306
34 59-10-1009, as last amended by Laws of Utah 2007, Chapter 306
35 59-13-103, as last amended by Laws of Utah 1997, Chapter 271
36 59-13-301, as last amended by Laws of Utah 2003, Chapters 7 and 268
37 59-13-304, as last amended by Laws of Utah 2005, First Special Session, Chapter 1
38 59-13-314, as last amended by Laws of Utah 2003, Chapter 7
39 72-2-124, as last amended by Laws of Utah 2006, Chapters 11 and 135
40
41 Be it enacted by the Legislature of the state of Utah:
42 Section 1. Section 41-1a-418 is amended to read:
43 41-1a-418. Authorized special group license plates.
44 (1) The division shall only issue special group license plates in accordance with this
45 section through Section 41-1a-422 to a person who is specified under this section within the
46 categories listed as follows:
47 (a) disability special group license plates issued in accordance with Section 41-1a-420 ;
48 (b) honor special group license plates, as in a war hero, which plates are issued for a:
49 (i) survivor of the Japanese attack on Pearl Harbor;
50 (ii) former prisoner of war;
51 (iii) recipient of a Purple Heart;
52 (iv) disabled veteran; or
53 (v) recipient of a gold star award issued by the United States Secretary of Defense if
54 the recipient is the spouse, parent, or sibling of a servicemember killed;
55 (c) unique vehicle type special group license plates, as for historical, collectors value,
56 or other unique vehicle type, which plates are issued for a:

57 (i) special interest vehicle;
58 (ii) vintage vehicle;
59 (iii) farm truck; or
60 (iv) vehicle powered by clean fuel [and for which a current clean special fuel certificate
61 is maintained as provided in Section 59-13-304 ] as defined in Section 59-13-102 ;
62 (d) recognition special group license plates, as in a public official or an emergency
63 service giver, which plates are issued for a:
64 (i) current member of the Legislature;
65 (ii) current member of the United States Congress;
66 (iii) current member of the National Guard;
67 (iv) licensed amateur radio operator;
68 (v) currently employed, volunteer, or retired firefighter;
69 (vi) emergency medical technician;
70 (vii) current member of a search and rescue team; or
71 (viii) current honorary consulate designated by the United States Department of State;
72 and
73 (e) support special group license plates, as for a contributor to an institution or cause,
74 which plates are issued for a contributor to:
75 (i) an institution's scholastic scholarship fund;
76 (ii) the Division of Wildlife Resources;
77 (iii) the Department of Veterans' Affairs;
78 (iv) the Division of Parks and Recreation;
79 (v) the Department of Agriculture and Food;
80 (vi) the Guardian Ad Litem Services Account and the Children's Museum of Utah;
81 (vii) the Boy Scouts of America;
82 (viii) spay and neuter programs through No More Homeless Pets in Utah;
83 (ix) the Boys and Girls Clubs of America;
84 (x) Utah public education; or
85 (xi) programs that provide support to organizations that create affordable housing for
86 those in severe need through the Division of Real Estate.
87 (2) Beginning January 1, 2003, the division may not issue a new type of special group

88 license plate unless the division receives:
89 (a) a start-up fee established under Section 63-38-3.2 for production and administrative
90 costs for providing the new special group license plates; or
91 (b) a legislative appropriation for the start-up fee provided under Subsection (2)(a).
92 (3) (a) A sponsoring organization that qualifies for tax-exempt status under Internal
93 Revenue Code Section 501(c)(3) may request the commission to authorize a new type of
94 special group license plate for the sponsoring organization. The sponsoring organization shall:
95 (i) collect a minimum of 200 applications; and
96 (ii) pay a start-up fee established under Section 63-38-3.2 for production and
97 administrative costs for providing the new type of special group license plates.
98 (b) If the provisions of Subsection (3)(a) are met, the commission shall approve the
99 request and the division shall:
100 (i) design a license plate in accordance with Section 41-1a-419 ; and
101 (ii) issue the new type of special group license plates.
102 Section 2. Section 41-6a-1508 is amended to read:
103 41-6a-1508. Low-speed vehicle.
104 (1) Except as otherwise provided in this section, a low-speed vehicle is considered a
105 motor vehicle for purposes of the Utah Code including requirements for:
106 (a) traffic rules under Title 41, Chapter 6a, Traffic Code;
107 (b) driver licensing under Title 53, Chapter 3, Uniform Driver License Act;
108 (c) motor vehicle insurance under Title 41, Chapter 12a, Financial Responsibility of
109 Motor Vehicle Owners and Operators Act;
110 (d) vehicle registration, titling, odometer statements, vehicle identification numbers,
111 license plates, and registration fees under Title 41, Chapter 1a, Motor Vehicle Act;
112 (e) vehicle taxation under Title 59, Chapter 13, Motor and Special Fuel Tax Act, and
113 fee in lieu of property taxes or in lieu fees under Section 59-2-405 ;
114 (f) motor vehicle dealer licensing under Title 41, Chapter 3, Motor Vehicle Business
115 Regulation Act;
116 (g) motor vehicle safety inspection requirements under Section 53-8-205 ; and
117 (h) safety belt requirements under Title 41, Chapter 6a, Part 18, Motor Vehicle Safety
118 Belt Usage Act.

119 (2) (a) A low-speed vehicle shall comply with federal safety standards established in 49
120 C.F.R. 571.500 and shall be equipped with:
121 (i) headlamps;
122 (ii) front and rear turn signals, tail lamps, and stop lamps;
123 (iii) turn signal lamps;
124 (iv) reflex reflectors one on the rear of the vehicle and one on the left and right side and
125 as far to the rear of the vehicle as practical;
126 (v) a parking brake;
127 (vi) a windshield that meets the standards under Section 41-6a-1635 , including a
128 device for cleaning rain, snow, or other moisture from the windshield;
129 (vii) an exterior rearview mirror on the driver's side and either an interior rearview
130 mirror or an exterior rearview mirror on the passenger side;
131 (viii) a speedometer and odometer; and
132 (ix) braking for each wheel.
133 (b) A low-speed vehicle that complies with this Subsection (2) and Subsection (3) and
134 that is not altered from the manufacturer is considered to comply with equipment requirements
135 under Part 16, Vehicle Equipment.
136 (3) A person may not operate a low-speed vehicle that has been structurally altered
137 from the original manufacturer's design.
138 [(4) A user of a low-speed vehicle shall obtain an annual clean special fuel tax
139 certificate for each low-speed vehicle as required under Section 59-13-304 .]
140 [(5)] (4) A low-speed vehicle is exempt from a motor vehicle emissions inspection and
141 maintenance program requirements under Section 41-6a-1642 .
142 [(6)] (5) (a) Except to cross a highway at an intersection, a low-speed vehicle may not
143 be operated on a highway with a posted speed limit of more than 35 miles per hour.
144 (b) In addition to the restrictions under Subsection [(6)] (5)(a), a highway authority,
145 may prohibit or restrict the operation of a low-speed vehicle on any highway under its
146 jurisdiction, if the highway authority determines the prohibition or restriction is necessary for
147 public safety.
148 [(7)] (6) A person may not operate a low-speed vehicle on a highway without
149 displaying on the rear of the low-speed vehicle, a slow-moving vehicle identification emblem

150 that complies with the Society of Automotive Engineers standard SAE J943.
151 [(8)] (7) A person who violates Subsection (2), (3), [(6)] (5), or [(7)] (6) is guilty of a
152 class C misdemeanor.
153 Section 3. Section 59-7-605 is amended to read:
154 59-7-605. Definitions -- Tax credit -- Cleaner burning fuels.
155 (1) As used in this section:
156 (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
157 the standards established in bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
158 [(a)] (b) "Board" means the Air Quality Board created under Title 19, Chapter 2, Air
159 Conservation Act.
160 [(b)] (c) "Certified by the board" means that:
161 (i) a motor vehicle on which conversion equipment has been installed meets the
162 following criteria:
163 (A) before the installation of conversion equipment, the vehicle does not exceed the
164 emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
165 Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
166 (B) the motor vehicle's emissions of regulated pollutants, when operating on a fuel
167 listed in Subsection (2)[(a)(ii)(A)](c)(i) or [(2)(a)(ii)(B)] (ii), is less than the emissions were
168 before the installation of conversion equipment; and
169 (C) a reduction in emissions under Subsection (1)[(b)](c)(i)(B) is demonstrated by:
170 (I) certification of the conversion equipment by the federal Environmental Protection
171 Agency or by a state whose certification standards are recognized by the board;
172 (II) testing the motor vehicle, before and after installation of the conversion equipment,
173 in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use Highway
174 Vehicles and Engines, using all fuel the motor vehicle is capable of using; or
175 (III) any other test or standard recognized by board rule; or
176 (ii) special mobile equipment on which conversion equipment has been installed meets
177 the following criteria:
178 (A) the special mobile equipment's emissions of regulated pollutants, when operating
179 on fuels listed in Subsection (2)[(a)(iii)(A)](d)(i) or [(2)(a)(iii)(B)] (ii), is less than the
180 emissions were before the installation of conversion equipment; and

181 (B) a reduction in emissions under Subsection (1)[(b)](c)(ii)(A) is demonstrated by:
182 (I) certification of the conversion equipment by the federal Environmental Protection
183 Agency or by a state whose certification standards are recognized by the board; or
184 (II) any other test or standard recognized by board rule.
185 [(c)] (d) "Clean fuel grant" means a grant awarded under Title 19, Chapter 1, Part 4,
186 Clean Fuels and Vehicle Technology Program Act, for reimbursement of a portion of the
187 incremental cost of an OEM vehicle or the cost of conversion equipment.
188 [(d)] (e) "Conversion equipment" means equipment referred to in Subsection
189 (2)[(a)(ii)](c) or [(2)(a)(iii)] (d).
190 [(e) "Electric-hybrid vehicle" is as defined in 42 U.S.C. Sec. 13435.]
191 (f) "Fuel economy standards" means that a vehicle's combined fuel economy, as
192 determined in 40 C.F.R. 600.209-95(d) is equal to or greater than:
193 (i) 31 miles per gallon for gasoline-fueled vehicles;
194 (ii) 36 miles per gallon for diesel-fueled vehicles;
195 (iii) 19 miles per gallon for vehicles fueled by a blend of 85% ethanol and 15%
196 gasoline;
197 (iv) 19 miles per gallon for liquified petroleum gas-fueled vehicles; or
198 (v) standards consistent with 40 C.F.R. 600.209-95(d) that are adopted by the Air
199 Quality Board by rule.
200 [(f)] (g) "Incremental cost" has the same meaning as in Section 19-1-402 .
201 [(g)] (h) "OEM vehicle" has the same meaning as in Section 19-1-402 .
202 (i) "Original purchase" means the purchase of a vehicle that has never been titled or
203 registered and has been driven less than 7,500 miles.
204 [(h)] (j) "Special mobile equipment":
205 (i) means any mobile equipment or vehicle that is not designed or used primarily for
206 the transportation of persons or property; and
207 (ii) includes construction or maintenance equipment.
208 (2) [(a) Except as provided in Subsection (2)(b), for] For taxable years beginning on or
209 after January 1, [2001] 2009, but beginning on or before December 31, [2010] 2013, a taxpayer
210 may claim a one-time tax credit per vehicle against tax otherwise due under this chapter or
211 Chapter 8, Gross Receipts Tax on Certain Corporations Not Required to Pay Corporate

212 Franchise or Income Tax Act, in an amount equal to:
213 [(i) 50% of the incremental cost of an OEM vehicle registered in Utah minus the
214 amount of any clean fuel grant received, up to a maximum tax credit of $3,000 per vehicle, if
215 the vehicle:]
216 [(A) is fueled by propane, natural gas, or electricity;]
217 [(B) is fueled by other fuel the board determines annually on or before July 1 to be at
218 least as effective in reducing air pollution as fuels under Subsection (2)(a)(i)(A); or]
219 [(C) meets the clean-fuel vehicle standards in the federal Clean Air Act Amendments
220 of 1990, 42 U.S.C. Sec. 7521 et seq.;]
221 (a) $750 for the original purchase of a new vehicle that is not fueled by compressed
222 natural gas if the vehicle is registered in Utah and meets air quality and fuel economy
223 standards;
224 (b) for the purchase of a vehicle fueled by compressed natural gas that is registered in
225 Utah, the lesser of:
226 (i) $2,500; or
227 (ii) 35% of the purchase price of the vehicle;
228 [(ii)] (c) 50% of the cost of equipment for conversion, if certified by the board, of a
229 motor vehicle registered in Utah minus the amount of any clean fuel grant received, up to a
230 maximum tax credit of $2,500 per motor vehicle, if the motor vehicle is to:
231 [(A)] (i) be fueled by propane, natural gas, or electricity;
232 [(B)] (ii) be fueled by other fuel the board determines annually on or before July 1 to
233 be at least as effective in reducing air pollution as fuels under Subsection (2)[(a)(ii)(A)](c)(i);
234 or
235 [(C)] (iii) meet the federal clean-fuel vehicle standards in the federal Clean Air Act
236 Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; and
237 [(iii)] (d) 50% of the cost of equipment for conversion, if certified by the board, of a
238 special mobile equipment engine minus the amount of any clean fuel grant received, up to a
239 maximum tax credit of $1,000 per special mobile equipment engine, if the special mobile
240 equipment is to be fueled by:
241 [(A)] (i) propane, natural gas, or electricity; or
242 [(B)] (ii) other fuel the board determines annually on or before July 1 to be:

243 [(I)] (A) at least as effective in reducing air pollution as the fuels under Subsection
244 (2)[(a)(iii)(A)](d)(i); or
245 [(II)] (B) substantially more effective in reducing air pollution than the fuel for which
246 the engine was originally designed.
247 [(b) Notwithstanding Subsection (2)(a), for taxable years beginning on or after January
248 1, 2006, a taxpayer may not claim a tax credit under this section with respect to an
249 electric-hybrid vehicle.]
250 (3) A taxpayer shall provide proof of the purchase of an item for which a tax credit is
251 allowed under this section by:
252 (a) providing proof to the board in the form the board requires by rule;
253 (b) receiving a written statement from the board acknowledging receipt of the proof;
254 and
255 (c) retaining the written statement described in Subsection (3)(b).
256 (4) Except as provided by Subsection (5), the tax credit under this section is allowed
257 only:
258 (a) against any Utah tax owed in the taxable year by the taxpayer;
259 (b) in the taxable year in which the item is purchased for which the tax credit is
260 claimed; and
261 (c) once per vehicle.
262 (5) If the amount of a tax credit claimed by a taxpayer under this section exceeds the
263 taxpayer's tax liability under this chapter for a taxable year, the amount of the tax credit
264 exceeding the tax liability may be carried forward for a period that does not exceed the next
265 five taxable years.
266 Section 4. Section 59-10-1009 is amended to read:
267 59-10-1009. Definitions -- Cleaner burning fuels tax credit.
268 (1) As used in this section:
269 (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
270 the standards established in bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
271 [(a)] (b) "Board" means the Air Quality Board created in Title 19, Chapter 2, Air
272 Conservation Act.
273 [(b)] (c) "Certified by the board" means that:

274 (i) a motor vehicle on which conversion equipment has been installed meets the
275 following criteria:
276 (A) before the installation of conversion equipment, the vehicle does not exceed the
277 emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
278 Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
279 (B) the motor vehicle's emissions of regulated pollutants, when operating on fuels
280 listed in Subsection (2)[(a)(ii)(A)](c)(i) or [(2)(a)(ii)(B)] (ii), is less than the emissions were
281 before the installation of conversion equipment; and
282 (C) a reduction in emissions under Subsection (1)[(b)](d)(i)(B) is demonstrated by:
283 (I) certification of the conversion equipment by the federal Environmental Protection
284 Agency or by a state whose certification standards are recognized by the board;
285 (II) testing the motor vehicle, before and after installation of the conversion equipment,
286 in accordance with 40 C.F.R. Part 86, Control Emissions from New and In-use Highway
287 Vehicles and Engines, using all fuels the motor vehicle is capable of using; or
288 (III) any other test or standard recognized by board rule; or
289 (ii) special mobile equipment on which conversion equipment has been installed meets
290 the following criteria:
291 (A) the special mobile equipment's emissions of regulated pollutants, when operating
292 on fuels listed in Subsection (2)[(a)(iii)(A)](c)(i) or [(2)(a)(iii)(B)] (ii), is less than the
293 emissions were before the installation of conversion equipment; and
294 (B) a reduction in emissions under Subsection (1)[(b)](c)(ii)(A) is demonstrated by:
295 (I) certification of the conversion equipment by the federal Environmental Protection
296 Agency or by a state whose certification standards are recognized by the board; or
297 (II) any other test or standard recognized by the board.
298 [(c)] (d) "Clean fuel grant" means a grant a claimant, estate, or trust receives under
299 Title 19, Chapter 1, Part 4, Clean Fuels and Vehicle Technology Program Act, for
300 reimbursement of a portion of the incremental cost of the OEM vehicle or the cost of
301 conversion equipment.
302 [(d)] (e) "Conversion equipment" means equipment referred to in Subsection
303 (2)[(a)(ii)](b) or [(2)(a)(iii)] (c).
304 [(e) "Electric-hybrid vehicle" is as defined in 42 U.S.C. Sec. 13435.]

305 (f) "Fuel economy standards" means that a vehicle's combined fuel economy, as
306 determined in 40 C.F.R. 600.209-95(d) is equal to or greater than:
307 (i) 31 miles per gallon for gasoline-fueled vehicles;
308 (ii) 36 miles per gallon for diesel-fueled vehicles;
309 (iii) 19 miles per gallon for vehicles fueled by a blend of 85% ethanol and 15%
310 gasoline;
311 (iv) 19 miles per gallon for liquified petroleum gas-fueled vehicles; or
312 (v) standards consistent with 40 C.F.R. 600.209-95(d) that are adopted by the Air
313 Quality Board by rule.
314 [(f)] (g) "Incremental cost" has the same meaning as in Section 19-1-402 .
315 [(g)] (h) "OEM vehicle" has the same meaning as in Section 19-1-402 .
316 (i) "Original purchase" means the purchase of a vehicle that has never been titled or
317 registered and has been driven less than 7,500 miles.
318 [(h)] (k) "Special mobile equipment":
319 (i) means any mobile equipment or vehicle not designed or used primarily for the
320 transportation of persons or property; and
321 (ii) includes construction or maintenance equipment.
322 (2) [(a) Except as provided in Subsection (2)(b), for] For taxable years beginning on or
323 after January 1, [2001] 2009, but beginning on or before December 31, [2010] 2013, a
324 claimant, estate, or trust may claim one-time a nonrefundable tax credit per vehicle against tax
325 otherwise due under this chapter in an amount equal to:
326 [(i) 50% of the incremental cost of an OEM vehicle registered in Utah minus the
327 amount of any clean fuel grant received, up to a maximum tax credit of $3,000 per vehicle, if
328 the vehicle:]
329 [(A) is fueled by propane, natural gas, or electricity;]
330 [(B) is fueled by other fuel the board determines annually on or before July 1 to be at
331 least as effective in reducing air pollution as fuels under Subsection (2)(a)(i)(A); or]
332 [(C) meets the clean-fuel vehicle standards in the federal Clean Air Act Amendments
333 of 1990, 42 U.S.C. Sec. 7521 et seq.;]
334 (a) $750 for the original purchase of a new vehicle that is not fueled by compressed
335 natural gas if the vehicle is registered in Utah and meets air quality and fuel economy

336 standards;
337 (b) for the purchase of a vehicle fueled by compressed natural gas that is registered in
338 Utah, a one-time credit per vehicle equal to the lesser of:
339 (i) $2,500; or
340 (ii) 35% of the purchase price of the vehicle;
341 [(ii)] (c) 50% of the cost of equipment for conversion, if certified by the board, of a
342 motor vehicle registered in Utah minus the amount of any clean fuel conversion grant received,
343 up to a maximum tax credit of $2,500 per vehicle, if the motor vehicle:
344 [(A)] (i) is to be fueled by propane, natural gas, or electricity;
345 [(B)] (ii) is to be fueled by other fuel the board determines annually on or before July 1
346 to be at least as effective in reducing air pollution as fuels under Subsection
347 (2)[(a)(ii)(A)](c)(i); or
348 [(C)] (iii) will meet the federal clean fuel vehicle standards in the federal Clean Air Act
349 Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; and
350 [(iii)] (d) 50% of the cost of equipment for conversion, if certified by the board, of a
351 special mobile equipment engine minus the amount of any clean fuel conversion grant
352 received, up to a maximum tax credit of $1,000 per special mobile equipment engine, if the
353 special mobile equipment is to be fueled by:
354 [(A)] (i) propane, natural gas, or electricity; or
355 [(B)] (ii) other fuel the board determines annually on or before July 1 to be:
356 [(I)] (A) at least as effective in reducing air pollution as the fuels under Subsection
357 (2)[(a)(iii)(A)](d)(i); or
358 [(II)] (B) substantially more effective in reducing air pollution than the fuel for which
359 the engine was originally designed.
360 [(b) Notwithstanding Subsection (2)(a), for taxable years beginning on or after January
361 1, 2006, a claimant, estate, or trust may not claim a tax credit under this section with respect to
362 an electric-hybrid vehicle.]
363 (3) A claimant, estate, or trust shall provide proof of the purchase of an item for which
364 a tax credit is allowed under this section by:
365 (a) providing proof to the board in the form the board requires by rule;
366 (b) receiving a written statement from the board acknowledging receipt of the proof;

367 and
368 (c) retaining the written statement described in Subsection (3)(b).
369 (4) Except as provided by Subsection (5), the tax credit under this section is allowed
370 only:
371 (a) against any Utah tax owed in the taxable year by the claimant, estate, or trust;
372 (b) in the taxable year in which the item is purchased for which the tax credit is
373 claimed; and
374 (c) once per vehicle.
375 (5) If the amount of a tax credit claimed by a claimant, estate, or trust under this
376 section exceeds the claimant's, estate's, or trust's tax liability under this chapter for a taxable
377 year, the amount of the tax credit exceeding the tax liability may be carried forward for a period
378 that does not exceed the next five taxable years.
379 Section 5. Section 59-13-103 is amended to read:
380 59-13-103.