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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. List of clean fuels provided to tax commission -- Report to the
             381      Legislature.
             382          (1) The Air Quality Board shall annually provide to the tax commission a list of fuels
             383      that are clean fuels under Section 59-13-102 .
             384          (2) The Air Quality Board created under Section 19-2-103 shall in conjunction with the
             385      State Tax Commission prepare and submit to the Legislature before January 1, 1995, a report
             386      evaluating the impacts, benefits, and economic consequences of the clean fuel [certificate]
             387      provisions of Sections 59-13-201 and 59-13-301 .
             388          Section 6. Section 59-13-301 is amended to read:
             389           59-13-301. Tax basis -- Rate -- Exemptions -- Revenue deposited with treasurer
             390      and credited to Transportation Fund -- Reduction of tax in limited circumstances.
             391          (1) (a) Except as provided in Subsections (2), (3), [and] (11), and (12) and Section
             392      59-13-304 , a tax is imposed at the same rate imposed under Subsection 59-13-201 (1)(a) on the:
             393          (i) removal of undyed diesel fuel from any refinery;
             394          (ii) removal of undyed diesel fuel from any terminal;
             395          (iii) entry into the state of any undyed diesel fuel for consumption, use, sale, or
             396      warehousing;
             397          (iv) sale of undyed diesel fuel to any person who is not registered as a supplier under


             398      this part unless the tax has been collected under this section;
             399          (v) any untaxed special fuel blended with undyed diesel fuel; or
             400          (vi) use of untaxed special fuel[, other than a clean special fuel].
             401          (b) The tax imposed under this section shall only be imposed once upon any special
             402      fuel.
             403          (2) (a) No special fuel tax is imposed or collected upon dyed diesel fuel which:
             404          (i) is sold or used for any purpose other than to operate or propel a motor vehicle upon
             405      the public highways of the state, but this exemption applies only in those cases where the
             406      purchasers or the users of special fuel establish to the satisfaction of the commission that the
             407      special fuel was used for purposes other than to operate a motor vehicle upon the public
             408      highways of the state; or
             409          (ii) is sold to this state or any of its political subdivisions.
             410          (b) No special fuel tax is imposed on undyed diesel fuel [which] or clean fuel that:
             411          (i) is sold to the United States government or any of its instrumentalities or to this state
             412      or any of its political subdivisions;
             413          (ii) is exported from this state if proof of actual exportation on forms prescribed by the
             414      commission is made within 180 days after exportation;
             415          (iii) is used in a vehicle off-highway;
             416          (iv) is used to operate a power take-off unit of a vehicle;
             417          (v) is used for off-highway agricultural uses;
             418          (vi) is used in a separately fueled engine on a vehicle that does not propel the vehicle
             419      upon the highways of the state; or
             420          (vii) is used in machinery and equipment not registered and not required to be
             421      registered for highway use.
             422          (3) No tax is imposed or collected on special fuel if it is:
             423          (a) (i) purchased for business use in machinery and equipment not registered and not
             424      required to be registered for highway use; and
             425          [(b)] (ii) used pursuant to the conditions of a state implementation plan approved under
             426      Title 19, Chapter 2, Air Conservation Act[.]; or
             427          (b) propane or electricity.
             428          (4) Upon request of a buyer meeting the requirements under Subsection (3), the


             429      Division of Air Quality shall issue an exemption certificate that may be shown to a seller.
             430          (5) The special fuel tax shall be paid by the supplier.
             431          (6) (a) The special fuel tax shall be paid by every user who is required by Sections
             432      59-13-303 and 59-13-305 to obtain a special fuel user permit and file special fuel tax reports.
             433          (b) The user shall receive a refundable credit for special fuel taxes paid on purchases
             434      which are delivered into vehicles and for which special fuel tax liability is reported.
             435          (7) (a) Except as provided under Subsections (7)(b) and (c), all revenue received by the
             436      commission from taxes and license fees under this part shall be deposited daily with the state
             437      treasurer and credited to the Transportation Fund.
             438          (b) An appropriation from the Transportation Fund shall be made to the commission to
             439      cover expenses incurred in the administration and enforcement of this part and the collection of
             440      the special fuel tax.
             441          (c) Five dollars of each special fuel user trip permit fee paid under Section 59-13-303
             442      may be used by the commission as a dedicated credit to cover the costs of electronic
             443      credentialing as provided in Section 41-1a-303 .
             444          (8) The commission may either collect no tax on special fuel exported from the state
             445      or, upon application, refund the tax paid.
             446          (9) (a) The United States government or any of its instrumentalities, this state, or a
             447      political subdivision of this state that has purchased special fuel from a supplier or from a retail
             448      dealer of special fuel and has paid the tax on the special fuel as provided in this section is
             449      entitled to a refund of the tax and may file with the commission for a quarterly refund in a
             450      manner prescribed by the commission.
             451          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             452      commission shall make rules governing the application and refund provided for in Subsection
             453      (9)(a).
             454          (10) (a) The purchaser shall pay the tax on diesel fuel purchased for uses under
             455      Subsections (2)(b)(i), (iii), (iv), (v), (vi), and (vii) and apply for a refund for the tax paid as
             456      provided in Subsection (9) and this Subsection (10).
             457          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             458      commission shall make rules governing the application and refund for off-highway and
             459      nonhighway uses provided under Subsections (2)(b)(iii), (iv), (vi), and (vii).


             460          (c) A refund of tax paid under this part on diesel fuel used for nonhighway agricultural
             461      uses shall be made in accordance with the tax return procedures under Section 59-13-202 .
             462          (11) (a) Beginning on April 1, 2001, a tax imposed under this section on special fuel is
             463      reduced to the extent provided in Subsection (11)(b) if:
             464          (i) the Navajo Nation imposes a tax on the special fuel;
             465          (ii) the tax described in Subsection (11)(a)(i) is imposed without regard to whether the
             466      person required to pay the tax is an enrolled member of the Navajo Nation; and
             467          (iii) the commission and the Navajo Nation execute and maintain an agreement as
             468      provided in this Subsection (11) for the administration of the reduction of tax.
             469          (b) (i) If but for Subsection (11)(a) the special fuel is subject to a tax imposed by this
             470      section:
             471          (A) the state shall be paid the difference described in Subsection (11)(b)(ii) if that
             472      difference is greater than $0; and
             473          (B) a person may not require the state to provide a refund, a credit, or similar tax relief
             474      if the difference described in Subsection (11)(b)(ii) is less than or equal to $0.
             475          (ii) The difference described in Subsection (11)(b)(i) is equal to the difference
             476      between:
             477          (A) the amount of tax imposed on the special fuel by this section; less
             478          (B) the tax imposed and collected by the Navajo Nation on the special fuel.
             479          (c) For purposes of Subsections (11)(a) and (b), the tax paid to the Navajo Nation on
             480      the special fuel does not include any interest or penalties a taxpayer may be required to pay to
             481      the Navajo Nation.
             482          (d) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             483      commission shall make rules governing the procedures for administering the reduction of tax
             484      provided under this Subsection (11).
             485          (e) The agreement required under Subsection (11)(a):
             486          (i) may not:
             487          (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
             488          (B) provide a reduction of taxes greater than or different from the reduction described
             489      in this Subsection (11); or
             490          (C) affect the power of the state to establish rates of taxation;


             491          (ii) shall:
             492          (A) be in writing;
             493          (B) be signed by:
             494          (I) the chair of the commission or the chair's designee; and
             495          (II) a person designated by the Navajo Nation that may bind the Navajo Nation;
             496          (C) be conditioned on obtaining any approval required by federal law;
             497          (D) state the effective date of the agreement; and
             498          (E) state any accommodation the Navajo Nation makes related to the construction and
             499      maintenance of state highways and other infrastructure within the Utah portion of the Navajo
             500      Nation; and
             501          (iii) may:
             502          (A) notwithstanding Section 59-1-403 , authorize the commission to disclose to the
             503      Navajo Nation information that is:
             504          (I) contained in a document filed with the commission; and
             505          (II) related to the tax imposed under this section;
             506          (B) provide for maintaining records by the commission or the Navajo Nation; or
             507          (C) provide for inspections or audits of suppliers, distributors, carriers, or retailers
             508      located or doing business within the Utah portion of the Navajo Nation.
             509          (f) (i) If, on or after April 1, 2001, the Navajo Nation changes the tax rate of a tax
             510      imposed on special fuel, any change in the amount of the reduction of taxes under this
             511      Subsection (11) as a result of the change in the tax rate is not effective until the first day of the
             512      calendar quarter after a 60-day period beginning on the date the commission receives notice:
             513          (A) from the Navajo Nation; and
             514          (B) meeting the requirements of Subsection (11)(f)(ii).
             515          (ii) The notice described in Subsection (11)(f)(i) shall state:
             516          (A) that the Navajo Nation has changed or will change the tax rate of a tax imposed on
             517      special fuel;
             518          (B) the effective date of the rate change of the tax described in Subsection
             519      (11)(f)(ii)(A); and
             520          (C) the new rate of the tax described in Subsection (11)(f)(ii)(A).
             521          (g) If the agreement required by Subsection (11)(a) terminates, a reduction of tax is not


             522      permitted under this Subsection (11) beginning on the first day of the calendar quarter after a
             523      30-day period beginning on the day the agreement terminates.
             524          (h) If there is a conflict between this Subsection (11) and the agreement required by
             525      Subsection (11)(a), this Subsection (11) governs.
             526          (12) Beginning on January 1, 2009, a tax imposed under this section on compressed
             527      natural gas is imposed at a reduced rate of 8-1/2 cents per gasoline gallon equivalent to be
             528      increased or decreased proportionately with any increase or decrease in the rate in Subsection
             529      59-13-201 (1)(a).
             530          Section 7. Section 59-13-304 is amended to read:
             531           59-13-304. Inspection of clean fuel vehicles.
             532          [(1) (a) Except as provided in Subsection (4), a user of special fuel who owns a vehicle
             533      powered by a clean special fuel as defined under Section 59-13-102 shall pay a clean special
             534      fuel tax as provided under this section for use of clean special fuel.]
             535          [(b) A user of special fuel who qualifies for the clean special fuel tax shall annually
             536      purchase from the commission a clean special fuel tax certificate for each vehicle owned or
             537      leased that is powered by a clean special fuel.]
             538          [(c) Clean special fuel tax certificates are provided to encourage the use of clean fuels
             539      to reduce air pollution.]
             540          [(2) (a) The fee for a clean special fuel tax certificate is:]
             541          [(i) 70/.19 of the tax per gallon imposed under Subsection 59-13-201 (1)(a), rounded up
             542      to the nearest dollar, for qualified motor vehicles as defined under Section 59-13-102 ; and]
             543          [(ii) 36/.19 of the tax per gallon imposed under Subsection 59-13-201 (1)(a), rounded
             544      up to the nearest dollar, for other vehicles.]
             545          [(b)] (1) The commission may require each clean fuel vehicle to be inspected for safe
             546      operation [before issuing the certificate].
             547          [(c)] (2) Each clean fuel vehicle shall be equipped with an approved and properly
             548      installed carburetion system if it is powered by a fuel that is gaseous at standard atmospheric
             549      conditions.
             550          [(3) (a) Beginning January 1, 2001 through December 31, 2010, there is imposed a
             551      surcharge of $35 on each clean special fuel tax certificate issued under this section.]
             552          [(b) (i) Until Subsection (3)(b)(ii) applies, surcharges imposed under Subsection (3)(a)


             553      shall be deposited into the Centennial Highway Fund Restricted Account created under Section
             554      72-2-118 .]
             555          [(ii) When the highway general obligation bonds have been paid off and the highway
             556      projects completed that are intended to be paid from revenues deposited in the Centennial
             557      Highway Fund Restricted Account as determined by the Executive Appropriations Committee
             558      under Subsection 72-2-118 (6)(d), the surcharge imposed under Subsection (3)(a) shall be
             559      deposited into the Transportation Investment Fund of 2005 created by Section 72-2-124 .]
             560          [(4) A governmental entity identified in Subsection 59-13-301 (9) that owns or leases a
             561      vehicle powered by a special fuel that qualifies as a clean special fuel is exempt from the clean
             562      special fuel tax imposed under this section.]
             563          Section 8. Section 59-13-314 is amended to read:
             564           59-13-314. Special fuel user permit required before registration of vehicle.
             565          Before registering any motor vehicle which is operated by special fuels, the registered
             566      owner or lessee of the vehicle shall obtain[: (1)] a valid special fuel user permit for the current
             567      year if required under Section 59-13-303 [; or].
             568          [(2) a valid clean special fuel tax certificate for the current year if required under
             569      Section 59-13-304 .]
             570          Section 9. Section 72-2-124 is amended to read:
             571           72-2-124. Transportation Investment Fund of 2005.
             572          (1) There is created a special revenue fund entitled the Transportation Investment Fund
             573      of 2005.
             574          (2) The fund consists of monies generated from the following sources:
             575          (a) any voluntary contributions received for the maintenance, construction,
             576      reconstruction, or renovation of state and federal highways; and
             577          (b) appropriations made to the fund by the Legislature.
             578          (3) When the highway general obligation bonds have been paid off and the highway
             579      projects completed that are intended to be paid from revenues deposited in the Centennial
             580      Highway Fund Restricted Account as determined by the Executive Appropriations Committee
             581      under Subsection 72-2-118 (6)(d), the fund shall also consist of monies generated from the
             582      following sources:
             583          (a) registration fees designated under Subsection 41-1a-1201 (6)(a); and


             584          [(b) the clean special fuel tax certificate surcharge under Subsection 59-13-304 (3);
             585      and]
             586          [(c)] (b) the sales and use tax amounts provided for in Section 59-12-103 .
             587          (4) (a) The fund shall earn interest.
             588          (b) All interest earned on fund monies shall be deposited into the fund.
             589          (5) (a) Except as provided in Subsections (5)(b) and (c), the executive director may use
             590      fund monies only to pay the costs of maintenance, construction, reconstruction, or renovation
             591      to state and federal highways prioritized by the Transportation Commission through the
             592      prioritization process for new transportation capacity projects adopted under Section 72-1-304 .
             593          (b) The executive director may use fund monies deposited into the fund in fiscal year
             594      2006 only to pay the costs of maintenance, construction, reconstruction, or renovation to state
             595      and federal highways prioritized by the Transportation Commission.
             596          (c) The executive director may use fund monies to exchange for an equal or greater
             597      amount of federal transportation funds to be used as provided in Subsection (5)(a).
             598          Section 10. Effective date.
             599          This bill takes effect on January 1, 2009.


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