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Second Substitute H.B. 70

Representative Jack R. Draxler proposes the following substitute bill:


             1     
RETROFIT COMPRESSED NATURAL GAS VEHICLES

             2     
AMENDMENTS

             3     
2010 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Jack R. Draxler

             6     
Senate Sponsor: Mark B. Madsen

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill addresses the retrofitting of vehicles to operate on compressed natural gas.
             11      Highlighted Provisions:
             12          This bill:
             13          .    requires certain inspections, emission standards, and certifications for retrofit
             14      compressed natural gas vehicles;
             15          .    requires compliance with applicable law;
             16          .    authorizes the Division of Air Quality to develop programs to coordinate amongst
             17      government and private entities to facilitate use of retrofit compressed natural gas
             18      vehicles;
             19          .    provides that a retrofit compressed natural gas vehicle in compliance with certain
             20      requirements satisfies fleet requirements;
             21          .    prohibits a retrofit compressed natural gas vehicle from receiving a clean fuel
             22      vehicle tax credit, unless it meets certain requirements; and
             23          .    makes technical changes.
             24      Monies Appropriated in this Bill:
             25          None


             26      Other Special Clauses:
             27          None
             28      Utah Code Sections Affected:
             29      AMENDS:
             30          19-2-105.3, as last amended by Laws of Utah 2009, Chapter 183
             31          59-7-605, as last amended by Laws of Utah 2008, Chapter 153
             32          59-10-1009, as last amended by Laws of Utah 2008, Chapter 153
             33      ENACTS:
             34          19-1-406, Utah Code Annotated 1953
             35     
             36      Be it enacted by the Legislature of the state of Utah:
             37          Section 1. Section 19-1-406 is enacted to read:
             38          19-1-406. Retrofit compressed natural gas vehicles -- Inspections, standards, and
             39      certification -- Compliance with other law -- Programs to coordinate.
             40          (1) An owner of a retrofit compressed natural gas vehicle that is retrofit on or after July
             41      1, 2010 may not operate the retrofit compressed natural gas vehicle before the owner has the
             42      retrofit compressed natural gas vehicle:
             43          (a) inspected and certified as safe in accordance with relevant standards, including the
             44      National Fire Protection Association 52 Vehicular Gaseous Fuel Systems Code, by a CSA
             45      America CNG Fuel System Inspector; and
             46          (b) tested to ensure that the retrofit compressed natural gas vehicle satisfies the
             47      emissions standards:
             48          (i) if any, for the county in which the retrofit compressed natural gas vehicle is
             49      registered; or
             50          (ii) for the county in the state with the most lenient emissions standards, if the retrofit
             51      compressed natural gas vehicle is registered in a county with no emissions standards.
             52          (2) A person who performs a retrofit on a retrofit compressed natural gas vehicle shall
             53      certify to the owner of the retrofit compressed natural gas vehicle that the retrofit does not
             54      tamper with, circumvent, or otherwise affect the vehicle's on-board diagnostic system, if any.
             55          (3) (a) After the owner of a retrofit compressed natural gas vehicle that is retrofit on or
             56      after July 1, 2010, has the retrofit compressed natural gas vehicle inspected under Subsection


             57      (1), the owner shall have the retrofit inspected for safety by a CSA America CNG Fuel System
             58      Inspector:
             59          (i) the sooner of:
             60          (A) every three years after the retrofit; or
             61          (B) every 36,000 miles after the retrofit; and
             62          (ii) after any collision occurring at a speed of greater than five miles per hour.
             63          (b) An inspector at a state-required safety inspection shall verify that a retrofit
             64      compressed natural gas vehicle is inspected in accordance with Subsection (3)(a).
             65          (4) The owner of a compressed natural gas vehicle, and a person performing a retrofit
             66      of a compressed natural gas vehicle, shall comply with any applicable federal law concerning a
             67      retrofit compressed natural gas vehicle.
             68          (5) (a) The Division of Air Quality may develop programs to coordinate amongst
             69      government agencies and interested parties in the private sector to facilitate:
             70          (i) testing to ensure compliance with emissions and anti-tampering standards
             71      established in this section or by federal law; and
             72          (ii) the retrofitting of vehicles to operate on compressed natural gas vehicles in a
             73      manner that provides for:
             74          (A) safety;
             75          (B) compliance with applicable law; and
             76          (C) potential improvement in the air quality of this state.
             77          (b) In developing a program under this Subsection (6), the Division of Air Quality
             78      shall:
             79          (i) allow for testing using equipment widely available within the state, if possible; and
             80          (ii) consult with relevant federal, state, and local government agencies and other
             81      interested parties.
             82          Section 2. Section 19-2-105.3 is amended to read:
             83           19-2-105.3. Clean fuel requirements for fleets.
             84          (1) As used in this section:
             85          (a) "1990 Clean Air Act" means the federal Clean Air Act as amended in 1990.
             86          (b) "Clean fuel" means:
             87          (i) propane, compressed natural gas, or electricity;


             88          (ii) other fuel the Air Quality Board created in Title 19, Chapter 2, Air Conservation
             89      Act, determines annually on or before July 1 is at least as effective as fuels under Subsection
             90      (1)(b)(i) in reducing air pollution; and
             91          (iii) other fuel that meets the clean fuel vehicle standards in the 1990 Clean Air Act.
             92          (c) "Fleet" means 10 or more vehicles:
             93          (i) owned or operated by a single entity as defined by board rule; and
             94          (ii) capable of being fueled or that are fueled at a central location.
             95          (d) "Fleet" does not include motor vehicles that are:
             96          (i) held for lease or rental to the general public;
             97          (ii) held for sale or used as demonstration vehicles by motor vehicle dealers;
             98          (iii) used by motor vehicle manufacturers for product evaluations or tests;
             99          (iv) authorized emergency vehicles as defined in Section 41-6a-102 ;
             100          (v) registered under Title 41, Chapter 1a, Part 2, Registration, as farm vehicles;
             101          (vi) special mobile equipment as defined in Section 41-1a-102 ;
             102          (vii) heavy duty trucks with a gross vehicle weight rating of more than 26,000 pounds;
             103          (viii) regularly used by employees to drive to and from work, parked at the employees'
             104      personal residences when they are not at their employment, and not practicably fueled at a
             105      central location;
             106          (ix) owned, operated, or leased by public transit districts; or
             107          (x) exempted by board rule.
             108          (2) (a) After evaluation of reasonably available pollution control strategies, and as part
             109      of the state implementation plan demonstrating attainment of the national ambient air quality
             110      standards, the board may by rule, subject to Subsection (2)(c), require fleets in specified
             111      geographical areas to use clean fuels if the board determines fleet use of clean fuels is:
             112          (i) necessary to demonstrate attainment of the national ambient air quality standards in
             113      any area where they are required; and
             114          (ii) reasonably cost effective when compared to other similarly beneficial control
             115      strategies for demonstrating attainment of the national ambient air quality standards.
             116          (b) State implementation plans developed prior to July 1, 1995, may require fleets to
             117      use clean fuels no earlier than July 1, 1995, unless the board determines fleet use of clean fuels
             118      is necessary prior to July 1, 1995, to demonstrate attainment of the national ambient air quality


             119      standards in any area by an attainment date established by federal law.
             120          (c) The board may not require more than 50% of those trucks in a fleet that are heavy
             121      duty trucks having a gross vehicle weight rating of more than 8,500 pounds and not more than
             122      26,000 pounds to convert to clean fuels under Subsection (2)(b).
             123          (d) A vehicle retrofit to operate on compressed natural gas in accordance with Section
             124      19-1-406 qualifies as a clean fuel vehicle under this section.
             125          (3) (a) After evaluation of reasonably available pollution control strategies, and as part
             126      of a state implementation plan demonstrating only maintenance of the national ambient air
             127      quality standards, the board may by rule, subject to Subsection (3)(b), require fleets in specified
             128      geographical areas to use clean fuels if the board determines fleet use of clean fuels is:
             129          (i) necessary to demonstrate maintenance of the national ambient air quality standards
             130      in any area where they are required; and
             131          (ii) reasonably cost effective as compared with other similarly beneficial control
             132      strategies for demonstrating maintenance of the national ambient air quality standards.
             133          (b) Under Subsection (3)(a) the board may require no more than:
             134          (i) 30% of a fleet to use clean fuels before January 1, 1998;
             135          (ii) 50% of a fleet to use clean fuels before January 1, 1999; and
             136          (iii) 70% of a fleet to use clean fuels before January 1, 2000.
             137          (c) The board may not require more than 50% of those trucks in a fleet that are heavy
             138      duty trucks having a gross vehicle weight rating of more than 8,500 pounds and not more than
             139      26,000 pounds to convert to clean fuels under Subsection (3)(b).
             140          (4) Rules the board makes under this section may include:
             141          (a) dates by which fleets are required to convert to clean fuels under the provisions of
             142      this section;
             143          (b) definitions of fleet owners or operators;
             144          (c) definitions of vehicles exempted from this section by rule;
             145          (d) certification requirements for persons who install clean fuel conversion equipment,
             146      including testing and certification standards regarding installers; and
             147          (e) certification fees for installers, established under Section 63J-1-504 .
             148          (5) Implementation of this section and rules made under this section are subject to the
             149      reasonable availability of clean fuel in the local market as determined by the board.


             150          Section 3. Section 59-7-605 is amended to read:
             151           59-7-605. Definitions -- Tax credit -- Cleaner burning fuels.
             152          (1) As used in this section:
             153          (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
             154      the standards established in bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
             155          (b) "Board" means the Air Quality Board created under Title 19, Chapter 2, Air
             156      Conservation Act.
             157          (c) "Certified by the board" means that:
             158          (i) a motor vehicle on which conversion equipment has been installed meets the
             159      following criteria:
             160          (A) before the installation of conversion equipment, the vehicle does not exceed the
             161      emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
             162      Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
             163          (B) the motor vehicle's emissions of regulated pollutants, when operating on a fuel
             164      listed in Subsection (2)(c)(i) or (ii), is less than the emissions were before the installation of
             165      conversion equipment; and
             166          (C) a reduction in emissions under Subsection (1)(c)(i)(B) is demonstrated by:
             167          (I) certification of the conversion equipment by the federal Environmental Protection
             168      Agency or by a state whose certification standards are recognized by the board;
             169          (II) testing the motor vehicle, before and after installation of the conversion equipment,
             170      in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use Highway
             171      Vehicles and Engines, using all fuel the motor vehicle is capable of using; or
             172          (III) any other test or standard recognized by board rule, which may not include a
             173      retrofit compressed natural gas vehicle that is retrofit in accordance with Section 19-1-406 ,
             174      unless that motor vehicle also satisfies Subsection (1)(c)(i)(C)(I); or
             175          (ii) special mobile equipment on which conversion equipment has been installed meets
             176      the following criteria:
             177          (A) the special mobile equipment's emissions of regulated pollutants, when operating
             178      on fuels listed in Subsection (2)(d)(i) or (ii), is less than the emissions were before the
             179      installation of conversion equipment; and
             180          (B) a reduction in emissions under Subsection (1)(c)(ii)(A) is demonstrated by:


             181          (I) certification of the conversion equipment by the federal Environmental Protection
             182      Agency or by a state whose certification standards are recognized by the board; or
             183          (II) any other test or standard recognized by board rule.
             184          (d) "Clean fuel grant" means a grant awarded under Title 19, Chapter 1, Part 4, Clean
             185      Fuels and Vehicle Technology Program Act, for reimbursement of a portion of the incremental
             186      cost of an OEM vehicle or the cost of conversion equipment.
             187          (e) "Conversion equipment" means equipment referred to in Subsection (2)(c) or (d).
             188          (f) "Fuel economy standards" means that a vehicle's combined fuel economy, as
             189      determined in 40 C.F.R. 600.209-95(d) is equal to or greater than:
             190          (i) 31 miles per gallon for gasoline-fueled vehicles;
             191          (ii) 36 miles per gallon for diesel-fueled vehicles;
             192          (iii) 19 miles per gallon for vehicles fueled by a blend of 85% ethanol and 15%
             193      gasoline;
             194          (iv) 19 miles per gallon for liquified petroleum gas-fueled vehicles; or
             195          (v) standards consistent with 40 C.F.R. 600.209-95(d) that are adopted by the Air
             196      Quality Board by rule.
             197          (g) "Incremental cost" has the same meaning as in Section 19-1-402 .
             198          (h) "OEM vehicle" has the same meaning as in Section 19-1-402 .
             199          (i) "Original purchase" means the purchase of a vehicle that has never been titled or
             200      registered and has been driven less than 7,500 miles.
             201          (j) "Special mobile equipment":
             202          (i) means any mobile equipment or vehicle that is not designed or used primarily for
             203      the transportation of persons or property; and
             204          (ii) includes construction or maintenance equipment.
             205          (2) For taxable years beginning on or after January 1, 2009, but beginning on or before
             206      December 31, 2013, a taxpayer may claim a tax credit against tax otherwise due under this
             207      chapter or Chapter 8, Gross Receipts Tax on Certain Corporations Not Required to Pay
             208      Corporate Franchise or Income Tax Act, in an amount equal to:
             209          (a) $750 for the original purchase of a new vehicle that is not fueled by compressed
             210      natural gas if the vehicle is registered in Utah and meets air quality and fuel economy
             211      standards;


             212          (b) for the purchase of a vehicle fueled by compressed natural gas that is registered in
             213      Utah, the lesser of:
             214          (i) $2,500; or
             215          (ii) 35% of the purchase price of the vehicle;
             216          (c) 50% of the cost of equipment for conversion, if certified by the board, of a motor
             217      vehicle registered in Utah minus the amount of any clean fuel grant received, up to a maximum
             218      tax credit of $2,500 per motor vehicle, if the motor vehicle is to:
             219          (i) be fueled by propane, natural gas, or electricity;
             220          (ii) be fueled by other fuel the board determines annually on or before July 1 to be at
             221      least as effective in reducing air pollution as fuels under Subsection (2)(c)(i); or
             222          (iii) meet the federal clean-fuel vehicle standards in the federal Clean Air Act
             223      Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; and
             224          (d) 50% of the cost of equipment for conversion, if certified by the board, of a special
             225      mobile equipment engine minus the amount of any clean fuel grant received, up to a maximum
             226      tax credit of $1,000 per special mobile equipment engine, if the special mobile equipment is to
             227      be fueled by:
             228          (i) propane, natural gas, or electricity; or
             229          (ii) other fuel the board determines annually on or before July 1 to be:
             230          (A) at least as effective in reducing air pollution as the fuels under Subsection (2)(d)(i);
             231      or
             232          (B) substantially more effective in reducing air pollution than the fuel for which the
             233      engine was originally designed.
             234          (3) A taxpayer shall provide proof of the purchase of an item for which a tax credit is
             235      allowed under this section by:
             236          (a) providing proof to the board in the form the board requires by rule;
             237          (b) receiving a written statement from the board acknowledging receipt of the proof;
             238      and
             239          (c) retaining the written statement described in Subsection (3)(b).
             240          (4) Except as provided by Subsection (5), the tax credit under this section is allowed
             241      only:
             242          (a) against any Utah tax owed in the taxable year by the taxpayer;


             243          (b) in the taxable year in which the item is purchased for which the tax credit is
             244      claimed; and
             245          (c) once per vehicle.
             246          (5) If the amount of a tax credit claimed by a taxpayer under this section exceeds the
             247      taxpayer's tax liability under this chapter for a taxable year, the amount of the tax credit
             248      exceeding the tax liability may be carried forward for a period that does not exceed the next
             249      five taxable years.
             250          (6) The tax credit provided by this section may be taken only once per vehicle.
             251          Section 4. Section 59-10-1009 is amended to read:
             252           59-10-1009. Definitions -- Cleaner burning fuels tax credit.
             253          (1) As used in this section:
             254          (a) "Air quality standards" means that a vehicle's emissions are equal to or cleaner than
             255      the standards established in bin 2 in Table S04-1, of 40 C.F.R. 86.1811-04(c)(6).
             256          (b) "Board" means the Air Quality Board created in Title 19, Chapter 2, Air
             257      Conservation Act.
             258          (c) "Certified by the board" means that:
             259          (i) a motor vehicle on which conversion equipment has been installed meets the
             260      following criteria:
             261          (A) before the installation of conversion equipment, the vehicle does not exceed the
             262      emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
             263      Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
             264          (B) the motor vehicle's emissions of regulated pollutants, when operating on fuels
             265      listed in Subsection (2)(c)(i) or (ii), is less than the emissions were before the installation of
             266      conversion equipment; and
             267          (C) a reduction in emissions under Subsection (1)[(d)](c)(i)(B) is demonstrated by:
             268          (I) certification of the conversion equipment by the federal Environmental Protection
             269      Agency or by a state whose certification standards are recognized by the board;
             270          (II) testing the motor vehicle, before and after installation of the conversion equipment,
             271      in accordance with 40 C.F.R. Part 86, Control Emissions from New and In-use Highway
             272      Vehicles and Engines, using all fuels the motor vehicle is capable of using; or
             273          (III) any other test or standard recognized by board rule, which may not include a


             274      retrofit compressed natural gas vehicle that is retrofit in accordance with Section 19-1-406 ,
             275      unless that motor vehicle also satisfies Subsection (1)(c)(i)(C)(I); or
             276          (ii) special mobile equipment on which conversion equipment has been installed meets
             277      the following criteria:
             278          (A) the special mobile equipment's emissions of regulated pollutants, when operating
             279      on fuels listed in Subsection (2)(c)(i) or (ii), is less than the emissions were before the
             280      installation of conversion equipment; and
             281          (B) a reduction in emissions under Subsection (1)(c)(ii)(A) is demonstrated by:
             282          (I) certification of the conversion equipment by the federal Environmental Protection
             283      Agency or by a state whose certification standards are recognized by the board; or
             284          (II) any other test or standard recognized by the board.
             285          (d) "Clean fuel grant" means a grant a claimant, estate, or trust receives under Title 19,
             286      Chapter 1, Part 4, Clean Fuels and Vehicle Technology Program Act, for reimbursement of a
             287      portion of the incremental cost of the OEM vehicle or the cost of conversion equipment.
             288          (e) "Conversion equipment" means equipment referred to in Subsection (2)(c) or (d).
             289          (f) "Fuel economy standards" means that a vehicle's combined fuel economy, as
             290      determined in 40 C.F.R. 600.209-95(d) is equal to or greater than:
             291          (i) 31 miles per gallon for gasoline-fueled vehicles;
             292          (ii) 36 miles per gallon for diesel-fueled vehicles;
             293          (iii) 19 miles per gallon for vehicles fueled by a blend of 85% ethanol and 15%
             294      gasoline;
             295          (iv) 19 miles per gallon for liquified petroleum gas-fueled vehicles; or
             296          (v) standards consistent with 40 C.F.R. 600.209-95(d) that are adopted by the Air
             297      Quality Board by rule.
             298          (g) "Incremental cost" has the same meaning as in Section 19-1-402 .
             299          (h) "OEM vehicle" has the same meaning as in Section 19-1-402 .
             300          (i) "Original purchase" means the purchase of a vehicle that has never been titled or
             301      registered and has been driven less than 7,500 miles.
             302          (j) "Special mobile equipment":
             303          (i) means any mobile equipment or vehicle not designed or used primarily for the
             304      transportation of persons or property; and


             305          (ii) includes construction or maintenance equipment.
             306          (2) For taxable years beginning on or after January 1, 2009, but beginning on or before
             307      December 31, 2013, a claimant, estate, or trust may claim a nonrefundable tax credit against
             308      tax otherwise due under this chapter in an amount equal to:
             309          (a) $750 for the original purchase of a new vehicle that is not fueled by compressed
             310      natural gas if the vehicle is registered in Utah and meets air quality and fuel economy
             311      standards;
             312          (b) for the purchase of a vehicle fueled by compressed natural gas that is registered in
             313      Utah, the lesser of:
             314          (i) $2,500; or
             315          (ii) 35% of the purchase price of the vehicle;
             316          (c) 50% of the cost of equipment for conversion, if certified by the board, of a motor
             317      vehicle registered in Utah minus the amount of any clean fuel conversion grant received, up to
             318      a maximum tax credit of $2,500 per vehicle, if the motor vehicle:
             319          (i) is to be fueled by propane, natural gas, or electricity;
             320          (ii) is to be fueled by other fuel the board determines annually on or before July 1 to be
             321      at least as effective in reducing air pollution as fuels under Subsection (2)(c)(i); or
             322          (iii) will meet the federal clean fuel vehicle standards in the federal Clean Air Act
             323      Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; and
             324          (d) 50% of the cost of equipment for conversion, if certified by the board, of a special
             325      mobile equipment engine minus the amount of any clean fuel conversion grant received, up to a
             326      maximum tax credit of $1,000 per special mobile equipment engine, if the special mobile
             327      equipment is to be fueled by:
             328          (i) propane, natural gas, or electricity; or
             329          (ii) other fuel the board determines annually on or before July 1 to be:
             330          (A) at least as effective in reducing air pollution as the fuels under Subsection (2)(d)(i);
             331      or
             332          (B) substantially more effective in reducing air pollution than the fuel for which the
             333      engine was originally designed.
             334          (3) A claimant, estate, or trust shall provide proof of the purchase of an item for which
             335      a tax credit is allowed under this section by:


             336          (a) providing proof to the board in the form the board requires by rule;
             337          (b) receiving a written statement from the board acknowledging receipt of the proof;
             338      and
             339          (c) retaining the written statement described in Subsection (3)(b).
             340          (4) Except as provided by Subsection (5), the tax credit under this section is allowed
             341      only:
             342          (a) against any Utah tax owed in the taxable year by the claimant, estate, or trust;
             343          (b) in the taxable year in which the item is purchased for which the tax credit is
             344      claimed; and
             345          (c) once per vehicle.
             346          (5) If the amount of a tax credit claimed by a claimant, estate, or trust under this
             347      section exceeds the claimant's, estate's, or trust's tax liability under this chapter for a taxable
             348      year, the amount of the tax credit exceeding the tax liability may be carried forward for a period
             349      that does not exceed the next five taxable years.
             350          (6) The tax credit provided by this section may be taken only once per vehicle.


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