H.B. 184

1

MOTOR AND SPECIAL FUEL TAX ACT AMENDMENTS
2 2011 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Christopher N. Herrod
5 Senate Sponsor: Wayne L. Niederhauser
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Motor and Special Fuel Tax Act by amending provisions relating
10 to a tax on liquified natural gas.
11 Highlighted Provisions:
12 This bill:
13 . amends the definition of clean fuel;
14 . provides that beginning on July 1, 2011, a tax is imposed at a reduced rate on
15 liquified natural gas per gasoline gallon equivalent; and
16 . makes technical changes.
17 Money Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 None
21 Utah Code Sections Affected:
22 AMENDS:
23 59-13-102, as last amended by Laws of Utah 2000, Chapter 258
24 59-13-301, as last amended by Laws of Utah 2008, Chapters 153 and 382
25
26 Be it enacted by the Legislature of the state of Utah:
27 Section 1. Section 59-13-102 is amended to read:

28 59-13-102. Definitions.
29 As used in this chapter:
30 (1) "Aviation fuel" means fuel that is sold at airports and used exclusively for the
31 operation of aircraft.
32 (2) "Clean fuel" means:
33 (a) the following special fuels:
34 (i) propane;
35 (ii) compressed natural gas; [or]
36 (iii) liquified natural gas; or
37 [(iii)] (iv) electricity; or
38 (b) any motor or special fuel that meets the clean fuel vehicle standards in the federal
39 clean Air Act Amendments of 1990, Title II.
40 (3) "Commission" means the State Tax Commission.
41 (4) (a) "Diesel fuel" means any liquid that is commonly or commercially known,
42 offered for sale, or used as a fuel in diesel engines.
43 (b) "Diesel fuel" includes any combustible liquid, by whatever name the liquid may be
44 known or sold, when the liquid is used in an internal combustion engine for the generation of
45 power to operate a motor vehicle licensed to operate on the highway, except fuel that is subject
46 to the tax imposed in Part 2, Motor Fuel, and Part 4, Aviation Fuel, of this chapter.
47 (5) "Distributor" means any person in this state who:
48 (a) imports or causes to be imported motor fuel for use, distribution, or sale, whether at
49 retail or wholesale;
50 (b) produces, refines, manufactures, or compounds motor fuel in this state for use,
51 distribution, or sale in this state;
52 (c) is engaged in the business of purchasing motor fuel for resale in wholesale
53 quantities to retail dealers of motor fuel and who accounts for his own motor fuel tax liability;
54 or
55 (d) for purposes of Part 4, Aviation Fuel, only, makes retail sales of aviation fuel to:
56 (i) federally certificated air carriers; and
57 (ii) other persons.
58 (6) "Dyed diesel fuel" means diesel fuel that is dyed in accordance with 26 U.S.C. Sec.

59 4082 or United States Environmental Protection Agency or Internal Revenue Service
60 regulations and that is considered destined for nontaxable off-highway use.
61 (7) "Exchange agreement" means an agreement between licensed suppliers where one
62 is a position holder in a terminal who agrees to deliver taxable special fuel to the other supplier
63 or the other supplier's customer at the loading rack of the terminal where the delivering supplier
64 holds an inventory position.
65 (8) "Federally certificated air carrier" means a person who holds a certificate issued by
66 the Federal Aviation Administration authorizing the person to conduct an all-cargo operation or
67 scheduled operation, as defined in 14 C.F.R. Sec. 119.3.
68 (9) "Fuels" means any gas, liquid, solid, mixture, or other energy source which is
69 generally used in an engine or motor for the generation of power, including aviation fuel, clean
70 fuel, diesel fuel, motor fuel, and special fuel.
71 (10) "Highway" means every way or place, of whatever nature, generally open to the
72 use of the public for the purpose of vehicular travel notwithstanding that the way or place may
73 be temporarily closed for the purpose of construction, maintenance, or repair.
74 (11) "Motor fuel" means fuel that is commonly or commercially known or sold as
75 gasoline or gasohol and is used for any purpose, but does not include aviation fuel.
76 (12) "Motor fuels received" means:
77 (a) motor fuels that have been loaded at the refinery or other place into tank cars,
78 placed in any tank at the refinery from which any withdrawals are made directly into tank
79 trucks, tank wagons, or other types of transportation equipment, containers, or facilities other
80 than tank cars, or placed in any tank at the refinery from which any sales, uses, or deliveries not
81 involving transportation are made directly; or
82 (b) motor fuels that have been imported by any person into the state from any other
83 state or territory by tank car, tank truck, pipeline, or any other conveyance at the time when,
84 and the place where, the interstate transportation of the motor fuel is completed within the state
85 by the person who at the time of the delivery is the owner of the motor fuel.
86 (13) (a) "Qualified motor vehicle" means a special fuel-powered motor vehicle used,
87 designed, or maintained for transportation of persons or property which:
88 (i) has a gross vehicle weight or registered gross vehicle weight exceeding 26,000
89 pounds;

90 (ii) has three or more axles regardless of weight; or
91 (iii) is used in a combination of vehicles when the weight of the combination of
92 vehicles exceeds 26,000 pounds gross vehicle weight.
93 (b) "Qualified motor vehicle" does not include a recreational vehicle not used in
94 connection with any business activity.
95 (14) "Rack," as used in Part 3, Special Fuel, means a deck, platform, or open bay which
96 consists of a series of metered pipes and hoses for the delivery or removal of diesel fuel from a
97 refinery or terminal into a motor vehicle, rail car, or vessel.
98 (15) "Removal," as used in Part 3, Special Fuel, means the physical transfer of diesel
99 fuel from a production, manufacturing, terminal, or refinery facility and includes use of diesel
100 fuel. Removal does not include:
101 (a) loss by evaporation or destruction; or
102 (b) transfers between refineries, racks, or terminals.
103 (16) (a) "Special fuel" means any fuel regardless of name or character that:
104 (i) is usable as fuel to operate or propel a motor vehicle upon the public highways of
105 the state; and
106 (ii) is not taxed under the category of aviation or motor fuel.
107 (b) Special fuel includes:
108 (i) fuels that are not conveniently measurable on a gallonage basis; and
109 (ii) diesel fuel.
110 (17) "Supplier," as used in Part 3, Special Fuel, means a person who:
111 (a) imports or acquires immediately upon importation into this state diesel fuel from
112 within or without a state, territory, or possession of the United States or the District of
113 Columbia;
114 (b) produces, manufactures, refines, or blends diesel fuel in this state;
115 (c) otherwise acquires for distribution or sale in this state, diesel fuel with respect to
116 which there has been no previous taxable sale or use; or
117 (d) is in a two party exchange where the receiving party is deemed to be the supplier.
118 (18) "Terminal," as used in Part 3, Special Fuel, means a facility for the storage of
119 diesel fuel which is supplied by a motor vehicle, pipeline, or vessel and from which diesel fuel
120 is removed for distribution at a rack.

121 (19) "Two party exchange" means a transaction in which special fuel is transferred
122 between licensed suppliers pursuant to an exchange agreement.
123 (20) "Undyed diesel fuel" means diesel fuel that is not subject to the dyeing
124 requirements in accordance with 26 U.S.C. Sec. 4082 or United States Environmental
125 Protection Agency or Internal Revenue Service regulations.
126 (21) "Use," as used in Part 3, Special Fuel, means the consumption of special fuel for
127 the operation or propulsion of a motor vehicle upon the public highways of the state and
128 includes the reception of special fuel into the fuel supply tank of a motor vehicle.
129 (22) "User," as used in Part 3, Special Fuel, means any person who uses special fuel
130 within this state in an engine or motor for the generation of power to operate or propel a motor
131 vehicle upon the public highways of the state.
132 (23) "Ute tribal member" means an enrolled member of the Ute tribe.
133 (24) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.
134 (25) "Ute trust land" means the lands:
135 (a) of the Uintah and Ouray Reservation that are held in trust by the United States for
136 the benefit of:
137 (i) the Ute tribe;
138 (ii) an individual; or
139 (iii) a group of individuals; or
140 (b) specified as trust land by agreement between the governor and the Ute tribe meeting
141 the requirements of Subsections 59-13-201.5 (3) and 59-13-301.5 (3).
142 Section 2. Section 59-13-301 is amended to read:
143 59-13-301. Tax basis -- Rate -- Exemptions -- Revenue deposited with treasurer
144 and credited to Transportation Fund -- Reduction of tax in limited circumstances.
145 (1) (a) Except as provided in Subsections (2), (3), (11), and (12) and Section
146 59-13-304 , a tax is imposed at the same rate imposed under Subsection 59-13-201 (1)(a) on the:
147 (i) removal of undyed diesel fuel from any refinery;
148 (ii) removal of undyed diesel fuel from any terminal;
149 (iii) entry into the state of any undyed diesel fuel for consumption, use, sale, or
150 warehousing;
151 (iv) sale of undyed diesel fuel to any person who is not registered as a supplier under

152 this part unless the tax has been collected under this section;
153 (v) any untaxed special fuel blended with undyed diesel fuel; or
154 (vi) use of untaxed special fuel other than propane or electricity.
155 (b) The tax imposed under this section shall only be imposed once upon any special
156 fuel.
157 (2) (a) No special fuel tax is imposed or collected upon dyed diesel fuel which:
158 (i) is sold or used for any purpose other than to operate or propel a motor vehicle upon
159 the public highways of the state, but this exemption applies only in those cases where the
160 purchasers or the users of special fuel establish to the satisfaction of the commission that the
161 special fuel was used for purposes other than to operate a motor vehicle upon the public
162 highways of the state; or
163 (ii) is sold to this state or any of its political subdivisions.
164 (b) No special fuel tax is imposed on undyed diesel fuel or clean fuel that is:
165 (i) [is] sold to the United States government or any of its instrumentalities or to this
166 state or any of its political subdivisions;
167 (ii) [is] exported from this state if proof of actual exportation on forms prescribed by
168 the commission is made within 180 days after exportation;
169 (iii) [is] used in a vehicle off-highway;
170 (iv) [is] used to operate a power take-off unit of a vehicle;
171 (v) [is] used for off-highway agricultural uses;
172 (vi) [is] used in a separately fueled engine on a vehicle that does not propel the vehicle
173 upon the highways of the state; or
174 (vii) [is] used in machinery and equipment not registered and not required to be
175 registered for highway use.
176 (3) No tax is imposed or collected on special fuel if it is:
177 (a) (i) purchased for business use in machinery and equipment not registered and not
178 required to be registered for highway use; and
179 (ii) used pursuant to the conditions of a state implementation plan approved under Title
180 19, Chapter 2, Air Conservation Act; or
181 (b) propane or electricity.
182 (4) Upon request of a buyer meeting the requirements under Subsection (3), the

183 Division of Air Quality shall issue an exemption certificate that may be shown to a seller.
184 (5) The special fuel tax shall be paid by the supplier.
185 (6) (a) The special fuel tax shall be paid by every user who is required by Sections
186 59-13-303 and 59-13-305 to obtain a special fuel user permit and file special fuel tax reports.
187 (b) The user shall receive a refundable credit for special fuel taxes paid on purchases
188 which are delivered into vehicles and for which special fuel tax liability is reported.
189 (7) (a) Except as provided under Subsections (7)(b) and (c), all revenue received by the
190 commission from taxes and license fees under this part shall be deposited daily with the state
191 treasurer and credited to the Transportation Fund.
192 (b) An appropriation from the Transportation Fund shall be made to the commission to
193 cover expenses incurred in the administration and enforcement of this part and the collection of
194 the special fuel tax.
195 (c) Five dollars of each special fuel user trip permit fee paid under Section 59-13-303
196 may be used by the commission as a dedicated credit to cover the costs of electronic
197 credentialing as provided in Section 41-1a-303 .
198 (8) The commission may either collect no tax on special fuel exported from the state
199 or, upon application, refund the tax paid.
200 (9) (a) The United States government or any of its instrumentalities, this state, or a
201 political subdivision of this state that has purchased special fuel from a supplier or from a retail
202 dealer of special fuel and has paid the tax on the special fuel as provided in this section is
203 entitled to a refund of the tax and may file with the commission for a quarterly refund in a
204 manner prescribed by the commission.
205 (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
206 commission shall make rules governing the application and refund provided for in Subsection
207 (9)(a).
208 (10) (a) The purchaser shall pay the tax on diesel fuel or clean fuel purchased for uses
209 under Subsections (2)(b)(i), (iii), (iv), (v), (vi), and (vii) and apply for a refund for the tax paid
210 as provided in Subsection (9) and this Subsection (10).
211 (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
212 commission shall make rules governing the application and refund for off-highway and
213 nonhighway uses provided under Subsections (2)(b)(iii), (iv), (vi), and (vii).

214 (c) A refund of tax paid under this part on diesel fuel used for nonhighway agricultural
215 uses shall be made in accordance with the tax return procedures under Section 59-13-202 .
216 (11) (a) Beginning on April 1, 2001, a tax imposed under this section on special fuel is
217 reduced to the extent provided in Subsection (11)(b) if:
218 (i) the Navajo Nation imposes a tax on the special fuel;
219 (ii) the tax described in Subsection (11)(a)(i) is imposed without regard to whether the
220 person required to pay the tax is an enrolled member of the Navajo Nation; and
221 (iii) the commission and the Navajo Nation execute and maintain an agreement as
222 provided in this Subsection (11) for the administration of the reduction of tax.
223 (b) (i) If but for Subsection (11)(a) the special fuel is subject to a tax imposed by this
224 section:
225 (A) the state shall be paid the difference described in Subsection (11)(b)(ii) if that
226 difference is greater than $0; and
227 (B) a person may not require the state to provide a refund, a credit, or similar tax relief
228 if the difference described in Subsection (11)(b)(ii) is less than or equal to $0.
229 (ii) The difference described in Subsection (11)(b)(i) is equal to the difference
230 between:
231 (A) the amount of tax imposed on the special fuel by this section; less
232 (B) the tax imposed and collected by the Navajo Nation on the special fuel.
233 (c) For purposes of Subsections (11)(a) and (b), the tax paid to the Navajo Nation on
234 the special fuel does not include any interest or penalties a taxpayer may be required to pay to
235 the Navajo Nation.
236 (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
237 commission shall make rules governing the procedures for administering the reduction of tax
238 provided under this Subsection (11).
239 (e) The agreement required under Subsection (11)(a):
240 (i) may not:
241 (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
242 (B) provide a reduction of taxes greater than or different from the reduction described
243 in this Subsection (11); or
244 (C) affect the power of the state to establish rates of taxation;

245 (ii) shall:
246 (A) be in writing;
247 (B) be signed by:
248 (I) the chair of the commission or the chair's designee; and
249 (II) a person designated by the Navajo Nation that may bind the Navajo Nation;
250 (C) be conditioned on obtaining any approval required by federal law;
251 (D) state the effective date of the agreement; and
252 (E) state any accommodation the Navajo Nation makes related to the construction and
253 maintenance of state highways and other infrastructure within the Utah portion of the Navajo
254 Nation; and
255 (iii) may:
256 (A) notwithstanding Section 59-1-403 , authorize the commission to disclose to the
257 Navajo Nation information that is:
258 (I) contained in a document filed with the commission; and
259 (II) related to the tax imposed under this section;
260 (B) provide for maintaining records by the commission or the Navajo Nation; or
261 (C) provide for inspections or audits of suppliers, distributors, carriers, or retailers
262 located or doing business within the Utah portion of the Navajo Nation.
263 (f) (i) If, on or after April 1, 2001, the Navajo Nation changes the tax rate of a tax
264 imposed on special fuel, any change in the amount of the reduction of taxes under this
265 Subsection (11) as a result of the change in the tax rate is not effective until the first day of the
266 calendar quarter after a 60-day period beginning on the date the commission receives notice:
267 (A) from the Navajo Nation; and
268 (B) meeting the requirements of Subsection (11)(f)(ii).
269 (ii) The notice described in Subsection (11)(f)(i) shall state:
270 (A) that the Navajo Nation has changed or will change the tax rate of a tax imposed on
271 special fuel;
272 (B) the effective date of the rate change of the tax described in Subsection
273 (11)(f)(ii)(A); and
274 (C) the new rate of the tax described in Subsection (11)(f)(ii)(A).
275 (g) If the agreement required by Subsection (11)(a) terminates, a reduction of tax is not

276 permitted under this Subsection (11) beginning on the first day of the calendar quarter after a
277 30-day period beginning on the day the agreement terminates.
278 (h) If there is a conflict between this Subsection (11) and the agreement required by
279 Subsection (11)(a), this Subsection (11) governs.
280 (12) (a) Beginning on January 1, 2009, a tax imposed under this section on compressed
281 natural gas is imposed at a reduced rate of 8-1/2 cents per gasoline gallon equivalent to be
282 increased or decreased proportionately with any increase or decrease in the rate in Subsection
283 59-13-201 (1)(a).
284 (b) Beginning on July 1, 2011, a tax imposed under this section on liquified natural gas
285 is imposed at a reduced rate of 8-1/2 cents per gasoline gallon equivalent to be increased or
286 decreased proportionately with any increase or decrease in the rate in Subsection
287 59-13-201(1)(a).




Legislative Review Note
as of 11-30-10 1:10 PM

Office of Legislative Research and General Counsel