CA Prepares for Updated CNG, LNG Fuel Tax Rules

The California State Board of Equalization is readying the implementation of revisions to A.B.1907, which includes new use fuel tax rates for compressed natural gas (CNG) and liquefied natural gas (LNG) that is used as a fuel in motor vehicles.

Effective Jan. 1, 2015, the tax rate for CNG will be adjusted to $0.0887/gasoline gallon equivalent (GGE), which equates to 5.66 pounds of CNG at standard pressure and temperature.

The bill also specifies a new means for measuring LNG that is dispensed at the retail level for vehicular applications: the well-established diesel gallon equivalent (DGE). With that move, the bill also adjusts the tax rate for LNG to $0.1017/DGE. (A DGE of LNG is equivalent to 6.06 pounds.)

The board notes that in addition to the requirement for collecting the adjusted tax, CNG retailers in California must place a label on the CNG dispenser that indicates ‘gasoline gallon equivalent.’ Retailers of LNG must place a similar label that reads ‘diesel gallon equivalent.’

Natural gas vehicle operators and fleets that have paid the annual flat-rate tax are not subject to the use fuel tax, so long as the NGVs have a current flat-rate decal affixed to them.

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