No. 35222 (Amendment): Rule R307-121. General Requirements: Clean Air and Efficient Vehicle Tax Credit

(Amendment)

DAR File No.: 35222
Filed: 09/06/2011 08:10:11 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The Utah Legislature revised the statutes governing the Clean Fuel Tax Credit, Sections 59-7-605 and 59-10-1009, during the 2011 General Session. S.B. 226 amended the eligibility requirements for cleaner burning fuels tax credits available under the Individual Income Tax Act and the Corporate Franchise and Income Taxes chapter, and made technical and conforming changes. Additionally, during the 01/06/2010 Air Quality Board meeting, the Board requested that DAQ staff review and clarify the proof of certification requirements found in Rule R307-121.

Summary of the rule or change:

The Utah Legislature revised the statutes governing the Clean Fuel Tax Credit, Sections 59-7-605 and 59-10-1009, during the 2011 General Session. S.B. 226 amended the eligibility requirements for cleaner burning fuels tax credits available under the Individual Income Tax Act and the Corporate Franchise and Income Taxes chapter, and made technical and conforming changes. These amendments included: amending the definition of "air quality standards" found in Sections 59-7-605 and 59-10-1009 to include plug-in electric drive motor vehicles that meet Tier II Bin 4 standards, and changing the tax credit amount associated with vehicles that meet the air quality and fuel economy standards. S.B. 226 did not provide a fuel economy standard for plug-in electric drive motor vehicles. A definition of a plug-in electric drive motor vehicle and a fuel economy standard was added to Rule R307-121 for these vehicles. This amendment would apply to all vehicles purchased as of 01/01/2011 to be consistent with the retrospective operation provision of the bill. During the 01/06/2010 Air Quality Board meeting, the Board requested that DAQ staff review and clarify the proof of certification requirements found in Rule R307-121. In response to this, DAQ staff worked with EPA to streamline and expand its process to allow for intermediate and out-of-useful-life vehicles to be converted to run on alternative fuels, such as Compressed Natural Gas. EPA finalized its rulemaking on 04/08/2011. Language was added that helps clarify the proof of certification requirements found in Rule R307-121. This amendment would apply to all conversions as of 04/08/2011. Finally, the following amendments where made to Rule R307-121 for clarification purposes: The term "Manufacturer Statement of Origin" is replaced with "motor vehicles window sticker, which includes its VIN" to help identify what was installed on the vehicle from the factory to determine if the vehicle is a qualified Original Equipment Manufacturer (OEM) vehicle. The term "window sticker" is defined as "the label required by United States Code Title 15 Sections 1231 and 1232, as effective 02/01/2010." In circumstances where the applicant is required to provide certification by an ASE technician, the ASE technician's number must be included with the required signed statements. The requirement that the taxpayer claiming the tax credit provide a signed statement that the motor vehicle was acquired as the original purchase (found in Subsection R307-121-4(2)), is replaced with a requirement for an odometer disclosure statement.

State statutory or constitutional authorization for this rule:

• Section 59-7-605
• Section 19-2-104
• Section 19-1-402
• Section 59-10-1009

Anticipated cost or savings to:

the state budget:

The Legislature considered cost when it passed the bill related to plug-in electric drive motor vehicles, which this rule amendment incorporates. It is anticipated that the other amendments to this rule will bring additional costs to the state budget, because it expands the potential vehicles that can qualify for the tax credit. However, DAQ is not able to determine the exact costs due to data limitations on likely vehicle availability and consumer demand.

local governments:

No cost or savings are anticipated for local government budgets, because local governments do not pay taxes.

small businesses:

Because this amendment expands the number of potential vehicles that could be eligible for the tax credit, small business that take advantage of the tax credit could see savings if they buy or convert these types of vehicles; however, DAQ cannot determine the exact savings as it depends greatly on the cost to convert or purchase the vehicle.

persons other than small businesses, businesses, or local governmental entities:

Because this amendment expands the eligibility criteria, persons other than small businesses, businesses, or local government entities may be able to receive tax credits that they were not eligible to receive prior to this amendment. However, DAQ cannot determine exact savings as it depends greatly on the cost to convert or purchase the vehicle.

Compliance costs for affected persons:

No compliance costs are anticipated for individuals applying for the Clean Air and Efficient Vehicle Tax Credit. It is anticipated that some amendments to this rule will bring additional costs to the state budget, because it expands the potential vehicles that can qualify for the tax credit. However, DAQ is not able to determine the exact costs due to data limitations on likely vehicle availability and consumer demand.

Comments by the department head on the fiscal impact the rule may have on businesses:

There is a potential that businesses could see some savings if they take advantage of the expanded list of vehicles that could qualify for the tax credit. However, it is difficult to determine the exact amount of these savings due to data limitations.

Amanda Smith, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Environmental Quality
Air QualityRoom Fourth Floor
195 N 1950 W
SALT LAKE CITY, UT 84116-3085

Direct questions regarding this rule to:

• Mark Berger at the above address, by phone at 801-536-4000, by FAX at 801-536-4099, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/31/2011

Interested persons may attend a public hearing regarding this rule:

• 10/25/2011 02:00 PM, DEQ, Four Corners Conference Room, 195 N 1950 W, Salt Lake City, UT

This rule may become effective on:

01/01/2012

Authorized by:

Bryce Bird, Director

RULE TEXT

R307. Environmental Quality, Air Quality.

R307-121. General Requirements: Clean Air and Efficient Vehicle Tax Credit.

R307-121-1. Authorization and Purpose.

This rule is authorized by Sections 59-7-605 and 59-10-1009. These statutes establish criteria and definitions used to determine eligibility for an income tax credit. R307-121 establishes procedures to provide proof of purchase , in accordance with 59-7-605(3) or 59-10-1009(3), to the executive secretary[Board] for an OEM vehicle or the conversion of a motor vehicle for which an income tax credit is allowed under Sections 59-7-605 [and]or 59-10-1009.

 

R307-121-2. Definitions.

Definitions. The following additional definitions apply to R307-121.

"Air quality standards" means air quality standards as defined in Subsection 59-7-605(1)(a) and 59-10-1009(1)(a).

"Clean fuel" means clean fuel as defined in Subsection 19-1-402(1).

"Clean fuel vehicle" means clean fuel vehicle as defined in Subsection 19-1-402(2).

"Conversion equipment" means a package which may include fuel, ignition, emissions control, and engine components that are modified, removed, or added to a motor vehicle or special mobile equipment to make that motor vehicle or equipment eligible for the tax credit.

"Fuel economy standards" means fuel economy standards as defined in Subsection 59-7-605(1)(f) and 59-10-1009(1)(f) or 31 miles per gallon equivalent for a plug-in electric drive motor vehicle.[

"Manufacturer's Statement of Origin" means a certificate showing the original transfer of a new motor vehicle from the manufacturer to the original purchaser.]

"Miles per gallon equivalent" means the miles a vehicle can drive with the energy equivalent of one gallon of gasoline.

"Motor Vehicle" means a motor vehicle as defined in 41-1a-102.

"Original equipment manufacturer(OEM) vehicle" means original equipment manufacturer(OEM) as defined in Subsection 19-1-402(8).

"Original purchase" means original purchase as defined in Subsection 59-7-605(1)(i) and 59-10-1009(1)(i).

"Plug-in Electric Drive Motor Vehicle" means plug-in electric drive motor vehicle as defined in Subsection 59-7-605(1)(a)(ii) or 59-10-1009(1)(a)(ii).

"Window Sticker" means the label required by United States Code Title 15 Sections 1231 and 1232, as effective February 1, 2010 .

 

R307-121-3. Proof of Purchase to Demonstrate[ion of] Eligibility for OEM Compressed Natural Gas Vehicles.

To demonstrate that an OEM Compressed Natural Gas motor vehicle is eligible for the tax credit, proof of purchase shall be made in accordance with 59-7-605(3) or 59-10-1009(3), by submitting the following documents to the executive secretary:

(1)(a) a copy of the motor vehicle's window sticker, which includes its Vehicle Identification Number (VIN),[Manufacturer's Statement of Origin] or equivalent manufacturer's documentation showing that the motor vehicle is an OEM Compressed Natural Gas vehicle, or

(b) a signed statement by an Automotive Service Excellence (ASE)-certified technician that includes the vehicle identification number (VIN) , the technician's ASE certification number, and states that the motor vehicle is an eligible OEM vehicle;

(2) an original or copy of the purchase order, customer invoice, or receipt including the VIN, purchase date, and price of the motor vehicle; and

(3) a copy of the current Utah vehicle registration.

 

R307-121-4. Proof of Purchase to Demonstrate[ion of] Eligibility for Motor Vehicles that meet Air Quality and Fuel Economy Standards.

To demonstrate that a motor vehicle is eligible for the tax credit based on air quality and fuel economy standards, proof of purchase shall be made , in accordance with 59-7-605(3) or 59-10-1009(3), by submitting the following documents to the executive secretary:

(1) a copy of the motor vehicle's window sticker, which includes its VIN,[Manufacturer's Statement of Origin] or equivalent manufacturer's documentation;

(2) an original or copy of the odometer disclosure statement required in Utah Code Annotated Title 41 Chapter 1a Section 902 for the motor vehicle that was acquired as an original purchase[a signed statement from the taxpayer claiming the tax credit, stating that the motor vehicle was acquired as the original purchase];

(3) an original or copy of the purchase order, customer invoice, or receipt including the VIN, purchase date, and price of the motor vehicle;

(4) the underhood identification number or engine group of the motor vehicle; and

(5) a copy of the current Utah vehicle registration.

 

R307-121-5. Proof of Purchase to Demonstrate[ion of] Eligibility for Motor Vehicles Converted to Natural Gas or Propane.

To demonstrate that a conversion of a motor vehicle to be fueled by natural gas or propane is eligible for the tax credit, proof of purchase shall be made , in accordance with 59-7-605(3) or 59-10-1009(3), by submitting the following documentation to the executive secretary:

(1) the VIN;

(2) the fuel type before conversion;

(3) the fuel type after conversion;

(4)(a) a copy of the motor vehicle inspection report from an approved county inspection and maintenance station showing that the converted motor vehicle meets all county emissions requirements for all installed fuel systems if the motor vehicle is registered within a county with an inspection and maintenance (I/M) program, or

(b) in all other areas of the State, a signed statement by an ASE-certified technician that includes the VIN , the technician's ASE certification number, and states that the conversion is functional;

(5) each of the following:

(a) the conversion equipment manufacturer,

(b) the conversion equipment model number,

(c) the date of the conversion, and

(d) the name, address, and phone number of the person that converted the motor vehicle;

(6) the EPA Certificate of Conformity, or equivalent documentation that is consistent with requirements outlined in 40 CFR Part 85 and 40 CFR Part 86, as published in Federal Register Volume 76 Page 19830 on April 8, 2011, or an Executive Order from the California Air Resources Board showing that the conversion will meet the proof of certification require ments[d] in 59-10-1009(1) (c)(i)(C)[(b)] or 59-7-605(1) (c)(i)(C)[(b)];

(7) an original or copy of the purchase order, customer invoice, or receipt; and

(8) a copy of the current Utah vehicle registration.

 

R307-121-6. Proof of Purchase to Demonstrate[ion of] Eligibility for Motor Vehicles Converted to Electricity.

(1) To demonstrate that a conversion of a motor vehicle to be powered by electricity is eligible for the tax credit, proof of purchase shall be made , in accordance with 59-7-605(3) or 59-10-1009(3), by submitting the following documentation to the executive secretary:

(a) the VIN;

(b) the fuel type before conversion;

(c) the fuel type after conversion;

(d) each of the following:

(i) the conversion equipment manufacturer,

(ii) the conversion equipment model number,

(iii) the date of the conversion, and

(iv) the name, address, and phone number of the person that converted the motor vehicle;

(e) an original or copy of the purchase order, customer invoice, or receipt; and

(f) a copy of the current Utah vehicle registration.

(2) If the converted motor vehicle does not have any auxiliary sources of combustion emissions, then the applicant shall submit a signed statement by an ASE-certified technician that includes the VIN , the technician's ASE certification number, and states that the conversion is functional, and that the converted motor vehicle does not have any auxiliary source of combustion emissions.

(3) If the converted motor vehicle has an auxiliary source of combustion emissions, then the applicant shall submit:

(a) a copy of the vehicle inspection report from an approved county inspection and maintenance station showing that the converted motor vehicle meets all county emissions requirements for all installed fuel systems if the motor vehicle is registered within a county with an I/M program, or

(b) in all other areas of the State, a signed statement by an ASE-certified technician that includes the VIN , the technician's ASE certification number, and states that the conversion is functional, and

(c) Provide the EPA Certificate of Conformity or equivalent documentation that is consistent with requirements outlined in 76 FR 19830 April 8, 2011, or an Executive Order from the California Air Resources Board showing that the conversion will meet the proof of certification require ments[d] in 59-10-1009(1) (c)(i)(C)[(b)] or 59-7-605(1) (c)(i)(C)[(b)].

 

R307-121-7. Proof of Purchase to Demonstrate[ion of] Eligibility for Special Mobile Equipment Converted to Clean Fuels.

To demonstrate that a conversion of special mobile equipment to be fueled by clean fuel is eligible for the tax credit, proof of purchase shall be made , in accordance with 59-7-605(3) or 59-10-1009(3), by submitting the following documentation to the executive secretary:

(1) a description, including serial number, of the special mobile equipment for which credit is to be claimed;

(2) the fuel type before conversion;

(3) the fuel type after conversion;

(4) the conversion equipment manufacturer and model number;

(5) the date of the conversion;

(6) the name, address and phone number of the person that converted the special mobile equipment; and

(7) an original or copy of the purchase order, customer invoice, or receipt; and

(8) the EPA Certificate of Conformity, or an Executive Order from the California Resource Board showing that the conversion will meet the proof of certification require ments[d] in 59-10-1009(1) (c)(i)(C)[(b)] or 59-7-605(1) (c)(i)(C)[(b)].

 

R307-121-8. Applicability.

(1) The definitions of plug-in electric drive motor vehicle and fuel economy standards in R307-121-2 shall apply to all purchases as of January 1, 2011.

(2) Provisions found in sections R307-121-5(6) and R307-121-6(3)(c) shall apply to all conversions as of April 8, 2011.

 

KEY: air pollution, alternative fuels, tax credits, motor vehicles

Date of Enactment or Last Substantive Amendment: [January 1, 2009]2012

Notice of Continuation: January 6, 2009

Authorizing, and Implemented or Interpreted Law: 19-2-104; 19-1-402; 59-7-605; 59-10-1009

 

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