Natural Gas Laws and Incentives in Arizona

The list below contains summaries of all Arizona laws and incentives related to natural gas.

Laws and Regulations

Alternative Fuel Vehicle (AFV) Dealer Information Dissemination Requirement

New motor vehicle dealers must make information about AFVs and Arizona-based incentives for purchasing or leasing AFVs available to the public. For the purpose of these requirements, alternative fuels include propane, natural gas, electricity, hydrogen, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 28-4414)

Alternative Fuel Vehicle (AFV) Special License Plate

The Arizona Department of Transportation (ADOT) must issue a special license plate to dedicated AFVs. Dedicated AFVs include vehicles powered exclusively by propane, compressed natural gas, electricity, hydrogen, a blend of hydrogen with propane or natural gas. AFVs may not be capable of operating on any other fuel type. There is no limit to the number of AFV license plates ADOT can issue. The Arizona Department of Environmental Quality (ADEQ) must inspect vehicles converted to operate solely on alternative fuel and issue an Alternative Fuel Certificate before converted vehicles may receive the AFV special plate. State or agency directors who conduct activities of a confidential nature and use AFVs are exempt from the requirement to display an AFV special license plate. For more information, see the ADOT Specialty Plates website.

(Reference Arizona Revised Statutes 1-215 and 28-2416)

Federal Fleet Operation Regulations

Federal fleets based in Arizona that operate primarily in counties with a population of more than 1.2 million people must be comprised of at least 90% alternative fuel vehicles. Alternatively, federal fleets may meet acquisition requirements through alternative fuel use or apply for waivers. For the purpose of these requirements, alternative fuels include propane, natural gas, electricity, hydrogen, qualified diesel fuel substitutes, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 49-573)

Joint Use of Government Fueling Infrastructure

To the extent practical, an Arizona state agency or political subdivision that operates an alternative fueling station must allow vehicles, other state agencies, or political subdivisions to fuel at the station. For the purpose of this requirement, alternative fuels include propane, natural gas, electricity, hydrogen, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 49-572)

Municipal Alternative Fuel Tax Regulation

A taxing jurisdiction may not levy a tax or fee, however denominated, on natural gas or propane used to propel a motor vehicle.

(Reference Arizona Revised Statutes 42-6004)

Municipal Alternative Fuel Vehicle (AFV) Acquisition Requirements

Local governments in Maricopa, Pinal, and Yavapai counties with a population of more than 1.2 million people must develop and implement vehicle fleet plans to encourage and increase the use of alternative fuels in municipal fleets. At least 75% of the total municipal fleet must operate on alternative fuels. Alternatively, municipal fleets may meet AFV acquisition requirements through biodiesel or other alternative fuel use or apply for waivers. Local governments in counties with populations of more than 500,000 people with bus fleets must purchase or convert buses to operate on alternative fuels. For the purpose of these requirements, alternative fuels include propane, natural gas, electricity, hydrogen, qualified diesel fuel substitutes, E85, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 9-500.04, 49-474.01, 49-541, and 49-571)

Propane and Compressed Natural Gas (CNG) Device Fee

The Arizona Department of Weights and Measures collects license fees for certain propane and CNG fueling devices used for commercial purposes. A penalty equal to 20% of the fee may be imposed for late license fee payments.

(Reference Recodified as Arizona Revised Statutes 3-3452)

State Incentives

Alternative Fuel Vehicle (AFV) Parking Incentive

An individual driving a dedicated AFV may park without penalty in parking areas that are designated for carpool operators, provided the vehicle is using alternative fuel. Recognized alternative fuels include propane, natural gas, electricity, hydrogen, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 28-877)

Alternative Fuel and Alternative Fuel Vehicle (AFV) Use Tax Exemption

Arizona use taxes do not apply to natural gas or propane used in an AFV, AFVs converted to operate on alternative fuels, or the equipment used to convert a diesel vehicle to an AFV. Recognized alternative fuels include propane, natural gas, electricity, hydrogen, and a blend of hydrogen with propane or natural gas.

(Reference Arizona Revised Statutes 1-215 and 42-5159)

High Occupancy Vehicle (HOV) Lane Exemption

The Arizona Department of Transportation (ADOT) allows qualified alternative fuel vehicles (AFV) with an AFV license plate to use HOV lanes, regardless of the number of occupants. Qualified AFVs include vehicles powered exclusively by electricity, propane, natural gas, hydrogen, or a blend of hydrogen with propane or natural gas. This exemption expires September 20, 2025. For more information about vehicle eligibility and HOV access, visit the ADOT AFV website.

Idle Reduction and Alternative Fuel Vehicle Weight Exemption

A heavy-duty vehicle that is equipped with qualified idle reduction technology may exceed the state’s gross, total axle, or bridge formula vehicle weight limits by up to 550 pounds (lbs.) to accommodate the weight of the idle reduction technology. To qualify for the exemption, the vehicle operator must also be able to prove the weight of the idle reduction technology and demonstrate that the technology is fully functional. Any vehicles fueled by natural gas, electricity, or hydrogen may exceed the limits by up to 2,000 lbs as described by Title 23 U.S. Code, section 127(s).

(Reference Arizona Revised Statutes 28-1100)

Reduced Alternative Fuel Vehicle (AFV) License Tax

The vehicle license tax for an AFV registered in Arizona is $4 for every $100 in assessed value. The minimum amount of the annual AFV license tax is $5. AFV assessed values are determined as follows:

  • For AFVs initially registered between January 1, 2022, and December 31, 2022, the assessed value of the AFV is 20% of the manufacturer’s suggested retail price (MSRP);
  • For each succeeding year, for the purpose of calculating the license tax, the assessed value of the AFV is reduced by 15% from the value from the preceding year.

For the purpose of this tax, AFVs include those powered exclusively by propane, natural gas, electricity, hydrogen, or a blend of hydrogen with propane or natural gas. For more information, see the ADOT AFV website. The reduced alternative fuel vehicle license tax does not apply to any vehicle purchased on or after December 31, 2022.

(Reference Arizona Revised Statutes 1-215, 28-5801, 28-5805)

More Laws and Incentives

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