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 28-4414)

Alternative Fuel Vehicle (AFV) Special License Plate

A registered AFV must display an AFV license 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. The Arizona Department of Transportation has the authority to issue regular plates to AFVs used by law enforcement agencies and the federal government. Recognized alternative fuels include propane, natural gas, electricity, hydrogen, and a blend of hydrogen with propane or natural gas. (Reference Arizona Revised Statutes 28-2416 and 28-2511)

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, E85, and a blend of hydrogen with propane or natural gas. (Reference Arizona Revised Statutes 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 own or operate 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 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 Arizona Revised Statutes 3-3452)

State Vehicle Acquisition and Fuel Use Requirements

Arizona state agencies, boards, and commissions must purchase hybrid electric vehicles (HEVs), alternative fuel vehicles (AFVs), or vehicles that meet set greenhouse gas emissions standards; or use alternative fuels. At least 75% of light-duty state fleet vehicles operating in counties with a population of more than 250,000 people must be capable of operating on alternative fuels. If the AFVs operate in counties with populations of more than 1.2 million people, those vehicles must meet U.S. Environmental Protection Agency emissions standards for Low Emission Vehicles. Alternatively, the state fleet may meet AFV acquisition requirements through biodiesel or 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, E85, and a blend of hydrogen with propane or natural gas. (Reference Arizona Revised Statutes 41-803)

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 28-877)

Alternative Fuel Vehicle (AFV) and Energy Efficient Plate Programs

Dedicated AFVs qualify for an AFV special license plate, which are available from the Arizona Department of Transportation (ADOT). Recognized alternative fuels are propane, natural gas, electricity, and hydrogen. There is no limit to the number of AFV license plates ADOT can issue. For more information, see the ADOT AFV website.

In addition, certain plug-in hybrid electric vehicles are eligible for the Energy Efficient license plate from ADOT. At any time, only 10,000 eligible vehicles may be registered for the Energy Efficient license plate. ADOT has reached its maximum limit of 10,000 vehicles and the issuance of Energy Efficient license plates to new program participants has been suspended until further notice (verified June 2018). For more information, including how to apply, see the ADOT Energy Efficient Plate Program website.

(Reference Arizona Revised Statutes 28-2416 and 28-2416.01)

Alternative Fuel Vehicle Emissions Test Exemption

All-electric vehicles, hydrogen powered vehicles, and current model year propane and natural gas vehicles (NGVs) registered for the first time in Arizona are not required to complete emissions testing. This exemption does not apply after the first registration year. All AFVs, with the exception of electric, solar, and hydrogen powered vehicles, used to commute into Phoenix or Tucson are required to be emissions tested before they are registered. For more information, visit the Arizona Department of Environmental Quality website. (Reference Arizona Revised Statutes 49-542 and 49-542.05)

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

The following are exempt from the Arizona use tax: natural gas or liquefied petroleum gas (propane) used to propel a motor vehicle; AFVs, if the AFV was manufactured as a diesel fuel vehicle and converted to operate on an alternative fuel; and equipment that is installed on a conventional diesel fuel motor vehicle to convert the vehicle to operate on an 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 42-5159)

High Occupancy Vehicle (HOV) Lane Exemption

Vehicles with an Alternative Fuel Vehicle (AFV) or Energy Efficient license plate are permitted to use HOV lanes, regardless of the number of passengers. Qualified vehicles must display the required license plate, which are available from the Arizona Department of Transportation (ADOT). Vehicles registered with Energy Efficient plates prior to May 20, 2014, may continue to use HOV lanes until the owner sells or transfers the vehicle. For more information, see the ADOT AFV and the Energy Efficient Plate Program websites. (Reference Arizona Revised Statutes 28-2416, and 23-2416.01)

Idle Reduction and Natural Gas Vehicle (NGV) 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 400 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 NGV may exceed the limits by up to 2,000 lbs. (Reference Arizona Revised Statutes 28-1100)

Reduced Alternative Fuel Vehicle (AFV) License Tax

The vehicle license tax for an AFV is $4 for every $100 in assessed value. During the first year after initial registration, the AFV's assessed value is 1% of the manufacturer's suggested retail price (MSRP) compared to 60% for conventional vehicles. For each succeeding year, the original value of the AFV is reduced by 15%. The minimum amount of the annual AFV license tax is $5. 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.

Beginning January 1, 2020, the vehicle license tax for a previously registered AFV will be a percentage of the MSRP set by Arizona Department of Transportation (ADOT). For each succeeding year, the original value of the AFV is reduced by 15%. The vehicle license tax for an AFV that is less than 10,000 pounds gross weight this is purchased on or after January 1, 2020, will be 30% of the MSRP. For each succeeding year, the original value of the AFV is reduced by 15%.

For more information, see the ADOT AFV website.

(Reference House Bill2166, 2018, and Arizona Revised Statutes 28-5801)

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