Natural Gas Laws and Incentives in Montana

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

Laws and Regulations

Alternative Fuel Dealer License

A person may not act as a CNG, propane, hydrogen, or other alternative fuel dealer unless the person holds a valid dealer’s license issued by the Montana Department of Transportation.

(Reference Montana Code Annotated 15-70-702)

Alternative Fuel Tax

Retail sales for CNG, propane, hydrogen, and other alternative fuels used to operate vehicles are subject to a modified tax based on energy content. CNG is taxed per 120 cubic feet, measured at 14.73 pounds per square inch absolute base pressure. Propane is taxed per gallon, hydrogen is taxed per kilogram, and all other alternative fuels are taxed using the gasoline-gallon equivalency from DOE’s current fuel-properties chart, multiplied by Montana’s gasoline tax rate. Exceptions may apply. Dealers must collect and remit the tax.

(Reference Montana Code Annotated 15-70-711)

Carbon Penalty Prohibition

Local governments are prohibited from imposing penalties, fees, or taxes on carbon or carbon use, including but not limited to the carbon content of fuels or electricity in the transportation sector.

(Reference Montana Code Annotated 7-1-116)

Energy Performance Contract Authorization

Government entities in Montana are authorized to enter into energy performance contracts to pay for energy efficiency improvements with energy savings, including savings from the use of energy-efficient vehicles.

(Reference Montana Code Annotated 90-4-1101)

State Incentives

Heavy-Duty Vehicle Replacement Grants

The Montana Department of Environmental Quality (DEQ) offers grants for the replacement of qualified medium- and heavy-duty diesel transit buses with new all-electric, diesel hybrid, compressed natural gas, or propane shuttle or transit buses. Funding is also available for the replacement of school buses and airport ground support vehicles with all-electric vehicles. The program is funded by Montana’s portion of the Volkswagen Environmental Mitigation Trust. For more information, including program guidance and the application, see the DEQ Alternative Fuels & Transportation website.

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