BILL ANALYSIS �
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THIRD READING
Bill No: AB 1907
Author: Ridley-Thomas (D)
Amended: 4/3/14 in Assembly
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 10-0, 6/10/14
AYES: DeSaulnier, Gaines, Cannella, Galgiani, Hueso, Lara, Liu,
Pavley, Roth, Wyland
NO VOTE RECORDED: Beall
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 6/25/14
AYES: Wolk, Knight, Beall, DeSaulnier, Hernandez, Walters
NO VOTE RECORDED: Liu
SENATE APPROPRIATIONS COMMITTEE : 7-0, 08/11/14
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 78-0, 5/15/14 (Consent) - See last page for
vote
SUBJECT : Fuel tax: natural gas: gallon equivalent
SOURCE : California Natural Gas Vehicle Coalition
DIGEST : This bill requires compressed and liquefied natural
gas (LNG) sold as motor vehicle fuels to be metered, labeled,
and taxed in units of gasoline- and diesel-gallon equivalents,
respectively.
ANALYSIS : Existing law imposes an excise tax on compressed
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natural gas (CNG) at a rate of $0.07 per 100 cubic feet at
standard temperature and pressure, and on LNG at a rate of $0.06
per gallon. Sellers of CNG and LNG must clearly display on the
dispensing apparatus a label showing the total price per gallon
or liter of all motor fuel sold. An owner or operator of a
vehicle propelled by CNG or LNG may pay an annual flat-rate fuel
tax based on the type or weight of a vehicle instead of a
per-gallon or cubic-foot rate. Existing law recognizes the
National Bureau of Standards as the authority that defines basic
units of weight and measure, and their equivalents, for purposes
of governing weighing and measuring equipment and transactions
in the state.
This bill:
1.Requires retail sales of CNG vehicle fuel to be metered in
gasoline gallon equivalent units, equal to 5.66 pounds, or
126.67 cubic feet, of natural gas at standard temperature and
pressure.
2.Requires retail sales of LNG vehicle fuel to be metered in
diesel gallon equivalent units, equal to 6.06 pounds of LNG.
3.Requires labeling of the retail price of CNG or LNG in units
of gasoline or diesel gallon equivalents, respectively, in a
conspicuous place on the dispensing apparatus.
4.Maintains the existing excise taxes on CNG and LNG, but
changes the units of the excise tax rates to conform to gallon
equivalents ($0.0887 for each gasoline gallon equivalent of
CNG and $0.1017 for each diesel gallon equivalent of LNG).
Comments
Purpose . The purpose of this bill is to provide consumers with
easily understandable unit pricing of CNG and LNG motor vehicle
fuels, allowing direct comparison with the prices per gallon of
gasoline or diesel fuel, with which motorists are most familiar.
The most recent U.S. Department of Energy data from April shows
that nationwide, CNG cost $2.15 per equivalent gasoline gallon,
compared to $3.65 per gallon for gasoline during the same
period. This bill would reveal these price savings to
consumers.
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Natural gas as a vehicle fuel . Natural gas as a vehicle fuel
comes in two forms: compressed and liquefied. CNG is
pressurized to above 3,100 pounds per square inch, and is used
in all vehicle types (light- and heavy-duty), although it is
more commonly used in light-duty vehicles and buses. LNG,
obtained from cooling natural gas to below -260o F, is more
often used as a substitute for diesel fuel in heavy-duty
vehicles. In recognizing that CNG typically replaces gasoline
while LNG typically replaces diesel fuel, the author specifies a
gasoline gallon equivalent for CNG and diesel gallon equivalent
for LNG.
Equivalent gallon units are a national trend . Since March,
2013, 11 states have passed legislation to measure or label CNG
and/or LNG in equivalent gallons of gasoline or diesel.
All natural gas is not created equal . The energy content of a
given volume of natural gas may vary by up to 10%, because
although natural gas is mostly composed of methane, it also
includes other hydrocarbons and inert gases, which vary by
supply origin and refining process. LNG is typically less
variable in its energy content than CNG, because in the process
of condensing the gas to a liquid, other constituents and
impurities are removed. Notwithstanding this variability, the
conversion factors specified in this bill are based on the
average energy content of CNG, as originally codified in 1994 by
the National Conference on Weights and Measures. A single
conversion factor and label based on average energy content of
CNG may mask variation in CNG quality. As new sources of
renewable natural gas emerge, including biomethane obtained from
landfills or anaerobic digesters, CNG variability may continue
to be an important consideration in its use as a vehicle fuel.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
The Department of Food and Agriculture anticipates increased
ongoing workload resulting from the bill that would cost $1
million annually (special fund).
The Board of Equalization (BOE) indicates that the bill would
result in minor and absorbable administrative costs.
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Additionally, BOE estimates that the change in measurement and
conforming revisions to the excise taxes would be revenue
neutral.
SUPPORT : (per Senate Transportation and Housing Committee
analysis; unable to reverify at time of writing)
California Natural Gas Vehicle Coalition (source)
Bay Area Air Quality Management District
California Trucking Association
Honda
San Diego Gas & Electric
Sempra Energy Utilities
Southern California Gas Company
Trillium CNG
United Parcel Service
VNG, Co.
Waste Management
ASSEMBLY FLOOR : 78-0, 5/15/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. P�rez, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Mansoor, Vacancy
JA:nl 8/17/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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