California Governor Signs Gallon Equivalent Measure into Law

On Monday, California Governor Jerry Brown signed into law Assembly Bill 1907. The measure, introduced by Sebastian Ridley-Thomas (D-Los Angeles), incorporates the gasoline gallon equivalent (GGE) and diesel gallon equivalent (DGE) units into California law for purposes of taxation of CNG and LNG, respectively. It also amends state law to recognize the DGE unit as the method of sale for retailers who offer LNG for sale. GGE already is recognized in the state as the method of sale for CNG so no change in law was necessary. The law also changes the motor fuel tax, changing the CNG tax rate from $0.07 per one hundred cubic feet to $0.0887 per GGE of 5.66 lbs. or 126.67 cubic feet. The LNG tax rate is changed from $0.06 per gallon to $0.1017 per DGE of 6.06 lbs. of LNG. The changes made by AB 1907 go into effect January 1, 2015. The adoption of this law is an important step toward ensuring that LNG is taxed appropriately when used as a motor fuel. It also signifies increased support for the use of the DGE unit as the method of sale at retail fueling stations. This means that retailers can sell LNG using the DGE unit on pumps instead of having pumps set to show the number of pounds or kilograms of LNG. As you’ll no doubt recall, earlier this year, the National Conference of Weights and Measure (NCWM) considered – but failed to adopt — a measure supported by NGVAmerica and many other trade allies that would have (among other things) made the DGE the national standard for sales of LNG. The GGE unit has been the national standard for CNG since 1994. Despite the setback at the NCWM Annual Meeting, there continues to be a lot of state support for the DGE unit for both taxation and method of sale. California joins Alabama, Arkansas, Colorado and Missouri as states that are using the DGE unit for sales of LNG or planned to in the near future. AB 1907 was strongly supported by the California Natural Gas Vehicle Coalition and many companies who are both members of CNGVC and NGVAmerica.