UT tax credits & non-certified conversions

[Luke]

Follow-up story tonight on Channel 2.

Apparently an attorney is fighting his inability to receive a tax credit for his non-certified conversion. The state code is very clear on this issue. Many CNG conversion shops that were installing non-certified kits knew that they were not eligible for tax incentives; the honest ones passed this onto the consumer.

FYI -

The requirement to show EPA certification to receive a tax credit is within the Utah State Code:

(http://www.rules.utah.gov/publicat/c...307-121.htm#T4)
R307-121-4. Procedures for Vehicles Converted to Clean Fuels.

To demonstrate that a conversion of a motor vehicle to be fueled by clean fuel is eligible, proof of purchase shall be made by submitting the following documentation to the executive secretary:

(1) VIN;
(2) fuel type before conversion;
(3) fuel type after conversion;
(4)(a) if within a county with an I/M program, a copy of the vehicle inspection report from an approved station showing that the converted alternate fuel vehicle meets all county emissions requirements for all installed fuel systems, or
(b) a signed statement by an ASE certified technician that includes the VIN and states that the conversion is functional;
(5) each of the following:
(a) conversion system manufacturer,
(b) conversion system model number,
(c) date of the conversion, and
(d) name, address, and phone number of the person that converted the vehicle;
(6) proof of certification required in 59-10-1009(1)(b) or 59-7-605(1)(b); and
(7) a copy of the vehicle registration.

_____________________________________
(http://le.utah.gov/~code/TITLE59/htm/59_10_100900.htm)
59-10-1009 (Superseded 01/01/09). Definitions -- Cleaner burning fuels tax credit.
(1) As used in this section:
(a) "Board" means the Air Quality Board created in Title 19, Chapter 2, Air Conservation Act.
(b) "Certified by the board" means that:
(i) a motor vehicle on which conversion equipment has been installed meets the following criteria:
(A) before the installation of conversion equipment, the vehicle does not exceed the emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51, Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
(B) the motor vehicle's emissions of regulated pollutants, when operating on fuels listed in Subsection (2)(a)(ii)(A) or (2)(a)(ii)(B), is less than the emissions were before the installation of conversion equipment; and
(C) a reduction in emissions under Subsection (1)(b)(i)(B) is demonstrated by:
(I) certification of the conversion equipment by the federal Environmental Protection Agency or by a state whose certification standards are recognized by the board;
(II) testing the motor vehicle, before and after installation of the conversion equipment, in accordance with 40 C.F.R. Part 86, Control Emissions from New and In-use Highway Vehicles and Engines, using all fuels the motor vehicle is capable of using; or
(III) any other test or standard recognized by board rule; or
(ii) special mobile equipment on which conversion equipment has been installed meets the following criteria:
(A) the special mobile equipment's emissions of regulated pollutants, when operating on fuels listed in Subsection (2)(a)(iii)(A) or (2)(a)(iii)(B), is less than the emissions were before the installation of conversion equipment; and
(B) a reduction in emissions under Subsection (1)(b)(ii)(A) is demonstrated by:
(I) certification of the conversion equipment by the federal Environmental Protection Agency or by a state whose certification standards are recognized by the board; or
(II) any other test or standard recognized by the board.
(c) "Clean fuel grant" means a grant a claimant, estate, or trust receives under Title 19, Chapter 1, Part 4, Clean Fuels and Vehicle Technology Program Act, for reimbursement of a portion of the incremental cost of the OEM vehicle or the cost of conversion equipment.
(d) "Conversion equipment" means equipment referred to in Subsection (2)(a)(ii) or (2)(a)(iii).
(e) "Electric-hybrid vehicle" is as defined in 42 U.S.C. Sec. 13435.
(f) "Incremental cost" has the same meaning as in Section 19-1-402.
(g) "OEM vehicle" has the same meaning as in Section 19-1-402.
(h) "Special mobile equipment":
(i) means any mobile equipment or vehicle not designed or used primarily for the transportation of persons or property; and
(ii) includes construction or maintenance equipment.
(2) (a) Except as provided in Subsection (2)(b), for taxable years beginning on or after January 1, 2001, but beginning on or before December 31, 2010, a claimant, estate, or trust may claim a nonrefundable tax credit against tax otherwise due under this chapter in an amount equal to:
__________________________________________________
(http://le.utah.gov/~code/FTITL59/htm..._01-01-09).htm)
_______________________________________________
(http://le.utah.gov/~code/TITLE59/htm/59_07_060500.htm)

59-7-605 (Superseded 01/01/09). Definitions -- Tax credit -- Cleaner burning fuels.
(1) As used in this section:
(a) "Board" means the Air Quality Board created under Title 19, Chapter 2, Air Conservation Act.
(b) "Certified by the board" means that:
(i) a motor vehicle on which conversion equipment has been installed meets the following criteria:
(A) before the installation of conversion equipment, the vehicle does not exceed the emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51, Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
(B) the motor vehicle's emissions of regulated pollutants, when operating on a fuel listed in Subsection (2)(a)(ii)(A) or (2)(a)(ii)(B), is less than the emissions were before the installation of conversion equipment; and
(C) a reduction in emissions under Subsection (1)(b)(i)(B) is demonstrated by:
(I) certification of the conversion equipment by the federal Environmental Protection Agency or by a state whose certification standards are recognized by the board;
(II) testing the motor vehicle, before and after installation of the conversion equipment, in accordance with 40 C.F.R. Part 86, Control of Emissions from New and In-use Highway Vehicles and Engines, using all fuel the motor vehicle is capable of using; or
(III) any other test or standard recognized by board rule; or
(ii) special mobile equipment on which conversion equipment has been installed meets the following criteria:
(A) the special mobile equipment's emissions of regulated pollutants, when operating on fuels listed in Subsection (2)(a)(iii)(A) or (2)(a)(iii)(B), is less than the emissions were before the installation of conversion equipment; and
(B) a reduction in emissions under Subsection (1)(b)(ii)(A) is demonstrated by:
(I) certification of the conversion equipment by the federal Environmental Protection Agency or by a state whose certification standards are recognized by the board; or
(II) any other test or standard recognized by board rule.
(c) "Clean fuel grant" means a grant awarded under Title 19, Chapter 1, Part 4, Clean Fuels and Vehicle Technology Program Act, for reimbursement of a portion of the incremental cost of an OEM vehicle or the cost of conversion equipment.
(d) "Conversion equipment" means equipment referred to in Subsection (2)(a)(ii) or (2)(a)(iii).
(e) "Electric-hybrid vehicle" is as defined in 42 U.S.C. Sec. 13435.
(f) "Incremental cost" has the same meaning as in Section 19-1-402.
(g) "OEM vehicle" has the same meaning as in Section 19-1-402.
(h) "Special mobile equipment":
(i) means any mobile equipment or vehicle that is not designed or used primarily for the transportation of persons or property; and
(ii) includes construction or maintenance equipment.
(2) (a) Except as provided in Subsection (2)(b), for taxable years beginning on or after January 1, 2001, but beginning on or before December 31, 2010, a taxpayer may claim a tax credit against tax otherwise due under this chapter or Chapter 8, Gross Receipts Tax on Certain Corporations Not Required to Pay Corporate Franchise or Income Tax Act, in an amount equal
_____________________________________
(http://le.utah.gov/~code/FTITL59/htm..._01-01-09).htm)

__________________________________________________ _______
Another good source of tax-credit related information (Division of Air Quality website - they are the "Board"):

http://www.airquality.utah.gov/Planning/Mobile/Clean_Fuel_Tax_Credit_QA.htm#q2

__________________________________________________ _______

[vaughnr007]

Re: Channel 2 News - approx. 4,000 illegal conversions cannot be licensed in Utah

Luke,
Tonight’s Gephardt reporting was based on Jack McIntyre’s fight for Non EPA Certified Kits tax credit and vehicle registration. I’m glad to see you posted the regulations:

(I) certification of the conversion equipment by the federal Environmental Protection Agency or by a state whose certification standards are recognized by the board;
(II) testing the motor vehicle, before and after installation of the conversion equipment, in accordance with 40 C.F.R. Part 86, Control Emissions from New and In-use Highway Vehicles and Engines, using all fuels the motor vehicle is capable of using; or
(III) any other test or standard recognized by board rule; or

Mr. McIntyre’s bases his claim on the “any other test or standard”. I think that getting an emissions test according to the then current requirements is the “test” we passed with Non EPA Certified Kits done prior to the draft DPS Vehicle Inspections requirements.

There still maybe hope for us!

Go Jack!

[Luke]

Re: Channel 2 News - approx. 4,000 illegal conversions cannot be licensed in Utah

(III) any other test or standard recognized by board rule; or

I understand he is trying to use that argument. The state code is clear, I cannot see how it could be interpreted as "a test standard that the board does not recognize". Whatever test standard used must be recognized by the Air Quality Board/Division of Air Quality. They are the ones to determine which tests are acceptable. Apparently, any testing done by Mr. McIntyre or his conversion shop were not recognized/acceptable.

One installer of non-certified kits told me that vehicles he converted would not be eligible for tax incentives. I figure that was the honest thing for him to do (and I commend him). If I would have been told by the conversion shop that I could get tax incentives and then I later found that to be false, I would have filed a complaint with the conversion shop.

[younkin]

Re: Channel 2 News - approx. 4,000 illegal conversions cannot be licensed in Utah

In 2007 any CNG Conversion was getting the tax credit, now they are being told they can't license their cars?????? Whats up with that? Jim

[Luke]

Re: Channel 2 News - approx. 4,000 illegal conversions cannot be licensed in Utah

Jim,

Are you suggesting that the board changed what it recognized as testing between 2007 and now OR that they changed how they enforced the state code regarding conversions. This would be an important thing to consider and document. (I have done research - wording related to these incentives in state code did not change between 2007 and now, but from your statement, the interpretation/enforcement of them has)

[vaughnr007]

Re: Channel 2 News - approx. 4,000 illegal conversions cannot be licensed in Utah

Luke,
What about this scenario: You’re told that you can get the tax credit from the installer and he gives you the contact information for the state division that grants those requests. You contact the state by phone, verify you can get the tax credit, and file the necessary paper work including the emissions test result (Passed). You’re granted the credit. Then the next year you are told that it is illegal and the conversion that was accepted before by the STATE is now rejected. OR
A person verifies with the state that any conversion that passes emission testing will get the credit. You save the money and get the conversion done. Meanwhile the state changes their mind and requires a EPA Certified Kit for the credit. 6 months later, the state changes their position on vehicle registration and the conversion acceptable before is now considered illegal.

Was the public misled by the state’s actions? John Q Public should not have to be a lawyer to interrupt state rules and regulations but he should be able to rely on directions from the state without fear of reprisals or punishment. Did the state make a public announcement that they were reviewing emissions and safety regulations and the public should wait until a final determination is made? Not a peep. If a business did that, you bet they would be sued for damages.
I believe a fair solution would be to grant the tax credit and grandfather those who had conversion done prior to 1 January 2009.

[younkin]

Re: Channel 2 News - approx. 4,000 illegal conversions cannot be licensed in Utah

Luke and Vaughn007, Last year (or late 2007) as people who had converted their vehicles began to apply for the CNG Tax Credit at some point began to be turned down, because they didn't have the "EPA" certification. I have talked with people who knew of others that were able to receive the tax credit (in 2007 or early 2008?)without the "EPA" sticker. The way it was explained to me was that the person in charge over the State CNG tax credit program was changed and that they began requiring the "EPA" sticker. There are ways to challenge this rule and actually get the credit but I have never done it.It would be hard to tell if they actually changed the law from before unless you have a hard copy from last year they could of changed it online. My thinking is that they really didn't want to pas out the money so they made it harder to get the Credit. Whats funny is that many "EPA" approved kits burn dirtier, throw engine codes and may have tank and piping safety issues. I feel that if a car is running clean and has its high pressure tank and piping inspected by a CSA Certified inspector it should be able to receive its Tax Credit and Tags.

Below is part of story I wrote called The Summer of 2008 a True CNG Story. I address some of the problems everyone was faced with when converting and some solutions.

"Many of these talented Technicians here in Utah saw the introduction of CNG (Compressed Natural Gas) Vehicles as an opportunity to help their customers run on less expensive fuel while doing something good for the environment by cleaning the air and burning a home grown fuel. It was a win-win situation for both the installer and the consumer, or so it seemed. These New CNG car owners would be able to burn clean Natural Gas, a fuel source that we have plenty of here in Utah, a fuel source that is low priced & a fuel source that burns cleaner than traditional gasoline. Instead of being rewarded for getting their Safety training in CNG, collecting CNG components and installing CNG kits, most of
these Technicians were painted as Criminals by the press and others.

Now, let’s take a look at the Modern CNG Industry as a whole. Where did all of the current CNG Vehicles come from? Most of the Dedicated (CNG only) and Bi-fuel (both CNG and Gasoline) vehicles on the road today were built and converted over the past 15 years by Car Companies and Private Retrofitters. Most of these conversions were spawned out of Mandates and Directives from the Government in an effort to clean up our Air. As the CNG Industry in the US grew and the vehicles got more complicated, the older certified CNG kits were not sophisticated enough for the newer vehicle this introduced more tunable Kits to the certified converters. Around this time, the EPA noticed that some of these conversions were burning dirtier than their Gasoline counterparts so, (tampering) directives were issued whereby the offending Vehicles could be monitored. The older certified CNG systems were good in their day, but as the Vehicles themselves got more sophisticated, more tunable certified CNG kits (as mentioned above) were introduced, most of these were sequential injection. Many of these kits came from companies outside the United State who had been producing these kits for many years. For a while it was profitable for CNG Kit manufacturers to get the EPA approval each year. There were plenty of fleets who needed their kits due to Government mandates, etc.. and the installers and consumers of these kits were in some cases receiving rebates and incentives from the Federal and State government for these conversions. As the Vehicles got more sophisticated and the rebates and incentives dried up, it was no longer profitable for the Kit Producers to certify their kits. A single certification is only good for one vehicle, one engine family for one year, the next year, the process needed to be repeated.

Now comes the famous Summer of 2008, the gasoline prices are tripled, the consumers are squeezed and here in Utah we have a clean burning money saving Alternative, CNG. As the car dealers began pulling in overpriced factory converted vehicles the Independent Repair Facilities began training their technicians and searching for CNG kits to install.


World wide the United States is behind the curve when it comes to CNG Conversions. As the US tries to catch up with the rest of the world and help clear the air, we now go into this new year, needing to rethink our approach to CNG Conversions. We, all CNG Shops, need to work together. Those who install certified, (EPA) and imported, (non certified) kits. We can all come together and help each other. The certified Kits need Safety and
Emission Testing from time to time. Some older systems may need to be retrofitted with an Imported kit to run cleaner. We must share tuning information and mantainence schedules & the Imported kit conversions also need to be checked for Safety and Emissions.

Each individual State needs to Certify and Safety Check the CNG Vehicles within their borders. At this time the EPA Certification Process is cumbersome, antiquated and not flexible enough to keep up with the current influx of CNG Conversions. People need to be able to convert what ever vehicle they are driving, not just the Fords and Chevy’s that the government and state fleets have been using. The CITIZENS want CNG, the POLITICIANS want CNG, OBAMA wants CNG,the PICKENS PEOPLE want CNG, and those driving GAS GUZZLERS want relief through CNG.
There is an answer:
1) Streamline the conversion and certification process.
2) Create an Emission testing and Certification program for CNG tighter than the original EPA Standard.
3) Create a Safety standard based on NFPA52 for all CNG Vehicles and systems.
4) Let the State implement and regulate these programs using the Certified Trained CNG Technicians already in the state.
5) Create a board of Certified CNG Technicians to help train others in the testing and repair of CNG systems.
6) Implement these programs using existing Safety and Emission station

BTW we have created the above mentioned Board, it is called CCATS, Certified CNG Automotive Technicians for Safety, we are all ASE Master, CSA (tank inspection), Certified Technicians with over 250 years of experience. We have written proposal which we are presenting to the state, if you want more information E Mail me, Jim
[email protected]
801 427 2284

[Luke]

Re: UT tax credits & non-certified conversions

Here is a link to the news video for those who missed it:

http://www.kutv.com/mediacenter/[email protected]

Here is the link to the story text:

http://www.kutv.com/content/gephardt/story/Get-Gephardt-Natural-Gas-Car-Conversions-might-be/J6wMLYlQck2k5s0HPtESjA.cspx

[Luke]

Re: UT tax credits & non-certified conversions

Does the tank installation on the vehicle showcased on the news story conform to NFPA-52? I do not have a copy of NFPA-52, but have learned a little about its contents from this website and others.

It has no tank shields to protect from rock impacts, etc. and seems to be resting on a welded steel box without isolation between the mounts and the tanks. Exhaust system also seems to run close to right-hand side of tanks without thermal shielding.

[Yroc]

Re: UT tax credits & non-certified conversions

I didn't read all that, but yes, the code changed around May 2008 (or at least online and by enforcement) when the EPA came in and fired the guy that was doing the credits. I thought this was very suspect and posted somewhere on here about it. The Utah State site DID NOT read the way it's posted above before May 2008. Nobody said anything about it and when the first non-epa conversions were denied their credits the site changed and made it look like the didn't have a chance.

I also worked with an installer who has pioneered a lot of CNG systems here in UT, anyway, he told me that there was nothing legal that said you couldn't get a tax credit for non-epa conversion. Obviously, the new posting leaves no questions there. I asked how this changed happened overnight, but the only responses I got on this site was to the tune of, "well that's the law so deal with it". But nothing really was found out about how it actually happened. I still wonder...

I believe what actually changed was the 'definition' of 'proof of certification'. There was no mention of anything EPA to qualify for the tax credit before. I know this because we were getting ready to start a conversion company and needed to know the status for getting a tax credit, at the time we checked, early 2008, we were told by the state (I wish I knew who now) that a vehicle running properly on cng would qualify. They would even grant an exemption if the vehicle wouldn't pass OBD tests so it could be registered. We had chosen to use conversions that were OBD II compliant, so that wasn't an issue for us, this is how it had been in prior years, but oh how we know this has all changed with the recent popularity of CNG, which I thought would be a good thing.....

[Luke]

Re: UT tax credits & non-certified conversions

The code did not change online in May 2008. The enforcement may have. Division of Administration Rules (DAR) files document changes to R307-121.

DAR File No. 25495 (http://www.rules.utah.gov/publicat/b.../b20021101.pdf PDF page 12; document page 6) details changes made to R307-121 in 2002. (effective 3 January 2003)

DAR File No. 29797 (http://www.rules.utah.gov/publicat/b...0501/29797.htm) details changes made to R307-121 in 2007. (effective 9 July 2007) see also http://www.airquality.utah.gov/Air-Q...n_R307_121.pdf (also attached)

DAR File No. 31928 (http://www.rules.utah.gov/publicat/b...1001/31928.htm) details changes made to R307-121 in 2008 (effective 1 January 2009)

The requirements for EPA certification are evident in each revision of R307-121. If anything, the requirements are becoming more clear and concise.

In May 2008, the Division of Air Quality put up a FAQ page on the clean vehicle credits and requirements. I presume this was in response to the rapid growth of the CNG sector in Utah. The current page is located here (http://www.airquality.utah.gov/Plann...Tax_Credit.htm)

[Yroc]

Re: UT tax credits & non-certified conversions

I looked online when I bought my first vehicle, which was actually in Nov 2007 and it was not the way it was now, It only said that I needed a note from an ASE mechanic that the vehicle ran properly on CNG. I don't know anything about the code but there is nothing in the law saying that it has to be epa to get the credit as per the article stated above. That attorney found what I've been hearing about from others.