Federal Natural Gas Incentives and Laws
On this page, you will find Federal incentives and laws related to natural gas. If you are interested in additional incentives and laws available by state, return to the main Natural Gas Incentives and Laws page to do a State Search for Natural Gas Incentives and Laws.
United States (Federal)
Air Pollution Control Program
The Air Pollution Control Program assists state, local, and tribal agencies in planning, developing, establishing, improving, and maintaining adequate programs for prevention and control of air pollution or implementation of national air quality standards. Plans may emphasize alternative fuels, vehicle maintenance, and transportation choices to reduce vehicle miles traveled. Eligible applicants may receive federal funding for up to 60% of project costs to implement their plans. (Reference 42 U.S. Code 7405)
Point of Contact
U.S. Environmental Protection Agency
Phone (202) 272-0167
http://www.epa.gov
Congestion Mitigation and Air Quality (CMAQ) Improvement Program
The CMAQ Improvement Program provides funding to state departments of transportation (DOTs), municipal planning organizations (MPOs), and transit agencies for projects and programs in air quality non-attainment and maintenance areas that reduce transportation-related emissions. Eligible activities include transit improvements, travel demand management strategies, traffic flow improvements, purchasing idle reduction equipment, development of alternative fueling infrastructure, conversion of public fleet vehicles to operate on cleaner fuels, and outreach activities that provide assistance to diesel equipment and vehicle owners and operators regarding the purchase and installation of diesel retrofits. State DOTs and MPOs must give priority to projects and programs to include diesel retrofits and other cost-effective emissions reduction activities, and cost-effective congestion mitigation activities that provide air quality benefits. For more information, visit the CMAQ Web site. (Reference 23 U.S. Code 149)
Point of Contact
Federal Highway Administration
U.S. Department of Transportation
http://www.fhwa.dot.gov/index.html
Clean School Bus USA
Clean School Bus USA is a public-private partnership that focuses on reducing children's exposure to harmful diesel exhaust by limiting school bus idling, implementing pollution reduction technologies, improving route logistics, and switching to clean fuels. Clean School Bus USA is part of the U.S. Environmental Protection Agency's National Clean Diesel Campaign and provides funding for projects designed to retrofit and/or replace older diesel school buses. Eligible applicants are school districts, state and local government programs, federally recognized Indian tribes, and non-profit organizations.
Point of Contact
Jennifer Keller
National Clean Diesel Campaign
U.S. Environmental Protection Agency
Phone (202) 343-9541
keller.jennifer@epa.gov
http://www.epa.gov/cleandiesel/
Clean Construction USA
Clean Construction USA is a voluntary program that promotes the reduction of diesel exhaust emissions from construction equipment and vehicles by encouraging proper operations and maintenance, use of emission-reducing technologies, and use of cleaner fuels. Clean Construction USA is part of the U.S. Environmental Protection Agency's National Clean Diesel Campaign, which offers funding for clean diesel construction equipment projects.
Point of Contact
Trish Koman
National Clean Diesel Campaign
U.S. Environmental Protection Agency
Phone (734) 214-4955
Fax (734) 214-4869
koman.trish@epa.gov
http://www.epa.gov/cleandiesel/
Clean Ports USA
Clean Ports USA is an incentive-based program designed to reduce emissions by encouraging port authorities and terminal operators to retrofit and replace older diesel engines with new technologies and use cleaner fuels. The U.S. Environmental Protection Agency's National Clean Diesel Campaign offers funding to port authorities and public entities to help them overcome barriers that impede the adoption of cleaner diesel technologies and strategies.
Point of Contact
Trish Koman
National Clean Diesel Campaign
U.S. Environmental Protection Agency
Phone (734) 214-4955
Fax (734) 214-4869
koman.trish@epa.gov
http://www.epa.gov/cleandiesel/
Clean Fuels Grant Program
The Clean Fuels Grant Program assists designated ozone and carbon monoxide air quality nonattainment and maintenance areas in achieving or maintaining the National Ambient Air Quality Standards through grant funding. The program accelerates the deployment of advanced bus technologies by supporting the use of low-emission vehicles in transit fleets. The program assists transit agencies in purchasing low-emission buses and related equipment, constructing alternative fuel stations, modifying garage facilities to accommodate clean fuel vehicles, and assisting with the use of biodiesel. For more information, see the Clean Fuels Grant Program fact sheet. (Reference 49 U.S. Code 5308 and 49 CFR 624)
Point of Contact
Federal Transit Administration, Office of Program Management
U.S. Department of Transportation
Phone (202) 366-4020
http://www.fta.dot.gov/index.html
State Energy Program (SEP) Funding
The SEP provides grants to states to assist in designing, developing, and implementing renewable energy and energy efficiency programs. Funding from the SEP is directed to state energy offices, and each state's energy office manages all SEP-funded projects. States may also receive project funding from technology programs in the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE) for SEP Special Projects. EERE distributes the funding through an annual competitive solicitation to state energy offices. For more information about the SEP, including SEP project descriptions, visit the SEP Web site.
Point of Contact
U.S. Department of Energy
Phone (800) 342-5363
Fax (202) 586-4403
http://www.energy.gov
Alternative Fuel Excise Tax Credit
An excise tax credit is available for alternative fuel that is sold for use or used as a fuel to operate a motor vehicle. The credit is $0.50 per gasoline gallon equivalent (GGE) of compressed natural gas and $0.50 per liquid gallon of liquefied petroleum gas, liquefied natural gas, and liquefied hydrogen. The entity eligible for the credit is the one liable for reporting and paying the federal excise tax on the fuel. Eligible entities must be registered with the Internal Revenue Service (IRS). Tax exempt entities that fuel vehicles from an on-site fueling station can claim the excise tax credit and receive a direct payment from the IRS. The following forms may be used to claim the excise tax credit: Form 720 (PDF 442 KB); Form 8849, Schedule 3 (PDF 189 KB); and/or Form 4136 (PDF 263 KB). The credit is available until December 31, 2009, except in the case of the credit for liquefied hydrogen, which expires September 30, 2014. For more information see Publication 510 (PDF 1 MB) and IRS Notice 2006-92 (PDF 29 KB). (Reference House Resolution 1424, 2008, and 26 U.S. Code 6427) Download Adobe Reader
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
Clean Cities
The mission of Clean Cities is to advance the energy, economic, and environmental security of the United States by supporting local initiatives to adopt practices that reduce the use of petroleum in the transportation sector. Clean Cities carries out this mission through a network of more than 80 volunteer coalitions, which develop public/private partnerships to promote alternative fuels and advanced vehicles, fuel blends, fuel economy, hybrid vehicles, and idle reduction. Clean Cities provides information about financial opportunities, coordinates technical assistance projects; updates and maintains databases and Web sites, and publishes fact sheets, newsletters, and related technical and informational materials. For more information, visit the Clean Cities Web site.
Point of Contact
U.S. Department of Energy
Phone (800) 342-5363
Fax (202) 586-4403
http://www.energy.gov
SmartWay Transport Partnership
The SmartWay Transport Partnership is a voluntary partnership between the U.S. Environmental Protection Agency (EPA) and the ground freight industry. It was designed to reduce greenhouse gases and air pollution through increased fuel efficiency. EPA provides Partners with benefits and services that include fleet management tools, technical support, information, public recognition, and use of the SmartWay Transport Partner logo. The SmartWay Transport Partnership is working with states, banks, and other organizations to develop innovative financing options that help Partners purchase devices that save fuel and reduce emissions. Grants are available to states, nonprofits, and academic institutions to demonstrate innovative idle reduction technologies for the trucking industry.
Point of Contact
SmartWay Transport Partnership
U.S. Environmental Protection Agency
Phone (734) 214-4767
Fax (734) 214-4052
smartway_transport@epa.gov
http://www.epa.gov/smartway
Vehicle Incremental Cost Allocation
The U.S. General Services Administration (GSA) is required to allocate the incremental cost of purchasing alternative fuel vehicles across the entire fleet of vehicles distributed by GSA. This mandate also applies to other federal agencies that procure vehicles for federal fleets. (Reference 42 U.S. Code 13212 (c))
Point of Contact
U.S. General Services Administration
Phone (703) 605-5630
AFVteam@gsa.gov
http://www.gsa.gov/afv
Vehicle Acquisition and Fuel Use Requirements for State and Alternative Fuel Provider Fleets
Under the Energy Policy Act (EPAct) of 1992, certain state government and alternative fuel provider fleets are required to acquire alternative fuel vehicles (AFVs). Compliance is required by fleets that operate, lease, or control 50 or more light-duty vehicles within the U.S. Of those 50 vehicles, at least 20 must be used primarily within a single Metropolitan Statistical Area/Consolidated Metropolitan Statistical Area. Those same 20 vehicles must also be capable of being centrally fueled. Covered fleets earn credits for each vehicle purchased, and credits earned in excess of their requirements can be banked or traded with other fleets. Additionally, fleets that use fuel blends containing at least 20% biodiesel (B20) in medium- and heavy-duty vehicles may earn credits toward their annual AFV acquisition requirements.
On March 20, 2007, the U.S. Department of Energy (DOE) issued a final rule on Alternative Compliance (Section 703 of EPAct of 2005), which allows fleets the option to choose a petroleum reduction path in lieu of acquiring AFVs. Interested fleets must obtain a waiver from DOE by proving that they will achieve petroleum reductions equivalent to that achieved by having AFVs running on alternative fuels 100% of the time. For more information, visit the EPAct State and Alternative Fuel Provider Rule Web site, or contact the Regulatory Information Line at (202) 586-9171 or regulatory_info@afdc.nrel.gov.
(Reference 42 U.S. Code 13251 and 13263a, and 10 CFR 490)
Point of Contact
Dana O'Hara
State and Alternative Provider Rule
U.S. Department of Energy
Phone (202) 586-8063
dana.o'hara@ee.doe.gov
http://www1.eere.energy.gov/vehiclesandfuels/epact/state/index.html
Alternative Fuel Infrastructure Tax Credit
A tax credit is available for the cost of installing alternative fueling equipment placed into service after December 31, 2005. Qualified alternative fuels are natural gas, liquefied petroleum gas, hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel. The credit amount is up to 30% of the cost, not to exceed $30,000, for equipment placed into service before January 1, 2009. The credit amount is up to 50% not to exceed $50,000, for equipment placed into service on or after January 1, 2009. Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location. Consumers who purchase residential fueling equipment may receive a tax credit of up to $1,000, which increases to $2,000 for equipment placed into service after December 31, 2008. The maximum credit amount for hydrogen fueling equipment placed into service after December 31, 2008, and before January 1, 2015, is $200,000. The credit expires December 31, 2010, for all other eligible fuel types. Form 8911 (PDF 247 KB) provides additional information and must be used in order to claim the tax credit. Download Adobe Reader (Reference Public Law 111-5, Section 1123, and 26 U.S. Code 30C)
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
Vehicle Acquisition and Fuel Use Requirements for Federal Fleets
Under the Energy Policy Act (EPAct) of 1992, 75% of new light-duty vehicles acquired by certain federal fleets must be AFVs. As amended in January 2008, Section 301 of EPAct of 1992 defines AFVs to include hybrid electric vehicles, fuel cell vehicles, and advanced lean burn vehicles. Federal fleets are also required to use alternative fuels in dual-fuel vehicles unless the U.S. Department of Energy (DOE) determines an agency qualifies for a waiver; grounds for a waiver include the lack of alternative fuel availability and cost restrictions. Fleets that use fuel blends containing at least 20% biodiesel (B20) in medium- and heavy-duty vehicle may earn credits toward their annual requirements. Additionally, Executive Order 13423 requires federal agencies with 20 vehicles or more in their U.S. fleet to decrease petroleum consumption by 2% per year, relative to their Fiscal Year (FY) 2005 baseline, through FY 2015. Agencies must also continue to increase their alternative fuel use by 10% per year, relative to the previous year. For more information, visit the Federal Fleet Management Web site.
Additional requirements for federal fleets were included in the Energy Independence and Security Act of 2007, including low greenhouse gas emitting vehicle acquisition requirements and renewable fuel infrastructure installation. These requirements are dependent upon formal rulemaking by DOE.
(Reference 42 U.S. Code 13212 and Executive Order 13423)
Point of Contact
Federal Fleet Requirements
U.S. Department of Energy
fed_fleets@afdc.nrel.gov
http://www1.eere.energy.gov/femp/about/fleet_mgmt.html
Vehicle Acquisition and Fuel Use Requirements for Private and Local Government Fleets
Under the Energy Policy Act (EPAct) of 1992, the U.S. Department of Energy (DOE) was directed to determine whether private and local government fleets should be mandated to acquire alternative fuel vehicles (AFVs). In January 2004, DOE published a final rule announcing its decision not to implement an AFV acquisition mandate for private and local government fleets. In March 2006, the U.S. District Court for the Northern District of California ruled that DOE must mandate AFV acquisitions for private and local fleets, and directed DOE to complete two rulemakings within two years: a final determination on the Private and Local Government Fleet Rule and a new Replacement Fuel Goal. DOE issued a final rulemaking on the new Replacement Fuel Goal in March 2007 extending the EPAct of 1992 goal to 2030. The goal is to achieve a domestic production capacity for replacement fuels sufficient to replace 30% of the U.S. motor fuel consumption. In September 2007, DOE issued a Notice of Propose Rulemaking (NOPR) for the Alternative Fuel Transportation Program; Private and Local Government Fleet Determination. DOE is expected to issue a final rule in March 2008. For more information on the Private and Local Government Fleet Rule compliance, visit the EPAct Private and Local Government Fleet Rule Web page. (Reference 42 U.S. Code 13257)
Qualified Alternative Fuel Motor Vehicle (QAFMV) Tax Credit
A tax credit is available toward the purchase of QAFMVs, which may be either new, original equipment manufacturer vehicles or vehicles that have been repowered by an aftermarket conversion company to operate on an alternative fuel. Qualifying alternative fuels are those powered by natural gas, liquefied petroleum gas, hydrogen, and fuel containing at least 85% methanol. The vehicle must be placed in service as an alternative fuel vehicle on or after January 1, 2006. Vehicle manufacturers must follow the procedures as published in Notice 2006-54 in order to certify to the Internal Revenue Service (IRS) that a vehicle meets the requirements to claim the QAFMV credit and confirm the allowable credit with respect to that vehicle. See the IRS QAFMV Web site for the current list of qualified vehicles and credits. Form 8910 (PDF 267 KB) provides additional information and must be used to claim the tax credit. This tax credit expires December 31, 2010. (Reference 26 U.S. Code 30B) Download Adobe Reader
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
Energy Independence and Security Act of 2007 Signed Into Law
President Bush signed the Energy Independence and Security Act (EISA) of 2007 (House Resolution 6), designed to improve vehicle fuel economy and help reduce U.S. dependence on oil. EISA aims to increase the supply of alternative fuel sources by setting a mandatory Renewable Fuel Standard (RFS) requiring transportation fuel sold in the U.S. to contain a minimum of 36 billion gallons of renewable fuels by 2022, including advanced and cellulosic biofuels and biomass-based diesel. In addition, the law requires the Corporate Average Fuel Economy (CAFE) standard to reach 35 miles per gallon by the year 2020. The EISA is projected to reduce energy consumption by 7% and greenhouse gas emissions by 9% by 2030. For a summary of the major provisions set forth by the legislation, visit the Energy Independence and Security Act of 2007 page of the Federal Incentives & Laws Web site. The complete legislation can be viewed on the Library of Congress Web site.
Alternative Transportation in Parks and Public Lands Program
The Alternative Transportation in the Parks and Public Lands Program provides funding to support public transportation projects in parks and on public lands. The goals of the program include conservation of natural, historical, and cultural resources, and reduced congestion and pollution. The Federal Transit Administration administers the program while partnering with the Department of the Interior and the Forest Service to provide for technical assistance in alternative transportation options. Eligible projects include capital and planning expenses for alternative transportation systems such as clean fuel shuttle vehicles. For more information, see the Alternative Transportation in Parks and Public Lands fact sheet. (Reference 49 U.S. Code 5320)
Point of Contact
Federal Transit Administration, Office of Program Management
U.S. Department of Transportation
Phone (202) 366-4020
http://www.fta.dot.gov/index.html
Voluntary Airport Low Emission (VALE) Program
The goal of the VALE program is to reduce ground level emissions at commercial service airports located in designated ozone and carbon monoxide air quality nonattainment and maintenance areas. The VALE program provides funding through the Airport Improvement Program and the Passenger Facility Charges program for the purchase of low-emission vehicles, development of fueling and recharging stations, implementing gate electrification, and other airport air quality improvements. (Reference 49 U.S. Code 40101)
Point of Contact
Jake Plante
Federal Aviation Administration, Airports Environmental Office
U.S. Department of Transportation
Phone (202) 493-4875
jake.plante@faa.gov
http://www.faa.gov/airports_airtraffic/airports/environmental/vale/
Clean Agriculture USA
Clean Agriculture USA is a voluntary program that promotes the reduction of diesel exhaust emissions from agricultural equipment and vehicles by encouraging proper operations and maintenance by farmers, ranchers, and agribusinesses, use of emission-reducing technologies, and use of cleaner fuels. Clean Agriculture USA is part of the U.S. Environmental Protection Agency's National Clean Diesel Campaign, which offers funding for clean diesel agricultural equipment projects.
Point of Contact
Trish Koman
National Clean Diesel Campaign
U.S. Environmental Protection Agency
Phone (734) 214-4955
Fax (734) 214-4869
koman.trish@epa.gov
http://www.epa.gov/cleandiesel/
Aftermarket Alternative Fuel Vehicle (AFV) Conversions
Conventional original equipment manufacturer vehicles altered to operate on propane, natural gas, methane gas, ethanol, or electricity are classified as aftermarket AFV conversions. All vehicle conversions, except those that are completed for a vehicle to run on electricity, must meet current applicable U.S. Environmental Protection Agency standards. For more information about vehicle conversion certification requirements, see the Alternative Fuels & Advanced Vehicles Data Center's Conversions Web site. (Reference 40 CFR 85)
Point of Contact
U.S. Environmental Protection Agency
Phone (202) 272-0167
http://www.epa.gov
National Clean Diesel Campaign (NCDC)
The NCDC was established by the U.S. Environmental Protection Agency to reduce pollution emitted from diesel engines through the implementation of varied control strategies and the involvement of national, state, and local partners. The NCDC includes programs for existing diesel fleets, regulations for clean diesel engines and fuels, and regional collaborations and partnerships.
Point of Contact
Jennifer Keller
National Clean Diesel Campaign
U.S. Environmental Protection Agency
Phone (202) 343-9541
keller.jennifer@epa.gov
http://www.epa.gov/cleandiesel/
Alternative Fuel Definition
The following fuels are defined as alternative fuels by the Energy Policy Act (EPAct) of 1992: pure methanol, ethanol, and other alcohols; blends of 85% or more of alcohol with gasoline; natural gas and liquid fuels domestically produced from natural gas; liquefied petroleum gas (propane); coal-derived liquid fuels; hydrogen; electricity; pure biodiesel (B100); fuels, other than alcohol, derived from biological materials; and P-Series fuels. In addition, the U.S. Department of Energy (DOE) is authorized to designate other fuels as alternative fuels, provided that the fuel is substantially nonpetroleum, yields substantial energy security benefits, and offers substantial environmental benefits. For more information about the alternative fuels defined by EPAct 1992 as well as DOE's alternative fuel designation authority, visit the EPAct Web site. (Reference 42 U.S. Code 13211)
Point of Contact
U.S. Department of Energy
Phone (800) 342-5363
Fax (202) 586-4403
http://www.energy.gov
Improved Energy Technology Loans
The U.S. Department of Energy (DOE) provides loan guarantees through the Loan Guarantee Program (Program) to eligible projects that reduce air pollution and greenhouse gases, and support early commercial use of advanced technologies, including biofuels and alternative fuel vehicles. The Program is not intended for research and development projects. DOE may issue loan guarantees for up to 100% of the amount of the loan for an eligible project. For loan guarantees of over 80%, the loan must be issued and funded by the Treasury Department's Federal Financing Bank. For additional Program guidelines and solicitation announcements, please visit the Loan Guarantee Program Web site. (Reference 42 U.S. Code 16513)
Point of Contact
U.S. Department of Energy
Phone (800) 342-5363
Fax (202) 586-4403
http://www.energy.gov
Alternative Fuel Tax Exemption
Alternative fuels used in a manner that the Internal Revenue Service (IRS) deems as nontaxable are exempt from federal fuel taxes. Common nontaxable uses in a motor vehicle are: on a farm for farming purposes; in certain intercity and local buses; in a school bus; exclusive use by a nonprofit educational organization; and exclusive use by a state, political subdivision of a state, or the District of Columbia. This exemption is not available to tax exempt entities that are not liable for excise taxes on transportation fuel. For more information, see IRS Publication 510 (PDF 1 MB). Download Adobe Reader
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
Alternative Fuel Definition - Internal Revenue Code
The Internal Revenue Service (IRS) defines alternative fuels as liquefied petroleum gas, compressed natural gas, liquefied natural gas, liquefied hydrogen, liquid fuel derived from coal through the Fischer-Tropsch process, liquid hydrocarbons derived from biomass, and P-Series fuels. Biodiesel, ethanol, and renewable diesel are not considered alternative fuels by the IRS. While the term “hydrocarbons” includes liquids that contain oxygen, hydrogen, and carbon and as such “liquid hydrocarbons derived from biomass” includes ethanol, biodiesel, and renewable diesel, the IRS specifically excluded these fuels from the definition. (Reference 26 U.S. Code 6426)
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
Emergency Economic Stabilization Act/Energy Improvement and Extension Act of 2008
The Emergency Economic Stabilization Act (House Resolution 1424) was signed by President Bush, enacting the Energy Improvement and Extension Act of 2008. The bill amends and extends existing biodiesel blending and production tax credits, extends existing alternative fuel excise tax credit, and extends the alternative fueling infrastructure tax credit. The bill also creates a new tax incentive toward the purchase of qualified plug-in hybrid electric vehicles, based on vehicle weight and battery capacity. Additionally, qualified idle reduction devices are exempt for heavy-duty truck retail excise taxes.