Tennessee Laws and Incentives for Natural Gas
The list below contains summaries of all Tennessee laws and incentives related to Natural Gas.
Natural Gas Station Property Tax Reduction
Any public utility, commercial, or industrial property that is used to fuel natural gas vehicles and that is a certified alternative fueling site may not be valued for property tax purposes at more than 30% of its total installed cost. To qualify as an alternative fueling site, the Tennessee Department of Environment and Conservation must certify that the station uses compressed or liquefied natural gas for the purpose of fueling motor vehicles and is projected to displace more than 6,000 gallons of petroleum annually. (Reference House Bill 1272, 2013, and Tennessee Code 67-5-601 and 67-4-2004).
Laws and Regulations
Utility District Natural Gas Fueling Station Regulation
Utility districts may own and operate natural gas fueling stations provided that the operation of the station is not franchised to another entity. This regulation does not prohibit private companies from owning or operating natural gas fueling stations within a utility district service area. (Reference Tennessee Code 7-82-302)
Alternative Fuel and Fuel-Efficient Vehicle Acquisition and Use Requirements
The Tennessee Department of General Services must ensure that at least 25% of newly purchased passenger motor vehicles procured for use in areas designated as ozone nonattainment areas are hybrid electric vehicles (HEVs) or natural gas vehicles (NGVs), provided that such vehicles are available at the time of procurement. If HEVs or NGVs are not available, conventional gasoline vehicles achieving an average fuel economy of at least 25 miles per gallon (mpg) may satisfy the requirement. In areas not designated as ozone nonattainment areas, at least 25% of newly purchased passenger motor vehicles must be HEVs, NGVs, or conventional gasoline vehicles achieving an average fuel economy of at least 25 mpg.
State fleets must make every effort to ensure that 100% of newly purchased motor vehicles are energy-efficient vehicles. Energy-efficient vehicles are defined as passenger vehicles that are alternative fuel vehicles using alternative fuels, as defined by the Energy Policy Act of 1992; HEVs; conventional gasoline vehicles achieving an average fuel economy of at least 25 mpg; or vehicles powered by ultra-low sulfur diesel achieving an average fuel economy of at least 30 mpg. Additionally, state agencies should strive to use ethanol and biodiesel in appropriate state-owned vehicles whenever possible and should support the development of biofuels fueling infrastructure.
The Tennessee Department of Health and Conservation must inventory the state's passenger vehicle fleet and prepare annual progress reports that outline cost savings, pollution avoidance, and petroleum displacement of the fleet
Energy Task Force
The Governor's Task Force on Energy Policy is developing a state energy plan to facilitate energy efficiency and the use of alternative and renewable fuels in Tennessee. The energy plan will include a summary of opportunities for the state government to use an energy-efficient approach to purchasing and managing the state vehicle fleet; prospective policies, legislation, and incentives to encourage energy efficiency; possible public-private partnerships to encourage research and development of clean energy technologies; and strategies for expanding the use of alternative and renewable fuels. (Reference Executive Order 54, 2008)
Compressed Natural Gas (CNG) Tax and Permit
A $0.13 per gallon tax is imposed on CNG used for operating motor vehicles on public highways. For the purpose of determining the tax on CNG, the Tennessee Department of Revenue (Department) uses a gallon equivalent factor of 5.66 pounds. A CNG vehicle user must apply for and obtain a CNG user's permit from the Department unless the user purchases CNG from a dealer through a metered dispenser. Government agencies are exempt from this tax. For more information, see the Department Compressed Natural Gas Tax Return for Dealers fact sheet. (Reference Tennessee Code 67-3-1113 and 67-3-1114)
Compressed Natural Gas (CNG) Dealer Permit
CNG dealers must apply for and obtain a permit from the Tennessee Department of Revenue. The permit authorizes the dealer to collect and remit taxes on CNG delivered to motor vehicles by means of a dispenser with meter capability. This permit will remain valid as long as the dealer provides timely reports and remits taxes when due, or until surrendered or cancelled. All CNG meters and dispensers are subject to inspection and verification by the Tennessee Department of Agriculture's Weights and Measures enforcement provisions. For more information, see the Department of Revenue Compressed Natural Gas Tax Return for Dealers fact sheet. (Reference Tennessee Code 67-3-1119 and 67-3-1120)