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Alternative Fuels -- State Regulations for Texas

This page contains selected data from the Alternative Fuels Data Center (AFDC) at the U. S. Department of Energy. Additional details and the latest updates may be found at the AFDC summary page for Texas.

Vehicle Acquisition

State agency vehicles

State agency fleets with more than 15 vehicles, excluding emergency and law enforcement vehicles, may not purchase or lease a motor vehicle unless the vehicle uses compressed or liquefied natural gas, propane, ethanol or fuel blends of at least 85% ethanol (E85), methanol or fuel blends of at least 85% methanol (M85), biodiesel or fuel blends of at least 20% biodiesel (B20), or electricity including plug-in hybrid electric vehicles. Waivers may be granted for fleets under the following circumstances: 1) the fleet will operate primarily in areas where neither the state agency or a supplier can reasonably be expected to establish adequate fueling infrastructure for these fuels, or 2) the agency is unable to obtain equipment or fueling facilities necessary to operate alternative fuel vehicles at a cost that is no greater than the net costs of using conventional fuels.Covered state agency fleets must consist of at least 50% of vehicles that are able to operate on alternative fuels and use these fuels at least 80% of the time the vehicles are driven. Covered state agencies may meet these requirements through the purchase of new vehicles or the conversion of existing vehicles. State agencies that purchase passenger vehicles or other ground transportation vehicles for general use must ensure that at least 25% of the vehicles purchased during any state fiscal biennium, other than exempted vehicles, meet or exceed federal Tier II, Bin 3 emissions standards.(Reference Texas Statutes, Government Code 2158.004-2158.009)


Certification Requirement (CNG vehicles)

Vehicles converted to operate on CNG must be inspected and certified in accordance with relevant safety standards by a CSA America certified CNG Fuel System Inspector. The vehicle must also be tested to ensure that it meets emissions standards in the applicable county, or the county with the most lenient emissions standards if the vehicle is registered in a county without its own emissions standards. A person who performs a conversion must certify to the vehicle owner that the conversion does not tamper with, circumvent, or otherwise affect the vehicle's on-board diagnostic system, if applicable. A CSA America certified CNG Fuel System Inspector must also inspect the vehicle every three years, or every 36,000 miles, and after a collision occurring at a speed greater than five miles per hour. The Utah Division of Air Quality may develop programs to facilitate coordination between government agencies and the private sector regarding emissions and anti-tampering compliance testing, vehicle safety, and potential improvements in the air quality of the state. (Reference Utah Code 19-1-406)

Funding (alternative fueling infrastructure)

Effective September 1, 2011, the Texas Commission on Environmental Quality will establish and administer the Alternative Fueling Facilities Program, part of the Texas Emissions Reduction Plan, which provides grants for 50% of eligible costs, up to $500,000, to construct, reconstruct, or acquire a facility to store, compress, or dispense alternative fuels in Texas air quality nonattainment areas. Qualified alternative fuels include electricity, natural gas, hydrogen, propane, and fuel mixtures containing at least 85% methanol (M85). The entity receiving the grant must agree to make the fueling station available to people and organizations not associated with the grantee during certain times. Additional terms and conditions apply. This program ends August 31, 2018. (Reference Senate Bill 20, 2011, and Texas Statutes, Health and Safety Code 394)

Funding (alternative fueling infrastructure, Houston)

The Houston-Galveston Area Council provides Congestion Mitigation and Air Quality (CMAQ) program grants through the Greater Houston Clean Cities Coalition for 33% of the cost of a new original equipment manufacturer clean fuel vehicle, 75% of the cost of a clean fuel vehicle conversion/repower, or 50% of eligible equipment and installation costs to establish publicly-accessible alternative fueling infrastructure. This grant is for public and private entities in the eight-county Houston-Galveston nonattainment area. For more information, contact Kelli Angelone (713-993-2444) at the Greater Houston Clean Cities Coalition.

Funding (diesel vehicle fleets, infrastructure)

The Texas Commission on Environmental Quality (TCEQ) administers the Texas Clean Fleet Program, part of the Texas Emissions Reduction Plan, which encourages owners of fleets containing diesel vehicles to permanently remove the vehicles from the road and replace them with alternative fuel vehicles (AFVs) or hybrid electric vehicles (HEVs). Grants are available to fleets to offset the incremental cost of such replacement projects. An entity that operates a fleet of at least 100 vehicles and places 25 or more qualifying vehicles in service for use entirely in Texas during a given calendar year may be eligible for grant. Qualifying AFV or HEV replacements must reduce emissions of nitrogen oxides or other pollutants by at least 25% as compared to baseline levels and must replace vehicles that meet operational and fuel usage requirements. Neighborhood electric vehicles do not qualify. This program ends August 31, 2017. As of July 2011, the latest grant application period has closed. (Reference Texas Statutes, Health and Safety Code 391)

Funding (heavy vehicles, infrastructure)

The Texas Commission on Environmental Quality administers the Emissions Reduction Incentive Grants (ERIG) Program, part of the Texas Emissions Reduction Plan, which provides grants for various types of clean air projects to improve air quality in the state's nonattainment areas. Eligible projects include those that involve heavy-duty vehicle replacement, retrofit, or repower; alternative fuel dispensing infrastructure; idle reduction and electrification infrastructure; and alternative fuel use. As of July 2011, the latest ERIG application period has closed. (Reference Texas Statutes, Health and Safety Code 386)

Funding (natural gas vehicles)

Effective September 1, 2011, the Texas Commission on Environmental Quality (CEQ) will establish and administer the NGV Grant Program, part of the Texas Emissions Reduction Plan, which provides grants to replace existing medium- and heavy-duty vehicles with new, converted, or repowered NGVs. Qualifying vehicles must be on-road vehicles with a gross vehicle weight rating of more than 8,500 pounds and certified to current federal emissions standards. Grant funds may cover only the incremental costs. Additional terms and conditions apply.To ensure that NGVs have access to natural gas fueling infrastructure, CEQ may also award grants to support the development of a network of natural gas fueling stations along the interstate highways connecting Houston, San Antonio, Dallas, and Forth Worth. Through a competitive process, CEQ may not award more than three station grants to any one entity, or more than one grant for each station. Grant amounts may not exceed $100,000 for a compressed natural gas station, $250,000 for a liquefied natural gas station, or $400,000 for a station providing both forms of natural gas. Funded stations must be accessible to the public and located within three miles of an interstate highway system. Additional terms and conditions apply.This program ends August 31, 2017. (Reference Senate Bill 20, 2011, and Texas Statutes, Health and Safety Code 393)

Funding (propane vehicles)

The Railroad Commission of Texas, Alternative Energy Division's Low Emissions Propane Equipment Initiative Program offers grants to buyers who wish to replace aging medium-duty diesel school bus or delivery vehicles with qualified propane vehicles that meet or exceed current U.S. Environmental Protection Agency (EPA) emissions standards. The grant amount is dependent upon the calculated emissions reductions. The Alternative Energy Division also offers incentives to buyers who wish to replace aging internal combustion forklifts with new propane forklifts that meet or exceed 2008 EPA emissions standards.

Permit Requirement

The State Tax Commission (Commission) may require vehicles operating on clean fuels to be inspected for safe operation. In addition, clean fuel vehicles that have a gross vehicle weight rating of more than 26,000 pounds or have more than three axels are required to obtain a special fuel user permit from the Commission. Clean fuels are defined as propane, compressed natural gas, liquefied natural gas, and electricity. (Reference Utah Code 59-13-102, 59-13-303, and 59-13-304)

Rebate (natural gas vehicles)

The Texas Gas Service Conservation Program offers a $2,000 rebate for the purchase of a qualified NGV or $3,000 for the conversion of a gasoline powered vehicle to operate on natural gas. The rebate is available for up to five vehicles per customer, and only centers certified by the Railroad Commission of Texas may perform conversions. A $1,000 rebate is also available for the purchase of a natural gas forklift. Additionally, qualified residential and commercial NGV fueling infrastructure may be eligible for a $2,000 rebate. These incentives are available to commercial and residential customers within the city limits of Austin, Sunset Valley, Rollingwood, West Lake Hills, Cedar Park, and Kyle with specific gas rate codes.

Tax (propane)

Motor fuel taxes for propane used in vehicles are collected through an annual sticker permit fee based on the vehicles' registered gross vehicle weight rating and the number of miles driven the previous year. (Reference Texas Statutes, Tax Code 162.305)

Tax Exemption (biodiesel, ethanol)

The biodiesel or ethanol portion of blended fuel containing taxable diesel is exempt from the diesel fuel tax. The biodiesel or ethanol fuel blend must be clearly identified on the retail pump, storage tank, and sales invoice in order to be eligible for the exemption. (Reference Texas Statutes, Tax Code 162.204)

Weight Limit Exemption (idle reduction)

Any vehicle equipped with qualifying idle reduction technology may exceed the state's gross vehicle weight limits by up to 400 pounds to compensate for the additional weight of the idle reduction technology. Upon request, vehicle operators must provide proof that the idle reduction technology is fully functional. (Reference Senate Bill 493, 2011, and Texas Statutes, Transportation Code 622.955)