Committee clears bill to streamline replacement of fuel tax labels at Arizona pumps

The Arizona House Committee on Transportation Infrastructure on Feb. 6 approved House Bill 2166 as amended, a measure that directs the Arizona Department of Transportation to provide replacement used‑fuel dispenser labels to fuel vendors when vendors submit receipts demonstrating the tax rate collected at the specific pump or pumps.

The amendment, offered in Representative Biasucci’s name and adopted in committee, clarifies that vendors seeking labels must submit receipts from a representative pump (rather than every pump on site) and, where applicable, receipts showing each of the different in‑store point‑of‑sale rates. The committee adopted the amendment by voice vote and then returned the bill with a “do pass” recommendation on a roll call vote.

Why it matters: Arizona is the only state the witnesses and legislators said still uses a bifurcated use‑fuel tax system that charges different per‑gallon rates for heavier commercial diesel vehicles and lighter vehicles. The small tax‑rate stickers required on pumps can be damaged or removed; if a required sticker is missing, statute and ADOT enforcement can expose the retailer to fines. The bill is intended to speed replacement of those stickers so vendors are not repeatedly fined while waiting for replacements.

Industry and ADOT explained the change. Mike Williams, who identified himself as representing the Arizona Petroleum Marketing Association, told the committee the association wants bulk access to replacement labels because stickers “get damaged so often” and fines can be significant. “Last year's bill, we reduced those fines…This is just allowing us to get the decals,” Williams said.

Amy Love, the state and local division administrator for the Arizona Department of Transportation, said ADOT signed in neutral on the bill and requested the amendment that requires vendors to submit receipts reflecting the different tax rates the department uses (the hearing referenced roughly an 18¢ rate for regular motor‑vehicle fuel and a roughly 26¢ rate for heavier use/diesel classes). “If a vendor is selling both 18¢ and 26¢ tax, and they have those labels on their pumps, then we would request that they submit receipts at the 18¢ and the 26¢ rate to ensure, before those labels are provided,” Love said.

Committee members asked how receipts would be used; Williams and ADOT staff said the receipts or vendor reports show that the pump is programmed to collect the correct tax rate for that pump and that ADOT’s fuel tax licensing unit could verify compliance. Williams said the association had tried to resolve some of the problems administratively and requested a clearer and quicker process for obtaining replacement decals.

Quantities and penalties discussed: witnesses and members cited the two tax rates (about 18¢ and about 26¢ per gallon) and gave the example of fines of up to $100 per pump per day when required labels are missing. ADOT staff said they were researching the number of violations in recent years and provided a preliminary figure of roughly 72 violations over the prior three years, but said they would confirm that number.

Committee action: The committee adopted the “strike everything” (Biasucci) amendment dated Feb. 6 and then voted to return HB 2166 as amended with a do‑pass recommendation.

Outlook: With the committee “do pass” recommendation, the bill moves to the next legislative step. ADOT staff said the department will continue discussions with the petroleum association’s licensing unit to identify any administrative fixes that could further reduce short‑term compliance burdens on vendors.