House approves bill to deregulate retail compressed natural gas for vehicle fueling

The Utah House voted to pass Senate Bill 172 on third reading after debate over how to encourage compressed natural gas use as a motor fuel.

Sponsor Representative Allen told colleagues the bill would remove Public Service Commission regulation from compressors that fill natural gas for vehicle fuel when installed on private property or by retailers on their own property, arguing that deregulation is needed to create a market for CNG refueling and help the state’s clean-air goals. "This bill deregulates natural gas as a motor vehicle fuel," Allen said, adding that exempting privately installed compressors would encourage stations to add high-pressure pumps.

Lawmakers pressed the sponsor on tax and highway-fund effects. Representative Davis asked whether natural gas used as motor fuel would be taxed under motor fuel taxes; Allen said the bill is not a tax bill and is intended as an early-stage incentive. Several members worried that shifting vehicle miles to untaxed fuels could reduce motor-fuel tax revenue used for roads. Representative Lewis and others urged caution but supported the legislation’s environmental goals.

Supporters said the change is intended to create incentives for fleet operators and private retailers to install compressors and for local governments to convert municipal vehicles, improving air quality. Opponents focused on uncertain revenue impacts and the need for future policy adjustments if CNG use expands.

The House closed voting and the clerk announced the bill had passed with 70 affirmative votes and 1 negative vote. The bill was then signed by the presiding officers for return to the Senate where required steps were completed.

What's next: The bill moves forward with the House's approval; tax treatment and longer-term regulatory oversight were left to future action if CNG adoption changes revenue patterns.