How are CNG, LNG, and propane converted to gallon equivalents for South Carolina's motor fuel user fee?

Plain-English summary

South Carolina Revenue Ruling #18-2 gives the statutory energy-equivalent conversions used to calculate the motor fuel user fee on alternative fuels used to propel motor vehicles.

• Compressed natural gas (CNG): 126.67 cubic feet equals one gasoline gallon equivalent. If dispensed through a mass-flow meter, 5.66 pounds equals one gallon.
• Liquefied natural gas (LNG): 6.06 pounds equals one diesel gallon equivalent.
• Liquefied petroleum gas (propane): one physical gallon equals 0.73 gallon of motor fuel.

The same per-gallon fee imposed on gasoline and diesel is applied after converting the alternative fuel with these factors. The ruling also explains that a backup user fee can apply when untaxed fuel is delivered into the supply tank of a highway vehicle for a nonexempt use.

Act No. 40 of 2017 increased the motor fuel user fee by two cents per gallon each July 1 over six years, from 16 cents to 28 cents, with the final scheduled increase on July 1, 2022. The conversion factors themselves were codified in § 12-28-110.

What this means for you

Alternative-fuel vendors

Measure the quantity delivered, convert it using the statutory factor for that fuel and metering method, and apply the relevant per-gallon user fee to the resulting gallon equivalents.

CNG stations

Use cubic feet unless dispensing through a mass-flow meter, in which case the ruling provides the 5.66-pound factor.

Fleet operators and end users

The backup fee can apply to alternative fuel placed into a highway vehicle when the motor fuel user fee has not already been paid and the use is not exempt.

Common questions

Q: Is one gallon of propane treated as one gallon of motor fuel?
A: No. It converts to 0.73 gallon for fee calculation.

Q: Is LNG measured by volume in this ruling?
A: No. The statutory conversion is 6.06 pounds per diesel gallon equivalent.

Q: Do these rules apply to gas not used in a motor vehicle?
A: This ruling addresses CNG, LNG, and propane used to produce or generate power for propelling a motor vehicle.

Citations and references

• S.C. Code Ann. § 12-28-110 — alternative fuel, DGE, and GGE definitions
• S.C. Code Ann. § 12-28-310 — motor fuel user fee
• S.C. Code Ann. § 12-28-970 — backup user fee
• Act No. 40 of 2017 — scheduled user-fee increases

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR18-2.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC REVENUE RULING #18-2

SUBJECT:

Compressed Natural Gas, Liquefied Natural Gas, and Liquefied
Petroleum Gas Conversion to Gallon Equivalents
(Motor Fuel User Fee)

EFFECTIVE DATE:

July 1, 2017

SUPERSEDES:

SC Revenue Ruling #16-1 and all previous advisory opinions and any
oral directives in conflict herewith.

REFERENCES:

S.C. Code Ann. Section 12-28-110 (Supp. 2017)
S.C. Code Ann. Section 12-28-310 (2014; Supp. 2017)
S.C. Code Ann. Section 12-28-970 (2014)
S.C. Code Ann. Section 12-28-2355 (2014)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public.
It is an advisory opinion issued to apply principles of tax law to a set
of facts or general category of taxpayers. It is the Department’s
position until superseded or modified by a change in statute,
regulation, court decision, or another Department advisory opinion.

PURPOSE
The purpose of this advisory opinion is to update SC Revenue Ruling #16-1 to address the
increase in the motor fuel user fee as part of Act No. 40 of 2017, “The South Carolina
Infrastructure and Economic Development Reform Act.” The Act increased the motor fuel user
fee over six years from sixteen cents per gallon to twenty-eight cents per gallon. The increase
will be fully implemented on July 1, 2022.
Since the motor fuel user fee is imposed on a per-gallon basis, this advisory opinion also
addresses the codification by the General Assembly of various conversion factors previously
approved by the Department in SC Revenue Ruling #16-1. These conversion factors are used to
calculate the one gallon equivalent of various gases used in producing or generating power for
propelling a motor vehicle.
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QUESTION
How is the motor fuel user fee calculated on compressed natural gas, liquefied natural gas, and
liquefied petroleum gas (propane) used in a motor vehicle?

LAW AND DISCUSSION
Code Section 12-28-310 imposes the motor fuel user fee and reads, in part:
(A) Subject to the exemptions provided in this chapter, a user fee of sixteen cents
a gallon is imposed on:
(1) all gasoline, gasohol, or blended fuels containing gasoline that are used or
consumed for any purpose in this State; and
(2) all diesel fuel, substitute fuels, or alternative fuels, or blended fuels
containing diesel fuel that are used or consumed in this State in producing or
generating power for propelling motor vehicles.

(D) On July 1, 2017, and each July first thereafter until after July 1, 2022, the
department shall permanently increase the amount of the user fee imposed
pursuant to subsection (A) by two cents, for a total of twelve cents. All the funds
raised by the increase in the motor fuel user fee imposed by this subsection must
be credited to the Infrastructure Maintenance Trust Fund.
Code Section 12-28-970 imposes a “back-up” user fee on certain fuels and reads:
(A) A backup user fee equal to the user fee imposed by Section 12-28-310 is
imposed and must be administered in accordance with procedures established by
the department on the use on the highways of motor fuel subject to the user fee by
an end user, including operators of state and local government vehicles, American
Red Cross vehicles, and buses, and other persons exempted from the full federal
highway tax, unless the person is exempted otherwise under Section
12-28-710(12), upon the delivery in this State into the fuel supply tank of a
highway vehicle of:

(3) alternative fuels; …

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(B) The ultimate vendor of motor fuel subject to the user fee is jointly and
severally liable for the user fee imposed by subsection (A) if the ultimate vendor
knows or has reason to know that the motor fuel, as to which the user fee imposed
by this chapter has not been paid, is or will be consumed in a nonexempt use.
Code Section 12-28-110 contains the following definitions:
(1) “Alternative fuel” means a liquefied petroleum gas, liquefied natural gas,
compressed natural gas product, or a combination of liquefied petroleum gas and
a compressed natural gas product used in an internal combustion engine or motor
to propel any form of vehicle, machine, or mechanical contrivance. It includes all
forms of fuel commonly or commercially known or sold as butane, propane,
liquefied natural gas, or compressed natural gas.

(73) “Diesel gallon equivalent” or “DGE” means the amount of liquefied natural
gas containing the same energy content as one gallon of diesel. For purposes of
calculating the motor fuel user fee on liquefied natural gas that is used or
consumed in this State in producing or generating power for propelling a motor
vehicle, each 6.06 pounds of liquefied natural gas equals one gallon of motor fuel.
(74) “Gasoline gallon equivalent” or “GGE” means the amount of compressed
natural gas or liquefied petroleum gas containing the same energy content as one
gallon of gasoline. For purposes of calculating the motor fuel user fee on
compressed natural gas or liquefied petroleum gas that is used or consumed in
South Carolina in producing or generating power for propelling a motor vehicle,
each 126.67 cubic feet of compressed natural gas, or 5.66 pounds if the
compressed natural gas is dispensed via a mass flow meter, equals one gallon of
motor fuel and each gallon of liquefied petroleum gas equals .73 of a gallon of
motor fuel.
Based on the above, when used in a motor vehicle, compressed natural gas, liquefied natural gas,
and liquefied petroleum gas (propane) are alternative fuels subject to the motor fuel user fee
under Code Section 12-28-310 or the “back-up” user fee under Code Section 12-28-970.

CONCLUSION
For the purpose of calculating the motor fuel user fee on compressed natural gas, liquefied
natural gas, or liquefied petroleum gas that will be used or consumed in South Carolina in
producing or generating power for propelling a motor vehicle, the following conversion factors
to a “gallon equivalent” are provided in Code Section 12-28-110:
•

Compressed Natural Gas: Each 126.67 cubic feet (or 5.66 lbs. if dispensed via a mass
flow meter) equals one gallon of motor fuel.

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•

Liquefied Natural Gas: Each 6.06 lbs. equals one gallon of motor fuel.

•

Liquefied Petroleum Gas (Propane): Each gallon equals 0.73 of a gallon of motor fuel.

For additional information, please contact the Department’s Motor Fuel Section at (803) 8961990.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
May 2
, 2018
Columbia, South Carolina

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