[Federal Register: March 4, 2003 (Volume 68, Number 42)]
[Proposed Rules]
[Page 10319-10344]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04mr03-21]
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Part III
Department of Energy
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10 CFR Part 490
Office of Energy Efficiency and Renewable Energy; Alternative Fuel
Transportation Program; Private and Local Government Fleet
Determination; Proposed Rule
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DEPARTMENT OF ENERGY
10 CFR Part 490
[Docket No. EE-RM-FCVT-03-001]
RIN 1904-AA98
Office of Energy Efficiency and Renewable Energy; Alternative
Fuel Transportation Program; Private and Local Government Fleet
Determination
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy (DOE).
ACTION: Notice of proposed rulemaking (NOPR) and public hearing.
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SUMMARY: Pursuant to the Energy Policy Act of 1992 (EPAct), the
Department of Energy proposes to determine that a regulatory
requirement for the owners and operators of certain private and local
government fleets to acquire alternative fueled vehicles is not
``necessary,'' and thus cannot and should not be promulgated, because
such a program would result in no appreciable increase in the
percentage of alternative fuel and replacement fuel used by motor
vehicles in the United States and thus would not appreciably contribute
to the achievement of the replacement fuel goal set forth in section
502(b)(2) of EPAct.
DATES: Written comments (eight copies and, if possible, an e-mail copy)
on the proposed determination must be received by DOE on or before June
2, 2003; electronic copies of comments may be sent to the e-mail
address listed below.
Oral views, data, and arguments may be presented at the public
hearing, which will be held on May 7, 2003. The length of each oral
presentation is limited to 10 minutes. The public hearing will be held
at the U.S. Department of Energy Main Auditorium, Forrestal Building,
1000 Independence Avenue, SW., Washington, DC 20585-0121. Requests to
speak at the hearing must be submitted to DOE no later than 4 p.m. on
April 22, 2003.
ADDRESSES: Written comments (eight copies) and requests to speak at the
public hearing should be addressed to: U.S. Department of Energy,
Office of Energy Efficiency and Renewable Energy, EE-2G, Docket Number
EE-RM-FCVT-03-001, 1000 Independence Avenue, SW., Washington, DC 20585-
0121. E-mails may be sent to: regulatory--info@afdc.nrel.gov.
Copies of this notice, the transcript from the hearing, and written
comments will be placed at the following website address:
http://www.ott.doe.gov/epact/private_fleets.shtml. You may also access these
documents using a computer in DOE's Freedom of Information (FOI)
Reading Room, U.S. Department of Energy, Forrestal Building, Room 1E-
190, 1000 Independence Avenue, SW., Washington, DC 20585-0121, (202)
586-3142, between the hours of 9 a.m. and 4 p.m., Monday through
Friday, except Federal holidays. To request a copy of this notice or
arrange on-site access to paper copies of other information in the
docket, contact Mr. Dana V. O'Hara at the phone number or e-mail
address below.
For more information concerning public participation in this
rulemaking see the ``Opportunity for Public Comment'' section found in
the SUPPLEMENTARY INFORMATION section of this notice.
FOR FURTHER INFORMATION CONTACT: For information concerning this
notice: Mr. Dana V. O'Hara, Office of Energy Efficiency and Renewable
Energy (EE-2G), U.S. Department of Energy, 1000 Independence Avenue,
SW., Washington, DC 20585-0121; (202) 586-9171; regulatory--
info@afdc.nrel.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
II. Previous Opportunities for Public Comment
III. Private and Local Government Fleet Determination
IV. Whether to Modify Replacement Fuel Goal
V. Opportunity for Public Comment
VI. Review Under Executive Order 12988
VII. Review Under Executive Order 12866
VIII. Review Under the Regulatory Flexibility Act
IX. Review Under the Paperwork Reduction Act
X. Review Under the National Environmental Policy Act
XI. Review Under Executive Order 13132
XII. Review of Impact on State Governments--Economic Impact on
States
XIII. Review of Unfunded Mandates Reform Act of 1995
XIV. Review of Treasury and General Government Appropriations Act,
1999
XV. Review of Treasury and General Government Appropriations Act,
2001
XVI. Review Under Executive Order 13175
XVII. Review Under Executive Order 13045
XVIII. Review Under Executive Order 13211
I. Introduction
Section 507(e) of EPAct states that ``* * * the Secretary shall . .
. determine whether a fleet requirement program is necessary under this
section'' with respect to certain private and local government vehicle
fleets (42 U.S.C. 13257(e)). The Department of Energy (DOE) proposes to
determine that it is not ``necessary'' to promulgate a regulation
requiring these fleets to acquire alternative fueled vehicles (AFVs).
DOE proposes this determination because implementation of a private and
local government fleet rule program would not appreciably contribute to
the achievement of EPAct's existing 2010 replacement fuel goal of 30
percent, or of a revised replacement fuel goal were one to be adopted.
DOE's review of EPAct, existing fleet programs, and the status of
markets for alternative fuels and AFVs leads it to conclude that
adopting a private and local government fleet rule would result in no
appreciable increase in the percentage of alternative fuel and
replacement fuel used by motor vehicles in the United States.
This conclusion and DOE's proposed determination are based on two
interrelated findings and reasons. First, DOE has concluded that the
number of fleets that would be covered by a private and local
government fleet mandate and the number of AFV acquisitions that would
occur are too small to cause an appreciable increase in the percentage
of replacement fuel that is used as motor fuel. This is because of the
limitations placed by EPAct itself on DOE's authority to promulgate a
private and local government fleet acquisition mandate. For example,
and as will be explained below, a private and local government fleet
program could only apply to light duty vehicles (i.e., less than 8,500
lbs. gross vehicle weight rating (GVWR)), to fleets that are located in
certain metropolitan areas, and could not apply to a number of excluded
vehicle classes and types (e.g., rental vehicles, emergency vehicles,
and vehicles garaged at residences overnight). Furthermore, EPAct
requires that even fleets potentially covered by a fleet mandate may
avoid some or all of its acquisition requirements if they fall within
one of the numerous exemptions set forth in the statute.
Second, even if a private and local government fleet acquisition
mandate were adopted and substantial numbers of AFVs were acquired as a
result, there is no assurance that the AFVs acquired by covered fleets
would actually use replacement fuel. EPAct gives DOE no authority to
require that vehicles acquired by private and local government fleets
use any particular fuel. Moreover, DOE's experience with implementation
of the Federal fleet, State fleet, and alternative fuel provider fleet
programs required by EPAct leads DOE to conclude that as a result of
the lack of alternative fuel infrastructure, lack of suitable AFV
models, lack of reasonable vehicle prices, and high alternative fuel
costs relative to conventional motor fuels, market forces would prevent
appreciable increases in
[[Page 10321]]
replacement fuel use in covered fleets, even if DOE were to impose a
private and local government fleet vehicle acquisition requirement
pursuant to EPAct sections 507(e) and (g).
DOE's proposed determination that a private and local government
fleet regulatory program is not ``necessary'' under the standards set
forth in EPAct section 507(e) and therefore cannot and should not be
promulgated is also consistent with the view expressed in many of the
comments DOE received during earlier stages of work that preceded
issuance of this notice of proposed rulemaking. In these earlier
stages, commenters (especially potentially covered fleets) expressed
concerns regarding the lack of available fueling infrastructure and
suitable AFV models. In addition, a number of alternative fuel
proponents stated that the best means of increasing the introduction of
AFVs and the use of alternative fuels would be to provide incentives
for their use rather than adopting new mandates. These proponents urged
DOE to support legislative initiatives that would provide incentives
for the use of AFVs and alternative fuels. This Administration is in
fact supporting the adoption of incentives for high-efficiency,
advanced technology vehicles, which include AFVs. In addition, the
President and DOE have proposed the FreedomCAR and Hydrogen Fuel
Initiative, which is a major new initiative focused on significantly
increasing the availability and use of non-petroleum motor fuels.
In evaluating whether to propose adoption of a private and local
government fleet rule under EPAct sections 507(e) and (g), DOE reviewed
the status of progress toward achieving the current replacement fuel
goal. Based on this review, DOE believes that extraordinary measures
would be required to achieve the current goal of 30 percent petroleum
replacement by 2010.
At the same time, DOE takes note of the fact that Congress is
widely expected to take up comprehensive legislation that may
significantly affect our nation's energy future and may bear
importantly not only on the achievability of the current goals but also
on what any potential revised goals might be. In addition, the
FreedomCAR and Hydrogen Fuel Initiative is focused on dramatically
increasing the availability and use of replacement fuels and reducing
reliance on petroleum as a motor fuel. In light of the momentum that
this effort is engendering; in light of what DOE understands to be the
principal purpose of EPAct's replacement fuel goals\1\--to keep the
pressure on policymakers, industry and the public to engage in
aggressive action to expand the use of alternative and replacement
fuels; and in light of the likelihood of consideration and enactment of
new legislation this Congress that would have a significant bearing on
these issues, DOE has concluded that it should not make a determination
under EPAct concerning the achievability of the 2010 goals at this
time. Therefore DOE also is not proposing at this time to use its EPAct
authority to seek to modify these goals. DOE will continue to evaluate
this issue.
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\1\ The replacement fuel goals call for a certain percentage of
motor fuel demand to be supplied by ``replacement fuels.'' Because
petroleum (i.e., gasoline and diesel) is the dominant fuel used for
motor vehicles, the replacement fuel goals are sometimes referred to
in this document as petroleum replacement goals. DOE notes that
because the EPAct goals reference ``replacement fuel,'' they cannot
be met by simply using less petroleum (such as through efficiency
measures), but rather must be met by increasing the overall
percentage of non-petroleum or replacement fuels that is used.
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A. Authority
The issue DOE addresses in this notice of proposed rulemaking is
whether a private and local government fleet requirement program is
``necessary'' under EPAct section 507(e). That section states that a
private and local government fleet program shall be promulgated if DOE
determines such a program is ``necessary,'' and that such a program
``shall be considered necessary'' only if DOE finds that ``the goal of
replacement fuel use * * * is not expected to be actually achieved * *
* without such a fleet requirement program'' and ``such goal is
practicable and actually achievable * * * through implementation of
such a fleet requirement program in combination with voluntary means
and the application of other programs relevant to achieving such
goals.''
The statutory definitions of vehicles and fuels in EPAct are key to
DOE's determination discussed in this notice. An ``alternative fuel
vehicle'' is a ``dedicated vehicle or a dual fuel vehicle.'' (EPAct
section 301(3)). A ``dual fuel'' vehicle is one ``capable of operating
on alternative fuel and on gasoline or diesel fuel.'' (EPAct section
301(8)(A)). The purchase of an AFV does not assure that ``alternative''
or ``replacement'' fuel will be used to operate the AFV. As discussed
below, fleets are not required to use alternative or replacement fuel
in their AFVs (except for alternative fuel providers, which are
required to use alternative fuel in their AFVs by section 501(a)(4) of
EPAct).
``Replacement fuel'' is defined by EPAct to mean ``the portion of
any motor fuel that is methanol, ethanol, or other alcohols, natural
gas, liquefied petroleum gas, hydrogen, coal derived liquified fuels,
fuels (other than alcohol) derived from biological materials,
electricity (including electricity from solar energy), ethers,'' or any
other fuel that the Secretary determines meets certain statutory
requirements. (42 U.S.C. 13211(14) (emphasis added)) ``Alternative
fuel'' is defined to include many of the same types of fuels (such as
methanol, natural gas, hydrogen and electricity), but also includes
certain ``mixtures'' of petroleum-based fuel and other fuels. (10 CFR
490.2 (2002) \2\) Thus, a certain mixture might constitute an
``alternative fuel,'' but only the portion of the fuel that fell within
the definition of ``replacement fuel'' would actually constitute
``replacement fuel.'' For example, a mixture of 85 percent methanol and
15 percent gasoline would, in its entirety, constitute ``alternative
fuel,'' but only the 85 percent that was methanol would constitute
``replacement fuel.'' Also by way of example, gasohol (a fuel blend
typically consisting of approximately 10 percent ethanol and 90 percent
gasoline), considered as a total fuel blend, would not qualify as an
``alternative fuel,'' but the 10 percent that is ethanol would qualify
as ``replacement fuel.''
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\2\ EPAct defines ``alternative fuel'' (see 42 U.S.C. 13211(2)),
but DOE has exercised its authority to modify, by regulation, this
definition. Therefore, the currently effective definition of
``alternative fuel'' is set forth at 10 CFR 490.2 (2002).
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The rulemaking process for determining whether to promulgate a
private and local government fleet rule is very different from the
previous DOE rulemaking concerning State government and alternative
fuel provider fleets. With that rule, DOE was not required to make any
findings in order to promulgate a fleet rule; EPAct itself imposed the
fleet program. The determination of whether to adopt AFV acquisition
mandates for private and local government fleets, however, is
conditional and depends on several critical findings by DOE.
Regulations covering private and local government fleets, if adopted,
in other respects would likely be similar to those already in place for
State government and alternative fuel provider fleets. These
regulations essentially require that a percentage of a covered fleet's
annual acquisitions of light-duty vehicles must be AFVs. See
Alternative Fuel Transportation Program, 10 CFR Part
[[Page 10322]]
490 (2002). Section 507(g) sets forth a tentative schedule for
implementing a program for covered fleets that would be enforced if DOE
were to promulgate a private and local government AFV acquisition
mandate.
In order to determine whether a fleet requirement program for
private and local government fleets is ``necessary'' pursuant to
section 507(e), DOE considered the number of fleets that likely would
be covered by such a rule and the likely increase in the amount of
replacement fuel that would be used by covered fleets as a result of
the acquisition mandate. EPAct severely limits the universe of fleets
that could be covered by a private and local government fleet rule.
These limitations are described in the definitions, exceptions, and
exemptions contained in the relevant sections of EPAct, as discussed
below.
A ``fleet'' is defined in section 301(9) of EPAct as follows:
[T]he term ``fleet'' means a group of 20 or more light duty
motor vehicles, used primarily in a metropolitan statistical area or
consolidated metropolitan statistical area, as established by the
Bureau of the Census, with a 1980 population of more than 250,000,
that are centrally fueled or capable of being centrally fueled and
are owned, operated, leased, or otherwise controlled by a
governmental entity or other person who owns, operates, leases, or
otherwise controls 50 or more such vehicles, by any person who
controls such person, by any person controlled by such person, and
by any person under common control with such person, except that
such term does not include--
(A) Motor vehicles held for lease or rental to the general
public;
(B) Motor vehicles held for sale by motor vehicle dealers,
including demonstration motor vehicles;
(C) Motor vehicles used for motor vehicle manufacturer product
evaluations or tests;
(D) Law enforcement motor vehicles;
(E) Emergency motor vehicles;
(F) Motor vehicles acquired and used for military purposes that
the Secretary of Defense has certified to the Secretary must be
exempt for national security reasons;
(G) Nonroad vehicles, including farm and construction motor
vehicles; or
(H) Motor vehicles which under normal operations are garaged at
personal residences at night.
The key limitations in this definition include: (1) Only light duty
vehicles (i.e., vehicles less that 8,500 GVWR) are covered, and all
medium-duty and heavy duty vehicles are excluded; (2) the vehicles must
be part of a fleet of 20 vehicles used primarily in a large
metropolitan area; (3) the vehicles must be centrally fueled or capable
of being centrally fueled; (4) they must be owned or controlled by a
local government or an entity that owns at least 50 such vehicles; (5)
fleets of rental vehicles are excluded; (6) law enforcement and
emergency vehicles are excluded; and (7) vehicles garaged at personal
residences are excluded.
Moreover, even if it is determined that a particular private or
local government fleet constitutes a ``fleet'' under EPAct, the statute
provides several exemptions. Section 507(i) allows a fleet to obtain an
exemption from DOE for all or part of its fleet, from an otherwise
applicable fleet mandate, on grounds of: (1) Non-availability of
appropriate AFVs and alternative fuels; (2) non-availability of
appropriate alternative fuels; and (3) with respect to local government
entities, for a financial hardship.
EPAct furthermore contains a petition provision in section 507(n).
That section provides that ``[a]s part of the rule promulgated * * *
pursuant to subsection * * * (g) of this section, the Secretary shall
establish procedures for any fleet owner or operator or motor vehicle
manufacturer to request that the Secretary modify or suspend a fleet
requirement program * * * nationally, by region, or in an applicable
fleet area because, as demonstrated by the petitioner, the
infrastructure or fuel supply or distribution system for an applicable
alternative fuel is inadequate to meet the needs of a fleet.'' As a
result, even to the extent a fleet constitutes a ``fleet'' under the
narrow EPAct definition, and does not otherwise qualify for one of the
statutory exemptions, it could petition for relief or suspension of a
fleet mandate for any one of several different reasons.
Finally, AFV purchase requirements that DOE could impose under
section 507(g) could only apply to the purchase of ``light duty motor
vehicles.'' A light duty motor vehicle is defined as ``a light duty
truck or light duty vehicle * * * having a gross vehicle weight rating
of 8,500 pounds or less, before any after-market conversion to
alternative fuel operation.'' See 10 CFR 490.2 (2002). Therefore,
medium- and heavy-duty vehicles would not be covered by any mandatory
section 507 private and local government fleet program.
DOE originally estimated that about 2 million private and local
government fleet vehicles would be covered under a fleet program, were
one to be adopted, with AFV acquisitions eventually rising to about
320,000 annually. As discussed below in Section III, however, DOE's
original estimate of the number of fleet vehicles that would be covered
under a private and local government fleet rule, and thus the number of
annual AFV acquisitions resulting from such a rule, probably was far
too high.
The limitations on the potential contribution of a private and
local government fleet program to the replacement fuel goal are
discussed in Section III. In brief, however, one DOE report issued in
1996 estimated that total fuel use from all fleets, including private
and local government fleets, potentially covered by EPAct fleet
programs to be approximately 1.2 percent of U.S. gasoline use. See
Assessment of Costs and Benefits of Flexible and Alternative Fuel Use
in the U.S. Transportation Sector, Technical Report Fourteen: Market
Potential and Impacts of Alternative Fuel Use in Light-Duty Vehicles: A
2000/2010 Analysis (DOE/PO-0042) (January 1996) [hereinafter Technical
Report 14]. Similarly, a subsequent DOE report stated that, even if an
AFV acquisition mandate for private and local government fleets was
imposed, fleets covered by EPAct mandates would provide no more than
about 1.5 percent replacement fuel use. These reports were issued
before DOE had much experience with implementation and operation of
EPAct Fleet programs. A more recent analysis (September 17, 2000),
discussed in Section III of this notice of proposed rulemaking,
indicated that replacement fuel use would increase only .25 percent if
a private and local government rule was promulgated.
Section 504(c) of EPAct limits DOE's authority to promote the use
of replacement fuel. Specifically, DOE is precluded from promulgating
rules that would mandate any of the following: ``production of
alternative fueled vehicles or to specify, as applicable, the models,
lines, or types of, or marketing or pricing practices, policies, or
strategies for, vehicles subject to this Act.'' Section 504(c) also
precludes rules that would ``mandate marketing or pricing practices,
policies, or strategies for alternative fuels or to mandate the
production or delivery of such fuels.'' Thus, DOE's authority under
EPAct to promote the use of replacement fuels is primarily limited to
the following: implementation of the limited fleet programs found in
sections 303, 501 and 507; research and development (R&D) activities
with industry under Title XX, subtitle B; and voluntary promotional
efforts, such as those fostered by the Clean Cities Program under
sections 405, 409, and 505.
EPAct section 507 directs DOE to determine whether private and
local government fleets should be required to acquire AFVs as they
replace their existing stock of light-duty vehicles. Requirements for
private and local government fleets, if adopted, would
[[Page 10323]]
likely be similar to those mandated by EPAct (42 U.S.C. 13251,
13257(o)) and already in place for State government and alternative
fuel provider fleets. See Alternative Transportation Fuel Program, 10
CFR part 490 (2002).
EPAct authorizes DOE to conduct two separate rulemakings in order
to determine whether to promulgate a private and local government fleet
rule. First, section 507(b) allows for an early rulemaking, to be
completed by December 15, 1996. As part of that rulemaking, section
507(a)(3) of EPAct required DOE to publish an Advance Notice of
Proposed Rulemaking (ANOPR). If no final rule was promulgated by
December 15, 1996, then sections 507(b)(3)(c), and (e) require a later
rulemaking to determine whether vehicle acquisition requirements are
``necessary'' under the standards set forth in section 507(e) and
should be imposed on private and local government fleets.
The relevant guidance for determining whether a private and local
government fleet rule should be implemented is set forth in EPAct
section 507(e). This section states that DOE shall promulgate a private
and local government fleet requirement program only if it determines
that such a program is ``necessary.'' Section 507(e) further states
that such a program is ``necessary'' if ``the Secretary finds that''
the replacement fuel goal, or a revised replacement fuel goal, ``is not
expected to be actually achieved by 2010 * * * without such a fleet
requirement program'' and the goal is practicable and achievable
``through implementation of such a fleet requirement program in
combination with voluntary means and the application of other programs
relevant to achieving such goals.''
Section 507(l) requires: ``In carrying out this section, the
Secretary shall take into consideration energy security, costs, safety,
lead time requirements, vehicle miles traveled annually, effect on
greenhouse gases, technological feasibility, energy requirements,
economic impacts, including impacts on workers and the impact on
consumers (including users of the alternative fuel for purposes such as
for residences, agriculture, process use and non-fuel purposes) and
fleets, the availability of alternative fuels and alternative fueled
vehicles, and other relevant factors.'' Section 507(e) is equally
categorical in requiring DOE to promulgate a private and local fleet
requirement program only upon a determination that such a program is
``necessary'' to achieve the replacement fuel goal, and section 507(e)
sets forth the criteria DOE is to apply in determining whether such a
program is ``necessary.''
It not clear that section 507(l) should be interpreted to apply to
a rulemaking proceeding under section 507(e). Section 507(l) includes
factors such as greenhouse gas and economic effects that have no
bearing on a determination of ``necessity'' under section 507(e).
Moreover, the section 507(l) factors seem geared to helping decide the
proper contours of a fleet acquisition mandate once DOE has decided to
promulgate such a program, rather than to the threshold determination
of whether a program should be promulgated in the first place.
Regardless, it is not necessary in this proceeding to determine
whether section 507(l) is properly interpreted as applying to a section
507(e) rulemaking proceeding. Even assuming that it does apply,
consideration of the section 507(l) factors would not alter DOE's
proposed determination that a private and local government fleet
program is not ``necessary'' under section 507(e).
As explained below, DOE proposes to determine that because
implementation of a private and local government fleet AFV acquisition
mandate would result in no appreciable increase in the use of
replacement fuel, such a program is not ``necessary'' under the
standard set forth in section 507(e). None of the section 507(l)
factors could change the outcome of the analysis because they would not
change the conclusion that there would be no appreciable increase in
the use of replacement fuels. Therefore, even if all of the section
507(l) factors pointed uniformly and strongly in favor of the
implementation of a private and local government fleet mandate, and
they do not, consideration of those factors could not and would not
alter DOE's proposed determination that a fleet program is not
``necessary'' because such a mandate still would not appreciably
increase the use of replacement fuel.
Section 507(m) of EPAct requires DOE to consult with the Secretary
of Transportation (DOT) and Administrator of the Environmental
Protection Agency (EPA) and other appropriate agencies in carrying out
the requirements of section 507. DOE provided a pre-publication draft
of today's notice of proposed rulemaking to DOT, EPA, and the Office of
Management and Budget for their review.
B. Regulatory Time Line
On August 7, 1996, and as required by EPAct sections 507(a) and
(b), DOE published in the Federal Register an ANOPR to evaluate
progress toward achievement of the replacement fuel goals in EPAct,
identifying problems with achieving those goals, assess the adequacy
and practicability of the goals, and consider actions needed to achieve
the goals. See 61 FR 41031. DOE intended this notice to stimulate
comments to assist DOE in making decisions concerning future rulemaking
actions and non-regulatory initiatives to promote alternative fuels and
AFVs. Three hearings were held to receive oral comments on the ANOPR.
They were held on September 17, 1996, in Dallas, Texas; on September
25, 1996, in Sacramento, California; and on October 9, 1996, in
Washington, DC. A total of 70 persons spoke at the three hearings, and
105 written comments were received by November 5, 1996.
On April 23, 1997, DOE published in the Federal Register a Notice
of Termination stating that DOE would not promulgate regulations to
implement AFV requirements for private and local government fleets
pursuant to the early rulemaking schedule of EPAct section 507(a)(1).
See 62 FR 19701.
On April 17, 1998, and for the purposes of EPAct sections 507(e),
(g), and (k), DOE published in the Federal Register an ANOPR that asked
for comments to assist DOE in making decisions concerning future
rulemaking actions and non-regulatory initiatives to promote
alternative fuels and alternative fueled vehicles. See 63 FR 19372. DOE
held three hearings to receive oral comments on the ANOPR. They were
held on May 20, 1998, in Los Angeles, California; on May 28, 1998, in
Minneapolis, Minnesota; and on June 4, 1998, in Washington, DC. A total
of 110 persons spoke at the three hearings, and/or submitted written
comments.
On January 12, 2000, consistent with section 507(h) of EPAct (42
U.S.C. 13257(h)), DOE published in the Federal Register a notice,
stating that it was extending by 90 days the January 1, 2000, deadline
contained in section 507(e) in order to provide additional time for
consultations with State and local officials, as required by Executive
Order 13132. See 65 FR 1831. On July 20, 2000, DOE published in the
Federal Register a notice stating that DOE was further delaying the
section 507 rulemaking proceedings concerning private and local
government fleets until after it had completed consultations with State
and local government officials. See 65 FR 44987. DOE said that it was
preserving the option of promulgating, at a later time, requirements
for private and local government vehicle fleets. In the notice, DOE
announced that it would hold three public workshops in order to discuss
regulatory options and other
[[Page 10324]]
issues related to potential alternative fuel transportation
requirements for private and local government fleets. In furtherance of
its objective of consulting with affected State and local government
officials, the first two workshops were open only to State and local
officials. DOE held workshops on August 1, 2000 in Chicago, Illinois;
on August 22, 2000 in Denver, Colorado; and on September 26, 2000 in
Washington, DC.
On January 2, 2002, EarthJustice, on behalf of the Center for
Biological Diversity, Bluewater Network, and Sierra Club, filed a
lawsuit in the U.S. District Court for the Northern District of
California which, in addition to seeking redress of other grievances,
sought to compel DOE to ``issue a proposed rule and final determination
on the necessity of a private and municipal fleet program.'' On July
26, 2002, the Court granted plaintiffs' motion for summary judgment on
the issue of whether DOE had missed the deadline set forth in EPAct
section 507(e) for completing the rulemaking; as a result, the Court
ordered a September 26, 2002, hearing to determine a timetable for
completing the rulemaking. See Center for Biological Diversity v.
Abraham, et al., No. C 02-00027 (N.D. Calif., July 26, 2002) (order on
motions for summary judgment). On September 27, 2002, the District
Court ordered DOE to complete its proposed rulemaking by January 27,
2003 and its final rule by November 27, 2003. See Center for Biological
Diversity v. Abraham, et al., No. C 02-00027 (N.D. Calif., Sept. 27,
2002). The Court subsequently granted a 30-day extension (to February
26, 2003) of the deadline for DOE to complete work on this notice of
proposed rulemaking.
As required by section 507 of EPAct and the order of the U.S.
District Court for the Northern District of California, DOE has issued
today's notice of proposed rulemaking which proposes to determine that
DOE should not promulgate regulatory requirements for private and local
government fleets.
C. Program Background
Titles III, IV, and V of EPAct are focused on promoting the use of
non-petroleum motor fuels, including replacement fuels and alternative
fuels, in the transportation sector. EPAct focused on the
transportation sector because of its almost complete reliance on
petroleum as a fuel source and its significant contribution to
petroleum demand. The transportation sector is nearly 97 percent
dependent on oil as a fuel and is a major reason the U.S. is so
dependent on imported oil. See Center for Transportation Analysis, Oak
Ridge National Laboratory, Transportation Energy Data Book Edition 22,
p. 2-4 (Table 2.2) (ORNL 6967) (Sept. 2002) (http://www.ornl.gov) [hereinafter
Energy Data Book]. The transportation sector's demand for oil has
continued to grow while other sectors have become less reliant on oil.
In 1973, the U.S. transportation sector accounted for 52 percent of
total U.S. petroleum use (9.05 of 17.31 million barrels per day
(mmbd)). Id. at p. 1-18 (Table 1.13). In 2001, transportation sector
demand for petroleum accounted for roughly 67 percent of total U.S.
petroleum demand and exceeded domestic production by 5.2 mmbd
equivalent of oil. Id. at pp. 1-16 (Table 1.12), 1-18 (Table 1.13).
The U.S. Energy Information Administration (EIA) has projected that
transportation sector consumption of petroleum will rise to 19.22 mmbd
by 2020. See EIA, Annual Energy Outlook 2002, p. 141 (Table A11) (DOE/
EIA-0383(2002)) (December 2001) [hereinafter AEO 2002]. In 2020,
passenger cars and light-duty trucks, which are the primary focus of
Titles III-V of EPAct, are expected to account for 59 percent of the
total energy used by the transportation sector. Id. at p. 136 (Table
A7). In 2020, it is projected that U.S. oil production will provide
only about half the total energy needed to fuel light-duty vehicles.
Id. at pp. 141 (Table A11), 136 (Table A7).
As demand for transportation petroleum has grown, so too have U.S.
petroleum imports. Dependence on imported petroleum was 41 percent when
EPAct was enacted (6.96 mmbd), reached nearly 56 percent in 2001 (10.9
mmbd), and is expected to reach 63 percent by 2020 (16.6 mmbd). See
Energy Data Book at p. 1-16 (Table 1.12), and AEO 2002 at p. 141 (Table
A11). Of net U.S. imports, members of the Organization of Petroleum
Exporting Countries (OPEC) currently supply almost 50 percent, with
Persian Gulf states supplying almost half of this amount. See EIA,
Monthly Energy Review, Table 1.8 (November 2002)
(http://www.eia.doe.gov/emeu/mer/txt/mer1-8). OPEC members now account for
approximately 40 percent of world oil production, and 52 percent of the
petroleum export market. See EIA, International Energy Outlook 2002
Tables D4, 11; http://www.eia.doe.gov/oiaf/ieo/ [hereinafter IEO 2002].
According to the IEO 2002 (Table 11), OPEC's share of worldwide crude
oil exports is projected to increase to 64 percent by 2020. Much of the
oil controlled by OPEC is concentrated in the Middle East, which
contains nearly two-thirds of the world's proven reserves. See IEO 2002
Table 8.
Reducing total petroleum use and reducing petroleum imports
decrease our economy's vulnerability to oil price shocks. Reducing
dependence on oil imports from unstable regions enhances our energy
security and can reduce payments to nations that may be hostile to U.S.
interests. In 2000, the annual U.S. trade deficit in oil reached $106
billion. See AEO 2002 at p. 141 (Table A-11). Reducing the growth rate
of oil use through conservation and use of non-petroleum motor fuels
also relieves pressure on an already strained domestic refinery
capacity, decreasing the likelihood of price volatility. Finally,
conserving energy and using non-petroleum fuels, many of which are low
in carbon intensity, help achieve the goal of decreasing greenhouse gas
emissions.
Reductions in the U.S. demand for petroleum can significantly
affect worldwide oil demand because the U.S. accounts for one-fourth of
total world oil consumption. See Energy Data Book at 1-5 (Table 1.4).
The consumption of motor fuels by U.S. light-duty vehicles in 2000
accounted for almost 10 percent of total world demand. As demand
declines, prices for oil also are generally expected to decline. DOE
has previously stated that a ``reasonable rule of thumb is that a 1
percent decrease in U.S. petroleum demand will reduce world oil price
by 0.5 percent, in the long-run.'' Short-term impacts are expected to
be even greater. See Energy Efficiency and Renewable Energy, DOE,
Replacement Fuel and Alternative Fuel Vehicle--Technical and Policy
Analysis p. viii-ix (Dec. 1999--Amendments Sept. 2000);
http://www.ccities.doe.gov/pdfs/section506.pdf [hereinafter Section 506
Report] (issued pursuant to EPAct section 506).
DOE manages a number of different programs that are aimed at
reducing reliance on petroleum motor fuels. Part of this effort
includes continued implementation of the programs contemplated under
EPAct, including the fleet AFV acquisition programs for Federal, State
government and fuel provider fleets (see below for discussion of EPAct
Programs). These programs are primarily focused on the development and
use of AFVs. DOE will continue efforts through its Clean Cities Program
to encourage fleets to expand their use of alternative fuels and AFVs.
These efforts involve primarily focusing on niche market fleets, but
also include continued support for regulated fleets. DOE also plans to
continue research programs involving replacement fuels, including
biofuels, such as ethanol and
[[Page 10325]]
biodiesel, in order to make these fuels less costly and more widely
used. The use of replacement fuels in fuel blends has a number of
advantages that makes their increased use likely, including an ability
to use the existing petroleum infrastructure, the ability to enable
advanced engine control strategies, and relatively low costs compared
with other immediate strategies.
Most importantly, the President and DOE have recently announced the
creation of the FreedomCAR and Hydrogen Fuel Initiative, which is
intended to make clean and affordable automotive energy a reality for
all consumers. This initiative is focused on the introduction of
hydrogen as a transportation fuel for the future and involves a number
of different DOE programs. These efforts complement work already done
in the area of hybrid electric drive systems and fuel cells, and look
to advance these technologies beyond their existing state. DOE is
working with the EPA, industry, academia, State Energy Offices, and
DOE's national laboratories to bring the promise of low-cost, clean,
and efficient hydrogen energy to the market. Although it will be many
years before hydrogen vehicles and fuels are widely available, steps
must be taken today in order to make hydrogen possible for the future.
At the same time, DOE will continue to work with its partners through
R&D programs to improve current technologies in order to make them
cleaner, more economical and more fuel-efficient.
D. Description of the Energy Policy Act's Alternative Fuel
Transportation Programs
Alternative Fuel Provisions in the Energy Policy Act
Titles III, IV, V, and VI of EPAct contain the basic provisions for
various non-research alternative fuel-related programs, all of which
are aimed at displacing motor vehicle petroleum consumption. (See 42
U.S.C. 13211 et seq.) Title III contains definitions of (1) alternative
fuel; (2) AFV; and (3) covered fleet. Title III also sets forth
requirements for Federal fleet acquisitions of AFVs, which began in
fiscal year 1993.
Title IV authorizes, subject to the availability of appropriations,
a financial incentive program for States, a public information program,
and a program for certifying alternative fuel technicians. The public
information program is intended to promote the use of AFVs and
alternative fuels.
Title V specified percentages of light duty vehicles acquired by
State governments and alternative fuel providers that must be AFVs. The
minimum acquisition requirements are phased-in, escalating from year to
year until reaching a fixed percentage. Title V also gives DOE
authority under specified conditions to impose by rule a similar
mandate on private and local government fleets. Title V authorizes the
allocation of credits to covered fleets that exceed their AFV
acquisition requirements. These credits may be sold and used by other
fleets that are subject to Title V vehicle acquisition mandates. It
also contains investigative and enforcement authorities, including
provisions for civil penalties and, in certain circumstances, criminal
fines for noncompliance with the statutory mandates and implementing
regulations. Finally, section 505 of Title V contains voluntary supply
commitments that are covered by the Clean Cities Program.
Title VI of the Act confers on DOE a variety of authorities to
promote, subject to the availability of appropriations, development and
utilization of electric motor vehicles. Subtitle A provides for a
commercial demonstration program for electric motor vehicles, and
Subtitle B provides for an infrastructure and support systems
development program.
DOE Implementation of the Energy Policy Act
Since 1992, DOE has taken a number of steps to implement EPAct's
alternative fuel programs. DOE coordinates various aspects of the
Federal fleets' efforts to comply with the vehicle acquisition
requirements established under section 303. (42 U.S.C. 13212) DOE has
promulgated and implemented regulations and guidance for alternative
fuel providers and State government fleets, which are subject to the
fleet provisions contained in sections 501 and 507(o), respectively.
The implementation of the fleet regulations, in particular, has given
DOE considerable experience in understanding the issues associated with
fleet mandates.
DOE also has experience with implementing voluntary alternative
fuel programs. The Clean Cities Program (Clean Cities) (sections 405,
409 and 505 of EPAct), is the primary means by which DOE promotes the
use of alternative fuels. This program supports public and private
partnerships that deploy AFVs and build supporting infrastructure. The
Clean Cities Program has established the following relevant goals: (1)
One million AFVs operating exclusively on alternative fuels by 2010;
and, (2) one billion gasoline gallon equivalents per year used in AFVs
by 2010.
Unlike traditional command and control regulatory programs, Clean
Cities takes a unique, voluntary approach to AFV development, working
with coalitions of local stakeholders to help develop the AFV industry.
The program thrives on strong local initiatives and a flexible approach
to building alternative fuels markets, providing participants with
options to address problems unique to their cities and fostering
partnerships to help overcome them. There are currently more than 80
local Clean Cities organizations around the country. From local
businesses and municipal governments to regional air quality
organizations and national alternative fuel companies, more than 4,400
stakeholders have found the Clean Cities to be an effective route to
building local alternative fuels markets.
Many Clean Cities organizations have focused their efforts on
marketing to niche markets. Niche market fleets offer the best
opportunities for overcoming the barriers that often limit alternative
fuel use. These barriers include limited refueling infrastructure,
higher acquisition costs, and lower operational range for vehicles.
High-mileage, centrally-fueled fleets are a good example of a niche
market. High-mileage fleets consume larger quantities of fuel, so over
time, fleet managers can benefit from the cost savings associated with
alternative fuels that cost less than conventional fuels. Low-mileage,
high-fuel-use vehicles--those that must often wait, idling, or those
with repeated starts and stops, such as airplane tugs and airline
baggage carts--are another niche market. Predictable routes and
centralized refueling stations also facilitate scheduling and allow for
overnight or off-hour refueling, leaving more time for scheduled stops
during the workday. Considering these factors, alternative fuels in
many niche applications make sense and can be economical today. With
the many niche markets in communities across the country--taxis,
delivery fleets, shuttle service and transit bus fleets, airport ground
fleets, school bus fleets, and national park vehicles--market
penetration for alternative fuels and vehicles is viable and can have
an impact on alternative fuel growth.
Additional details on the Clean Cities Program may be found on the
world wide web at http://www.ccities.doe.gov. Details on DOE's existing fleet
regulations may be found on the World Wide Web at http://www.ott.doe.gov/epact/.
[[Page 10326]]
Status of Alternative Fuel and Alternative Fueled Vehicle Markets
According to the EIA, the number of AFVs on the road has more than
doubled since EPAct's passage in 1992. See Energy Data Book at 9-3
(Table 9.1), and EIA, Alternatives to Traditional Transportation Fuels
2000 Table 1 (Sept. 2002) [hereinafter Transportation Fuels 2000]
(http://www.eia.doe.gov/fuelalternate.html). As of 2002, EIA estimates that
AFVs number slightly more than a half million vehicles, comprising a
small fraction of the total U.S. vehicle stock. Id. Of the forecasted
2002 total, approximately 281,000 will be fueled by liquefied petroleum
gas (propane); 126,000 will be fueled by compressed natural gas; 5,900
will be fueled by M85 (a blend of 85 percent methanol and 15 percent
gasoline); 82,500 will be fueled by E85 (a blend of 85 percent ethanol
and 15 percent gasoline); and almost 20,000 will be fueled by
electricity. The remaining quantity of AFVs consists of a very small
number of vehicles fueled by liquefied natural gas, M100 (100 percent
methanol), and E100 (100 percent ethanol). Id. DOE estimates that
approximately 20,000-25,000 new AFVs are acquired annually as a result
of the Federal fleet requirements under section 303 of EPAct and the
State and Alternative Fuel Provider Fleet Programs found in sections
501 and 507(o).
In addition to the vehicles described above, EIA estimates that by
2000 there were approximately 2.6 million flexible fueled vehicles
(FFVs) on U.S. roads capable of operating on ethanol blends of E85.
Transportation Fuels 2000 at Table 1. An FFV is ``any motor vehicle
engineered and designed to be operated on any mixture of two or more
different fuels.'' 10 CFR 490.2. The number of FFVs is expected to grow
significantly in future years as automakers continue to sell hundreds
of thousands of these vehicles each year. EIA does not count most of
these vehicles in its AFV figures above since these vehicles include
cars and light trucks owned by non-fleet owners, who for the most part
are not expected at this time to use ethanol in their vehicles. These
vehicles, however, could use ethanol if the infrastructure becomes more
widely available and fuel supplies are offered at a competitive price.
When EPAct was enacted in 1992, EIA estimated that total
alternative fuel and replacement fuel use accounted for approximately
1.6 percent of total motor fuel consumption. This figure rose quickly
to 2.2 percent in 1993 largely as a result of requirements under the
Clean Air Act Amendments of 1990, which required the use of oxygenated
and reformulated fuels. EIA has projected that, for 2002, the annual
consumption of alternative fuels in alternative fuel vehicles will
reach the equivalent of approximately 294 million gasoline gallons.
Factored together with the use of replacement fuels such as ethanol and
MTBE, the total amount of replacement fuel and alternative fuel
consumption will displace the equivalent of approximately 4 billion
gallons of gasoline. While encouraging, this figure represents only a
small part (2.8 percent) of total 2002 on-road motor vehicle fuel
consumption. Thus, despite the efforts of the past decade and
significant improvements in the state of alternative fuel technology,
alternative and replacement fuel use has grown relatively little.
II. Previous Opportunities for Public Comment
Pursuant to the rulemaking process set out in sections 507(c)-(g)
of EPAct, DOE issued an advanced notice of proposed rulemaking (ANOPR)
and held a series of stakeholder workshops to discuss various options
open to it for implementing a private and local government fleet
program and in general how to encourage increased use of replacement
fuel. Commenters also were asked to provide input on the replacement
fuel goals contained in EPAct. The comments and public statements DOE
received have informed the determination proposed today. The sections
below describe the process used to solicit information, the different
proposals made, and the input received. DOE notes that neither
EarthJustice nor the other entities it represented in the lawsuit in
Center for Biological Diversity v. Abraham filed written comments or
provided testimony in response to the opportunities for public comment
described below.
A. 1998 Advanced Notice of Proposed Rulemaking
On April 17, 1998, DOE published in the Federal Register an ANOPR
stating that DOE was beginning its process for determining whether to
promulgate a rule imposing possible AFV acquisition requirements on
private and local government fleets. See 63 FR 19372. Accordingly, DOE
requested comments on a number of issues potentially relating to such a
rule, arising from section 507(g) of EPAct, as well as relating to
possible alternative fuel requirements for urban transit buses under
section 507(k). In May and June of 1998, DOE held three public hearings
in Minneapolis, MN; Los Angeles, CA; and Washington, DC. More than 110
interested parties responded by providing written and verbal comments.
The ANOPR requested comments on 23 questions within three broad
areas: replacement fuel goals, fleet requirements, and urban transit
buses. Many of the comments expressed during the public workshops
included common themes and overlap among these three areas. Information
related to the ANOPR and this rulemaking, in general, is located on the
World Wide Web at http://www.ott.doe.gov/epact/private_fleets.shtml
Discussion of Replacement Fuel Goals and Fleet Requirements
More than 40 commenters addressed the question whether the goal of
replacing 30 percent of the Nation's motor fuel by 2010 is achievable.
Commenters also identified likely problems in achieving this goal. Less
than half of the commenters who explicitly addressed this question
regarded the goal as unachievable. Many of the commenters considered
the goal unachievable under the then-present economic conditions, and
many offered suggestions as to what changes would be required to make
the goal feasible. Commenters were in general agreement that the lack
of alternative fuel infrastructure, low petroleum fuel prices, and
various limitations on AFV availability were key barriers to
achievement of EPAct's 30 percent petroleum replacement goal and
implementation of any new fleet rules. Many commenters cited the lack
of an alternative fuel infrastructure as a significant barrier. One
commenter said public access to most existing natural gas refueling
sites in his area is either restricted or prohibited. Another commenter
said supplies of alternative fuels themselves were inadequate at
present.
Two commenters pointed to the low prices of petroleum-derived fuels
as an impediment to alternative fuel implementation. One commenter said
that low petroleum prices implied that AFV fleet operators might never
see a return on their investment. A related comment, noted that
installation of an alternative fuel infrastructure could be a financial
burden for small and independent fuel retailers and could be unfair to
them.
The cost of AFVs and the lack of selection among AFVs were
mentioned by a number of commenters. Several commenters also mentioned
that it was difficult to lease AFVs or acquire certified conversions.
Two commenters said incremental costs of AFVs could
[[Page 10327]]
inhibit widespread acceptance of the vehicles and technology.
Five comments identified the resale or residual value of AFVs as a
barrier to fleets' acceptance of AFVs. Two of these comments urged
government action to address this problem. One commenter stated that
government purchase of AFVs at the end of their lease life or a resale
price guarantee by the government was needed. The other said that
government should establish a resale market (or surrogate), or create a
residual value insurance pool for alternative fueled vehicles,
analogous to resale value insurance that can be obtained for fleet
vehicles.
Commenters who opposed adoption of a private and local government
fleet mandate questioned the benefits of or the justification for such
a mandate, and suggested it would foster non-compliance and limit
participation in voluntary programs. Several commenters questioned
DOE's authority to promulgate a private and local government fleet
rule. These comments argued that DOE had not yet demonstrated that a
private and local government fleet rule was ``necessary'' or that
meeting the EPAct fuel replacement goal through a fleet rule was
economically achievable. One commenter said that DOE had not yet
performed the cost/benefit analysis called for in section 507(l) of
EPAct. Commenters also cited the draft Section 506 Report (section III
below) which indicated that a private and local government fleet
mandate would result in only 1.5 percent fuel displacement.
Several commenters also asserted that much of the additional
alternative fuel used under a fleet program would actually be imported,
and hence promoting the use of such fuel would do little to meet the
section 502(b)(2) provision that at least half of the replacement fuel
used to meet EPAct's replacement fuel goals must consist of ``domestic
fuels.'' They also believed that there was not currently a match
between the AFVs available and vehicles which could meet the normal
business requirements of the fleets that would be subject to the
acquisition mandate. These commenters, and a few others stated the 30
percent replacement fuel goal set forth in EPAct was arbitrary, and
that any modified goal would be equally arbitrary. These commenters
stated that DOE should concentrate on accelerating public information
programs and increasing participation in voluntary programs, like Clean
Cities and Clean Airports. In contrast, two commenters argued in favor
of mandates, with one saying failure to impose them would indicate a
lack of confidence in the alternative fuels industry.
DOE's second question solicited input on what level of replacement
fuel use is actually achievable, if the goal originally specified in
EPAct is not feasible or achievable. Eight commenters responded to this
question; only one provided an alternative numerical goal.
DOE's third question asked for information on the practicality of
EPAct's replacement fuel goals and whether they should be modified. In
response, one commenter criticized the fundamental assumption that
replacement fuel goals are needed. Several commenters said that some
AFVs are not necessarily cleaner than gasoline-fueled vehicles and that
current AFV models are more expensive to operate than their
conventional fueled counterparts. Commenters urged DOE to consider the
effects of current AFV programs on fleet economics, on progress toward
reaching EPAct's replacement fuel goals, and to consider alternatives
to mandates. Another commenter questioned the reasonableness of DOE's
projections of the number of AFVs that would be necessary in the future
to achieve the replacement fuel goals.
DOE's fourth question asked commenters to describe the general
outline, structure and implementation of a possible program that
focused on fuel use instead of simply on vehicle acquisitions. Many
commenters urged the adoption of an incentives-based program instead of
new mandates. Other commenters, however, supported a new mandate.
Nearly all commenters, including those opposed to mandates, thought
that focusing on fuel use rather than vehicle acquisitions was a good
idea. A number of commenters recommended replacement fuel programs that
were based on or emphasized specific alternative fuels, even though DOE
historically and uniformly has been of the view that it should remain
fuel neutral in implementing EPAct's regulatory programs.
Some commenters said that DOE should focus its efforts on programs
already in place, especially the Clean Cities and Clean Airports
Programs. One commenter thought that these programs, combined with the
mandatory fleet programs already in place, constituted a sufficient
replacement fuel program.
DOE's next two questions concerned what other measures could be
taken, in addition to or instead of an acquisition mandate, to further
the achievement of the replacement fuel goals, and what types of
incentives should be offered, what form should they take, and whom
should they benefit. These questions drew the largest response from
commenters. The overwhelming majority of commenters recommended the
adoption of financial and non-financial incentives. There was an almost
equal split between commenters that advocated measures other than
mandates, and commenters that advocated measures in addition to
mandates. One commenter, who advocated incentives in addition to
mandates, said the adoption of incentives should precede mandates.
Another commenter, who called for incentives instead of mandates, said
that mandates should be imposed only if the adoption of incentives
fails to elicit adoption of alternative fuels. Two commenters opposed
incentives; one said they were inappropriate for uneconomic fuels and
the other predicted they would not further significant petroleum
replacement.
A common theme among comments by State and local government
representatives was that incentives also should be available to them.
In addition, one commenter suggested linking incentives to actual
alternative fuel use. Numerous commenters discussed how incentives
could be funded. Commenters suggested a 1-cent-per-gallon tax on
gasoline, as well as a tax, or import tariff, on foreign petroleum. One
commenter called for additional taxes to be placed on all fuels
produced from imported petroleum. Another commenter suggested that
incentives be funded through the Transportation Trust Fund.
Many commenters called for tax incentives, including credits for
the acquisition of vehicles, fueling infrastructure investments, and
alternative fuel use. One commenter noted that if tax incentives are
adopted, they should be available for a sufficient period, with a
specified phase-out date to facilitate business planning. In addition
to tax credits, two commenters advocated direct grants for entities
that could not take advantage of tax credits.
Several commenters recommended of non-financial incentives,
including granting AFVs access to high-occupancy vehicle (HOV) lanes or
their own dedicated travel lanes, parking and toll preferences, relaxed
vehicle inspection standards, lower vehicle registration fees, and
lower sales taxes. DOE notes that while some such incentives already
exist, additional incentives, including new tax credits, would either
require new legislation from Congress or legislation or regulatory
actions at the State and local government levels.
Several comments suggested regulatory intervention in the vehicle
[[Page 10328]]
and fuel markets. One called for a requirement that conventional motor
fuel station operators install alternative fuel storage and dispensing
systems and sell alternative fuel(s) as a minimum of 10 percent of
their annual sales by 2000, and a minimum of 30 percent by 2010. All of
these suggestions call for actions that are outside of DOE's authority
or are expressly prohibited by EPAct.
Most commenters wanted fleets and other AFV owners and operators to
be the primary targets of incentives. One commenter said that
incentives should be targeted to small businesses and users, and not to
large Original Equipment Manufacturers (OEMs). A few commenters thought
that fuel providers should qualify for financial incentives as a way to
encourage infrastructure development.
Commenters favoring a program to encourage fuel use offered
suggestions on how such a program could work. The general aim of these
suggestions was to allow covered and potentially covered fleet
operators greater flexibility in meeting requirements. Suggestions for
such a program included providing acquisition credits for medium- and
heavy-duty vehicles, extra credits for electric and dedicated
alternative fueled vehicles, providing credits to non-covered fleets,
and providing credits for alternative fuel use.
Commenters voiced considerable support for tying credits (and other
incentives) to the amount of alternative fuel(s) actually consumed by
the vehicles. Several commenters suggested that emissions trading
credits be granted to AFV operators who exceeded alternative fuel use
requirements.
DOE asked for guidance on how to factor in changes in oil price and
availability into the decision-making process. Relatively few
commenters addressed this question. Two pointed to a General Accounting
Office study that estimated the benefits to the U.S. of using low-cost
imported petroleum to be in the hundreds of billions of dollars, and to
outweigh the benefits of alternative fuels. One commenter said that
alternative fuel mandates, while they might reduce petroleum imports,
could increase imports of other fuels. Two commenters suggested DOE
consider the national defense and security costs of the country's
current petroleum imports, one of them calling for excise taxes on
petroleum that reflect its ``costs to society.''
There were 15 responses to DOE's question about measures to
encourage use of alternative fuels, rather than conventional fuels, in
bi-fuel and FFVs. Three commenters recommended DOE simply require
alternative fuel use in FFVs. One commenter argued that alternative
fuel use in bi-fuel vehicles and FFVs at least 50 percent of the time
should be sufficient to qualify these vehicles for EPAct compliance,
while another recommended DOE establish a guideline that an AFV must
operate at least 75 percent of the time on alternative fuel if the
vehicle is to count toward an operator's compliance with EPAct.
One commenter suggested that DOE add biodiesel and reformulated
gasoline (RFG) to the list of alternative fuels specified in the EPAct.
In the Final Rule for the Alternative Fuel Transportation Program
promulgated on March 14, 1996, DOE added neat (or 100 percent)
biodiesel to the definition of ``alternative fuel.'' Additionally,
after enactment of section 7 of the Energy Conservation Reauthorization
Act of 1998 (ECRA) (Pub. L. 105-388) which allowed covered fleets to
earn acquisition credits by using biodiesel blends in medium- and
heavy-duty vehicles, DOE issued regulations allowing credit in these
circumstances as well. See 64 FR 27169 (May 19, 1999). However, DOE has
consistently stated that it cannot add RFG to the definition of
``alternative fuel'' because RFG is more than 80 percent petroleum, and
therefore is not ``substantially not petroleum'' as required by EPAct
section 301(2). See 61 FR 10622, 10630 (March 14, 1996) (notice of
final rulemaking establishing 10 CFR Part 490).
The final replacement fuel question on which DOE sought comments
was how to estimate the impacts of replacement fuel. One commenter
predicted that achievement of the 30 percent replacement fuel goal
would create supply and price problems for current propane users in the
agricultural, residential, and industrial sectors. This commenter
predicted price increases of several hundred percent, and cited a DOE
report that projected vehicle fuel demand for propane could go from
35,000 barrels per day (bbl/day) to 1.7 million bbl/day, and imports
could increase from 200,000 bbl/day to 1.7 million bbl/day. General
Accounting Office report GAO/RCED-98-260, entitled Energy Policy Act:
Including Propane as an Alternative Motor Fuel Will Have Little Impact
on Propane Market, addressed this concern. The report asserted that
EPAct's effects on the supply and price of propane would be minimal and
the increase in overall price of propane, attributable to EPAct, would
be negligible. It also stated that EPAct would have little effect on
existing consumers of propane because the price increases will be so
small.
In the area of fleet requirements, DOE asked whether the AFV
acquisition schedule in section 507(g) of EPAct should be adhered to,
and if not, what alternative schedule should be used. Section 507(g)
requires that if DOE promulgates an AFV acquisition mandate for private
and local government fleets, annually escalating percentages of the
light duty vehicles acquired by the covered fleets must be AFVs,
beginning with 20 percent in model year 2002 and rising to 70 percent
in model year 2005 and thereafter, although this section also gives DOE
authority to change these years and percentages. Eight commenters spoke
in favor of retaining the section 507(g) schedule, although one advised
making the schedule applicable only to local government fleets and
adopting incentives for these fleets. Several commenters supported
adoption of a new mandate for local government fleets, including
transit agencies, but not for private fleets. Six commenters opposed
the schedule in section 507(g). Some commenters opposed any mandate,
while others recommended a longer phase-in schedule.
DOE received numerous comments in response to its question
regarding what programs other than the fleet requirement program would
maximize market penetration of alternative fuels and AFVs, and what
market penetration these programs would induce. Many of these comments
simply reiterated the call for incentives of various types. A number of
commenters, however, said that a concerted effort to expand existing
infrastructure would enable fleets to expand their use of AFVs. Though
not responsive to the question, a number of commenters suggested
expanding the existing fleet programs to cover medium- and heavy-duty
vehicles. A few commenters also thought that the statutory geographical
limitations on fleet programs should be removed.
A number of commenters cited the Clean Cities Program as an
effective means of expanding AFV use. Some called for the program to be
expanded, in terms of the number of its participants, the areas it
covers, and in funding. Commenters also recommended that Clean Cities
coordinators receive training in how to seek Department of
Transportation Congestion Mitigation and Air Quality (CMAQ) Improvement
Program funds.
A number of commenters urged continued Federal leadership in
establishing the use of alternative fuels and alternative fueled
vehicles. These commenters indicated that the Federal
[[Page 10329]]
Government must do a better job of meeting its own AFV acquisition
requirements and using alternative fuels in its vehicles. DOE has
worked closely with all the Federal agencies to maximize acquisitions
of alternative fueled vehicles and increase the use of alternative
fuels. DOE participated actively in the development of Executive Order
13149, which strengthens the Federal Government's commitment to using
AFVs and gives DOE a greater role in assisting Federal agencies
compliance with EPAct's AFV acquisition requirements and report on
their acquisitions.
DOE's final question about fleet requirements asked how DOE should
weigh the factors in section 507(l) of EPAct when deciding whether to
promulgate a private and local government fleet program. Nine responses
explicitly addressed this question. There was no clear consensus that
DOE should accord the greatest weight to any particular factor. Four
commenters mentioned economic factors: the impacts on fleets, workers,
consumers (particularly non-transportation propane consumers); cost
burdens the rule would impose on local governments; and fuel market
impacts. One commenter said Congress did not intend that a fleet
mandate be imposed if it would harm the economic well-being of
businesses, workers, or consumers. This commenter also stated that the
evidence suggests the costs of such a mandate would greatly exceed its
benefits. Three commenters mentioned AFV availability as a concern that
should be considered before DOE proposes any fleet AFV acquisition
program. Another commenter said the unavailability of suitable vehicles
had been regarded by Congress as sufficient reason to defer imposition
of fleet mandates.
A commenter raised the issue of environmental benefits of AFVs,
saying Congress had not intended for acquisition mandates to be imposed
on fleets if AFVs did not confer environmental benefits. The same
commenter noted earlier that AFVs at one time had been automatically
assumed to have lower environmental impacts than petroleum-fueled
vehicles, but that the evidence had since showed this assumption to be
false. This commenter also urged DOE to weigh vehicle safety and
greenhouse gases in its consideration of a possible private and local
government fleet program.
Discussion of Urban Transit Buses
In the ANOPR, DOE asked for input on how it should determine if the
inclusion of urban transit buses in the proposed rule would help meet
the replacement fuel goals. Virtually all the commenters responding to
this question took it as soliciting their opinion on whether an urban
transit bus fleet rule should be promulgated. Eighteen commenters urged
DOE to promulgate a mandate that urban transit bus operators acquire
alternative fuel buses. A number of these comments suggested that this
mandate could be adopted independent of a private fleet mandate. There
was general agreement among supporters of a transit fleet mandate that
transit buses were a good fit for alternative fuels.
Nine commenters, six of them urban transit bus operators, opposed
the imposition of an urban transit bus AFV mandate. Two of them
described such a mandate as ``unfunded.'' One argued that imposition of
such a requirement would be overly ambitious, financially burdensome,
and could decrease urban transit bus ridership. Several commenters
stated that requiring the acquisition of more expensive alternative
fueled buses could lead to reduced ridership if transit agencies had to
raise fares to pay for the buses. One commenter said transit riders
already help reduce petroleum imports by not driving their own cars,
and that DOE should recognize that the petroleum fuel consumed by urban
transit buses is going to the ``highest use.'' Two commenters pointed
out that an increasingly large percentage of new urban transit bus
purchases are alternative fueled, and that alternative fuels have made
impressive inroads in the urban transit bus sector. Two other
commenters said these gains have been made without mandates, and
voluntary adoption of alternative fueled urban transit buses should
continue, as local funding and circumstances permit.
DOE asked how it should quantify the impact on public transit
properties of requiring them to acquire alternative fueled buses.
Thirteen of the 15 respondents to this question spoke directly or
indirectly to the issue of economics. All said that it would be a
financial burden because of the higher cost of alternative fuel buses,
the cost of installing the infrastructure (or the operational costs of
off-site refueling), the cost of training maintenance personnel, and
the costs (in some cases) of retrofitting large facilities to
accommodate AFVs. One also pointed out that increasing (conventional)
diesel engine efficiency had permitted a reduction in transit bus fuel
consumption over the past 10 years.
DOE asked for comment on whether an urban transit bus fleet
mandate, if imposed, should apply to public and private urban transit
bus operators, or only to public operators. By a substantial margin
(nine to one), commenters favored applying the requirement equally to
public and private operators.
Two commenters commented on ways to address offset the economic
penalties of owning and operating alternative fueled urban transit
buses. One favored using a life-cycle cost approach, rather than
emphasizing the first cost of vehicles and infrastructure. The other
noted that CMAQ funds are available from the Department of
Transportation and that other Federal funds are available to help
finance alternative fueled bus purchases. This commenter urged DOE to
work with the Federal Transit Administration (FTA) and the Federal
Highway Administration to secure the maximum available funding for
urban transit bus projects.
In response to its question concerning what implementation
schedule, if any, should be used for transit bus fleets, DOE received
three comments advocating use of the schedule that is described in
section 507(g) of EPAct, described above. One commenter called for an
emphasis on fuel replacement, but offered no specific advice on how
this objective should be accomplished. Eight comments suggested other
schedules, mostly longer phase-in periods.
DOE's final question about a potential AFV mandate for urban
transit buses concerned the types of exemptions and exclusions it
should provide transit agencies. Three transit properties called for
exemption of all urban transit bus fleets irrespective of size. One
commenter said participation of urban transit bus fleets should be
based not on acquisition numbers, but on annual fuel use. Three other
transit properties said exemptions should be based on the cost-
effectiveness and/or the technical applicability of alternative fueled
urban transit bus operation for the fleet in question. Another
commenter said that fleets with fewer than 100 buses should be exempted
if an urban transit bus fleet rule were imposed.
B. Stakeholder Meetings--Fall 1998
In the Fall of 1998, DOE held a series of informal meetings with
stakeholder groups to supplement the formal hearings held in
conjunction with the ANOPR several months earlier. These meetings were
held because DOE was interested in expanding the scope of regulatory
options that it was considering and in gauging stakeholder reactions.
At these meetings, DOE discussed the issues affecting the development
of the NOPR, including DOE's processes, requirements, and
[[Page 10330]]
authority. In addition to giving them a forum to respond to the options
presented, DOE offered stakeholders an opportunity to identify key
barriers to increased use of alternative fuels and to suggest possible
solutions. Invitees included fuel providers, fleets (both public and
private), regulatory agencies, technology research organizations,
vehicle fuel systems providers, consulting firms, vehicle
manufacturers, and related associations and coalitions.
In connection with new stakeholder workshops, DOE developed several
new potential regulatory options. These alternatives were raised as a
way of soliciting comments on whether DOE could encourage or require
fuel replacement in addition to or instead of requiring fleets to
acquire AFVs. DOE developed these potential options because of its
concern that simply adopting the fleet mandate authorized by section
507(e) and (g) would not result in a significant increase in
alternative fuel use or petroleum replacement. This focus on fuel use
was also a potential way of responding to sentiments expressed in
comments DOE received during ANOPR process.
DOE developed these new options, in part, in response to the
direction in EPAct section 507(a)(3) and 507(c) for DOE to evaluate
``all actions needed to achieve [the replacement fuel] goals.'' This
directive obviously did not limit the scope of DOE's analysis to only
regulatory actions and policies that were within DOE's current legal
authority to promulgate. As a result, DOE concluded that it should ask
for comments on a number of different options without regard to whether
those options or the other options commenters might offer were within
DOE's statutory authority under EPAct.
DOE's concern about fuel use arose in part from its experience in
implementing the mandate for State government fleets under section
507(o). Based on this experience, DOE believed that many State
government fleets use alternative fuels a relatively small percentage
of the time in their alternative fueled vehicles. With no requirement
to use alternative fuels, many State fleets are acquiring FFVs and
running them on gasoline. Many fleets prefer these vehicles because
they have little or no incremental cost. At the same time, State fleets
lack inducements to actually fuel their FFVs with alternative fuel.
Reasons for this vary. For example, the existing infrastructure for
ethanol is very localized and limited. Many States do not have any
locations that provide ethanol. The ethanol industry is focusing its
efforts on having ethanol blended into gasoline and RFG, and for the
most part, has not focused on developing a widespread fueling
infrastructure for E85. Additionally, ethanol, in general, costs more
at the pump than gasoline. See Alternative Fuel Price Report
(http://www.afdc.doe.gov/documents/pricereport/pricereports.html).
A few State fleets make substantial use of alternative fuel. These
States tend to be those where natural gas and/or propane is abundant,
or where the Governor has publicly committed to using alternative
fuels, such as California, New York, Texas and West Virginia. These
States also tend to acquire dedicated alternative fueled vehicles as a
larger portion of their new acquisitions.
Because DOE's experience had shown that fleets will opt to fuel
AFVs with gasoline or diesel rather than alternative fuels, DOE sought
to identify ways to require or encourage local government and private
fleets to use alternative fuel. DOE turned to the public comments it
received in response to the ANOPR and on the proposed rule for the
State and Alternative Fuel Provider Fleet Program. Commenters suggested
a variety of ideas to DOE in these forums, including that DOE should
mandate fuel use or provide credits for alternative fuel use. At the
same time, a number of commenters stated that DOE does not have the
authority to require fuel use. Many of the comments in favor of a fuel
use requirement suggested that fleets should receive credits based on
the amount of alternative fuel their vehicles used and that medium- and
heavy-duty vehicles, because they use more fuel than light-duty
vehicles, should receive multiple credits. Some commenters suggested
that dedicated vehicles be awarded multiple credits or that dual-fueled
vehicles should only receive half a credit.
No efforts were made during the meetings to achieve consensus.
Meetings ranged in size from approximately 15 to 40 representatives in
attendance, and included a reasonably representative cross-section of
stakeholders. DOE identified representatives from stakeholder groups
and invited them to attend the stakeholder meetings. In some cases, an
individual representing multiple stakeholders was invited (such as from
an association), while in other cases, an individual representing a
particular interest was invited (such as from a single company or
government organization).
The schedule for the meetings was as follows:
October 26, 1998--Private Fleets, Transit Bus Operators, and Medium-/
Heavy-Duty Fleets
October 27, 1998--Local and State Government Fleets
October 28, 1998--Electric Utilities and Fleets
October 30, 1998--Liquid Fuel Providers
November 2, 1998--Natural Gas Fuel Providers, Propane Fuel Providers
and Fleets
The meetings were held in Washington, DC. In addition, DOE held
several informal meetings or discussions with automobile manufacturers
outside of the stakeholder meetings, with the same purposes and
information as the stakeholder meetings identified above. These
consisted of the following:
October 6, 1998--American Honda Motor Company
October 29, 1998--Toyota Motor Corporation
November 9, 1998--Ford Motor Company
November 10, 1998--Chrysler Corporation
November 10, 1998--General Motors Corporation
DOE began each meeting by discussing the replacement fuel goals,
the authority to modify these goals, the possible regulatory options
for a fleet requirement rule, and the additional statutory authority
related to urban transit buses. DOE also presented four regulatory
options that were under consideration at the time. These options were:
Option 1--Proposing a rule based solely upon the AFV
acquisition requirements identified within section 507(g);
Option 2--Including all elements of Option 1,
but adding a requirement that the alternative fueled vehicles must
operate on alternative fuels wherever available;
Option 3--Including all elements of Option 1,
but adding a provision for the allocation of credits for actual use
of replacement fuel; and
Option 4--Proposing a replacement fuel program, focused
on reducing fleet petroleum consumption by requiring fleets to
reduce their light-duty fleet petroleum consumption through the use
of replacement fuel.
Most of the discussions at the stakeholder workshops focused on the
specific approaches to developing a fleet rule. Some of the discussions
also concerned to the replacement fuel goals.
Many of the comments made during these meetings were similar to
those made during the ANOPR process. Private fleets cited barriers to
increased alternative fuel use, including the incremental price of many
AFVs, the lack of sufficient infrastructure, increased operational
costs of AFVs,
[[Page 10331]]
and the lack of established resale value for AFVs. Several commenters
suggested ways of overcoming these barriers. Private fleets suggested
providing incentives not only for the development of alternative fuels
infrastructure, but for maintenance and training as well. Private
fleets also favored imposing a moratorium on taxes of AFVs and/or
alternative fuels.
Private fleets also suggested that DOE investigate the possibility
of making certain requirements conditional upon market events. For
example, if AFV or alternative fuel prices came down to a certain level
or infrastructure developed to a certain point, AFV acquisitions or
alternative fuel use could then be required.
Transit bus operators cautioned that their cost-effectiveness is
closely tied to Federal Transit Authority funding policies. They also
cautioned that anything that increases fares discourages overall
ridership. For this reason, among others, transit bus operators opposed
any mandates. Some stakeholders expressed support for including the
transit bus industry in a private and local government fleet mandate.
These stakeholders indicated that current new orders for alternative
fuel transit buses are increasing. Some also indicated that transit
buses are a very successful market niche for alternative fuels.
Medium- and heavy-duty fleet stakeholders favored establishing non-
financial incentives at the local level and providing them to State and
local government fleets alike. One suggested providing special curb
access (non-ticketing zones) to alternative fuel delivery vehicles.
These stakeholders generally believed that medium- and heavy-duty
vehicles are a good fit for alternative fuel use, often better than
light-duty vehicles. These stakeholders stated, however, that DOE
should not require the acquisition of medium- and heavy-duty AFVs, but
instead should provide credits for the use of alternative fuels by
medium- and heavy-duty vehicles.
Local government attendees identified a number of barriers to
alternative fuel use. They said they have trouble justifying
incremental purchase and higher operating costs for AFVs, especially
for governments with severe fiscal constraints. Conversions were
generally viewed as a cost-effective alternative to OEM product
offerings. In some cases, a mandate, if too costly, might impede some
local government agencies from fully completing their core missions.
Several local government representatives also said that the Federal
Government must lead first, before local governments can be expected to
follow.
Local governments offered a number of proposals to address
barriers. While they saw financial incentives as critical to increasing
alternative fuel use, a number of fleet managers also indicated their
support for non-financial incentives. These included giving AFVs the
right to use HOV lanes with and ``green'' parking spaces where AFVs
would have receive preferential parking locations, possibly at reduced
or no cost). Commenters also said that because heavy-duty vehicles use
significantly more fuel than light-duty vehicles, their use should be
strongly encouraged, and large numbers of credits should be provided
for these vehicles (such as based upon a comparison of annual fuel
use).
State representatives provided information both in their capacity
as government agencies interested in pursuing certain societal goals
(such as increased energy security or improved environment) and in
their capacity as the owners of fleets operating under the current AFV
acquisition requirements. State fleets asserted that there needs to be
a more explicit tie between energy and environment among the Federal
agencies. For example, States (and others) would like to receive EPAct
credit for alternative fuels dispensed from stations they build. They
pointed out that States could make use of alternative fuels and AFVs by
private entities a condition of receiving State contracts. State fleets
already regulated under DOE's existing regulations were interested in
finding out if other AFV-related programs (such as those discussed
above) could be available to them.
Electric utilities indicated that they would like to receive
credits for putting infrastructure in place. They also expressed an
interest in receiving credits for R&D commitments. Some of these
commenters expressed the belief that many organizations (including the
electric utilities) are acquiring vehicles slightly larger than 8500
GVWR limit for light duty vehicles so as to avoid acquisition
requirements, and that these practices are causing greater petroleum
use by these fleets. Others, however, thought that AFV acquisition
requirements should be extended to medium- and heavy-duty vehicles, to
provide manufacturers with a greater incentive to make these vehicles
available as alternative fueled vehicles. They also said that increased
competition in the electric industry is forcing many utilities to re-
evaluate their electric vehicle (EV) programs, since they typically
have not been cost-effective. This means that not only fleet purchases,
but deployment, demonstration, R&D, infrastructure, and fleet
assistance programs are coming under greater scrutiny.
Liquid alternative fuel providers and petroleum providers seemed to
support an approach similar to option number 4, the replacement fuel/
reduced fuel consumption approach. Overall, the oil industry asserted
that there is little value in achieving a replacement fuel goal. These
providers stated that there is a disconnect between projected or
desired demand and actual demand for alternative fuels, which is
seriously hindering development of the infrastructure. Fuel suppliers
would also like to see some sort of credit for providing alternative
fuel.
The natural gas and propane providers comprised the largest
stakeholder group and raised many issues and concerns. These providers
said option 4 provided the most flexible method for fleets to comply
with a fleet rule, while also avoiding the situation of having dual-
fueled vehicles not operating on alternative fuels. At the same time,
several organizations said that an AFV acquisition program approach
should not be completely abandoned.
Many attendees asserted that including medium- and heavy-duty
vehicles within an AFV acquisition program would be advisable, for
several reasons. First, they would present significant opportunities
for using larger quantities of alternative fuels. Second, this would
close off a perceived way around the requirements for fleets
(eliminating the chance to avoid requirements through acquisition of
vehicles above the 8,500 lbs. GVWR level). In addition, there was
significant interest in adding requirements for transit buses, due to
the current success in this market as well as their potential for large
consumption of alternative fuel.
Most attendees felt that including any contribution from fuel
efficiency would ``water down'' the contribution from alternative
fuels, and was not really in keeping with the purpose of the
alternative fuels portions of EPAct. At the same time, they felt it was
important to keep the rule ``wide open'' for a variety of vehicle
technologies, as well as for generation of credits by fleets that may
not be covered.
Several stakeholders voiced strong opinions that no matter which
approach is ultimately adopted, enforcement must be made an integral
part of the program, and must be seen as a program priority. Otherwise,
many fleets were likely to disregard the requirements.
[[Page 10332]]
Meetings and discussions with automobile manufacturers focused
primarily upon presentation of DOE's authority, possible approaches,
and issues. The manufacturers indicated their continuing interest in
alternative fueled vehicles and their desire in being informed
concerning development of the rule. As a whole, the automakers
expressed interest in options that provided the maximum flexibility to
the fleets. They also encouraged aggressive enforcement of the existing
requirements for Federal, State, and alternative fuel provider fleets.
Several automakers reemphasized that their corporate policies do not
favor governmental mandates.
C. Public Workshops--August--September 2000
Pursuant to its Notice of Intergovernmental Consultation, DOE
conducted three public workshops (Argonne, IL; Golden, CO; and
Washington, DC) and solicited written comments from the public
concerning the replacement fuel goals and a potential private and local
government fleet program. See 65 FR 44987 (July 20, 2000). These
workshops were held to ensure that the requirements of Executive Order
13132 (Federalism) (See 64 FR 43255 (August 10, 1999)) and DOE's
statement of policy regarding intergovernmental consultation (DOE
Statement of Policy) (See 65 FR 13735 (March 14, 2000)) were met. Under
these directives, DOE must consult with State and local governments
before issuing any proposed rule which would have substantial direct
effects on the States, on the relationship between the Federal
Government and the States, or on the distribution of power and
responsibilities among the various levels of government. To ensure that
State and local government organizations had ample opportunities to
respond, the first two workshops were limited primarily to those types
of organizations, with Clean Cities coordinators also permitted. The
Washington, DC workshop was open to all groups. A total of over 100
interested persons attended, and 28 sets of written comments were
received. Neither EarthJustice nor any of the entities it represents in
the lawsuit that resulted in the court order compelling the issuance of
this notice filed comments in those proceedings.
Public workshops were held in Chicago, IL (August 1, 2000); Denver,
CO (August 22, 2000); and Washington, DC (September 26, 2000). DOE once
again took the opportunity to solicit input on a number of different
options for implementing a private and local government fleet rule.
Some of these options involved creative alternatives to the section
507(e) mandate that DOE acknowledged might require new legislative
authority for their adoption. The options presented at these workshops
included:
Option 1--No Regulatory Requirement for Local Government and Private
Fleets is Proposed
Option 2--The Local Government and Private Fleet AFV Acquisition
Program as Provided by Section 507(g) of EPAct
Option 3--The Fleet Rewards Program
Option 4--The Replacement Fuel Program
Option 5--Extension of Flexible Options to Other Fleets
Option 6--An Alternative Fueled Urban Transit Bus Acquisition
Program as Provided by Section 507(k) of EPAct
The discussion that follows provides details concerning each of
these options.
Option 1--No Regulatory Requirement for Local Government and Private
Fleets Is Proposed
Under this option, DOE indicated that it could decide that no
requirement for local private and local government fleets should be
promulgated.
Option 2--The Local Government and Private Fleet AFV Acquisition
Program as Provided by Section 507(g) of EPAct
Under this option, DOE would require certain private and local
government fleets to acquire AFVs as a percentage of their new light-
duty vehicle acquisitions starting with Model Year 2002. The program
was envisioned to parallel the existing program for State and
alternative fuel provider fleets.
DOE acknowledged that there were significant drawbacks to this
option, primarily that it did not guarantee alternative fuel use or
petroleum replacement. Because of the experiences with the similar
programs for State and fuel provider fleets, as well as the Federal
fleet, there was concern that this option would result in little actual
alternative fuel use. DOE indicated that it had considered the option
of promulgating a rule, based upon section 507(g), with a fuel use
requirement, but stated at the time that it was doubtful that DOE had
authority to require fuel use under section 507(g). For this reason,
the options presented did not include a 507(g) rule with a fuel use
requirement as had earlier been discussed as a possibility.
Option 3--The Fleet Rewards Program
Under this option, DOE would craft a regulatory program that
encouraged fuel use. Although the local government and private fleet
market is very large, imposing AFV acquisition requirements on this
market would not necessarily result in the expansion of alternative
fuel use, nor the complementary expansion of the alternative fuel
infrastructure necessary to permit that expansion. DOE again reiterated
its belief that section 507(g) does not require the fleets to use
alternative fuel in the AFVs they acquire. DOE indicated that it was
considering adoption of a Fleet Rewards Program to fill this gap. Under
this option, fleets could meet the requirements of 507(g) directly
(through AFV acquisitions), or opt into the Fleet Rewards Program under
which they could meet their requirements through a combination of
voluntary AFV acquisitions and alternative fuel use.
Under the Fleet Rewards Program, the number of light-duty vehicles
acquired by a fleet in a model year would still serve as the basis for
determining the potential proposed rule's requirements. As under the
prior option, a specific percentage of the light-duty vehicles each
covered fleet acquired would have to be AFVs. However, the Fleet
Rewards Program would differ by allowing a fleet to take specific
actions, called AFV-Equivalency actions, to achieve compliance with its
AFV acquisition requirements while also encouraging the use of
alternative fuel. Specifically, a fleet would receive AFV-Equivalency
Credits for any size and class of AFV it acquired, and for each 500
gasoline gallons equivalent (GGEs) of alternative fuel it consumed.
Each AFV acquired by a fleet, regardless of size or class, would earn
an AFV-Equivalency Credit. Each discrete use of 500 GGEs of alternative
fuel would also earn an AFV-Equivalency Credit. Two AFV-Equivalency
credits would be allocated for the acquisition of dedicated AFVs. The
operation of an existing dedicated AFV in a fleet would also be
eligible for AFV-Equivalency Credit.
Option 4--The Replacement Fuel Program
For Option 4, DOE stated it was considering whether to design a
program different from the 507(g) acquisition requirements, that was
more tailored to achieving the overall goals of displacing petroleum
through use of replacement fuel. Such a program might avoid the
shortcomings of EPAct's existing approach toward fleets, which solely
focuses on acquiring AFVs, but not on the use of alternative fuel.
The Replacement Fuel Program would require fleets to reduce their
light-duty vehicle petroleum usage by increasing the percentage of
replacement fuel used by their light-duty vehicles. In order to use a
sufficient amount of replacement
[[Page 10333]]
fuel, fleets would eventually need to acquire AFVs, even though AFV
acquisitions themselves would not be specifically required. DOE
proposed a possible compliance schedule that included certain
percentages, which represented the portion of a fleet's light-duty fuel
use that would have to be replacement fuel. The required replacement
fuel portion of a fleet's light-duty vehicle fuel use would eventually
rise to 50 percent. Another option that was presented included adopting
a schedule that would rise to a maximum of 70 percent, which is the
same as the top AFV acquisition percentage requirement set forth in
section 507(g).
As with other fleet programs, this option would include a credit
program allowing fleets to bank or trade credits. However, since the
Replacement Fuel Program would not be restricted to the credit program
currently in place for State and alternative fuel provider fleets, the
program could be designed to provide fuel providers with replacement
fuel credits for installation of refueling stations, which they could
then sell to organizations with requirements under the Replacement Fuel
Program. Under this approach, there would also be a new opportunity for
fuel blends to have a key role, since blends of replacement fuels with
conventional fuels would greatly assist fleets in meeting their
requirements. This option could include extending credit generation to
non-covered fleets or to the general public.
Option 5--Extension of Flexible Options to Other Fleets
Participants in the stakeholder groups discussion repeatedly asked
DOE whether any of the optional program concepts (such as the Fleet
Rewards Program) could be extended to fleets currently operating under
the Alternative Fuel Transportation Program. The two types of fleets
currently covered by this program are State government and alternative
fuel provider fleets.
Section 507(o) of EPAct required that DOE promulgate a rule
requiring State fleets to acquire specified percentages of AFVs. The
State program acquisition requirements started in model year 1996
(ultimately modified to 1997) with percentages increasing through model
year 2000 (modified to 2001) to a maximum of 75 percent. Because EPAct
section 507(o) makes the State fleet AFV acquisition mandate program
mandatory, DOE does not believe that it could extend the Fleet Rewards
Program concept to State fleets.
Likewise, section 501 of EPAct required DOE to promulgate a rule
covering alternative fuel provider fleets. Again, the language in this
section made it clear this was a mandatory program. Section 501
specifies an AFV acquisition program, with requirements starting in
model year 1996 (modified to 1997) and increasing to 90 percent or more
of new acquisitions in model year 1999 (modified to 2000) and
thereafter. Congress also provided one additional requirement on
alternative fuel providers which was not imposed on any other fleet
type: that their AFVs must operate on alternative fuels wherever the
fuels are available. DOE believes it would be inappropriate to allow
alternative fuel provider fleets to receive credits for using
alternative fuels when they are already required by statute to do so.
The Fleet Rewards Program option would only allow covered fleets to
earn credits. The Replacement Fuel Program, on the other hand, would
allow non-covered fleets to earn credits to provide additional
flexibility, encourage additional persons to use alternative fuels, and
possibly increase the overall use of alternative fuels.
Option 6--An Alternative Fueled Urban Transit Bus Acquisition Program
as Provided by Section 507(k) of EPAct
This option was previously discussed with stakeholders and in the
ANOPR. DOE again solicited comments on whether it should adopt a fleet
rule that included urban transit buses, as authorized under section
507(k) of EPAct. DOE offered several different options for how transit
operators could comply with a fleet requirement. One possible option
would require that a portion of new bus acquisitions be alternative
fuel buses, with percentages requirements similar to those contained in
section 507(g) or perhaps rising to a maximum of only 50 percent.
Another possible option would allow urban transit bus operators the
opportunity to ``opt into'' the Fleet Rewards Program as an optional
compliance path. Under this approach, urban transit bus operators might
receive credit both for acquisitions of AFVs and for alternative fuel
use. As with the light-duty vehicle program, the bus program would
include a fair and appropriate AFV-Equivalency Credit program.
DOE also discussed a Replacement Fuel Program for urban transit bus
fleets. DOE requested comments on whether urban transit bus operators
should have a separate Fleet Rewards or Replacement Fuel Program, or
whether it should be a subset of a possible Fleet Rewards or
Replacement Fuel Program for private and local government fleets.
Summary of Workshop Proceedings
The first workshop was held on August 1, 2000 in Chicago, Illinois.
Representatives from State government, city governments, and Clean
Cities coalitions located in Illinois, Wisconsin, and Indiana were the
primary attendees.
Representatives at the workshop generally agreed that DOE should
take steps to increase use of alternative fuels and reduce dependence
on petroleum imports. A number of organizations indicated that
additional efforts to promote the use of alternative fuels would likely
not occur without government action. A number stated that many of the
voluntary programs to promote use of alternative fuels have been
developed in anticipation of new mandates. These organizations said
that without additional mandates from DOE these efforts would stall.
Representatives generally agreed that whatever mechanism DOE
selects needs to be flexible and focus on fuel use. There seemed to be
slightly more support for a fleet rewards-type concept, certainly more
than for a straight 507(g) AFV acquisition mandate. The Replacement
Fuel Program option also generated considerable interest and prompted
many questions. Attendees also thought that DOE should gradually phase
in any option it might select, whether requirements for private fleets
could be promulgated separately from requirements for local government
fleets, since the situations of private and local government fleets are
very different.
Some attendees at the workshop expressed concern about the level of
refueling infrastructure--both its current and future availability, and
what it will take to encourage the necessary investments by fuel
retailers. Representatives from areas with relatively little refueling
infrastructure were concerned about options focused on fuel use.
Ethanol was singled out as a concern--there are many FFVs that could
operate on it, but very few stations, and fuel cost has been high.
Some commenters indicated that fleets are moving away from central
refueling, which may make fuel records difficult to obtain for fuel
use-based programs. In addition, even centrally-fueled fleets often do
not keep records on a vehicle-by-vehicle basis, and therefore it may be
difficult to determine which fuel is used in a light-duty vehicle and
which in a medium-or heavy-duty vehicle. Commenters also continued to
express concerns about vehicle availability.
A number of local government organizations (especially cities) said
[[Page 10334]]
their fleets likely would oppose a mandatory program. Other
organizations expressed significant concern that private fleets, and
their representatives, would fight any requirements (including through
court challenges). Other representatives indicated that DOE should
simply ``get on with it,'' whatever DOE should decide to do.
Organizations not supporting mandates stated that they supported
incentives instead of mandates. Despite the fact that no large source
of funds was expected to be available from DOE, organizations asked for
DOE's assistance in applying for funds from other sources (e.g., CMAQ
funds). In addition, several organizations indicated that incentives
must be large enough to make them worth pursuing because small grants
simply are not worth the time and expense required to secure them.
Some attendees expressed interest in extending flexible options to
other fleets, although there was concern regarding the administrative
burden this would place on DOE and whether DOE would be able to obtain
sufficient funding to implement such a program properly. Some attendees
also expressed interest in transit buses, especially given their
success as a niche market for alternative fuels, but most attendees
acknowledged they could not provide detailed input on this issue.
The second workshop was held in Denver, Colorado on August 22,
2000. Representatives from State governments, city governments, and
Clean Cities coalitions, plus one municipal utility attended. The
largest number of representatives were from Colorado, but
representatives from California, Louisiana, Kentucky, Kansas, Oklahoma,
Arizona, Washington, Oregon, and Missouri attended as well.
As at the Chicago workshop, the consensus was that DOE should take
additional actions to increase demand for alternative fuels and to
reduce petroleum imports. Additionally, attendees felt that energy
goals (and any requirements that might grow out of them) needed to be
closely tied to environmental goals, such as those from the Clean Air
Act Amendments (Pub. L. 101-549). Attendees said that incentives were
the key to building necessary infrastructure. Conversely, tax credits
were viewed as too complex and of no real assistance for government
fleets. One Clean Cities coordinator pointed out that a number of
fleets joined the coalition because of potential future mandates, and
that without additional mandates it was unlikely that fleets would
continue to be interested in alternative fuels. Participants echoed the
sentiment from the first meeting that regardless of which requirements
are imposed, they should ramp up slowly to allow fleets time to plan
their acquisitions or determine how to obtain fuel. Attendees again
expressed concerns about the necessary infrastructure--not only the
number of refueling sites but also maintenance and training
requirements for stations as well as actually being able to reliably
find the correct fuel. There was some frustration with the level of
investment by fuel providers.
Attendees generally favored the Replacement Fuel Program and the
Fleet Rewards Program, the latter receiving the most support. There was
general support for extending credits to non-covered fleets. Fleets
already covered under the existing State and Alternative Fuel Provider
Programs expressed an interest in participating in either the
Replacement Fuel Program or the Fleet Rewards Program. A common theme
was that fuel use should be encouraged or required. A very small number
of attendees opposed any kind of new mandate. Several representatives
addressed transit buses, emphasizing local air quality issues and the
benefits of using alternative fuels in transit buses. Several attendees
felt that there would be more overall support for a new regulatory
program if transit buses were included.
There was some general concern with the technical performance of
AFVs. Many of these concerns were associated with earlier generation
vehicles, including conversions. However, several commenters noted that
there also had been problems with vehicles offered by OEMs.
The last workshop was held in Washington, DC on September 26, 2000.
Unlike the previous two workshops, attendees included not only
representatives from State, city governments, and Clean Cities
coalitions, but also from nongovernmental entities including transit
operators, alternative fuels associations, vehicle manufacturers, fleet
associations, and fuel providers.
A number of attendees made specific points about the replacement
fuel goals. Some said the replacement fuel goals covered by sections
502 and 504 of EPAct were important to determining what path to take.
Several attendees indicated that more data and analysis were required
in order to make decisions. Others said it would be arbitrary for DOE
to set a revised goal in the absence of this information. Some
attendees identified the need for an overall plan incorporating all
regulatory and voluntary programs and others suggested that a
coordinated approach for implementation of programs between State,
local, and Federal Government efforts is very important. For example,
many participants believed DOE should be working more closely with EPA.
Certain representatives asserted that environmental drivers for
alternative fuels, while still important in the near-term would
diminish in the future as petroleum vehicle technologies become
cleaner. Attendees said flexibility was key element of all programs.
Several attendees stated that they were looking to DOE to display
leadership with respect to alternative fuels. Attendees had differing
opinions on the subject of efficiency and its role within the goals and
under fleet programs. Some felt that programs should address both
efficiency and alternative fuels. Others felt that efficiency was not
addressed within Title V of EPAct and therefore was outside of DOE's
authority. Some attendees asserted that alternative fuel use would
displace more petroleum than efficiency measures, at least on a per-
vehicle basis.
The Washington, DC attendees also discussed the subject of barriers
to greater utilization of alternative fuel and replacement fuel. First,
they identified the following overall barriers: Vehicle incremental
purchase costs, vehicle reliability and range, fuel costs, public/
private education and awareness, and infrastructure. Second, concerning
vehicle costs, several participants indicated that it might help if
they could use the General Services Administration buying schedule, or
if all fleet purchases could be ``bundled'' to reduce costs through
larger acquisitions. Third, attendees wanted DOE to work more closely
with OEMs to ensure that AFVs meet covered fleet demand for
performance, range, reliability, and design. For example, several fleet
managers asserted that OEMs adding tanks in pickup beds to increase
range was unacceptable, since it reduces pickup bed utility. R&D was
also highlighted as a key need, especially since the OEMs are still
spending many times more on R&D to improve petroleum-fueled vehicles
than AFVs. Fourth, within infrastructure, attendees identified
refueling availability and reliability, the need for trained
technicians, maintenance facility costs, and the ability to have
vehicles maintained at convenient facilities as key issues. Several
fleet managers asserted that their costs would rise if a fleet AFV
acquisition mandate were promulgated, not only because of increased
costs to meet the vehicle or fuel acquisition requirements, but also
for increased costs of maintenance and
[[Page 10335]]
to conduct planning and reporting. Fifth, attendees generally agreed on
the need for incentives to help offset the costs of moving toward
alternative fuels, especially the costs of infrastructure. Some stated
that incentives should be adopted instead of mandates, while others
said incentives were useful in conjunction with mandates.
The attendees at the Washington, DC workshop also raised issues
concerning education and outreach needs. First and foremost they saw,
education and outreach programs as key activities, whether or not a
fleet rule is proposed. They identified a major need to provide
information to fleet operators and decision-makers. Second, they stated
that education of personnel is also now more complicated, because of
the need to train them on the aspects of complex, computer-controlled
vehicles. Third, attendees asserted that most of the public does not
understand the true affect of oil use, and how individual actions
impact the Nation's energy security. Attendees argued that the general
public hears about supply issues, but not about demand. They asserted
that large vehicles (like sport utility vehicles and full-size pickup
trucks) are often not actually needed by the drivers using them, but
that the OEMs are selling these vehicles in large numbers. Attendees
argued that until the general public understands the impacts of oil
use, support for higher budgets (such as for local governments or
incentives) to help AFV programs, and changes to the relative economics
of oil and alternative fuels is unlikely.
In contrast to the attendees at the first two workshops described
above, attendees at the Washington, DC workshops had widely differing
opinions on possible regulations. This wide divergence of opinions was
primarily was due to the unrestricted attendance at the Washington
workshop.
While a number of attendees supported some form of regulatory
action by DOE, several not only had a negative view of mandates, but
also asserted that because of the substantial legal issues presented,
virtually any mandate by DOE would be met with litigation. Of those who
supported regulatory action, most supported a Replacement Fuel Rule,
with some stating that the Fleet Rewards Program should be a fall-back
position. Most attendees supported a flexible approach that focused on
fuel use, and felt that vehicle acquisition programs do not result in
alternative fuel use. Several commenters felt that unless DOE moved
forward with some regulatory action, it would be sending a message that
replacing petroleum is not important.
Several attendees were interested in whether private fleets could
be separated from local government fleets, so that different
requirements could be imposed on each. Several State government
representatives discussed the relationship between a potential private
and local government rule and the existing fleet regulations because
they were interested in opting into a Replacement Fuel Rule or Fleet
Rewards Program.
Attendees said enforcement of existing and future fleet programs
was an issue. For any regulations put in place, commenters asserted
that DOE must be committed to enforcing them to ensure that the program
goals are being achieved.
Summary of Written Comments
DOE received 28 sets of written comments in response to the notice
for intergovernmental consultation, from equipment suppliers, local
governments, alternative fuel organizations, Clean Cities coalitions
and coordinators, and fleet management and leasing organizations, among
others. These comments in many respects echo the remarks made at the
three workshops. Some important themes run through these comments, and
are summarized below.
While most comments focused almost exclusively on a potential fleet
requirement rule, a few key addressed the replacement fuel goals. A
representative from a conversion company asserted that reducing the use
of petroleum is important, and that incentives are needed for natural
gas companies to provide public stations. The representative also
stated that grants are needed for stations and equipment, but
organizations trying to move things ahead are being penalized by
matching requirements. One local government representative submitted a
similar statement, arguing that DOE should focus on reducing the
financial burden on fleets from AFV acquisition programs, through
additional grants for vehicles and refueling infrastructure.
An alternative fuel association representative stated that EPAct's
energy security objectives are not being met under current conditions.
This representative felt that the present regulatory framework is not
effective in displacing petroleum, and that DOE should reform existing
fleet programs by adding greater flexibility and multiple options. The
representative also believed that DOE must realize EPAct's replacement
fuel goals cannot be achieved solely through AFV acquisitions and
alternative fuel use by private and local government fleets. This
representative supported adoption of financial and non-financial
incentives, including tax incentives and grant programs, especially for
infrastructure.
A representative for Clean Cities coalitions stated that its
chapters strongly support fuel-neutral incentives. This representative
said its chapter were working toward an initial appropriations target
of $25-30 million to support AFV acquisitions, infrastructure
construction, and educational programs. This additional funding would
be used to increase alternative fuel use.
One Northeastern State asserted that not achieving the replacement
fuel goals set forth in EPAct is a function of policy limitations, not
potential. The State said fleets are acquiring FFVs and dual-fuel
vehicles, and thus gaining the capability of using alternative fuels,
but operating them on gasoline. The State felt that DOE should keep the
30 percent by 2010 replacement fuel goal in EPAct.
The U.S. Conference of Mayors, an association representing
potentially-covered fleets, stated that it strongly supports policies
to promote use of alternative fuels, but does not support mandates. It
suggested that DOE work with communities to support the use of
alternative fuels. It also suggested that DOE work with EPA to develop
a comprehensive policy integrating clean air objectives and EPAct
goals. Its members adopted a resolution supporting reducing dependence
on imported fossil fuels and increasing fuel diversity, as well as one
indicating that widespread use of alternative fuels provides air
quality, economic, and national security benefits. It said that Clean
Cities has not provided sufficient funding to support widespread
promotion and implementation of alternative fuel programs. Further, the
resolution indicated that community leaders are committed to actively
implementing AFV projects if adequate resources are available, and that
the organization supports making alternative fuels a priority for the
Nation, but calls upon the Federal government to provide sufficient
funds. In addition, the National League of Cities expressed the concern
that the proposals presented did not include sufficient information
concerning costs to local governments and availability of
infrastructure.
An association representing vehicle dealers indicated that a
successful local government or private fleet AFV acquisition program
needs to try to reduce the cost differentials between
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AFVs and powered vehicles for cost-sensitive fleet buyers. This could
include tax credits, grant funding, access to Federal acquisition
pricing, and an expansion of allowable vehicles to include hybrids.
Cost and performance are key considerations for fleets, and alternative
fuels must be comparable to, if not better than, conventional fuels.
The association said that most available alternative fuels do not meet
these criteria. Therefore, it opposed new mandates because there are
still too many barriers to increased use of alternative fuels to make
an AFV acquisition mandate practicable. The association suggested that
DOE could scale back Clean Cities to focus on niche market fleets
selected for high likelihood of success and reproducibility. The
association said resale value of used AFVs was a big issue to dealers,
who are the largest purchasers and resellers of used fleet vehicles. If
AFVs are not well-accepted by the market, the impact on dealers could
be disastrous, according to the association. It said that DOE should
assist in guaranteeing a resale value floor.
A member of an association of State fleet administrators suggested
that programs need to provide incentives or accommodation for future
technologies and current emerging technologies, especially high fuel
economy vehicles. The commenter strongly urged a restructuring of the
basic legislation to allow flexibility to recognize technologies that
achieve the objectives of EPAct and the Clean Air Act Amendments.
A large city government suggested creation of a voluntary
incentive-based program, although it cautioned that DOE needs to
determine whether this would meet DOE's objectives under EPAct. It felt
that DOE needs to conduct cost and operational impacts analyses and
seek long-term Federal funding to offset costs for local governments
for operation and maintenance, repair facility retrofits, land
acquisition, staffing, etc., and that DOE should also coordinate
efforts with EPA. Specifically, it stated that DOE needs to assist
local governments concerning technical issues, such as vehicle
availability, performance, operational limitations, health and safety
requirements, as well as lack of fueling infrastructure.
One fuel producer asserted that if DOE chooses to seek to increase
the use of alternative or replacement fuels through funding, it should
be done in a fuel-neutral manner, providing equal funds for all
alternative/replacement fuel. Under this approach, if a fuel does not
require funding for refueling infrastructure, funds could be used to
increase production. A Midwestern State argued that the two most
critical aspects of reducing petroleum consumption are having AFVs
available that meet consumer needs at prices comparable to conventional
vehicles, and having alternative fuels readily available at prices
comparable to conventional fuels. The State did not view raising the
price of petroleum to high levels as the answer. From a fleet
perspective, the State said efforts to provide incentives to
manufacturers and fuel providers have not worked well, since the
availability of vehicles and fuels is still relatively low and has
grown very slowly.
A second alternative fuel provider association voiced its
preference for a comprehensive package of incentives that would
encourage, not require, private fleets to use AFVs and alternative
fuels. It also argued that energy security is an important national
priority, and that the U.S. will not be able to protect itself from
future oil supply disruptions unless it offsets petroleum demand with
alternative fuel use. The association also asserted that more efficient
vehicles were no substitute for AFVs in this regard. ``Even if more
efficient vehicles were available in large numbers, it would take many
years for them to replace the existing fleet of vehicles and have an
impact on petroleum consumption * * *. Efforts to increase efficiency
should be encouraged but should not be used to undermine the basic goal
of Titles III-V of EPAct: replacing petroleum motor fuels with the use
of alternative fuels.''
This trade association also believed that the EPAct goal of 30
percent replacement fuel use by 2010 was a high requirement, but that
it is an important goal that should be retained. It commented that the
markets covered by EPAct are too small, especially since medium- and
heavy-duty vehicles are excluded, and are thus insufficient to create
economies of scale that would cause vehicle owners not subject to an
acquisition mandate to participate. In addition, it said that the
government has been slow to enforce existing programs. It also
mentioned FFVs as a problem, since due to the higher price of the
fuels, there is no incentive for operators to use anything but
gasoline. The association asserted that financial incentives would be
key, especially to encourage voluntary alternative fuel use. It
suggested that these could include tax incentives, increased funding
for infrastructure projects, and a competitive grant program. It also
said that market development, including building up international
markets, identification of key market sectors, and coordination of AFV
acquisitions among all types of government fleets should be pursued.
Air quality and energy security criteria should be applied when
providing Federal grants, and States should receive State
implementation plan (air quality) credits for AFV programs. In
addition, the trade association argued that funding for alternative
fuel R&D is also required to improve vehicle efficiency, reduce
emissions, reduce the cost and improve the reliability of fueling
infrastructure, and demonstrate AFV systems in new applications. It
said that education and outreach were required to improve public
awareness of alternative fuels and their benefits.
One Western State stated that a number of efforts should be pursued
to reduce the barriers to alternative fuel use. For example, it said
that the Federal Government should work with local organizations to
more fully utilize existing refueling stations. It said that the
Federal fleet should not put large numbers of ethanol FFVs into States
where there is no ethanol refueling. Along with a county board of
commissioners from another Western State and a California coastal city,
it also encouraged DOE to improve grant programs, encourage legislation
to help fleets for whom tax incentives do not work, encourage
development of highly fuel-efficient vehicles, encourage the use of new
technologies (e.g., hybrid vehicles), provide recommendations to
Congress for encouraging use of AFVs and alternative fuels by the
public, change current programs to be fuel-rather than AFV-based, and
establish a reward program for organizations that exceed their
requirements.
A small Eastern State's agriculture department stated that it has
been working with soybean organizations to support use of biodiesel in
its State. It believed that the future of U.S. agriculture depends upon
increasing the utilization of the Nation's renewable resources and that
DOE should consider options that benefit the use of agricultural-based
fuels, which can help energy security, the environment, and the
agriculture sector.
The fleets that would be potentially covered by new regulations
were overwhelmingly opposed to the adoption of mandates. Most fleets
expressed their support for alternative fuels but said that they have
limited funding to pay for the added costs of many (especially local
governments) such requirements. These fleets supported using incentives
to encourage increased use of alternative fuels. A number of State
representatives
[[Page 10337]]
expressed their interest in being included in a Replacement Fuel or
Fleet Rewards Program. These fleets generally thought that it would be
unfair and impracticable to set up two separate programs, one for
covered State fleets, and another new one covering local government
fleets.
At least one commenter expressed an interest in drastically
reworking the existing EPAct fleet programs in order to provide credits
for infrastructure investments. Several commenters favored providing
credits for petroleum-fueled hybrid electric vehicles. Most commenters
supported a Fleet Rewards or Replacement Fuel Program. Very few
commenters were in favor of adopting a fleet program of the type set
forth in EPAct section 507(g) (i.e., an AFV acquisition only mandate).
In fact, a number of commenters suggested that such a program would not
result in significant petroleum replacement.
Several comments addressed enforcement and potential loopholes. One
commenter asserted that if DOE is not serious about enforcement it
should not adopt new mandates. It also noted that fleets could break up
their fleets into smaller units or develop employee vehicle ownership
programs as a way of avoiding the mandates. Several comments questioned
DOE's authority to promulgate any new regulations. One comment noted
that EPAct's deadline for promulgating a private and local government
fleet rule had lapsed.
Only one organization addressed the issue of whether DOE had the
legal authority to adopt a Fleet Rewards or Replacement Fuel Program.
That organization asserted that DOE had authority under section 502 of
EPAct to promulgate a Replacement Fuel Program but did not have that
authority under section 507(g). The comments appear to assert that DOE
has authority independent of section 507(g) to require fuel use
regardless of the fleets that are covered.
D. November 2002 Meeting
In November of 2002, representatives of the National Association of
Fleet Administrators (NAFA) met with DOE officials to express their
views on the private and local government fleet rulemaking. DOE stated
at that time that it was working on a draft. NAFA representatives
stated that its members are opposed to additional mandates, including
requirements to purchase AFVs. With respect to the replacement fuel
goal, NAFA expressed concern that DOE would establish a replacement
fuel goal that would not accomplish any societal objective or any of
the stated objectives of EPAct, but that was gerrymandered so that it
would serve as the basis for DOE to establish an AFV acquisition
mandate for private and local government fleets.
III. Private and Local Government Fleet Determination
A. Statutory Requirements
EPAct section 507(e) directs DOE to determine whether private and
local government fleets should be required to acquire AFVs. In this
respect, the rulemaking process for the private and local government
fleet rule is very different from the previous rulemaking on the State
government and alternative fuel provider fleet rule. In the case of the
State government and alternative fuel provider fleet rule, DOE was not
required to make any findings in order to promulgate a fleet rule. The
determination of whether to adopt regulations for private and local
government fleets, however, is conditional and depends on DOE first
making several critical findings. Regulations covering private and
local government fleets, if adopted, would in other respects likely be
similar to those already in place for State government and alternative
fuel provider fleets. As described above, these regulations essentially
require that a percentage of a covered fleet's annual acquisitions of
light-duty vehicles must be AFVs. See Alternative Fuel Transportation
Program, 10 CFR Part 490. Section 507(g) sets forth a tentative AFV
acquisition schedule for private and local government fleets should DOE
establish such a program.
Section 507(e) sets forth the requirements for determining whether
a private and local government fleet program is ``necessary.'' Section
507(e)(1) states that:
* * * Such a program shall be considered necessary and a rule
therefor shall be promulgated if the Secretary [of Energy] finds
that--(A) the goal of replacement fuel use described in section
502(b)(2)(B), as modified under section 504, is not expected to be
actually achieved by 2010, or such other date as is established
under section 504, by voluntary means or pursuant to this title or
any other law without such a fleet requirement program, taking into
consideration the status of the achievement of the interim goal
described in section 502(b)(2)(A), as modified under section 504;
and (B) such goal is practicable and actually achievable within
periods specified in section 502(b)(2), as modified under section
504, through implementation of such a fleet requirement program in
combination with voluntary means and the application of other
programs relevant to achieving such goals.
(42 U.S.C. 13257(e)(1))
The question addressed in this portion of this SUPPLEMENTARY
INFORMATION is whether a fleet rule is ``necessary'' under the section
507(e) standard. DOE believes that a determination of whether a fleet
rule is ``necessary'' depends on the following factors: The amount of
replacement fuel use that would result if such a program would adopted
(i.e., whether it provides more than a very small percentage
contribution to overall U.S. use of replacement fuels in motor
vehicles); the level of certainty about the contribution such program
might make; whether the replacement fuel use resulting from such a
fleet rule could be encouraged through other means, including voluntary
measures; and whether certain necessary market conditions (e.g.,
whether alternative fuel and suitable AFVs are sufficiently available)
exist to support a new fleet rule.
B. Rationale for the Private and Local Fleet Determination
Statutory Limitations
As described above, while EPAct authorizes DOE to mandate certain
vehicle acquisitions, it severely limits the universe of fleets that
would be covered by a private and local government fleet mandate, thus
limiting the replacement fuel use that would result from such a
program. The definition for ``fleet'' in EPAct section 301(9), (42
U.S.C. 13211(9)), limits coverage to large, centrally-fueled fleets
located in major metropolitan areas. Only those fleets that operate or
own at least 50 or more light duty vehicles may be considered for
coverage. In addition, the definition of fleet specifically excludes
from coverage a number of vehicle types and classes (e.g., rental
vehicles, emergency vehicles, demonstration vehicles, vehicles garaged
at personal residences at night, etc.). Vehicles that tend to use
larger amounts of fuel, medium- and heavy-duty vehicles, are also
excluded from coverage.
Even for potentially covered fleets, EPAct section 507(i) provides
several opportunities for regulatory relief through exemptions for non-
availability of appropriate AFVs and alternative fuels. Specifically,
any private and local government fleet rule ``shall provide for the
prompt exemption'' by DOE of any fleet that demonstrates AFVs ``that
meet the normal requirements and practices of the principal business of
the fleet owner are not reasonably available for acquisition,''
alternative fuels ``that meet the normal requirement and practice of
the principal business of the fleet owner are not available in the area
in which the vehicles are to be
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operated,'' or for government fleets, if the requirements of the
mandate ``would pose an unreasonable financial hardship.'' Section
507(a)(3) further reinforces these exemptions: ``Nothing in [Title V of
EPAct] shall be construed as requiring any fleet to acquire alternative
fueled vehicles or alternative fuels that do not meet the normal
business requirements and practices and needs of the fleet.''
Taken together, these statutory exemptions would likely
dramatically lower the number of fleets and fleet vehicles subjects to
a private and local government AFV acquisition mandate. The provision
concerning state and local government might not be implicated by a
majority of otherwise covered government fleets, since in times when
local government budgets are particularly stretched and many local
governments are required to cut services or raise taxes to maintain
existing levels of service, there will be greater likelihood that
petitions for exemption from hard-pressed local governments would be
granted. Even if DOE were disinclined to grant such petitions, the
prospects that these petitions must be considered would create a ``stop
and go'' quality about the local government portion of a private and
local government fleet requirement program.
The ability of a private and local government fleet rule to affect
petroleum consumption also depends, in significant part, on whether DOE
can require covered fleets to use alternative or replacement fuels in
addition to requiring that they acquire AFVs. DOE's experience with
fleet programs demonstrates that vehicle acquisition requirements alone
result in a relatively small (in the context of overall U.S. fuel
consumption) amount of petroleum replacement. However, as will be
explained below, DOE believes it does not have the authority, were it
to promulgate a private and local government fleet mandate program, to
require that the vehicles acquired use any particular fuel, including
alternative fuels.
The only explicit requirement for fuel use in EPAct is contained in
section 501, which extends only to alternative fuel provider fleets.
Section 501(a)(4) states that ``vehicles purchased pursuant to this
section shall be operated solely on alternative fuels except when
operating in an area where the appropriate alternative fuel is
unavailable.'' Section 507, which concerns private and local government
fleets, does not contain a similar provision, nor does it contain a
provision either authorizing DOE to mandate fuel use or explicitly
prohibiting DOE from mandating fuel use. Therefore, DOE recognizes that
it may be argued that section 507's silence leaves the issue of
imposing a requirement to use alternative fuel open to DOE rulemaking
authority.
However, DOE believes the more appropriate interpretation is that,
because Congress specifically required use of alternative fuel in
section 501(a)(4), but not in section 507, the omission was deliberate.
As a result, DOE believes that Congress did not intend for DOE, when
acting under section 507, to have authority to promulgate regulations
containing a requirement that fleet vehicles use particular types of
fuel.
Although this textual analysis is sufficient to support DOE's
determination that it should not impose a fuel use requirement under
section 507(e) and (g), it also is worthwhile to revisit Congressman
Philip Sharp's remarks when he called up the conference report on EPAct
for House approval. Congressman Sharp was one of the key architects of
EPAct, and the floor manager for the bill in the U.S. House of
Representatives. Congressman Sharp said:
Under section 501, covered persons must actually run their
alternative fueled vehicles on alternative fuels when the vehicle is
operating in an area where the fuel is available. This requirement
was not included in the fleet requirement program under section 507,
because the conferees were concerned that the alternative fuel
providers might charge unreasonable fuel prices to the fleets that
are not alternative fuel providers if such fleets were required to
use the alternative fuel.
138 Cong. Rec. H11400 (October 5, 1992).
Thus, Congressman Sharp's floor statement is fully consistent with
DOE's interpretation that it does not have statutory authority to
mandate fuel use under a section 507 fleet program, and that in
enacting section 507, Congress specifically intended to withhold that
authority from the agency.
Finally, DOE is also limited in its authority to affect other
market behavior. Section 504(c) precludes DOE from promulgating rules
that would:
* * * mandate the production of alternative fueled vehicles or
to specify, as applicable, the models, lines, or types of, or
marketing or pricing practices, policies, or strategies for,
vehicles subject to this Act. Nothing in this Act shall be construed
to give the Secretary authority to mandate marketing or pricing
practices, policies, or strategies for alternative fuels or to
mandate the production or delivery of such fuels.
(42 U.S.C. 13254(c))
These limitations severely restrict DOE's opportunities to affect
the use of replacement fuel, or to establish the market conditions
necessary to support a private and local government fleet rule.
In addition to all of these provisions, Congress furthermore
enacted a petition provision in section 507(n). That section provides:
As part of the rule promulgated * * * pursuant to subsection * *
* (g) of this section, the Secretary shall establish procedures for
any fleet owner or operator or motor vehicle manufacturer to request
that the Secretary modify or suspend a fleet requirement program * *
* nationally, by region, or in an applicable fleet area because, as
demonstrated by the petitioner, the infrastructure or fuel supply or
distribution system for an applicable alternative fuel is inadequate
to meet the needs of a fleet. In the event that the Secretary
determines that a modification or suspension of the fleet
requirements program on a regional basis would detract from the
nationwide character of any fleet requirement program established by
rule or would sufficiently diminish the economies of scale for the
production of alternative fueled vehicles or alternative fuels and
thereafter the practicability and effectiveness of such program, the
Secretary may only modify or suspend the program nationally. The
procedures shall include provisions for notice and public hearings.
The Secretary shall deny or grant the petition within 180 days after
filing.
(42 U.S.C. 13257(n))
Thus, even if DOE had authority to require alternative fuel use or
could adopt an approach that awarded credits (e.g., Fleet Rewards) for
fuel use, the ``normal requirements and practices'' provisions in
sections 507(i)(1) and 507(g)(3), described above, and the petition
procedure for modification or suspension of a fleet requirement program
under section 507(n), would likely result in many fleets potentially
covered by the fleet rule in the first instance being able to obtain
relief from the rules requirements.
Consequently, it is fair to say that there is an unusually high
degree of regulatory uncertainty built into Title V of EPAct, and that
Congress has substantially limited the effectiveness of any fleet
program that might be promulgated under section 507. The nature of the
exemption and petition procedures and the associated regulatory
uncertainty would undermine the potential effectiveness of a regulatory
mandate to purchase significant numbers of alternative fueled vehicles,
and accordingly, support today's proposed finding that a private and
local government fleet requirement program would make no appreciable
contribution to actual achievement of
[[Page 10339]]
any replacement fuel goal and therefore is not ``necessary'' under the
section 507(e) standard.
Analysis of Potential Replacement Fuel Use
The limitations on the potential contributions of a private and
local government fleet program identified above are supported by
analyses conducted for and by DOE. In both Technical Report 14 and the
Section 506 Report, estimates of the potential replacement fuel use
from a private and local government fleet program were very similar.
Technical Report 14 estimated total fuel use from all EPAct fleet
programs to be approximately 1.2 percent of U.S. gasoline use (p. 63,
Table III-21). The Section 506 Report was only slightly more
optimistic, indicating that ``[a]lternative fuel use by EPACT covered
fleets, even with the contingent mandates for private and local
government fleets, is unlikely to provide more than about 1.5 percent
replacement fuel use * * *'' Section 506 Report at p. 35 In either
case, subtracting out the portion of replacement fuel use represented
by the existing (Federal, State, and alternative fuel provider) fleet
programs, would leave the potential private and local government fleet
program contribution at closer to 1 percent. It should be noted that
both reports chose to include calculations based only upon the
percentage of light-duty fuel use, represented as solely gasoline at
the time of these reports. Therefore, replacement fuel use from the
private and local government fleet program when viewed as a percentage
of all on-highway motor fuel use would be on the order of 0.7 to 0.8
percent.
Both the analyses in Technical Report 14 and the Section 506 Report
were conducted before DOE had much experience with implementation and
operation of the EPAct fleet programs. This experience has shown that
the number of fleets originally envisioned to be covered was far larger
than actually occurred.
Estimates prepared by Oak Ridge National Laboratory indicated that
approximately 380,000 AFVs would be acquired annually pursuant to the
various AFV acquisition mandates in EPAct, if a private and local
government fleet program were promulgated and once all EPAct programs
reached their maximum mandated percentage requirements. (See TAFV Model
Report, p. 25, and Technical Documentation of the Transitional
Alternative Fuels and Vehicles TAFV Model, Model Version 1.0, ONRL,
July 1997, table 10, pp. 32-33 (hereafter, TAFV Documentation)). More
specifically, fleets covered by the current Federal Government, State
Government, and Alternative Fuel Provider fleet programs were projected
to require approximately 60,000 AFVs each year, while private and local
government fleets were projected to require approximately 320,000
vehicles each year. Based upon replacement rates of 3 years for private
fleet cars, 4.5 years for private fleet light trucks, and 6.75 years
for all local government light-duty vehicles, this equates to a total
covered fleet vehicle population of approximately 1.87 million light-
duty fleet vehicles at the maximum AFV acquisition requirement of 70
percent.
The TAFV model, however, has proven to be incorrect for fleets
currently subject to EPAct AFV acquisition requirements. That model
estimated that the current EPAct fleet programs would result in
approximately 60,000 AFV acquisitions annually, but DOE's experience
with those programs shows that the covered fleets are acquiring closer
to 20,000 to 25,000 AFVs per year. (See Federal Fleet and State and
Fuel Provider programs at http://www.ott.doe.gov/epact.) Based on this
experience, which DOE believes would likely be replicated with respect
to private and local government fleets, the TAFV estimate of AFV
acquisitions that would result from a private and local government
fleet mandate probably is 2 to 2 \1/2\ times the actual level of AFV
acquisitions that would result. Thus, annual AFV acquisitions resulting
from a potential private and local government fleet AFV acquisition
mandate probably would be in the neighborhood of 130,000 to 160,000,
with total covered light-duty fleet vehicles of approximately 750,000.
Similarly, DOE's experience has also been that fleets not required to
use alternative fuel often tend to acquire FFVs or bi-fuel vehicles,
and operate them on gasoline. There is no reason to believe the results
would be any different with private and local government fleets.
A more recent analysis, The Alternative Fuel Transition: Results
from the TAFV Model of Alternative Fuel Use in Light-Duty Vehicles
1996-2000 (ORNL.TM2000/168) (September 17, 2000) [hereinafter TAFV
Model Report], http://pzl1.ed.ornl.gov/tafv99report31a_ornltm.pdf,
appears to incorporate more realistic assumptions regarding these fleet
programs. The TAFV Model Report states that, ``In particular, over all
of the price scenarios, we find that the [private and local government
fleet] rule increases the alternative fuel penetration in 2010 from
0.12% (without the private and local government rule) to, at most,
0.37% [with a private and local government rule] of total fuel sales.''
TAFV Model Report at p. 28 Thus, this analysis placed contributions
from the private and local government fleet rule at 0.25 percent.
Again, as with Technical Report 14 and the Section 506 Report, the
percentages were based only upon fuel use by light-duty vehicles.
Therefore, the contribution from a potential rule drops below 0.2
percent when compared against all on-highway motor fuel use.
Thus, a potential private and local fleet program under authority
provided to DOE by EPAct would be expected to contribute, at best, an
extremely small amount toward achievement of replacement fuel goals.
Even without the statutory limitations in EPAct described above, such a
contribution would still be very small.
Infrastructure and Fuel Availability
During the ANOPR and public workshops, a number of commenters
expressed their concern that alternative fuel infrastructure was not
adequate to support a private and local government fleet rule. Since
that time, it is DOE's view that fuel provider investments in
alternative fuel infrastructure have in fact slowed down. In the early
1990's, shortly after EPAct's passage, a significant number of natural
gas and electric utilities entered the transportation fuels market,
hoping to market alternative fuels to fleets subject to the Clean Air
Act and EPAct. The number of alternative fuel stations, natural gas
stations in particular, grew from little more than a handful to several
thousand. The total number of alternative fuel stations, however,
appears to have stalled or slightly declined in the past few years. See
Department of Energy, Alternative Fuel Data Center, Refueling Stations
(http://www.afdc.doe.gov/refuel/state_tot.shtml) (Dec. 2002)
[hereinafter AFDC Refueling Stations].
Restructuring in the utility industry and the lack of demand for
alternative fuels have played a part in the reduced role of utilities
in the development of these facilities. Under existing fleet mandates
and voluntary programs, electric utilities have expressed their
discouragement at the lack of EVs on the road. A private and local
government fleet rule probably would not appreciably affect that
calculus given the small percentage of vehicles covered fleets would
seek to operate on those fuels. Therefore, it is DOE's view that, if it
were to adopt an AFV acquisition requirement for private and local
government fleets, there is no assurance
[[Page 10340]]
or even any demonstrable likelihood that utilities would invest in the
infrastructure needed to support these fleets.
The ethanol industry also has made only limited investment in
building infrastructure for supplying E-85, the fuel used by ethanol
FFVs, of which there are several million in service today. That
industry has primarily focused its attention on supplying the gasohol
and gasoline oxygenate market. DOE furthermore has concerns that if, in
the future, the demand for ethanol blends increases as a result of
market forces outside of any DOE mandate, there could be a lack of
domestic ethanol to meet the demand for E-85. Today, there are only
approximately 150 fueling outlets nationwide that provide E-85. See
AFDC Refueling Stations.
Major energy suppliers, principally oil companies, have been
unwilling to invest in the alternative fuels market (or they have
actively opposed it) and instead have primarily focused their attention
on ensuring that gasoline and diesel fuels meet current and future
environmental regulations. Thus, DOE does not expect that the major oil
retailers would install infrastructure necessary to support a private
and local government fleet rule given the extremely small amount of
replacement fuel use that likely would result from such a mandate;
certainly that infrastructure is not in place now. This lack of
infrastructure is likely to result in exemption requests and petitions
to suspend any fleet requirement program DOE might impose under section
507(e), and DOE's granting of those requests.
Alternative Fueled Vehicle Availability
Automakers have for several years now offered some variety of AFVs,
including passenger cars, light-duty pickup trucks and vans. The
availability of these vehicles is in stark contrast to when EPAct was
passed. In 1992, there were virtually no OEM vehicles available that
operated on alternative fuel. Consumers and fleets had to have an
existing gasoline vehicle converted by an aftermarket shop if they
wanted an AFV. The AFVs that are available today are built by auto
manufacturers for two primary purposes: (1) To meet the needs of the
fleets currently subject to fleet mandates; and, (2) to provide credits
to automakers that can be used to meet the corporate average fuel
economy (CAFE) standards. Automobile manufacturers are awarded CAFE
credits as an incentive develop a fleet of AFVs that will in turn lead
to the development of infrastructure to support alternative fuel use.
Manufacturers currently offer up to a million new FFVs each year. Other
AFVs are available in significantly lower numbers, generally on the
order of 10,000 per year.
DOE is concerned that if it adopts a requirement for private and
local government fleets to acquire AFVs, there may not be an adequate
supply of suitable AFVs available. The number of AFVs that likely would
be acquired under a private and local government fleet mandate are, in
DOE's view and based on the comments it has received, insufficient to
create the market demand that would cause manufacturers to build
sufficient numbers of AFVs, suitable for the covered fleets, at
affordable prices. Under the existing State government and alternative
fuel provider fleet programs, DOE has been obliged to provide
exemptions to a number of fleets that are unable to acquire AFVs that
meet their business needs. Unless automakers significantly expand their
current offerings of AFVs, DOE likely would be forced to process and
approve thousands of exemption requests each year.
Because EPAct expressly prohibits DOE from mandating the production
of AFVs or to specify the types of AFVs that are made available, there
is little that DOE can do, outside of the voluntary efforts already
underway with vehicle manufacturers, to ensure that adequate supplies
suitable of AFVs would be available.
Alternative Fuel Costs and Alternative Fuel Use
At the present time, the cost of some alternative fuels (such as
biofuels) exceeds the cost of conventional motor fuel, and it is
reasonable to assume that, absent changes in technology, in the supply
of petroleum, or in policy as established by law, the price
differential will continue and will influence fleet owners and
operators for the foreseeable future. The likely effect of the price
differential is predictable in light of DOE's experience in
administering the State government fleet requirement program under
section 507(o) of EPAct. Most State government fleets are acquiring
significant numbers of FFVs and operating them lawfully using
conventional motor fuels. Although this practice in part may be a
function of lack of infrastructure, the fuel cost differential of
ethanol is probably a significant contributing factor. There is no
reason to assume that the result would be any different--and
substantial reason to believe that the result would be exactly the
same--if DOE were to impose a private and local government fleet
requirement program under section 507(e).
Discussion of Previous Proposals
DOE considered but ultimately has decided not to propose a Fleet
Rewards or Replacement Fuel Program, or any of the tax credit, tax
incentive, or other programs discussed in the earlier stages of this
rulemaking proceeding. Many commenters supported these concepts, but
few offered any arguments that DOE had authority to implement such
programs under section 507(e). On the other hand, a number of comments
did question whether DOE had sufficient legal authority to promulgate
or implement them. DOE believes it has no legal authority under EPAct
to promulgate the tax credit and tax incentive programs that were
discussed by DOE and commenters, and believes it is doubtful DOE has
authority to promulgate the other types of incentive programs
discussed.
One advantage of the Fleet Rewards program was that it did not
require fuel use, so it was not an explicit fuel use requirement; it
would have allowed fuel use credits to be used instead of requiring
vehicle acquisitions. Therefore, the program would not have been an
explicit fuel use mandate, which DOE believes it has no authority to
promulgate. Even so, DOE still has serious doubt about its authority to
adopt such a program under section 507 because EPAct only provides
credits for vehicle acquisitions. Specifically, EPAct section 508 sets
forth a detailed crediting system, but allows credits to be earned only
for AFV acquisitions, not fuel use or some other action. Moreover, even
if DOE did have authority to provide credits for fuel use, DOE believes
that there would be little incentive for most fleets to choose this
option, since they could comply by acquiring FFVs that have little or
no incremental cost, and could operate them on gasoline.
In any event, a Fleet Rewards or Replacement Fuel Program would be
of little use unless it was accompanied by a mandate for vehicle
acquisitions or fuel use; those programs would be alternative methods
to comply with the mandates. Because DOE is proposing to determine that
a private and local government program is not ``necessary'' and thus
cannot and should not be promulgated, there is no reason or need for
DOE to consider or propose adopting a Fleet Rewards or Replacement Fuel
Program in this notice. Furthermore, coupling a Fleet Rewards or
Replacement Fuel Program with a private and local government fleet AFV
acquisition mandate would be extremely unlikely to change significantly
the amount of estimated
[[Page 10341]]
alternative and replacement fuel use by covered fleets and thus would
not alter the analysis described above as to whether a fleet program is
``necessary.'' There is no evidence that the Fleet Rewards or
Replacement Fuel Programs would result in enough fuel use to
significantly change the economics and practicability of using
alternative or replacement fuels, and therefore there is no evidence
that such programs would affect covered fleets' willingness or ability
to use alternative or replacement fuels to any appreciable degree.
Summary of Determination
For the reasons stated in this part of the SUPPLEMENTARY
INFORMATION, DOE proposes to determine that a private and local
government fleet requirement rule under sections 507(e) and (g) of
EPAct is not ``necessary,'' and therefore should not be imposed. Such a
mandate would make no appreciable contribution (less than 0.2 to 0.8
percent of on-highway motor fuel use) toward achievement of the 2010
replacement fuel goal in EPAct section 502 or a revised goal, and even
this extremely small contribution is highly uncertain. As a result, DOE
cannot make either of the two determinations set forth in section
507(e), both of which must be determined in the affirmative before a
private and local government fleet requirement program can be
determined to be ``necessary'' and thus implemented. At this time, DOE
cannot determine that the 2010 replacement fuel goal in EPAct (or a
revised goal) is not expected to be achieved ``without such a fleet
requirement program,'' or that the replacement fuel goal can be
achieved ``through implementation of such a fleet requirement program''
in combination with other means.
First, there are the limitations in EPAct itself, which include:
(1) Limitations on the coverage of a private and local government fleet
requirement program to only certain light-duty vehicle fleets; (2)
procedures allowing case-by-case exemptions; and (3) DOE's lack of
authority to require alternative or replacement fuel use or to create
an effective substitute regulatory program. Second, even if DOE imposed
AFV acquisition requirements, market conditions will encourage covered
fleets to file petitions seeking modification and/or suspension of the
entire fleet requirement program and/or its application to specific
fleets and vehicles. Those conditions, which are likely to persist for
the foreseeable future, are: (1) Lack of an alternative fuel
infrastructure; (2) unavailability of suitable AFVs; and (3) high
alternative fuel costs (for certain fuels) relative to the costs of
conventional motor fuels.
On the basis of the foregoing, DOE today proposes to determine that
a private and local government fleet requirement program is not
``necessary'' under the standards set forth in EPAct section 507(e) and
therefore cannot and should not be promulgated.
C. Determination for Fleet Requirements Covering Urban Transit Bus
Option and Law Enforcement Vehicles
Section 507(k)(1) of EPAct provides in relevant part: ``If the
Secretary determines, by rule, that the inclusion of fleets of law
enforcement motor vehicles in the fleet requirement program established
under subsection (g) would contribute to achieving the [replacement
fuel] goal described in section 502(b)(2)(B) * * * and the Secretary
finds that such inclusion would not hinder the use of the motor
vehicles for law enforcement purposes, the Secretary may include such
fleets in such program * * *.'' (emphasis added). Section 507(k)(2)
contains similar language with regard to new urban buses. 42 U.S.C.
13257(k)(1) and (2).
DOE considered whether to interpret section 507(k) to mean that law
enforcement vehicle fleets and urban buses must be considered in making
a determination under section 507(e) and (g) as to whether a private
and local government fleet acquisition mandate program is ``necessary''
or, alternatively, whether a rulemaking to consider whether law
enforcement fleets and urban buses should be covered by a fleet
acquisition mandate only may follow completion of a rulemaking under
section 507(e) and (g) that determines a private and local government
fleet acquisition program is ``necessary'' and that promulgates such a
program. In DOE's view, EPAct prohibits DOE from considering law
enforcement vehicle fleets when making the ``necessary'' determination
under sections 507(e) and (g) because such fleets are specifically
excluded from the statutory definition of the term ``fleet'' (42 U.S.C.
13211(9)). Similarly, it is DOE's view that EPAct prohibits DOE from
considering urban buses when making the ``necessary'' determination
under sections 507(e) and (g) because the statutory definition of the
term ``fleet'' is limited to ``light duty vehicles'' which are vehicles
no more than 8,500 lbs. GVWR, and under the definition of ``urban bus''
referenced in section 507(k) and contained in 40 CFR 86.093-2, most
urban buses would not qualify as light duty vehicles.
Furthermore, sections 507(k)(1) and (2) specifically refer to ``the
fleet requirement program established under subsection (g).'' In DOE's
view, the better interpretation of section 507(g) is that it did not in
and of itself ``establish'' a fleet requirement program. That section
merely sets forth a vehicle acquisition schedule that, in order to have
any applicability or force at all, must be implemented by DOE with a
rule promulgated pursuant to a determination under section 507(e) that
a private and local government fleet rule is ``necessary.'' As a
result, in order for section 507(k) to come into operation, a private
and local government fleet program first must be ``established'' by DOE
pursuant to the authority in sections 507(e) and (g). Although it is
perhaps arguable that subsection (k) could be construed to merely refer
to subsection (g) without the necessity for DOE to have first acted to
establish a private and local fleet program under sections 507(e) and
(g), this alternative interpretation is not as reasonable as DOE's
interpretation in view of the text of the statutory definition of
``fleet'' and the use of that term in subsection (g).
Moreover, in DOE's view, this alternative interpretation is
undesirable as a matter of policy. First of all, with respect to urban
transit buses, during the earlier stages of this rulemaking some
commenters argued that an AFV acquisition mandate should not be imposed
on urban transit buses because the buses and their riders already were
reducing petroleum consumption by the fact the riders were not using
their personal cars. These commenters argued that imposing an AFV
acquisition mandate could raise the cost of riding an urban transit
bus, which could then reduce ridership and actually increase petroleum
consumption by causing riders to return to driving their cars. DOE
agrees with these concerns.
Second, and with respect to law enforcement vehicles, EPAct already
expresses a policy that such vehicles should not be considered
``fleets.'' DOE believes that, as a matter of policy, it should not
seek to impose mandates on law enforcement authorities until a mandate
first was extended to other local governmental fleets, both because the
numbers are insufficient to appreciably change the overall analysis of
the necessity or desirability of a private and local government fleet
mandate program, and because commenters generally did not support
imposing mandates on such fleets. Therefore, on the basis of the
foregoing, today's rulemaking notice does not address law enforcement
fleets and urban buses under section 507(k).
[[Page 10342]]
IV. Whether To Modify Replacement Fuel Goal
DOE has decided not to propose modification of the 2010 replacement
fuel goal of 30 percent in this notice of proposed rulemaking. As noted
earlier, the process of determining whether to adopt a regulatory
requirement for private and local fleets depends on whether such a rule
is ``necessary'' to achieve EPAct's petroleum replacement fuel goals.
As part of the process of evaluating whether to propose AFV acquisition
mandates for private and local government fleets pursuant to EPAct
section 507, DOE reviewed the replacement fuel goals in EPAct section
502 and considered whether to revise them, but decided for several
reasons that it would not propose any such modifications.
First of all, EPAct does not require DOE to revise the petroleum
replacement fuel goal in order for DOE to determine whether a private
and local government fleet rule is ``necessary.'' Although section
507(e)(2) permits DOE to modify the replacement fuel goal in the
context of making a private and local government fleet determination,
the statute does not require the goals to be modified.
Second, DOE believes it would not promote the right incentives or
actions to propose modifications to the 2010 replacement fuel goal at
this time. Congress in 1992 created by statute (in EPAct section
502(b)(2)) an initial national goal of using replacement fuels for at
least 10 percent of motor fuel used in the United States in 2000, and a
long-term goal of at least 30 percent in 2010, on a petroleum fuel
energy equivalent basis. EPAct's legislative history does not explain
why Congress chose these particular goals and dates, nor does it
provide any analysis supporting them. However, and in light of the
overall purposes of EPAct, DOE believes that Congress set these
particular goals to establish aggressive aspirational petroleum
reduction targets for the Federal government and the public. Congress
apparently intended to encourage action that would aggressively advance
the availability and use of replacement fuels. DOE believes that the
goals as set in EPAct were intended to encourage actions that would
lead to significant increases in replacement fuel use.
Since EPAct's enactment in late 1992, the Federal government has
implemented a number of regulatory and voluntary programs in an effort
to increase the use and availability of replacement fuels. These
programs are discussed in more detail in the Introduction section of
this SUPPLEMENTARY INFORMATION. While these programs have had a
favorable impact on the environment and on the use of alternative fuels
and replacement fuels, these programs have not had the desired effect
of greatly increasing the availability or use of alternative and
replacement fuels, or of causing the use of replacement fuels to become
a viable alternative, on a large-scale basis, to the use of petroleum-
based fuels in vehicles. The result is that although the use of
replacement and alternative fuels has increased since 1992, the overall
use of these fuels relative to total petroleum consumption remains
relatively small. In 1992, replacement fuels accounted for slightly
less than 2 percent of total motor fuel consumption; by 2001,
replacement fuels accounted for less than 3 percent. See Transportation
Fuels 2000 at Table 10. Thus, to date, very little progress has been
made toward achieving the aggressive goals established by EPAct and
little progress will be made in the future without major new
initiatives.
At the same time, DOE takes note of the fact that Congress is
widely expected to take up comprehensive legislation that may
significantly affect our nation's energy future and may bear
importantly not only on the achievability of the current goals but also
on what any potential revised goals might be. Moreover, the President
and DOE have proposed bold initiatives to dramatically increase the
availability, use and commercial viability of replacement fuels in the
transportation sector. DOE's primary efforts are focused on the long-
term goal of developing the technology and infrastructure to allow
hydrogen to become a key motor vehicle fuel. These efforts, if fully
supported with necessary enabling legislation and funding as DOE has
proposed, offer the potential to achieve the long term goal of
replacing petroleum as the primary transportation fuel.
In light of the momentum that these various efforts are
engendering; in light of what DOE understands to be the principal
purpose of EPAct's replacement goals in section 502(b)(2)--to encourage
policymakers, industry and the public to engage in aggressive action to
expand the use off alternative and replacement fuels; and in light of
the likelihood of consideration and enactment of new legislation by
this Congress that would have significant bearing on these issues, DOE
has concluded that it should not make a determination under EPAct
concerning the achievability of the 2010 goals at this time. Therefore
DOE is not at this time proposing to change the 2010 replacement fuel
goal set forth in EPAct section 502(b)(2). DOE will continue to
evaluate this issue and may in the future, if it considers appropriate,
review and modify the 2010 replacement fuel goal pursuant to its
authority in EPAct Title V.
V. Opportunity for Public Comment
A. Participation in Rulemaking
Interested persons are invited to participate in this proceeding by
submitting written data, views, or comments with respect to the subject
set forth in this notice and the proposals made by DOE. DOE encourages
the maximum level of public participation possible in this proceeding.
Individual consumers, representatives of consumer groups,
manufacturers, associations, coalitions, States or other government
entities, and others are urged to submit written comments on the
proposal. DOE also encourages interested persons to participate in the
public hearing announced at the beginning of this notice. Whenever
applicable, full supporting rationale, data and detailed analyses
should also be submitted.
B. Written Comment Procedures
Written comments (eight copies) should be identified on the outside
of the envelope, and on the comments themselves, with the designation:
``Alternative Fuel Transportation Program: Private and Local Government
Fleet Determination, NOPR, Docket Number EE-RM-FCVT-03-001'' and must
be received by the date specified at the beginning of this notice. In
the event any person wishing to submit written comments and cannot
provide eight copies, alternative arrangements can be made in advance
by calling Mr. Dana O'Hara at (202) 586-9171. Additionally, DOE would
appreciate an electronic copy of the comments to the extent possible.
Electronic copies should be e-mailed to regulatory--info@afdc.nrel.gov.
DOE is currently using Corel WordPerfect or Microsoft Word.
All comments received on or before the date specified at the
beginning of this notice of proposed rulemaking and other relevant
information will be considered by DOE before final action is taken on
the proposal. All comments submitted will be made available in the
electronic docket set up for this rulemaking. This docket will be
available on the World Wide Web at the following address--
http://www.ott.doe.gov/epact/private_fleets.shtml. Pursuant to the provisions
of 10 CFR 1004.1, anyone
[[Page 10343]]
submitting information or data that he or she believes to be
confidential and exempt by law from public disclosure should submit one
complete copy of the document, as well as seven (7) copies, if
possible, from which the information has been deleted. DOE will make a
determination as to the confidentiality of the information and treat it
accordingly.
C. Public Hearing Procedures
The time and place of the public hearing are set forth at the
beginning of this notice. DOE invites any person who has an interest in
this proceeding, or who is a representative of a group or class of
persons that has an interest, to make a request for an opportunity to
make an oral presentation at the hearing. Requests to speak should be
sent to the address or phone number indicated in the ADDRESSES section
of this notice and should be received by the time specified in the
DATES section of this notice.
The person making the request should briefly describe his or her
interest in the proceeding and, if appropriate, state why that person
is a proper representative of the group or class of persons that has
such an interest. The person also should provide a phone number where
he or she may be reached during the day. Each person selected to speak
at the public hearing will be notified as to the approximate time that
he or she will be speaking. A person wishing to speak should bring ten
copies of his or her statement to the hearing. In the event any person
wishing to speak at the hearing cannot meet this requirement,
alternative arrangements can be made in advance by calling Mr. Dana
O'Hara, at (202) 586-9171.
DOE reserves the right to select persons to be heard at the
hearing, to schedule their presentations, and to establish procedures
governing the conduct of the hearing. The length of each presentation
will be limited to ten minutes, or based on the number of persons
requesting to speak.
A DOE official will be designated to preside at the hearing. The
hearing will not be a judicial or an evidentiary-type hearing, but will
be conducted in accordance with 5 U.S.C. 553 and section 501 of the
Department of Energy Organization Act. (42 U.S.C. 7191). At the
conclusion of all initial oral statements, each person may, if time
allows, be given the opportunity to make a rebuttal statement. The
rebuttal statements will be given in the order in which the initial
statements were made.
Any further procedural rules needed for the proper conduct of the
hearing will be announced by the Presiding Officer at the hearing.
If DOE must cancel the hearing, DOE will make every effort to
publish an advance notice of such cancellation in the Federal Register.
Notice of cancellation will also be given to all persons scheduled to
speak at the hearing. The hearing may be canceled in the event no
public testimony has been scheduled in advance.
VI. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
Civil Justice Reform, 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b) of Executive Order 12988
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines issued by the Attorney
General. Section 3(c) of Executive Order 12988 requires Executive
Agencies to review regulations in light of applicable standards in
section 3(a) and 3(b) to determine whether they are met or it is
unreasonable to meet one or more of them. Executive Order 12988 does
not apply to this rulemaking notice because DOE is not proposing any
regulations and instead is proposing to determine that regulations are
not ``necessary'' under section 507(e) and (g) of EPAct.
VII. Review Under Executive Order 12866
This proposed regulatory action has been determined to be a
``significant regulatory action'' under Executive Order 12866,
Regulatory Planning and Review. See 58 FR 51735 (October 4, 1993).
Accordingly, today's action was subject to review under the Executive
Order by the Office of Information and Regulatory Affairs (OIRA). A
draft of today's action and any other documents submitted to OIRA for
review are a part of the rulemaking record and are available for public
review as provided in the ADDRESSES section of this notice of proposed
rulemaking.
VIII. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980, Public Law 96-354, 5 U.S.C.
601-612, requires preparation of a regulatory flexibility analysis for
any rule that is likely to have a significant economic impact on a
substantial number of small entities. The proposed negative
determination under EPAct section 507(e) would not result in compliance
costs on small entities. Therefore, DOE certifies that today's proposed
determination will not have a significant economic impact on a
substantial number of small entities, and accordingly, no initial
regulatory flexibility analysis has been prepared.
IX. Review Under the Paperwork Reduction Act
Because DOE has proposed not to promulgate requirements for private
and local government fleets, no new record keeping requirements,
subject to the Paperwork Reduction Act, 44 U.S.C. 3501, et seq., would
be imposed by today's regulatory action.
X. Review Under the National Environmental Policy Act
The proposed rule would determine that a regulatory requirement for
the owners and operators of certain private and local government light-
duty vehicle fleets to acquire alternative fueled vehicles would make
no appreciable contribution to actual achievement of the replacement
fuel goal in EPAct or a revised goal, and therefore is not
``necessary'' under EPAct section 507(e). The ``to its achievement. The
negative determination regarding the necessity for a fleet requirement
program would not require any government entity or any member of the
public to act or to refrain from acting. Accordingly, DOE has
determined that its proposed determination is covered under the
Categorical Exclusion found at paragraph A.5 of Appendix A to Subpart
D, 10 CFR Part 1021, which applies to rulemakings interpreting or
amending an existing rule or regulation that does not change the
environmental effect of the rule or regulation being interpreted or
amended.
XI. Review Under Executive Order 13132
Executive Order 13132, Federalism, 64 FR 43255 (August 4, 1999),
imposes
[[Page 10344]]
certain requirements on agencies formulating and implementing policies
or regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the States and carefully assess the
necessity for such actions. DOE has examined today's proposed
determination and has determined that it would not preempt State law
and would not have a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.
XII. Review of Impact on State Governments--Economic Impact on States
Section 1(b)(9) of Executive Order 12866, Regulatory Planning and
Review, 58 FR 51735 (September 30, 1993), established the following
principle for agencies to follow in rulemakings: ``Wherever feasible,
agencies shall seek views of appropriate State, local, and tribal
officials before imposing regulatory requirements that might
significantly or uniquely affect those governmental entities. Each
agency shall assess the effects of Federal regulations on State, local,
and tribal governments, including specifically the availability of
resources to carry out those mandates, and seek to minimize those
burdens that uniquely or significantly affect such governmental
entities, consistent with achieving regulatory objectives. In addition,
agencies shall seek to harmonize Federal regulatory actions with
regulated State, local and tribal regulatory and other governmental
functions.''
Because DOE is proposing to determine that a private and local
government fleet AFV program is not ``necessary'' under section 507(e)
and therefore is not proposing the promulgation of such a program, no
significant impacts upon State and local governments are anticipated.
The position of State fleets currently covered under the existing EPAct
fleet program is unchanged by this action. Before reaching these
conclusions, DOE sought and considered the views of State and local
officials. DOE's efforts in this regard are discussed above in the
portion of this SUPPLEMENTARY INFORMATION describing the workshops DOE
conducted on various options for implementing a fleet program.
XIII. Review of Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995, Public Law
104-4, requires each Federal agency to assess the effects of Federal
regulatory actions on State, local and tribal governments and the
private sector. The Act also requires a Federal agency to develop an
effective process to permit timely input by elected officials on a
proposed ``significant intergovernmental mandate,'' and requires an
agency plan for giving notice and opportunity for timely input to
potentially affected small governments before establishing any
requirements that might significantly or uniquely affect small
governments. On March 18, 1997, DOE published in the Federal Register a
statement of policy on its process for intergovernmental consultation
under the Act (62 FR 12820). The notice of proposed rulemaking
published today does not propose or contain any Federal mandate, so the
requirements of the Unfunded Mandates Reform Act do not apply.
XIV. Review of Treasury and General Government Appropriations Act, 1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999, Public Law 105-277, requires Federal agencies to issue a
Family Policymaking Assessment for any proposed rule that may affect
family well-being. Today's notice of proposed rulemaking and proposed
determination would not have any impact on the autonomy or integrity of
the family as an institution. Accordingly, DOE has concluded that it is
not necessary to prepare a Family Policymaking Assessment.
XV. Review of Treasury and General Government Appropriations Act, 2001
The Treasury and General Government Appropriations Act, 2001 (44
U.S.C. 3516, note) provides for agencies to review most disseminations
of information to the public under guidelines established by each
agency pursuant to general guidelines issued by OMB. OMB's guidelines
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed
today's notice under the OMB and DOE guidelines, and has concluded that
it is consistent with applicable policies in those guidelines.
XVI. Review Under Executive Order 13175
Under Executive Order 13175 (Consultation and Coordination with
Indian Tribal Governments), 65 FR 67249 (November 9, 2000), DOE is
required to consult with Indian tribal officials in development of
regulatory policies that have tribal implications. Today's notice and
proposed determination would not have such implications. Accordingly,
Executive Order 13175 does not apply to this notice and proposed
determination.
XVII. Review Under Executive Order 13045
Executive Order 13045 (Protection of Children from Environmental
Health Risks and Safety Risks), 62 FR 19885 (April 23, 1997) contains
special requirements that apply to certain rulemakings that are
economically significant under Executive Order 12866. Today's action is
not economically significant. Accordingly, Executive Order 13045 does
not apply to this rulemaking.
XVIII. Review Under Executive Order 13211
Executive Order 13211 (Actions Concerning Regulations That
Significantly Affect Energy, Supply, Distribution, or Use), 66 FR 28355
(May 22, 2001) requires preparation and submission to OMB of a
Statement of Energy Effects for significant regulatory actions under
Executive Order 12866 that are likely to have a significant adverse
effect on the supply, distribution, or use of energy. A determination
that a private and local government fleet AFV acquisition program is
not ``necessary'' under EPAct section 507(e) does not require private
and local government fleets, suppliers of energy, or distributors of
energy to do or to refrain from doing anything. Thus, although today's
proposed negative determination is a significant regulatory action, if
finalized the determination will not have a significant adverse impact
on the supply, distribution, or use of energy. Consequently, DOE has
concluded there is no need for a Statement of Energy Effects.
Issued in Washington, DC, on February 26, 2003.
David K. Garman,
Assistant Secretary, Energy Efficiency and Renewable Energy.
[FR Doc. 03-4991 Filed 3-3-03; 8:45 am]
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