[Federal Register Volume 66, Number 8 (Thursday, January 11, 2001)]
[Rules and Regulations]
[Pages 2207-2211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-744]
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 490
RIN 1904-AB-00
Alternative Fuel Transportation Program; Biodiesel Fuel Use
Credit
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy (DOE).
ACTION: Final rule.
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SUMMARY: The Department of Energy (DOE) adopts with changes an interim
final rule published on May 19, 1999, to implement the Energy
Conservation Reauthorization Act of 1998 (ECRA). This Act amended title
III of the Energy Policy Act of 1992 (EPACT). ECRA allows fleets that
are required to purchase alternative fueled vehicles under titles III
and V of EPACT to meet these requirements, in part, through the use of
biodiesel fuel use credits. The rule establishes procedures for fleets
and covered persons to request credits for specified biodiesel fuel use
and implements ECRA's credit eligibility and allocation provisions. The
biodiesel fuel use credit gives fleets and covered persons, who are
otherwise required under EPACT to purchase an alternative fueled
vehicle, the option of purchasing and using 450 gallons of biodiesel in
vehicles in excess of 8,500 pounds gross vehicle weight instead of
acquiring an alternative fueled vehicle.
DATES: This final rule is effective February 12, 2001.
[[Page 2208]]
FOR FURTHER INFORMATION CONTACT: David Rodgers, Office of Energy
Efficiency and Renewable Energy, EE-34, U.S. Department of Energy, 1000
Independence Avenue, SW., Washington, DC 20585, (202) 586-9118.
SUPPLEMENTARY INFORMATION:
I. Introduction and Background
II. Section-by-Section Discussion of Public Comments and Rule
Provisions
A. Section 490.703--Biodiesel Fuel Use Credit Allocation
B. Section 490.704--Procedures and Documentation
C. Section 490.705--Use of Credits
D. Section 490.707--Increasing the Qualifying Volume of the
Biodiesel Component
III. Regulatory and Procedural Requirements
A. Review Under Executive Order 12866
B. Review Under Executive Order 12612
C. Review Under the Regulatory Flexibility Act
D. Review Under the National Environmental Policy Act
E. Review Under the Paperwork Reduction Act
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Congressional Notification
I. Introduction and Background
This notice of final rulemaking concludes a regulatory action that
is mandated under section 7 of the Energy Conservation Reauthorization
Act of 1998 (ECRA), Pub. L. No. 105-388. ECRA adds section 312 to title
III of the Energy Policy Act of 1992 (EPACT), 42 U.S.C. 13211-13219.
Section 312 allows titles III and V fleets and covered persons, that
are required to acquire certain annual percentages of alternative
fueled vehicles, to use biodiesel fuel use credits to meet, in part,
these acquisition requirements. (Although title IV is included as one
of the titles covered in ECRA, this inclusion appears to be a drafting
error since title IV has no mandated acquisition requirements for
fleets and covered persons.) DOE is required to allocate one credit to
fleets and covered persons for using, in certain vehicles, 450 gallons
(or ``qualifying volume'') of the biodiesel component of a motor fuel
containing at least 20 percent biodiesel by volume.
Additionally, the vehicles in which the fuel is used must weigh
more than 8,500 pounds gross vehicle weight rating. Fleets and covered
persons must own or operate these vehicles and the biodiesel fuel must
be used in these vehicles if the fleets and covered persons are to
receive credits. Credits will be allocated only for the biodiesel fuel
purchased after the enactment of ECRA, i.e., November 13, 1998. The
legislation prohibits the allocation of biodiesel fuel use credits for
the purchase of biodiesel when the biodiesel is used in alternative
fueled vehicles that are utilized to satisfy the EPACT alternative
fueled vehicle purchase requirements, or when biodiesel fuel use is
required by Federal or State law. With the exception of biodiesel fuel
providers, allocated credits can be used to satisfy up to 50 percent of
a fleet's or covered person's alternative fueled vehicles requirements.
For biodiesel fuel providers, biodiesel credits can satisfy up to 100
percent of the requirements.
On May 19, 1999, DOE issued an interim final rule (64 FR 27169)
that added a new subpart H to DOE's Alternative Fuel Transportation
Program rules at 10 CFR part 490. The interim final rule became
effective on June 18, 1999. The interim final rule established
procedures for fleets that are required to purchase alternative fueled
vehicles under titles III and V of EPACT to meet these requirements, in
part, through the use of biodiesel fuel use credits. With changes, this
final rule adopts the interim final rule.
II. Section-by-Section Discussion of Public Comment and Rule
Provisions
DOE received from 10 interested organizations comments on the
interim final rule. Most commenters addressed essentially the same
issues.
A. Section 490.703--Biodiesel Fuel Use Credit Allocation
Five commenters all argued that there is no evidence that Congress
intended to compel the use of biodiesel within the model year in which
the biodiesel is purchased. It appears that the commenters wish to
carry forward unused biodiesel to another model year or that they wish
to sell excess purchases of biodiesel to other fleets. DOE believes
that ECRA bases the allocation of biodiesel fuel use credits on
biodiesel purchases. However, DOE points out that ECRA requires that
the fuel must be purchased for use in the covered entities' vehicles to
earn credits. Credits are earned when the fuel is purchased for use in
the covered entities' vehicles, even though the fuel may be used at a
later date. On this issue, DOE explained in the Preamble that ``[t]he
use of biodiesel fuel credit to serve as the acquisition of one
alternative fueled vehicle is restricted to the model year, or the
fiscal year in the case of Federal fleets, in which the biodiesel is
purchased and cannot be carried forward like alternative fueled vehicle
acquisition credits generated under Subpart F.'' DOE reinforced this
statement by citing language from the House of Representatives Commerce
Committee Report 105-727. That report provided that credits ``may only
be used by the fleet or covered person that earned the credits and only
in the year that the credit is issued, so they cannot be traded or
banked.'' H.R. Rep. No. 727, 105th Cong., 2d Sess., at 20 (1998). (See
also the discussion under section 490.705.)
Three commenters submitted similar comments on language contained
in section 490.703 (b). That paragraph prohibits the allocation of
biodiesel fuel use credits if: (1) the biodiesel is used in an
alternative fueled vehicle; or (2) if the biodiesel fuel use is
required by Federal or State law. They argue that there are certain
circumstances where a covered fleet may want to acquire an alternative
fueled vehicle (AFV) as a result of a local, State or Federal incentive
program or policy, unrelated to EPACT AFV purchase requirements.
Allowing fleets to count biodiesel fuel used in AFVs, provided those
AFVs are not used to meet EPACT AFV requirements, according to one
commenter, would increase the flexibility of covered fleets to
integrate biodiesel fuel into their fuel mix. This commenter recommends
that DOE amend the language in section 490.703(b) in two ways. First,
that DOE clarify that the prohibition against allocating a credit for
biodiesel fuel use in AFVs be restricted to only AFVs used to meet
EPACT AFV purchase requirements. DOE agrees with this comment and has
integrated it into the final regulatory language.
Second, this commenter suggests that DOE delete the prohibition
against allocating a credit where biodiesel fuel use is also used to
meet other Federal or State requirements. DOE does not agree with this
comment. The statutory language in ECRA states quite clearly that no
credit can be allocated if the fuel is required by Federal or State
law. This prohibition appears to be intended to prevent fleets from
meeting both EPACT and other Federal and State requirements through the
same biodiesel fuel use.
B. Section 490.704--Procedures and Documentation
Eight commenters argued that the procedures and documentation
requirements of section 490.704 should include only that information
that is necessary to support the verification of the biodiesel fuel
purchase. They claim that asking for information on vehicle make and
model, vehicle model year and vehicle identification number does not
relate to fuel purchases of biodiesel and could make reporting more
onerous. Providing such information would
[[Page 2209]]
impose an unnecessary burden on the reporting entities. DOE agrees that
requesting specific vehicle data may be burdensome, and believes that
asking for such data may reduce the attractiveness of the biodiesel
fuel use credit option. DOE has, therefore, revised the Annual
Alternative Fuel Vehicle Acquisition Report For State Government and
Alternative Fuel Provider Fleets (DOE/OTT/101 form). The revised form
only requests that fleets claiming the biodiesel fuel use credit submit
model year specific biodiesel purchases and that such fleets maintain
records of those purchases for three years. The updated form is posted
on the DOE's Office of Transportation Technologies website at http://www.ott.doe.gov/credits. It can also be obtained by calling the
National Alternative Fuels Hotline at 1-800-423-1DOE.
C. Section 490.705--Use of Credits
Most commenters argued that the language in Sections 705(a) and (b)
is too narrow in limiting the biodiesel fuel use credit to fleets
covered by section 490.201, section 490.302, section 490.307 and title
III of EPACT. A consequence of narrowing the language, according to
these commenters, is that the biodiesel fuel use credit regulation may
not apply to certain private and municipal fleets if DOE adds these
fleets to the Alternative Fuel Transportation Program. These commenters
recommend expanding the regulatory language so that it applies to
fleets or covered persons identified in EPACT titles III and V, rather
than the specific sections in the regulation. DOE believes that the
current regulatory language is appropriate. Specifically, DOE noted in
the Preamble that these fleets would be covered if DOE decides to
include them under this subpart in the Alternative Fuel Transportation
Program. Section 490.701 also acknowledges that Title V fleets are
covered under this subpart. However, DOE recognizes that the rule
language could have been clearer. Therefore the language in sections
705(a) and 705(b) has been amended to include references only to EPACT
titles III and V.
Seven commenters argued that section 490.705(a) should not restrict
the allocation of a biodiesel fuel use credit to the model year in
which it is generated. They also contended that fleets should be able
to trade excess credits to other covered fleets or bank excess credits
for future model years. One commenter asserts that this limitation will
prevent over compliance and reduce the likelihood of achieving higher
volumes and economies of scale in biodiesel production. Six commenters
meanwhile, claim that DOE's reliance on the House of Representatives
Commerce Committee Report 105-727 for this restriction is misplaced.
They contend that this is not the intent of Congress, and that the
restriction would have an adverse impact on the production, sale and
use of biodiesel.
Although DOE respects the commenters' views, DOE has not revised
section 490.705. We believe that both the statutory language and the
House of Representatives Commerce Committee Report support the
restriction. Section 312(b)(1) of EPACT, as amended by ECRA, declares
that a credit is to be allocated in the year in which the purchase of a
qualifying volume of biodiesel is made. Furthermore, section 312(c)
states that a credit under this section shall not be considered a
credit as defined by section 508 of EPACT. DOE believes that this
statutory view is supported by the House of Representatives Commerce
Committee Report 105-727. It stated that biodiesel fuel use credits
``may only be used by the fleet or covered person that earned the
credits and only in the year the credit is issued, so they cannot be
traded or banked.'' \1\ For these reasons, the rule cannot allow
trading or banking of biodiesel fuel use credits. To avoid future
questions on this issue, DOE has added to this section a new paragraph
(d). Paragraph (d) specifically speaks to this prohibition.
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\1\ H.R. Rep. No. 727, 105th Cong., 2d Sess. at 20 (1998).
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D. Section 490.707--Increasing the Qualifying Volume of the Biodiesel
Component
One commenter suggested that DOE annually publish in the Federal
Register the ``qualifying volume,'' which is the amount of biodiesel
purchases required to be allocated one biodiesel fuel use credit. As
reflected in section 490.707, section 312(d) gives DOE authority, via
rulemaking, to increase the qualifying volume. Since the qualifying
volume is set at 450 gallons and cannot be changed except via a
rulemaking process, DOE sees no reason to annually publish the
qualifying volume in the Federal Register. Thus, DOE has not revised
this section. Interested parties can be assured that the qualifying
volume will stay at 450 gallons, unless DOE commences a rulemaking to
increase it. If this happens, DOE will notify the public via a Federal
Register notice. DOE will provide ample time and opportunity for the
public to submit comments.
III. Regulatory and Procedural Requirements
A. Review Under Executive Order 12866
Today's regulatory action has been determined not to be a
``significant regulatory action'' under Executive Order 12866,
``Regulatory Planning and Review,'' 58 FR 51735 (October 4, 1993).
Accordingly, this rulemaking has not been reviewed by the Office of
Information and Regulatory Affairs of the Office of Management and
Budget.
B. Review Under Executive Order 13132
Executive Order 13132 (64 FR 43255, August 10, 1999) requires
agencies to develop an accountable process to ensure meaningful and
timely input by State and local officials in the development of
regulatory policies that have ``federalism implications.'' Policies
that have federalism implications are defined in the Executive Order to
include regulations that have ``substantial direct effects 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.'' On March 14, 2000, DOE published a
statement of policy describing the intergovernmental consultation
process it will follow in the development of such regulations (65 FR
13735). DOE has examined today's rule and determined that it does 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.
No further action is required by the Executive Order.
C. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires
preparation of an initial regulatory flexibility analysis for every
rule for which the law requires publication of a general notice of
proposed rulemaking unless the agency certifies that the rule, if
promulgated, will not have a significant economic impact on a
substantial number of small entities. The Regulatory Flexibility Act's
requirements do not apply to this final rule because a general notice
of proposed rulemaking was not required by law. Accordingly, DOE did
not prepare a regulatory flexibility analysis for this rule.
D. Review Under the National Environmental Policy Act
The Department has determined that this rule is covered by
categorical
[[Page 2210]]
exclusion in paragraph A5 to subpart D, 10 CFR part 1021. Accordingly,
neither an environmental assessment nor an environmental impact
statement is required.
E. Review Under the Paperwork Reduction Act
This final rule contains a collection of information that the
Office of Management and Budget (OMB) reviews under the Paperwork
Reduction Act of 1995. The Paperwork Reduction Act of 1995 (Pub. L.
104-13, 44 U.S.C. Chapter 35) requires agencies to submit information
collection requests for OMB review and approval. Accordingly, DOE
submitted to OMB the interim final rule. DOE sought public comments on:
(1) Whether the proposed collection of information is necessary, (2)
the accuracy of DOE's estimate of the burden of the proposed
information collection, (3) ways to enhance the quality, utility, and
clarity of the information to be collected, and (4) ways to minimize
the burden of the collection of information on those who choose to
respond.
As mentioned in this rule's Preamble, several entities submitted
comments recommending that DOE only require information that is
necessary to verify the biodiesel fuel purchase. In particular, they
contended that DOE should not require information on vehicle make and
model, vehicle model year and vehicle identification number. They
opined that this information does not relate to fuel purchases of
biodiesel and would impose an unnecessary burden on the reporting
entities. DOE incorporated these recommendations into its information
collection request to OMB.
On October 25, 1999, DOE issued a Federal Register notice (64 FR
57445) that announced that DOE had submitted to OMB a proposed
information collection request for the collection of biodiesel purchase
data from fleets participating in DOE's Alternative Fuel Transportation
Program. No additional comments were received in response to the
October 25, 1999, Federal Register notice. During the OMB review
period, DOE issued interim reporting guidance and placed that guidance
on DOE's Office of Transportation Technologies website at http://www.ott.doe.gov/credits.
On February 2, 2000, OMB approved the biodiesel data collection and
revised the Annual Alternative Fuel Vehicle Acquisition Report For
State Government and Alternative Fuel Provider Fleets (DOE/OTT/101
form, approved under OMB Control No. 1910-5101). Fleets claiming the
biodiesel fuel use credit must submit to DOE model year specific
biodiesel purchases and maintain records of those purchases for three
years. The updated form is posted on the DOE's Office of Transportation
Technologies website at http://www.ott.doe.gov/credits or can be
obtained by calling the National Alternative Fuels Hotline at 1-800-
423-1DOE.
F. 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. 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 section 3(b) to determine whether they
are met or it is unreasonable to meet one or more of them. DOE has
completed the required review and determined that, to the extent
permitted by law, this final rule meets the relevant standards of
Executive Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to prepare a written assessment of the
effects of any Federal mandate in a proposed or final agency rule that
may result in the expenditure by State, local, and tribal governments,
in the aggregate, or by the private sector, of $100 million in any one
year. The Act also requires a Federal agency to develop an effective
process to permit timely input by elected officers of State, local, and
tribal governments on a proposed ``significant intergovernmental
mandate.'' Additionally, it 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. The final rule
published today does not contain any Federal mandate, so these
requirements do not apply.
H. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is not a ``major rule''
as defined by 5 U.S.C. 801(2).
List of Subjects in 10 CFR Part 490
Administrative practice and procedure, Energy conservation, Fuel,
Motor vehicles.
Issued in Washington, DC, on January 4, 2001.
Dan W. Reicher,
Assistant Secretary, Energy Efficiency and Renewable Energy.
Accordingly, the interim final rule amending part 490 of title 10,
chapter II, subchapter D of the Code of Federal Regulations, which was
published at 64 FR 27169 on May 19, 1999, is adopted as a final rule
with the following changes:
PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM
1. The authority citation for part 490 is revised to read as
follows:
Authority: 42 USC. 7191, 13211-13212, 13220, 13235, 13251,
13257, 13260-13263.
2. Amend Sec. 490.703 by revising paragraph (b) to read as follows:
Sec. 490.703 Biodiesel fuel use credit allocation.
* * * * *
(b) No credit shall be allocated under this subpart for a purchase
of the biodiesel component of a fuel if the fuel is:
(1) For use in alternative fueled vehicles which have been used to
satisfy the alternative fueled vehicle acquisition requirements under
Titles III and V of the Energy Policy Act of 1992; or
(2) Required by Federal or State law.
3. Amend Sec. 490.705 by revising paragraphs (a) and (b) and adding
paragraph (d) to read as follows:
Sec. 490.705 Use of Credits.
(a) At the request of a fleet or covered person allocated a credit
under this subpart, DOE shall, for the model year
[[Page 2211]]
in which the purchase of a qualifying volume is made, treat that
purchase as the acquisition of one alternative fueled vehicle the fleet
or covered person is required to acquire under titles III and V of the
Energy Policy Act of 1992.
(b) Except as provided in paragraph (c) of this section, credits
allocated under this subpart may not be used to satisfy more than 50
percent of the alternative fueled vehicle requirements of a fleet or
covered person under titles III and V of the Energy Policy Act of 1992.
* * * * *
(d) A fleet or covered person may not trade or bank biodiesel fuel
credits.
[FR Doc. 01-744 Filed 1-10-01; 8:45 am]
BILLING CODE 6450-01-P