[Federal Register Volume 69, Number 19 (Thursday, January 29, 2004)]
[Rules and Regulations]
[Pages 4219-4231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1923]
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 490
[Docket No. EE-RM-03-001]
RIN No. 1904-AA98
Alternative Fuel Transportation Program; Private and Local
Government Fleet Determination
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) is publishing this final rule
pursuant to the Energy Policy Act of 1992 (EPAct). In this final rule,
DOE announces that it is not adopting a regulatory requirement that
owners and operators of certain private and local government fleets
acquire alternative fueled vehicles. DOE's decision is based on its
findings that such a requirement would not appreciably increase the
percentage of alternative fuel and replacement fuel used by motor
vehicles
[[Page 4220]]
in the United States and thus would make no more than a negligible
contribution to the achievement of the replacement fuel goals set forth
in EPAct. As a result of these findings, DOE is precluded from
promulgating a regulatory requirement for private and local government
fleets because such a rule is not ``necessary'' within the meaning of
EPAct. The findings and conclusions reached in this document are
consistent with those proposed in DOE's March 4, 2003, notice of
proposed rulemaking.
EFFECTIVE DATE: This rule is effective March 1, 2004.
FOR FURTHER INFORMATION CONTACT: For information concerning this
rulemaking: 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; [email protected]. Copies of this final rule and supporting
documentation for this rulemaking will be placed at the following Web
site address: http://www.ott.doe.gov/epact/private_fleets.shtml.
Interested persons also may 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.
SUPPLEMENTARY INFORMATION:
I. Introduction
II. Discussion of Public Comments
A. Comments on Promulgating a Fleet Rule
B. Comments on Revising the Replacement Fuel Goal
C. Comments on Conducting an Environmental Assessment
III. Private and Local Government Fleet Determination
A. Statutory Requirements
B. Rationale for the Private and Local Government Fleet
Determination
C. Determination for Fleet Requirements Covering Urban Transit
Bus and Law Enforcement Vehicles
IV. Replacement Fuel Goal
V. Review Under Executive Order 12988
VI. Review Under Executive Order 12866
VII. Review Under the Regulatory Flexibility Act
VIII. Review Under the Paperwork Reduction Act
IX. Review Under the National Environmental Policy Act
X. Review Under Executive Order 13132
XI. Review of Impact on State Governments--Economic Impact on States
XII. Review Under Unfunded Mandates Reform Act of 1995
XIII. Review Under Treasury and General Government Appropriations
Act, 1999
XIV. Review Under Treasury and General Government Appropriations
Act, 2001
XV. Review Under Executive Order 13175
XVI. Review Under Executive Order 13045
XVII. Review Under Executive Order 13211
XVIII. Congressional Notification
XIX. Approval by the Office of the Secretary
I. Introduction
On March 4, 2003, DOE published a notice of proposed rulemaking
(NOPR) announcing its proposed determination not to promulgate
regulations requiring private and local government fleets to acquire
alternative fueled vehicles (AFVs). See 68 FR 10320. In the same
notice, DOE also stated that it intended to forgo a determination
concerning the achievability of the replacement fuel goals contained in
EPAct. The NOPR invited the public to submit written comments and
announced that DOE also would hold a hearing to receive public comment.
In response, five written comments were submitted, and four statements
were given at the public hearing held on May 7, 2003. The final rule
issued today summarizes the comments received by DOE, and includes
DOE's responses.
This final rule fulfills DOE's obligation under section 507(e) of
EPAct (42 U.S.C. 13257(e)) to conduct a rulemaking to determine whether
a private and local government fleet rule is necessary. DOE's final
rule determines that a regulation requiring private and local
government fleets to acquire AFVs is not ``necessary'' and, therefore,
cannot be promulgated. The necessity determination is based on DOE's
findings that a private and local government fleet vehicle acquisition
mandate would not appreciably increase the percentage of alternative
fuel or replacement fuel used in motor vehicles in the United States
and thus would make no more than a negligible contribution to the
achievement of EPAct's existing 2010 replacement fuel goal of 30
percent, or of a revised replacement fuel goal were one adopted.
The finding that the regulation by itself, if adopted, would not
result in a meaningful increase in the percentage of alternative fuel
or replacement fuel used by motor vehicles is based on the following
factors. First and foremost, 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 in those
fleets as a result of the mandate are too small to cause more than a
negligible increase in the percentage of replacement fuel that is used
as motor fuel. This is due in part to the limitations EPAct imposes on
DOE's authority to promulgate a private and local government fleet AFV
acquisition mandate. For example, a private and local government fleet
program could only apply to light-duty vehicles (i.e., less than or
equal to 8,500 lbs. gross vehicle weight rating (GVWR)) and fleets of
sufficient size 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). It should be noted that automakers are already
annually manufacturing several times the number of AFVs that would be
required under this program. As a result, it is quite possible that a
private and local government AFV acquisition mandate would not increase
AFV production or sales at all, but rather would simply change the
identity of the buyers of the vehicles. Therefore, increases in the
production of AFVs due to the requirements of this fleet program are
unlikely to occur.
Second, EPAct is structured such that even fleets potentially
covered by a fleet mandate may avoid some or all of the acquisition
requirements, if they qualify for one of the numerous exemptions set
forth in the statute. This situation would still be expected to be an
issue even if manufacturers continue to manufacture large numbers of
FFVs because, in addition to requiring the right volume of AFVs,
implementation of a fleet mandate would require the availability of the
right combinations of vehicle models and alternative fuel types to meet
fleets' operational needs. Based on experience with its existing fleet
programs, DOE has found that the availability of some important vehicle
types continues to be limited.
Third, even if DOE promulgated a private and local government fleet
AFV acquisition mandate 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 does not give DOE
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 given the current alternative fuel infrastructure and high
alternative fuel costs relative to conventional motor fuels (despite
availability of large total numbers of AFVs), market forces would
prevent more than a very small increase in replacement fuel use in
covered fleets, even if DOE were to impose a
[[Page 4221]]
private and local government fleet AFV vehicle acquisition requirement.
In the March 2003 NOPR, DOE also indicated that it did not intend
in this rulemaking to revise the replacement fuel goals in EPAct, which
call for replacement fuels to make up 10 percent and 30 percent of the
total motor fuel used in the U.S. by 2000 and 2010, respectively.
``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 liquid fuels, fuels
(other than alcohol) derived from biological materials, electricity
(including electricity from solar energy), ethers,'' or any other fuel
that the Secretary determines ``is substantially not petroleum and
would yield substantial energy security benefits and substantial
environmental benefits.'' ``Alternative fuel'' is defined to include
many of the same types of fuels (such as methanol, ethanol, natural
gas, liquid fuels domestically produced from natural gas, hydrogen and
electricity), but also includes certain ``mixtures'' of alternative
fuels blended with small portions of petroleum-based fuel and ``any
other fuel the Secretary [of Energy] determines by rule, is
substantially not petroleum and would yield substantial energy security
benefits and substantial environmental benefits.'' (42 U.S.C. 13211)
For example, a mixture of 85 percent methanol and 15 percent gasoline
(by volume) 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 by volume), 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.''
In carrying out the rulemaking proceeding contemplated in section
507(e) of EPAct (42 U.S.C. 13257(e)), DOE is authorized to evaluate the
replacement fuel goals and to modify them if they are not ``practicable
and actually achievable * * * through implementation of * * * a fleet
requirement program * * *'' and other means. DOE has concluded that it
is not legally required to propose and finalize a revision of the
replacement fuel goal as part of this rulemaking proceeding because, as
indicated in the NOPR and in this final rule, the adoption of a revised
goal would not impact its determination that a private and local
government rule establishing a section 507(e) ``fleet requirements
program'' would not provide any appreciable increase in replacement
fuel use and is therefore not ``necessary'' within the meaning of
section 507(e) of EPAct. DOE, however, will continue to evaluate this
matter and may, if appropriate, modify the goals in the future. In the
alternative, assuming arguendo that DOE is required to consider whether
to revise the replacement fuel goal, DOE declines to revise for good
cause, as explained below.
In addition, apart from the terms of section 507(e), DOE declines
to broaden the scope of this rulemaking to encompass goal revision
under section 504 because it is not an appropriate time to initiate
such a rulemaking. A review of the current status of replacement fuels
and alternative fuels reveals that only about 3 percent of total motor
fuel use is non-petroleum. The NOPR acknowledged that meeting the 2010
goal of 30 percent would require extraordinary measures. DOE also
expressed its belief that EPAct's replacement fuel goal is intended to
establish an aggressive aspirational petroleum reduction target for the
Federal government and the public. Based on its understanding of the
purpose of the goal, DOE stated that it would be inappropriate and ill-
advised to propose revising the goal downward at a time when the
Administration and Congress are considering (and in some cases, already
implementing) the passage of major new energy initiatives. These
initiatives, discussed in greater detail in today's final rule, could
significantly impact transportation motor fuel use and would have an
important influence on any future replacement fuel goal. Based on these
factors, DOE has decided that initiating a rulemaking to modify the
replacement fuel goal at this time is not appropriate.
The final rule issued today addresses the March 4, 2003, NOPR and
the comments received in response to it. It does not summarize the
extensive actions that took place prior to March 4, 2003, with respect
to this rulemaking. A detailed summary of those rulemaking proceedings
is contained in the March 4, 2003, notice. In addition, DOE has
established a Web site that contains information relating to this
rulemaking activity. Persons interested in learning more about this
rulemaking and its history should review the items contained on the Web
site: http://www.ott.doe.gov/epact/private_fleets.shtml.
II. Discussion of Public Comments
In response to DOE's NOPR, five written comments were submitted,
and four statements were given at the public hearing. The American
Automobile Leasing Association (AALA), Congressman Joe Barton (R-TX),
the Center for Biological Diversity (Center), the Electric Drive
Transportation Association (ETDA), and Mr. J.E. Barker (Fleet Manager,
City of Gadsden, Alabama), submitted written comments. The following
individuals or organizations provided statements at the public hearing:
AALA, the National Association of Fleet Administrators (NAFA), and Nic
van Vuuren (Hampton Roads Clean City Coordinator). Two individuals
presented separate testimonies on behalf of NAFA at the public hearing.
The comments and statements are available on DOE's Web site.
These comments and statements can primarily be grouped according to
whether they support or oppose DOE's proposed determination regarding
adoption of a private and local government fleet mandate and the
decision not to revise the replacement fuel goals contained in EPAct.
However, the comments submitted by EDTA are not summarized below
because they do not speak directly to the issues relevant to a
determination under section 507(e) of EPAct. EDTA's comments instead
urge DOE to support the adoption of incentives and to develop other
programs that encourage the increased use of AFVs and alternative
fuels.
A. Comments on Promulgating a Fleet Rule
The coordinator for the Hampton Roads Clean Cities Coalition (Nic
van Vuuren), Mr. J.E. Barker (Fleet Manager, City of Gadsden, Alabama),
and the Center each submitted comments opposing the proposed
determination not to promulgate a new fleet rule. Mr. van Vuuren stated
that DOE's NOPR ignores the fact that fleet AFV programs, including a
private and local government fleet mandate, were intended to be a
``foundation for voluntary efforts,'' and were not expected by
themselves to achieve the petroleum use reduction goals in EPAct. He
also stated that the purpose of the replacement fuel goal in EPAct is
not to achieve a specific percentage of petroleum replacement, but
rather to further petroleum replacement in general. Therefore, he
asserted that a private and local government fleet AFV acquisition
requirement is necessary because it would contribute generally to
petroleum replacement, even if it would not result in the achievement
of the levels established in EPAct.
As DOE indicated in the NOPR, the existing fleet programs generate
demand
[[Page 4222]]
for AFVs and alternative fuels to some extent and, in fact, account for
a significant share of the existing market for each. However, EPAct
establishes a much higher bar than that before DOE can promulgate a
private and local government fleet regulation. Under section 507(e) of
EPAct, it is not enough that a private and local government fleet AFV
acquisition mandate simply increase the level of alternative or
replacement fuel used; rather, in order for a mandate to be promulgated
DOE must find that the 2010 goal actually is achieved ``through
implementation of such a fleet requirement program in combination with
voluntary means and the application of other programs * * *.'' (42
U.S.C. 13257(e)).
As indicated in the NOPR, DOE estimates that implementation of the
private and local government fleet AFV acquisition mandate could result
in between 0.20-0.80 percent petroleum replacement. (See 68 FR 10339.)
Several of the comments focused on the fact that the NOPR included an
estimate that the private and local government fleet AFV acquisition
mandate could potentially replace 1 percent of petroleum motor fuel
use. However, the NOPR indicated that the 1 percent estimate overstates
the potential impact that the program would have because the 1 percent
estimate does not include motor fuel used in heavy-duty vehicles,
primarily diesel fuel. If both light- and heavy-duty vehicle motor fuel
use is considered, the maximum amount of replacement fuel use expected
to result from a private and local government AFV acquisition mandate--
even if EPAct required the AFVs to use alternative fuel--is only about
0.70-0.80 percent. While the Center questioned DOE's assertion that it
could not require fuel use and expressed the view that DOE's fuel use
projections were low, neither the Center nor any other commenter
supplied any data or information to demonstrate that DOE's estimate was
in error.
In DOE's view, the high relative cost of most alternative fuels
makes it unlikely that the adoption of a private and local government
fleet regulation would lead other fleets to voluntarily adopt
alternative fuel programs or that some local governments might, as the
coordinator for Hampton Roads indicated, adopt fuel use programs to
compliment the vehicle acquisition requirement. In fact,
representatives of fleet associations vigorously contested the idea
that their members would voluntarily participate in any programs as
long as the threat of future mandates exists.
The Center also submitted comments opposing DOE's proposed
determination regarding whether to promulgate a private and local
government fleet regulation. The Center commented that an AFV
acquisition mandate for private and local government fleets ``will have
a profound effect on the market for AFVs and alternative fuels.'' The
Center asserted that a private and local government fleet regulation,
if adopted, would significantly expand the number of AFVs acquired
annually. However, the key consideration with respect to whether a
private and local government fleet rule is necessary is not the number
of AFVs that are acquired each year, but rather the resulting
percentage of motor fuel use that will be replacement fuel. Thus, the
number of AFVs that would be acquired under the program is largely
irrelevant to the question of whether such a rule is ``necessary'' as
that term is used in section 507(e).
The Center also argued that even if the private and local
government fleet rule only provided a 1 percent reduction in petroleum
consumption, this would not be insignificant given the amount of oil
the U.S. consumes. This comment appears to imply that DOE could adopt a
private and local government fleet regulation regardless of the actual
amount of replacement fuel use that might result, and that a 1 percent
reduction would be sufficient to justify the rule. As indicated above,
the 1 percent estimate was based on earlier estimates of the potential
impact of a private and local government fleet rule and it did not take
into account fuel used in heavy-duty vehicles. As explained in the
NOPR, DOE's analysis indicates that a private and local government
fleet AFV acquisition mandate would replace at best between 0.20-0.80
percent of motor fuel consumption, with the probable amount toward the
lower end of this range. (See 68 FR 10339.) In DOE's view, this amount
of petroleum replacement is not sufficient to warrant such a program,
and certainly is not enough to render the program ``necessary'' under
the standards set forth in EPAct section 507(e).
The Center also argued that DOE underestimates the potential impact
that a private and local government fleet rule would have by
incorrectly concluding in the March 4, 2003 NOPR that DOE does not have
legal authority to require private and local government fleets to use
alternative fuels in their AFVs. In the NOPR, DOE said the following:
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 operate solely on alternative fuels except when operating
in an area where the appropriate alternative fuel is unavailable.''
Section 507, which concerns private and local fleets, does not contain
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 the use of alternative fuel in
section 504(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 the 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 section 507 fleet program, and that in enacting
section 507, Congress specifically intended to withhold that authority
from the agency.
See 68 FR 10338.
In evaluating the correctness of the foregoing statutory
interpretation, DOE notes that the Center in its comments did not
respond directly to the points that DOE made in the NOPR. The Center
did not contest the relevance of either
[[Page 4223]]
DOE's textual comparison of sections 501 and 507 or the legislative
history DOE quoted.
The Center instead relies exclusively on the text of section
507(g)(4) as the basis for its argument that DOE has authority under
EPAct to require private and local government fleets to use alternative
fuels in their AFVs. EPAct section 507(g)(4) reads as follows:
A vehicle operating only on gasoline that complies with
applicable requirements of the Clean Act Air shall not be considered
an alternative fueled vehicle under subsection (b) or this
subsection, except that the Secretary, as part of the rule under
subsection (b) or this subsection, may determine that such vehicle
should be treated as an alternative fueled vehicle for purposes of
this section, for fleets subject to part C of title II of the Clean
Air Act [42 U.S.C. 7581, et seq.], taking into consideration the
impact on energy security and the goals stated in section 502(a).
(42 U.S.C. 13257(g)(4).) The Center appears to argue that section
507(g)(4) authorizes DOE to prohibit--and that DOE should exercise this
authority to prohibit--private and local government fleets from
complying with an AFV acquisition mandate by acquiring dual fueled or
flexible fueled AFVs if these vehicles are operated only on gasoline
(even though dual fueled and flexible fueled vehicles are, by
definition, capable of operating on gasoline or diesel).
DOE believes that section 507(g)(4) is best read not as having the
meaning ascribed to it by the Center, but rather as authorizing DOE to
allow certain vehicles capable of (and thus necessarily) operating only
on gasoline to be treated as AFVs for purposes of a fleet program
promulgated under EPAct sections 507(b) and 507(g). The text, structure
and context of section 507(g)(4) strongly militate against the
construction of this section advanced by the Center, and in favor of
DOE's construction.
DOE reads section 507(g)(4) as imposing the general rule, which is
consistent with EPAct's definition of an AFV, that vehicles capable of
and thus necessarily operating only on gasoline ordinarily may not be
counted as AFVs. However, section 507(g)(4) allows DOE to treat some
such vehicles as AFVs for purposes of a section 507 fleet program if it
determines to do so after taking into consideration the impacts on
energy security and the goals stated in EPAct section 502(a). Section
507(g)(4) thus was intended to allow DOE to mitigate the effect that a
private and local government fleet rule otherwise might have on covered
fleets under certain circumstances by expanding, not limiting, the
vehicles that could be counted as AFVs for purposes of section 507.
Therefore, DOE rejects the Center's argument that DOE mistakenly
interpreted its authority under section 507(g)(4), and thus
underestimated the amount of replacement fuel use that would result
from a private and local government fleet program. If anything, DOE has
overestimated resulting replacement fuel use by not accounting for the
possibility that certain vehicles capable of operating solely on
gasoline could be classified as AFVs for purposes of this program.
The Clean Air Act (CAA) Title II, Part C (the part of the CAA cited
in EPAct section 507(g)(4)) addresses clean fuel vehicles and clean
fuel fleets. Significantly, vehicles powered only by reformulated
gasoline can meet the requirements of this Part, so long as they meet
certain emission requirements. However, reformulated gasoline is not
listed in EPAct as an alternative fuel, and because it is 80-90 percent
petroleum, DOE previously has determined (in the notice of final
rulemaking that established 10 CFR Part 490) that it cannot be
designated as an ``alternative fuel'' under EPAct because it is
``substantially petroleum.'' Under EPAct section 301(2), DOE has the
authority to add fuels to the statutory definition of ``alternative
fuel'' only if, among other things, the fuel ``is substantially not
petroleum'; the same is true with respect to ``replacement fuel'' under
EPAct section 301(14).
DOE interprets section 507(g)(4) as authorizing DOE to allow a
vehicle capable of operating only on gasoline and complying with the
applicable clean fuel vehicle requirements under Title II of the CAA to
be treated as an AFV for purposes of a fleet program under section 507,
notwithstanding the exclusion of reformulated gasoline and diesel from
EPAct's definition of ``alternative fuel,'' and even though the vehicle
otherwise could not be counted as an AFV for purposes of an EPAct fleet
program. This interpretation makes sense because, among other reasons,
section 507(g)(4) explicitly provides that DOE can make this allowance
only for fleets subject to both the EPAct section 507 and CAA Title II
fleet programs. Given this interpretation, section 507(g)(4) does not
mean, as the Center claims, that DOE has underestimated the amount of
replacement fuel use that would result from a private and local
government fleet rule. Rather, section 507(g)(4) provides DOE with
authority which, if exercised, would reduce, not increase, the amount
of replacement fuel use resulting from a private and local government
fleet rule. DOE's interpretation is further supported by the fact that
section 507(g)(4) appears in section 507 among various other
subsections the clear object of which is to relieve the potential
burdens that a private and local government fleet rule would place on
covered fleets.
As DOE explained above, Congress displayed a willingness and
ability to impose a fuel use requirement when and where it intended to
do so, as it did in EPAct section 501. EPAct section 507(g)(4) does not
contain any such explicit requirement. In light of the explicit terms
with which Congress mandated fuel use in section 501, it would be
incorrect to stretch the words of section 507(g)(4) to find a fuel use
requirement, or an authorization for DOE to impose one.
Moreover, it is difficult to understand how the Center's proposed
interpretation even makes sense or could be administered in practice.
Dual fueled vehicles are by definition capable of operating on either
alternative fuel or on gasoline or diesel; yet at any particular time a
dual fueled vehicle is ``operating only'' (to use the words of section
507(g)(4)) on one particular fuel. Thus, if the Center's interpretation
of section 507(g)(4) were to be adopted and DOE were to exercise its
alleged authority to require covered fleets to use alternative fuels in
their AFVs, a dual fueled vehicle would no longer be considered to be
an AFV at any particular time it was operating on gasoline. Therefore,
again under the Center's interpretation, the section potentially would
prohibit (or authorize DOE to prohibit) a vehicle from being considered
an AFV during any period in which it was in fact operated on gasoline,
but allow the vehicle to be considered an AFV during any period of time
when it was operated on an alternative fuel.
This interpretation would make section 507(g)(4) impossible to
administer in practice. The Center has not indicated how such a
requirement could be enforced, nor how vehicles operating on
alternative fuels some of the time and gasoline at other times would be
counted. Similarly, the Center did not clarify how a dual fueled
vehicle would be counted when it was not operating at all--i.e., when
it was being garaged overnight. And since section 507(g)(4) speaks in
terms of vehicles operated only on gasoline, its unclear how the Center
would propose that DOE treat vehicles operating some or all of the time
on diesel. Finally, the Center has not indicated if section 507(g)(4)
should be interpreted as calling for the peculiar result of allowing
dual fueled vehicles operating
[[Page 4224]]
all of the time on diesel to be counted as AFVs, but prohibiting dual
fueled vehicles operating all of the time on gasoline from being
counted as AFVs. Neither the Center nor any other commenter addressed
these issues.
Finally, DOE is of the view that it would be inappropriate, as a
matter of policy, to interpret section 507(g)(4) as authorizing DOE to
impose a broad restriction on the use of gasoline in dual fueled
vehicles for the purposes of a section 507 fleet program. DOE's
interpretation of section 507(g)(4) is in keeping with the purpose of
section 507, which is to promote acquisition of AFVs as a means of
achieving replacement fuel goals while protecting covered fleets from
bearing unfair financial burdens. The Center's proposed interpretation
would result in imposition on private and local fleet operators of an
unfunded mandate in the form of the higher costs of purchasing
alternative fuels. Unfunded regulatory mandates of this nature have
been disfavored at least since the enactment of the Unfunded Mandates
Reform Act of 1995.
In summary, DOE believes its interpretation of section 507(g)(4) is
both reasonable and consistent with the other sections of EPAct and
with the Clean Air Act, and DOE declines to adopt the Center's proposed
interpretation.
Comments supporting DOE's decision not to promulgate a fleet
mandate were submitted by the AALA, Congressman Joe Barton (R-TX), and
NAFA. AALA and NAFA, which represent hundreds of individual fleets and
businesses that would be potentially covered by a private and local
government fleet AFV acquisition mandate, agreed with DOE's analysis
regarding the impact that a private and local fleet AFV acquisition
mandate would have on the achievement of EPAct's replacement fuel goals
and supported DOE's determination that such a mandate is not necessary.
AALA expressed the belief that the high cost of AFVs would make
leasing costs prohibitive for many companies and that adoption of a
fleet mandate would encourage more businesses to move away from leasing
vehicles and toward employee-reimbursement programs, where employees
operate their own vehicles and are reimbursed for expenses. EPAct
excludes from its authorized fleet programs vehicles garaged at
personal residences when not in use. Thus, AALA indicated that some
fleets might also attempt to avoid having to comply with a private and
local government fleet acquisition mandate by moving to employee
reimbursement plans. AALA contended that this would not be conducive to
cleaner air or energy efficiency because the vehicles owned and
operated by employees would generally be less maintained, less fuel
efficient, and more polluting than vehicles provided by leasing
companies.
NAFA's comments reiterated concerns expressed to DOE in earlier
rulemaking proceedings regarding the high cost of AFVs relative to non-
AFVs, and the lack of supporting refueling infrastructure. Congressman
Joe Barton, the Chairman of the Subcommittee on Energy and Air Quality
of the U.S. House of Representatives Committee on Energy and Commerce,
also submitted a short statement supporting DOE's proposed decision not
to promulgate a fleet mandate and indicating his belief that efforts to
increase the use of AFVs should be voluntary and market-oriented.
B. Comments on Revising the Replacement Fuel Goal
The Center comments fault the March 4, 2003, NOPR on the ground
that DOE did not propose a revision of the 30 percent replacement fuel
goal established for the year 2010 pursuant to sections 507(e) and 504
of EPAct. The Coordinator for the Hampton Roads Clean Cities Coalition
also submitted comments arguing that DOE should have proposed a
revision to the replacement fuel goals. In DOE's view, if an AFV
acquisition mandate on private and local fleets under section 507(e)
could make an appreciable contribution to achievement of a replacement
fuel goal, there could be an obligation to consider revision of the
existing 30 percent goal in this rulemaking. However, as explained in
the NOPR and in this final rule (see section IV), DOE's analysis
indicates that imposing such a vehicle acquisition mandate on private
and local fleets would not appreciably increase the demand for and
consumption of alternative fuels. Analysis of DOE's limited regulatory
authority under title V of EPAct and existing market factors
independently warrant a finding that a private and local fleet AFV
acquisition mandate under section 507(e) is not ``necessary.''
Therefore, DOE is not required under section 507(e) to go further and
revise EPAct replacement fuel goals.
DOE recognizes that section 504 of EPAct provides for ``periodic''
examination and revision of the statutory replacement fuel goals
originally established in section 502(b) for reasons other than the
requirement to make a necessity determination under section 507(e) of
EPAct. More specifically, section 504(a) provides for DOE to publish in
the Federal Register a notice providing an opportunity for public
comment on the results of ``periodic'' examination of the statutory
replacement fuel goals. However, as the word ``periodic'' indicates,
section 504(a) generally leaves to DOE's discretion how often the
statutory goals should be reexamined. More importantly, under section
504(b), DOE may only initiate a rulemaking proceeding to revise the
statutory replacement fuel goals `` * * * after analysis of information
in connection with carrying out subsection (a) * * *'' of section 504.
In DOE's view, the pending legislative and the Administration proposals
described in the March 4, 2003, NOPR (see 68 FR 10321) make it untimely
to carry out a proceeding under subsection (a) of section 504.
Furthermore, carrying out such a proceeding and broadening the scope of
this rulemaking beyond section 507(e) would have likely delayed the
issuance of this final rule.
On the basis of the foregoing, DOE rejects the Center's claim that
DOE violated sections 507(e) and 504 of EPAct when it omitted a
proposal to revise the statutory replacement fuel goals and declines to
expand the scope of this rulemaking beyond issues necessary to comply
with section 507(e).
C. Comments on Conducting an Environmental Assessment
The Center argues in its comments that DOE should have conducted an
environmental assessment for its NOPR because this rulemaking does not
qualify for application of the categorical exemption found in 10 CFR
part 1021 at paragraph A.5 of appendix A to subpart D. Paragraph A.5
applies to: ``Rulemaking (interpreting/amending), no change in
environmental effect.'' The Center first argues that paragraph A.5 does
not apply to this rulemaking because DOE did not propose to ``* * *
interpret or amend an existing rule * * *''. In the alternative, the
Center argues that this rulemaking does not qualify for application of
this categorical exemption because `` * * * DOE's decision not to
promulgate a private and municipal fleet rule has a significant
detrimental impact on the human environment by withholding action that
would reduce petroleum consumption and its attendant environmental
damage.''
DOE rejects the Center's first argument because this proceeding is
a rulemaking to determine whether to amend 10 CFR part 490 by extending
AFV acquisition mandates beyond alternative fuel providers under
section
[[Page 4225]]
501 of EPAct and State government fleets under section 507(o) of EPAct
to include mandates applicable to certain private and local government
fleets under section 507(e) of EPAct. In DOE's view, the categorical
exemption in paragraph A.5 applies to this rulemaking because DOE
construes that exemption to cover rulemakings the purpose of which is
to determine whether to amend an existing rule even if, as in this
case, the rulemaking subsequently does not result in promulgation of
amendatory language.
DOE also rejects the Center's argument that imposition of an AFV
acquisition mandate would result in appreciable reductions in petroleum
consumption. For the reasons explained in section II.A of this
Supplementary Information, DOE has found that such a mandate would not
have the effect of appreciably reducing petroleum consumption. On that
basis, DOE continues to be of the view that a rulemaking determination
for or against amending part 490 to impose such a mandate is
environmentally neutral. Moreover, this rulemaking maintains the status
quo with respect to private and local government fleets because it does
not impose any new obligations or prohibitions on these fleets. For
these reasons, an environmental assessment is not necessary.
III. Private and Local Government Fleet Determination
A. Statutory Requirements
Section 507(e) of EPAct directs DOE to determine whether private
and local government fleets should be required to acquire AFVs. In this
respect, the rulemaking process for a private and local government
fleet rule is very different from DOE's 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 before it promulgated a fleet
rule. (See 42 U.S.C. 13251.) The determination of whether to adopt
regulations for private and local government fleets, however, is
conditional and depends on DOE making several critical findings.
Sections 507(e) and 507(g), read together, authorize DOE to
promulgate a private and local government fleet AFV acquisition mandate
only if DOE determines such a program is ``necessary.'' 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).)
DOE believes that a determination of whether a private and local
government fleet AFV acquisition mandate is ``necessary'' depends, in
large part, on the following factors: the amount of replacement fuel
use that would result if such a program was 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 Government Fleet Determination
1. Statutory Limitations
While EPAct authorizes DOE to mandate AFV 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)), is limited in coverage only
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, such as 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 requirements and practices of
the principal business of the fleet owner are not available in the area
in which the vehicles are to be operated,'' or for government fleets,
if the requirements of the mandate ``would pose an unreasonable
financial hardship.'' Section 507(g)(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 that fleet.''
Taken together, these statutory exemptions would likely
dramatically lower the number of fleets and fleet vehicles subject to a
private and local government AFV acquisition mandate. With respect to
local government fleets, a number of these otherwise covered fleets
might be exempted, for example, 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,
since 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.
As explained in the NOPR and also in portions of the Supplementary
Information for today's final rule, DOE lacks the authority under
section 507 to require private and local government fleets to use
alternative fuels in their AFVs. DOE's textual analysis of the statute
and the legislative history provided in the NOPR (see 68 FR 10338) and
above support its conclusion regarding its lack of authority to require
fuel use. This lack of authority makes it doubtful that a fleet rule
would have any appreciable impact on petroleum consumption. Many fleets
might be compelled to buy AFVs, but would
[[Page 4226]]
operate the AFVs on petroleum-based fuels due to limited nature of the
current alternative fuel infrastructure and the oftentimes high
relative price of alternative fuels. DOE's experience with fleet
programs demonstrates that vehicle acquisition requirements alone
result in only a relatively small (in the context of overall U.S. fuel
consumption) amount of petroleum replacement.
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 in EPAct 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. As a result, it is quite possible that a private and local
government AFV acquisition mandate would not increase AFV production or
sales at all, but rather would simply change the identity of the buyers
of the vehicles.
In addition to all of the provisions discussed, Congress also
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,
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 in
section 507(n), would likely result in many fleets potentially covered
by the fleet rule being able to obtain relief from the rule's
requirements.
Title V of EPAct substantially limits the effectiveness of any
private and local government fleet AFV acquisition program that might
be promulgated under section 507. The nature of the exemption and
petition procedures and the associated regulatory uncertainty undermine
the potential effectiveness of a regulatory mandate to purchase
significant numbers of AFVs. These factors support DOE's determination
that a private and local government fleet program under section 507(g)
would make no appreciable contribution to actual achievement of any
replacement fuel goal and, therefore, is not ``necessary'' under the
section 507(e) standard.
2. Analysis of Potential Replacement Fuel Use
Available analyses further support DOE's conclusion that only a
very small amount of alternative or replacement fuel use would result
from a private and local government fleet program. Technical Report 14,
discussed in the NOPR, 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).\1\ DOE's Section 506 Report \2\ 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 closer to a maximum of 1 percent. However, both
these earlier reports include calculations based only upon the
percentage of light-duty gasoline fuel use. For purposes of the goals
contained in EPAct, DOE believes that fuel replacement should be
considered in the context of all on-highway motor fuel use, including
heavy-duty vehicle fuel use, because the goals contained in section 502
of EPAct are to be considered in the context of the ``projected
consumption of motor fuel in the United States.'' (42 U.S.C.
13252(b)(2).) This section does not refer only to light-duty fuel use.
The figures provided in these earlier reports, when adjusted to reflect
the impact on all on-highway motor fuel use, show that a private and
local government fleet rule--even with a fuel use requirement, which as
noted above DOE does not have the authority to impose--would provide at
most on the order of 0.7-0.8 percent motor fuel replacement. After
taking into account the fact that DOE has no authority to mandate fuel
use, DOE estimates that a private and local government fleet AFV
acquisition mandate would likely provide only about 0.2 percent motor
fuel replacement.
---------------------------------------------------------------------------
\1\ 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)
(1996).
\2\ 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.
---------------------------------------------------------------------------
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. DOE's experience with those
programs now has shown that the number of fleets originally envisioned
to be covered was far larger than the number of fleets covered in
actual practice. DOE stated in the March 4, 2003, NOPR its belief that
the figures in these reports probably overstate the potential impact of
a private and local government fleet rule because they overestimate the
total number of AFVs that would be acquired under such a program. This
view is supported by analyses contained in a more recent DOE-supported
report, 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, which incorporates 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
[[Page 4227]]
at 0.25 percent. Like Technical Report 14 and the Section 506 Report,
these percentages were calculated based on the total fuel sales of the
fuel used by light-duty vehicles only. Therefore, the contribution from
a potential rule drops below 0.2 percent when evaluated as part of all
on-highway motor fuel use.
No commenter presented any persuasive analysis or data to counter
or dispute the data and conclusions in Technical Report 14 or the
Section 506 Report. The TAFV Model Report further supports the
conclusions of the earlier reports. Therefore, DOE finds and concludes
that a potential private and local fleet program under authority
provided to DOE by EPAct section 507 would be expected to contribute,
at best, an extremely small amount toward achievement of the
replacement fuel goal (below 1 percent and likely below 0.2 percent of
all on-highway motor fuel use). Even without the additional statutory
limitations described above that EPAct places on such a private and
local government fleet mandate, the contribution from such a mandate to
the EPAct replacement fuel goals would be very small.
3. Infrastructure and Fuel Availability
Throughout the proceedings associated with this rulemaking
(including the advanced notice of proposed rulemaking and public
workshops), numerous comments received by DOE expressed concern that
the level of alternative fuel infrastructure is not adequate to support
a private and local government fleet rule. In the NOPR, DOE noted that
alternative fuel provider investments in alternative fuel
infrastructure actually have slowed down in recent years. Shortly after
EPAct's passage in 1992, 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 by
the end of the 1990s. While the number of ethanol refueling stations
has grown over the past few years, the total number of alternative fuel
stations appears to have stalled or slightly declined. 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 has played a
significant part in the reduced investment by utilities in alternative
fuel stations and therefore in the lack of growth in the total number
of alternative fuel stations.
In the NOPR, DOE stated that the ethanol industry has made only a
limited investment in building infrastructure for supplying E-85, the
fuel used by ethanol FFVs, of which there are several million in
service today. The ethanol industry has primarily focused its attention
on supplying the gasohol and gasoline-oxygenate market. Consequently,
today there are only approximately 180 fueling outlets nationwide that
provide E-85. See AFDC Refueling Stations (http://www.afdc.doe.gov/refueling.html). Some efforts are underway to expand the number of E-85
refueling sites. However, the number of E-85 stations would have to
grow significantly to have a measurable impact on overall U.S. motor
fuel consumption.
As DOE explained in the NOPR, major energy suppliers, principally
oil companies, have largely been unwilling to date 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. No
commenter disputed the discussion in the NOPR regarding this issue.
Thus, DOE does not expect that the major oil and fuel retailers would
install the infrastructure necessary to support alternative fuel use by
AFVs were DOE to promulgate a private and local government fleet
mandate, 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 limited infrastructure would likely result in
exemption requests and petitions to suspend any fleet requirement
program DOE might impose under section 507(e), and DOE possibly
granting these requests.
4. AFV 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 stands in stark contrast to when EPAct
was enacted. In 1992, there were virtually no original equipment
manufacturer (OEM) vehicles available that operated on alternative
fuel. Consumers and fleets had to have existing gasoline vehicles
converted by aftermarket shops if they wanted AFVs. The AFVs that are
available today are built by auto manufacturers for two primary
purposes: (1) To provide credits to automakers that can be used to meet
the corporate average fuel economy (CAFE) standards; and, (2) to meet
the needs of the fleets currently subject to fleet mandates.
Automobile manufacturers are awarded CAFE credits as an incentive
to develop AFVs. The sale of these vehicles in turn could potentially
lead to the development of infrastructure to support alternative fuel
use. Data available to DOE indicates that manufacturers currently offer
over a million new flexible fuel vehicles (FFVs) each year (at
virtually no incremental purchase price). Other AFVs (such as gaseous
fuel vehicles) are available in significantly lower numbers, and
generally combine for a total of less than 10,000 vehicles per year
(often at incremental purchase prices of approximately $2000 to $8000).
It should be noted that the total number of AFVs available each
year is several times the number projected to be required to meet the
annual acquisition requirements of a private and local government AFV
fleet program. We believe such a fleet program would be unlikely to
result in large numbers of additional AFVs being produced because most
AFVs are manufactured as a result of the CAFE incentive provisions
contained in the Alternative Motor Fuels Act of 1988 (AMFA) (49 U.S.C.
32905), and the ability to earn additional credits is constrained.
Therefore, DOE expects that, for the most part, imposition of a private
and local government AFV fleet program would largely result in a shift
of these already-available vehicles to fleets covered under this
program. No commenter explained why a different outcome might
reasonably be expected.
DOE is also concerned that if it were to adopt a requirement for
private and local government fleets to acquire AFVs, there may not
necessarily be the right mix of vehicle types required by fleets. DOE
explained this concern in the NOPR and no commenter offered any
information or explanation why DOE's concern was not well-grounded. See
68 FR at 10340. 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 modify their product
plans and build the range of models and fuel type combinations required
by fleets. It should be noted that section 504(c) of EPAct (42 U.S.C.
13254(c)) expressly prohibits DOE from mandating the production of AFVs
or to specify the types of AFVs that are made available.
[[Page 4228]]
Under the existing State government and alternative fuel provider fleet
programs, DOE has been obliged to provide a number of exemptions to
fleets that were unable to acquire AFVs that meet their ``normal
requirements and practices.'' Unless automakers significantly expand
their current offerings of AFVs, DOE likely would be forced to process
and approve thousands of exemption requests each year made by private
and local government fleets, thus further watering down the effect a
private and local government fleet mandate would have in causing use of
alternative fuels.
5. 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, this price
differential will continue and will influence fleet owners and
operators for the foreseeable future. DOE set forth this assumption in
the NOPR, and no commenters offered any evidence or persuasive
arguments to dispute it. See 68 FR at 10340. 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 ready access to sufficient alternative fuel
infrastructure, the fuel cost differential of ethanol (in some
geographic areas) is likely a contributing factor.
6. Summary of Determination
DOE determines that a private and local government fleet AFV
acquisition mandate under sections 507(e) and (g) of EPAct is not
``necessary,'' and, therefore, DOE is precluded from imposing it. Such
a mandate would make no appreciable contribution (from less than 0.2
percent to a maximum of 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 the determinations set forth in
section 507(e), both of which must be made in the affirmative before a
private and local government fleet requirement program can be
determined to be ``necessary'' and thus implemented. DOE cannot
determine that the 2010 replacement fuel goal in EPAct (or a revised
goal) will not be achieved ``without such a fleet requirement program''
because the existence of the fleet rule would have no appreciable
impact (indeed almost no measurable impact at all) on the goal's
achievement. For the same reason, DOE cannot determine that the
replacement fuel goal can be achieved ``through implementation of such
a fleet requirement program'' in combination with other means.
DOE has come to these conclusions for all of the reasons explained
above. To summarize, 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. In
addition, 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, are: (1) Lack of ready access
to sufficient alternative fuel infrastructure; (2) limited availability
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 determines that a private
and local government fleet requirement program is not ``necessary''
under the standards set forth in EPAct section 507(e) and, therefore,
will not be promulgated.
C. Determination for Fleet Requirements Covering Urban Transit Bus 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)). Both section 507(k)(1) and 507(k)(2) limit DOE to
only one rulemaking opportunity for implementing requirements for law
enforcement and urban bus fleets.
As discussed in the NOPR, DOE considered interpreting section
507(k) to mean that law enforcement vehicle fleets and urban buses
could be considered as part of the determination process under sections
507(e) and (g) as to whether a private and local government fleet AFV
acquisition mandate program is ``necessary.'' DOE, however, believes
that EPAct only allows it to consider whether law enforcement fleets
and urban buses should be covered by a fleet acquisition mandate after
DOE has completed the rulemaking contemplated by sections 507(e) and
(g), and only if DOE has determined that a private and local government
fleet acquisition program is ``necessary.'' DOE does not believe that
these programs can be considered as part of the rulemaking that section
507(e) directs DOE to conduct regarding private and local government
fleets. This view is supported by the fact that the provisions relating
to law enforcement vehicles and urban buses require DOE to conduct
separate rulemakings to consider whether to adopt these programs.
DOE further interprets EPAct to prohibit 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.
No commenter presented any persuasive argument as to why DOE's
interpretation of sections 507(k), 507(e) and 507(g) as discussed in
this section C of this Supplementary Information is incorrect. Thus,
since DOE is not adopting a private and local government fleet
requirement, it also is precluded from adopting a fleet requirement for
law enforcement vehicles and urban buses.
IV. Replacement Fuel Goal
DOE has decided not to modify the 2010 replacement fuel goal of 30
percent in this final rule. As noted earlier, the process of
determining whether to adopt
[[Page 4229]]
an AFV acquisition mandate for private and local government 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.
DOE has decided not to propose or finalize any revisions to the
replacement fuel goal because, first, DOE does not believe that EPAct
requires it to revise the petroleum replacement fuel goal in order to
determine whether a private and local government fleet rule is
``necessary.'' Revising the goal as part of this rulemaking would serve
no purpose because, as indicated in the NOPR and in this final rule,
the adoption of a revised goal would not impact DOE's determination
that a private and local government fleet rule provides no appreciable
increase in replacement fuel use. In addition, the limited regulatory
authority under Title V of EPAct and existing market factors
independently warrant a finding that an AFV acquisition mandate under
section 507(e) is not ``necessary.'' Therefore, DOE is not required
under section 507(e) to revise the EPAct 2010 percent replacement fuel
goal, since it would not influence DOE's decision regarding whether or
not to implement a private and local government fleet regulation.
Second, DOE believes that revising the 2010 replacement fuel goal
at this time would not serve the aims of EPAct to promote or encourage
the use of replacement fuels. Congress 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 by
2000, and a long-term goal of at least 30 percent by 2010, on a
petroleum fuel energy equivalent basis. Neither the text of EPAct nor
the legislative history explains why Congress chose these particular
goals and dates. Nor does the text or legislative history 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 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. While these
programs have increased the availability of AFVs and 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 replacement fuel 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
currently considering 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 transportation efforts are focused on the goal of developing
advanced motor vehicle technologies (such as hydrogen-based fuel cells)
that could someday significantly offset demand for petroleum motor
fuels. These efforts also support the shorter-term objective of more
efficiently utilizing existing petroleum resources. These efforts, if
fully supported with necessary enabling legislation and funding as DOE
has proposed, offer the potential to achieve the long-term EPAct goal
of replacing petroleum as the primary transportation fuel.
In light of the momentum that these various efforts are gaining; 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 of alternative and replacement fuels; and in light of the
possibility of new legislation 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 goal at this time.
Therefore, DOE is not modifying 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 it appropriate, review and
modify the 2010 replacement fuel goal pursuant to its authority in
EPAct Title V.
V. 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 because DOE has determined that a private
and local government fleet program is not ``necessary'' under sections
507(e) and (g) of EPAct, and, therefore, DOE is not promulgating
regulations to implement such a program.
VI. Review Under Executive Order 12866
This regulatory action has been determined to be a ``significant
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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).
VII. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et. seq.) requires
preparation of a regulatory flexibility analysis for any rule that by
law must be proposed for public comment, unless the agency certifies
that the rule, if promulgated, will not have a significant economic
impact on a substantial number of small entities. As required by
Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking'' (67 FR 63461, August 16, 2002), DOE published
procedures and policies to ensure that the potential impacts of its
draft rules on small entities are properly considered during the
rulemaking process (68 FR 7990, February 19, 2003), and has made them
available on the Office of General Counsel's Web site: http://www.gc.doe.gov. DOE reviewed today's final rule under the provisions of
the Regulatory Flexibility Act and the procedures and policies
published on February 19, 2003. DOE's negative determination under
EPAct section 507(e) will not impose compliance costs on small
entities. On the basis of the foregoing, DOE certifies that this final
rule will not have a significant economic impact on a substantial
number of small entities. Accordingly, DOE has not prepared a
regulatory flexibility analysis for this rulemaking.
VIII. Review Under the Paperwork Reduction Act
Because DOE has determined 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.
IX. Review Under the National Environmental Policy Act
This rule determines that a regulatory requirement for the owners
and operators of certain private and local government light-duty
vehicle fleets to acquire AFVs 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 negative determination regarding the necessity for a
private and local government fleet requirement program will not require
any government entity or any member of the public to act or to refrain
from acting. Accordingly, for this reason and reasons discussed in
section II.C of the Supplementary Information, DOE has determined that
its 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.
X. Review Under Executive Order 13132
Executive Order 13132, Federalism, 64 FR 43255 (August 4, 1999),
imposes 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 determination and
determines that it will not preempt State law and will 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.
XI. 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 has determined that a private and local government
fleet AFV program is not ``necessary'' under section 507(e) and,
therefore, is not promulgating 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. Prior to issuance of its NOPR, DOE sought and
considered the views of State and local officials. The March 4 NOPR
contains a full discussion of these consultations. See 68 FR 10320.
XII. Review Under 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 final rule published today does not
propose or contain any Federal mandate, so the requirements of the
Unfunded Mandates Reform Act do not apply.
XIII. Review Under 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 action will 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.
XIV. 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
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reviewed today's final rule under the OMB and DOE guidelines, and has
concluded that it is consistent with applicable policies in those
guidelines.
XV. 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 action would
not have such implications. Accordingly, Executive Order 13175 does not
apply to this final rule.
XVI. 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.
XVII. 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
negative determination is a significant regulatory action, the
finalization of this 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.
XVIII. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of today's 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. 804(2).
XIX. Approval by the Office of the Secretary
The issuance of the final rule for the Private and Local Government
Fleet Determination has been approved by the Office of the Secretary.
Issued in Washington, DC, on January 23, 2004.
David K. Garman,
Assistant Secretary, Energy Efficiency and Renewable Energy.
[FR Doc. 04-1923 Filed 1-28-04; 8:45 am]
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