```

[Federal Register Volume 79, Number 55 (Friday, March 21, 2014)]
[Rules and Regulations]
[Pages 15881-15907]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06044]

[[Page 15881]]

Vol. 79

Friday,

No. 55

March 21, 2014

Part III

Department of Energy

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10 CFR Part 490

Alternative Fuel Transportation Program; Alternative Fueled Vehicle 
Credit Program Modification and Other Amendments; Final Rule

Federal Register / Vol. 79 , No. 55 / Friday, March 21, 2014 / Rules 
and Regulations

[[Page 15882]]

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DEPARTMENT OF ENERGY

10 CFR Part 490

[Docket ID No. EERE-2011-OT-0066]
RIN 1904-AB81

Alternative Fuel Transportation Program; Alternative Fueled 
Vehicle Credit Program Modification and Other Amendments

AGENCY: Department of Energy (DOE).

ACTION: Final rule.

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SUMMARY: Pursuant to section 133 of the Energy Independence and 
Security Act of 2007 (EISA), DOE is finalizing a rule that revises 
regulations on the Alternative Fuel Transportation Program (AFTP or the 
Program). This final rule establishes regulations on the allocation of 
marketable credits for the acquisition of EISA-specified electric drive 
vehicles and for investments in qualified alternative fuel 
infrastructure, qualified alternative fuel non-road equipment, and 
relevant emerging technologies. DOE also is promulgating modifications 
to the exemption process and the Alternative Compliance option, as well 
as a number of technical and other revisions that will make the Program 
regulations clearer.

DATES: This final rule is effective on April 21, 2014.

ADDRESSES: DOE established a docket for this action under Docket ID No. 
EERE-2011-OT-0066. The docket is available for review at http://www.regulations.gov. All documents in the docket, including Federal 
Register notices, supporting materials, and public comments, are listed 
in the docket index.

FOR FURTHER INFORMATION CONTACT: 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. Telephone: 
(202) 586-9171. Email: /regulatory.info">regulatory.info@nrel.gov">regulatory.info@nrel.gov.
    Mr. Ari Altman, Office of the General Counsel (GC-71), U.S. 
Department of Energy, 1000 Independence Avenue SW., Washington, DC 
20585-0121. Telephone: (202) 287-6307. Email: Ari.Altman@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction and Background
    A. General
    B. Current Status of Alternative Fuel Transportation Program
    C. Statutory Authority
    1. EISA
    2. Additional Revisions
II. Public Comments
III. Discussion of the Final Rule
    A. Existing Definitions
    1. Alternative Fuel
    2. Alternative Fueled Vehicle
    3. Automobile
    4. Dedicated Vehicle
    5. Dual Fueled Vehicle
    6. Electric Motor Vehicle and Electric-Hybrid Vehicle
    7. Section 133-Identified Vehicles That Already Qualify as AFVs
    B. New Definitions: EISA Section 133 Vehicles and Investments
    1. Fuel Cell Electric Vehicle
    2. Hybrid Electric Vehicle
    3. Medium- or Heavy-Duty Electric Vehicle
    4. Neighborhood Electric Vehicle
    5. Plug-In Electric Drive Vehicle
    6. Alternative Fuel Infrastructure
    7. Alternative Fuel Non-Road Equipment
    8. Emerging Technology
    C. Allocation of Credit
    1. General Basis for Allocations
    2. Electric Drive Vehicles
    a. Hybrid Electric Vehicles
    b. Plug-In Electric Drive Vehicles
    c. Fuel Cell Electric Vehicles
    d. Neighborhood Electric Vehicles
    e. Medium- and Heavy-Duty Electric Vehicles
    3. Investments
    a. Alternative Fuel Infrastructure
    b. Alternative Fuel Non-Road Equipment
    c. Emerging Technology
    4. Summary of Credit Allocations and Implementation Requirements
    D. Additional Program Modifications
    1. Timeliness of Exemption Request Submittals
    2. Program Credits and Exemption Requests
    3. Alternative Compliance
    4. Other Regulatory Revisions
    5. Other Issues
IV. Compliance
V. Regulatory Review
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act of 1995
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 12988
    F. Review Under Executive Order 13132
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under the Treasury and General Government 
Appropriations Act, 2001
    J. Review Under Executive Order 13211
    K. Congressional Notification

I. Introduction and Background

    This notice of final rulemaking concludes a regulatory action 
mandated under section 133 of the Energy Independence and Security Act 
of 2007 (EISA, Pub. L. 110-140). Section 133 calls for DOE to allocate 
credits to covered State government and alternative fuel provider 
fleets that acquire various types of electric drive vehicles, and 
invest in emerging technologies related to those vehicles, qualified 
alternative fuel infrastructure, and qualified alternative fuel non-
road equipment. These allocations impact the Alternative Fuel 
Transportation Program (AFTP or the Program) under 10 CFR part 490. 
Under the Program, covered fleets have two avenues for compliance, 
Standard Compliance (initiated under the Energy Policy Act of 1992 
(EPAct 1992, Pub. L. 102-486)) and Alternative Compliance (an optional 
path provided in the Energy Policy Act of 2005 (EPAct 2005, Pub. L. 
109-58)). In conjunction with these allocations required under EISA, 
DOE is also finalizing modifications to Standard Compliance and 
Alternative Compliance under the Program.
    On October 31, 2011, DOE published the Notice of Proposed 
Rulemaking (NOPR) associated with this final rule (76 FR 67288). The 
60-day comment period closed on December 30, 2011. DOE received eight 
sets of timely comments, as discussed in Parts II and III below.
    The NOPR included a detailed introduction and background 
discussion. To provide a full context for this final action, DOE has 
chosen to restate this background material, with appropriate revisions.
    Titles III through V of EPAct 1992, as amended at 42 U.S.C. 13201 
et seq., focus on the replacement of petroleum transportation fuels 
with fuels such as alternative fuels and conventional/replacement fuel 
blends. The provisions in EPAct 1992 encourage the purchase and use of 
replacement fuels, requiring that certain fleets acquire alternative 
fueled vehicles (AFVs) as part of their annual light duty vehicle (LDV) 
acquisitions. Section 301(3) of EPAct 1992 (42 U.S.C. 13211(3)) defines 
the term ``alternative fueled vehicle'' as a ``dedicated [alternative 
fuel] or dual fueled vehicle,'' and sections 501 (42 U.S.C. 13251) and 
507 (42 U.S.C. 13257) of the statute contain AFV-acquisition mandates 
for alternative fuel provider fleets and State fleets, respectively. 
These fleets may earn credits towards their light duty AFV-acquisition 
requirements in various ways, as provided by section 508 of EPAct 1992 
(42 U.S.C. 13258) and the Program regulations at 10 CFR part 490.
    Congress has amended the EPAct 1992 fleet program for State and 
alternative fuel provider (SFP) fleets several times. The amendments 
have allowed covered fleets to earn additional credits for the use of 
biodiesel in blends of 20 percent biodiesel or greater and have 
provided an alternative compliance option. Note

[[Page 15883]]

that upon the creation of the ``Alternative Compliance'' option (see 
discussion in Part II.A), the original program based on AFV 
acquisitions and biodiesel use became known as ``Standard Compliance.'' 
Each amendment has allowed the fleets to explore the viability of 
expanded use of AFVs and alternative fuels and thereby promote the use 
of replacement fuels.
    For the purposes of EPAct 1992 and related programs, the terms 
``alternative fuel'' and ``replacement fuel'' both are widely used, but 
are not interchangeable. While a more specific definition of 
``alternative fuel'' is set forth below, in general, alternative fuels 
include a variety of non-petroleum transportation fuels, as provided in 
section 301(2) of EPAct 1992. Replacement fuel, as defined in section 
301(14), refers to the alternative fuel portion of an alternative/
petroleum fuel mix or a neat (i.e., 100%) alternative fuel. For 
example, B20 (a 20 percent blend of biodiesel with 80 percent petroleum 
diesel) is not an alternative fuel, but the 20 percent that is non-
petroleum is considered replacement fuel, while B100 (neat biodiesel) 
is both an alternative fuel and a replacement fuel.
    The primary focus of this final rule is section 133 of EISA, which 
amended section 508 of EPAct 1992. EISA section 133 provides 
definitions and directs DOE to allocate credits under section 508 for 
the acquisition by covered fleets of various types of electric drive 
vehicles, and for investments by covered fleets in qualified 
alternative fuel infrastructure, non-road equipment, and emerging 
technologies related to those electric drive vehicles. As discussed in 
more detail below, some of the electric drive vehicles within the 
definitions provided in section 133 already meet the EPAct 1992 
definition of an AFV and therefore already are counted towards a 
fleet's light duty AFV-acquisition requirements or receive one credit 
under the AFTP, as appropriate, while others do not currently meet the 
AFV definition. In this action, DOE is finalizing credit allocations 
under the AFTP for the acquisition by covered fleets of those section 
133-identified electric drive vehicles that do not already qualify as 
AFVs, and for several specific types of investments that covered fleets 
may make. These credit allocations would only impact SFP fleets 
operating under Standard Compliance.
    DOE also is finalizing today modifications to several aspects of 
the existing AFTP. These modifications will enhance the timeliness of 
exemption requests and revise the deadline for submitting Alternative 
Compliance waiver applications. Finally, DOE is making a number of 
clarifications and revisions to make the AFTP regulations consistent 
with amendments to EPAct 1992.

A. General

    The overall objectives of the fleet programs and other efforts 
under Titles III-V of EPAct 1992 are to expand the use of alternative 
fuels and AFVs within specified fleets and to replace petroleum with 
replacement fuels to the ``maximum extent practicable.'' \1\ The 
requirements of Titles III through V of EPAct 1992 focus on particular 
fleets, such as SFP fleets (which are the subjects of this rule) and 
Federal fleets,\2\ as well as voluntary activities, such as those 
implemented under DOE's Clean Cities Program.\3\ The mandated programs 
for centrally-fueled fleets seek to catalyze maximum use of replacement 
fuels, and, in particular, alternative fuels.
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    \1\ 42 U.S.C. 13252(a).
    \2\ Under section 303 of EPAct 1992 (42 U.S.C. 13212), Federal 
fleets were required to acquire AFVs starting in Fiscal Year (FY) 
1993, increasing their acquisitions to 75 percent of all covered 
acquisitions in FY 1999 and thereafter.
    \3\ Under section 505 of EPAct 1992 (42 U.S.C. 13255), DOE 
obtains voluntary commitments from fuel suppliers to make 
replacement fuels available, from fleets to acquire AFVs and use 
alternative fuels, and from vehicle manufacturers to make AFVs and 
related services available to the public. These commitments comprise 
the Clean Cities Program, which works to bring together all 
necessary parties in given geographic areas to further the use of 
alternative fuels.
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    As indicated above, EPAct 1992 establishes AFV-acquisition 
requirements for SFP fleets, which DOE codified as the AFTP at 10 CFR 
490.1 et seq.\4\ Titles III, IV, and V of EPAct 1992 focus on 
requirements for certain centrally-fueled fleets to acquire AFVs.
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    \4\ DOE promulgated the AFTP regulations on March 14, 1996. 61 
FR 10622.
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    EPAct 1992 requires that SFP fleets acquire AFVs as minimum 
percentages of their annual LDV acquisitions (now 90 percent for 
alternative fuel provider fleets and 75 percent for State fleets, in 
sections 501(a) and 507(o), respectively). The types of vehicles that 
satisfy the SFP fleet acquisition mandates are determined primarily by 
the definitions of ``alternative fuel'' and ``alternative fueled 
vehicle'' in section 301 of the statute. The threshold that determines 
whether an SFP fleet is subject to these respective acquisition 
mandates turns on the size and location criteria set forth in the 
section 301 definitions of ``fleet'' and ``covered person.'' Generally, 
covered fleets under the AFTP are those State government entities and 
alternative fuel providers that own, operate, lease, or otherwise 
control 50 or more non-excluded LDVs, at least 20 of which are capable 
of being centrally fueled and are used primarily in a metropolitan 
statistical area (MSA) or consolidated MSA with a 1980 Census 
population of more than 250,000.
    Consistent with sections 501(a)(5) and 507(i)(1) of EPAct 1992, the 
AFTP regulations provide a process through which State fleets and 
alternative fuel provider fleets, respectively, may request exemptions 
from the applicable AFV-acquisition requirements for a particular model 
year. All covered fleets may seek an exemption on the basis of lack of 
available AFVs or lack of available alternative fuels; State fleets 
also may seek an exemption on the basis of unreasonable financial 
hardship.
    Under section 507(o)(2) of EPAct 1992 and its implementing 
regulation, 10 CFR 490.203, States may submit a Light Duty Alternative 
Fueled Vehicle Plan to DOE for approval, which serves as an additional 
compliance option. An approved plan relieves those State fleets that 
are included in the plan from otherwise having to meet the AFV-
acquisition mandate on their own. While the plan must provide for 
voluntary acquisitions or conversions by State, local, and private 
fleet participants that, in the aggregate, equal or exceed the State's 
AFV-acquisition requirement, there is no limit to the number of State, 
local, and private fleets that may participate in the plan. Any such 
plan must include, among other information, a certification from the 
appropriate State official and a written statement of commitment from 
each plan participant.
    Under the AFTP, covered fleets can earn, sell, or purchase AFV-
acquisition credits. Section 508 of EPAct 1992 enables fleets to earn 
bankable and tradable credits by acquiring AFVs prior to or in excess 
of requirements. DOE's implementing regulations for the credit program 
appear at Subpart F of 10 CFR part 490.
    In practice, SFP fleets typically generate surplus credits in one 
of two ways--either by acquiring in a particular model year more of 
their covered LDVs as AFVs (such as acquiring 100 percent as AFVs 
instead of the required 75 or 90 percent), or by acquiring AFVs in 
``excluded vehicle'' classes (such as employee take-home vehicles or 
law enforcement vehicles).\5\ As indicated, they are also able to 
generate credits by acquiring AFVs earlier than required. Fleets may 
use the surplus credits generated in these ways

[[Page 15884]]

in future model years to cover shortfalls (banking), or they may sell 
or trade the credits to other covered fleets. For a fleet that has not 
met its AFV-acquisition requirement in a particular model year, 
purchasing or trading for credits is a viable means by which to attain 
AFTP compliance inasmuch as the fleet can obtain the necessary number 
of credits and thereby compensate for its failure to acquire the 
requisite number of AFVs.
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    \5\ See 10 CFR 490.3.
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    The Energy Conservation Reauthorization Act of 1998 (Pub. L. 105-
388) included an amendment to the EPAct 1992 Title V fleet AFV-
acquisition requirement, allowing SFP fleets to use biodiesel blends 
(of at least 20 percent biodiesel, B20) as an alternative means of 
complying with a portion of their AFV-acquisition requirements (limited 
to meeting 50 percent of requirements, except for biodiesel fuel 
providers). In EPAct 2005, Congress again amended the Title V fleet 
program by providing an optional compliance path for covered fleets 
called ``Alternative Compliance.'' Under this option, an SFP fleet may 
apply for an Alternative Compliance waiver that, if granted by DOE, 
enables the fleet to implement various means of achieving petroleum 
reductions, including but not limited to the use of alternative fuels, 
the use of biodiesel blends without either the B20 threshold or the 50 
percent cap that apply under Standard Compliance, fuel economy 
improvements, the purchase of hybrid and other advanced technology 
(higher efficiency) vehicles, idle time reductions, and a reduction in 
vehicle miles traveled, in lieu of complying through AFV acquisitions 
and/or biodiesel use (under Standard Compliance). The addition of this 
Alternative Compliance option provided additional flexibility to fleets 
exploring the use of alternative fuels, as well as certain fuel 
efficiency technologies (e.g., hybrid vehicles, idle reduction) and 
trip reduction approaches. In fact, the Alternative Compliance option 
already allows fleets to explore many of the technologies that are the 
subject of this final rule.
    This final rule implements EISA section 133, establishing 
regulations to allocate to covered fleets operating under Standard 
Compliance credits under section 508 for the acquisition of various 
types of electric drive vehicles, and for investments in qualified 
alternative fuel infrastructure, non-road equipment, and emerging 
technologies related to specific vehicle types. In developing this 
rule, DOE has been guided by the fact that EISA section 133 
specifically amends section 508 of EPAct 1992 and requires DOE to 
revise the manner in which credits may be earned by covered fleets for 
purposes of achieving SFP fleet compliance. For this reason, DOE is 
assigning credits to those electric drive vehicles identified in 
section 133 that do not already qualify as AFVs based on a yardstick of 
petroleum displacement, rather than simply treating the vehicles as 
equivalent to AFVs. The section 133-identified vehicles that already 
qualify as AFVs already are counted towards a fleet's light duty AFV-
acquisition requirements or receive one credit, as appropriate.

B. Current Status of Alternative Fuel Transportation Program

    Since Model Year (MY) 2000, the AFTP has been highly successful. 
Through MY 2011, covered SFP fleets acquired more than 201,000 AFVs. 
Annually, these fleets typically are acquiring between 10,000 and 
14,000 AFVs.
    SFP fleets unable to acquire AFVs or without alternative fuel 
available for AFVs may file for exemptions from the AFV-acquisition 
requirements, in accordance with the provisions of EPAct 1992 sections 
501(a)(5) and 507(i). Since MY 1997, DOE has received nearly 390 
exemption requests, granting exemptions and thereby relieving the 
requesting fleets from having to acquire more than 10,225 AFVs.
    Covered fleets have used and continue to use the credit program 
regularly. In the early stages of the AFTP, the primary users of 
credits were the fleets generating and banking them to provide 
additional compliance flexibility in future years. Since MY 1997, 
covered SFP fleets have applied approximately 31,000 credits to meet 
AFV-acquisition requirements. Subsequently, while applying banked 
credits has remained a significant use of surplus credits, a number of 
fleets have been selling their credits, with approximately 1,000-1,500 
credits now being exchanged each year, and more than 11,700 credits 
having been exchanged over the life of the Program. Overall, covered 
fleets currently hold approximately 70,000 banked credits, enough 
credits for perhaps four or more years of operation of the entire AFTP 
if covered fleets did not acquire any AFVs but instead traded and 
applied banked credits.

C. Statutory Authority

1. EISA
    EISA section 133 amended section 508 of EPAct 1992 by providing 
definitions of specific electric drive vehicles. These electric drive 
vehicles include ``fuel cell electric vehicles,'' ``hybrid electric 
vehicles,'' ``medium- or heavy-duty electric vehicles,'' ``neighborhood 
electric vehicles,'' and ``plug-in electric drive vehicles.'' (42 
U.S.C. 13258(a)) EISA section 133(3) further amended section 508 by 
directing DOE to allocate credit ``in an amount to be determined by 
[DOE]'' for the acquisition of these electric drive vehicles, as well 
as for ``investment in qualified alternative fuel infrastructure or 
nonroad equipment, as determined by [DOE].'' (42 U.S.C. 13258(b)(2)(A)) 
DOE is also directed to ``allocate more than 1, but not to exceed 5, 
credits for investment in an emerging technology relating to any'' of 
the enumerated electric drive vehicles ``to encourage'' petroleum and 
vehicle emissions reductions and technological advancement. (42 U.S.C. 
13258(b)(2)(B))
    Considered broadly, section 133 requires that DOE allocate some 
level of credit for additional vehicle types and various investments, 
further expanding the list of options that covered fleets may use in 
their efforts to comply with EPAct 1992's AFV-acquisition requirements. 
Importantly, section 133 does not define, nor require DOE to define, 
the specified vehicle types as AFVs--it merely calls for DOE to 
allocate some level of credit to these vehicle types.
    DOE reiterates that EISA section 133 revised section 508 of EPAct 
1992, which pertains to SFP fleets. This final rule therefore addresses 
SFP fleets only, and not Federal fleets.
    The allocations that DOE is adopting today are intended to ensure 
consistency with the overall approach of the relevant provisions of 
EPAct 1992, which focus on the replacement of petroleum fuels through 
the use of replacement fuels to the maximum extent practicable.
    To understand the allocations, it is critical to consider the 
AFTP's existing definitions. As discussed throughout this final rule, 
if a given vehicle type already qualifies as an AFV, it is already 
eligible for either one credit (when it is an excess or early 
acquisition) under the existing AFTP or, assuming it is an LDV, to be 
counted towards a fleet's light duty AFV-acquisition requirements. If 
the vehicle is not an AFV, the focus shifts to whether the specific 
vehicle type is among the electric drive vehicles set forth in EISA 
section 133 and for which Congress directed DOE to determine a specific 
credit level. Similarly, only those investments that fit within the 
definitions provided in this final rule will receive credit under the 
AFTP.

[[Page 15885]]

2. Additional Revisions
    DOE is also finalizing today various AFTP modifications it proposed 
that are unrelated to EISA. These modifications, discussed more fully 
in Part III.D below, include establishing a timeframe for the 
submission of exemption requests and setting a single due date for 
Alternative Compliance waiver applications. Like the existing 
regulations in 10 CFR part 490, the statutory basis for these 
modifications lies in Titles III-V of EPAct 1992, as amended.

II. Public Comments

    On October 31, 2011, DOE published in the Federal Register its NOPR 
proposing credit allocations for acquisitions of certain electric drive 
vehicles and investments in certain infrastructure and technologies, as 
well as making several other modifications to the Alternative Fuel 
Transportation Program. The NOPR stated that DOE would consider public 
comments received on or before December 30, 2011.\6\ DOE received 
timely written comments from eight organizations, including the 
American Public Gas Association (APGA), Eaton Corporation, the Edison 
Electric Institute (EEI), the Electric Drive Transportation Association 
(EDTA), Florida Power & Light Co. (FP&L), Natural Gas Vehicles for 
America (NGV America), the National Electrical Manufacturers 
Association (NEMA), and Securing America's Future Energy (SAFE). All of 
these comments are available in the public docket for this rulemaking. 
The specific issues raised by the commenters are addressed in Part III 
below.
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    \6\ 76 FR at 67288.
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III. Discussion of the Final Rule

    In this section of the preamble, DOE discusses the AFTP definitions 
that are key to DOE's approach to the allocation of credits under EISA 
section 133, as well as the existing AFTP definitions that DOE is 
amending through this action.

A. Existing Definitions

1. Alternative Fuel
    The definition of ``alternative fuel'' for purposes of EPAct 1992 
and its fleet programs is provided in section 301(2),\7\ and the 
corresponding AFTP definition appears at 10 CFR 490.2. DOE proposed to 
add to the regulatory definition the phrase ``including liquid fuels 
domestically produced from natural gas,'' which Congress added to the 
section 301(2) definition in 2000.\8\ DOE did not receive any comments 
on this revision, and is finalizing it as proposed.
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    \7\ 42 U.S.C. 13211(2).
    \8\ See Public Law 106-554 App. D, Div. B, Title I, section 122, 
as codified at 42 U.S.C. 13211(2).
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2. Alternative Fueled Vehicle
    As provided in section 301(3) of EPAct 1992, an alternative fueled 
vehicle is ``a dedicated vehicle or a dual fueled vehicle.'' Thus, for 
a vehicle to be counted towards a fleet's AFV-acquisition requirements 
or receive full (i.e., one) credit under the AFTP, as appropriate, it 
must either be a ``dedicated vehicle,'' which is a vehicle that 
operates solely on alternative fuel, or a ``dual fueled vehicle,'' 
which is a vehicle that has some capability for switching back and 
forth from alternative fuel to conventional fuel (such as a bi-fuel 
natural gas/gasoline vehicle) or otherwise can operate on a blend of 
alternative and conventional fuel (such as a flexible fuel vehicle). 
DOE pointed out in the NOPR that Congress has never amended the 
statutory definition of an AFV as it applies to SFP fleets, though 
Congress has, through section 2862 of the National Defense 
Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), amended the 
definition as it applies to Federal fleets.
    The corresponding AFTP definition of the term ``alternative fueled 
vehicle'' appears at 10 CFR 490.2. When DOE established this 
definition, it included language in the regulatory text clarifying that 
flexible fuel vehicles (FFVs) are encompassed within the definition, 
and also provided a separate definition of the term ``flexible fuel 
vehicle.'' In the NOPR, DOE set forth that FFVs qualify as ``dual 
fueled automobiles'' under the Energy Policy and Conservation Act 
(EPCA) definition of that term (codified at 49 U.S.C. 32901(a)(9)), and 
thus also as AFVs. DOE therefore proposed to streamline the regulatory 
definition of an AFV by deleting the parenthetical reference to FFVs. 
DOE also proposed to delete the AFTP definition of ``flexible fuel 
vehicle'' and subsection (3) in the AFTP definition of ``dual fueled 
vehicle.'' DOE did not receive any comments on these revisions, and is 
finalizing them as proposed.
3. Automobile
    DOE proposed to amend the AFTP definition of ``automobile'' by 
making it consistent with the EPCA definition of the term, which 
Congress revised in section 103(a) of EISA. Specifically, DOE proposed 
to define an ``automobile'' for purposes of the AFTP as ``a 4-wheeled 
vehicle that is propelled by conventional fuel, or by alternative fuel, 
manufactured primarily for use on public streets, roads, and highways 
and having a gross vehicle weight rating of less than 10,000 pounds,'' 
with explicit exceptions for vehicles operated only on a rail line, 
certain vehicles manufactured in different stages by two or more 
original equipment manufacturers, and work trucks. Importantly, DOE 
emphasized that while the proposed definition in 10 CFR 490.2 would 
contain an express gross vehicle weight rating cutoff of ``less than 
10,000 pounds,'' a covered fleet's light duty AFV-acquisition 
requirement in a particular model year would continue to hinge on the 
total number of ``light duty motor vehicles'' the fleet acquired during 
that model year. DOE further emphasized that the regulatory definition 
of the term ``light duty motor vehicle'' would be unchanged, i.e., an 
LDV would continue to be a light duty truck or light duty vehicle with 
a gross vehicle weight rating of 8,500 pounds or less, in accordance 
with section 301(11) of EPAct 1992 (42 U.S.C. 13211(11)). Consistent 
with the revised EPCA definition of ``automobile,'' DOE also proposed 
to add to the AFTP definition of ``automobile'' a reference to, and a 
definition of, the term ``work truck.''
    DOE did not receive any comments on the definitions of 
``automobile'' and ``work truck,'' and is finalizing them as proposed. 
In the interest of clarity, DOE also point outs today that it construes 
``intermediate original equipment manufacturer'' and ``final-stage 
original equipment manufacturer,'' as those terms are used in the 
second exception to the definition of an ``automobile,'' in accordance 
with the meanings given those terms by the National Highway Traffic 
Safety Administration (NHTSA).\9\
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    \9\ See 49 CFR 529.3 and 567.3.
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4. Dedicated Vehicle
    The AFTP regulations at 10 CFR 490.2 currently define the term 
``dedicated vehicle'' to mean:
     (1) An automobile that operates solely on alternative fuel; or
     (2) A motor vehicle, other than an automobile, that operates 
solely on alternative fuel.\10\
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    \10\ In addition to ``automobile,'' as discussed in the text 
above, section 490.2 of the Program regulations provides a 
definition of the term ``motor vehicle.'' See 10 CFR 490.2.
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    For example, a battery electric vehicle (EV) is considered a 
dedicated vehicle and hence an AFV, as defined above, because 
electricity, the only fuel on which the vehicle operates, is an 
``alternative fuel.'' A hybrid electric vehicle (HEV) with an engine 
that operates solely on alternative fuel (e.g., compressed natural gas 
(CNG)) also

[[Page 15886]]

would be considered a dedicated vehicle under the AFTP, and thus an 
AFV.
    To address the future possibility that certain vehicles may operate 
exclusively on more than one alternative fuel, DOE proposed to amend 
the regulatory definition of ``dedicated vehicle'' so that it states 
``operates solely on one or more alternative fuels.'' DOE, which did 
not receive any comments on this issue, is finalizing the revision as 
proposed.
5. Dual Fueled Vehicle
    The AFTP regulations at 10 CFR 490.2 currently define the term 
``dual fueled vehicle'' to mean:
     (1) An automobile that meets the criteria for a dual fueled 
automobile, as that term is defined in section 513(h)(1)(C) of the 
Motor Vehicle Information and Cost Savings Act, 49 U.S.C. 32901(a)(8); 
or
     (2) A motor vehicle, other than an automobile, that is capable of 
operating on alternative fuel and on gasoline or diesel; or
     (3) A flexible fuel vehicle.
    DOE proposed to amend subsection (1) of this definition so that it 
refers to the correct statutory citation for the dual fueled automobile 
definition, 49 U.S.C. 32901(a)(9). DOE did not receive any comments on 
this revision, and is finalizing it as proposed. As discussed in Part 
III.A.2 above, DOE also proposed, and is finalizing the deletion of 
subsection (3) on the grounds that it is no longer necessary.
    In the NOPR, DOE explained that it has always interpreted the 
definition of dual fueled vehicle in the context of NHTSA's minimum 
driving range criteria. Under those criteria, for a passenger 
automobile to be considered a dual fueled automobile, it must be able 
to drive at least 200 miles when operating on the alternative fuel; for 
a dual fueled electric passenger automobile, the automobile must be 
able to operate on a full U.S. Environmental Protection Agency (EPA) 
urban test cycle and a full EPA highway test cycle on electricity 
alone, which means it must meet all speed and acceleration requirements 
over a total of 17.7 miles, albeit with charging allowed prior to each 
of the two test cycles.\11\ DOE stressed that only motor vehicles that 
meet these minimum driving range criteria qualify as dual fueled 
vehicles and hence are considered AFVs under the AFTP.
---------------------------------------------------------------------------

    \11\ 49 CFR 538.5 and 538.6. The test cycles consist of 7.5 
miles of urban driving and 10.2 miles of highway driving.
---------------------------------------------------------------------------

    In the context of plug-in hybrid electric vehicles (PHEVs), DOE 
added that to the extent that questions arose as to whether a PHEV is a 
dual fueled vehicle, DOE would look to NHTSA, meaning that if NHTSA 
considers a particular automobile to be dual fueled under EPCA (i.e., 
for corporate average fuel economy (CAFE) purposes), then DOE would 
treat the vehicle as a dual fueled vehicle and hence an AFV under the 
AFTP.
    EEI and SAFE took issue with DOE's reliance on the NHTSA minimum 
driving range criteria as applied to PHEVs. EEI essentially contended 
that the criteria are outdated and biased against ``blended'' range 
PHEVs that EEI claimed manufacturers plan to offer.\12\ EEI argued that 
like PHEVs that have been optimized for all-electric range, PHEVs with 
blended ranges offer considerable petroleum reduction benefits. EEI 
requested that DOE assess whether a particular PHEV is a dual fueled 
vehicle based on the Society of Automotive Engineers' (SAE) utility 
factor approach, SAE J2841,\13\ with a PHEV having a utility factor at 
or above 0.2 qualifying, and a PHEV with a utility factor below 0.2 not 
qualifying as a dual fueled vehicle. SAFE claimed that DOE is not 
obligated to apply the minimum driving range criteria, either to PHEVs 
or to dual fueled vehicles more generally, and urged DOE to adopt a 
dual fueled vehicle definition that does not have a minimum all-
electric range. While initially supporting DOE's use of the NHTSA 
minimum driving range criteria (indicating its concurrence with one 
credit for PHEVs that can complete the urban and highway cycles on 
electricity alone), EDTA indicated that the existing NHTSA methodology 
is problematic for blended operation PHEVs and recommended that the 
methodology be updated.
---------------------------------------------------------------------------

    \12\ DOE's understanding is that ``blended'' range PHEVs are 
typically designed in a manner to maximize overall battery 
management. As such, ``blended'' range PHEVs may be designed (though 
not always) with some level of all-electric range, but that all-
electric operation may not necessarily apply to all load or speed 
conditions (including all conditions required under the EPA urban 
and highway test cycles). For example, even for a ``blended'' range 
PHEV designed with some level of all-electric range, operation 
purely on electricity may only be available up to a certain vehicle 
speed or acceleration level.
    \13\ See http://www.sae.org, specifically SAE J2841, ``Utility 
Factor Definitions for Plug-In Hybrid Electric Vehicles Using Travel 
Survey Data'' (Sept. 21, 2010).
---------------------------------------------------------------------------

    DOE disagrees with these comments. Congress defined the term ``dual 
fueled vehicle'' in section 301(8) of EPAct 1992 (42 U.S.C. 13211(8)), 
and that definition incorporates the EPCA definition of a dual fueled 
automobile, which definition, in turn, expressly includes the minimum 
driving range requirement for dual fueled passenger automobiles (49 
U.S.C. 32901(a)(9)(D)). DOE cannot ignore, and does not have the 
authority to revise, the criteria prescribed by NHTSA under 49 U.S.C. 
section 32901(c).
    Moreover, EPA determines whether a particular vehicle meets the 
NHTSA minimum driving range requirement applicable to dual fueled 
electric automobiles. DOE relies, and must continue to rely, on EPA and 
NHTSA for this key information. Once it is determined that a particular 
PHEV meets the driving range requirement and, thus, qualifies as a dual 
fueled electric automobile, DOE will treat the vehicle as an AFV and 
either count it towards the fleet's AFV-acquisition requirements or 
accord it one credit (when it is an excess or early acquisition). 
Conversely, a PHEV that does not meet the minimum driving range 
requirement will be treated by DOE as a non-AFV PHEV.\14\
---------------------------------------------------------------------------

    \14\ For MY 2014 and later PHEVs, DOE encourages covered fleets 
to review the EPA/DOT (i.e., Department of Transportation) Fuel 
Economy and Environment label (a/k/a, the fuel economy window 
sticker, sometimes known as the Monroney label) that is posted on 
all new LDVs. See 76 FR 39478 (July 6, 2011). If the label contains 
the statement, ``[t]his is a dual fueled automobile,'' then the PHEV 
is a dual fueled vehicle and hence an AFV under the AFTP.
---------------------------------------------------------------------------

6. Electric Motor Vehicle and Electric-Hybrid Vehicle
    DOE proposed to remove the ``electric motor vehicle'' and 
``electric-hybrid vehicle'' definitions from 10 CFR 490.2, and to 
delete section 490.307 from the AFTP regulations on the grounds that 
the electric utility option contained in that section was time limited 
and the period for the option had long since passed. DOE explained in 
the NOPR that the definitions would be extraneous in the absence of the 
electric utility option. DOE invited public comments on these proposed 
deletions, but received none. Consequently, DOE is finalizing the 
amendments as proposed.
    Because the deleted definitions of ``electric motor vehicle'' and 
``electric-hybrid vehicle'' were the sole reasons for listing title VI 
of EPAct 1992 in section 490.1(a) of the AFTP regulations, DOE also is 
revising that regulatory provision by deleting the reference to title 
VI.
7. Section 133-Identified Vehicles That Already Qualify as AFVs
    Of the electric drive vehicles identified in EISA section 133, DOE 
notes that several types of vehicles within those definitions already 
qualify as AFVs and, for that reason, already are counted towards a 
fleet's light duty

[[Page 15887]]

AFV-acquisition requirements or receive one credit under the AFTP, as 
appropriate. These include certain HEVs, PHEVs, and fuel cell electric 
vehicles (FCEVs), light duty battery electric vehicles, and medium- or 
heavy-duty battery electric vehicles.
    An HEV or PHEV equipped with an engine that is capable of operating 
on a liquid or gaseous alternative fuel (e.g., E85 or CNG) is either a 
dual fueled vehicle (if the engine can operate on the alternative fuel 
and on gasoline or diesel) or a dedicated vehicle (if the engine 
operates solely on the alternative fuel), and, consequently, already an 
AFV. Similarly, a PHEV with a conventional gasoline (or other 
petroleum-fueled) engine is a dual fueled vehicle and therefore already 
an AFV under the AFTP if it qualifies as a dual fueled electric 
automobile under the applicable NHTSA criteria.
    FCEVs, as discussed more fully in Parts III.B.1 and III.C.2.c 
below, use a ``fuel cell,'' which typically is fueled by hydrogen, an 
alternative fuel, but which can also be fueled by a petroleum fuel 
(e.g., gasoline or diesel). An FCEV that operates on alternative fuel 
is either a dedicated vehicle (if the FCEV's fuel cell is fueled solely 
by an alternative fuel such as hydrogen) or a dual fueled vehicle (if 
the FCEV's fuel cell can be fueled by an alternative fuel, such as 
hydrogen, and by gasoline or diesel fuel) and, consequently, already an 
AFV under the AFTP.
    Battery EVs (e.g., the Nissan Leaf, Tesla Model S, Ford Focus 
Electric, Honda Fit EV, and Mitsubishi i-MiEV) are already considered 
AFVs under section 301 of EPAct 1992 by virtue of electricity's 
inclusion within the definition of alternative fuel. Hence, when 
acquired by covered fleets, they, too, are already eligible to be 
counted as AFV acquisitions under the AFTP. Finally, medium- or heavy-
duty battery electric vehicles (e.g., the Smith Electric Newton) 
likewise are entitled to one credit because they, too, already qualify 
as AFVs (although to receive credit for the medium- or heavy-duty AFV, 
the covered fleet first must meet its light duty AFV-acquisition 
requirement, as discussed in Part III.C.2.e below).
    In sum, the following already qualify as AFVs: (1) HEVs and PHEVs 
with an engine that operates solely on alternative fuel or one that can 
operate on alternative fuel and on gasoline or diesel; (2) PHEVs that 
meet the NHTSA minimum driving range criteria and thus qualify as dual 
fueled electric automobiles; (3) FCEVs that operate solely on 
alternative fuel or on alternative fuel and on gasoline or diesel; (4) 
light duty battery electric vehicles; and (5) medium- or heavy-duty 
battery electric vehicles. As a result, these vehicles are already 
entitled to be counted towards a fleet's light duty AFV-acquisition 
requirements (assuming they are LDVs) or to receive one credit under 
the AFTP, although in the case of medium- or heavy-duty AFVs, they are 
not entitled to credit until the fleet has met its light duty AFV-
acquisition requirement.

B. New Definitions: EISA Section 133 Vehicles and Investments

    As described in the following paragraphs, DOE is finalizing 
definitions of various terms for purposes of Subpart F of the AFTP 
regulations, in accordance with the definitions provided in section 
508(a) of EPAct 1992, as amended by EISA section 133.
1. Fuel Cell Electric Vehicle
    A ``fuel cell electric vehicle'' is defined for purposes of section 
508 of EPAct 1992, as amended, as an ``on-road or non-road vehicle that 
uses a fuel cell (as defined in section 803 of the Spark M. Matsunaga 
Hydrogen Act of 2005 (42 U.S.C. 16152)).'' Section 803 of the Hydrogen 
Act of 2005 defines a ``fuel cell'' as a ``device that directly 
converts the chemical energy of a fuel, which is supplied from an 
external source, and an oxidant into electricity by electrochemical 
processes occurring at separate electrodes in the device.'' Typically, 
FCEVs are actually fuel cell hybrid vehicles that include some form of 
electric storage medium (such as batteries) to allow for better 
matching of vehicle generation capabilities to performance demand. Most 
FCEVs currently under development are fueled by hydrogen, either in 
compressed or liquefied form, but some that have been developed use 
onboard reformers to allow fueling with other fuels (e.g., petroleum 
fuels or other alternative fuels like methanol or natural gas).
    DOE proposed adopting in Subpart F of the AFTP regulations the 
statutory definition of ``fuel cell electric vehicle,'' albeit with the 
substitution of ``motor vehicle'' in place of the term ``on-road.'' DOE 
did not receive any comments on the proposed FCEV definition, and is 
finalizing it in 10 CFR 490.501.\15\
---------------------------------------------------------------------------

    \15\ DOE notes that the AFTP definition of an FCEV is not 
identical to the definition of ``fuel cell vehicle'' found in EPA's 
light duty vehicle greenhouse gas emission standards under the Clean 
Air Act. See 40 CFR 86.1803-01; 75 FR 25324, 25684 (May 7, 2010). 
However, this final rule is consistent with EISA section 133.
---------------------------------------------------------------------------

2. Hybrid Electric Vehicle
    EISA section 133 defines a ``hybrid electric vehicle'' for purposes 
of section 508 of EPAct 1992, as amended, as a ``new qualified hybrid 
motor vehicle (as defined in section 30B(d)(3) of the Internal Revenue 
Code of 1986).'' Section 30B(d)(3) of the Internal Revenue Code (26 
U.S.C. 30B(d)(3)) defines the term ``new qualified hybrid motor 
vehicle'' and sets specific conditions for purposes of meeting this 
definition, including that a motor vehicle be one that ``draws 
propulsion energy from onboard sources of stored energy which are both 
an internal combustion or heat engine using consumable fuel and a 
rechargeable energy storage system'' and has a maximum available power 
of a set minimum amount. In the case of a light duty vehicle, the 
vehicle also must be one that ``has received a certificate of 
conformity under the Clean Air Act and meets or exceeds the 
[applicable] equivalent qualifying California low emission vehicle 
standard under section 243(e)(2) of the Clean Air Act'' as well as 
``the [applicable] emission standard [established by EPA] under section 
202(i) of the Clean Air Act,'' among other conditions.\16\ In the case 
of a vehicle with a gross vehicle weight rating of more than 8,500 
pounds, the vehicle also must be one that ``has an internal combustion 
engine which has received a certificate of conformity under the Clean 
Air Act as meeting the emission standards set [by EPA for] diesel heavy 
duty engines or ottocycle heavy duty engines,'' among other 
conditions.\17\
---------------------------------------------------------------------------

    \16\ See generally Internal Revenue Service, Notice 2006-9--
Credit for New Qualified Alternative Motor Vehicles (Advanced Lean 
Burn Technology Motor Vehicles and Qualified Hybrid Motor Vehicles), 
available at http://www.irs.gov/irb/2006-06_IRB/ar11.html.
    \17\ See generally Internal Revenue Service, Notice 2007-23--
Credit for New Qualified Heavy-Duty Hybrid Motor Vehicles, available 
at http://www.irs.gov/irb/2007-23_IRB/ar08.html.
---------------------------------------------------------------------------

    DOE proposed adopting in Subpart F of the AFTP regulations the EISA 
section 133 definition of ``hybrid electric vehicle.'' DOE did not 
receive any comments on the proposed HEV definition, and is finalizing 
it in 10 CFR 490.501.\18\
---------------------------------------------------------------------------

    \18\ DOE notes that the AFTP definition of an HEV is not 
identical to the HEV definition found in EPA's light duty vehicle 
greenhouse gas emission standards under the Clean Air Act. See 40 
CFR 86.1803-01; 75 FR 25324, 25684 (May 7, 2010). However, this 
final rule is consistent with EISA section 133.
---------------------------------------------------------------------------

3. Medium- or Heavy-Duty Electric Vehicle
    EISA section 133 defines a ``medium- or heavy-duty electric 
vehicle'' for purposes of section 508 of EPAct 1992, as amended, as 
``an electric, hybrid electric, or plug-in hybrid electric

[[Page 15888]]

vehicle with a gross vehicle weight of more than 8,501 pounds.'' To be 
consistent with section 301(11) of EPAct 1992, which defines a light 
duty motor vehicle as a vehicle weighing 8,500 pounds or less, DOE 
proposed to define a medium- or heavy-duty electric vehicle in 10 CFR 
490.501 as ``an electric, hybrid electric, or plug-in hybrid electric 
vehicle with a gross vehicle weight rating of more than 8,500 pounds.''
    EEI recommended that the proposed definition be broadened to 
include medium- and heavy-duty battery EVs and FCEVs, while EDTA 
requested that DOE clarify that the proposed definition encompasses 
medium- and heavy-duty battery EVs, HEVs, PHEVs, and FCEVs.
    Except for FCEVs, DOE's proposed definition of ``medium or heavy-
duty electric vehicle'' expressly included all of the medium- and 
heavy-duty vehicles mentioned by these commenters, and DOE maintains 
that no revision or additional clarification is needed. With respect to 
``medium- or heavy-duty FCEVs,'' although DOE proposed to define them 
separately, it also proposed to treat these vehicles in the same manner 
as ``medium- or heavy-duty electric vehicles''--\1/2\ credit for those 
that are not AFVs. DOE is finalizing the definitions as proposed.\19\
---------------------------------------------------------------------------

    \19\ As discussed in Part III.B.8 below, DOE is adding medium- 
or heavy-duty FCEVs to the definition of ``emerging technology.''
---------------------------------------------------------------------------

4. Neighborhood Electric Vehicle
    EISA section 133 defines a ``neighborhood electric vehicle'' (NEV) 
for purposes of section 508 of EPAct 1992, as amended, as ``a 4-wheeled 
on-road or nonroad vehicle that--(A) has a top attainable speed in 1 
mile of more than 20 mph and not more than 25 mph on a paved level 
surface; and (B) is propelled by an electric motor and [an] on-board, 
rechargeable energy storage system that is rechargeable using an off-
board source of electricity.'' In the NOPR, DOE proposed to adopt this 
statutory definition in Subpart F of the AFTP regulations.
    EEI suggested that the maximum attainable speed of 25 mph be 
increased, and that the proposed definition be revised further to 
enable vehicles with more than 4 wheels to qualify. DOE notes that it 
does not have the authority to modify the definitional criteria 
Congress established. Consequently, DOE is finalizing the proposed NEV 
definition in 10 CFR 490.501.
5. Plug-In Electric Drive Vehicle
    EISA section 133 defines a ``plug-in electric drive vehicle'' for 
purposes of section 508 of EPAct 1992, as amended, as ``a vehicle that 
-- (A) draws motive power from a battery with a capacity of at least 4 
kilowatt-hours; (B) can be recharged from an external source of 
electricity for motive power; and (C) is a light-, medium-, or heavy-
duty motor vehicle or nonroad vehicle (as those terms are defined in 
section 216 of the Clean Air Act (42 U.S.C. 7550)).'' Section 216 of 
the Clean Air Act defines the term ``motor vehicle'' to mean ``any 
self-propelled vehicle designed for transporting persons or property on 
a street or highway,'' and it defines ``nonroad vehicle'' as a vehicle 
that is ``powered by a nonroad engine and that is not a motor vehicle 
or a vehicle used solely for competition.'' DOE proposed to adopt in 
Subpart F of the AFTP regulations the section 133 definition of ``plug-
in electric drive vehicle.''
    DOE explained in the NOPR that there are two primary forms of plug-
in electric drive vehicles: (1) Battery EVs; and (2) PHEVs, assuming 
they have a minimum battery capacity of four kilowatt-hours (kWh).\20\ 
For the purposes of this rulemaking, PHEVs are considered similar in 
many cases to today's available HEVs, but PHEVs include greater 
electric storage capacity (and therefore use either a different type of 
battery or simply more/larger batteries than HEVs), possess the 
capability to recharge their electric storage system by ``plugging in'' 
to an off-board source, and typically have the capability for some 
electric-only operation. As indicated above, DOE considers a PHEV that 
is equipped with a conventional gasoline (or other petroleum-fueled) 
engine to be a dual fueled vehicle, and thus also an AFV, if it is able 
to complete the EPA urban and highway test cycles on electricity alone.
---------------------------------------------------------------------------

    \20\ DOE reiterates that it expects all PHEVs to have a battery 
capacity of at least four kWh, because that is the minimum battery 
capacity needed for a vehicle to qualify for the Federal tax credit 
for new qualified plug-in electric drive motor vehicles. See 26 
U.S.C. 30D(d)(1)(F)(i).
---------------------------------------------------------------------------

    SAFE urged DOE to eliminate from the plug-in electric drive vehicle 
definition the four kWh minimum battery capacity, contending that the 
requirement is inappropriate because plug-in vehicles with a lower 
battery capacity could displace considerably more petroleum than FFVs 
operating on gasoline. DOE emphasizes in response that it is bound by 
the EISA section 133 definition of ``plug-in electric drive vehicle,'' 
and does not have the authority to modify the criteria set by Congress. 
If a PHEV with a battery capacity below the four kWh minimum in fact 
becomes available, DOE notes that although such a vehicle would not 
qualify as a plug-in electric drive vehicle and, as a result, would not 
be eligible for the \1/2\ credit that DOE is allocating today to non-
AFV plug-in electric drive vehicles (see Part III.C.2.b below), a 
covered fleet acquiring such a vehicle would still receive \1/2\ credit 
because the vehicle would qualify as a non-AFV hybrid electric vehicle 
(see Part III.C.2.a below). Furthermore, notwithstanding the vehicle's 
insufficient battery capacity, if it is equipped with a liquid or 
gaseous alternative fuel-capable engine, the vehicle, as an AFV, would 
entitle the acquiring fleet either to count the vehicle as an AFV 
acquisition or earn one credit (if it is an excess or early AFV 
acquisition).
6. Alternative Fuel Infrastructure
    EISA section 133 provides no definition of the term ``alternative 
fuel infrastructure,'' merely indicating that DOE should allocate 
credit for ``investment in qualified alternative fuel infrastructure . 
. ., as determined by the Secretary.'' DOE proposed to base the Subpart 
F definition of this term on the Internal Revenue Code definition of 
``qualified clean-fuel vehicle refueling property'' (26 U.S.C. 
179A(d)), such that ``alternative fuel infrastructure'' would mean one 
or more alterative fueling stations or one or more charging or battery 
exchange stations for EISA section 133-specified electric drive 
vehicles.
    Two organizations, APGA and NGV America, commented on the proposed 
definition of ``alternative fuel infrastructure.'' Both expressed their 
support for it. DOE is finalizing the definition in 10 CFR 490.501, 
albeit with one minor revision to ensure that stations for NEVs are 
encompassed within the definition.
7. Alternative Fuel Non-Road Equipment
    EISA section 133 also provides no definition of the term 
``alternative fuel nonroad equipment.'' Congress simply instructed DOE 
to allocate credit for ``investment in qualified alternative fuel . . . 
nonroad equipment, as determined by the Secretary.'' DOE proposed to 
consider as eligible for credit only non-road equipment that is mobile, 
such as mobile cargo and material handling equipment (e.g., forklifts) 
and mobile farm, landscaping, or construction equipment (e.g., riding 
lawnmowers, tractors, bulldozers, backhoes, front-end loaders, rollers/
compactors). Consistent with the Program's focus on vehicle 
acquisitions, DOE explained that stationary non-road equipment would 
not qualify.

[[Page 15889]]

    DOE received three comments on the proposed definition of 
``alternative fuel non-road equipment.'' All three commenters (APGA, 
FP&L, and NGV America) supported the proposed definition. DOE is 
finalizing it in 10 CFR 490.501. As explained in Part III.C.3.b below, 
a fleet seeking credit for its investment in such equipment will have 
to certify that the equipment is being operated on alternative fuel, 
within the constraints of best practices or seasonal fuel availability. 
In addition, DOE clarifies today that to be considered mobile, the non-
road equipment must be self-propelled. Thus, a generator that is 
portable by virtue of its placement on a towing skid or trailer does 
not qualify as alternative fuel non-road equipment notwithstanding its 
operation on biodiesel. Similarly, a walk-behind lawnmower, even though 
powered by alternative fuel, is not alternative fuel non-road 
equipment.
8. Emerging Technology
    As with ``alternative fuel infrastructure'' and ``alternative fuel 
nonroad equipment,'' EISA section 133 does not provide a definition of 
the term ``emerging technology,'' although the statute indicates that 
such technology must ``relat[e] to'' any of the electric drive vehicles 
that Congress described earlier in section 133. Based on its experience 
in deploying advanced vehicle technologies, DOE proposed to interpret 
``emerging technology'' to mean pre-production or pre-commercially-
available vehicles of the types defined and described in section 133. 
DOE expressed its belief that once these vehicle technologies reach the 
point of being mass produced or commercially available and thus are 
beyond the stage of demonstration or initial data collection, the 
provision of any investment credit under section 508 of EPAct 1992, as 
amended, would be inappropriate inasmuch as acquisition credit would 
then be warranted.
    NGV America supported the proposed focus on pre-production or pre-
commercially available vehicles, but argued for an expansion of the 
definition's coverage to include pre-production or pre-commercially 
available natural gas vehicles, thereby enabling emerging technology 
investment credit for these vehicles as well. DOE disagrees with such 
an expansion, and reiterates that Congress made clear in EISA section 
133 that emerging technology must ``relat[e] to'' one of the enumerated 
electric drive vehicles. DOE does not have the statutory authority to 
expand the definition's reach to any other vehicle types.
    EEI contended that the term ``emerging technology'' should not be 
restricted to pre-production or pre-commercially available vehicles, 
and should encompass production or commercially available versions of 
the electric drive vehicles. EEI also stated that NEVs do not further 
the electric drive vehicle industry's technological advancement, and 
for that reason should not be among the vehicle types identified as 
emerging technology. DOE disagrees with both of these positions. 
Regarding production (including limited production) or commercially 
available versions of the electric drive vehicles, DOE reiterates that 
credit for their acquisition will be provided under the vehicle-
specific credit provisions of this final rule (Part III.C.2 below). 
EEI's suggested approach would effectively provide double credit for 
commercially available vehicles--credit for their acquisition as well 
as investment credit. DOE believes this would be excessive, and notes 
that it proposed, and today is finalizing, that a covered fleet cannot 
earn duplicate credits for multiple reasons stemming from the same 
vehicle acquisition. Instead, the fleet must choose whether to seek 
credit at the applicable level for the vehicle's acquisition or under 
the emerging technology investment crediting provisions. With respect 
to NEVs, because they are one of the vehicles that Congress described 
in section 133, DOE maintains that they, too, must be identified in the 
definition.
    DOE is making one substantive change to the definition of 
``emerging technology'' that it proposed. DOE is adding the term 
``medium- or heavy-duty fuel cell electric vehicle'' to the vehicles 
identified in the definition, to make clear that a pre-production or 
pre-commercially available version of a medium- or heavy-duty FCEV, 
like the other listed vehicles (i.e., HEVs, medium- or heavy-duty 
electric vehicles, NEVs, plug-in electric drive vehicles, and light 
duty FCEVs), is eligible for emerging technology investment credit.

C. Allocation of Credit

1. General Basis for Allocations
    Because the AFTP and Title V of EPAct 1992 are designed to 
encourage the replacement of petroleum fuels with non-petroleum fuels 
through covered fleets' acquisition and use of AFVs, DOE proposed to 
allocate credit to those EISA section 133-identified electric drive 
vehicles that do not already qualify as AFVs (e.g., HEVs equipped with 
a petroleum-fueled engine) based on a yardstick of petroleum 
displacement, rather than simply treating the vehicles as the 
equivalent of AFVs. Non-AFVs, DOE posited, should receive partial 
rather than full credit because they do not have as significant an 
effect on the potential for petroleum replacement as AFVs. For example, 
even if a non-AFV HEV achieves twice the efficiency of a comparable 
non-hybrid vehicle, the non-AFV HEV only reduces petroleum consumption 
by one half, whereas an AFV operated solely on alternative fuel reduces 
petroleum consumption in full. For fleets wanting to make use of higher 
efficiency vehicles and other technologies, the AFTP's Alternative 
Compliance option provides a flexible means by which to achieve 
compliance with the Program.
    In accordance with section 133, DOE also proposed to allocate 
credits for covered fleets' investments in qualified alternative fuel 
infrastructure, qualified alternative fuel non-road equipment, and 
relevant emerging technologies, with 1 credit to be earned for every 
$25,000 invested. Within each investment category, DOE proposed a 5-
credit cap on the number of credits that could be earned in a single 
model year, although for the alternative fuel infrastructure category, 
DOE proposed a 10-credit cap for infrastructure that is publicly 
accessible. DOE explained that the credit caps would help limit the 
degree to which the AFTP's existing surplus of banked credits (see Part 
III.D below) grows in the future.
    FP&L suggested that in allocating credit under section 133, DOE 
should place additional emphasis on the extent to which a particular 
covered fleet has demonstrated its support for the EPAct 1992 objective 
of replacing petroleum with replacement fuels to the ``maximum extent 
practicable.'' \21\ While DOE believes that such an approach could 
further encourage the acquisition of AFVs and enhanced use of 
alternative fuels, thereby fostering an expansion of alternative fuel 
infrastructure, DOE maintains that its allocation of credit must be 
done in an equitable and even-handed manner, applied consistently 
across covered fleets. This necessarily means that the same vehicle 
acquisition or the same level of investment must yield the same number 
of credits for different fleets. In DOE's view, allocating unequal 
levels of credit to fleets that acquired the same vehicle or invested 
the same amount would be unfair. Equally important, Congress, through 
section 508 of EPAct 1992 as originally enacted and as amended by EISA 
section 133, has not authorized DOE to factor into the credit 
allocation

[[Page 15890]]

process a fleet's ``support'' for petroleum replacement.
---------------------------------------------------------------------------

    \21\ 42 U.S.C. 13252(b).
---------------------------------------------------------------------------

2. Electric Drive Vehicles
    EISA specifies several types of vehicle technologies for which DOE 
must determine the amount of credit each is to be allocated under the 
AFTP credit program. These include HEVs, plug-in electric drive 
vehicles, FCEVs, NEVs, and medium- and heavy-duty electric vehicles. As 
indicated above and as described in detail in the NOPR, some versions 
of these vehicle types may be considered AFVs under the Program, and 
thus no allocation of credit under EISA section 133 is required. In 
this section, DOE explains the credit allocations for non-AFV electric 
drive vehicles that are being finalized in this action.
    Several commenters provided comments that applied to more than one 
electric drive vehicle category, which will be reviewed prior to 
category-specific comments. NGV America indicated that it was largely 
supportive of DOE's proposal of partial credits for non-AFV electric 
drive vehicles ``based on the fact that none of the vehicles at issue 
have the potential to displace as much petroleum as an AFV that 
operates on alternative fuel.''
    EDTA suggested that DOE provide additional credit for the 
acquisition of electric drive vehicle types in the form of an 
``emerging technology premium.'' Under EDTA's approach, there would be 
additional credit provided for ``new, limited, or low production'' 
electric drive vehicles, ranging in value from one to five credits per 
acquisition. This premium would be applicable to all categories of 
electric drive vehicles, including those that qualify as AFVs, as well 
as those that do not, and would be available for each electric drive 
vehicle until some DOE-designated threshold of penetration in covered 
fleets was achieved. This premium also would be separate and distinct 
from the credits allocated to investments in emerging technologies 
(Part III.C.3.c. below). EEI similarly suggested additional credit for 
electric drive vehicles that qualify as ``emerging technologies,'' 
ranging from a 2.5 multiplier for light duty vehicles to a 5.0 
multiplier for medium- and heavy-duty vehicles. EEI also offered that 
such additional credits should sunset once certain levels of 
penetration are reached:
     ``Light-duty--50,000 cumulative eligible emerging 
technology vehicles were acquired in eligible fleets (or 20,000 for a 
single technology such as HEVs, PHEVs, FCVs, or BEVs).
     Medium and heavy duty--25,000 cumulative eligible emerging 
technology vehicles in eligible fleets (or 10,000 for a single 
technology as above).''
    DOE appreciates the EEI and EDTA suggestions as means by which to 
encourage and improve the market penetration of new technologies. 
Nonetheless, DOE rejects the suggestions for several reasons. First, 
the approaches EEI and EDTA offer do not provide certainty to covered 
fleets. For example, it may be unclear whether a vehicle acquired would 
still qualify for the emerging technology premium due to sudden changes 
in market penetration. If a threshold were reached during the model 
year, the level of credit available would hinge on when during the 
model year a fleet submitted its supporting documentation (i.e., before 
or after the threshold was reached). Second, EDTA did not suggest what 
might be considered an appropriate penetration level. While EEI did 
offer possible sunset levels, given that the entire Program typically 
results in the acquisition of roughly 10,000-14,000 AFVs per model 
year, the levels EEI proposed could easily be equal to as many as five 
years' worth of acquisitions by the entire Program. Without further 
supporting justification, DOE believes that such a level of production 
cannot still be considered ``emerging technology.'' Third, the approach 
EDTA and EEI proposed would only apply to electric drive vehicles, and 
not to other types of AFVs. Applying this premium only to electric 
drive vehicles would effectively discriminate against other AFV types. 
In fact, given that EDTA and EEI would apply this premium to all 
electric drive vehicle categories, this could result in far greater 
credit being provided for a non-AFV (such as an emerging technology 
hybrid electric vehicle) than an AFV, which would, as described in this 
preamble, still be seen as providing a greater potential for petroleum 
reduction. Therefore, DOE declines to incorporate an ``emerging 
technology premium'' into its credit allocation method for electric 
drive vehicles.
a. Hybrid Electric Vehicles
    Currently available light duty HEVs have a conventional gasoline 
engine and an electric motor that provides a boost or otherwise 
provides only some motive force. As indicated in the NOPR, because they 
are neither dedicated vehicles nor dual fueled vehicles, they have not 
previously qualified for AFV treatment (or excess acquisition credit) 
under the AFTP. Current HEVs simply offer higher efficiency than 
conventionally-fueled vehicles, as represented by mile per gallon (mpg) 
ratings.
    Under the Alternative Compliance option, fleets can comply by using 
HEVs to help meet their petroleum reduction requirement. For more 
information on HEVs and Alternative Compliance, see http://www1.eere.energy.gov/vehiclesandfuels/epact/pdfs/alt_compliance_guide.pdf or the final rule for Alternative Compliance at 72 FR 12958 
(March 20, 2007).
    DOE proposed that HEVs that are not AFVs because they lack an 
alternative fuel-capable engine would receive \1/2\ credit, rather than 
the full credit that dedicated and dual fueled vehicles already 
receive.\22\ DOE's proposal to allocate \1/2\ credit was based on the 
petroleum replacement potential of these vehicles, as well as their 
energy efficiency (i.e., fuel economy), which effectively dictates 
their petroleum replacement potential.
---------------------------------------------------------------------------

    \22\ Note that in order to give meaning to the EISA section 133 
amendments, covered fleets will earn credits for light duty HEVs 
(and, except for medium- and heavy-duty vehicles, all of the other 
EISA section 133-identified electric drive vehicles) under this 
final rule even if they have not yet met their light duty AFV-
acquisition requirements. While each light duty HEV purchase would 
increase the fleet's acquisition requirements as a non-excluded LDV 
purchase at a faster rate than it would offset such requirements, 
the rule would provide the concomitant benefit of providing 
immediately available credits. If the rule were to only allow the 
allocation of credits once the AFV-acquisition requirements had been 
met, an HEV purchase would afford no compliance benefit.
---------------------------------------------------------------------------

    DOE assumed the same annual usage (i.e., miles driven per year) for 
an HEV and a conventional vehicle. For the vast majority of HEVs (other 
than PHEVs, as described below), the fuel economy improvement that each 
HEV model achieves versus a conventional vehicle model is limited. DOE 
examined the efficiency gains and found that most HEVs generate 
efficiency gains that would suggest a credit value on the order of \1/
4\ credit or less in some instances. Some HEV models, in fact, achieve 
fuel economy barely greater than conventional internal combustion 
engine versions of the same model, while other HEV models actually 
achieve lower fuel economy than the most fuel efficient models in the 
same size class.
    Still other HEVs, however, do achieve a considerably higher 
efficiency than the most fuel efficient conventional models in the same 
EPA size class. As DOE explained in the NOPR, for MY 2011, the most 
notable of these HEVs were the 2011 Toyota Prius, Mercury Milan Hybrid 
FWD, and Ford Fusion Hybrid FWD, which were the most fuel efficient 
midsize HEVs on the market, and demonstrated an average 39% improvement 
in fuel economy and a 25% reduction in fuel use. Based on this

[[Page 15891]]

information, DOE proposed to allocate \1/2\ credit to all HEVs. DOE 
today is finalizing this allocation level.
    As indicated in the NOPR, DOE specifically considered proposing a 
higher credit value for those HEVs that provide significant efficiency 
gains and lower values for those HEVs with comparatively smaller 
efficiency gains. In the end, though, DOE believed that a single credit 
value for all HEVs would be most manageable from an administrative 
standpoint and represents an approximation of the petroleum reduction 
of the average hybrid electric vehicle. DOE also concluded that 
selecting a single value provides greater clarity and certainty for 
fleets when it comes to determining the credit value for a given hybrid 
vehicle, easing acquisition and compliance planning. Although the 
petroleum displacement achieved by the most efficient midsize HEVs, 
when compared to the most efficient conventional midsize cars, suggests 
a credit value closer to \1/3\, to provide an incentive for fleets to 
acquire HEVs, DOE continues to believe that \1/2\ credit for all non-
AFV HEVs is appropriate given the AFTP's goal of having fleets serve 
both as launching pads for new technologies and as entities seeking to 
achieve petroleum consumption reductions. In addition, it is 
anticipated that as hybrid technologies develop, the efficiency of 
these vehicles should increase.
    Figure 1 below provides the credit allocation determination process 
for HEVs (as well as for PHEVs and FCEVs). It is the same credit 
allocation determination figure that DOE provided in the NOPR.
[GRAPHIC] [TIFF OMITTED] TR21MR14.000

    NGV America recommended that non-AFV HEVs should be required to 
achieve at least a 30% fuel economy improvement over a comparable 
conventional vehicle in order to receive the \1/2\ credit. Similarly, 
EEI suggested that non-AFV HEVs be required to achieve some minimum 
level of efficiency improvement, though it did not specify the 
percentage improvement over the baseline that should be required. EEI, 
as well as FP&L, suggested additional modifications to the credit 
allocations for HEVs, however, they both indicated that covered fleets 
acquiring non-AFV HEVs should be allowed to claim the \1/2\ credit or 
``a higher credit on a sliding scale, based on the rated mile per 
gallon efficiency (or field measured efficiency),'' with a fleet 
requesting such higher credit needing to submit documentation for 
approval by DOE.
    Although each of these commenters clearly focused on the petroleum 
reduction potential of HEVs, DOE must reject these proposals. While 
FP&L focused on DOE's statements in the NOPR concerning ensuring that 
the allocation process be ``manageable from an administrative 
standpoint,'' DOE notes that this was only one of several reasons why 
DOE is taking this approach. For example, fleets must have some level 
of certainty concerning the value (credits) of a given acquisition. 
Also, an award of credits must be fair and equitable across all fleets. 
The comments, however, would create a relatively uncertain and uneven 
basis for the award of credits. For example, suggestions of the 
commenters would

[[Page 15892]]

make it such that different fleets could receive different levels of 
credit for the acquisition of the same vehicle model, depending on 
model year, because the efficiency of the vehicle versus some 
conventional baseline may vary from year to year. Further, the 
approaches offered would create additional administrative burden on 
reporting fleets and would create a relatively complex framework for 
earning credits. As a result, DOE is unconvinced that such a framework 
would be fair, equitable, and worth the additional burden on covered 
fleets.
    Therefore, DOE is finalizing the credit allocation for HEVs that 
are not AFVs at \1/2\ credit per vehicle.
b. Plug-In Electric Drive Vehicles
    As explained above, there are two primary forms of plug-in electric 
drive vehicles: (1) Battery EVs; and (2) PHEVs, assuming they have a 
minimum battery capacity of 4 kWh. Battery electric vehicles are 
already entitled to one credit, as they qualify as dedicated vehicles 
and, hence, AFVs under EPAct 1992 section 301. Section 133 more 
directly affects PHEVs. Because all PHEVs are anticipated to have at 
least a 4 kWh battery, they would qualify as plug-in electric drive 
vehicles under section 133. Like HEVs, PHEVs would most likely operate 
on both electricity and either conventional petroleum fuel or 
alternative fuel. PHEVs differ from other HEVs, however, in that they 
are designed to operate in part on electric power obtained from off-
board sources and typically have more electrical storage capacity 
onboard. For example, a PHEV20 would have a 20-mile electric-only 
range, and would be allocated one full credit, assuming it could meet 
the NHTSA criteria for a dual fueled electric automobile. PHEVs may 
also hold special promise to enhance fuel efficiency gains over 
conventional vehicles and enable the use of renewable energy in either 
centralized or distributed power generating systems. Thus, PHEVs could 
contribute substantially both to reducing petroleum use and reducing 
the associated generation of greenhouse gases.
    PHEVs that do not already qualify as AFVs, because they are not 
equipped with an engine that is capable of operating (or one that 
operates solely) on alternative fuel, and do not meet the NHTSA 
criteria for a dual fueled electric automobile, were proposed to be 
treated in the same manner as HEVs, meaning their acquisition by a 
covered fleet would result in \1/2\ credit.
    DOE's rationale for allocating to non-AFV PHEVs the same credit 
value that would be allocated to non-AFV HEVs, \1/2\ credit, was that 
both sets of vehicles are non-AFVs and, further, efficiency gains 
offered by the former vehicles versus the latter vehicles are 
relatively small and do not justify disparate treatment. DOE today is 
finalizing this allocation level.
    In addition to commercially available PHEVs, conversion options are 
offered by several organizations. To qualify for credit under the AFTP, 
any such conversion must be completed within four months of the 
vehicle's acquisition under 10 CFR 490.202(c) for States and 10 CFR 
490.305(c) for alternative fuel providers.
    Figure 1 above depicts the credit allocation determination process 
for PHEVs.
    As they had for HEVs, both EEI and FP&L proposed that fleets be 
allowed to apply for greater than \1/2\ credit, based on the vehicle's 
demonstrated fuel efficiency improvement, with EEI also proposing that 
fleets have the option of requesting greater credit based on the ratio 
of the all-electric range to the expected average daily driving range. 
NEMA supported the \1/2\ credit allocation, based on the battery 
capacities that are currently commercially available. NEMA did, 
however, suggest that as the all-electric range grows for these 
vehicles, greater credit (up to one credit per vehicle) be awarded, 
based on higher ranges specified by DOE. This approach, one based on 
the credit level being ``a function of the expected range in miles of 
the battery,'' NEMA stated, would help ``encourage rapid innovation of 
vehicle technologies.''
    SAFE proposed that all non-AFV PHEVs be allocated one credit 
``either by eliminating the range requirement for dual fuel vehicles in 
which one of the fuels is electricity [i.e., the NHTSA minimum drive 
range criteria], or by treating them as PHEVs but still giving them a 
full credit.'' SAFE argued that these vehicles should earn one credit 
``since the average flexible fuel vehicle--with a lower `alternative 
fuel factor' [the portion of a vehicle's energy or operation that comes 
from non-petroleum fuels]--receives one credit.'' SAFE also concluded 
that DOE's reliance on the NHTSA criteria ``is inappropriate given the 
purpose of [the AFTP]'' and ``shortchanges PHEVs that may not operate 
in a pure electric mode.'' SAFE suggested that credit should be ``based 
on the presence of a drive train designed to operate on an alternative 
fuel and the fuel savings provided by the vehicle, not its minimum all-
electric range or any other factors.''
    In its comments, EDTA indicated that vehicles that achieve the 
NHTSA minimum driving range should be entitled to one credit, as DOE 
had explained. EDTA went further, however, recommending that DOE also 
use ``a credit mechanism that recognizes incremental benefits of 
electrification in the non-AFV PHEVs with varying ranges, but less than 
[the one credit AFV PHEVs receive].'' Under EDTA's proposal, non-AFV 
PHEVs would be eligible for some level of credit between \1/2\ and 1.
    DOE rejects the above arguments supporting greater credit for non-
AFV PHEVs. First, as previously stated in Parts I.A, III.C.1, and 
elsewhere in this preamble, DOE is using petroleum displacement 
potential, measured against AFVs operating on alternative fuel, as the 
benchmark for allocating credit. PHEVs that do not meet the NHTSA 
minimum driving range criteria are simply not expected to achieve 
petroleum displacement close to what AFVs achieve when operating on 
alternative fuel. Second, proposals to allow fleets to apply for 
greater credit than \1/2\ depending on a number of varying factors 
would result in uncertainty for covered fleets (i.e., the level of 
credit for a given vehicle could not always be clearly ascertained by a 
fleet at the time of vehicle acquisition). In addition, the commenters' 
proposals would require fleets to submit considerably more 
documentation and would require that DOE undertake case-by-case 
determinations for potentially every vehicle in each annual report 
submitted. Third, and most importantly, DOE cannot alter the minimum 
driving range criteria for dual fueled electric automobiles, which were 
established by NHTSA pursuant to statute. As explained in Part III.A.5, 
Congress defined the term ``dual fueled vehicle'' in section 301(8) of 
EPAct 1992 (42 U.S.C. 13211(8)), using a definition that incorporates 
the EPCA definition of a dual fueled automobile. This definition, in 
turn, specifically includes the minimum driving range requirement for 
dual fueled passenger automobiles (49 U.S.C. 32901(a)(9)(D)).
    In sum, DOE is finalizing the credit level for non-AFV light duty 
PHEVs at \1/2\ credit per vehicle.
c. Fuel Cell Electric Vehicles
    FCEVs with fuel cells that can be powered by hydrogen or some other 
alternative fuel already qualify as AFVs and thus already are eligible 
for one credit under the AFTP. To DOE's knowledge, the majority of 
FCEVs under

[[Page 15893]]

development are fueled by hydrogen,\23\ but DOE cannot dismiss the 
possibility of a non-alternative fuel-based FCEV one day reaching the 
market. As a result, DOE is required by EISA section 133 to establish a 
credit value for non-AFV FCEVs.
---------------------------------------------------------------------------

    \23\ See http://www.fueleconomy.gov/feg/fcv_sbs.shtml (Honda 
and Mercedes-Benz); http://www.fueleconomy.gov/feg/fcv_links.shtml 
(various manufacturers); http://www.hyundaiusa.com/about-hyundai/news/Corporate_Tucson_ix_FCEV_Release-20110214.aspx (Hyundai); 
http://www.toyota.com/about/environment/innovation/advanced_vehicle_technology/index.html (Toyota).
---------------------------------------------------------------------------

    In the NOPR, DOE proposed to treat FCEVs that are neither dedicated 
vehicles nor dual fueled vehicles in the same manner as non-AFV HEVs 
and PHEVs and allocate them \1/2\ credit. This determination was based 
on the fact that current AFV FCEVs typically offer significant 
efficiency gains over conventional vehicles, but non-AFV FCEVs, while 
offering similar efficiency gains, would not displace as much petroleum 
as an AFV operating solely on alternative fuel. DOE solicited comments 
on this proposed allocation level.
    Both EEI and EDTA again suggested requiring a minimum efficiency 
level in order to receive \1/2\ credit, plus allowing additional credit 
on a sliding scale based on efficiency level. EDTA also proposed 
applying an emerging technology premium to non-AFV FCEVs. For the same 
reasons as those identified above in Parts III.C.2 and III.C.2.b, DOE 
is rejecting these requests. In addition, DOE notes that FCEVs are not 
anticipated to be commercially-available for several more years. Until 
that time, fleets are free to apply for credit for their investments in 
emerging technologies, as described under Part III.C.3.c. below. 
Therefore, DOE is finalizing the credit for non-AFV FCEVs at \1/2\ 
credit per vehicle, as proposed in the NOPR.
    The credit allocation determination process for FCEVs is depicted 
in Figure 1 above.
d. Neighborhood Electric Vehicles
    Most commonly-available NEVs have been produced as a type of low-
speed vehicle, limited to a top speed of between 20 and 25 mph. NEVs 
are typically used for driving short distances on low-speed streets or 
on campus-like sites (such as schools or power plants). NEVs 
functionally substitute for only some of the activities for which 
conventional vehicles are used, and in part serve as substitutes for 
walking or bicycling.\24\ In many areas, NEVs are not able to be 
licensed for use on public roads. Even in the jurisdictions where they 
may be licensed, they typically are limited to streets with speed 
limits of 35 mph or less and can never be driven on highways. To date, 
the AFTP has treated NEVs, which do not fall under the Clean Air Act 
section 216(2) definition of ``motor vehicles'' as interpreted by 
EPA,\25\ as ineligible for credit as AFVs. In a 2001 study, DOE found 
that NEVs are driven an average of 3,410 miles per year.\26\ This 
compares to the average annual use of light duty household vehicles in 
the U.S. in 2009 of 11,300 miles per year.\27\ For light duty business 
fleet vehicles, however, average annual use in 2010 ranged from 24,384 
to 29,616 miles.\28\ Therefore, the use of NEVs substitutes for a small 
percentage of conventional vehicles' applications.
---------------------------------------------------------------------------

    \24\ A 2001 DOE study showed that, of the 348 fleet NEVs 
studied, only 18 NEVs had been acquired to replace previous on-road 
vehicles, though some of the other NEVs might also have been 
acquired in lieu of new on-road vehicles (i.e., fleet expansion). 
The 348 NEVs were driven an average of 9 miles per day. See Idaho 
National Engineering and Environmental Laboratory, Field Operations 
Program--Neighborhood Electric Vehicle Fleet Use (July 2001) (INEEL 
Study), at 4, available at http://avt.inel.gov/pdf/nev/nevstudy.pdf.
    \25\ Section 301(13) of EPAct 1992 defines ``motor vehicle'' to 
have ``the meaning given such term under section 216(2) of the Clean 
Air Act (42 U.S.C. 7550(2)).'' In interpreting section 216(2), which 
states that a ``motor vehicle'' is ``any self-propelled vehicle 
designed for transporting persons or property on a street or 
highway,'' DOE defers to EPA, which has found that ``[a] vehicle 
shall be deemed not a motor vehicle [and excluded from the Clean Air 
Act if it] cannot exceed a maximum speed of 25 miles per hour over 
level, paved surfaces . . . .'' 40 CFR 85.1703(a). DOE has therefore 
historically chosen not to treat NEVs as motor vehicles.
    \26\ INEEL Study at 4.
    \27\ See DOE, Transportation Energy Data Book: Edition 31 (July 
2012), at Table 8.10.
    \28\ Id. at Table 7.3.
---------------------------------------------------------------------------

    A comparison of the data above on average annual miles driven by 
NEVs and average annual miles driven by business fleets suggests that a 
credit of no more than \1/8\ may be warranted. DOE, however, proposed 
allocating \1/4\ (0.25) credit for each NEV acquired, in an effort to 
provide a general incentive for covered fleets to eliminate petroleum 
consumption through the acquisition of these vehicles notwithstanding 
their limited fuel replacement value. The \1/4\ credit level may appear 
small, but the actual resulting value to the acquiring fleet is larger 
than the \1/4\ allocated. Unlike the acquisition of a light duty AFV, 
the acquisition of an NEV does not increase the vehicle count that is 
the basis for calculating the AFV-acquisition requirements. The 
acquisition of a light duty AFV would generate a requirement for the 
acquisition of another fractional AFV, meaning the net credit result 
stemming from the acquisition of the initial light duty AFV is either 
0.25 for State fleets (1 minus 0.75) or 0.1 for alternative fuel 
provider fleets (1 minus 0.9) of a credit. By comparison, an NEV 
acquisition results in a net surplus of \1/4\ credit.\29\
---------------------------------------------------------------------------

    \29\ Under the existing AFTP, neither AFV-acquisition 
requirements nor AFV credits are addressed in amounts below one, but 
fleet aggregates implicitly involve fractional credits for 
individual acquisitions.
---------------------------------------------------------------------------

    In its comments, EEI suggested that the appropriate credit level 
for the acquisition of an NEV should be \1/2\ rather than \1/4\, to be 
more reflective of the fact that many fleets replace conventional 
vehicles with NEVs. Conversely, EDTA was supportive of the \1/4\ credit 
level ``based upon the multiple benefits of NEVs' zero-petroleum 
operation and their utility to covered fleets.''
    DOE is not persuaded that NEVs warrant a credit level greater than 
\1/4\, particularly in light of the benefit provided in terms of 
compliance as discussed above, and is finalizing the \1/4\ credit 
allocation that it proposed.
e. Medium- and Heavy-Duty Electric Vehicles
i. General
    ``Medium- or heavy-duty electric vehicles,'' as that term is 
defined in this final rule (see Part III.B.3 above), are now 
commercially available in the U.S., both as original equipment 
manufacturer vehicles (e.g., the Smith Electric Newton) and as after-
market converted vehicles.\30\ Conventional medium- and heavy-duty 
vehicles typically use several times the amount of petroleum fuel that 
conventional LDVs use, so the deployment of higher efficiency or 
alternative fuel versions of these vehicles contribute significantly to 
a reduction in our nation's overall petroleum use.
---------------------------------------------------------------------------

    \30\ See, e.g., http://www.viamotors.com/news/press-releases/pge-via-motors-showcase-a-first-for-utilities-the-extended-range-electric-pickup-truck/; http://www.greencarreports.com/news/1073783_ford-f-750-plug-in-hybrid-work-truck-not-your-little-leaf-sonny#ixzz1obqAOAXH.
---------------------------------------------------------------------------

    Under the existing AFTP, the acquisition of a medium- or heavy-duty 
AFV yields one credit, but only after the fleet has met its light duty 
AFV-acquisition requirement, and DOE proposed to maintain this approach 
in the NOPR. As with NEVs, discussed above, the benefit to covered 
fleets of such purchases in comparison to an LDV acquisition includes 
not increasing a fleet's LDV total for purposes of calculating 
compliance requirements.

[[Page 15894]]

ii. Hybrid Electric and Plug-In Hybrid Electric Vehicles
    As discussed earlier in this preamble, medium- and heavy-duty 
battery electric vehicles already qualify as AFVs and thus already are 
entitled to one credit under the AFTP. Similarly, medium- and heavy-
duty HEVs and PHEVs that are equipped with an engine that can operate 
(or that operates solely) on a liquid or gaseous alternative fuel 
(e.g., E85 or CNG) already qualify as AFVs eligible for one credit.\31\ 
In the NOPR, DOE therefore interpreted EISA section 133 as calling for 
the allocation of credits to ``medium- or heavy-duty electric 
vehicles'' that do not already qualify as AFVs (i.e., non-AFV HEVs and 
PHEVs).
---------------------------------------------------------------------------

    \31\ See, e.g., 49 CFR 535.4 (defining, for purposes of the 
NHTSA Medium- and Heavy-Duty Vehicle Fuel Efficiency Program, the 
term ``dual fueled vehicle'').
---------------------------------------------------------------------------

    As explained in the NOPR, DOE considered two options for medium- 
and heavy-duty non-AFV HEVs and PHEVs: (1) Allocate one credit, 
accounting for the fact that conventional medium- and heavy-duty 
vehicles consume more fuel than do conventional LDVs, and thus offer a 
greater potential impact on petroleum reduction compared to an LDV 
using similar technology; or (2) allocate \1/2\ credit, as such a 
``medium- or heavy-duty electric vehicle'' still is not an AFV and 
therefore does not displace as much petroleum as a medium- or heavy-
duty AFV operating on alternative fuel. DOE proposed the latter credit 
level in the NOPR.
    DOE received a number of comments on its proposed allocation for 
medium- and heavy-duty non-AFV HEVs and PHEVs. Eaton sought 
clarification that medium- and heavy-duty hydraulic hybrid vehicles are 
entitled to credit, while EDTA and EEI, in addition to Eaton, took 
issue with the proposed electric drivetrain limitation. DOE disagrees 
with these comments, and emphasizes that in EISA section 133, Congress 
expressly referred to ``electric drive'' vehicles. In view of this, DOE 
concludes that hydraulic hybrid vehicles with a gross vehicle weight 
rating of more than 8,500 pounds do not qualify for credit as ``medium 
or heavy-duty electric vehicles,'' and that a vehicle must have an 
electric drivetrain for acquisition credit to be warranted. Even though 
DOE is excluding hydraulic hybrid and electric bucket system 
technologies from credit under this final rule, fleets are reminded 
that medium- and heavy-duty vehicles with these technologies may be 
used to demonstrate petroleum fuel use reductions under the AFTP's 
Alternative Compliance option.
    Eaton and EDTA also thought that ``medium- or heavy-duty electric 
vehicles'' that are not AFVs should be allocated a minimum of one 
credit per vehicle, in recognition of the greater petroleum use and 
emission reductions that accrue from these vehicles. NEMA supported \1/
2\ credit for medium- and heavy-duty PHEVs with currently available 
battery capacities, but urged that incrementally greater credit be 
allocated as the electric ranges of the vehicles increases. Finally, 
EEI questioned how DOE would determine whether a medium- or heavy-duty 
PHEV is an AFV already entitled to one credit or a non-AFV entitled to 
\1/2\ credit.
    After considering the comments, DOE is finalizing the proposed 
allocation of \1/2\ credit for medium- and heavy-duty non-AFV HEVs. DOE 
acknowledges the potentially greater petroleum reductions stemming from 
these vehicles, but reiterates that the vehicles do not qualify as 
AFVs.
    For medium- and heavy-duty PHEVs, although DOE proposed to allocate 
\1/2\ credit under EISA section 133 for fleet acquisitions of these 
vehicles, it has now concluded that an allocation under section 133 is 
not warranted after all because such vehicles already qualify as AFVs 
and, as a result, are already entitled to one credit under the AFTP. 
DOE observes that NHTSA, in the Medium- and Heavy-Duty Vehicle Fuel 
Efficiency Program (49 CFR Part 535) that it promulgated on September 
15, 2011,\32\ considers medium- and heavy-duty PHEVs to be dual fueled 
vehicles.\33\ To maintain regulatory consistency, DOE therefore deems 
PHEVs with a gross vehicle weight rating in excess of 8,500 pounds to 
be dual fueled vehicles and, consequently, AFVs for purposes of the 
AFTP. As such, medium- and heavy-duty PHEVs already are entitled to, 
and when acquired by covered fleets will be allocated one credit. An 
allocation under EISA section 133 is unnecessary.
---------------------------------------------------------------------------

    \32\ 76 FR 57106 (Sept. 15, 2011).
    \33\ See 49 CFR 535.4 (defining the term ``dual fueled vehicle'' 
and stating that ``a plug-in hybrid electric vehicle is considered a 
dual fueled vehicle''). NHTSA likewise treats medium- and heavy-duty 
vehicles that operate on gasoline and E85 to be duel fueled 
vehicles. In other words, the minimum driving range requirement set 
forth in 49 CFR 538.5 is inapplicable to medium- and heavy-duty 
vehicles.
---------------------------------------------------------------------------

    In sum, while DOE proposed allocating \1/2\ credit to medium- and 
heavy-duty non-AFV HEVs and PHEVs, it is finalizing this allocation 
under EISA section 133 for the former vehicles and acknowledging that 
medium- and heavy-duty PHEVs already qualify as AFVs.
    DOE will allocate credit for ``medium- or heavy-duty electric 
vehicles,'' whether AFVs or non-AFV HEVs, only after a covered fleet 
has met its light duty AFV-acquisition mandate. DOE wants to maintain a 
level playing field for all vehicles with a gross vehicle weight rating 
of more than 8,500 pounds, regardless of the drive or fuel type, and 
believes that because the light duty AFV precondition already applies 
to medium- and heavy-duty AFVs, it also must apply to medium- and 
heavy-duty non-AFVs that will receive \1/2\ credit under this action. A 
non-level playing field effectively would create an incentive for 
covered fleets to acquire medium- and heavy-duty non-AFV HEVs over 
AFVs.
    NGV America and APGA urged DOE to eliminate the need for a covered 
fleet to meet its light duty AFV-acquisition requirement before 
receiving credit for the medium- and heavy-duty AFVs and non-AFVs it 
acquired. DOE contends that removing this requirement would be 
inconsistent with statutory authority and the overall statutory scheme 
of the Program. The AFTP vehicle acquisition requirements are set forth 
in EPAct 1992, section 501(a) for alternative fuel provider fleets, and 
section 507(o) for State fleets, respectively. These sections specify 
the number of AFVs that must be acquired as a percentage of ``new light 
duty motor vehicles'' acquired by a fleet. The only acquisition 
requirement under the AFTP is therefore inherently a light duty vehicle 
requirement. The provision for allocating credit for other than light 
duty vehicles appears in EPAct 1992 section 508(b), as amended. This 
section states that ``[t]he Secretary shall allocate a credit to a 
fleet or covered person that is required to acquire an alternative 
fueled vehicle under this subchapter, if that fleet or person acquires 
an alternative fueled vehicle in excess of the number that fleet or 
person is required to acquire . . . .'' Thus, for an acquisition under 
section 508(b) to be in excess of what is required of a fleet, the 
light duty acquisition target must have already been met under sections 
501(a) or 507(o), as applicable. DOE continues to maintain, as it has 
since the inception of the AFTP, that the acquisition of a medium- or 
heavy-duty vehicle does not and cannot satisfy the mandate to purchase 
light duty AFVs imposed on a fleet by EPAct 1992.

[[Page 15895]]

3. Investments
a. Alternative Fuel Infrastructure
    In addressing EISA section 133's requirement that DOE allocate 
credit for fleets' investments in alternative fuel infrastructure, DOE 
believes it makes sense to focus on the original objectives of the 
EPAct 1992 fleet programs. In general, the concept behind the programs 
is to use the covered centrally-fueled fleets to catalyze both 
manufacturer AFV offerings and refueling infrastructure, paving the way 
for AFV use by other fleets and, ultimately, the general public. While 
the statutory requirements are in terms of vehicle acquisitions, the 
EPAct section 502(a) goal of maximizing replacement fuel use also 
involves consideration of infrastructure availability. Thus, the 
development of alternative fuel refueling infrastructure that 
ultimately serves as much of the population as possible is important to 
achieving the overall programmatic goals.
    As explained in Part III.B.6 above, DOE is defining the phrase 
``alternative fuel infrastructure'' to mean one or more alternative 
fueling or charging/battery exchange stations, a definition expressly 
supported by APGA and NGV America. In allocating credit for alternative 
fuel infrastructure investments, DOE has determined that a covered 
fleet that makes a financial investment in a new alternative fueling or 
charging/battery exchange station will receive one credit for every 
$25,000 invested toward developing the infrastructure. DOE believes 
$25,000 per investment credit is an appropriate dollar figure inasmuch 
as the installation of an E85 pump and tank historically has cost 
roughly $25,000.\34\ Moreover, as discussed in Part III.C.3.b below, 
the cost of a new light duty AFV, for which a covered fleet earns an 
AFV acquisition credit, is approximately $25,000. Because investing in 
alternative fuel infrastructure effectively is an alternative to 
acquiring light duty AFVs, DOE believes the consistent $25,000 
threshold is appropriate.
---------------------------------------------------------------------------

    \34\ See DOE's Alternative Fuels Data Center Web site at http://www.afdc.energy.gov/afdc/fuels/ethanol_infrastructure.html.
---------------------------------------------------------------------------

    NEMA supported the $25,000 figure, while EEI argued that fleets 
should receive alternative fuel infrastructure investment credit based 
on the number of stations installed, not the amount of money invested. 
EEI suggested one credit per private station and two credits per public 
station. Focusing in particular on electric vehicle charging stations, 
EDTA and NEMA recommended that fractional credits be allocated for 
investments below the $25,000 threshold. These organizations posited 
that if covered fleets do not receive any credit for alternative fuel 
infrastructure investments under $25,000, they will not be adequately 
encouraged to invest in charging stations.
    In DOE's view, an allocation approach based on the level of 
financial investment is inherently more balanced in that it rewards 
greater financial expenditures with a higher number of credits. 
Installation of an alternative fueling station that costs $100,000 will 
yield the investing fleet 4 credits, whereas under EEI's suggested 
approach the fleet would earn only 1 credit for a private station or 2 
credits for a publicly accessible station. DOE reiterates its belief 
that the appropriate dollar figure for purposes of allocating credit is 
an amount based on the approximate cost of installing an E85 pump and 
tank or acquiring a new light duty AFV. DOE also maintains that 
establishing the $25,000 value as a base level below which no credit 
may be earned is equally appropriate, given that this value is 
sufficiently high to demonstrate a significant investment in 
alternative fuel infrastructure rather than simply serve as a reward to 
fleets for actions they otherwise planned to take. In addition, as set 
forth in 10 CFR 490.504(g), DOE notes that fleets may aggregate the 
monetary sums invested in a particular model year to reach an 
applicable investment credit threshold.
    After reviewing the comments received on the allocation of 
fractional credits for investments, DOE has concluded that it will not 
allocate fractional credits for any of the investment credits. The AFTP 
is based on the acquisition of individual vehicles (LDVs and AFVs), and 
correspondingly, the AFTP's accounting and annual reporting mechanisms 
treat the vehicles as individual units. In the area of investments, DOE 
has identified a specific dollar amount, $25,000, as the basis on which 
to measure a unit for credit equivalency purposes. The approach set 
forth in the proposed rule and finalized today is based on this dollar 
amount rather than an absolute measurement of every dollar invested. 
DOE will record the investment of an amount equal to a unit ($25,000), 
not any discrete amount of dollars. In addition, DOE notes that if it 
were to track each dollar invested and award fractional credits, the 
burden of accounting and data collection on both reporting entities and 
DOE would be greatly increased.
    DOE proposed to limit the number of credits that may be earned in a 
single model year to a maximum of 5 credits per fleet if the 
infrastructure is private, and a maximum of 10 credits per fleet if the 
infrastructure is publicly accessible. APGA and NGV America expressed 
support for the establishment of a higher credit maximum for public 
alternative fuel infrastructure. DOE is maintaining the credit 
distinction proposed in the NOPR. It encourages the building of 
alternative fuel infrastructure to which the general public has access, 
as such accessibility expands the alternative fuel refueling options 
for the broadest range of vehicles. For a fleet that installs both 
public and private infrastructure in a given model year, a 10-credit 
maximum will apply, with up to 10 credits being offered for public 
stations, and 5 credits for private stations.\35\
---------------------------------------------------------------------------

    \35\ For example, a fleet that invests $250,000 in one or more 
public stations will earn 10 credits, while a fleet that invests 
$125,000 in one or more private stations will earn 5 credits. In the 
event a fleet invests $125,000 in public stations and an additional 
$125,000 in private stations, it will be entitled to 5 and 5 
credits, respectively, for a total of 10 credits. Finally, if a 
fleet invests $250,000 in public stations as well as $25,000 in a 
private station, it will be capped at 10 credits for the applicable 
model year.
---------------------------------------------------------------------------

    EDTA and EEI requested that DOE raise the annual per fleet cap to 
25 credits, while NEMA argued that an annual cap on alternative fuel 
infrastructure investment credits is unjustified. DOE understands that 
fleets' needs and opportunities are subject to variation, but stresses 
that it has a responsibility to balance competing interests: enable 
fleets to earn credits and at the same time ensure the proper 
functioning of the AFTP's credit system. As explained in Part III.D.2 
below, the Program currently has approximately 70,000 banked credits in 
the system and DOE wishes to avoid the devaluation of credits currently 
in fleets' accounts. DOE therefore declines EDTA's and EEI's suggestion 
that the maximum be increased as well as NEMA's suggestion to eliminate 
the annual cap.
    To be eligible for credit, the alternative fuel infrastructure 
investment must have been made (i.e., the infrastructure must have been 
paid for) by the fleet requesting credit. Infrastructure installed and 
paid for or simply paid for by entities or organizations that are not 
subject to the AFTP is ineligible for investment credit. DOE clarifies, 
however, that a covered fleet may earn credit for investments that it 
makes in alternative fuel infrastructure owned or operated by another 
entity, and that regardless of the type of alternative fuel offered, 
all dollar amounts associated with the installation

[[Page 15896]]

of the infrastructure will be treated equally.
    To allocate infrastructure investment credit to a particular fleet, 
DOE will need to know how much money was expended, the period or model 
year during which the investment was made, and on exactly what 
infrastructure the investment was spent. Covered fleets must seek 
credit through the credit activity reporting mechanism (10 CFR 490.508) 
and clearly identify the alternative fuel type, specific location, date 
of initial operation, and level of accessibility of the station. 
Importantly, credit may be sought only for the model year in which the 
station begins operating, and each fleet will be limited to one award 
of credits per site, per model year. For example, if a covered fleet's 
infrastructure investment spans more than one year, with the fleet 
having invested $12,500 in a new AFV fueling station during one model 
year and then an additional $12,500 in that station during the 
following model year, the fleet is entitled to 1 investment credit in 
the second model year. If the fleet neglects to seek credit during that 
second model year for its $25,000 total investment but instead applies 
for the single credit in a later year, DOE will allocate no credit. 
Similarly, if the fleet applies for credit in its credit activity 
report for the first model year, DOE will reject the request on the 
grounds that the alternative fuel infrastructure did not become 
operational during that year.
    Credits will be allocated for new fueling or charging stations, or 
for the expansion of existing stations if additional fueling or 
charging capability is being added (such as an additional dispensing 
unit at an existing station), in which case the additional capability 
must have become operational during the model year for which credit is 
sought. Simply installing additional electrical outlets, however, will 
not qualify for investment credit.\36\ Nor will credit be provided for 
maintenance of or improvements to existing equipment at an existing 
station. Fleets will have to certify the accuracy of the information 
provided.
---------------------------------------------------------------------------

    \36\ DOE will distinguish a basic 120V electrical wall outlet 
from Level 1 or Level 2 charging stations or DC (direct-current) 
fast charging stations, such as those currently available (see, 
e.g., http://www.pluginamerica.org/accessories; http://www.afdc.energy.gov/fuels/electricity_infrastructure.html).
---------------------------------------------------------------------------

b. Alternative Fuel Non-Road Equipment
    As discussed in Part III.B.7, DOE is defining ``alternative fuel 
non-road equipment'' to include only mobile, non-road equipment that 
operates on alternative fuel. Stationary equipment (e.g., a generator) 
is ineligible for alternative fuel non-road equipment investment 
credit. As with alternative fuel infrastructure, investment credit will 
only be provided for new mobile equipment, not for maintenance of or 
improvements to existing mobile equipment.
    DOE has decided to base the allocation of credit on the rough value 
represented by the average price of a new light duty AFV sold in the 
United States in 2010. According to the latest edition of DOE's 
Transportation Energy Data Book, the average price of a new LDV was 
$24,296 (in 2010 dollars).\37\ Understanding that there is little, if 
any, price differential between a new LDV and a new flexible fuel 
vehicle, the average price of a new LDV is approximately $25,000 after 
conversion to 2012 dollars (using the Department of Labor's CPI 
Inflation Calculator). DOE believes the appropriate expenditure level 
for purposes of earning a credit for investment in alternative fuel 
non-road equipment is this amount (i.e., $25,000).
---------------------------------------------------------------------------

    \37\ See DOE, Transportation Energy Data Book: Edition 31 (July 
2012), at Table 10.12.
---------------------------------------------------------------------------

    No commenters objected to this monetary value. DOE believes that 
$25,000 is a sufficiently high value to demonstrate a significant 
investment in qualified non-road equipment rather than simply serve as 
a reward to fleets for actions they otherwise planned to take. In 
addition, this amount is equivalent to the alternative fuel 
infrastructure investment credit under this action, providing for some 
level of administrative consistency.
    In sum, DOE is allocating 1 credit for every $25,000 that a covered 
fleet invests in alternative fuel non-road equipment. Credits will be 
allocated in whole number values, with 1 credit allocated for each 
$25,000 threshold achieved, with a maximum of 5 credits per fleet in a 
single model year. To be eligible for credit, the investment must have 
been made by the requesting fleet. Investments made by organizations 
that are not subject to the AFTP are ineligible for credit.
    Two commenters, EEI and FP&L, contended that fleets should receive 
credit based on the number of pieces of alternative fuel non-road 
equipment acquired in a model year, not the amount of money invested. 
DOE disagrees, and points out that section 508(b)(2)(A)(ii) of EPAct 
1992, as amended by EISA section 133, directs DOE to allocate credit 
for covered fleets' ``investment in qualified . . . alternative fuel 
nonroad equipment.'' Whereas Congress specified that credit be 
allocated for the ``acquisition of'' electric drive vehicles, it 
stipulated that credit be allocated for the ``investment in'' 
alternative fuel non-road equipment. DOE interprets the allocation of 
credit for dollars invested as being based on the ``investment in'' 
such equipment, and therefore declines to implement the commenters' 
suggestion of doing so by number of pieces of equipment acquired. Under 
the approach DOE is taking, all alternative fuel non-road equipment 
will be treated equally, whereas under a per piece approach, a $25,000 
piece of equipment would yield the same number of credits, one, as a 
$10,000 or less expensive piece of equipment.
    EEI and FP&L further recommended that there be no annual cap on the 
number of credits a fleet can earn from its alternative fuel non-road 
equipment investments. Alternatively, EEI requested that DOE raise the 
annual per fleet maximum from 5 to 25 credits. EDTA also requested that 
the annual cap be increased. For the same reasons set forth in Part 
III.C.3.a above regarding devaluation of the current credit market, DOE 
rejects these recommendations.
    APGA and NGV America argued that a covered fleet should earn credit 
even when the alternative fuel non-road equipment in which it invested 
is owned by another entity. DOE does not agree, principally because it 
considers a fleet's investment in alternative fuel non-road equipment 
to be somewhat analogous to the acquisition of an AFV. To maintain 
programmatic consistency, DOE is adopting the same guiding principle 
for investments in alternative fuel non-road equipment. Under the 
Program, a covered fleet can earn AFV acquisition credit only through 
its own AFV acquisitions; it cannot generate credits from the AFVs 
acquired by other organizations (with the one exception being an 
approved State plan).\38\
---------------------------------------------------------------------------

    \38\ See 10 CFR 490.203.
---------------------------------------------------------------------------

    This is different from the approach DOE is taking with respect to 
alternative fuel infrastructure investments. DOE believes the overall 
goal of the replacement fuel provisions of EPAct 1992 is to increase 
the availability of alternative and replacement fuels to all potential 
users. Investments made in infrastructure can help make this happen, 
regardless of who the ultimate owner of the infrastructure is. In the 
case of non-road equipment, however, the use of the equipment is, like 
an AFV, more specific to the fleet that owns it. In addition, to 
qualify for non-road equipment investment credit, DOE is requiring that 
the investing fleet verify that the equipment is being

[[Page 15897]]

operated on alternative fuel. From a compliance perspective, it is far 
more straightforward for a fleet to verify, and for DOE to audit, 
information on the non-road equipment that the fleet owns. Ensuring the 
accuracy of information pertaining to non-road equipment in which a 
fleet invested but that is owned by others would simply be too tenuous.
    Under the regulations being finalized today, a covered fleet must 
seek alternative fuel non-road equipment investment credit through its 
credit activity report. To allocate credit, DOE will need to know how 
much money was expended, the period or model year during which the 
investment was made, and on exactly what mobile equipment the 
investment was spent. Consistent with the definition of alternative 
fuel non-road equipment, a fleet requesting credit must certify that 
the equipment is being operated on alternative fuel, within the 
constraints of best practices and seasonal fuel availability.
    DOE acknowledges that a covered fleet's investment in alternative 
fuel non-road equipment may not necessarily coincide with the fleet's 
acquisition of the equipment. As with alternative fuel infrastructure, 
a fleet should seek credit in the model year in which the non-road 
equipment is put into operation. A fleet may combine the monetary 
amount invested in a particular model year in alternative fuel non-road 
equipment and alternative fuel infrastructure and/or emerging 
technology for the purpose of achieving an applicable investment credit 
threshold.
c. Emerging Technology
    As discussed in Part III.B.8, credit for investments in emerging 
technology will be based on the development status of the relevant 
vehicle technologies. In EISA section 133, Congress instructed DOE to 
allocate credits for such emerging technology investments so as ``to 
encourage (i) a reduction in petroleum demand; (ii) technological 
advancement; and (iii) a reduction in vehicle emissions.'' In DOE's 
view, only by deploying the vehicle technologies listed in section 133 
(i.e., hybrid electric vehicles, plug-in electric drive vehicles, 
neighborhood electric vehicles, fuel cell electric vehicles, and 
medium- or heavy-duty electric vehicles) before widespread commercial 
availability (or production) can necessary data from actual users be 
generated, including data related to performance and operating costs. 
If data show that no improvement is needed, then such data could assist 
future potential users in deciding whether to select the technology.
    DOE proposed that investments in pre-production versions of the 
EISA-specified vehicle types would earn 1 credit for each $25,000 
invested in one or more pre-production vehicles, up to a 5 credit limit 
(correlating with $125,000 invested), with expenditures on any 
remaining pre-production vehicles potentially counting as light duty 
AFV acquisitions.
    EDTA and EEI suggested either that the credit cap be raised to 25 
or that there be no fleet-specific credit cap, but rather a Program-
wide cap. Regarding the imposition of a credit cap and what the 
appropriate cap level should be, DOE again stresses that imposing a cap 
on the number of credits that may be earned is critical to ensuring 
proper functioning of the Program's credit system. As for a Program-
wide cap, DOE believes that such a cap would be inherently unfair, as 
only some fleets would be able to obtain credits for their investments 
in emerging technologies. Therefore, DOE is rejecting the suggestion of 
a Program-wide credit cap for investments in emerging technology.
    EEI also commented that DOE should apply a multiplier for credits 
for light duty emerging technology vehicles (x 2.5) and also for 
medium-duty and heavy-duty emerging technology vehicles (x 5.0). DOE 
recognizes the importance of emerging technology vehicles as the means 
by which new advanced technology vehicles and alternative fuel vehicles 
reach production. Nonetheless, through EPAct section 508(b)(2)(B), 
Congress specifically authorized DOE to allocate credits for emerging 
technology in an amount of more than 1 but not to exceed 5. Therefore, 
DOE lacks authority to provide additional credits beyond that which DOE 
proposed. Within the context of this limitation, this final rule 
establishes that an investment of a minimum of $125,000 in an emerging 
technology (i.e., a pre-production vehicle) yields 5 credits.
    In this final rule, DOE is making one minor change to what it 
proposed, namely that to earn any emerging technology credits, a 
$50,000 threshold must be met, at which point 2 credits will be 
allocated. DOE has selected the $50,000 threshold for several reasons. 
First, Congress specifically authorized DOE to provide more than 1 and 
not more than 5 credits for this category of investment. Therefore, DOE 
cannot provide 1 credit for $25,000 invested, but wishes to maintain 
the $25,000 increments that are consistent across all investment 
categories in this rule. Moreover, the typical emerging technology 
investment will likely be far more than $25,000, so this change should 
be of little consequence in most cases. Once the $50,000 threshold is 
met, each of the next $25,000 increments achieved will earn 1 
additional credit, up to a total of 5 credits (or $125,000). Finally, 
as with investments in alternative fuel non-road equipment, the $25,000 
increment is based on the average price of a new light duty AFV sold in 
the United States in 2010, and consistent with the other investment-
related credits, DOE will not allot fractional credits for investments 
in emerging technology. To illustrate the above criteria, a covered 
fleet spending $500,000 on the acquisition of 10 pre-production light 
duty PHEVs (i.e., $50,000 per PHEV) may obtain a total of 12 credits; 5 
credits for the expenditure of at least $125,000 to acquire three of 
the vehicles and 7 credits for the acquisition of the other seven light 
duty PHEVs (assuming they are AFVs). If, however, a single investment 
of $45,000 were made, for example, no credits would be allocated 
because the $50,000 threshold was not met.
    Fleets requesting credit under this provision will need to provide 
detailed information in order for DOE to verify the specific purposes 
of the subject investment, the number of credits the investment would 
qualify for, and that the investment has not been the subject of credit 
elsewhere under this program. Furthermore, eligibility for credits is 
dependent on the underlying vehicle technology still being considered 
``emerging,'' in accordance with the definition discussed in Part 
III.B.8 above. Therefore, an investment that might be eligible for 
investment credit in one year might not be eligible the next year, if 
the underlying vehicle technology moves into commercial production. DOE 
acknowledges that a covered fleet's investment in emerging technology 
may not necessarily coincide with the fleet's acquisition of the 
technology. For consistency, however, a fleet will get credit for the 
year in which the emerging technology is put into operation. In 
addition, to be eligible for consideration of credit, the requesting 
fleet will have to have made the investment. Investments in emerging 
technologies by organizations not subject to the requirements of the 
AFTP will not be eligible for credits (e.g., payments to industry 
groups or associations or for education outreach, lobbying, or other 
similar activities for which the fleet has little or no control over 
the activity). Fleets will have to certify the accuracy of the 
information provided.

[[Page 15898]]

4. Summary of Credit Allocations and Implementation Requirements
    Set forth below is a table summarizing the credit allocations under 
this action.

Summary Table of Credits

Credit Levels Under Standard Compliance for Electric Drive Vehicles not Classified as AFVS and for Other Actions
----------------------------------------------------------------------------------------------------------------
         Credit category              Credit allotment                       Limitations/other
----------------------------------------------------------------------------------------------------------------
HEV.............................  \1/2\ credit...........
PHEV............................  \1/2\ credit...........
FCEV............................  \1/2\ credit...........
NEV.............................  \1/4\ credit...........  Not included in covered LDV count.
Medium- or heavy-duty HEV.......  \1/2\ credit...........  Not included in covered LDV count.
Alternative Fuel Infrastructure.  1 credit per $25,000     Maximum of 5 credits if private infrastructure, 10
                                   invested*.               credits if publicly-accessible infrastructure;
                                                            credit allocated in model year placed into
                                                            operation.
Alternative Fuel Non-road         1 credit per $25,000     Maximum of 5 credits if per fleet per model year.
 Equipment.                        invested*.
Emerging Technology.............  2 credits for initial    Maximum of 5 credits if counting based on amount
                                   $50,000 invested and 1   invested, per fleet per model year.
                                   credit per $25,000
                                   thereafter, or 1
                                   credit per pre-
                                   production vehicle*.
----------------------------------------------------------------------------------------------------------------
* Aggregation of dollar amounts allowed.

    As indicated in the NOPR and as explained above, to receive credit 
for investments under EISA section 133, a covered fleet must provide 
DOE with a credit activity report. The credit activity report will also 
serve as the mechanism through which DOE will apportion credit for a 
fleet's acquisition of any of the electric drive vehicles being 
allocated credit under this final rule. As specified in the regulatory 
text, for each such acquired vehicle, a covered fleet must include in 
its credit activity report the make and model, model year, vehicle 
identification number, and date of acquisition. These vehicle-specific 
details are virtually identical to the data that covered fleets already 
provide, as part of their Standard Compliance annual reports, for the 
AFVs they acquire each year.
    Since the Program's inception, rather than formally requiring 
covered fleets to submit a credit activity report in order to obtain 
credits for excess (or early) AFV acquisitions, DOE has enabled fleets 
seeking to bank AFV credits as a result of these acquisitions (e.g., a 
light duty or a medium- or heavy-duty AFV acquired over and above the 
fleet's light duty AFV-acquisition requirement) to submit the necessary 
information to DOE as part of their annual reports. Upon verification 
of the information, DOE has proceeded to add the appropriate number of 
banked credits to the respective fleet's credit account.
    Under this final rule, covered fleets seeking to bank excess (or 
early) credits under Standard Compliance will no longer be able to 
submit only an annual report by the December 31 reporting deadline. 
Rather, any fleet seeking the allocation of credit under Subpart F of 
the AFTP regulations will have to provide DOE with a credit activity 
report. This includes not only fleets seeking credit for any of the 
investments (alternative fuel infrastructure, alternative fuel non-road 
equipment, emerging technology) and/or any of the electric drive 
vehicle acquisitions (non-AFV light duty HEVs, non-AFV light duty 
PHEVs, non-AFV light duty FCEVs, NEVs, non-AFV medium- or heavy-duty 
FCEVs, non-AFV medium- or heavy-duty HEVs) addressed in this action, 
but also fleets seeking to bank credits for their excess (or early) AFV 
acquisitions. In addition, DOE is adding regulatory language to make 
clear that fleets involved in a credit transfer and fleets that 
requested the application of banked credits likewise must provide DOE 
with a credit activity report. Credit transfer details have always been 
included in the credit activity reporting provision, and with regard to 
the application of banked credits, the new language merely reconciles 
the credit activity reporting provision with the AFTP's annual 
reporting requirements.
    To minimize the reporting burden on covered fleets, DOE has revised 
its online annual reporting system (http://www1.eere.energy.gov/vehiclesandfuels/epact/annual_report.html.) and the annual report form 
(Form DOE/FCVT/101: Standard Compliance Reporting Spreadsheet) so that 
the credit activity report is now incorporated in (i.e., a part of) the 
annual report. Importantly, this modification will not result in DOE 
receiving any information (except with regard to the EISA section 133 
electric drive vehicles and investments) that it does not already 
receive from covered fleets. Corresponding revisions have been made to 
the regulatory provisions on annual reporting.\39\
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    \39\ Specifically with respect to 10 CFR 490.205(b)(5)(iv) and 
10 CFR 490.308(b)(5)(iv), DOE encourages covered fleets to submit a 
photocopy of the label that automobile manufacturers have been 
obligated to attach to the fuel compartment of their dual fueled 
automobiles since September 1, 2006. See EPAct 2005 section 759 
(codified at 49 USC 32905(f)).
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D. Additional Program Modifications

    In the interest of ensuring continued efficient operation of the 
Program, DOE proposed a number of modifications that it believed would 
benefit stakeholders (i.e., covered fleets) and increase Program 
effectiveness. DOE today is finalizing most of these AFTP 
modifications, as discussed below.
1. Timeliness of Exemption Request Submittals
    Based on the experience it has gained since the AFTP's inception, 
DOE proposed to establish a five-month timeframe for the submission of 
exemption requests. Specifically, DOE proposed that a covered fleet may 
submit an exemption request no earlier than September 1 following the 
model year for which the exemption is sought and no later than January 
31 following that model year. DOE also proposed to make clear that an 
exemption request must be preceded by the fleet's annual report, and 
that if DOE seeks clarification or additional information pertaining to 
a submitted exemption

[[Page 15899]]

request, the concerned fleet must respond within 30 days of DOE's 
inquiry. DOE proposed these changes to enhance the accuracy of 
exemption requests and minimize the need either for fleets to revise 
and resubmit their requests or for DOE to have to follow up with the 
requesting fleet.
    Only one commenter, EEI, addressed DOE's proposed modifications on 
the timeliness of exemption requests. EEI supported the proposed 
changes. Hence, DOE is finalizing the five-month timeframe within which 
a covered fleet may seek exemptions under Standard Compliance, the 
necessity for a fleet's exemption request to be preceded by its annual 
report, and the 30-day period for a fleet to provide clarification or 
additional information in response to a DOE inquiry.
    Going forward, if a covered fleet submits an exemption request 
during the subject model year (i.e., at any time prior to the model 
year's close on August 31), DOE will inform the fleet's point of 
contact (POC) by electronic mail that the exemption request is 
premature and will not be considered unless it is resubmitted after 
September 1 and also after the fleet has filed its required annual 
report. Similarly, if a covered fleet submits an exemption request 
after January 31 following the subject model year, DOE will inform the 
POC by electronic mail that because the exemption request was submitted 
after the expiration of the five-month period, DOE considers the 
request invalid and, thus, will not provide a written determination 
under the applicable regulatory provisions. Finally, if a covered fleet 
does not respond to a DOE inquiry for additional information within 30 
days, DOE will process the fleet's exemption request based on the 
information DOE already has, which may not be sufficient to support the 
granting of the exemption request either in whole or in part.
    DOE expects no hardship to result from these changes. Additionally, 
DOE maintains that those covered fleets that file their annual reports 
by the December 31 annual reporting deadline will have at least a full 
month, which in DOE's view is sufficient time, to prepare and submit an 
exemption request, although early submission of annual reports remains 
highly recommended.
2. Program Credits and Exemption Requests
    In the NOPR, DOE explained that the purpose of the alternative 
fueled vehicle credit program in Subpart F of the AFTP regulations is 
to provide compliance flexibility to SFP fleets. DOE pointed out that 
since the AFTP's creation, fleets have generated a significant number 
of banked credits. In fact, there are currently approximately 70,000 
banked AFV credits in the system. Given that the average aggregate 
annual AFV-acquisition requirement for covered fleets operating under 
the AFTP's Standard Compliance method typically ranges from 10,000 to 
14,000 AFVs, DOE estimates that the credits currently in the system 
would be sufficient to keep the AFTP operating--without covered fleets 
acquiring any AFVs--for at least four years. DOE also explained in the 
NOPR that covered fleets with a positive credit account balance often 
request exemptions from DOE.
    In an effort to limit the future growth of the store of banked AFV 
credits currently in the system and thereby ensure that those credits 
continue to have value for the fleets possessing them, DOE proposed 
three separate AFTP revisions. First, DOE proposed to add language to 
the regulatory provision on the use of AFV credits that would require 
covered fleets to use their own banked credits before requesting 
exemptions from DOE. Second, DOE proposed to require that a deficient 
fleet without sufficient banked credits to resolve the deficiency 
include in its annual report a description of all efforts made to 
acquire AFV credits on the credit market. Third, DOE proposed to add 
language stating that a fleet may not submit an exemption request 
within 90 days of selling or trading any of its banked AFV credits. 
These proposals were based on DOE's view that a request for exemptions 
amounts to administrative relief of the last resort (i.e., relief when 
a fleet cannot otherwise meet its annual AFV-acquisition requirements), 
and sought to ensure that existing AFV credits get used for the very 
purpose for which they were generated.
    Three organizations (APGA, EEI, and FP&L) commented on these 
proposed changes. APGA agreed with DOE that there are an excessive 
number of banked credits in the system, and supported the proposal to 
require fleets to use their banked AFV credits before seeking 
exemptions. APGA also requested clarification of the annual reporting 
provision if deficient fleets would not be obligated to acquire 
credits. EEI and FP&L opposed the proposed changes. EEI contended that 
the revisions would hurt those fleets with fewer banked credits, and 
stated that the existing banking mechanism is important when AFVs that 
meet the business needs of a fleet are unavailable in a model year. 
FP&L argued that fleets should be rewarded for over-compliance, and 
opined that the acquisition of AFVs beyond the mandated levels serves 
to encourage the manufacture of AFVs.
    Based on the weight of the comments received and after 
consideration of the benefits of the three proposed credit provisions 
discussed above, DOE today is choosing not to finalize the proposed 
qualifications for the granting of exemptions. DOE has determined that 
the proposals would offer more rigorous compliance requirements without 
a sufficient benefit to the efficacy of the Program.
3. Alternative Compliance
    As explained in the NOPR, DOE believes it is appropriate to have a 
single due date for complete Alternative Compliance waiver 
applications. DOE therefore proposed to remove 10 CFR section 
490.805(b)(3) and establish in section 490.805(b)(2) a uniform 
application deadline such that all waiver applications would be due no 
later than July 31 prior to the model year for which a waiver is 
sought. DOE pointed out that the deadline for filing a notice of 
intent, March 31 prior to the model year for which a waiver is sought, 
would be unaffected by this change.
    The lone commenter to address this proposed revision, EEI, 
supported it. DOE is therefore finalizing the uniform Alternative 
Compliance waiver application deadline of July 31.
    Based on its implementation to date of the Alternative Compliance 
option, DOE also proposed amendments to 10 CFR section 490.804(c) to 
clarify the steps for requesting the roll-over of excess petroleum 
reductions and/or the application of banked rollover reductions. DOE 
received no comments on these revisions, and is finalizing them.
    Under this final rule, a fleet wishing to roll over for future use 
the excess petroleum reductions that it achieved in a particular model 
year must make a written request to DOE as part of the fleet's annual 
report for that model year, and DOE subsequently will inform the fleet 
of the amount that has been rolled over (i.e., banked). If a fleet 
seeks to apply any of its banked excess reductions to its petroleum 
reduction requirement in a later model year for which an Alternative 
Compliance waiver was also granted, the fleet likewise must include a 
written request as part of its annual report for that later model year. 
Before making a decision on a fleet's request to apply rollover 
reductions, DOE may request additional information from the fleet. In 
the past, for example, DOE has queried whether a fleet that failed to 
meet its petroleum reduction requirement owned/operated any FFVs or 
other AFVs, and if so,

[[Page 15900]]

whether it used E85 or some other alternative fuel (besides neat 
biodiesel). Such alternative fuel usage would reduce the quantity of 
banked gasoline gallon equivalents needed to be applied to offset the 
fleet's shortfall.
    Finally, in the NOPR, DOE proposed a modification to 10 CFR section 
409.809 to address the situation in which DOE has revoked a fleet's 
Alternative Compliance waiver. No organization commented on this 
revision, so DOE is finalizing it. Under revised section 490.809, a 
fleet whose waiver has been revoked is ineligible for any exemptions 
during that model year.
4. Other Regulatory Revisions
    As part of the NOPR, DOE proposed to make the ``emergency motor 
vehicles'' exclusion in 10 CFR section 490.3(e) consistent with the 
statutory language in section 301(9)(E) of EPAct 1992, as amended, and 
to make minor technical amendments to several other AFTP regulatory 
provisions. DOE did not receive comments on any of these proposed 
changes, and is finalizing them.
    With respect to the emergency motor vehicles exclusion, DOE reminds 
SFP fleets that for a particular vehicle to be excluded, the fleet must 
submit a written exclusion request in accordance with DOE's established 
guidance.\40\ The minor technical amendments being finalized today 
clarify the definitions of ``capable of being centrally fueled'' and 
``fleet'' in 10 CFR section 490.2, correct an incorrect reference to a 
State's rather than a covered person's exemption request, and 
standardize the use of the terms ``alternative fueled,'' ``dedicated,'' 
and ``dual fueled'' in various regulatory provisions.
---------------------------------------------------------------------------

    \40\ See DOE, ``Documentation Guidelines for Emergency Repair 
and Restoration Vehicle Exclusions'' (Sept. 2009), available at 
http://www1.eere.energy.gov/vehiclesandfuels/epact/pdfs/section_707_guidance.pdf.
---------------------------------------------------------------------------

5. Other Issues
    This final rule increases the number of creditable actions under 
the AFTP and, as a result, expands the range of available compliance 
options. In particular, credit will now be allocated to fleets for the 
acquisition of non-AFV HEVs, among other vehicles. DOE notes that non-
AFV HEVs and the fuel on which they operate (i.e., gasoline) are widely 
available throughout the country. For this reason, DOE's prospective 
approach to the granting of exemptions under the applicable regulatory 
provisions will be similar to its longstanding policy on biodiesel. 
Under that policy, unless a covered fleet seeking exemptions either 
indicates in its exemption request that it does not own or operate any 
or a sufficient number of medium-or heavy-duty diesel vehicles or 
demonstrates that biodiesel is unavailable to it, DOE limits the number 
of exemptions granted to no more than one-half of the fleet's annual 
AFV-acquisition requirements, inasmuch as biodiesel fuel use credits 
may account for up to 50% of those annual requirements (10 CFR 
490.705(b)). Because non-AFV HEVs are widely available, DOE will also 
expect a covered fleet seeking exemptions for MY 2014 or thereafter to 
demonstrate in its exemption request why it was unable to acquire such 
HEVs and therefore meet at least 50% of its annual AFV-acquisition 
requirements with such vehicles (due to the \1/2\ credit allocated for 
each non-AFV HEV).\41\ Unless the fleet shows that HEVs were not 
available in the light duty vehicle type needed by the fleet, DOE will 
limit the number of exemptions granted based on a shortfall of non-AFV 
HEV acquisitions.
---------------------------------------------------------------------------

    \41\ Note that beginning in MY 2014, a covered fleet could 
potentially meet 100% of its annual AFV-acquisition requirements 
through a combination of non-AFV HEV acquisitions and biodiesel fuel 
use credits.
---------------------------------------------------------------------------

IV. Compliance

    The approach that DOE is establishing today allocates less than one 
credit to certain vehicle types, and whole number values of credits for 
investments in alternative fuel infrastructure, alternative fuel non-
road equipment, and relevant emerging technologies. DOE also is 
directing that when fleets report to DOE the total credits they have 
earned in a model year, they must total the credits, including all 
fractional credits earned for vehicle acquisitions, and round to the 
nearest whole number. In rounding to the nearest whole number, 
fractions greater than or equal to one half (0.5) should be rounded up 
and fractions less than one half should be rounded down. For example, 
DOE would approve 14 credits for a fleet that submits appropriate 
documentation supporting its acquisition of AFVs and non-AFVs that 
total 13\1/2\ or 13\3/4\ credits. Similarly, DOE would approve 13 
credits for a fleet that submits appropriate documentation supporting 
its acquisition of AFVs and non-AFVs that total 13\1/4\ credits. This 
rounding approach to fractional credits is consistent with how fleets 
already round for purposes of calculating their AFV-acquisition 
requirements.
    Additionally, DOE notes that the section 133 credit provisions 
adopted in this final rule will apply to acquisitions and purchases in 
MY 2014 and all subsequent model years.

V. Regulatory Review

A. Review Under Executive Order 12866

    This rule has been determined not to be a ``significant regulatory 
action'' under section 3(f) of Executive Order 12866, ``Regulatory 
Planning and Review,'' 58 FR 51735 (October 4, 1993). Accordingly, this 
action was not subject to review under that Executive Order by the 
Office of Information and Regulatory Affairs (OIRA) of the Office of 
Management and Budget (OMB).

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA; 5 U.S.C. 601 et seq.) requires 
the 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 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. These procedures 
and policies are available at http://www.gc.doe.gov/documents/eo13272.pdf.
    DOE has reviewed this rule under the provisions of the RFA and the 
procedures and policies published on February 19, 2003. The 
requirements in 10 CFR part 490 apply to alternative fuel providers and 
State government entities that own, operate, lease, or otherwise 
control 50 or more non-excluded LDVs, at least 20 of which are 
centrally fueled or capable of being centrally fueled and are used 
primarily in a metropolitan statistical area (MSA) or consolidated MSA 
with a 1980 Census population of more than 250,000. DOE used the small 
business size standards to determine whether any small entities would 
be impacted by the proposed rule. Electric co-operatives and municipal 
utilities are classified under NAICS Code 221112, ``Fossil Fuel 
Electric Power Generation.'' In this category, small entities are those 
for which the total electric output for the preceding fiscal year did 
not exceed 4 million megawatt hours. The same threshold applies for 
other types of electric power generation, including hydroelectric (Code 
221111) and ``other'' electric power generation (Code 221119). Natural 
gas suppliers

[[Page 15901]]

(Code 221210) have a separate threshold, 500 employees. Analysis of the 
electric utilities and natural gas suppliers regulated under the 
Program identified at least 3 small entities that are required to 
report under the regulations.
    This final rule amends the process for demonstrating compliance in 
a number of ways, including primarily:

    (1) Offering credits for a variety of acquisitions and 
expenditures that did not previously receive credit, including the 
purchase of hybrid electric vehicles and investments in qualified 
alternative fuel infrastructure, non-road equipment, and emerging 
technologies related to specific vehicle types; and
    (2) Better aligning the timeframe for document submissions with 
the vehicle model year to obviate the need for amended reporting.

    Based on the scope of the rule provided above, DOE concludes that 
it will not have a significant economic impact on a substantial number 
of small entities. This rule provides additional compliance options 
under 10 CFR part 490 by expanding credits under the existing AFTP, and 
therefore provides covered small entities additional flexibility in 
complying through acquisition of vehicles and investments to the extent 
that such acquisitions and investments are consistent with the business 
needs of the small entities. DOE's certification and supporting 
statement of factual basis has been provided to the Chief Counsel for 
Advocacy of the Small Business Administration pursuant to 5 U.S.C. 
605(b).

C. Review Under the Paperwork Reduction Act of 1995

    Under the Paperwork Reduction Act of 1995 (PRA; 44 U.S.C. 3501 et 
seq.) and the regulations implementing the PRA, 5 CFR 1320.1 et seq., a 
``person'' is not required to respond to a ``collection of 
information'' unless it displays a currently valid OMB control number.
    The information collection requirements associated with the AFTP's 
annual report(s) were previously approved under OMB Control Number 
1910-5101. This rule includes an additional collection of information 
that is subject to review by OMB under the PRA, specifically 
documentation to support the allocation of credits through use of the 
AFTP's annual reporting form, DOE/FCVT/101, Standard Compliance 
Reporting Spreadsheet. OMB has approved this additional information 
collection under existing OMB Control Number 1910-5101. Under this 
final rule, specifically 10 CFR 490.508 (``Credit activity reporting 
requirements''), DOE will collect information regarding electric drive 
vehicle acquisitions and investments in refueling infrastructure, 
alternative fuel non-road equipment, and emerging technology when 
fleets choose to submit such information in support of their compliance 
requirements and in seeking to bank credits for such acquisitions and 
investments.
    DOE estimates that all covered fleets may seek to earn credits for 
acquiring electric drive vehicles, but that fewer fleets will seek to 
earn credits for investing in alternative fuel infrastructure, 
alternative fuel non-road equipment, and emerging technology. DOE 
estimates that a covered fleet seeking credits for both acquiring 
electric drive vehicles and for investing in alternative fuel 
infrastructure, alternative fuel non-road equipment, and emerging 
technology would expend 1 additional hour to comply with the reporting 
requirements of 10 CFR 490.508.
    DOE estimates the total annual costs to a covered fleet that seeks 
credits under this final rule are minimal, particularly given that the 
fleet is already submitting an annual report to achieve compliance with 
Program requirements, and that information it would submit for the 
acquisition of one vehicle type would simply replace information it 
would otherwise submit for a different vehicle type.

D. Review Under the National Environmental Policy Act

    DOE has determined that this rule is covered under the Categorical 
Exclusion found in DOE's National Environmental Policy Act regulations 
at paragraph A5 of Appendix A to Subpart D, 10 CFR part 1021, which 
applies to any rulemaking amending an existing rule or regulation that 
does not change the environmental effect of the rule or regulation 
being amended. Under this rule, covered fleets would be able to earn 
credits for the acquisition of specified electric drive vehicles and 
for investments in alternative fuel infrastructure, non-road equipment, 
and relevant emerging technologies, activities for which they may not 
earn credits under the existing AFTP. The rule has been structured to 
ensure that the petroleum reductions achieved by the AFTP in the future 
would be equivalent to those achieved in past years. Because the rule 
would not change the environmental effect of compliance with 10 CFR 
part 490, neither an environmental assessment nor an environmental 
impact statement is required.

E. 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 
Federal 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 Federal 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 
Federal agencies to review regulations in light of the applicable 
standards in sections 3(a) and 3(b) to determine whether those 
standards 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 rule meets the relevant standards of 
Executive Order 12988.

F. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 10, 
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 this rule and 
determined that it would not preempt State law and would not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. This rule 
provides additional compliance options under 10 CFR part 490 by 
expanding credits under the existing AFTP, and therefore provides 
covered state fleets additional flexibility in complying through

[[Page 15902]]

acquisition of vehicles and investments to the extent that such 
acquisitions and investments are consistent with the business needs of 
the covered state fleets. Therefore, no further action is required by 
Executive Order 13132.

G. Review Under the Unfunded Mandates Reform Act of 1995

    DOE reviewed this rule under Title II of the Unfunded Mandates 
Reform Act of 1995 (UMRA; Pub. L. 104-4), which requires each Federal 
agency to assess the effects of its regulatory actions on State, local, 
and tribal governments and the private sector. For a regulatory action 
likely to result in the promulgation of a rule that includes a Federal 
mandate that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year (adjusted annually for inflation), 
section 202 of UMRA requires the agency to prepare a written statement 
assessing the resulting costs, benefits, and other effects of the rule 
on the national economy (2 U.S.C. 1532(a) and (b)). UMRA also requires 
a Federal agency to develop an effective process to permit meaningful 
and timely input by elected officers of State, local, and tribal 
governments on any proposal containing a ``significant Federal 
intergovernmental mandate,'' and requires an agency to develop a plan 
for providing potentially affected small governments with notice and an 
opportunity for timely input prior to the establishment of any 
regulatory requirements that might significantly or uniquely affect 
small governments (2 U.S.C. 1533 and 1534). On March 18, 1997, DOE 
published a statement of policy on its process for intergovernmental 
consultation under UMRA (62 FR 12820) (also available at http://www.gc.doe.gov).
    This rule provides additional compliance options under 10 CFR part 
490 by expanding credits under the existing AFTP, and therefore 
contains neither an intergovernmental mandate nor a private sector 
mandate that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any year. Accordingly, no assessment or analysis is 
required under UMRA.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This rule would not have any impact on the autonomy or integrity of the 
family as an institution. Accordingly, DOE has concluded that it is not 
necessary to prepare a Family Policymaking Assessment.

I. Review Under the Treasury and General Government Appropriations Act, 
2001

    The Treasury and General Government Appropriations Act, 2001 (44 
U.S.C. 3516 note) provides for agencies to review most disseminations 
of information to the public under guidelines established by each 
agency pursuant to general guidelines issued by OMB. OMB's guidelines 
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines 
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed this 
rule under the OMB and DOE guidelines, and has concluded that it is 
consistent with applicable policies in those guidelines.

J. 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 Federal agencies to prepare and submit to OIRA 
a Statement of Energy Effects for any significant energy action. A 
``significant energy action'' is defined as any action by an agency 
that promulgates or is expected to lead to the promulgation of a final 
rule or regulation, and that: (1) Is a significant regulatory action 
under Executive Order 12866, or any successor order; and (2) is likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy; or (3) is designated by the Administrator of OIRA as a 
significant energy action. The Statement of Energy Effects must discuss 
any adverse effects on energy supply, distribution, or use should the 
proposal be implemented, and reasonable alternatives to the action and 
their expected benefits on energy supply, distribution, and use.
    As discussed in Part V.A above, this rule has been determined not 
to be a ``significant regulatory action'' under Executive Order 12866. 
In addition, this final rule provides additional compliance options 
under the AFTP that support reduced petroleum use in vehicle fleets. As 
such, the rule will not have a significant adverse effect on the 
supply, distribution, or use of energy and, therefore, is not a 
significant energy action. Additionally, OIRA has not designated this 
action as a significant energy action. Accordingly, DOE has not 
prepared a Statement of Energy Effects.

K. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on 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. 804(2).

List of Subjects in 10 CFR Part 490

    Administrative practice and procedure, Energy conservation, Fuel 
economy, Gasoline, Motor vehicles, Natural gas, Penalties, Petroleum, 
Reporting and recordkeeping requirements.

    Issued in Washington, DC, on March 12, 2014.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
    For the reasons set forth in the preamble, DOE amends part 490 of 
Title 10, Code of Federal Regulations as set forth below:

PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM

0
1. The authority citation for part 490 continues to read as follows:

    Authority:  42 U.S.C. 7191 et seq.; 42 U.S.C. 13201, 13211, 
13220, 13251 et seq.

Subpart A --[Amended]

0
2. Section 490.1 is amended by revising paragraph (a) to read as 
follows:

Sec.  490.1  Purpose and scope.

    (a) The provisions of this part implement the alternative fuel 
transportation program for State government and alternative fuel 
provider fleets under titles III, IV, and V of the Energy Policy Act of 
1992 (Pub. L. 102-486).
* * * * *

0
3. Section 490.2 is amended by:
0
a. Adding ``, including liquid fuels domestically produced from natural 
gas'' after the words ``natural gas'' in the definition of 
``Alternative Fuel''.
0
b. Removing the definitions of ``Electric-hybrid Vehicle,'' ``Electric 
Motor Vehicle,'' and ``Flexible Fuel Vehicle''.
0
c. Revising the definitions of ``Alternative Fueled Vehicle,'' 
``Automobile,'' ``Capable of Being Centrally Fueled,'' ``Dedicated 
Vehicle,'' ``Dual Fueled Vehicle,'' and ``Fleet''.
0
d. Adding the definition of ``Work Truck'' in alphabetical order.
    The additions and revisions read as follows:

[[Page 15903]]

Sec.  490.2  Definitions.

* * * * *
    Alternative Fueled Vehicle means a dedicated vehicle or a dual 
fueled vehicle, as those terms are defined in this section.
* * * * *
    Automobile means a 4-wheeled vehicle that is propelled by 
conventional fuel, or by alternative fuel, manufactured primarily for 
use on public streets, roads, and highways and having a gross vehicle 
weight rating of less than 10,000 pounds, except:
    (1) A vehicle operated only on a rail line;
    (2) A vehicle manufactured in different stages by two or more 
original equipment manufacturers, if no intermediate or final-stage 
original equipment manufacturer of that vehicle manufactures more than 
10,000 multi-stage vehicles per year; or
    (3) A work truck, as that term is defined in this section.
    Capable of Being Centrally Fueled means that a vehicle can be 
fueled at least 75 percent of the time at a location that is owned, 
operated, or controlled by the fleet or covered person, or at a 
location that is under contract with the fleet or covered person for 
fueling purposes.
* * * * *
    Dedicated Vehicle means--
    (1) An automobile that operates solely on one or more alternative 
fuels; or
    (2) A motor vehicle, other than an automobile, that operates solely 
on one or more alternative fuels.
    Dual Fueled Vehicle means--
    (1) An automobile that meets the criteria for a dual fueled 
automobile as set forth in 49 U.S.C. 32901(a)(9); or
    (2) A motor vehicle, other than an automobile, that is capable of 
operating on alternative fuel and on gasoline or diesel.
* * * * *
    Fleet means a group of 20 or more light duty motor vehicles, 
excluding certain categories of vehicles as provided by Sec.  490.3, 
used primarily in a metropolitan statistical area or consolidated 
metropolitan statistical area, as established by the Bureau of the 
Census as of December 31, 1992, with a 1980 Census population of more 
than 250,000 (listed in Appendix A to this subpart), that are centrally 
fueled or capable of being centrally fueled, and are owned, operated, 
leased, or otherwise controlled--
    (1) By a person who owns, operates, leases, or otherwise controls 
50 or more light duty motor vehicles within the United States and its 
possessions and territories;
    (2) By any person who controls such person;
    (3) By any person controlled by such person; or
    (4) By any person under common control with such person.
* * * * *
    Work Truck means a vehicle having a gross vehicle weight rating of 
more than 8,500 and less than or equal to 10,000 pounds that is not a 
medium-duty passenger vehicle as that term is defined in 40 CFR 
86.1803-01.

0
4. Section 490.3, paragraph (e), is revised to read as follows:

Sec.  490.3  Excluded vehicles.

* * * * *
    (e) Emergency motor vehicles, including vehicles directly used in 
the emergency repair of transmission lines and in the restoration of 
electricity service following power outages, as determined by DOE;
* * * * *

Subpart C--[Amended]

0
5. Section 490.202, paragraph (a), is revised to read as follows:

Sec.  490.202  Acquisitions satisfying the mandate.

* * * * *
    (a) The purchase or lease of an Original Equipment Manufacturer 
light duty vehicle (regardless of the model year of manufacture) that 
is an alternative fueled vehicle and that was not previously under the 
control of the State or State agency;
* * * * *

0
6. Section 490.204 is amended by:
0
a. Revising paragraph (b);
0
b. Redesignating paragraphs (g) through (h) as paragraphs (h) through 
(i); and
0
c. Adding new paragraph (g).
    The revision and additions read as follows:

Sec.  490.204  Process for granting exemptions.

* * * * *
    (b) Requests for exemption must be accompanied by supporting 
documentation, must be submitted no earlier than September 1 following 
the model year for which the exemption is sought and no later than 
January 31 following the model year for which the exemption is sought, 
and will only be considered following submission of the annual report 
under Sec.  490.205.
* * * * *
    (g) If DOE, in response to a request for exemption, seeks 
clarification or additional information from the State, such 
clarification or additional information must be submitted to DOE in 
accordance with paragraph (f) of this section within 30 days of DOE's 
inquiry. In the event a State does not comply with this timeframe, DOE 
will proceed under paragraph (h) of this section based on the 
documentation provided to date.
* * * * *

0
7. Section 490.205 is amended by:
0
a. Revising paragraphs (b)(4), (b)(5)(iv), (b)(5)(v), and (c); and
0
b. Adding new paragraphs (b)(5)(vi) through (vii).
    The revisions and additions read as follows:

Sec.  490.205  Reporting requirements.

* * * * *
    (b) * * *
    (4) Number of alternative fueled vehicle credits applied towards 
acquisition requirements pursuant to Sec.  490.505;
    (5) * * *
    (iv) An indication of whether the vehicle is a dedicated vehicle or 
a dual fueled vehicle;
    (v) Type(s) of alternative fuel on which the vehicle is capable of 
operating;
    (vi) Acquisition date; and
    (vii) If the annual report shows that the State fleet did not 
satisfy its alternative fueled vehicle acquisition mandate, an 
indication of whether the fleet intends to submit a request for 
exemption under Sec.  490.204; and
* * * * *
    (c) If banked alternative fueled vehicle credits are applied 
towards a State's alternative fueled vehicle acquisition requirements 
pursuant to Sec.  490.505, or if allocation of alternative fueled 
vehicle credits is sought under subpart F of this part, then a credit 
activity report, as described in Sec.  490.508, must be included with 
the annual report submitted under this section.
* * * * *

Subpart D--[Amended]

Sec.  490.302  [Amended]

0
8. Section 490.302 is amended by removing the reference ``section 
490.308'' in paragraph (e) and adding in its place ``Sec.  490.307.''

0
9. Section 490.305, paragraph (a), is revised to read as follows:

Sec.  490.305   Acquisitions satisfying the mandate.

* * * * *
0
(a) The purchase or lease of an Original Equipment Manufacturer light 
duty vehicle (regardless of the model year of manufacture) that is an

[[Page 15904]]

alternative fueled vehicle and that was not previously under the 
control of the covered person;
* * * * *

Sec.  490.307  [Removed]

0
10. Section 490.307 is removed.

Sec.  490.308  [Redesignated as Sec.  490.307]

0
11. Section 490.308 is redesignated as Sec.  490.307 and newly 
redesignated Sec.  490.307 is amended by:
0
a. Adding ``(1)'' after the letter ``(a)'' in paragraph (a);
0
b. Adding new paragraphs (a)(2) and (c)(4); and
0
c. Removing, in paragraph (f), the word ``State's'' and adding in its 
place, ``covered person's''.
    The additions read as follows:

Sec.  490.307  Process for granting exemptions.

    (a)(1) * * *
    (2) Requests for exemption must be accompanied by supporting 
documentation, must be submitted no earlier than September 1 following 
the model year for which the exemption is sought and no later than 
January 31 following the model year for which the exemption is sought, 
and will only be considered following submission of the annual report 
under Sec.  490.308.
* * * * *
    (c) * * *
    (4) If DOE, in response to a request for exemption, seeks 
clarification or additional information from the covered person, such 
clarification or additional information must be submitted to DOE in 
accordance with paragraph (a) of this section within 30 days of DOE's 
inquiry. In the event a covered person does not comply with this 
timeframe, DOE will proceed under paragraph (f) of this section based 
on the documentation provided to date.
* * * * *

Sec.  490.309  [Redesignated as Sec.  490.308]

0
12. Section 490.309 is redesignated as Sec.  490.308, and newly 
redesignated Sec.  490.308 is amended by:
0
a. Removing ``or section 490.307,'' from paragraph (a);
0
b. Revising paragraphs (b)(4), (b)(5)(iv), (b)(5)(v), and (c); and
0
c. Adding new paragraphs (b)(5)(vi) through (vii).
    The revisions and additions read as follows:

Sec.  490.308  Annual reporting requirements.

* * * * *
    (b) * * *
    (4) Number of alternative fueled vehicle credits applied towards 
acquisition requirements pursuant to Sec.  490.505;
    (5) * * *
    (iv) An indication of whether the vehicle is a dedicated vehicle or 
a dual fueled vehicle;
    (v) Type(s) of alternative fuel on which the vehicle is capable of 
operating;
    (vi) Acquisition date; and
    (vii) If the annual report shows that the covered person did not 
satisfy its alternative fueled vehicle acquisition mandate, an 
indication of whether the covered person intends to submit a request 
for exemption under Sec.  490.307.
    (c) If banked alternative fueled vehicle credits are applied 
towards a covered person's alternative fueled vehicle acquisition 
requirements pursuant to Sec.  490.505, or if allocation of alternative 
fueled vehicle credits is sought under subpart F of this part, then a 
credit activity report, as described in Sec.  490.508, must be included 
with the annual report submitted under this section.
* * * * *

Sec.  490.310  [Redesignated as Sec.  490.309]

0
13. Section 490.310 is redesignated as Sec.  490.309.

Subpart F--[Amended]

0
14. Section 490.500 is revised to read as follows:

Sec.  490.500  Purpose and scope.

    This subpart implements the statutory requirements of section 508 
of the Act, which provides for the allocation of credits to fleets or 
covered persons that:
    (a) Acquire alternative fueled vehicles in excess of the number 
they are required to acquire under this part or obtain alternative 
fueled vehicles before the model year when they are required to do so 
under this part;
    (b) Acquire certain other vehicles as identified in this subpart; 
or
    (c) Invest in qualified alternative fuel infrastructure or non-road 
equipment or an emerging technology.

0
15. Section 490.501 is revised to read as follows:

Sec.  490.501  Definitions.

    In addition to the definitions found in Sec.  490.2, the following 
definitions apply to this subpart:
    Alternative Fuel Infrastructure means property that is for:
    (1) The storage and dispensing of an alternative fuel into the fuel 
tank of a motor vehicle propelled by such fuel; or
    (2) The recharging of motor vehicles or neighborhood electric 
vehicles propelled by electricity.
    Alternative Fuel Non-road Equipment means mobile, non-road 
equipment that operates on alternative fuel (including but not limited 
to forklifts, tractors, bulldozers, backhoes, front-end loaders, and 
rollers/compactors).
    Emerging Technology means a pre-production or pre-commercially 
available version of a fuel cell electric vehicle, hybrid electric 
vehicle, medium- or heavy-duty electric vehicle, medium- or heavy-duty 
fuel cell electric vehicle, neighborhood electric vehicle, or plug-in 
electric drive vehicle, as such vehicles are defined in this section.
    Fuel Cell Electric Vehicle means a motor vehicle or non-road 
vehicle that uses a fuel cell, as that term is defined in section 803 
of the Spark M. Matsunaga Hydrogen Act of 2005 (42 U.S.C. 16152(1)).
    Hybrid Electric Vehicle means a new qualified hybrid motor vehicle 
as defined in section 30B(d)(3) of the Internal Revenue Code of 1986 
(26 U.S.C. 30B(d)(3)).
    Medium- or Heavy-Duty Electric Vehicle means an electric, hybrid 
electric, or plug-in hybrid electric vehicle with a gross vehicle 
weight rating of more than 8,500 pounds.
    Medium- or Heavy-Duty Fuel Cell Electric Vehicle means a fuel cell 
electric vehicle with a gross vehicle weight rating of more than 8,500 
pounds.
    Neighborhood Electric Vehicle means a 4-wheeled on-road or non-road 
vehicle that--
    (1) Has a top attainable speed in 1 mile of more than 20 mph and 
not more than 25 mph on a paved level surface; and
    (2) Is propelled by an electric motor and an on-board, rechargeable 
energy storage system that is rechargeable using an off-board source of 
electricity.
    Plug-in Electric Drive Vehicle means a vehicle that--
    (1) Draws motive power from a battery with a capacity of at least 4 
kilowatt-hours;
    (2) Can be recharged from an external source of electricity for 
motive power;
    (3) Is a light-, medium-, or heavy-duty motor vehicle or non-road 
vehicle, as those terms are defined in section 216 of the Clean Air Act 
(42 U.S.C. 7550); and
    (4) In the case of a plug-in hybrid electric vehicle, also includes 
an on-board method of charging the energy storage system and/or 
providing motive power.

0
16. Section 490.502 is revised to read as follows:

Sec.  490.502  Applicability.

    This subpart applies to all fleets and covered persons that are 
required to

[[Page 15905]]

acquire alternative fueled vehicles by this part.

0
17. Section 490.503 is revised to read as follows:

Sec.  490.503  Creditable actions.

    A fleet or covered person becomes entitled to alternative fueled 
vehicle credits, at the allocation levels specified in Sec.  490.504, 
by:
    (a)(1) Acquiring light duty alternative fueled vehicles, including 
those in excluded categories under Sec.  490.3, in excess of the number 
of light duty alternative fueled vehicles that the fleet or covered 
person is required to acquire under Sec.  490.201 or Sec.  490.302;
    (2) Acquiring alternative fueled vehicles, including those in 
excluded categories under Sec.  490.3, with a gross vehicle weight 
rating of more than 8,500 pounds, in excess of the number of light duty 
alternative fueled vehicles that the fleet or covered person is 
required to acquire under Sec.  490.201 or Sec.  490.302;
    (3) Acquiring in model year 2014 or in any model year thereafter, 
any of the following vehicles in excess of the number of light duty 
alternative fueled vehicles that the fleet or covered person is 
required to acquire under Sec.  490.201 or Sec.  490.302:
    (i) Medium- or heavy-duty fuel cell electric vehicles that are not 
alternative fueled vehicles; or
    (ii) Medium- or heavy-duty electric vehicles that are not 
alternative fueled vehicles;
    (b) Acquiring alternative fueled vehicles, including those in 
excluded categories under Sec.  490.3 and those with a gross vehicle 
weight rating of more than 8,500 pounds, in model years before the 
model year when that fleet or covered person is first required to 
acquire light duty alternative fueled vehicles under Sec.  490.201 or 
Sec.  490.302;
    (c) Investing, during a model year that is model year 2014 or 
thereafter and is also a model year in which requirements under this 
part apply to the fleet or covered person, at least $25,000 in 
alternative fuel infrastructure or alternative fuel non-road equipment, 
or at least $50,000 in an emerging technology, provided that:
    (1) The emerging technology, alternative fuel infrastructure, or 
alternative fuel non-road equipment is put into operation during the 
year in which the fleet or covered person has applied for credits;
    (2) In the case of an emerging technology, the amount invested by 
the fleet or covered person is not the basis for credit under 
paragraphs (a), (b), or (d) of this section; and
    (3) In the case of alternative fuel non-road equipment, the 
equipment is being operated on alternative fuel, within the constraints 
of best practices and seasonal fuel availability; or
    (d) Acquiring, during a model year that is model year 2014 or 
thereafter and is also a model year in which requirements under this 
part apply to the fleet or covered person, any of the following 
vehicles, including those in excluded categories under Sec.  490.3:
    (1) A hybrid electric vehicle that is a light duty motor vehicle, 
but that is not an alternative fueled vehicle;
    (2) A plug-in electric drive vehicle that is a light duty motor 
vehicle, but that is not an alternative fueled vehicle;
    (3) A fuel cell electric vehicle that is a light duty motor 
vehicle, but that is not an alternative fueled vehicle; or
    (4) A neighborhood electric vehicle.
    (e) For purposes of this subpart, a fleet or covered person that 
acquired a motor vehicle on or after October 24, 1992, and converted it 
to an alternative fueled vehicle before April 15, 1996, shall be 
entitled to a credit for that vehicle notwithstanding the time limit on 
conversions established by Sec. Sec.  490.202(c) and 490.305(c).

0
18. Section 490.504 is revised to read as follows:

Sec.  490.504  Credit allocation.

    (a) Based on annual credit activity report information, as 
described in Sec.  490.508, DOE shall allocate:
    (1) One alternative fueled vehicle credit for each alternative 
fueled vehicle, regardless of the vehicle's gross vehicle weight 
rating, that a fleet or covered person acquires in excess of the number 
of light duty alternative fueled vehicles that the fleet or covered 
person is required to acquire under Sec.  490.201 or Sec.  490.302; and
    (2) One-half of an alternative fueled vehicle credit for each 
medium- or heavy-duty fuel cell electric vehicle that is not an 
alternative fueled vehicle and each medium- or heavy-duty electric 
vehicle that is not an alternative fueled vehicle, either or both of 
which a fleet or covered person acquires in excess of the number of 
light duty alternative fueled vehicles that the fleet or covered person 
is required to acquire under Sec.  490.201 or Sec.  490.302.
    (b) If an alternative fueled vehicle, regardless of the vehicle's 
gross vehicle weight rating, is acquired by a fleet or covered person 
in a model year before the first model year that the fleet or covered 
person is required to acquire light duty alternative fueled vehicles by 
this part, as reported in the annual credit activity report, DOE shall 
allocate one credit per alternative fueled vehicle for each year the 
alternative fueled vehicle is acquired before the model year when 
acquisition requirements apply.
    (c) DOE shall allocate credits to fleets and covered persons under 
paragraph (b) of this section only for alternative fueled vehicles 
acquired on or after October 24, 1992.
    (d) Based on annual credit activity report information, as 
described in Sec.  490.508, DOE shall allocate alternative fueled 
vehicle credit in the amount set forth below for the associated 
creditable actions that a fleet or covered person undertakes as 
described in Sec.  490.503(d):
    (1) A hybrid electric vehicle that is a light duty motor vehicle, 
but that is not an alternative fueled vehicle--\1/2\ credit;
    (2) A plug-in electric drive vehicle that is a light duty motor 
vehicle, but that is not an alternative fueled vehicle--\1/2\ credit;
    (3) A fuel cell electric vehicle that is a light duty motor 
vehicle, but that is not an alternative fueled vehicle--\1/2\ credit; 
and
    (4) A neighborhood electric vehicle--\1/4\ credit.
    (e) Based on annual credit activity report information, as 
described in Sec.  490.508, DOE shall allocate one alternative fueled 
vehicle credit for every $25,000 that a fleet or covered person 
invests, as described in Sec.  490.503(c), in:
    (1) Alternative fuel infrastructure that is:
    (i) Publicly accessible, provided that the maximum number of 
credits under this paragraph shall not exceed ten for the model year 
and the alternative fuel infrastructure became operational in the same 
model year, and provided further that the total number of credits 
allocated under this paragraph (e)(1)(i) and paragraph (e)(1)(ii) of 
this section do not exceed ten in a given model year; or
    (ii) Not publicly accessible, provided that the maximum number of 
credits under this paragraph shall not exceed five for the model year 
and the alternative fuel infrastructure became operational in the same 
model year, and provided further that the total number of credits 
allocated under this paragraph (e)(1)(ii) and paragraph (e)(1)(i) of 
this section do not exceed ten in a given model year; or
    (2) Alternative fuel non-road equipment, provided that the maximum 
number of credits under this paragraph (e)(2) shall not exceed five for 
the model year, and provided further that the equipment is being 
operated on alternative fuel.
    (f) Based on annual credit activity report information, as 
described in Sec.  490.508 of this subpart, DOE shall allocate two 
alternative fueled vehicle credits for the first $50,000, and one

[[Page 15906]]

alternative fueled vehicle credit for every $25,000 thereafter, that a 
fleet or covered person invests, as described in Sec.  490.503(c), in 
emerging technology, provided that the maximum number of credits under 
this paragraph (f) shall not exceed five for the model year, and 
provided further that the amount for which credit is allocated under 
this paragraph has not been the basis for credit allocation under 
paragraphs (a), (b), or (d) of this section.
    (g) A fleet or covered person may aggregate the amount of money 
invested in alternative fuel infrastructure, alternative fuel non-road 
equipment, and emerging technology such that funds from multiple 
categories may be used to achieve the applicable threshold for the 
purpose of earning an alternative fueled vehicle credit, so long as no 
funds are aggregated from a category for which the fleet has already 
been allocated the maximum number of credits allowed for that category, 
as set forth in paragraphs (e) and (f) of this section.

0
19. Section 490.505 is revised to read as follows:

Sec.  490.505  Use of alternative fueled vehicle credits.

    At the request of a fleet or covered person in an annual report 
under subpart C or D of this part, DOE shall treat each banked 
alternative fueled vehicle credit as the acquisition of an alternative 
fueled vehicle that the fleet or covered person is required to acquire 
under this part. Each full credit shall count as the acquisition of one 
alternative fueled vehicle in the model year for which the fleet or 
covered person requests that the credit be applied.

0
20. Section 490.506 is revised to read as follows:

Sec.  490.506  Credit accounts.

    (a) DOE shall establish a credit account for each fleet or covered 
person that obtains an alternative fueled vehicle credit.
    (b) DOE shall send to each fleet and covered person an annual 
credit account balance statement after the receipt of its credit 
activity report under Sec.  490.508.

0
21. Section 490.507 is revised to read as follows:

Sec.  490.507  Alternative fueled vehicle credit transfers.

    (a) Any fleet or covered person that is required to acquire 
alternative fueled vehicles may transfer an alternative fueled vehicle 
credit to--
    (1) A fleet that is required to acquire alternative fueled 
vehicles; or
    (2) A covered person subject to the requirements of this part, if 
the transferor provides certification to the covered person that the 
credit represents a vehicle that operates solely on alternative fuel.
    (b) Proof of credit transfer may be on a form provided by DOE, or 
otherwise in writing, and must include dated signatures of the 
transferor and transferee. The proof should be received by DOE within 
30 days of the transfer date at the Office of Energy Efficiency and 
Renewable Energy, U.S. Department of Energy, EE-2G, 1000 Independence 
Avenue SW, Washington, DC 20585-0121, or such other address as DOE 
publishes on its Web site or in the Federal Register.

0
22. Section 490.508 is added to subpart F to read as follows:

Sec.  490.508  Credit activity reporting requirements.

    (a) A fleet or covered person that either applied one or more 
banked credits towards its alternative fueled vehicle acquisition 
requirements pursuant to Sec.  490.505, seeks the allocation of 
alternative fueled vehicle credits under this subpart, or participated 
in a credit transfer under Sec.  490.507 must include a credit activity 
report with its annual report submitted under subpart C or D of this 
part.
    (b) The credit activity report must include the following 
information:
    (1) Number of alternative fueled vehicle credits applied towards 
acquisition requirements pursuant to Sec.  490.505;
    (2) Number of alternative fueled vehicle credits requested for:
    (i) Light duty alternative fueled vehicles acquired in excess of 
the required acquisition number;
    (ii) Alternative fueled vehicles with a gross vehicle weight rating 
of more than 8,500 pounds acquired in excess of the required 
acquisition number;
    (iii) Medium- or heavy-duty fuel cell electric vehicles that are 
not alternative fueled vehicles, acquired in excess of the required 
acquisition number;
    (iv) Medium- or heavy-duty electric vehicles that are not 
alternative fueled vehicles, acquired in excess of the required 
acquisition number;
    (v) Light duty alternative fueled vehicles acquired in model years 
before the first model year the fleet or covered person is required to 
acquire light duty alternative fueled vehicles by this part;
    (vi) Alternative fueled vehicles with a gross vehicle weight rating 
of more than 8,500 pounds acquired in model years before the first 
model year the fleet or covered person is required to acquire light 
duty alternative fueled vehicles by this part;
    (vii) The acquisition of light duty hybrid electric vehicles that 
are not alternative fueled vehicles;
    (viii) The acquisition of light duty plug-in electric drive 
vehicles that are not alternative fueled vehicles;
    (ix) The acquisition of light duty fuel cell electric vehicles that 
are not alternative fueled vehicles; and
    (x) The acquisition of neighborhood electric vehicles.
    (3) Number of alternative fueled vehicle credits, in whole number 
values, requested for each of the following:
    (i) Investment in alternative fuel infrastructure;
    (ii) Investment in alternative fuel non-road equipment; and
    (iii) Investment in an emerging technology.
    (4) For each vehicle that is not an alternative fueled vehicle and 
for which credit is requested under paragraphs (b)(2)(iii), (iv), 
(vii), (viii), (ix), or (x) of this section:
    (i) Vehicle make and model;
    (ii) Model year;
    (iii) Vehicle Identification Number; and
    (iv) Acquisition date.
    (5) For investment in alternative fuel infrastructure, supporting 
documentation and a written statement, certified by a responsible 
official of the fleet or covered person, indicating or providing:
    (i) The model year or period in which the investment was made;
    (ii) The amount of money invested by the fleet or covered person 
and to whom the money was provided;
    (iii) The physical location(s) (address and zip code) and a 
detailed description of the alternative fuel infrastructure, including 
the name and address of the construction/installation company (where 
appropriate), whether the infrastructure is publicly accessible, and 
the type(s) of alternative fuel offered; and
    (iv) The date on which the alternative fuel infrastructure became 
operational.
    (6) For investment in alternative fuel non-road equipment, 
supporting documentation and a written statement, certified by a 
responsible official of the fleet or covered person, indicating or 
providing:
    (i) The model year or period in which the investment was made;
    (ii) The amount of money invested by the fleet or covered person 
and to whom the money was provided; and
    (iii) A detailed description of the alternative fuel non-road 
equipment, including the name and address of the manufacturer, the 
type(s) of alternative

[[Page 15907]]

fuel on which the equipment is capable of being operated, a 
certification that the equipment is being operated on that alternative 
fuel, the date on which the fleet or covered person purchased the 
equipment, and the date on which it was put into operation.
    (7) For investment in an emerging technology, supporting 
documentation and a written statement, certified by a responsible 
official of the fleet or covered person, indicating or providing:
    (i) The model year or period in which the investment was made;
    (ii) The amount of money invested by the fleet or covered person 
and to whom the money was provided;
    (iii) A certification that the emerging technology's acquisition is 
not included as a new light duty alternative fueled vehicle acquisition 
in the fleet or covered person's annual report;
    (iv) A certification that the emerging technology's acquisition is 
not included in paragraph (b)(2) of this section and the amount 
invested is not included in the amounts submitted under paragraph 
(b)(5)(ii) or (b)(6)(ii) of this section; and
    (v) A detailed description of the emerging technology, including 
the name and address of the manufacturer, the date on which the fleet 
or covered person purchased the emerging technology, and the date on 
which it was put it into operation.
    (8) The total number of alternative fueled vehicle credits 
requested by the fleet or covered person, calculated by adding the two 
subtotals under paragraphs (b)(2) and (b)(3) of this section and then 
rounding the aggregate figure to the nearest whole number; in rounding 
to the nearest whole number, any fraction equal to or greater than one 
half shall be rounded up and any fraction less than one half shall be 
rounded down.
    (9) Purchases of alternative fueled vehicle credits:
    (i) Credit source; and
    (ii) Date of purchase;
    (10) Sales of alternative fueled vehicle credits:
    (i) Credit purchaser; and
    (ii) Date of sale.

Subpart I--[Amended]

0
23. Section 490.804, paragraph (c) is revised to read as follows:

Sec.  490.804  Eligible reductions in petroleum consumption.

* * * * *
    (c) Rollover of excess petroleum reductions. (1) Upon approval by 
DOE, petroleum fuel use reductions achieved by a fleet in excess of the 
amount required for alternative compliance in a previous model year may 
be applied towards the petroleum fuel use reduction requirement under 
Sec.  490.803(a) in a model year for which a waiver is granted and for 
which the fleet experiences a shortfall.
    (2)(i) A fleet seeking to roll over for future use the petroleum 
fuel use reductions that it achieved in excess of the amount required 
for alternative compliance in a particular model year must make a 
written request to DOE as part of the fleet's annual report required 
under Sec.  490.807 for the model year in which the excess reductions 
were achieved.
    (ii) Following receipt of a request under paragraph (c)(2)(i) of 
this section, DOE will notify the requesting fleet of the amount of 
excess petroleum fuel use reductions that DOE has approved for rollover 
and potential application towards the petroleum fuel use reduction 
requirement in a future model year.
    (iii) A fleet seeking to apply excess petroleum fuel use reductions 
rolled over pursuant to paragraph (c)(2)(ii) of this section in a model 
year for which a waiver is granted and for which the fleet experiences 
a shortfall in achieving the petroleum fuel use reduction requirement 
under Sec.  490.803(a) must make a written request to DOE as part of 
the fleet's annual report required under Sec.  490.807. The written 
request must specify the amount of the rollover reductions (in GGE) the 
fleet wishes to have applied and the total balance of rollover 
reductions (in GGE) the fleet possesses.
    (3)(i) In considering a written request to apply rollover 
reductions under paragraph (c)(2)(iii) of this section, DOE may seek 
from the fleet additional information about the fleet and its 
operations.
    (ii) Upon approving a request to apply rollover reductions, DOE 
will apply the approved rollover reductions only to the extent that 
other reductions in petroleum consumption through any of the means set 
forth in paragraphs (a) and (b) of this section were not reasonably 
achievable.
    (4) Excess petroleum reductions are not tradable.
* * * * *

0
24. Section 490.805 is amended by removing paragraph (b)(3) and 
revising paragraph (b)(2) to read as follows:

Sec.  490.805  Application for waiver.

* * * * *
    (b) * * *
    (2) A complete waiver application must be received by DOE no later 
than July 31 prior to the model year for which a waiver is sought.
* * * * *

0
25. Section 490.809 is revised to read as follows:

Sec.  490.809  Violations.

    If a State or covered person that received a waiver under this 
subpart fails to comply with the petroleum motor fuel reduction or 
reporting requirements of this subpart, DOE will revoke the waiver and 
may impose on the State or covered person a penalty under subpart G of 
this part. A State or covered person whose waiver has been revoked by 
DOE is precluded from requesting an exemption under Sec.  490.204 or 
Sec.  490.307 from the vehicle acquisition mandate for the model year 
of the revoked waiver.

[FR Doc. 2014-06044 Filed 3-20-14; 8:45 am]
BILLING CODE 6450-01-P
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