```

[Federal Register Volume 76, Number 210 (Monday, October 31, 2011)]
[Proposed Rules]
[Pages 67288-67313]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-26761]

[[Page 67287]]

Vol. 76

Monday,

No. 210

October 31, 2011

Part III

Department of Energy

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10 CFR Part 490

 Alternative Fuel Transportation Program; Alternative Fueled Vehicle 
Credit Program (Subpart F) Modification and Other Amendments; Proposed 
Rule

Federal Register / Vol. 76, No. 210 / Monday, October 31, 2011 / 
Proposed Rules

[[Page 67288]]

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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 (Subpart F) Modification and Other Amendments

AGENCY: Department of Energy (DOE).

ACTION: Notice of proposed rulemaking.

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SUMMARY: DOE today proposes a rule pursuant to the Energy Independence 
and Security Act of 2007 (EISA), that would revise the allocation of 
marketable credits under DOE's Alternative Fuel Transportation Program 
(AFTP or Program), by including EISA-specified electric drive vehicles 
and investments in qualified alternative fuel infrastructure, nonroad 
equipment, and relevant emerging technologies. DOE also is proposing 
modifications to the use of Program credits, revisions to the exemption 
process, clarifications of the Alternative Compliance option, and 
several technical and other amendments intended to make the Program 
regulations clearer.

DATES: Public comments on this proposed rulemaking must be received no 
later than December 30, 2011 to ensure consideration.

ADDRESSES: DOE has established a docket for this action under Docket ID 
No. EERE-2011-OT-0066. All documents in the docket are listed in the 
EDOCKET index and may be accessed at http://www.regulations.gov, under 
the aforementioned docket number. Submit comments, identified by the 
aforementioned docket number, by one of the following methods:
    1. Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the on-line instructions.
    2. Email: regulatory_info@afdc.nrel.gov.
    3. Mail or deliver: (eight copies) U.S. Department of Energy, 
Office of Energy Efficiency and Renewable Energy, EE-2G, RIN 1904-AB81, 
1000 Independence Avenue SW., Washington, DC 20585-0121. DOE is 
currently using Microsoft Word. Organizations are strongly encouraged 
to submit comments electronically, to facilitate timely receipt of 
comments and inclusion in the electronic docket.
    Copies of this notice and written comments will be placed at the 
following Web site address: http://www1.eere.energy.gov/vehiclesandfuels/epact/private/index.html. Before taking final action 
on today's proposal, DOE will consider all comments and other relevant 
information received on or before the date specified above. All 
comments submitted will be made available in the electronic docket set 
up for this rulemaking. Therefore, no information desired to be kept 
confidential should be submitted to the docket. This docket will be 
available via the DOE EDOCKET through http://www.regulations.gov, which 
may be located using key words or the above noted docket number. For 
more information concerning public participation in this rulemaking, 
see the SUPPLEMENTARY INFORMATION section on ``Opportunity for Public 
Comment.''

FOR FURTHER INFORMATION CONTACT: For information concerning this 
notice, 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@afdc.nrel.gov; or Mr. Ari Altman, Office of the 
General Counsel, 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
II. Background
    A. General
    B. Current Status of Alternative Fuel Transportation Program
    C. Statutory Authority for Proposals Included in This NOPR
    1. EISA
    2. Additional Proposed Revisions
III. Key Definitions
    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 Actions
    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 Nonroad Equipment
    8. Emerging Technology
IV. Proposed Allocation of Credit
    A. General Basis for Allocations
    B. Electric Drive Vehicles
    1. Hybrid Electric Vehicles (HEVs)
    2. Plug-In Electric Drive Vehicles
    3. Fuel Cell Electric Vehicles (FCEVs)
    4. Neighborhood Electric Vehicles (NEVs)
    5. Medium- or Heavy-Duty Electric Vehicles
    a. General
    b. Hybrid Electric and Plug-In Hybrid Electric Vehicles
    C. Investments
    1. Alternative Fuel Infrastructure
    2. Alternative Fuel Nonroad Equipment
    3. Emerging Technology
V. Proposed Modifications to the Existing AFTP
    A. Timeliness of Exemption Request Submittals
    B. Program Credits and Exemption Requests
    C. Alternative Compliance
    D. Other Regulatory Revisions
    E. Other Issues
VI. Proposed Compliance
    A. Credit Values
    B. Reporting
VII. Opportunity for Public Comment
    A. Participation in Rulemaking
    B. Written Comment Procedures
VIII. 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

I. Introduction

    Titles III through V of the Energy Policy Act of 1992 (EPAct 1992, 
Pub. L. 102-486, 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.

[[Page 67289]]

    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 that upon the creation 
of the ``Alternative Compliance'' option (see discussion in Part II.A), 
the original program based upon 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 today's proposal 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, nonroad equipment, and emerging 
technologies related to those electric drive vehicles. As discussed in 
more detail below, some of the electric drive vehicles identified in 
section 133 already meet the EPAct 1992 definition of an AFV and 
therefore already are entitled to full credit under the AFTP, while 
others do not currently meet the AFV definition. In today's action, DOE 
is proposing 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 proposing today to modify several aspects of the 
existing AFTP. These modifications would: Enhance the timeliness of 
exemption requests; require covered fleets to use their own banked 
credits before requesting exemptions; mandate that fleets without 
sufficient AFV acquisitions, biodiesel fuel use credits, and banked 
credits to meet their compliance requirements include in their annual 
reports information about any efforts they made to acquire credits from 
other fleets; and revise the deadline for submitting Alternative 
Compliance waiver applications. Finally, DOE also is proposing a number 
of clarifications as well as several revisions that would make the AFTP 
regulations consistent with amendments to EPAct 1992.

II. Background

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 today's proposal) 
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 do not provide 
broad incentives for petroleum reduction or requirements for overall 
emissions reductions, but rather 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 at 10 CFR 490.204 and 490.308 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

[[Page 67290]]

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.\6\ Fleets may 
use the surplus credits generated in these ways in future model years 
to cover shortfalls (banking), or they may sell or trade the credits to 
other covered fleets.\7\ 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.
    \6\ 10 CFR 490.502(b).
    \7\ See 10 CFR 490.504 and 10 CFR 490.506, respectively.
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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 a partial alternative means 
of complying with their AFV-acquisition requirements (limited to 
meeting 50 percent of requirements, except for biodiesel fuel 
providers). In the Energy Policy Act of 2005 (EPAct 2005, Pub. L. 109-
58), Congress again amended the Title V fleet program to provide 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 solely 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 today's proposed rule.
    Today's proposal would implement EISA section 133, allocating 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, nonroad equipment, and emerging technologies related to 
specific vehicle types. In developing this NOPR, 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 proposing that credits be allocated 
to those electric drive vehicles identified in section 133 that do not 
already qualify as AFVs based upon 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 
are already entitled to full credit under the AFTP.

B. Current Status of Alternative Fuel Transportation Program

    Since Model Year (MY) 2000, the AFTP has been highly successful. 
Through MY 2009, covered SFP fleets acquired nearly 160,000 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 2000, DOE has received nearly 350 
exemption requests, granting exemptions and thereby relieving the 
requesting fleets from having to acquire more than 9,600 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 more than 27,000 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 9,500 credits having been 
exchanged since MY 1999. Overall, covered fleets currently hold over 
61,500 banked credits, enough credits for perhaps four or more years of 
operation of the entire AFTP.

C. Statutory Authority for Proposals Included in This NOPR

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. Today's proposed rule therefore 
addresses SFP fleets only, and not Federal fleets.
    The allocations that DOE is proposing today are intended to ensure 
consistency with the overall approach of the relevant provisions of 
EPAct 1992, which focus on the replacement of

[[Page 67291]]

petroleum fuels through the use of replacement fuels to the maximum 
extent practicable.
    It is critical to consider the AFTP's existing definitions in order 
to understand the proposed allocations. As discussed throughout this 
NOPR, if a given vehicle type already qualifies as an AFV, it is 
already eligible for full credit under the existing AFTP. 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 NOPR would receive credit under the AFTP.
    In addition to section 133, section 103(a) of EISA made changes to 
the Energy Policy and Conservation Act's (EPCA, codified at 49 U.S.C. 
32901-32919) definitions of the terms ``automobile'' and ``dual fueled 
automobile.'' These definitions are included or referenced in subpart A 
of the AFTP regulations.\8\ As part of the amended statutory definition 
of ``automobile,'' EISA section 103(a) introduced and defined a new 
term, ``work truck.'' DOE is proposing today to adopt in subpart A 
these definitions of ``automobile'' and ``work truck,'' to revise 
several of the existing regulatory definitions and provisions, and to 
delete those that DOE believes are no longer needed.
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    \8\ See 10 CFR 490.2.
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2. Additional Proposed Revisions
    As indicated above, DOE also is proposing today various 
modifications to the existing AFTP that are unrelated to EISA. These 
proposed modifications, discussed more fully in Part V below, include: 
Establishing a timeframe for the submission of exemption requests; 
requiring covered fleets to use their own banked credits before 
requesting exemptions; mandating that fleets without sufficient AFV 
acquisitions, biodiesel fuel use credits, or banked credits to meet 
their compliance requirements include in their annual reports 
information about any efforts they have made to acquire credits from 
other fleets; and creating a single due date for the submission of 
Alternative Compliance waiver applications. Like the existing 
regulations in 10 CFR part 490, the statutory basis for these proposed 
modifications lies in Titles III-V of EPAct 1992, as amended.
    In section 707 of EPAct 2005, Congress amended section 301(9)(E) of 
EPAct 1992 to make clear that the ``emergency motor vehicles'' 
exclusion from the term ``fleet'' includes ``vehicles directly used in 
the emergency repair of transmission lines and in the restoration of 
electricity service following power outages, as determined by the 
Secretary.'' \9\ DOE is proposing today to revise the regulatory 
exclusion at 10 CFR 490.3(e) so that it is consistent with this 
legislative amendment. DOE is also proposing to incorporate in the 
regulatory definition of ``alternative fuel'' language pertaining to 
liquid fuels domestically produced from natural gas, which Congress 
added to the section 301 definition in 2000.\10\ Both of these proposed 
changes would merely implement the particular statutory language 
modifications that Congress made, and thus DOE considers these proposed 
changes to be non-controversial.
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    \9\ See Pub. L. 109-58, section 707.
    \10\ See Pub. L. 106-554 App. D, Div. B, Title I, section 122, 
as codified at 42 U.S.C. 13211(2).
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III. Key Definitions

    This section of the NOPR discusses the AFTP definitions, both 
existing and newly proposed, that are key to DOE's proposed approach to 
the allocation of credits under EISA section 133, as well as the 
existing definitions that DOE is proposing today to amend. The 
rulemaking process associated with today's NOPR is intended to codify 
the definitions set forth in EISA section 133 for purposes of the 
AFTP's credit program (Subpart F). As developed pursuant to EPAct 1992, 
as amended, compliance under the AFTP is determined primarily through 
the acquisition of AFVs.

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) of EPAct 1992, 
\11\ and includes:
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    \11\ 42 U.S.C. 13211(2).
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     Methanol, denatured ethanol, and other alcohols;
     Mixtures containing 85 percent or more by volume of 
methanol, denatured ethanol, and other alcohols with gasoline or other 
fuels (or such other percentage, but not less than 70 percent, as 
determined by the Secretary, by rule);
     Natural gas, including liquid fuels domestically produced 
from natural gas;
     Liquefied petroleum gas;
     Hydrogen;
     Coal-derived liquid fuels;
     Fuels (other than alcohol) derived from biological 
materials;
     Electricity (including electricity from solar energy); 
and,
     Any other fuel the Secretary determines, by rule, is 
substantially not petroleum and would yield substantial energy security 
benefits and substantial environmental benefits.
    The corresponding AFTP definition of ``alternative fuel'' appears 
at 10 CFR 490.2. The explicit inclusion of electricity as an 
alternative fuel is particularly relevant to today's proposal.
    As indicated above, DOE is proposing to add to the AFTP definition 
the phrase ``including liquid fuels domestically produced from natural 
gas,'' which Congress added to the statutory definition in 2000.
2. Alternative Fueled Vehicle
    As provided in section 301(3) of EPAct 1992, an alternative fueled 
vehicle ``means a dedicated vehicle or a dual fueled vehicle.'' Thus, 
vehicles acceptable for the AFTP (i.e., vehicles that receive full 
credit under the AFTP) must either be ``dedicated vehicles,'' which are 
vehicles that operate solely on alternative fuel, or ``dual fueled 
vehicles,'' which have 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 fuels (such as flexible fuel vehicles). 
Importantly, Congress has not added to or otherwise modified the 
definition of an AFV as it applies to SFP fleets since its enactment in 
1992.\12\
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    \12\ Congress did, however, previously amend the definition of 
AFV in the context of Federal fleets, at section 2862 of the 
National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 
110-181). See 147 153 Cong. Rec. S12355 (Oct. 1, 2007) (the 
``purpose'' of section 2862 is ``[t]o allow additional types of 
vehicles to be used to meet minimum Federal fleet requirements''). 
The amended definition does not apply to the AFTP and SFP fleets 
regulated under it.
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    The corresponding AFTP definition of an AFV appears at 10 CFR 
490.2. When DOE promulgated this regulatory definition in 1996, it 
included language clarifying that flexible fuel vehicles (FFVs) are 
encompassed within the definition, and also provided a separate 
definition of the term ``flexible fuel vehicle.'' DOE explained that it 
took the latter definition from the Clean Fuel Fleet Program 
regulations that the U.S. Environmental Protection Agency (EPA) issued 
under the Clean Air Act.\13\ The National Highway Traffic Safety 
Administration (NHTSA), the Federal agency responsible for setting and 
enforcing the Corporate Average Fuel Economy (CAFE) standards under 
EPCA, did not and still does not have a regulatory definition of 
``flexible fuel vehicle.'' DOE has determined that the

[[Page 67292]]

reference to FFVs in the AFTP definition of ``alternative fueled 
vehicle'' and the separate definition of ``flexible fuel vehicle'' are 
unnecessary, principally because FFVs qualify as ``dual fueled 
automobiles'' under the EPCA definition of that term (codified at 49 
U.S.C. 32901(a)(9)). As recently as September 2010, NHTSA confirmed 
that FFVs ``are considered `dual fueled [automobiles]' under [the] 
EPCA'' meaning of that term.\14\ Because they are dual fueled 
automobiles, FFVs are also AFVs. Hence, DOE proposes to streamline the 
AFTP definition of ``alternative fueled vehicle'' by deleting the 
parenthetical reference to FFVs. For the same reason, DOE also proposes 
to delete the definition of ``flexible fuel vehicle,'' as well as 
subsection (3) in the AFTP definition of ``dual fueled vehicle.''
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    \13\ 61 FR 10630-31.
    \14\ 75 FR 58078, 58111 (Sept. 23, 2010); See also 75 FR 25324, 
25665 (May 7, 2010); 76 FR 39478, 39499 (July 6, 2011).
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3. Automobile
    Because the AFTP definitions of ``dedicated vehicle'' and ``dual 
fueled vehicle,'' each of which is discussed in more detail below, 
incorporate by reference the term ``automobile,'' DOE saw fit in its 
1996 final rule to include in 10 CFR 490.2 a definition of 
``automobile.'' DOE noted that the AFTP definition was ``adapted from 
and * * * intended to have the same meaning as `automobile' defined 
in'' 49 U.S.C. 32901(a)(3).\15\
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    \15\ 61 FR 10622, 10630.
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    EISA section 103(a) redefined the term ``automobile'' to include 
four-wheeled on-road vehicles rated at less than 10,000 pounds gross 
vehicle weight. To maintain consistency with the revised EPCA 
definition, DOE is proposing to make similar amendments to the AFTP 
definition of ``automobile.'' DOE stresses, though, 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, this revision 
would have no substantive effect on the AFTP. In other words, the AFTP 
would continue to be a light duty motor vehicle program, with a covered 
fleet's light duty AFV-acquisition requirement in a particular model 
year hinging on the total number of light duty motor vehicles the fleet 
acquired during that model year. The regulatory definition of ``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. Sec. 13211(11)).
    Because EISA added a reference to ``work truck'' in the definition 
of ``automobile,'' the proposed AFTP definition of ``automobile'' will 
also include a reference to the term ``work truck.'' DOE is therefore 
also proposing to add a new definition of this term in the regulations, 
consistent with the EISA section 103(a) definition of ``work truck'' as 
a vehicle between 8,500 and 10,000 pounds gross vehicle weight that is 
not a medium-duty passenger vehicle. The addition of this definition 
would not represent a shift from the LDV focus of the AFTP.
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.\16\
---------------------------------------------------------------------------

    \16\ In addition to ``automobile,'' as discussed in the text 
above, section 490.2 of the Program regulations also provides a 
definition of the term ``motor vehicle.'' See 10 CFR 490.2.
---------------------------------------------------------------------------

    For example, a pure (e.g., 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 
within the definition of alternative fuel. A hybrid electric vehicle 
(HEV) that has an engine that operates solely on alternative fuel 
(e.g., compressed natural gas (CNG)) also would be considered a 
dedicated vehicle under the AFTP, and thus an AFV. DOE anticipates that 
such a vehicle may enter the marketplace in the not too distant future.
    DOE is proposing to make one minor change to the existing 
definition of ``dedicated vehicle.'' DOE believes it is appropriate to 
address the future possibility that certain vehicles may operate 
exclusively on more than one alternative fuel. DOE proposes to do this 
by amending the definition so that it states ``operates solely on one 
or more alternative fuels.'' DOE believes this revision is non-
controversial.
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.
    As discussed in Part III.A.2 above, DOE is proposing to delete 
subsection (3) on the grounds that it is no longer necessary.
    In promulgating the dual fueled vehicle definition in 1996, DOE 
neglected to point out that Congress had revised and recodified the 
Motor Vehicle Information and Cost Savings Act (MVICSA) ``without 
substantive change'' on July 5, 1994.\17\ Nevertheless, DOE did cite to 
the correct U.S.C. provision containing the definition of ``dual fueled 
automobile,'' 49 U.S.C. 32901(a)(8). As a result of a change set forth 
in EISA section 103(a), this statutory definition now appears in 49 
U.S.C. 32901(a)(9).
---------------------------------------------------------------------------

    \17\ See Pub. L. 103-272, Sec. Sec.  1(a), 6(a).
---------------------------------------------------------------------------

    DOE is proposing to amend the AFTP definition of dual fueled 
vehicle in accordance with the above. The amended definition would read 
as follows:
    (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.
    DOE also takes this opportunity to note that it has always 
interpreted the definition of dual fueled vehicle in the context of 
NHTSA's minimum driving range criteria for dual fueled automobiles. 
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 
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.\18\ Only motor vehicles that meet these 
minimum driving range criteria qualify as dual fueled vehicles and 
hence are considered AFVs under the current AFTP definition.
---------------------------------------------------------------------------

    \18\ 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, with 
charging allowed prior to each test.
---------------------------------------------------------------------------

    Although it has not been problematic to date, the dual fueled 
vehicle determination may become more complicated as plug-in hybrid 
electric vehicles (PHEV) are commercialized (see Part IV.B.2 below). 
Except in those

[[Page 67293]]

instances in which it is clear to DOE that a vehicle is equipped with 
an engine that can operate on both petroleum and liquid or gaseous 
alternative fuel, DOE would look to NHTSA, meaning that if NHTSA 
considers a particular automobile or motor vehicle to be dual fueled 
under EPCA (i.e., for CAFE purposes), then DOE would treat the vehicle 
as a dual fueled vehicle and hence an AFV under the AFTP.
6. Electric Motor Vehicle and Electric-Hybrid Vehicle
    In its 1996 final rule, DOE adopted in 10 CFR 490.2 the definitions 
of the terms ``electric motor vehicle'' and ``electric-hybrid vehicle'' 
located in section 601 of EPAct 1992 (42 U.S.C. 13271). This was 
necessitated by the fact that section 501(c) of EPAct 1992, which 
directed DOE to establish an option for electric utilities, referred 
specifically to ``electric motor vehicles.'' The electric utility 
option is contained in 10 CFR 490.307.
    Because the electric utility option was time limited and the period 
for the option has long since passed, DOE is proposing to delete 
section 490.307 from the AFTP regulations and renumber the remaining 
provisions in Subpart D. Correspondingly, DOE is proposing to remove 
the ``electric motor vehicle'' and ``electric-hybrid vehicle'' 
definitions because they would be extraneous in the absence of the 
electric utility option. DOE, which believes these amendments would not 
have a major impact, solicits comments on them.
7. Section 133--Identified Vehicles That Already Qualify as AFVs
    Of the electric drive vehicle types identified in EISA section 133, 
several already qualify as AFVs and, for that reason, already are 
entitled to one full credit under the AFTP. As discussed below, these 
include certain HEVs, PHEVs, and fuel cell electric vehicles (FCEVs), 
light duty battery electric vehicles, and medium- or heavy-duty battery 
electric vehicles. For such vehicles, there is no need for DOE to 
address the allocation of credit in this NOPR--if and when acquired by 
covered fleets, these vehicles already are entitled to one AFV-
acquisition credit because the vehicles already qualify as AFVs 
(although in the case of medium- or heavy-duty vehicles, the covered 
fleet first must meet its light duty AFV-acquisition requirement).
    An HEV or PHEV whose engine is capable of operating on alternative 
fuel (such as E85) is either a dual fueled vehicle (if the engine can 
operate on alternative fuel and on gasoline or diesel) or a dedicated 
vehicle (if the engine operates solely on alternative fuel), and, 
consequently, already an AFV. To date, though, DOE is aware of only a 
small number of flexible fuel HEVs (e.g., Ford Escapes) that have been 
built for demonstration purposes. Likewise, a PHEV with a conventional 
gasoline engine would be a dual fueled vehicle and therefore already an 
AFV under the AFTP if it were to qualify as a dual fueled electric 
automobile under the applicable NHTSA criteria. DOE notes, though, that 
not all PHEVs are expected to meet the minimum driving range criteria 
for dual fueled automobiles under 49 U.S.C. 32901(a)(9).\19\
---------------------------------------------------------------------------

    \19\ See 75 FR 58078, 58104 (Sept. 23, 2010); 76 FR 39478, 
39480, 39502-04 (July 6, 2011).
---------------------------------------------------------------------------

    With respect to the HEVs currently on the market, DOE takes this 
opportunity to reiterate that it provides no credit under Standard 
Compliance because none of these vehicles qualify as AFVs. Equipped 
with gasoline-only engines, HEVs available to date ``obtain their 
electric power from their onboard conventional gasoline engine and 
energy captured through regenerative braking.'' \20\ Because they 
cannot operate without gasoline, these vehicles are not dedicated 
vehicles. Nor do they qualify as dual fueled vehicles, either as that 
term is presently defined or as it would be redefined under this NOPR. 
Contrary to what is required by the word ``fueled,'' the electricity 
that can propel the vehicle at low speeds for short distances does not 
emanate from an off-board source (e.g., the electric grid).
---------------------------------------------------------------------------

    \20\ Id. at 58087 n.45.
---------------------------------------------------------------------------

    Figure 1 below depicts the HEVs and PHEVs that already qualify as 
AFVs and those HEVs and PHEVs for which credit would be allocated under 
this NOPR.

[[Page 67294]]

[GRAPHIC] [TIFF OMITTED] TP31OC11.004

    FCEVs, as discussed more fully in Parts III.B.1 and IV.B.3 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 alternative fuel) or a dual fueled vehicle (if the FCEV's fuel cell 
can be fueled by alternative fuel and by gasoline or diesel fuel) and, 
consequently, already an AFV eligible for one credit under the AFTP. 
FCEVs that are not AFVs would be allocated credit under today's NOPR.
    Battery electric vehicles 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 for full AFV-acquisition credit under 
the AFTP. Finally, medium- or heavy-duty battery electric vehicles 
already are entitled to one credit under the creditable action 
provisions of 10 CFR 490.502 because they, too, already qualify as 
AFVs.
    In sum, the following 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 already are entitled to 
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 it 
light duty AFV-acquisition requirement.

B. New Definitions: EISA Section 133 Vehicles and Actions

    DOE is proposing definitions of key terms for purposes of Subpart F 
of the AFTP regulations, in accordance with the definitions within EISA 
section 133, as described in the paragraphs that follow.
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 ``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). DOE is proposing to adopt the definition of ``fuel cell 
electric

[[Page 67295]]

vehicle'' in Subpart F of the AFTP regulations, but substituting the 
defined term ``motor vehicle'' in place of the term ``on-road.'' \21\
---------------------------------------------------------------------------

    \21\ DOE notes that this definition is not identical to the 
definition of ``fuel cell vehicle'' that EPA promulgated as part of 
its light duty vehicle greenhouse gas emission standards under the 
Clean Air Act. See 75 FR 25324, 25684 (May 7, 2010). DOE, however, 
is constrained by the statutory definition set forth in EISA section 
133.
---------------------------------------------------------------------------

2. Hybrid Electric Vehicle
    EISA 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 (IRC) (26 
U.S.C. Sec. 30B(d)(3)) defines ``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.\22\ 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.\23\
---------------------------------------------------------------------------

    \22\ 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.
    \23\ 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 is proposing today to adopt the EISA definition of ``hybrid 
electric vehicle'' in Subpart F of the AFTP regulations.\24\
---------------------------------------------------------------------------

    \24\ DOE notes that this definition is not identical to the HEV 
definition that EPA promulgated as part of its light duty vehicle 
greenhouse gas emission standards under the Clean Air Act. See 75 FR 
25324, 25684 (May 7, 2010). DOE, however, is constrained by the 
statutory definition set forth in EISA section 133.
---------------------------------------------------------------------------

3. Medium- or Heavy-Duty Electric Vehicle
    EISA 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 vehicle with a gross 
vehicle weight of more than 8,501 pounds.'' For the purposes of 
consistency with EPAct 1992 section 301(11), which defines a light duty 
motor vehicle as 8,500 pounds or less, DOE proposes to modify EISA's 
definition of medium- or heavy-duty electric vehicle to ``an electric, 
hybrid electric, or plug-in hybrid electric vehicle with a gross 
vehicle weight rating of more than 8,500 pounds.'' \25\
---------------------------------------------------------------------------

    \25\ In EISA section 133, Congress provided a definition of 
``hybrid electric vehicle'' (see Part III.B.2 above), but not of the 
terms ``electric vehicle'' and ``plug-in hybrid electric vehicle,'' 
both of which appear in the definition of a ``medium- or heavy-duty 
electric vehicle.'' With respect to ``plug-in hybrid electric 
vehicle,'' DOE proposes that PHEVs may be considered a type of 
``plug-in electric drive vehicle'' (see Part III.B. 5 below). As for 
the term ``electric vehicle,'' DOE would interpret this term to mean 
a vehicle that operates solely on electricity (i.e., a battery 
electric vehicle).
---------------------------------------------------------------------------

4. Neighborhood Electric Vehicle
    EISA defines a ``neighborhood electric vehicle'' 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.'' DOE is proposing today to adopt this statutory 
definition.
5. Plug-In Electric Drive Vehicle
    EISA 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 is proposing today to adopt EISA's definition of 
plug-in electric drive vehicle.
    There are two primary forms of plug-in electric drive vehicles--
dedicated EVs (e.g., battery electric vehicles) and PHEVs, assuming 
they have a minimum battery capacity of four kilowatt-hours.\26\ 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 thus more/larger batteries) than HEVs, possess 
the capability to recharge their electric storage system by ``plugging 
in'' to the grid, and often have some duration of electric-only 
operation. DOE considers a PHEV to be a dual fueled vehicle if it is 
able to complete the EPA urban and highway test cycles on electricity 
alone.
---------------------------------------------------------------------------

    \26\ DOE expects that all PHEVs will have a battery capacity of 
at least four kilowatt-hours, because that is the minimum battery 
capacity needed for a vehicle to qualify for the $7,500 Federal tax 
credit for new qualified plug-in electric drive motor vehicles. See 
26 U.S.C. 30D(d)(1)(F)(i).
---------------------------------------------------------------------------

6. Alternative Fuel Infrastructure
    EISA section 133 provides no definition of the term ``alternative 
fuel infrastructure,'' merely indicating that DOE should allocate 
credits for ``investment in qualified alternative fuel infrastructure * 
* * as determined by the Secretary.''
    Section 179A(d) of the Internal Revenue Code (26 U.S.C. 179A(d)) 
defines a similar phrase, ``qualified clean-fuel vehicle refueling 
property,'' to mean a property that is:

    (A) For the storage or dispensing of a clean-burning fuel into 
the fuel tank of a motor vehicle propelled by such fuel, but only if 
the storage or dispensing of the fuel is at the point where such 
fuel is delivered into the fuel tank of the motor vehicle, or
    (B) for the recharging of motor vehicles propelled by 
electricity, but only if the property is located at the point where 
the motor vehicles are recharged.\27\
---------------------------------------------------------------------------

    \27\ 26 U.S.C. 179A(d)(3).

    DOE proposes to base the definition of the term ``alternative fuel 
infrastructure'' on the Internal Revenue Code definition of ``qualified 
clean-fuel vehicle refueling property,'' clarifying the language, 
however, regarding the requirement that fueling take place where the 
infrastructure is located.
    In short, ``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.

[[Page 67296]]

7. Alternative Fuel Nonroad Equipment
    Similarly, EISA section 133 provides no definition of the term 
``alternative fuel nonroad equipment.'' Congress simply instructed DOE 
to allocate credits for ``investment in qualified alternative fuel * * 
* nonroad equipment, as determined by the Secretary.'' Therefore, DOE 
must determine the types of alternative fuel nonroad equipment that 
would qualify for Program credit within the context of section 133's 
overall objectives.
    DOE proposes to consider as eligible for credit only alternative 
fuel nonroad equipment that is mobile, such as mobile cargo and 
material handling equipment (e.g., forklifts) and mobile farm or 
construction equipment (e.g., tractors, bulldozers, backhoes, front-end 
loaders, rollers/compactors). A fleet requesting credit would have to 
certify that the equipment is being operated on alternative fuel, 
within the constraints of best practices or seasonal fuel availability. 
DOE requests comments on this point. Consistent with the Program's 
focus on vehicle acquisitions, no stationary non-road equipment would 
qualify for credit.
8. Emerging Technology
    EISA section 133 likewise provides no definition of the term 
``emerging technology,'' although, as discussed in more detail in Part 
IV.C.3 of this NOPR, the statute explicitly requires that such 
technology ``relat[e] to'' at least one of the five vehicle types 
described earlier in the provision. Based on its experience in 
deploying advanced technologies, DOE proposes to interpret the term 
``emerging technology'' to mean pre-production or pre-commercially-
available vehicles of the five types described in section 133. DOE 
believes 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 would be 
inappropriate inasmuch as acquisition credit would then be warranted 
(see Part IV.C.3 below). DOE requests comments from stakeholders on 
whether drawing a distinction between pre-production and commercially 
available in the context of the definition of ``emerging technology'' 
is sufficient and appropriate.

IV. Proposed Allocation of Credit

A. General Basis for Allocations

    As described in Part I of this NOPR, the EPAct 1992 fleet programs 
use centrally-fueled fleets as launching pads for AFV technologies to 
encourage the growth of alternative fuel infrastructure. Through EISA 
section 133, Congress has expanded the range of vehicles that may earn 
AFV-acquisition credits under the Standard Compliance path of the AFTP. 
Congress has directed DOE, and DOE is today proposing, to allocate 
credit values for those section 133-specified vehicles that do not 
already qualify as AFVs.
    EPAct 1992 Title V and the AFTP are designed to encourage the 
replacement of petroleum fuels with non-petroleum fuels, through the 
use of AFVs. In implementing the EPAct 1992 program for SFP fleets, DOE 
has maintained an approach that focuses primarily on the petroleum 
replacement capability of vehicles subject to the program. For these 
reasons, DOE is proposing to allocate only partial credit to those 
section 133-identified electric drive vehicles that do not already 
qualify as AFVs, such as HEVs with an internal combustion engine that 
operates solely on conventional petroleum fuels.
    For those electric drive vehicles identified in section 133 that 
previously qualified as ``alternative fueled vehicles,'' based on their 
status as either dedicated vehicles or dual fueled vehicles, full AFV-
acquisition credit is already warranted under the AFTP. No further 
discussion of these vehicles is needed.
    DOE believes that non-AFVs should not receive as much credit as 
AFVs, but rather should receive only partial credit because they do not 
have as significant an effect on petroleum replacement as do AFVs. For 
example, consider an HEV that is not an AFV; even if the vehicle 
achieves twice the efficiency of a comparable vehicle, the vehicle 
itself is only reducing petroleum consumption by one half, whereas an 
AFV has the potential to decrease petroleum consumption in full if it 
is operated solely on alternative fuel. Further, fleets that seek 
credit for non-AFVs are encouraged to use the AFTP's Alternative 
Compliance option, which allows extensive use of various technologies 
including higher efficiency vehicles, all toward achieving compliance 
with the AFTP.
    In today's notice, DOE also proposes to allocate credits for 
investments by covered fleets in qualified alternative fuel 
infrastructure (e.g., fueling stations), alternative fuel nonroad 
equipment (e.g., mobile construction or material/cargo handling 
equipment), and emerging technologies (e.g., pre-production vehicles), 
with 1 credit to be earned for every $25,000 invested. Within each 
category, the number of investment credits would be capped at 5 credits 
in a single model year, although for alternative fuel infrastructure 
investments, the cap would be 10 credits in a single model year when 
the infrastructure at issue is publicly accessible rather than private. 
This higher cap for publicly-accessible infrastructure is being 
proposed to provide a somewhat greater incentive for those investments 
that DOE believes would make alternative fuel infrastructure more 
widely available. DOE maintains that this is a key to increasing 
petroleum substitution, in accordance with EPAct 1992's purposes (as 
implemented through Titles III through V). Congress, in EISA section 
133, imposed a five-credit cap on investments in emerging technologies, 
and DOE believes for reasons of administrative consistency that a 
comparable credit cap should likewise be placed on the other types of 
creditable investments. Moreover, DOE is of the view that placing a cap 
on investments in alternative fuel infrastructure and nonroad equipment 
would help to limit the degree to which the AFTP's existing surplus of 
banked credits grows in the future (see Part V.B below).
    DOE is proposing that for the purpose of calculating the number of 
credits earned, fleets should be allowed to aggregate dollar amounts 
spent in the areas of alternative fuel infrastructure, alternative fuel 
nonroad equipment, and emerging technology. DOE also proposes the 
following limitation: that such aggregation be allowed only to the 
extent that additional funds from a category for which the fleet has 
already earned the maximum number of credits may not be used to 
increase the number of credits earned in another category. For example, 
a fleet that spends $40,000 on alternative fuel nonroad equipment and 
$60,000 on emerging technology may aggregate the funds to total 
$100,000 and claim 2 credits for alternative fuel nonroad equipment and 
2 credits for emerging technology. In another example demonstrating the 
proposed limitation, a fleet that spends $45,000 on alternative fuel 
nonroad equipment and $130,000 on emerging technology may tally 5 
credits for emerging technology and 1 credit for nonroad equipment; the 
$5,000 spent on emerging technology beyond the cap of $125,000 cap 
applicable to emerging technology investment credits may not be used to 
increase the amount of funds and hence the number of credits earned 
overall by combining with the investment in the alternative fuel 
nonroad equipment category. In other words, there is a ceiling on the 
amount

[[Page 67297]]

of funds spent in one category that may be used to increase the number 
of credits earned in the second or third category. This limitation is 
necessary to ensure a cap on the number of credits that may be earned 
for funds spent in any one of the three categories. DOE considered not 
allowing aggregation of amounts spent. Because DOE is not allowing 
fractional credits for amounts lower than $25,000 spent in any one of 
the categories, DOE hopes that the proposed approach may be viewed as a 
reward for addressing the need for additional deployment in these 
categories. DOE welcomes comments on the proposed approach.
    DOE is proposing that when fleets report to DOE the total credits 
they have earned in a model year (i.e., the total of AFV-acquisition 
and relevant investment credits), fleets should total the credits, 
including all fractional credits, and then round that aggregate figure 
to the nearest whole number. This rounding approach is discussed 
further in Part VI.A below.

B. 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.
1. Hybrid Electric Vehicles (HEVs)
    Currently available HEVs have a conventional gasoline engine and an 
electric motor that provides a boost or otherwise provides only some 
motive force. As indicated above, because they are neither dedicated 
vehicles nor dual fueled vehicles, they have not previously qualified 
for 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).
    HEVs that are not AFVs because they lack an alternative fuel (e.g., 
E85)-capable engine would receive \1/2\ credit under today's proposed 
rule, rather than the full credit that dedicated and dual fueled 
vehicles already receive.\28\ DOE's proposal to allocate \1/2\ credit 
is 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.
---------------------------------------------------------------------------

    \28\ Note that in order to give meaning to the EISA section 133 
amendments, covered fleets would earn credits for light duty HEVs 
under this proposed 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 
covered 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 believes that most HEVs generate 
efficiency gains that would suggest that DOE propose a lower 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. The most notable of these HEVs are the 2011 Toyota 
Prius, Mercury Milan Hybrid FWD, and Ford Fusion Hybrid FWD, which are 
the most fuel efficient midsize HEVs on the market. According to the 
2011 Fuel Economy Guide (available at http://www.fueleconomy.gov), the 
Prius achieves 50 mpg ``combined'' (i.e., city/highway) while the 
Mercury Milan and Ford Fusion Hybrids each achieve 39 mpg combined. 
These three models, which together average almost 43 mpg combined, use 
an average of 2.4 gallons combined (city/highway) to travel 100 miles. 
This compares to the average of 31 mpg combined, translating into an 
average 3.2 gallons combined to travel 100 miles, achieved by the top 
three conventional midsize automatic cars, the Hyundai Elantra (33 mpg 
combined), Nissan Versa (30 mpg combined), and Kia Forte Eco (30 mpg 
combined). In view of this approximately 39% fuel economy improvement 
and 25% fuel reduction, DOE has opted to allocate \1/2\ credit to all 
HEVs.
    DOE specifically considered proposing a higher credit value for 
those HEVs that do provide significant efficiency gains and lower 
values for those HEVs with comparatively smaller efficiency gains, with 
the increments of credits being 0 (0 to 25% efficiency gains when 
compared with the most efficient conventional vehicles in their size 
class), \1/4\ (25% to 50% efficiency gains), and \1/2\ (over 50% 
efficiency gains). In the end, though, DOE believes 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. 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 believes \1/2\ credit for all non-AFV HEVs is 
warranted. While certain vehicles may therefore earn credit out of 
proportion to their petroleum savings, \1/2\ credit would still be 
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 also is anticipated 
that as hybrid technologies develop, the efficiency of these vehicles 
should increase.
    Figure 2 below provides the credit allocation determination process 
for HEVs.

[[Page 67298]]

[GRAPHIC] [TIFF OMITTED] TP31OC11.005

2. Plug-In Electric Drive Vehicles
    Battery electric vehicles are already entitled to a full credit, as 
they qualify as dedicated vehicles and, hence, alternative fueled 
vehicles under EPAct 1992 section 301.
    Because all PHEVs are expected to have at least a 4 kilowatt-hour 
battery, they would qualify as plug-in electric drive vehicles under 
section 133. Like HEVs, however, PHEVs are anticipated to operate on 
both electricity and either conventional petroleum fuel or alternative 
fuel. PHEVs typically have more electrical storage capacity onboard 
than HEVs, to allow for more significant operation on battery power 
alone. PHEVs differ from other HEVs, however, in that they are designed 
to operate in part on electric power obtained from off-board sources. 
For example, for a PHEV20 (20-mile electric-only range), if the 
operator's average daily use is 40 miles, half of the vehicle's 
operation could be supplied by electricity assuming no daytime 
charging. 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. DOE invites public comments on each of these points.
    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, nor able to meet the NHTSA 
criteria for a dual fueled electric automobile, would be treated under 
this proposed rule in the same manner as HEVs, meaning their 
acquisition by a covered fleet would result in \1/2\ credit. In 
addition to commercially available PHEVs, several organizations 
currently perform conversions. 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.
    DOE's rationale behind allocating to non-AFV PHEVs the same credit 
value that would be allocated to non-AFV HEVs, \1/2\ credit, is 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 invites 
comments from stakeholders on this equal treatment approach, and 
emphasizes that where a commenter believes that a non-AFV PHEV should 
be allocated more credit than a non-AFV HEV, the commenter should 
include in its comments a sufficiently detailed explanation, ideally 
supported by relevant data, articulating why a non-AFV PHEV deserves 
more credit than a non-AFV HEV.
    Figure 2 in section 1 above depicts the credit allocation 
determination process for PHEVs.
3. Fuel Cell Electric Vehicles (FCEVs)
    FCEVs with fuel cells that can be powered by hydrogen or some other 
alternative fuel already qualify as AFVs

[[Page 67299]]

and thus already are eligible for full credit under the AFTP. To DOE's 
knowledge, the majority of FCEVs under development are fueled by 
hydrogen, 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.
    DOE proposes 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 is 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 solicits comments on this 
proposed allocation level, and advises stakeholders who believe that 
more than \1/2\ credit is warranted to provide specific data in support 
of their position that FCEVs powered solely by non-alternative fuel 
(e.g., gasoline or diesel fuel) deserve a higher credit value.
    Figure 2 in section 1 above depicts the credit allocation 
determination process for FCEVs.
4. Neighborhood Electric Vehicles (NEVs)
    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.\29\ 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,\30\ as ineligible for credit as AFVs.
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    \29\ 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.
    \30\ 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 operation of the 
Act [if the] vehicle 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.
---------------------------------------------------------------------------

    In a 2001 study, DOE found that NEVs are driven an average of 3,410 
miles per year.\31\ This compares to the average annual use of light 
duty household vehicles in the U.S. in 2009 of 10,100 miles per 
year.\32\ For light duty business fleet vehicles, however, average 
annual use in 2008 ranged from 22,968 to 28,020 miles.\33\ Therefore, 
the use of NEVs substitutes for a small percentage of conventional 
vehicles' applications. While NEVs might serve well as substitutes for 
motor vehicles in some covered fleets, such as State college campus 
fleets, their potential for addressing the EPAct 1992 goal of petroleum 
fuel replacement is limited by their capabilities and reduced number of 
vehicles miles traveled.
---------------------------------------------------------------------------

    \31\ Id.
    \32\ See DOE, Transportation Energy Data Book: Edition 29 (July 
2010), at Table 8.9.
    \33\ 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, is 
proposing to allocate \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. This stems from the fact that 
NEVs are not considered motor vehicles under the AFTP and thus are not 
included within the covered LDV count used to set AFV-acquisition 
requirements; in other words, 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. Thus, 
the acquisition by a covered fleet of an NEV, rather than a light duty 
AFV, would provide an additional benefit to the fleet inasmuch as the 
acquisition of the light duty AFV would itself generate a requirement 
for the acquisition of 0.75 (State fleet) or 0.9 (alternative fuel 
provider fleet) of yet another light duty AFV, meaning the net credit 
result stemming from the acquisition of the initial light duty AFV 
would be either 0.25 (1 minus 0.75) or 0.1 (1 minus 0.9) of a credit. 
In the case of an NEV acquired by a covered fleet, the acquisition 
would result in a net surplus of \1/4\ credit.\34\
---------------------------------------------------------------------------

    \34\ 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 addition, DOE believes that for administrative management 
reasons, the \1/4\ credit value is the smallest value that should be 
allocated under the AFTP.
5. Medium- or Heavy-Duty Electric Vehicles
a. General
    Currently, medium- or heavy-duty electric vehicles are commercially 
available, though perhaps only in limited numbers outside of the 
transit bus sector. Conventional medium- or heavy-duty vehicles 
typically use several times the amount of fuel that conventional LDVs 
use. Thus, the deployment of higher efficiency or alternative fuel 
versions of such vehicles would be expected to have significant 
potential to reduce U.S. petroleum use.
    Under the existing AFTP, the acquisition of a medium- or heavy-duty 
AFV yields one credit, but only after the fleet meets its light duty 
AFV-acquisition requirements. Medium- or heavy-duty vehicles are not 
covered vehicles under the AFTP, meaning that, unlike the acquisition 
of light duty AFVs, the acquisition of medium- or heavy-duty AFVs does 
not increase the vehicle count that is the basis for calculating the 
AFV-acquisition requirements. Thus, as with NEVs (see Part IV.B.4 
above), under the existing AFTP the acquisition by a covered fleet of a 
medium- or heavy-duty AFV, rather than a light duty AFV, provides an 
additional benefit to the fleet inasmuch as the acquisition of the 
light duty AFV would itself generate a requirement for the acquisition 
of 0.75 (State fleet) or 0.9 (alternative fuel provider fleet) of yet 
another light duty AFV, thereby yielding a net credit result stemming 
from the acquisition of the initial light duty AFV of either 0.25 (1 
minus 0.75) or 0.1 (1 minus 0.9) of a credit. In the case of medium- or 
heavy-duty AFVs, including battery electric vehicles, acquired by a 
fleet, the acquisition results in a net surplus of one full credit.

[[Page 67300]]

b. Hybrid Electric and Plug-In Hybrid Electric Vehicles
    EISA section 133 calls for DOE to determine how to allocate credit 
to medium- or heavy-duty HEVs and PHEVs that do not already qualify for 
credits under the AFTP as AFVs. As indicated earlier, DOE proposes to 
define a ``medium- or heavy-duty electric vehicle'' to mean 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 battery electric vehicles, as dedicated vehicles, already 
qualify as AFVs and therefore already are eligible for one credit. 
Similarly, HEVs or PHEVs in excess of 8,500 pounds with an internal 
combustion engine that can operate (or that operates solely) on 
alternative fuel, already qualify as AFVs. For medium- or heavy-duty 
non-AFV HEVs and PHEVs, DOE considered the following options:
     Allocate one credit, accounting for the fact that 
conventional medium- or heavy-duty vehicles consume more fuel than do 
conventional LDVs and thus a greater potential impact results from the 
acquisition of a medium- or heavy-duty non-AFV HEV or PHEV; or
     Allocate \1/2\ credit, accounting for the potentially 
greater impact (as compared to an LDV) that a medium- or heavy-duty 
non-AFV HEV or PHEV can have over a conventional medium- or heavy-duty 
vehicle, but also noting that despite the increased efficiency, such a 
medium- or heavy-duty non-AFV HEV or PHEV still is not an AFV.
    DOE is proposing to allocate \1/2\ credit for the acquisition of 
medium- or heavy-duty HEVs and PHEVs (as well as medium- or heavy-duty 
fuel cell electric vehicles) that do not otherwise qualify as AFVs. DOE 
requests comments on this proposed allocation, and reminds covered 
fleets that they would still be able to earn biodiesel fuel use credits 
by using biodiesel blends of B20 or greater in medium- or heavy-duty 
non-AFV HEVs or PHEVs with diesel engines (or in medium- or heavy-duty 
fuel cell electric vehicles with diesel-powered fuel cells). DOE also 
clarifies that \1/2\ credit would be earned only for the acquisition of 
a medium- or heavy-duty non-AFV HEV or PHEV with an electric 
drivetrain, as opposed to those that use electric power only to run 
their onboard equipment while stationary at a site. Thus, a utility-
type truck with a plug-in electric bucket system, but no electric 
drivetrain, would not be eligible for credit under the allocation 
system proposed today. At the same time, acquisition of such a vehicle 
may allow the fleet to reduce idling time, thus saving fuel. In such a 
case, the fleet could still receive credit for the vehicle by choosing 
to comply under Alternative Compliance, where petroleum use reductions 
stemming from idle reduction technologies may be counted toward a 
fleet's petroleum reduction requirement.
    DOE also requests that commenters address whether the preferred 
approach of \1/2\ credit should only be available for commercially-
available/production vehicles and not for demonstration vehicles. DOE 
considers demonstration vehicles to be pre-production vehicles, which, 
as discussed in Part III.B.8 above, constitute ``emerging technology,'' 
credit for which is addressed in Part IV.C.3 of this NOPR. Fleets, 
however, would not be able to earn multiple credits for the same 
vehicle acquisition (e.g., credit under one of the above acquisition 
approaches as well as credit for an emerging technology investment). 
Rather, a fleet would have to choose whether to earn credit for the 
acquisition itself, or for the investment in emerging technology.
    Finally, DOE notes that, like medium- or heavy-duty AFVs, which 
receive credit only after the particular covered fleet has met its 
light duty AFV-acquisition requirement (10 CFR sections 490.502 and 
490.503), acquired medium- or heavy-duty non-AFVs would not be entitled 
to \1/2\ credit until the covered fleet has met its light duty AFV-
acquisition mandate. DOE seeks 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- or heavy-
duty AFVs, it also should apply to medium- or heavy-duty non-AFVs that 
would receive \1/2\ credit under this NOPR. A non-level playing field 
effectively would mean that covered fleets have an incentive to acquire 
medium- or heavy-duty non-AFVs over AFVs. To avoid this result, and to 
draw a clearer distinction between light duty versus medium- or heavy-
duty vehicles, DOE proposes revisions to existing 10 CFR 490.502(a)-
(b), 490.503(a)-(b), and 490.507(b). DOE invites comments on these 
modifications.

C. Investments

1. Alternative Fuel Infrastructure
    To address EISA section 133's requirement that DOE allocate credits 
for investments in alternative fuel infrastructure, DOE chooses first 
to focus on EPAct 1992's original objectives in its replacement fuel 
programs. In general, the concept behind the EPAct 1992 fleet 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 were set 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 an alternative fuel refueling infrastructure that 
ultimately serves as much of the population as possible is important to 
achieving the program goals.
    As explained in Part III.B.6 of this NOPR, DOE interprets the 
phrase ``alternative fuel infrastructure'' to mean one or more 
alternative fueling or charging/battery exchange stations. In 
determining the allocation of credits for alternative fuel 
infrastructure investment, DOE is proposing that a covered fleet that 
installs a new alternative fueling or charging/battery exchange station 
would be eligible to receive one credit for every $25,000 invested 
toward developing that infrastructure. DOE believes that $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.\35\ We also note that the average new LDV costs $25,000, as 
discussed in the next section, and as the investment credit proposal 
provides an alternative to acquiring light duty AFVs, the consistent 
$25,000 threshold is appropriate. DOE requests comments from 
stakeholders on the appropriateness of this dollar figure for purposes 
of determining the applicable investment credit.
---------------------------------------------------------------------------

    \35\ The average of the E85 stations listed on the ``Sample E85 
Station Costs'' Web page of DOE's Alternative Fuels & Advanced 
Vehicles Data Center (http://www.afdc.energy.gov/afdc/ethanol/cost.html) is approximately $27,000. This figure has been rounded 
down slightly for administrative purposes.
---------------------------------------------------------------------------

    DOE also is proposing 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. (Additionally, a fleet that 
installs both public and private infrastructure in a given model year 
would be limited to a maximum of 10 credits.) The difference is 
intended to reflect DOE's preference for alternative fuel 
infrastructure that can be accessed by the public, as such 
accessibility

[[Page 67301]]

would expand alternative fuel refueling options more broadly to other 
fleets and vehicles.
    To be eligible for investment credit, the alternative fuel 
infrastructure would have to be installed and paid for by the fleet 
requesting credit, or at least paid for by that fleet. Infrastructure 
that is installed and paid for or simply paid for by entities or 
organizations not subject to the requirements of the AFTP would not be 
eligible for credits.
    To receive infrastructure investment credit, DOE would 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 would have to apply to DOE through the credit 
activity reporting mechanism in subpart F of the AFTP regulations and 
clearly identify the alternative fuel type, specific location, date of 
initial operation, and level of accessibility of the station. 
Importantly, the station would have to begin operation during the model 
year for which credit is sought, and each fleet would 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, and with the new station becoming operational 
during that second year, the fleet would be entitled to 1 investment 
credit in the second model year. Should the fleet neglect to seek 
credit during that second model year for its $25,000 total investment 
but instead apply for the single credit in a later year, DOE would 
allocate no credit. Similarly, if the fleet applies for credit in its 
credit activity report for the first model year, DOE would reject the 
request on the grounds that the alternative fuel infrastructure did not 
become operational during that year.
    Credits would be awarded 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 
would have to become operational during the model year for which credit 
is sought. Simply installing additional electrical outlets, however, 
would not qualify for investment credit.\36\ Nor would credit be 
provided for maintenance of or improvements to existing equipment at an 
existing station. Fleets would have to certify the accuracy of the 
information provided.
---------------------------------------------------------------------------

    \36\ DOE would distinguish an electrical outlet from charging 
stations, such as those currently available (See, e.g., http://www.afdc.energy.gov/afdc/vehicles/electric_charging_equipment.html).
---------------------------------------------------------------------------

    For administrative management reasons, DOE is proposing to allocate 
only whole number values of credits for investments in alternative fuel 
infrastructure.
2. Alternative Fuel Nonroad Equipment
    ``Alternative fuel nonroad equipment'' eligible for investment 
credit allocation has been defined in Part III.B.7 of this NOPR to 
include only mobile equipment that operates on alternative fuel. 
Stationary equipment would not be eligible to receive credit. DOE 
anticipates that some stationary equipment may be eligible for credit 
as ``alternative fuel infrastructure,'' which would be defined to 
include charging or battery exchange stations. DOE's view is that 
credit for investment in such a station is better suited under the 
alternative fuel infrastructure mechanism as opposed to the alternative 
fuel nonroad equipment mechanism. For this reason, a fleet seeking 
credit for investment in a new or expanded charging or battery exchange 
station would be expected to proceed under the approach set forth for 
alternative fuel infrastructure. The fleet could not seek investment 
credit for the new or expanded charging or battery exchange station as 
alternative fuel nonroad equipment. Further, similar to the requirement 
for alternative fuel infrastructure, credit would only be provided for 
new mobile equipment, not maintenance of or improvements to existing 
mobile equipment.
    DOE has preliminarily chosen to base the allocation of credit on 
the rough value represented by the average price of a new LDV sold in 
the United States in 2008. According to the latest edition of DOE's 
Transportation Energy Data Book, this average price was $23,186 (in 
2009 dollars).\37\ Converting this value to 2010 dollars (using the 
Department of Labor's CPI Inflation Calculator), the figure is 
approximately $25,000. DOE believes that the appropriate expenditure 
level for purposes of earning a credit for investment in alternative 
fuel nonroad equipment is this amount, or $25,000. DOE believes that 
this value is a sufficiently high value to demonstrate a significant 
investment in nonroad equipment rather than rewarding credit for 
actions a fleet otherwise planned to take. In addition, this amount is 
equivalent to the other investment-type credits under today's action, 
providing for some level of administrative consistency. Therefore, DOE 
is proposing to allocate 1 credit for every $25,000 invested in 
alternative fuel nonroad equipment. Credits would be applied in whole 
number values, with 1 credit allocated for each $25,000 threshold 
achieved, with a maximum of 5 credits earned per fleet in a single 
model year. To be eligible for consideration of credit, the investment 
would have to have been made by the requesting fleet. Investments made 
by organizations not subject to the requirements of the AFTP would not 
be eligible for credits.
---------------------------------------------------------------------------

    \37\ See DOE, Transportation Energy Data Book: Edition 30 (July 
2011), at Table 10.12.
---------------------------------------------------------------------------

    Each fleet would have to apply for alternative fuel nonroad 
equipment credit through a credit activity report. To receive nonroad 
equipment investment credit, DOE would 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 proposed definition of alternative fuel nonroad 
equipment, a fleet requesting credit would have to certify that the 
equipment is being operated on alternative fuel, within the constraints 
of best practices and seasonal fuel availability. DOE requests comments 
on this point.
    DOE acknowledges that a covered fleet's investment in alternative 
fuel nonroad equipment may not necessarily coincide with the fleet's 
acquisition of the equipment. For consistency, however, DOE is 
proposing that a fleet would get credit for the year in which the 
nonroad equipment is put into operation.
    For administrative management reasons, DOE is proposing to allocate 
only whole number values of credits for alternative fuel nonroad 
equipment investments. DOE specifically considered setting the level 
for earning credit at twice the proposed level, or 1 credit per $50,000 
invested. DOE is therefore requesting comments upon the appropriate 
investment level for credit purposes.
3. Emerging Technology
    As discussed in Part III.B.8 of this NOPR, availability of credits 
for investments in emerging technology would be based on the 
development status of the relevant vehicle technologies. In EISA 
section 133, Congress has 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

[[Page 67302]]

DOE's view, only by deploying the five vehicle technologies listed in 
section 133 (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. 
These types of data can be critical to determining whether a technology 
needs improvement and if so, how it should be improved to allow wider 
use. If data show that no improvement is needed, then such data could 
assist future potential users in deciding whether to select the 
technology.
    Under the emerging technology investment credit allocation, DOE is 
proposing to allocate no additional credits for the acquisition of a 
pre-production version of any of the five vehicle types themselves, 
although DOE's position is that the pre-production vehicle constitutes 
an emerging technology. DOE is proposing that such pre-production 
vehicles would yield one credit by virtue of their acquisition (if they 
qualify as AFVs, or the appropriate level if they qualify as one of the 
five electric drive vehicles but not as an AFV) or they can yield 
emerging technology investment credits, but not both. In other words, 
fleets would not be able to earn duplicate credits for multiple reasons 
stemming from the same vehicle acquisition (e.g., credit under one of 
the vehicle acquisition approaches as well as credit for an emerging 
technology investment).
    DOE is proposing that investments in pre-production versions of the 
five vehicle types would earn 1 credit per $25,000 invested. DOE 
solicits comments from fleets and other stakeholders on this proposed 
level of credit allocation. As with investments in alternative fuel 
nonroad equipment, the $25,000 level is based on the average price of a 
new LDV sold in the United States in 2008. DOE also is proposing to 
limit the number of credits that may be earned in a single model year 
under this category of credits to a maximum of 5 credits per fleet.
    Under this approach, as an example, a covered fleet spending 
$500,000 on the acquisition of 10 pre-production PHEVs (i.e., $50,000 
per PHEV) could 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 PHEVs. In the above 
example, if the subject vehicles instead were pre-production non-AFV 
PHEVs, then the fleet would receive the same 5 credits for the 
investment of the $125,000, plus another 3.5 credits (7 x \1/2\ credit, 
subject to rounding rules when totaled) for the remaining seven 
vehicles.
    DOE considered allocating emerging technology investment credit for 
additional fleet investments (i.e., investments apart from the pre-
production vehicle's acquisition) that are required to support 
incorporation of emerging technology versions of the enumerated 
electric drive vehicles into covered fleets, as well as for investments 
in components of the enumerated vehicles. For example, incorporating a 
given emerging technology electric drive vehicle into a fleet might 
require the fleet to acquire specialized maintenance equipment to 
address the new vehicle's needs. DOE solicits comments on this issue 
and encourages stakeholders, to the extent they believe credit should 
be allocated for investments in components and/or support equipment, to 
address in particular the manageability aspect of such an approach.
    In summary, DOE is proposing to allocate one credit for every 
$25,000 investment in eligible emerging technologies, with a maximum of 
five credits to be earned per fleet per model year, consistent with 
other ``investment-type'' provisions under this proposed rule. DOE did 
consider whether to allow fleets to earn more than a maximum of five 
credits annually per technology, however, in an effort to limit the 
degree to which the system's credits surplus grows, DOE has chosen to 
allot a maximum of five credits per model year, per fleet, for this 
category of credits. Eligibility for such credit would only exist while 
the underlying vehicle technology is still considered ``emerging,'' in 
accordance with the definition provided in Part III.B.8 of this NOPR. 
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. In addition, to be 
eligible for consideration of credit, the requesting fleet would have 
to have made the investment. Investments in emerging technologies by 
organizations not subject to the requirements of the AFTP would 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).
    DOE is proposing to allocate credits in whole number values, with 
credit allocated for each $25,000 threshold achieved. As with the other 
investment-related credits, DOE would not allot fractional credits for 
investments in emerging technology. Each fleet would have to apply to 
DOE to receive credit for emerging technology investments. The 
documentation the fleet provides would be critical to any allocation of 
credit DOE makes; therefore, fleets requesting credit under this 
provision should be prepared to supply sufficiently-detailed 
information from which DOE could verify the specific purposes of the 
subject investment, as well as the specific amount of the investment 
and that the investment has not been the subject of credit elsewhere 
under this program. Fleets would have to certify the accuracy of the 
information provided. 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, DOE is 
proposing that a fleet would get credit for the year in which the 
emerging technology is put into operation.
    The amounts submitted for consideration for credit should not 
include amounts or activities that are credited elsewhere under the 
provisions related to acquisition of AFVs, electric drive vehicles, 
alternative fuel infrastructure, or alternative fuel nonroad equipment.
    DOE solicits comments from fleets and other stakeholders on the 
proposed level of credit allocation ($25,000/credit).

Summary Table of Credits

   Proposed 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.....

[[Page 67303]]

 
NEV...........................  \1/4\ credit.....  Not included in
                                                    covered LDV count.
Medium- or heavy-duty HEV/PHEV  \1/2\ credit.....  Not included in
                                                    covered LDV count.
Alternative Fuel                1 credit per       Maximum of 5 credits
 Infrastructure.                 $25,000 invested   if private
                                 *.                 infrastructure, 10
                                                    credits if publicly-
                                                    accessible
                                                    infrastructure;
                                                    credit allocated in
                                                    model year placed
                                                    into operation.
Alternative Fuel Nonroad        1 credit per       Maximum of 5 credits
 Equipment.                      $25,000 invested   per fleet per model
                                 *.                 year.
Emerging Technology...........  1 credit per       Maximum of 5 credits
                                 $25,000            if counting based on
                                 invested, or 1     amount invested, per
                                 credit per pre-    fleet per model
                                 production         year.
                                 vehicle *.
------------------------------------------------------------------------
* Aggregation of dollar amounts allowed (see Part IV.A above).

V. Proposed Modifications to the Existing AFTP

    Covered SFP fleets have been complying with the AFTP for almost 
fifteen years. Since its establishment in 1996, the AFTP has operated 
smoothly, with tremendous compliance rates. DOE has considered the 
successes of the AFTP and its applicable requirements in the context of 
seeking continued efficient and simple AFTP operation within a 
framework of limited resources. As a result, DOE has identified several 
areas in which it believes modifications to the existing AFTP can 
benefit AFTP stakeholders and increase Program efficiencies. DOE seeks 
comments from stakeholders on each of the proposals set forth below.

A. Timeliness of Exemption Request Submittals

    On occasion, DOE has received complete exemption requests before 
and also well past the model year for which the requests would apply. 
In other instances, DOE has received incomplete exemption requests and, 
following correspondence between DOE and the submitter, the latter has 
not provided necessary information to DOE in a timely fashion. The 
result in these instances is that a complete exemption request was not 
submitted to DOE until well past the relevant model year.
    The existing AFTP does not provide specific time frames in which 
covered fleets must submit their exemption requests to DOE. The 
regulations, specifically 10 CFR 490.204 (State fleets) and 490.308 
(alternative fuel provider fleets), currently specify neither the 
earliest date nor a deadline by which exemption requests must be 
submitted; in the case of States, section 490.204(b) specifically 
provides that requests for exemptions ``may be submitted at any time * 
* *.''
    When an exemption request is submitted before the model year for 
which the exemption would apply, there is a distinct risk that the 
submitting fleet will not have in hand information sufficient to be 
able to commit to vehicle specifics in its request. Moreover, when an 
exemption request is submitted before the start of and even during a 
model year, the fleet's planned acquisitions often will change 
subsequent to the request's submission. For example, the requesting 
fleet may acquire a different number of LDVs, or a different makeup 
(e.g., make and model) of LDVs, compared to what was indicated in the 
fleet's exemption request. Similarly, a fleet requesting exemptions 
before the close of a given model year on the basis that alternative 
fuel is unavailable may find that an appropriate alternative fuel 
station has opened after submission of its request. Such changes during 
the model year have resulted in fleets having to resubmit their 
exemption requests.
    DOE believes that submitting an exemption request before the close 
of the subject model year (i.e., before August 31) often leads to these 
situations. As required under 42 U.S.C. 13251(a)(5) and 13257(i), 
exemption requests must ``demonstrate[] to the satisfaction of the 
Secretary'' that certain factors apply. In establishing a start date 
for submissions, DOE hopes to encourage more accurate exemption 
requests, thus reducing the likelihood that fleets would have to revise 
and resubmit their requests.
    Similarly, exemption requests and responses to DOE requests for 
clarification or additional information would be limited by a deadline 
under this NOPR. DOE believes this is appropriate given that a fleet 
should have an adequate level of certainty regarding the availability 
of alternative fuels and vehicles for the just-completed model year.
    Based on the foregoing, DOE is proposing the following:
    [dec221] A covered fleet may submit an exemption request no earlier 
than September 1 following the subject model year, and the exemption 
request must be preceded by the fleet's annual report for that model 
year.
    [dec221] DOE must receive an exemption request no later than 
January 31 following the subject model year for which the exemption 
request would apply.
    [dec221] For submitted exemption requests on which DOE seeks 
clarification or additional information, the requesting fleet must 
respond to DOE within 30 days, or DOE would process the exemption 
request based solely upon the information it has.
    Therefore, covered fleets would have a five-month period in which 
to seek exemptions from DOE. If a covered fleet were to submit an 
exemption request during the subject model year (i.e., prior to the 
model year's close on August 31) and, therefore, prior to having 
submitted its annual report, DOE would inform the fleet's point of 
contact (POC) by electronic mail that the request was submitted too 
early and, for that reason, DOE would not consider it unless it were 
resubmitted after the fleet filed its required annual report. Should a 
covered fleet submit an exemption request after January 31 following 
the subject model year (i.e., more than five months after the model 
year ended), DOE would notify the POC by electronic mail that because 
the exemption request was submitted too late, DOE will not provide a 
written determination under section 490.204 or section 490.308. 
Similarly, if a covered fleet does not respond to a request from DOE 
for additional information within a timely manner (i.e., 30 days), DOE 
would process the fleet's exemption request based on the information 
DOE already has, which might not be sufficient to support the granting 
of the request either in whole or in part.
    DOE has based this schedule upon the experience it has gained since 
the inception of the AFTP, and believes that five months is sufficient 
time for covered fleets to submit their exemption requests. To date, 
the vast majority of exemption requests have been submitted by fleets 
after the applicable model year has ended, and, in fact, after

[[Page 67304]]

the respective fleet's submission of its required annual report. Only a 
few isolated cases have occurred outside of the proposed five-month 
filing period. Thus, no hardship is anticipated by formalizing this 
schedule.
    Moreover, requiring the prior submission of a fleet's annual 
report, which is due no later than December 31 following the model year 
(10 CFR Sec. 490.205 and 490.309), should limit the need for DOE to 
seek clarification or additional information from the requesting fleet. 
Even those fleets that file their annual report on the December 31 
reporting deadline would still have one full month to prepare their 
exemption requests, although earlier submission of reports is still 
recommended.

B. Program Credits and Exemption Requests

    Under the AFTP, covered fleets that go beyond compliance under the 
Standard Compliance method by acquiring more AFVs than they are 
required to acquire in a given model year may bank credits earned for 
these additional acquisitions. 10 CFR 490.503(a). These fleets may then 
draw upon these banked credits as they need them in future model years, 
or they may sell or trade these credits to other covered fleets that 
need credits for purposes of complying with their own Standard 
Compliance obligations. Thus, the purpose of the credit program is to 
provide flexibility to fleets. Since 1996, covered SFP fleets have 
generated a significant number of banked credits.
    The credit banking system has matured greatly since its inception. 
Fleets have generated and accumulated more credits than they are using. 
As of the start of MY 2010, there were over 61,500 banked AFV-
acquisition credits in the system. This number of credits is an amount 
sufficient to keep the AFTP operating without any fleets acquiring AFVs 
for at least an estimated four years. Clearly, as a group, covered 
fleets are not having trouble generating AFV-acquisition credits, and 
this proposed rule, once promulgated, would only increase the number of 
ways in which fleets can obtain credits under the AFTP.
    Despite this surplus of credits, covered SFP fleets annually 
request exemptions from AFV-acquisition requirements. Since MY 2000, 
DOE has granted exemptions for over 9,600 AFVs, which were included in 
nearly 350 exemption requests. In many instances, covered fleets with 
banked credits request and receive exemptions.
    DOE is not required to grant AFV-acquisition exemption requests 
unless certain demonstrations are made to its satisfaction. A request 
for exemptions should be a form of administrative relief of the last 
resort, in the event a fleet is unable to satisfy its AFV-acquisition 
requirements through the available compliance avenues, including AFV 
acquisitions, biodiesel use in medium- and heavy-duty vehicles, and 
obtaining banked credits from other fleets. Overall, DOE does not 
believe that exemptions further the replacement of petroleum fuels in 
accordance with EPAct 1992. Exemptions should therefore be viewed 
purely as administrative relief in the event a fleet cannot otherwise 
meet its AFV-acquisition requirements.
    In order to address the surplus of credits and the use of the 
exemption process, DOE is proposing three revisions. First, DOE is 
proposing that covered fleets be required to use their own banked 
credits before requesting exemptions from DOE. With respect to any 
covered fleet whose annual report reveals an AFV-acquisition 
deficiency, under today's proposed rule, DOE would not need to receive 
a specific request from the fleet to apply banked credits towards the 
existing deficiency. With the proposed coordinated timeframes for 
submitting exemption requests and model year annual reports, DOE would 
be able to consider a fleet's available credits when a deficiency is 
identified in an annual report, and then consider exemption requests as 
necessary. Pursuant to 10 CFR 490.504, which would become section 
490.505, DOE, in response to a fleet's request that its banked credits 
be counted as AFV acquisitions, would continue to apply the credits in 
such manner. In the absence of a request, though, DOE would 
automatically apply a deficient fleet's banked credits towards the 
credit shortfall. Proposed language to this effect is included in new 
section 490.505(b). In the case where a requesting fleet has some 
banked credits but not enough to negate the need for any exemptions, 
DOE would apply the fleet's banked credits first, reducing the number 
of exemptions sought.
    Second, DOE is proposing to require that deficient fleets without a 
sufficient number of banked credits to resolve the deficiency provide 
information in their annual reports regarding any efforts they have 
made to purchase or trade for credits in the credit market.
    Third, DOE is proposing in this rulemaking that exemption requests 
submitted by a fleet within 90 days of that fleet's sale of banked 
credits will not be granted.
    This NOPR would expand the array of creditable actions available to 
fleets, thus making it easier for covered fleets to comply with their 
AFV-acquisition requirements and simultaneously expanding the 
compliance options that fleets must explore in advance of pursuing 
exemptions. DOE believes that going forward there will be fewer 
justifications for granting exemptions. To date, DOE has granted 
exemptions as a means to provide fleets flexibility when their efforts 
to comply have resulted in a shortfall of credits. Today DOE proposes 
steps that are designed to ensure that fleets use their existing 
credits for the purpose for which they were generated. DOE seeks 
comments from stakeholders on applying a fleet's credits prior to 
granting exemptions, requiring covered fleets to provide information 
regarding their attempts to purchase or trade for credits in their 
annual reports, and the restriction on banked credit sales 90 days 
prior to an exemption request.
    In these ways, DOE seeks to limit the growth of the store of 
credits currently in the AFTP, and in so doing, ensure banked credits 
have value and further the goals of the AFTP. Reducing the store of 
credits and ensuring a demand for these credits would help to increase 
the value of credits and thereby make these credits relevant in a 
fleet's decision-making regarding how to comply with the AFV-
acquisition requirements. A fleet lacking credits may have to consider 
whether purchasing a market-priced credit is a better financial option 
than participating in the AFTP's Alternative Compliance option. DOE 
believes this latter option can save the fleet financial resources by 
helping the fleet reduce its petroleum consumption. As an option of 
last resort, a State fleet may still request an exemption based on 
unreasonable financial hardship (10 CFR 490.204(a)(3)).

C. Alternative Compliance

    As mentioned earlier, Congress created the Alternative Compliance 
option in 2005, and DOE promulgated its final rule establishing subpart 
I of 10 CFR part 490 on March 20, 2007. Covered fleets that wish to opt 
into Alternative Compliance are required to apply for a waiver. 10 CFR 
490.805(b)(1) requires that a preliminary intent to apply for a waiver 
be registered by March 31 prior to the model year for which the waiver 
is sought. Under 10 CFR 490.805(b)(2), a fleet's complete waiver 
application is due no later than July 31 if the application is 
dependent on information regarding the availability of motor vehicle 
models to be released by auto manufacturers, while under 10 CFR 
490.805(b)(3), the complete waiver

[[Page 67305]]

application is due by June 30 if it is not dependent on such 
information. DOE established these alternative due dates to alleviate 
difficulties associated with preparing an application in the face of 
new model year vehicle data, which manufacturers generally do not 
release until summer.
    After several years of experience with Alternative Compliance, DOE 
has determined that it is appropriate to have a single deadline for 
complete waiver applications. Having one due date is expected to be 
less confusing to fleets. In addition, it has proven to be difficult 
for DOE to determine whether a fleet should have submitted its waiver 
application by the earlier submittal date. Ultimately, DOE encourages 
covered fleets to submit Alternative Compliance waiver applications and 
seeks to ensure that interested fleets have sufficient time to submit 
their applications. Therefore, DOE is proposing to delete the June 30 
due date and establish a uniform application deadline of July 31. All 
waiver applications would be due no later than July 31 prior to the 
model year for which a waiver is sought. The deadline for filing a 
notice of intent, which is March 31 prior to the model year for which a 
waiver is sought, would be unaffected.
    Based upon its implementation to date of the Alternative Compliance 
option, DOE also has realized that the existing regulatory provisions 
pertaining to the rollover of excess petroleum reductions achieved 
through Alternative Compliance in a previous model year could be 
clearer for fleets. Therefore, DOE is proposing revisions to the 
language in 10 CFR 490.804(c) to clarify the steps for requesting and 
applying rollover reductions to future model years for which a waiver 
is sought. Under proposed section 490.804(c)(2)(i), a fleet wishing to 
roll over for future use the excess petroleum reductions that it 
achieved in a particular model year would have to make a written 
request to DOE as part of the fleet's annual report for that year. 
Similarly, under proposed section 490.804(c)(2)(ii), if the fleet seeks 
to apply any of the excess petroleum reductions previously rolled over 
to a later model year for which an Alternative Compliance waiver was 
also granted, the fleet would have to include a written request as part 
of its annual report for that later model year.
    Finally, DOE is proposing a modification to section 409.809 to 
address the situation in which DOE has revoked a fleet's Alternative 
Compliance waiver. The modification would clarify that such a fleet is 
precluded from requesting any exemptions under Standard Compliance for 
the model year of the revoked waiver. DOE previously has explained 
``that it would not grant exemptions to a State under [section] 490.204 
or to a covered person under [section] 490.308 if the State or covered 
person has been granted an alternative compliance waiver.'' \38\ The 
proposed revision to section 490.809 would set forth in the regulations 
DOE's longstanding position that a fleet that has been granted a waiver 
for a particular model year is not eligible for any exemptions during 
that model year.
---------------------------------------------------------------------------

    \38\ 72 FR 12958, 12962 (Mar. 20, 2007); See also 71 FR 36034, 
36036 (June 23, 2006).
---------------------------------------------------------------------------

D. Other Regulatory Revisions

    DOE also is proposing today several minor technical amendments that 
are designed to make the AFTP regulations internally consistent. These 
amendments, which DOE believes are non-controversial, clarify the 
definitions of ``capable of being centrally fueled'' and ``fleet'' as 
they appear in 10 CFR section 490.2, correct an error in 490.308(f), 
and standardize the use of the terms ``alternative fueled,'' 
``dedicated'', and ``dual-fueled'' as they appear in the following 
provisions:
     10 CFR 490.202(a);
     10 CFR 490.205(b)(5)(iv);
     10 CFR 490.305(a); and,
     10 CFR 490.309(b)(5)(iv).

E. Other Issues

    DOE also wishes to clarify that alternative fuel provider fleets 
will continue to receive credit under the AFTP for the acquisition of a 
light duty AFV irrespective of whether the appropriate alternative fuel 
is available in the area in which the vehicle is located or operated. 
10 CFR 490.306, consistent with section 501(a)(4) of EPAct 1992, 
provides that acquired AFVs ``shall be operated solely on alternative 
fuels, except when these vehicles are operating in an area where the 
appropriate alternative fuel is unavailable.'' DOE has found that 
acquisition credits for AFVs, which serve to get vehicles on the road, 
are valuable inasmuch as they spur demand not only for the vehicles 
but, just as importantly, for the alternative fuel. If the alternative 
fuel becomes available, however, section 490.306 requires the fleet to 
use the fuel in the acquired AFV.
    DOE reminds alternative fuel provider fleets that the operating 
requirement in 10 CFR 490.306 is a continuous one, and encourages 
fleets to review on a regular basis the availability of alternative 
fuels in their AFV operating areas, for example through DOE's 
Alternative Fueling Station Locator, which is available at http://www.afdc.energy.gov/afdc/locator/stations/, and to contact their local 
Clean Cities coalitions (see http://www.afdc.energy.gov/cleancities/progs/coalition_locations.php) for the latest information on 
alternative fuel availability.
    Finally, in the context of this issue and exemption requests, DOE 
reiterates that today's NOPR would increase the number of creditable 
actions under the AFTP and, consequently, expand the range of 
compliance options available to all covered fleets. In particular, as 
discussed earlier, credit would be allocated for the acquisition by 
fleets of non-AFV HEVs, among other vehicles. With respect to such 
HEVs, DOE notes both that the vehicles and their fuel (i.e., gasoline) 
are widely available throughout the country. For this reason, DOE 
intends to adopt an approach to the granting of exemptions that is 
similar to DOE's 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 AFV-acquisition 
requirements, inasmuch as biodiesel fuel use credits may account for up 
to 50% of those annual requirements (10 CFR Sec. 490.705(b)). Because 
non-AFV HEVs are widely available, DOE would therefore also expect a 
covered fleet seeking exemptions under these proposed regulations to 
demonstrate in its exemption request why it was unable to acquire such 
HEVs and therefore meet at least 50% of its AFV-acquisition 
requirements with such vehicles (based on the \1/2\ credit allocated 
for each HEV).\39\ DOE would limit the number of exemptions granted 
based on a shortfall of HEV purchases, unless the fleet shows that HEVs 
were not available in the light duty vehicle type needed by the fleet.
---------------------------------------------------------------------------

    \39\ Note that a covered fleet could potentially meet 100% of 
its AFV-acquisition requirements through a combination of non-AFV 
HEV purchases and biodiesel fuel use credits. As noted earlier in 
this proposed rule, like biodiesel purchases, light duty HEV 
purchases would earn credits even if a fleet has not yet met its AFV 
acquisition requirements.
---------------------------------------------------------------------------

VI. Proposed Compliance

A. Credit Values

    The approach that DOE is proposing today allocates less than one 
credit to certain vehicle types, and whole number values of credits for 
investments in alternative fuel infrastructure, alternative fuel 
nonroad equipment, and relevant emerging

[[Page 67306]]

technologies. DOE also is proposing that when fleets report to DOE the 
total credits they have earned in a model year, they should 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.

B. Reporting

    As with the existing AFTP, fleet compliance reporting may be 
accomplished through the Internet. Over the past several years, 
approximately 75 percent of reporting fleets have consistently 
submitted their compliance information to DOE through the available 
Internet online reporting system. Reporting compliance information 
online serves several purposes. First, reporting is immediate. Second, 
filing the information online reduces the potential for the 
introduction of errors through entry and transcription of compliance 
information. Third, reporting online is less burdensome and a more 
efficient use of both fleet and DOE resources.

VII. Opportunity for Public Comment

A. Participation in Rulemaking

    Interested persons are invited to participate in this proceeding by 
submitting written data, views, or comments with respect to the 
subjects and DOE proposals set forth in this notice. DOE encourages the 
maximum level of public participation possible in this proceeding. 
Individual consumers, representatives of consumer groups, 
manufacturers, associations, coalitions, alternative fuel providers, 
States or other government entities, and others are urged to submit 
written comments on the proposal. Whenever applicable, full supporting 
rationale, data and detailed analyses should also be submitted.

B. Written Comment Procedures

    Written comments (eight copies) should be identified on the outside 
of the envelope, and on the comments themselves, with the designation: 
``Alternative Fuel Transportation Program: Alternative Fuel 
Transportation Program; Alternative Fueled Vehicle Credit Program 
(Subpart F) Modification,'' NOPR, RIN 1904-AB81, and must be received 
by the date specified at the beginning of this notice. In the event any 
person wishing to submit written comments cannot provide eight copies, 
alternative arrangements can be made in advance by calling Mr. Dana 
O'Hara at (202) 586-8063. Additionally, DOE would appreciate an 
electronic copy of the comments to the extent possible. Electronic 
copies should be emailed to regulatory_info@afdc.nrel.gov. DOE is 
currently using Microsoft Word.
    Before taking final action on today's proposal, DOE will consider 
all comments and other relevant information received on or before the 
date specified at the beginning of this NOPR. All comments submitted 
will be made available in the electronic docket set up for this 
rulemaking. Therefore, no information desired to be kept confidential 
should be submitted to the docket. This docket will be available via 
the DOE EDOCKET through http://www.regulations.gov, which may be 
located using key words or the above noted docket number.

VIII. Regulatory Review

A. Review Under Executive Order 12866

    Today's proposed 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 an initial 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 today's proposed 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 only 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 has identified 
certain fleet operators that may qualify as small entities under RFA. 
Today's action, if finalized, however, would provide additional 
compliance options and amend the administrative process for 
demonstrating compliance, and therefore will not have a significant 
economic impact on a substantial number of small entities. DOE's 
certification and supporting statement of factual basis will be 
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. 
This proposed rule would contain a collection of information that is 
subject to review by OMB under the PRA. DOE plans to obtain 
documentation to support the allocation of credits through use of the 
AFTP's annual reporting form, DOE/FCVT/101, Standard Compliance 
Reporting Spreadsheet. OMB Control Number 1910-5101 is currently valid 
and assigned to the AFTP's annual report(s). As part of this proposed 
rule, DOE is proposing to collect additional information regarding 
investments in refueling infrastructure, alternative fuel non-road 
equipment, and emerging technology, as well as efforts made to procure 
credits on the credit market.
    Proposed Sec.  490.508 (``Credit activity reporting requirements'') 
contain information collection requirements. DOE has submitted this 
proposed

[[Page 67307]]

collection of information to the Office of Management and Budget for 
approval pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.) and the procedures implementing that Act, 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.
    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 acquiring and deploying alternative fuel 
infrastructure, alternative fuel nonroad equipment, and emerging 
technology. DOE estimates that a State or covered person seeking 
credits for both acquiring electric drive vehicles and for acquiring 
and deploying alternative fuel infrastructure, alternative fuel nonroad 
equipment, and emerging technology would expend 1 additional hour to 
comply with the reporting requirements of EISA section 508. DOE 
estimates the total annual costs to a State or covered person that 
receives credits proposed under today's NOPR are negligible, 
particularly given that the covered fleet is already submitting an 
annual report to achieve compliance with Program requirements.
    DOE estimates that approximately 10 to 30 fleets request exemptions 
each model year. Under today's proposed rule, these fleets would have 
to provide information in their annual reports regarding any efforts 
they have made to purchase or trade for credits in the credit market. 
DOE estimates that fleet in this instance would expend 1 additional 
hour to comply with this requirement. DOE estimates that the total 
annual costs to a state or covered person complying with this 
requirement for the purpose of requesting an exemption under the 
Program, as proposed under today's NOPR, are negligible, particularly 
given that the covered fleet may already have attempted to acquire 
credits from another covered fleet.
    DOE invites public comment on: (1) Whether the proposed information 
collection requirements are necessary for the performance of DOE's 
functions, including whether the information will have practical 
utility; (2) the accuracy of DOE's estimates of the burden of the 
proposed information collection requirements; (3) ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(4) ways to minimize the burden of the information collection 
requirements on respondents. Comments should be addressed to the 
Department of Energy Desk Officer, Office of Information and Regulatory 
Affairs, OMB, 725 17th Street, NW., Washington, DC 20503. Persons 
submitting comments to OMB also are requested to send a copy to the 
contact person at the address given in the ADDRESSES section of this 
notice of proposed rulemaking. Interested persons may obtain a copy of 
the DOE's Paperwork Reduction Act Submission to OMB from the contact 
person named in this notice of proposed rulemaking.

D. Review Under the National Environmental Policy Act

    DOE has determined that this proposed 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 proposed rule, covered fleets 
would be able to earn credits for the acquisition of specified electric 
drive vehicles and for investments in alternative fuel infrastructure, 
nonroad equipment, and relevant emerging technologies, activities for 
which they may not earn credits under the existing AFTP. The proposed 
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 proposed 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 proposed 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 proposed 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. Therefore, 
no further action is required by Executive Order 13132.

G. Review Under the Unfunded Mandates Reform Act of 1995

    DOE reviewed this proposed 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 
proposed 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

[[Page 67308]]

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).
    Today's proposed 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 proposed rule that may affect family 
well-being. This proposed 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 
today's proposed 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 proposed 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 section VIII.A above, this proposed rule has been 
determined not to be a ``significant regulatory action'' under 
Executive Order 12866. In addition, the proposal is not likely to have 
a significant adverse effect on the supply, distribution, or use of 
energy and, therefore, is not a significant energy action. Nor has OIRA 
designated this action as a significant energy action. Accordingly, DOE 
has not prepared a Statement of Energy Effects.

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 October 5, 2011.
Henry C. Kelly,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, the Department of Energy 
is proposing to amend Part 490 of Title 10, Chapter II of the Code of 
Federal Regulations as set forth below:

PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM

    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.

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

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 
refueled at least 75 percent of the time at a location that is owned, 
operated, or controlled by the fleet or covered person, or is under 
contract with the fleet or covered person for refueling 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 of 
this part, 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

[[Page 67309]]

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.
    3. 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;
* * * * *

Subpart C--[Amended]

    4. 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;
* * * * *
    5. Section 490.204 is amended by:
    a. Revising paragraph (b);
    b. Redesignating paragraphs (g) through (h) as paragraphs (h) 
through (i); and
    c. Adding a new paragraph (g).
    The revision and addition 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 of this part. A fleet may not request exemptions 
within 90 days of selling any or all of its banked credits. Any such 
exemption request will be denied.
* * * * *
    (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.
* * * * *
    6. Section 490.205 is amended by:
    a. Revising paragraph (b)(5)(iv); and
    b. Adding a new paragraph (b)(5)(vi).
    The revision and addition read as follows:

Sec.  490.205  Reporting requirements.

* * * * *
    (b) * * *
    (5) * * *
    (iv) Dedicated vehicle or dual fueled vehicle;
* * * * *
    (vi) A description of all efforts made to acquire alternative 
fueled vehicle credits; and
* * * * *

Subpart D--[Amended]

Sec.  490.302  [Amended]

    7. Section 490.302 is amended by removing the reference ``section 
490.308'' in paragraph (e) and adding in its place `` Sec.  490.307.''
    8. Section 490.305, paragraph (a), is revised to read as follows:

Sec.  490.305  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 covered person;
* * * * *

Sec.  490.307  [Removed]

    9. Section 490.307 is removed.

Sec.  490.308  [Redesignated as Sec.  490.307]

    10. Section 490.308 is redesignated as Sec.  490.307 and newly 
redesignated Sec.  490.307 is amended by:
    a. Adding ``(1)'' after the letter ``(a)'' in paragraph (a);
    b. Adding new paragraphs (a)(2), and (c)(4); and
    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 of this part. A fleet may not request exemptions 
within 90 days of selling any or all of its banked credits. Any such 
exemption request will be denied.
* * * * *
    (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)(1) 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]

    11. Section 490.309 is redesignated as Sec.  490.308, and newly 
redesignated Sec.  490.308 is amended by:
    a. Removing ``or section 490.307,'' from paragraph (a); and
    b. Revising paragraph (b)(5)(iv);
    c. Adding a new paragraph (b)(5)(vi).
    The revision and addition read as follows:

Sec.  490.308  Annual reporting requirements.

* * * * *
    (b) * * *
    (5) * * *
    (iv) Dedicated vehicle or dual fueled vehicle;
* * * * *
    (vi) A description of all efforts made to acquire alternative 
fueled vehicle credits; and
* * * * *

Sec.  490.310  [Redesignated as Sec.  490.309]

    12. Section 490.310 is redesignated as Sec.  490.309.

Subpart F--[Amended]

    13. Section 490.500 is revised to read as follows:

[[Page 67310]]

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; or
    (c) Invest in qualified alternative fuel infrastructure or non-road 
equipment or an emerging technology.
    14. Section 490.501 is revised to read as follows:

Sec.  490.501  Definitions.

    In addition to the definitions found in Sec.  490.2 of this part, 
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 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, 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.
    15. 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 acquire alternative fueled vehicles by this part.
    16. 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 of 
this part, by:
    (a)(1) Acquiring light duty alternative fueled vehicles, including 
those in excluded categories under Sec.  490.3 of this part, in excess 
of the number of light duty alternative fueled vehicles that the fleet 
or covered person is required to acquire in a model year when 
acquisition requirements apply under Sec.  490.201 or Sec.  490.302 of 
this part;
    (2) Acquiring alternative fueled vehicles, including those in 
excluded categories under Sec.  490.3 of this part, 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 in a model year when acquisition 
requirements apply under Sec.  490.201 or Sec.  490.302 of this part;
    (3) Acquiring 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 in a model year when acquisition 
requirements apply under Sec.  490.201 or Sec.  490.302 of this part:
    (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 of this part 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 of this part;
    (c) Investing, in a model year when acquisition requirements apply 
under Sec.  490.201 or Sec.  490.302 of this part, at least $25,000 in 
an emerging technology or alternative fuel infrastructure or 
alternative fuel non-road equipment, provided that:
    (1) The technology, infrastructure, or equipment is put into 
operation during the year in which the fleet 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, in a model year when acquisition requirements apply 
under Sec.  490.201 or Sec.  490.302 of this part, any of the following 
vehicles, including those in excluded categories under Sec.  490.3 of 
this part:
    (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(a)(3) and 490.305(a)(3) 
of this part.
    17. 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 of this subpart, DOE shall allocate:
    (1) One alternative fueled vehicle credit for each alternative 
fueled

[[Page 67311]]

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 in a model year when acquisition requirements apply 
under Sec.  490.201 or Sec.  490.302 of this part; 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 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 in a model year when acquisition requirements apply 
under Sec.  490.201 or Sec.  490.302 of this part.
    (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 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 of this subpart, DOE shall allocate 
alternative fueled vehicle credit in the amount set forth below for 
each of the following vehicles that a fleet or covered person acquires 
in a model year when acquisition requirements apply under Sec.  490.201 
or Sec.  490.302 of this part:
    (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 of this subpart, DOE shall allocate one 
alternative fueled vehicle credit for every $25,000 that a fleet or 
covered person invests, in a model year when acquisition requirements 
apply under Sec.  490.201 or Sec.  490.302 of this part, 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;
    (2) Alternative fuel non-road equipment, provided that the maximum 
number of credits under this paragraph (e) shall not exceed five for 
the model year, and provided further that the equipment is being 
operated on alternative fuel; and
    (3) An emerging technology, provided that the maximum number of 
credits under this paragraph (e) 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.
    (f) A fleet or covered person may aggregate the amount of money 
invested in a model year on alternative fuel infrastructure, 
alternative fuel non-road equipment, and emerging technology such that 
funds from multiple categories may be used to achieve the $25,000 
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 paragraph (e) of this 
section.
    18. Section 490.505 is revised to read as follows:

Sec.  490.505  Use of alternative fueled vehicle credits.

    (a) At the request of a fleet or covered person in an annual report 
under this part, DOE shall treat each credit as the acquisition of an 
alternative fueled vehicle that the fleet or covered person is required 
to acquire under this part. Each credit shall count as the acquisition 
of one alternative fueled vehicle in the model year for which the fleet 
or covered person requests the credit to be applied.
    (b) If an annual report shows that the fleet or covered person did 
not meet its acquisition requirements under Sec.  490.201 or Sec.  
490.302 of this part, and the fleet or covered person has credits in 
its credit account under Sec.  490.506, DOE will apply the number of 
credits needed from those available to offset the shortfall. Each 
credit shall count as the acquisition of one alternative fueled vehicle 
in the model year of the subject annual report.
    19. 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 who 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.
    20. 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 in the Federal Register.
    21. Section 490.508 is revised to read as follows:

Sec.  490.508  Credit activity reporting requirements.

    (a) A covered person or fleet applying for allocation of 
alternative fueled vehicle credits must submit a credit activity report 
by the December 31 after the close of a model year to the Office of 
Energy Efficiency and Renewable Energy, U.S. Department of Energy, EE-
2G, 1000 Independence Avenue SW.,

[[Page 67312]]

Washington, DC 20585-0121, or such other address as DOE may publish in 
the Federal Register.
    (b) This report must include the following information:
    (1) 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 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.
    (2) 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.
    (3) 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.
    (4) 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 fuel on which the equipment is capable of being 
operated, a certification that the equipment is being operated on that 
alternative fuel, and the date on which the fleet or covered person 
purchased the equipment and the date on which it was put into 
operation.
    (5) 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 in paragraph (b)(1) of this section and the amount 
invested is not included in paragraph (b)(3)(ii) or (b)(4)(ii) of this 
section; and
    (iv) A detailed description of the emerging technology, including 
the name and address of the manufacturer and the date on which the 
fleet or covered person purchased the emerging technology and the date 
on which it was put it into operation.
    (6) The total number of alternative fueled vehicle credits 
requested by the fleet or covered person, calculated by adding the two 
subtotals under paragraphs (b)(1) and (b)(2) 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.
    (7) Purchases of alternative fueled vehicle credits:
    (i) Credit source; and
    (ii) Date of purchase;
    (8) Sales of alternative fueled vehicle credits:
    (i) Credit purchaser; and
    (ii) Date of sale.

Subpart I--[Amended]

    22. 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 fleet's petroleum fuel use reduction requirement 
under Sec.  490.803(a) of this part in another model year for which a 
waiver is granted.
    (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 of this part for the model year in which the 
reductions were achieved.
    (ii) A fleet seeking to apply, in a later model year for which a 
waiver was granted, any excess petroleum fuel use reductions rolled 
over pursuant to paragraph (c)(2)(i) of this section must make a 
written request to DOE as part of the fleet's annual report required 
for that model year under Sec.  490.807 of this part. 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) DOE will apply approved rollover reductions to a model year for 
which a waiver was granted but the fleet's required reduction in 
petroleum fuel use was not achieved only to the extent that additional 
reductions attributable to motor vehicles were not reasonably 
available.
* * * * *
    23. 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.
* * * * *

[[Page 67313]]

    24. 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 of this part from the vehicle acquisition mandate for the 
model year of the revoked waiver.

[FR Doc. 2011-26761 Filed 10-28-11; 8:45 am]
BILLING CODE 6450-01-P
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