10970 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

DEPARTMENT OF ENERGY

Office of Energy Efficiency and

Renewable Energy

10 CFR Part 490

[Docket No. EE–RM–95–110]

RIN 1904–AA64

Alternative Fuel Transportation

Program

AGENCY: Office of Energy Efficiency and

Renewable Energy, Department of

Energy (DOE).

ACTION: Notice of Proposed Rulemaking

and Public Hearings.

SUMMARY: The Department of Energy

today proposes rules required by the

Energy Policy Act of 1992 in order to

implement statutorily-imposed

alternative fueled vehicle acquisition

requirements that become effective by

operation of law on September 1, 1995,

when model year 1996 begins. These

statutory requirements apply to certain

alternative fuel providers and some

State government vehicle fleets. The

proposed rules principally cover: (1)

Required interpretations necessary for

affected entities to determine whether

and to what extent the statutory

requirements apply; (2) required

procedures for exemptions and

administrative remedies; and (3) a

program of marketable credits to reward

whose who voluntarily acquire vehicles

in excess of mandated requirements or

before the requirements take effect, and

to allow use of such credits in order to

demonstrate compliance with those

requirements.

DATES: Written comments (8 copies and,

if possible, a computer disk) on the

proposed rule must be received by the

Department on or before May 1, 1995.

Oral views, data, and arguments may

be presented at public hearings which

are scheduled as follows:

1. March 23, 1995, beginning at 9:30

a.m. in Chicago, Illinois.

2. March 30, 1995, beginning at 9:30

a.m. in Berkeley, California.

3. April 4, 1995, beginning at 9:30

a.m. in Washington, DC.

Requests to speak at a hearing should

be submitted to the Department no later

than 4 p.m. on:

1. March 20, 1995 for the March 23,

1995 Chicago, Illinois, hearing.

2. March 27, 1995 for the March 30,

1995 Berkeley, California, hearing.

3. March 30, 1995 for the April 4,

1995 Washington, DC, hearing.

The length of each oral presentation is

limited to 10 minutes.

ADDRESSES: Written comments (8

copies) and requests to speak at a public

hearing should be addressed to: U.S.

Department of Energy, Office of Energy

Efficiency and Renewable Energy, EE–

33, Docket Number EE–RM–95–110,

1000 Independence Ave., SW,

Washington, DC 20585, (202) 586–3012.

The public hearings will be held at the

following locations:

1. Chicago—University of Illinois at

Chicago, Chicago Circle Center Building

(Student Union), Room 605 (6th floor),

750 S. Halsted Street, Chicago, IL.

2. Berkeley—Lawrence Berkeley

Laboratory, 1 Cyclotron Road, Building

50 Auditorium, Berkeley, CA 94720.

The Lawrence Berkeley Laboratory

(LBL) Shuttle stops at Center Street and

Shattuck Street as well as the BART

station and downtown public parking

lots.

3. Washington, DC—U.S. Department

of Energy, Forrestal Building,

Auditorium, 1000 Independence

Avenue, SW, Washington, DC 20585.

Copies of transcripts from hearings

and written comments may be inspected

and photocopied in the DOE Freedom of

Information Reading Room, Room 1E–

190, (202) 586–6020, between the hours

of 9:00 a.m. and 4:00 p.m. Monday

through Friday, except Federal holidays.

For more information concerning

public participation in this rulemaking

see the ‘‘Opportunity for Public

Comment’’ section found in the

Supplementary Information section of

this proposed rule.

FOR FURTHER INFORMATION CONTACT: For

information concerning the proposed

rule: Mr. Kenneth R. Katz, Program

Manager, Office of Energy Efficiency

and Renewable Energy (EE–33), U.S.

Department of Energy, 1000

Independence Avenue SW.,

Washington, DC 20585. (202) 586–6116.

Josephine B. Patton, Esq., U.S.

Department of Energy, Office of General

Counsel (GC–72), 1000 Independence

Avenue SW., Washington, DC 20585.

(202) 586–9507.

For information concerning the public

hearings and submitting written

comments: Andi Kasarsky, (202) 586–

3012.

SUPPLEMENTARY INFORMATION:

I. Introduction

II. Section-By-Section Analysis

III. Opportunity for Public Comment

IV. Review Under Executive Order 12612

V. Review Under Executive Order 12778

VI. Review Under Executive Order 12866

VII. Review Under the Regulatory Flexibility

Act

VIII. Review Under the Paperwork Reduction

Act

IX. Review Under the National

Environmental Policy Act

X. Impact on State Governments

I. Introduction

Pursuant to title V of the Energy

Policy Act of 1992 (Act) (Pub. L. 102–

486), the Department of Energy

(Department or DOE) today proposes

rules required by law to implement

statutorily-imposed alternative fueled

vehicle acquisition requirements that

take effect by operation of law on

September 1, 1995, when model year

1996 begins. These statutory

requirements establish that specified

percentages of vehicles acquired by

covered fleets must be alternative fueled

vehicles. These requirements apply to

certain alternative fuel providers and

some State government fleets. The

statutory percentages for model year

1996 are 30 percent for affected

alternative fuel providers and 10

percent for affected State government

fleets, and these percentages increase

over time. This notice of proposed

rulemaking principally covers: (1)

Required interpretations of statutory

provisions essential for affected entities

to determine whether and to what

extent the mandatory vehicle

acquisition requirements apply; (2)

procedures for exemptions and

administrative remedies; and (3) a

program of marketable credits to reward

voluntary acquisition of alternative

fueled vehicles in excess of mandatory

requirements or before the requirements

take effect, and to allow use of such

credits as an alternative means of

compliance. This notice also

summarizes, and is accompanied by, a

detailed cost impact analysis for public

review.

A. Background

A primary goal of the Energy Policy

Act of 1992 (the Act) (Pub. L. 102–486)

is to enact a comprehensive national

energy policy that strengthens U.S.

energy security by reducing dependence

on imported oil. Currently, the United

States consumes seven million barrels of

oil more per day than it produces.

Section 502 of the Act (42 U.S.C. 13252)

provides goals of a 10 percent

displacement in U.S. motor fuel

consumption by the year 2000 and a 30

percent displacement in U.S. motor fuel

consumption by the year 2010 through

the production and increased use of

replacement fuels. Section 504 of the

Act (42 U.S.C. 13254) allows the

Secretary to revise these goals

downward. According to the latest

projections by the Energy Information

Administration, the transportation

sector will consume 13.1 million barrels

per day of petroleum in 2010. Of this

total, about 7.4 million barrels per day

of petroleum are projected to be used by
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10971

light duty vehicles. The Energy

Information Administration also

estimates that 65 percent of our total

petroleum demand will be imported in

2010.

The greatest gains in displacing

petroleum motor fuel consumption by

the year 2010 are expected to occur by

replacing gasoline with alternative fuels

such as electricity, ethanol, hydrogen,

methanol, natural gas and propane, in a

portion of the U.S. car and truck

population, which is projected to be in

excess of 200 million vehicles in the

year 2010. Currently, alternative fueled

vehicles comprise a small fraction of the

total U.S. vehicle stock. According to

the Energy Information Administration,

of the 180 million light duty vehicles

registered in 1992, 250,000 were

alternative fueled vehicles. Of this total,

about 221,000 were fueled by liquified

petroleum gas (propane), about 24,000

were fueled by compressed natural gas,

and about 3,400 were fueled by

methanol or ethanol. The remaining

quantity of vehicles was comprised of

electric vehicles and vehicles fueled by

liquified natural gas. In 1994, it is

expected that 300,000 alternative fueled

vehicles will be registered in the U.S.

and that the proportion of vehicles

operating on each fuel will be

approximately the same. (Alternatives to

Traditional Transportation Fuels: An

Overview, DOE/EIA–0585/0, 1994)

To enable the Act’s displacement

goals to be met, alternative fuels must be

readily accessible and motor vehicles

that operate on these alternative fuels

must be available for purchase. Thus,

two important elements of reducing

petroleum motor fuel consumption are:

a nationwide alternative fuels

infrastructure and the availability of

alternative fueled vehicles for purchase

at a reasonable cost by the general

public in a wide variety of vehicle types

and fueling options.

B. Description of the Energy Policy Act

Alternative Fuel Transportation

Program’s Basic Provisions

1. General structure. Titles III, IV, V,

and VI of the Act contain the basic

provisions for regulatory mandates and

authorities, as well as various financial

incentives, all of which are aimed at

displacing substantial quantities of oil

consumed by motor vehicles. Title III

contains general definitions which set

forth legislatively mandated policy

essential to understanding: (1) What

constitutes an alternative fueled vehicle;

(2) who must comply with regulatory

mandates to acquire such vehicles; and

(3) the extent to which a regulated

entity’s inventory of vehicles is subject

to mandates to acquire alternative

fueled vehicles. Title III also sets forth

mandatory requirements for Federal

fleet acquisitions of alternative fueled

vehicles, which began in fiscal year

1993.

Title IV includes a financial incentive

program for states, a public information

program, and a program for certifying

alternative fuel technician training

programs.

Title V provides for separate

regulatory mandates for the purchase of

alternative fueled vehicles which apply

to: (1) Alternative fuel providers; (2)

State government fleets; and (3) private

and municipal fleets. These mandates

set forth annual percentages of new light

duty motor vehicle acquisitions which

must be alternative fueled vehicles. The

minimum acquisition requirements are

phased-in, escalating from year to year

until reaching a fixed percentage. The

acquisition schedules for alternative

fuel providers and State governments

automatically take effect at the

beginning of model year 1996. The

acquisition schedule for private and

municipal fleets in section 507(a) is a

tentative schedule which may only take

effect if confirmed in a DOE rulemaking.

Such a rulemaking could conclude that

imposition of a vehicle acquisition

mandate on private and municipal fleets

is not appropriate.

Title V also allows for credits for new

light duty alternative fueled motor

vehicles acquired beyond what is legally

required. These credits may be sold and

used by other persons or fleets subject

to a vehicle acquisition mandate.

Finally, title V contains investigative

and enforcement authorities including

provisions for civil penalties and, in

certain circumstances, criminal fines for

noncompliance with the statutory

mandates and implementing

regulations.

Title VI of the Act contains a variety

of authorities to promote development

and utilization of electric motor

vehicles. More specifically, subtitle A

provides for a commercial

demonstration program, and subtitle B

provides for an infrastructure and

support systems development program.

This notice of proposed rulemaking

focuses principally on: (1) The general

definitions of title III applicable to

alternative fuel providers, state

governments, and private and municipal

fleets; (2) procedures for obtaining

interpretive rulings applying the

regulations to particular facts; (3) the

title V vehicle acquisition mandates

applicable to alternative fuel providers

and to state governments; (4) the credit

program applicable to alternative fuel

providers, state governments, and

private and municipal fleets; and (5) the

investigative and enforcement

authorities which also apply to

alternative fuel providers, state

governments, and private and municipal

fleets. In a separate notice, the

Department will be proposing rules for

the financial incentive program for

States under section 409 of the Act. 42

U.S.C. 13235.

As provided by section 507, DOE will

be initiating a statutorily required

rulemaking to determine whether a fleet

requirement program is necessary for

private and municipal fleets, 42 U.S.C.

13257. Section 507 contains complex

requirements for making such a

determination, and it is not clear at this

time what determination will be made.

Nevertheless, private persons (other

than alternative fuel providers) and

municipal authorities may be interested

in reviewing and commenting on the

proposed rules in the general subpart A

and subpart F (credit program) of this

notice which could apply to private and

municipal fleet owners if the

Department were to issue rules for a

private and municipal fleet requirement

program.

With respect to alternative fuel

providers, there is discretion in section

501(b) of the Act to reduce the

acquisition percentage requirements to

as low as 20 percent for model years

1997 and beyond, and to extend the

time to comply for up to two years. 42

U.S.C. 13251(b). The Department

currently does not intend to exercise its

discretion under section 501(b). The

Department seeks comment on the

conditions under which it should

propose a rule to reduce the percentage

requirements. There is no similar

provision in section 507 authorizing

modifications to the vehicle acquisition

mandate on state governments. See 42

U.S.C. 13257(h), (o).

2. Who must comply and which

vehicles are covered. The vehicle

acquisition mandate applicable to

alternative fuel providers is set forth in

section 501 of the Act, 42 U.S.C. 13251.

There are a series of subsections in

section 501 which, when read in

conjunction with certain definitions in

section 301 of the Act, make the task of

determining who must comply and to

what extent the vehicle inventory is

affected a complex matter.

The vehicle acquisition mandate

applicable to states in section 507(o) of

the Act, 42 U.S.C. 13257, also has to be

read in conjunction with the definitions

in section 301. While it is clear that the

mandate in section 507(o) applies to

state governments as distinguished from

municipal governments, determining

the extent to which a State’s vehicle
10972 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

inventory is subject to the mandate is

also a complex matter.

The beginning of an understanding of

who must comply with the regulatory

mandates in title V, and of which

vehicles are in the base number against

which the acquisition percentages are

applied, lies in the partially overlapping

statutory definitions of the terms ‘‘fleet’’

and ‘‘covered person.’’ The statutory

definition of ‘‘fleet,’’ in section 301(9),

provides that the term ‘‘fleet’’ means a

group of 20 or more light duty motor

vehicles, used primarily in a

metropolitan statistical area or

consolidated metropolitan statistical

area, as established by the Bureau of the

Census, with a 1980 population of more

than 250,000, that are centrally fueled or

capable of being centrally fueled and are

owned, operated, leased or otherwise

controlled by a governmental entity or

other person who owns, operates, or

otherwise controls 50 or more such

vehicles, by any person who controls

such person, by any person controlled

by such person, and by any person

under common control with such

person, except that such term does not

include—

(A) motor vehicles held for lease or

rental to the general public;

(B) motor vehicles held for sale by

motor vehicle dealers, including

demonstration vehicles;

(C) motor vehicles used for motor

vehicle manufacturer product

evaluations or tests;

(D) law enforcement motor vehicles;

(E) emergency motor vehicles;

(F) motor vehicles acquired and used

for military purposes that the Secretary

of Defense has certified to the Secretary

must be exempt for national security

reasons;

(G) nonroad vehicles, including farm

and construction motor vehicles; or

(H) motor vehicles which under

normal operations are garaged at

personal residences at night.

In the section-by-section analysis in

part II of this Supplementary

Information, DOE explains proposed

regulatory provisions related to the

above-quoted statutory definition of

‘‘fleet.’’ Among other things, DOE: (1)

Lists all of the relevant metropolitan

statistical areas and consolidated

metropolitan statistical areas; (2) defines

‘‘centrally fueled’’ and ‘‘capable of being

centrally fueled’’; (3) discusses in some

detail how the provisions for

aggregating vehicles are interpreted; and

(4) provides interpretive regulatory

language for some of the exclusions.

The word ‘‘fleet,’’ with all its

complexities, is embedded in the

definition of the term ‘‘covered person’’

at section 301(5) which provides that

‘‘covered person’’ means a person that

owns, operates, leases, or otherwise

controls—

(A) a fleet that contains at least 20

motor vehicles that are centrally fueled

or capable of being centrally fueled, and

are used primarily within a

metropolitan statistical area or a

consolidated metropolitan statistical

area, as established by the Bureau of the

Census, with a 1980 population of

250,000 or more; and

(B) at least 50 motor vehicles within

the United States.

The term ‘‘fleet’’ is used for making

determinations with regard to who must

comply, and to what extent, with the

vehicle acquisition mandates in section

507 on state governments, private

persons, and municipal governments.

The term ‘‘covered person’’ is used for

making such determinations with regard

to the vehicle acquisition mandate on

alternative fuel providers in section 501

of the Act.

Under section 507, only a ‘‘fleet’’ is

obligated to comply. Congress appears

to have used the word ‘‘fleet’’ rather

than ‘‘covered person’’ to limit the

affected portion of the vehicle inventory

to the vehicles in the ‘‘fleet.’’ By

contrast, under section 501(a), certain

‘‘covered persons’’ are obligated to

comply, and consequently, the section

501 vehicle acquisition mandate

potentially applies to all vehicles in the

inventory throughout the United States

and not just those vehicles in a ‘‘fleet’’

of a ‘‘covered person’’ who is subject to

the mandate. 42 U.S.C. 13251. However,

the potentially broad impact of section

501(a) is heavily qualified by the

succeeding subsections of section 501,

which limit the sweeping impact of

section 501(a) both with regard to who

must comply and the extent of the

affected vehicle inventory.

Paragraph (a)(2) of section 501 limits

application of the vehicle acquisition

mandate to a subset of covered persons

consisting of:

(A) A covered person, whose

principal business is producing, storing,

refining, processing, transporting,

distributing, importing, or selling at

wholesale or retail any alternative fuel

other than electricity;

(B) A non-Federal covered person

whose principal business is generating,

transmitting, importing, or selling at

wholesale or retail electricity; or

(C) A covered person—

(i) Who produces, imports, or

produces and imports in combination,

an average of 50,000 barrels per day or

more of petroleum; and

(ii) A substantial portion of whose

business is production of alternative

fuels * * *.

Paragraph (a)(2) appears to be a

description of alternative fuel providers

subject to the vehicle acquisition

mandate. The proposed regulations

interpret the underscored phrase

‘‘principal business.’’

The statutory refinement of which

‘‘covered persons’’ must comply and to

what extent continues in subsection

(a)(3) of section 501 which provides

that:

(A) In the case of a covered person

described in paragraph (2) with more

than one affiliate, division, or other

business unit, only an affiliate, division,

or business unit which is substantially

engaged in the alternative fuels business

(as determined by the Secretary by rule)

shall be subject to this subsection.

(B) No covered person or affiliate,

division, or other business unit of such

person whose principal business is—

(i) transforming alternative fuels into

a product that is not an alternative fuel;

or

(ii) consuming alternative fuels as a

feedstock or fuel in the manufacture of

a product that is not an alternative fuel

shall be subject to this subsection.

Paragraph (a)(3) of section 501 has

two effects. First, it limits the vehicle

acquisition mandate of paragraph (a)(1)

to the vehicles owned, operated, leased,

or otherwise controlled by certain

affiliates, divisions or other business of

major energy producing corporations.

Second, it excludes from coverage those

covered persons, affiliates, divisions, or

other business units that use an

alternative fuel to create a product other

than an alternative fuel. It is possible

when the definitions of ‘‘affiliate’’ and

‘‘covered person’’ are applied to an

entity, it may be both. However, merely

being an affiliate does not necessarily

mean that an entity must also be a

covered person.

Section 501(a)(5) provides for

petitions for exemption in certain

circumstances for alternative fuel

providers who otherwise would have to

comply. The exemptions are available

for those alternative fuel providers who

can show that alternative fuels are not

available in the operating area or that

alternative fueled vehicles are not

reasonably available.

There is a parallel exemption

provision applicable to State

governments in section 507(i). 42 U.S.C.

13257(i). That provision also makes

‘‘financial hardship’’ a ground for

exemption. However, section 507 does

not define ‘‘financial hardship,’’ and the

legislative history is devoid of any

guidance as to what circumstances

would constitute ‘‘financial hardship.’’

The Department would welcome

comments from States making
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10973

recommendations as to how to interpret

and apply the term ‘‘financial hardship’’

in practice.

In the section-by-section analysis in

part II of this Supplementary

Information, the Department

systematically distinguishes between

proposed regulatory text that tracks the

statutory language and proposed

regulatory text that represents what the

Department is proposing to add, such

as, proposed procedures and

interpretations. Members of the public

are particularly encouraged to comment

on the proposed regulations in the latter

category. Members of the public are

reminded that many of the details of the

complex program described in this

proposal are specified in the statute, and

thus are not within the Department’s

discretion to change.

3. Comparison to Environmental

Protection Agency (EPA) Fleet

Requirement Program. As many State

and local officials and members of the

public are undoubtedly aware, there is

a fleet requirement program under the

provisions of the Clean Air Act, (42

U.S.C. 7401 et seq.), that is somewhat

similar to those in the Energy Policy Act

of 1992. Section 246 of the Clean Air

Act requires each State in which there

is located all or part of an ozone nonattainment area classified as extreme,

severe, or serious under the Clean Air

Act, or a carbon monoxide nonattainment area with a design value at

or above 16.0 parts per million, to

submit a state implementation plan

revision establishing a clean fuel vehicle

program providing that, beginning in

model year 1998, certain percentages of

covered fleet vehicles be clean fuel

vehicles operating on clean alternative

fuels. 42 U.S.C. 7586. Section 241 of the

Clean Air Act contains definitions for

the terms ‘‘clean alternative fuel,’’

‘‘covered fleet,’’ and ‘‘covered fleet

vehicle’’ that contain some phrases later

used in the definitions in section 301 of

the Energy Policy Act of 1992. Compare

42 U.S.C. 7581 with 42 U.S.C. 13211.

For example, the definition of ‘‘covered

fleet vehicle’’ in section 241 refers to

motor vehicles ‘‘* * * in a covered fleet

which are centrally fueled (or capable of

being centrally fueled). * * *.’’

[Emphasis added.] 42 U.S.C. 7581(6).

That phraseology is similar to the

definitions of ‘‘fleet’’ and ‘‘covered

person’’ in section 301 of the Energy

Policy Act of 1992 which refer to motor

vehicles ‘‘* * * that are centrally fueled

or capable of being centrally fueled

* * *.’’ 42 U.S.C. 13211(5)(A),

13211(9).

While such similarities in statutory

text are significant and should not be

ignored in formulating regulations, the

differences between the two pieces of

legislation are more important. The

critical differences are: (1) The primary

goal of the EPA program is to

significantly improve air quality

through reduced emissions of pollutants

and the primary goal of the DOE

program is to strengthen national energy

security by reducing dependence on

imported oil; (2) the lists of fuels

enumerated in the definitions of ‘‘clean

alternative fuel’’ under section 241 of

the Clean Air Act and of ‘‘alternative

fuel’’ under section 301 of the Energy

Policy Act of 1992 are not identical, and

the Department’s rulemaking discretion

to add to the section 301 list is limited

by stringent statutory standards; (3) the

EPA program applies to fleets as small

as 10 vehicles while 20 is the minimum

number of vehicles for a fleet as defined

by section 301; (4) the EPA program

applies to light duty motor vehicles (up

to 8,500 gross vehicle weight rating) and

heavy duty motor vehicles (up to 26,000

gross vehicle weight rating) while the

DOE program applies only to light duty

motor vehicles; (5) the States will

administer the EPA program while DOE

will directly administer the Energy

Policy Act program; and (6) the EPA

program applies only to fleets in 22

ozone or carbon monoxide

nonattainment areas while the DOE

program applies to fleets in

approximately 121 areas including both

nonattainment and attainment areas.

The Department recognizes that fleet

owners and operators who are subject to

the EPA and the DOE fleet requirement

programs would like to use the same

vehicles and fuels to comply with both.

In order to minimize differences, the

Department has reviewed EPA’s

rulemaking notice implementing its

statutory provisions, 40 CFR part 88; 58

FR 64679 (December 9, 1993), and

followed EPA’s lead where legally

permissible and consistent with the

Act’s policy goals. Nevertheless, there

are some unavoidable differences that

will constrain the options of those fleet

owners and operators interested in

using the same vehicles and fuels to

comply simultaneously with both

statutory requirements. Where relevant,

the Department identifies the basis for

those differences in parts of the

Supplementary Information that follow

hereafter. Members of the public are

invited to comment on ways the

Department could lawfully make it

easier to comply with both statutory

requirements.

4. Reformulated gasoline. Although

percentages can vary to a small degree,

it is the Department’s understanding

that reformulated gasoline is comprised

of over 90 percent petroleum on an

energy equivalent basis. Reformulated

gasoline is an enumerated ‘‘clean

alternative fuel’’ in section 241 of the

Clean Air Act. 42 U.S.C. 7581. It is not

mentioned at all in the definition of

‘‘alternative fuel’’ in section 301 of the

Energy Policy Act of 1992. Section

301(2) provides that the term

‘‘alternative fuel’’ means methanol,

denatured ethanol, and other alcohols;

mixtures containing 85 percent or more

(or such other percentage, but not less

than 70 percent, as determined by the

Secretary, by rule, to provide for cold

start, safety, or vehicle functions) by

volume of methanol, denatured ethanol,

and other alcohols with gasoline, or

other fuels; natural gas; liquified

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.

Each of the above-underscored

phrases sets forth limited authority for

the Department to add fuels to the

definition of ‘‘alternative fuel.’’ Under

either authority, the Department must

undertake notice and comment

rulemaking under the Administrative

Procedure Act, 5 U.S.C. § 553, to add a

fuel to the statutory list. The

Department did not include in today’s

proposal a provision adding

reformulated gasoline to the definition

of ‘‘alternative fuel.’’ The percentage of

petroleum in reformulated gasoline, at

least 90 percent of the total volume, is

too large to warrant proposing to make

any of the necessary substantive

determinations described above. To the

extent that reformulated gasoline is an

alcohol/gasoline mixture, it does not

meet the minimum 70 percent alcohol

volume requirement described above.

To the extent that reformulated gasoline

is some other kind of mixture, the 90

percent petroleum volume precludes a

determination that the mixture is

‘‘substantially not petroleum’’ and

would ‘‘substantially enhance energy

security.’’

Members of the public are invited to

comment on the Department’s

determination not to propose a rule that

would include reformulated gasoline as

an ‘‘alternative fuel’’ under section 301.

II. Section-By-Section Analysis

This part of the Supplementary

Information discusses those provisions

of the proposed regulations that are not

self-explanatory.
10974 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

A. Subpart A—General Subpart

Definition of ‘‘Fleet’’

In order to promote easier

understanding, DOE has divided the

statutory definition into two parts. The

main paragraph in the statutory

definition appears in proposed § 490.2

under the word ‘‘fleet.’’ This proposed

regulatory definition of ‘‘fleet’’ cross

references proposed § 490.3, that

describes the categories of vehicles

excluded from the definition.

In the proposed definition of ‘‘fleet,’’

there is a cross reference to proposed

appendix A to subpart A which sets

forth a list of metropolitan statistical

areas (MSAs) and consolidated

metropolitan statistical areas (CMSAs),

as defined by the Bureau of the Census,

with the requisite 250,000 population as

of the 1980 census. The statutory

definition of ‘‘fleet’’ does not state

whether the list must be updated in

light of changes in the geographic areas

designated by the Bureau of the Census

as MSAs and CMSAs which meet the

1980 population requirement of the Act.

The proposed rule allows DOE to

update the list, but DOE may delete this

provision in the final rule to eliminate

uncertainty. Members of the public are

invited to comment on this choice.

Consistent with the statutory

language, the proposed definition

requires that there be a minimum of 20

light duty motor vehicles ‘‘used

primarily’’ in a relevant statistical area.

DOE is proposing to interpret those

words to mean that the majority of the

vehicles’ total miles are accumulated

within a covered statistical area.

With regard to fleet fueling

characteristics, the statutory and

proposed regulatory definition of ‘‘fleet’’

provide that the vehicles be ‘‘centrally

fueled or capable of being centrally

fueled.’’ Proposed § 490.2 defines the

term ‘‘centrally fueled’’ as meaning that

a vehicle is fueled 75 percent of the time

at a location that is owned, operated, or

controlled by a fleet or covered person

or is under contract with the fleet or

covered person.

It should be noted that simply

because a fleet vehicle is not centrally

fueled does not mean it is exempt from

counting, because the statutory

requirement covers those vehicles that

are centrally fueled or are capable of

being centrally fueled. It is possible that

a vehicle that is not currently centrally

fueled could be centrally fueled.

Therefore, an organization which has

determined that its vehicles are not

centrally fueled must still determine if

the vehicles are capable of being

centrally fueled. If the vehicles are, then

the total of these vehicles, i.e., those

vehicles either centrally fueled or

capable of being centrally fueled, may

result in a ‘‘fleet’’ or ‘‘covered person’’

that is subject to the acquisition

requirements of the Act.

In determining whether 20 or more

light duty motor vehicles within a MSA

or CMSA are centrally fueled or capable

of being centrally fueled, the

organization must also consider

situations where vehicles that are

centrally fueled or capable of being

centrally fueled are present in more

than one location within the MSA or

CMSA. The number of vehicles at all

locations that are centrally fueled or

capable of being centrally fueled must

be totaled. For example, if a fleet or

covered person has 12 vehicles at

location A that are centrally fueled or

capable of being centrally fueled and 10

vehicles at location B that are also

centrally fueled or capable of being

centrally fueled, the organization has 22

vehicles in a MSA or CMSA that are

centrally fueled or capable of being

centrally fueled.

In providing that contract fueling is a

method of being centrally fueled, retail

credit card purchases by themselves are

not considered to be a contractual

refueling agreement. However,

commercial fleet credit cards are

considered to be a contractual refueling

agreement, since they are intended as a

special fuel arrangement for fleet

purchases alone. The intent of DOE’s

definition is to ensure that only those

fleet-based agreements which provide

special fleet refueling benefits at a

particular facility or group of facilities

would qualify as central fueling. DOE

does not intend the definition of

‘‘centrally fueled’’ to pertain to fleet

service card agreements which include

a wide network of fuel providers, unless

the service card agreement effectively

operates as a commercial refueling

arrangement between a circumscribed

subset of such refueling facilities and a

given fleet operator.

Proposed § 490.2 defines the term

‘‘capable of being centrally fueled’’ as

meaning a vehicle can be refueled at

least 75 percent of its 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. One method that DOE is

proposing for determining central

fueling capability is whether 75 percent

of a vehicle’s total miles traveled are

derived from trips that are less than the

operational range of the vehicle. As

defined by EPA, in its December 9,

1993, Federal Register notice on the

final rule for the definitions and general

provisions for the Clean Fuel Fleet

Program, 58 FR 64684, the operational

range is the distance a vehicle is able to

travel on a round trip with a single

refueling. The operational range should

be no less than 50 percent of the average

range of the existing fleet and in no

instance should be less than 300 miles.

It is important to note that the fuel in

question is the fuel that the vehicle

currently operates on. DOE believes that

this proposed definition will allow

fleets and covered persons to easily

determine which vehicles are ‘‘capable

of being centrally fueled.’’ DOE requests

comment on this definition of

operational range, and on the

operational range of alternative fueled

vehicles which may be required to

comply with this program.

In defining the same phrase in 40 CFR

88.302–94, EPA provided that the

presence of one or more nonconforming

vehicles in a fleet does not exempt an

entire fleet from the requirements of this

program; those vehicles that are capable

of being centrally fueled will count

towards the 20-vehicle minimum fleet

size. DOE agrees, but does not find a

need to include a phrase to this effect

in the definition of ‘‘capable of being

centrally fueled.’’

The DOE proposed definition differs

from the EPA definition of ‘‘capable of

being centrally fueled,’’ at 40 CFR

88.302–94, because the DOE proposed

definition does not require that vehicles

covered must be capable of being

centrally fueled 100 percent of the time.

In developing its definition, EPA had to

consider the fueling characteristics of

both light duty and heavy duty vehicles.

EPA amended its proposed definition to

reflect the 100 percent fueling

requirement based on the comments of

heavy duty engine manufacturers, who

argued that vehicles purchased by heavy

duty vehicle fleet operators in order to

comply with the Clean Fuel Fleet

Program would have to be dedicated to

a single fuel that may not be widely

available. It appears that if the heavy

duty vehicles had not been involved in

the program that EPA would have

settled on the 75 percent figure. DOE

did not take these comments into

consideration when developing the

proposed definition because the Act has

no requirement for fleets to acquire

heavy duty vehicles. Thus, separate

heavy duty vehicle fueling

characteristics do not have to be

considered. DOE requests comment on

whether the 75 percent level is

appropriate.

DOE’s proposed definition of

‘‘capable of being centrally fueled’’ is

based on EPA’s work. However, DOE

requests comment as to whether further

editing is necessary to clarify the

meaning of this phrase.
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10975

The statutory definition of ‘‘fleet’’

requires that a minimum of 20 vehicles

be ‘‘owned, operated, leased, or

otherwise controlled by a governmental

entity or other person.’’ The proposed

regulatory definition of ‘‘fleet’’

substantially tracks this language.

However, there is also a definition of

‘‘lease’’ in proposed § 490.2 that

excludes rental agreements of less than

120 days. This provision is consistent

with the EPA regulations. As EPA

explained, a person does not have the

same level of control over a vehicle

lease for a short period of time, and the

120-day period takes into account short

term variations in fleet operations and

the number of fleet vehicles that ought

not to trigger the vehicle acquisition

mandates. 58 FR at 64687. DOE shares

this view.

The proposed regulatory definition of

‘‘fleet’’ further tracks the statutory

definition by requiring that a person

controls 50-light duty motor vehicles

regardless of where they are located.

The proposed definition of ‘‘fleet’’ uses

the concept of ‘‘control’’ to establish the

guidelines for attributing vehicles to a

‘‘fleet’’ for the purposes of determining

whether the 50-vehicle minimum is

satisfied. The concept is used with

regard to: (1) Control of vehicles; (2)

control by another person; (3) control of

another person; and (4) being subject to

common control together with another

person.

There is similar language in the

definition of ‘‘covered fleet’’ which

applies to the EPA fleet program

requirement. EPA has promulgated an

elaborate definition of ‘‘control’’ in 40

CFR § 88.302–94 which reflects the

various ways in which the concept of

‘‘control’’ is used in the definition of

‘‘covered fleet.’’ The explanation of that

definition appears at 58 FR 64686–7.

DOE is proposing to adopt EPA’s

definition of ‘‘control.’’

Other Definitions

Proposed § 490.2 defines the term

‘‘after-market converted vehicle’’ as a

new or used conventional fuel Original

Equipment Manufacturer vehicle that

has been converted to operate on

alternative fuel by an after-market

converter. This converter must be in

compliance with all Federal, state, and

local laws at the time of conversion.

After-market converted vehicles differ

from Original Equipment Manufacturer

converted vehicles with respect to

which company warranties the

conversion and its components. In the

case of an Original Equipment

Manufacturer converted vehicle, the

vehicle is converted prior to first sale by

a manufacturer-authorized conversion

company under contract to the

manufacturer to convert Original

Equipment Manufacturer vehicles, and

is then offered by the Original

Equipment Manufacturer, with warranty

coverage through the Original

Equipment Manufacturer, for sale to the

general public. In the case of an aftermarket converted vehicle, the

conversion is performed by an aftermarket converter, who provides the

warranty for the vehicle conversion and

the conversion kit.

Proposed § 490.2 defines the term

‘‘alternative fuel’’ consistent with the

definition for that term in section 301 of

the Act. The text of the statutory

definition of ‘‘alternative fuel’’ was

quoted earlier in this Supplementary

Information section in a discussion of

reformulated gasoline. The terms of that

definition do not restrict ‘‘alternative

fuels’’ to fuels used only for

transportation purposes. However,

section 501(a)(3)(B) of the Act

specifically exempts certain businesses

that do not use ‘‘alternative fuels’’ for

transportation purposes. That provision

is reflected in proposed § 490.303(b)

which is discussed in detail below in

this section-by-section analysis.

Proposed § 490.2 defines the term

‘‘covered person’’ consistent with the

definition for that term in section 301 of

the Act.

‘‘Dealer demonstration vehicles’’ are

excluded from the definition of ‘‘fleet.’’

Proposed § 490.2 follows the EPA

definition for the term ‘‘dealer

demonstration vehicle’’ found at 40 CFR

§ 88.302–94 which defines ‘‘dealer

demonstration vehicle’’ as meaning any

vehicle that is operated by a motor

vehicle dealer solely for the purpose of

promoting motor vehicle sales, either on

the sales lot or through other marketing

or sales promotions, or for permitting

potential purchasers to drive the vehicle

for pre-purchase or pre-lease evaluation.

The intent of this definition is to exempt

the vehicles held on the lot of a motor

vehicle dealer as stock from which

potential purchasers or lessees can

choose. Vehicles held by dealers for

their own business purposes, such as

shuttle buses, loaner vehicles, or other

repair or business-related vehicles are

not exempt, unless they are also offered

for retail sale as part of the dealer stock

or are rotated through the fleet back to

the dealer stock.

As required by section 301(8) of the

Act, proposed § 490.2 defines the term

‘‘dual fueled vehicle,’’ consistent with

section 513(h)(1)(D) of the Motor

Vehicle Information and Cost Savings

Act, 15 U.S.C. § 2013, as a motor vehicle

that is capable of operating on

alternative fuel and on gasoline or diesel

fuel. These include flexible-fuel

vehicles that operate on a mixture of an

alternative fuel and a petroleum-based

fuel, and bi-fuel vehicles that can be

switched to operate on either an

alternative fuel or a petroleum-based

fuel. The intent of this definition is to

include all vehicles that are capable of

operating on an alternative fuel and a

petroleum-based fuel, regardless of what

terminology is used to describe the

vehicle. The Department is aware that

the terms ‘‘bi-fuel’’ and ‘‘dual-fuel’’ are

being used interchangeably to describe

the same motor vehicle and does not

wish to further confuse the situation.

‘‘Emergency vehicles’’ are excluded

from the definition of ‘‘fleet.’’ Proposed

§ 490.2 adopts EPA’s definition for the

term ‘‘emergency vehicle’’ in 40 CFR

§ 88.302–94 which defines ‘‘emergency

vehicle’’ as meaning any vehicle that is

legally authorized by a governmental

authority to exceed the speed limit to

transport people and equipment to and

from situations in which speed is

required to save lives or property, such

as a rescue vehicle, fire truck or

ambulance. These vehicles normally

have red and/or blue flashing lights and

sirens. DOE is relying on the speed limit

criterion because this is the way that

many states define ‘‘emergency

vehicles.’’ The requirement for legal

authorization to exceed the speed limit

may be problematic, however, for

localities that authorize certain utility

vehicles to exceed the speed limit in

special circumstances. However, those

vehicles are not normally considered

emergency vehicles in that their primary

function does not include exceeding the

speed limit to transport people and

equipment to and from situations in

which speed is required to save lives or

property. Their response to an

emergency does not usually require

them to exceed the speed limit, and they

are not usually equipped with red and/

or blue flashing lights and sirens for use

when exceeding the speed limit.

Therefore, those vehicle types are not

considered excluded from the definition

of ‘‘fleet’’ unless, on a vehicle-byvehicle basis, they are specifically and

legally authorized by a governmental

authority to respond to emergencies as

described above.

‘‘Law enforcement vehicles’’ are

excluded from the definition of ‘‘fleet.’’

Proposed § 490.2 adopts EPA’s

definition of the term ‘‘law enforcement

vehicle’’ found at 40 CFR § 88.302–94

which defines ‘‘law enforcement

vehicle’’ as meaning any vehicle which

is primarily operated by a civilian or

military police officer or sheriff, or by

personnel of the Federal Bureau of

Investigation, the Drug Enforcement
10976 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

Administration, or other law

enforcement agencies of the Federal

Government, or by state highway

patrols, municipal law enforcement, or

other similar law enforcement agencies,

and which is used for the purpose of

law enforcement activities including,

but not limited to, chase, apprehension,

surveillance, or patrol of people engaged

in or potentially engaged in unlawful

activities. This definition is intended to

clarify the difference between law

enforcement vehicles and vehicles used

for other security purposes. Under this

definition, a vehicle is considered to be

a law enforcement vehicle and is

exempt by virtue of its use for official

law enforcement purposes, as conveyed

by local, state or federal government

mandate. Security vehicles do not

usually comply with this definition, and

as such are not excluded from the

definition of ‘‘fleet’’ unless they are

contracted by a law enforcement agency

for the purposes described above.

Proposed § 490.2 defines the term

‘‘lease’’ to mean use of a vehicle for

transportation purposes pursuant to a

rental contract or similar arrangement,

the term of such contract or similar

arrangement is for a period of 120 days

or more, and such person has control

over the vehicle. This definition closely

tracks EPA’s definition of ‘‘owned or

operated, leased or otherwise controlled

by such person,’’ found at 40 CFR

§ 88.302–94. The intent of this

definition is to include, for compliance

purposes, any vehicles controlled by a

covered person, whether by ownership

or lease. The 120-day period is slightly

longer than a calendar season, and is

intended to reflect the fact that the

leasing of vehicles can occur for short

periods of time, including seasonal uses,

and that such short term, temporary

leases should not be subject to the

conditions of the program. However,

fleets and covered persons leasing or

renting a vehicle for more than 120 days

must include this vehicle in the

company’s total count of new light duty

motor vehicles acquired for the

respective model year.

Proposed § 490.2 defines the term

‘‘model year’’ for the purposes of

vehicle acquisition requirements as

September 1 of the previous calendar

year through August 31. This definition

closely tracks EPA’s definition of

‘‘model year,’’ found at 40 CFR

§ 88.302–94. For purposes of

compliance, covered persons should

compute their vehicle acquisitions

during the period beginning September

1 of each year through August 31. This

definition of model year coincides with

the period in which most automobile

manufacturers introduce their new

annual models, which should facilitate

compliance since fleets can make their

acquisition plans regarding alternative

fueled vehicles when they make plans

for acquiring new model year vehicles.

This definition is intended to clarify

which vehicles count toward the

required annual acquisitions under the

program. This definition is also

intended to ensure that all fleets and

covered persons acquire vehicles based

on the same annual period, which is

important to facilitate enforcement of

the programs. Thus, any new vehicles

that are acquired by a fleet or covered

person between September 1 and

August 31 are counted and used as the

basis for determining the acquisition

requirement of the same year, and are

considered of the same model year as

the January that falls between them.

‘‘Motor vehicles held for lease or

rental to the general public’’ are

excluded from the definition of ‘‘fleet.’’

Proposed § 490.3 follows EPA’s

definition of this phrase found at 40

CFR § 88.302–94 which defines ‘‘motor

vehicles held for lease or rental to the

general public’’ as meaning a vehicle

that is owned or controlled primarily for

the purpose of short-term rental or

extended-term leasing, without a driver,

pursuant to a contract. According to this

definition, the vehicles must be owned

primarily for the purpose of renting or

leasing them without a driver,

effectively granting someone else

control over them in exchange for

money or other compensation. In

addition, this exchange must be based

on a contract. Thus, a firm cannot be

found to ‘‘lease’’ its vehicles to its

employees unless the vehicles are

owned primarily for leasing them to the

general public and they are leased

pursuant to formal contracts which give

control of the vehicle to the lessee.

‘‘Motor vehicles used for motor

vehicle manufacturer product

evaluations and test’’ are also excluded

from the definition of ‘‘fleet.’’ Proposed

§ 490.3 follows EPA’s definition of the

phrase ‘‘vehicle used for motor vehicle

manufacturer product evaluations and

tests’’ at 40 CFR § 88.302–94. There the

phrase is defined to mean vehicles that

are owned and operated by a motor

vehicle manufacturer, or motor vehicle

component manufacturer, or owned or

held by a university research

department, independent testing

laboratory, or other such evaluation

facility, solely for the purpose of

evaluating the performance of such

vehicle for engineering, research and

development, or quality control reasons.

It is the intent of this provision to

exclude vehicles which are part of a

‘‘fleet’’ used by an Original Equipment

Manufacturer for production control or

quality control reasons.

‘‘Motor vehicles which under normal

operations are garaged at personal

residences at night’’ is another category

of vehicles excluded from the definition

of ‘‘fleet.’’ Proposed § 490.2 tracks the

language of section 301(h) of the Act.

Proposed § 490.2 defines the term

‘‘Original Equipment Manufacturer

Vehicle’’ as meaning a vehicle

engineered, designed and produced by

an Original Equipment Manufacturer.

This term applies to conventionally

fueled Original Equipment

Manufacturer vehicles as well as to

alternative fueled vehicles. Included in

this definition are vehicles that were

conventionally fueled Original

Equipment Manufacturer vehicles, but

were converted prior to sale by the

Original Equipment Manufacturer,

through a contract with a conversion

company, to operate on an alternative

fuel and which are covered under the

Original Equipment Manufacturer

warranty.

Proposed Section 490.3 Excluded

Vehicles

Proposed § 490.3 sets forth the

vehicles which may be excluded when

counting to determine whether there are

a sufficient number of vehicles to

constitute a ‘‘fleet’’ as defined in

proposed § 490.2. Some of the

exclusions are categories capsulized in

a term such as ‘‘dealer demonstration

vehicle,’’ ‘‘emergency vehicle,’’ and

‘‘law enforcement vehicle.’’ Those terms

are defined in proposed § 490.2 and are

discussed above.

Proposed Section 490.4 General

Information Inquiries

In other regulatory programs, DOE has

learned that on occasion representatives

of regulated persons make informal

inquiries, usually by telephone, and

need a quick response from the program

office even if the response is not binding

on DOE. Proposed § 490.4 would make

this device for obtaining information

available to those who are subject to

regulation under part 490.

Proposed Section 490.5 Requests for

an Interpretive Ruling

For those who want a more

authoritative answer as to how the

Department intends to construe and

apply its regulations to particular

factual situations, and for whom other

procedures such as petitions for

exemption are irrelevant, proposed

§ 490.5 would provide a useful option.

The uncertainties related to the complex

provisions applicable to determining

who must comply and the extent of
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10977

affected vehicle inventories prompted

DOE to devise proposed § 490.5. Any

interpretive ruling that the Department

issues would apply only to the person

who requested it. However, the

Department will make copies of these

rulings available for inspection and

copying in a public file in its Freedom

of Information Reading Room in the

Forrestal Building at 1000

Independence Ave., SW, Washington,

DC 20585.

Proposed Section 490.6 Petitions for

Generally Applicable Rulemaking

Proposed § 490.6 sets forth procedures

for petitioning the Department to issue

new or amended rules of general

applicability for part 490. These

procedures implement rights available

to members of the public under the

Administrative Procedure Act. 5 U.S.C.

553(e).

Proposed Section 490.7 Relationship

to Other Law

Proposed § 490.7 makes a declaratory

statement to avoid arguments that

provisions of part 490, by their silence,

authorize acquisition of vehicles or

conversion of vehicles in a manner that

does not comply with other laws and

regulations at the Federal, state, or local

level.

Subpart B—[Reserved]

Subpart C—Mandatory State Fleet

Program

Proposed Section 490.201 Alternative

Fueled Vehicle Acquisition Mandate

Schedule

Proposed § 490.201 sets forth the

requirements, subject to some

exemptions, for the percentage of new

light duty motor vehicles for State fleets

that must be alternative fueled vehicles

when acquired under the Mandatory

State Fleet Program. Beginning with the

1996 model year, September 1, 1995,

any state fleet that is covered under this

subpart must comply with these

requirements, unless otherwise

provided in this subpart.

In cases where acquisition

percentages result in something less

than a whole number, DOE is proposing

that these fractions be rounded up to the

next whole number.

Proposed Section 490.202

Acquisitions Satisfying the Mandate

Proposed § 490.202 provides in

substance that an acquisition of an

alternative fueled vehicle, regardless of

the year of manufacture, counts toward

satisfaction of the vehicle acquisition

mandate. Such a vehicle would be new

to the fleet operator. Credits acquired

under subpart F also count toward

satisfaction of the mandate.

Proposed Section 490.203 Light Duty

Alternative Fueled Vehicle Plan

The Act provides an alternative

means of compliance for States. In lieu

of a State meeting the acquisition

requirements proposed by § 490.201

solely through acquisition of new Stateowned vehicles, a State may comply

with a Light Duty Alternative Fueled

Vehicle Plan submitted by the State and

approved by DOE. The Plan must

demonstrate that there will be a

sufficient number of light duty motor

vehicles by State, local and private

fleets, which in aggregate meet or

exceed the applicable vehicle

percentage for any given year.

DOE is proposing that any acquisition

or conversion of light duty alternative

fueled vehicles for a State may be part

of the Plan, irrespective of whether the

vehicles are in the excluded categories

of vehicles in the definition of ‘‘fleet’’ as

enumerated in proposed § 490.3. This

allows for law enforcement vehicles, or

other vehicles otherwise excluded from

the definition of ‘‘fleet’’ to be part of a

Light Duty Alternative Fueled Vehicle

Plan.

DOE is proposing that, until a Plan is

approved or unless DOE grants an

exemption, a State is subject to the fleet

percentage requirements in proposed

§ 490.201. This will be equally true in

instances where a State plan participant

(such as a municipality) fails to fulfill

its commitments under the Plan.

However, if the State is able to find a

substitute participant, then the State

may submit to DOE for approval an

amendment to the Plan.

DOE is proposing in paragraph (b) of

this section to require States to monitor

and verify on an ongoing basis the

implementation of its Plan. This is to

ensure that all participants in the Plan

are indeed in compliance, and that at

the end of the model year, all

requirements will have been met. If for

whatever reasons a participant is unable

to fulfill its commitments, the State

should be able to find a substitute

participant before the end of the year.

Paragraph (c) proposes to require a

State to submit to DOE, for approval, its

Light Duty Alternative Fueled Vehicle

Plan no later than the June 1 prior to the

model year covered by the Plan. A State

should know by this deadline the

number of light duty motor vehicles it

plans to acquire during the upcoming

model year. DOE would like to receive

comments as to whether it is reasonable

to require all Plans be submitted by the

June 1 prior to the model year.

Proposed Section 490.204 Process for

Granting Exemptions

Section 507 (i)(1) of the Act provides

three categories under which a State

may seek exemptions in whole or in

part from the annual acquisition

percentages. A State may seek

exemption if it can demonstrate that—

(1) Alternative fuels that meet the

normal requirements and practices of

the principal business of the State fleet

are not available in the area where the

vehicles are to be operated; or

(2) Alternative fueled vehicles that

meet the normal requirements and

practices of the principal business of the

state fleet are not reasonably available

for acquisition because they are not

offered for acquisition commercially on

reasonable terms and conditions in any

of the States; or

(3) The application of such

requirements would pose an

unreasonable financial hardship.

Category 1 tracks section 507(i)(1) of

the Act. Category 2 is based on section

507(i)(1) and would preclude arguments

that the physical unavailability in a

state is not a valid reason for exemption

when a vehicle can be ordered from

somewhere else in the United States.

Time delays in delivery of alternative

fueled vehicles are generally not

acceptable as an excuse. States must be

cognizant of the possible irregular

manufacturer production schedules and

considerably longer lead times involved

in the acquisition of alternative fueled

vehicles compared with conventional

vehicles. It is the responsibility of the

state to plan and schedule its ordering

and acquisitions of alternative fueled

vehicles so as to comply with the

acquisition requirements for each model

year. Regarding category 3, section

507(i)(1) allows only States, not

alternative fuel providers, the right to

seek an exemption based on financial

hardship. Proposed paragraph (d)(3)

describes the few items of information

that a State must submit to DOE when

requesting an exemption based on

financial hardship. (Earlier in this

Supplementary Information, States were

invited to comment on how DOE should

interpret and apply the term ‘‘financial

hardship.’’)

Proposed paragraph (g) provides that

the Assistant Secretary for Energy

Efficiency and Renewable Energy may

grant a request for exemption. In order

to keep the procedures simple, the

Assistant Secretary may act finally for

the Department, and there is no

requirement to obtain the specific

approval of the Secretary. If the

Assistant Secretary denies the request

for exemption, proposed paragraph (g)
10978 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

further provides for a State right to

appeal to the Department’s Office of

Hearings and Appeals, whose decision

would be final for the purpose of

judicial review. Further discussion on

the exemption process is found in

section-by-section analysis for the

Alternative Fuel Provider Vehicle

Acquisition Mandate.

The Act requires that the exemption

process be reasonable and simple. The

DOE invites comments on the proposed

process for States to request exemptions,

in whole or in part.

Proposed Section 490.205 Reporting

Requirements

Proposed § 490.205 will require each

state that is subject to the vehicle

acquisition mandate to submit to DOE

an annual report. This report will assist

DOE in determining if a state has met

the requirements of this subpart as well

as to determine how successfully the

goals and requirements of this subpart

are being met. For further discussion on

reporting requirements, see proposed

section 490.309. DOE invites comment

as to the reasonableness of these

reporting requirements, as well as

recommendations for additional,

substitute or reduced requirements

which would achieve the desired

results.

Subpart D—Alternative Fuel Provider

Vehicle Acquisition Mandate

I. Background

The Alternative Fuel Provider Vehicle

Acquisition Mandate is intended to

cover a broad range of alternative fuel

providers in a flexible, workable

program that will allow for compliance

in the most economical fashion

possible. The program allows alternative

fuel providers flexibility in the

acquisition of new alternative fuel

vehicles via purchase, lease, or

conversion, and in the geographical

placement of alternative fuel vehicles. It

also provides a minimum of restrictions

on how the alternative fueled vehicles

are to be used.

The program specifies the criteria for

determining whether an alternative fuel

provider is covered and under what

circumstances exemptions from the

program will be granted. Only those

alternative fuel providers who are

classified as ‘‘covered persons’’ are

subject to the requirements of this

proposed regulation and only that

affiliate, division, or other business unit

which is substantially engaged in the

alternative fuels business may be subject

to the acquisition mandate requirements

of the Act.

Proposed Section 490.300 Purpose and

Scope

Proposed § 490.300 defines the

purpose and scope of part 490 Subpart

D as implementing the statutory

requirements of section 501 of the

Energy Policy Act of 1992, which sets

forth a mandate for those alternative

fuel providers, who are classified as

covered persons, to acquire alternative

fuel vehicles at an escalating percentage

of their new vehicle acquisitions.

Proposed Section 490.301 Definitions

Proposed § 490.301 sets forth the

definitions for part 490, Subpart D.

Proposed § 490.301 defines the term

‘‘alternative fuels business’’ as meaning

an activity undertaken to derive revenue

from: (1) Producing, storing, refining,

processing, transporting, distributing,

importing, or selling at wholesale or

retail any alternative fuel other than

electricity; or (2) generating,

transmitting, importing, or selling at

wholesale or retail electricity. This

definition tracks the language of section

501(a)(2).

Proposed § 490.301 provides

definitions for the terms ‘‘affiliate,’’

‘‘division,’’ and ‘‘business unit’’ which

are used in section 501 of the Act and

proposed §§ 490.303 and 490.304. The

first two are dictionary definitions.

‘‘Business unit’’ is defined to make clear

the grouping of business activities must

be similar in autonomy to affiliates and

divisions.

Proposed § 490.301 defines the term

‘‘normal requirements and practices’’ as

meaning the operating business

practices and required conditions under

which the principal business of the

covered person operates. In a request for

an interpretive ruling or in a civil

penalty proceeding, the burden would

be on the fuel provider to show that

actions to acquire alternative fuel

vehicles and/or obtain alternative fuel

are outside the normal practices of the

covered person’s principal business.

Proposed § 490.301 defines the term

‘‘principal business’’ as meaning the

largest sales-related gross revenue

producing activity. If an organization

derives a plurality of gross revenue from

sales-related alternative fuels activity

then the organization’s principal

business is alternative fuels. As it is

used above, plurality does not require

that over 50 percent of an organization’s

sales-related gross revenue be based on

activities related to alternative fuels.

Sales-related in this context means that

the gross revenue does not come from

investments such as corporate stocks.

In determining whether an

organization’s principal business is

alternative fuels, the important criterion

to look at is what is the organization’s

single largest source of sales-related

gross revenue. For example, if an

organization derives 35 percent of its

sales-related gross revenue from

alternative fuels and the next largest

single source of sales-related gross

revenue comprises 25 percent of the

organization’s gross revenue, the

organization’s principal business is

alternative fuels.

Proposed § 490.301 defines the term

‘‘substantially engaged’’ to mean that a

covered person, or affiliate, division, or

other business unit thereof, regularly

derives sales-related gross revenue from

an alternative fuels business. To

determine whether a covered person or

affiliate, division, or other business unit

thereof is ‘‘substantially engaged’’ in the

alternative fuels business, it is

important to look at the involvement the

covered person, affiliate, division, or

other business unit has with the

alternative fuels business. Thus, only

that affiliate, division, or business unit

that meets the substantially engaged

criteria, as defined above, is subject to

the acquisition requirements of this

program.

The covered person is responsible for

clearly defining the specific affiliate,

division, or other business unit that is

substantially engaged and is therefore

subject to the acquisition requirements

of this rule. If this designation is not

made or is not made clearly, DOE will

assume that the entire organization is

subject to the acquisition requirements

of this rule and will enforce it as such.

Proposed § 490.301 defines the term

‘‘substantial portion’’ to mean that at

least 2 percent of a covered person’s

refinery yield of petroleum products is

composed of alternative fuels.

Alternative fuel is as defined in

proposed § 490.2. This proposed

definition was formulated using reliable

data compiled by the Energy

Information Administration and

published in its Petroleum Supply

Annual 1993, Volume 1 (DOE/EIA–

0340(93)/1). Table 19 provides aggregate

data on refinery yield for the Petroleum

Administration for Defense districts and

can be readily verified.

The 2% threshold was chosen

because it represents the average yield

for the production of alternative fuel by

petroleum refiners as reported by the

Energy Information Administration.

DOE believes that the use of this

percentage in the definition of

‘‘substantial portion’’ allows for the

initial identification of that group of

covered persons described in Sec.

501(a)(2)(c) of the Act and provides a

sound basis for identifying those
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10979

affiliates, divisions, or other business

units of such covered persons which are

substantially engaged in the alternative

fuel business.

The Department considered including

some measure of the gross revenue

attributed to the production of

alternative fuels as an alternative in the

definition of ‘‘substantial portion.’’ The

first measure that was considered was

setting a minimum level of gross

revenue from the sale of alternative

fuels that an organization would have to

equal or exceed to be classified as an

alternative fuel provider. The second

measure that was considered was

establishing a minimum percentage, that

reflects the percent of total gross

revenue attributed to the sale of

alternative fuels, that an organization

would have to equal or exceed to be

classified as an alternative fuel provider.

Unfortunately, the information available

on these measures is too fragmented to

be the basis for proposed regulatory

language. DOE seeks comment on

whether reliable information exists that

would allow establishment of a

monetary measure (or any measure apart

from the measure in the proposed rule)

for determining whether alternative

fuels production comprises a substantial

portion of a company’s business. DOE

also seeks comment recommending any

other alternative definitions for

‘‘substantial portion.’’

Proposed Section 490.302 Vehicle

Acquisition Mandate Schedule

Proposed § 490.302 describes the

vehicle acquisition schedule that

alternative fuel providers must comply

with if they are classified as covered

persons. Proposed paragraph (a)

requires that of the new light duty motor

vehicles acquired by alternative fuel

providers, the following percentages

shall be alternative fueled vehicles for

the following model years:

(A) 30 percent for model year 1996.

(B) 50 percent for model year 1997.

(C) 70 percent for model year 1998.

(D) 90 percent for model year 1999

and thereafter. For example, if an

alternative fuel provider purchases or

leases 50 light duty motor vehicles in

model year 1996, 30 percent, or 15, of

the vehicles have to be alternative

fueled vehicles.

Proposed paragraph (b) states that,

except as provided by § 490.304, these

requirements apply to all new light duty

vehicles acquired by a ‘‘covered

person,’’ not just those vehicles

acquired for the fleets which initially

qualified the alternative fuel provider as

a ‘‘covered person.’’ These requirements

also apply regardless of where the new

vehicles are to be located. For example,

if an alternative fuel provider, which is

a covered person, is acquiring new light

duty motor vehicles for a location that

is not in a subject MSA or CMSA, the

required percentage of these vehicles

must be alternative fueled vehicles. The

MSA/CMSA requirement is used for

classifying ‘‘covered persons,’’ not for

determining how many light duty

vehicles must be alternative fueled

vehicles. The provisions of proposed

§ 490.302(b) are not discretionary

because they follow the wording of

section 501(a)(1) of the Act. 42 U.S.C.

13251(a)(1).

Proposed paragraph (c) provides for

rounding off to the next higher number

if application of a percent to the base

number of new light duty vehicles

acquired results in a requirement to

acquire a fraction of a vehicle. This

procedure is consistent with the

statutory objective of promoting the

acquisition of alternative fuel vehicles.

Proposed paragraph (d) states that

only acquisitions satisfying the

mandate, as described in proposed

§ 490.305, and/or Alternative Fueled

Vehicle credits will be counted toward

compliance with the acquisition

schedule in proposed paragraph (a).

Proposed Section 490.303 Who Must

Comply

Proposed § 490.303 gives an answer to

the question: who is a covered person

that must comply? This proposed

section tracks section 501(a)(2) of the

Act. There are two components to this

determination. The first component

involves determining whether the

organization fits the profile of an

alternative fuel provider as provided by

section 501(a)(2) of the Act. The second

component eliminates from coverage

those alternative fuel providers whose

principal business uses alternative fuel

to create a product that is not an

alternative fuel.

Types of companies likely to be

covered persons subject to the

alternative fuel providers mandate

include, but are not limited to, private

and public electric and natural gas

utilities; natural gas distribution

companies; pipeline companies;

petroleum companies; propane

producers, distributors, and suppliers;

methanol providers; ethanol providers;

and fuel transport companies.

Municipal utilities possessing the

required fleet size, fueling

characteristics, and located within the

specified geographical areas are

classified as alternative fuel providers

under section 501(a)(2)(B). Therefore,

they are expected to comply with the

requirements of the mandate under

§ 490.302 and will not be subject to any

future municipal fleet mandate imposed

by rule under section 507 of the Act.

If an organization produces, imports,

or produces and imports in

combination, an average of 50,000

barrels per day or more of petroleum,

and regularly derives gross revenue

from the production of alternative fuels,

that organization has a ‘‘substantial

portion’’ of its business in alternative

fuels. To determine whether an

organization has a substantial portion of

its business in alternative fuels it is

important to look at the organization’s

involvement in the alternative fuels

business, not just the amount of gross

revenue from alternative fuels

production or the level of investment in

alternative fuels production. DOE’s

determination of whether an

organization has a substantial portion of

its business in alternative fuels will be

made on a case-by-case basis. Comment

is invited as to what criteria might be

used in making this determination.

Paragraph (b) of proposed § 490.303

deals with covered persons who are

excluded from having to comply with

this subpart. This section tracks the

language of section 501(a)(3)(B) of the

Act. Two types of covered persons may

be excluded from the requirements of

this regulation: (1) Those who transform

alternative fuels into a product that is

not an alternative fuel; and (2) those

who consume alternative fuels as a

feedstock or fuel in the manufacture of

a product that is not an alternative fuel.

An example of an excluded person

described in paragraph (b)(1) would be

a manufacturer of windshield washer

fluid. The manufacturer would be

classified as an excluded person

because it blends an alternative fuel,

methanol, in producing windshield

washer fluid, which is not an alternative

fuel.

An example of an excluded person

described in paragraph (b)(2) would be

a company that burns natural gas to

provide a heat source for a

manufacturing operation.

An example of an excluded person

under paragraphs (b)(1) and (b)(2)

would be an entity whose principal

business is the production of alcoholic

beverages.

Proposed Section 490.304 Which New

Light Duty Motor Vehicles Are Covered

Under section 501(a)(3)(A) of the Act,

if the covered person has more than one

affiliate, division, or other business unit,

only the vehicles of an affiliate,

division, or business unit that is

‘‘substantially engaged in the alternative

fuels business’’ are subject to the vehicle

acquisition mandate. Proposed

§ 490.304 reflects the provisions of
10980 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

section 501(a)(3)(A), and should be read

in conjunction with the proposed

definitions of ‘‘affiliate,’’ ‘‘division,’’

and ‘‘business unit’’ in § 490.301.

Proposed Section 490.305

Acquisitions Satisfying the Mandate

Proposed § 490.305 deals with the

three types of acquired vehicles that

will count toward compliance with

proposed § 490.302, in addition to

alternative fueled vehicle credits under

Subpart F. These categories provide

flexibility for organizations in acquiring

vehicles to meet this regulation. An

alternative fueled light duty motor

vehicle shall be considered newly

acquired, regardless of model year, if:

(a) The vehicle is an Original

Equipment Manufacturer vehicle

capable of operating on alternative fuels

and was not previously under the

control of the covered person; or

(b) The vehicle is an after-market

converted vehicle and was not

previously under the control of the

covered person; or

(c) The vehicle is an Original

Equipment Manufacturer vehicle that

has been converted to operate on

alternative fuels prior to the vehicle’s

first use in service.

A vehicle that meets the description

of paragraph (a) is one that is

manufactured by an Original Equipment

Manufacturer to be capable of operating

on alternative fuels. For example, if a

covered person acquires a 1993 flex-fuel

light duty motor vehicle during model

year 1996, this vehicle is classified as

being a new acquisition for that

organization.

A vehicle that meets the description

of paragraph (b) is one that has been

converted by a licensed converter to be

capable of operating on alternative fuels.

A vehicle that meets the description of

paragraph (c) is a vehicle that upon

acquisition by the organization is taken

to a licensed converter for conversion to

an alternative fueled vehicle and is

never intended to be operated solely on

petroleum-based fuel. It is important to

note that section 507(j) of the Act states

that no fleet owner shall be required to

acquire converted vehicles in order to

meet compliance with this or any fleet

acquisition requirement.

Proposed Section 490.306 Vehicle

Operation Requirements

Proposed § 490.306 largely tracks the

provisions of section 501(a)(4), which

requires that all alternative fueled

vehicles acquired pursuant to section

501 be operated solely on alternative

fuels, except when these vehicles are

operating in an area where alternative

fuel is not available.

Proposed Section 490.307 Option for

Electric Utilities

Proposed § 490.307 deals with the

statutory option for electric utilities.

Proposed paragraph (a) tracks the

provisions of section 501(c) of the Act,

which provides that a covered person

whose principal business is generating,

transmitting, importing, or selling, at

wholesale or retail, electricity has the

option of delaying the alternative fuel

vehicle acquisition schedule in section

501(a) of the Act until January 1, 1998,

if that covered person intends to comply

with this regulation by acquiring

electric motor vehicles. DOE considered

delaying the date that electric utilities

would have to start acquiring vehicles

until the beginning of model year 1999

which starts on September 1, 1998. But

given that the California Air Resources

Board requires that 2 percent of all

vehicles sold in California by major auto

producers be Zero Emission Vehicles,

(emission level currently only

achievable by electric vehicles) starting

September 1, 1997, DOE decided not to

propose a delay in the effective date of

the 30 percent alternative fueled vehicle

acquisition requirement. Also, the States

of New York and Massachusetts have

enacted laws which adopt California

standards and timetables.

Proposed paragraph (b) provides the

date (January 1, 1996) by which

notification must be received by DOE

for an electric utility to be eligible for

this delayed schedule. That date is

dictated by section 501(c) of the Act.

This notification should be in letter

format and must explain the utility’s

commitment to electric vehicles.

Proposed paragraph (c) describes the

acquisition schedule that an electric

utility must comply with if the electric

utility notifies the Secretary by the

required date.

Proposed Section 490.308 Process for

Granting Exemptions

Proposed § 490.308 deals with the

requirements of section 501(a)(5) of the

Act which provides for a simple and

reasonable exemption process for those

covered persons seeking exemptions

either because alternative fuel is not

available or alternative fueled vehicles

are not reasonably available. Proposed

paragraph (a) describes the procedure

that a covered person needs to complete

to receive an exemption. The first

category of exemption is if any covered

person demonstrates to the satisfaction

of the Secretary that alternative fuels

that meet the normal requirements and

practices of the principal business of

that person are not available in the area

where the vehicles are to be operated.

The second category of exemption is if

any covered person demonstrates to the

satisfaction of the Secretary that

alternative fueled vehicles that meet the

normal requirements and practices of

the principal business of that person are

not reasonably available for acquisition

because they are not offered for

acquisition commercially on reasonable

terms and conditions in the United

States. These exemptions would be

granted for one model year only. To

receive exemptions for additional model

years, alternative fuel providers must reapply to the Secretary each year. Criteria

for granting exemptions will be based

on documentation that specifically

relates to the availability of alternative

fuels and alternative fueled vehicles.

To determine whether alternative fuel

is ‘‘not available,’’ an alternative fuel

provider must map out the operating

area and base of operations for its fleet

of vehicles. Next it must locate on the

map the alternative fueling facilities

within its MSA or CMSA. Then, for

each vehicle, it must determine whether

any location providing alternative fuel

is in the area in which the vehicle is

operated. If there is any location

providing alternative fuel within the

vehicle’s operating area, alternative fuel

is available. If there are no locations

providing alternative fuel, for any

alternative fuel that meets the normal

requirements and practices of the

covered person’s principal business,

within the vehicle’s operating area, then

alternative fuel is ‘‘not available.’’

The Act requires that the exemption

process be reasonable and simple. DOE

invites comment on the proposed

process for exemptions, in whole or in

part.

It is anticipated that alternative fuel

will be available and accessible for

almost all alternative fuel providers, and

that it will be difficult for fuel providers

to prove that alternative fuel is not

available. Since alternative fuel

providers stand to benefit greatly from

the expanded use of alternative fuels

and the proliferation of alternative

fueled vehicles, it is also anticipated

that they will help accelerate the

establishment of the alternative fuels

infrastructure and be less likely to seek

exemptions based on alternative fuels

being ‘‘not available.’’

To receive an exemption based on the

criteria in subparagraph (a)(2) a covered

person must show that there are no

alternative fueled vehicles available for

commercial acquisition on reasonable

terms and conditions in any State. The

covered person also must show good

faith effort in attempting to obtain these

vehicles. DOE requests comment on the

extent to which vehicle cost, either
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10981

initial cost or life-cycle cost, should be

considered in determining whether

vehicles are available on ‘‘reasonable

terms.’’

If a covered person normally and

historically acquires vehicles from one

automobile dealer or from one

automobile manufacturer, but is unable

to acquire alternative fueled vehicles of

the model type needed from these same

sources, this is not sufficient to qualify

for an exemption under subparagraph

(a)(2) if appropriate alternative fueled

vehicles are available from other dealers

or manufacturers. Having to use another

dealer or manufacturer is not classified

as outside the normal requirements and

practices of the covered person, because

the same procedures that are currently

being employed by the covered person

to obtain these vehicles can be used to

obtain them from different sources.

Having to wait slightly longer for

delivery of alternative fueled vehicles

than for conventionally fueled vehicles

is not a sufficient reason for granting an

exemption. If, however, the time delay

will result in a covered person violating

the regulation, DOE will consider the

covered person to be in compliance

with this regulation if the delivery delay

was through no fault of its own. Thus,

if alternative fueled vehicles are ordered

during the model year with expectations

that they will be delivered by the end

of the model year, but are not delivered

until the next model year, the covered

person will be deemed to be in

compliance if it can provide DOE with

proof of order date and anticipated

delivery schedule. On the other hand, if

a covered person orders alternative

fueled vehicles and knows, at the time

of the order, that it will not be receiving

these alternative fueled vehicles by the

end of the model year, it will be deemed

to be in noncompliance and no

exemption will be granted.

Additionally, in determining whether

alternative fueled vehicles are

reasonably available, a covered person

must examine whether alternative

fueled vehicles of the appropriate type

are available in any alternative fuel

configuration. Thus, the availability of

the type of vehicle a covered person

needs that operates on the fuel that the

covered person provides is not the

appropriate test for determining

whether alternative fueled vehicles are

‘‘not reasonably available.’’ The test for

determining whether alternative fueled

vehicles are ‘‘not reasonably available’’

is whether there are alternative fueled

vehicles available that operate on any

alternative fuel and meet the normal

requirements and practices of the

business, including the vehicle

performance requirements of the

business.

Proposed paragraph (b) sets forth the

types of documentation in support of

exemption requests that should be

provided to DOE.

Proposed paragraph (e) states that

exemption determinations are letter

rulings binding for the covered person

only and cannot be used to establish a

precedent for other exemption requests.

DOE will review each exemption

request on a case-by-case basis.

In proposed paragraphs (f) and (g)

DOE is proposing an administrative

remedy for those aggrieved by the initial

decision of the DOE Deciding Official,

who will be the Assistant Secretary for

Energy Efficiency and Renewable

Energy. In order to exhaust

administrative remedies, it will be

necessary to appeal to DOE’s Office of

Hearings and Appeals. This procedure

has two virtues. It would be less

expensive than pursuing a judicial

remedy immediately. It would also

ensure that DOE has made a record

which is appropriate for judicial review

in the event a petition for review is filed

in a Federal court.

Proposed Section 490.309 Annual

Reporting Requirements

Proposed § 490.309 sets forth annual

reporting requirements. An annual

report to verify regulation compliance is

required of all alternative fuel providers.

Proposed paragraph (a) sets forth where

and by when annual reports should be

sent.

Proposed paragraph (b) describes the

required information that would be

included in this annual report. Most of

the requirements are self-explanatory;

however, several of them deserve

discussion for clarification purposes.

Proposed subparagraph (b)(2) would

require covered persons to calculate the

number of new light duty alternative

fueled vehicles that they are required to

acquire. To determine this number, a

covered person would multiply the

number entered for proposed

subparagraph (b)(1), by the acquisition

percentage from § 490.302 or § 490.307

that applies for that model year. For

example, in model year 1996, if the

number of new light duty motor

vehicles acquired is 50, the number of

new light duty vehicles that are required

to be acquired is 30 percent of 50, or 15

(50×.3=15). The number of new light

duty alternative fueled vehicles

acquired, added to the number of

alternative fueled vehicle credits

applied, from proposed subparagraph

(b)(5), should be greater than or equal to

the number calculated for proposed

subparagraph (b)(2).

Proposed paragraph (c) sets forth the

procedure that a covered person must

follow if it is applying alternative fueled

vehicle credits against its acquisition

requirements.

Consistent with the requirements of 5

CFR Part 1320.6(f), proposed paragraph

(d) would require that records related to

this reporting requirement be

maintained and retained for a period of

three years.

DOE seeks comment on the reporting

requirements, especially relating to the

information that is requested to be

included in the report.

Subpart F—Alternative Fueled Vehicle

Credit Program

Background

Section 508 of the Act requires DOE

to establish an alternative fueled vehicle

credit program that will allocate

alternative fueled vehicle credits to a

fleet or covered person that is required

to acquire alternative fueled vehicles

under Title V of the Act if that fleet or

covered person acquires alternative

fueled vehicles in excess of the number

that fleet or covered person is required

to acquire or acquires alternative fueled

vehicles prior to the date that fleet or

covered person is required to acquire

alternative fueled vehicles. An

alternative fueled vehicle credit may be

used to comply with alternative fuel

provider or fleet program requirements

in a later year, or may be traded or sold

for use to another fleet or covered

person who is required to acquire

alternative fueled vehicles by Part 490.

The purpose of establishing a credit

program is to provide purchasing

flexibility for the regulated fleet

operators without sacrificing the

program’s energy security goals. The

general concept is that some fleet

operators may, at times, find it attractive

to buy more alternative fueled vehicles

than required, if in doing so they can get

credit against future acquisition

requirements, or can sell or transfer the

credits to another party. If the credits

program is properly implemented and

managed, there will be no decrease in

energy security compared to a program

based strictly on compliance through

acquisitions.

Both section 246(f) of the Clean Air

Act (42 U.S.C. 7586(f)) and section 508

of the Act (42 U.S.C. 13258) allow for

awarding credits to entities that initiate

clean fuel vehicle or alternative fueled

vehicle programs sooner or in greater

numbers than required. But the laws

differ in their goals: the goal of the

Clean Air Act Amendments is to

improve air quality while the goal of the

Act is energy security. Thus, the credit
10982 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

programs and implementing regulations

emanating from these acts also have

different goals and objectives.

The EPA has a program called the

Clean Fuel Fleet Credit Program (40 CFR

§ 88.304–94) that may be confused with

the Department’s Alternative Fueled

Vehicle Credit program. In the Clean

Fuel Fleet Credit program, a fleet owner

obtains credits by implementing clean

fuel vehicles earlier, in greater numbers,

or which meet more stringent emission

standards than those established by

EPA. Clean Fuel Fleet credits can also

be obtained for Clean Fuel Vehicle

purchases in vehicle categories that are

excluded from the Energy Policy Act

definition of ‘‘fleet’’. These credits are

awarded based on a formula that

compares the clean fuel vehicle

emissions with conventional vehicle

emissions. By contrast, under section

508 of the Energy Policy Act, one credit

is allocated for each alternative fueled

vehicle acquired in excess of the

required number. Also, the Energy

Policy allocates one credit for each year

the alternative fueled vehicle is

acquired before the required date.

Another area of difference between

the two statutes is where they allow

credits to be traded. Under the Clean Air

Act, credit trading is only allowable

within the same non-attainment area.

For example, fleet operators in the

Baltimore non-attainment area can only

buy, sell, or trade credits with other

fleet operators in the Baltimore area.

Congress appears to have concluded

that it was not logical for nonattainment areas to trade credits with

other areas, because the air quality in

the area where credits were purchased

and used would not be improved as a

result of this transaction. On the other

hand, the Energy Policy Act credits can

be traded freely among those

organizations that are required to

acquire alternative fueled vehicles,

which are located within the United

States. However, there is an exception to

this trading provision, based upon the

last sentence of section 508(d) of the

Act, which provides that vehicles

representing credits generated or

transferred to alternative fuel providers

operate solely on alternative fuel. (42

U.S.C. 13258). This requirement is

discussed under § 490.506 of this

Supplementary Information. Because

one of the major goals of the Act is the

reduction of our Nation’s foreign oil

dependency, it makes little difference

where in the United States this

reduction takes place.

Proposed Section 490.500 Purpose and

Scope

Proposed § 490.500 defines the

purpose and scope of part 490 subpart

F as implementing the statutory

requirements of Section 508 of the Act,

which instructs the Secretary to allocate

credits to fleets or covered persons that

acquire alternative fueled vehicles in

excess of the number required, or obtain

alternative fueled vehicles prior to the

date when they are required to acquire

alternative fueled vehicles.

Proposed Section 490.501

Applicability

Proposed § 490.501 deals with the

applicability of the credit program to

fleets and covered persons.

Proposed Section 490.502 Creditable

Actions

Proposed § 490.502 describes the

actions associated with allocation of

alternative fueled vehicle credits by

DOE. Proposed paragraphs (a) and (b)

are consistent with the language of

section 508(a) of the Act, which

authorizes the Secretary to allocate

credits to fleets or covered persons that

acquire alternative fueled vehicles in

excess of the number they are required

to acquire, or acquire alternative fueled

vehicles in advance of the date they are

required to. Once a fleet or covered

person is required to acquire alternative

fueled vehicles the only way credits can

be generated is by exceeding their

required acquisition number. For

example, an alternative fueled vehicle

acquired in excess of the number

required in model year 1996 cannot be

claimed to be an early alternative fueled

vehicle acquisition for model year 1999.

The excess alternative fueled vehicle

will generate 1 alternative fueled

vehicle credit only, not 3 credits

because it was acquired 3 years in

advance.

Additionally, DOE is proposing that

one credit be allocated for the

acquisition of a light duty alternative

fueled vehicle in a category listed in

proposed § 490.3, such as motor

vehicles held for lease or rental to the

general public, law enforcement

vehicles, etc. Section 508(b) provides

the statutory basis for this proposal

because it refers to the allocation of

credits for the acquisition of alternative

fueled vehicles in excess of the number

required. Therefore, the acquisition of

light duty alternative fueled vehicles in

the excluded categories constitutes the

acquisition of alternative fueled vehicles

in excess of the number required

qualifies for the allocation of credits.

Because these excluded vehicles are not

required to be acquired they are not

eligible to earn credits for early

acquisition which results in multiple

credits. Thus, DOE is proposing that the

acquisition of these vehicles in excess of

the required number will generate only

one credit per vehicle.

It is reasonable to expect that any

requirements placed on alternative

fueled vehicles which are acquired to

comply with alternative fuel provider or

fleet program requirements would also

apply to vehicles that generate credits.

For example, the Act requires that

alternative fuel providers operate their

alternative fueled vehicles solely on

alternative fuels except when operating

in an area where the appropriate

alternative fuel is unavailable. A net

loss to energy security goals would

occur if a credit-generating vehicle, such

as an alternative fueled vehicle bought

a year earlier than required by an

alternative fuel provider, did not also

operate solely on alternative fuel. This

requirement applies only to those

alternative fueled vehicles that generate

credits to be used by covered persons

who are alternative fuel providers. The

Department is unaware of any possible

requirements which would apply to

vehicles purchased to demonstrate

compliance and not to vehicles

purchased for credits. Therefore, DOE is

proposing that any such requirements

apply equally to both types of vehicles.

The Department considered whether

to allow the acquisition of medium duty

and heavy duty alternative fueled

vehicles (those alternative fueled

vehicles with gross vehicle weight

ratings of greater than 8,500 lbs.), by

covered persons and fleets, to generate

credits. Many medium duty and heavy

duty vehicles are predominantly urban

use vehicles, such as transit buses and

delivery trucks, and could take

advantage of the anticipated fueling

infrastructure within these urban areas.

These vehicles possess larger capacity

engines, which consume significantly

more fuel than light duty vehicles and

result in increased displacement of

petroleum-based fuel. However,

paragraph (b) of section 508 provides

that credits can only be allocated for the

acquisition of the same type of vehicles

that are required under the fleet

mandates of Title V of the Act. The only

type of vehicles that are required to be

acquired in Title V are light duty

vehicles. Thus, credits cannot be

awarded for the acquisition of medium

duty and heavy duty vehicles because

the Act does not require any fleet or

covered person to acquire them.
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10983

Proposed Section 490.503 Credit

Allocation

Proposed § 490.503 deals with

alternative fueled vehicle credit

allocation. Proposed paragraphs (a) and

(b) are consistent with the language of

section 508(a) of the Act, which

describes how credits are to be

allocated. Before alternative fueled

vehicle credits are allocated they must

be applied for using the procedure

described in proposed § 490.507.

Proposed paragraph (a) provides for

the allocation of one credit for each

alternative fueled vehicle a fleet or

covered person acquires that exceeds

the number of alternative fueled

vehicles that fleet or person is required

to acquire. If a fleet or covered person

is required to acquire 10 alternative

fueled vehicles in a model year and they

acquire 15 alternative fueled vehicles,

they can apply for allocation of five

alternative fueled vehicle credits.

Proposed paragraph (b) provides for

the allocation of one credit per

alternative fueled vehicle for each year

the alternative fueled vehicle is

acquired in advance of the date the fleet

or covered person is required to acquire

alternative fueled vehicles. These

credits cannot be allocated until the

date that a fleet is required to acquire

alternative fueled vehicles. Thus, only

covered persons and State fleets are

presently eligible for credit allocation.

Until such time as private and

municipal fleets are required to acquire

alternative fueled vehicles, they cannot

be allotted credits for early acquisition.

At that time, all alternative fueled

vehicles acquired between October 24,

1992, and the start date of the private

and municipal fleet mandate would be

eligible for credit allocation.

Proposed paragraph (c) provides for

the allocation of credits to alternative

fuel providers and State governments

for alternative fueled vehicles acquired

from October 24, 1992, the date the

Energy Policy Act was enacted.

Credit allocation is best explained by

the following examples. In the first

example a covered person acquires 10

alternative fueled vehicles in model

year 1994 and 15 alternative fueled

vehicles in model year 1995. Because

the covered person is not required to

acquire alternative fueled vehicles until

model year 1996, each alternative fueled

vehicle acquired in model year 1994

will generate 2 credits and each

alternative fueled vehicle acquired in

model year 1995 will generate 1 credit.

Thus, the covered person generates 35

credits [(10×2)+(15×1)=35], which can

be used against future alternative fueled

vehicle acquisition requirements or can

be traded.

In the second example a state fleet

acquires 50 alternative fueled vehicles

in model year 1995 and 15 alternative

fueled vehicles in excess of their

required acquisition number in model

year 1996. The state generates 50 credits

for acquiring alternative fueled vehicles

early and 15 credits for acquiring

alternative fueled vehicles in excess of

their required number. If the state

doesn’t trade away or use any credits, it

will have 65 credits that it can use

against future acquisitions or can trade.

A database will be established that

will keep a record of credit allocations,

trades and credit balances.

Proposed Section 490.504 Use of

Alternative Fueled Vehicle Credits

Consistent with the language of

section 508(c) of the Act, proposed

§ 490.504 states that a credit shall be

treated as the acquisition of a light duty

alternative fueled vehicle. Each

alternative fueled vehicle credit will

represent one light duty alternative

fueled vehicle and can be applied

against the required alternative fueled

vehicle acquisition number for one

model year only, designated by a fleet

or covered person, in lieu of the

acquisition of a light duty alternative

fueled vehicle during that model year.

Proposed Section 490.505 Credit

Accounts

Proposed § 490.505 deals with

Alternative Fueled Vehicle Credit

accounts. Proposed paragraph (a) states

that DOE will establish a credit account

for each fleet or covered person who

obtains an alternative fueled vehicle

credit.

Proposed paragraph (b) states that

each fleet or covered person will receive

an annual credit account balance

statement after the receipt and recording

of its annual activity report. This

statement will reflect the credit account

activity that occurred in the previous

model year and can be used as proof of

the credit balance for an account.

DOE is considering whether to

provide updated credit account balance

statements to fleets and covered persons

upon request during the year and is also

considering whether to charge a

nominal fee for this service. These

updated credit account balance

statements would provide written proof

of a fleet or covered person’s credit

account balance as of the date they are

printed. These updated credit account

balance statements may be required of a

credit seller by a credit purchaser before

proceeding with the credit transfer.

Thus, the credit seller can use this

updated credit account balance

statement to gain independent private

benefit.

The charging of a fee for this service

is authorized under 31 U.S.C. 9701,

which provides that each Federal

government agency may establish a

charge for a service of a thing of value

provided by the agency if this service

results in independent private benefit.

This charge must be fair and based on

the costs to the Government, the value

of the service or thing to the recipient,

public policy or interest served, and

other relevant facts. DOE asks for

comments related to the desirability of

providing updated credit account

balance statements and what value a

fleet or covered person would place on

this service.

Proposed Section 490.506 Alternative

Fuel Vehicle Credit Transfers

Proposed § 490.506 deals with the

transfer of alternative fueled vehicle

credits. Proposed paragraph (a)(1) states

that any fleet may transfer an alternative

fueled vehicle credit to any other fleet,

which is required to acquire alternative

fueled vehicles. In contrast, proposed

paragraph (a)(2) states that any fleet may

transfer an alternative fueled vehicle

credit to an alternative fuel provider,

who is a covered person, if the fleet

provides certification to the covered

person that the credit represents a

vehicle that operates solely on

alternative fuel. This restriction on the

transfer of credits from a fleet to an

alternative fuel provider, who is a

covered person, is necessary because of

the vehicle operational requirement

placed on alternative fuel provider

vehicles. 42 U.S.C. 13251(a)(4). Section

508(d) of the Energy Policy Act permits

alternative fuel providers to use credits

only if these operational requirements

are met. 42 U.S.C. 13258(d).

Proposed paragraph (c) states that

proof of credit transfer should be

provided to DOE within seven days of

the transfer date, and provides for the

use of a DOE form, or other written

documentation containing the dated

signatures of the transferor and

transferee. This provision allows for the

maintenance and verification of credit

transfer activity.

Proposed Section 490.507 Credit

Activity Reporting Requirements

Proposed § 490.507 describes the

credit program’s activity reporting

requirements. An annual report is

required of all fleets or covered persons

who have generated or traded

alternative fueled vehicle credits to

record and track their credit activity.

Proposed paragraph (a) sets forth where
10984 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

and by when annual reports should be

sent.

Proposed paragraph (b) describes the

required information that would be

included in this annual report. Most of

the requirements are self-explanatory,

however, subparagraph (b)(4) deserves

discussion for clarification purposes.

Proposed subparagraph (b)(4) would

only allow a fleet or covered person to

report either the number of alternative

fueled vehicles acquired in excess of

acquisition requirements or the number

of alternative fueled vehicles acquired

in advance of the start date of the

acquisition requirements, not both of

them. Once the first model year in

which acquisition requirements apply

has begun, credits can no longer be

earned for early acquisition of

alternative fueled vehicles.

Subpart G—Investigations and

Enforcement

Proposed Section 490.601 Powers of

the Secretary

Proposed § 490.601 sets forth the

powers of the Secretary provided

specifically by section 513 of the Act.

Some of these powers (e.g., subpoenas

for witnesses or documents) can be used

either in a investigative effort begun

with orders to show cause or in

connection with a civil penalty

proceeding.

Proposed Section 490.602 Special

Orders

Proposed § 490.602 tracks the

provisions of section 505(b)(1) of the

Motor Vehicle Information and Cost

Savings Act, 15 U.S.C. § 2005(b)(1).

Those provisions are applicable under

part 490 because section 505(b)(1) is

cross referenced in section 513 of the

Act. Orders under this section could be

used to deal with a wide variety of

circumstances. One example would be

the failure to submit a required report.

Another would be an order to show

cause why civil penalty proceedings

should not be initiated for failure to

comply with subparts C, D, or F.

Proposed Section 490.603 Prohibited

Acts

This proposed regulation tracks the

language of section 511 of the Act. 42

U.S.C. 13261.

Proposed Section 490.604 Penalties

and Fines

This proposed regulation follows

section 512 of the Act. 42 U.S.C.

§ 13262. The text reflects DOE

conclusions with regard to which of the

subsections of section 512 provide for

civil penalties and which provide for

criminal fines.

Proposed Section 490.605 Statement of

Enforcement Policy

In rare instances, DOE may initiate

enforcement with the object of ensuring

compliance and deterring future

violations. This proposed section

indicates that DOE will not proceed

with enforcement if there is a

satisfactory compliance agreement.

Proposed Section 490.606 Proposed

Assessments and Orders

This proposed section provides for

issuance of proposed assessments of

civil penalty and an order to pay which

becomes a final order for the

Department if the recipient fails to

appeal on a timely basis to the Office of

Hearings and Appeals.

Proposed Section 490.607 Appeals

This proposed section provides for

administrative due process if the

recipient of a proposed assessment and

order to pay wishes to contest the basis

therefore. The appeal must be filed in

the Office of Hearings and Appeals on

or before 30 days from the date of the

issuance of a proposed assessment and

order. Most of the applicable procedures

for the Office of Hearings and Appeals

are in subpart H of 10 CFR part 205. In

addition, paragraph (b) of proposed

§ 490.607 provides that the appellant

has the ultimate burden of persuasion

which is appropriate because the

appellant will in most cases have

unequal access to the relevant evidence

(its own records). Paragraph (b) also

provides that a trial-type hearing on

contested issues of fact may occur only

if the hearing officer concludes that

cross examination will materially assist

in determining the facts in addition to

the evidence available in documentary

form. There should not be extended

hearings in order to fill the record with

evidence which is largely repetitious.

III. Opportunity for Public Comment

A. Participation in Rulemaking

Interested persons are invited to

participate in this proposed rulemaking

by submitting written data, views, or

comments with respect to the subject set

forth in this notice. The Department

encourages the maximum level of public

participation possible in this

rulemaking. Individual consumers,

representatives of consumer groups,

manufacturers, associations, coalitions,

states or other government entities, and

others are urged to submit written

comments on the proposal. The

Department also encourages interested

persons to participate in the public

hearings to be held at the times and

places indicated at the beginning of this

notice. Comments relating to the energy

security, environmental, or economic

effects that might result from the

adoption of the proposals contained in

this notice are specifically invited and

desired. 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 Provider Vehicle

Acquisition Mandate and Alternative

Fuel Vehicle Credit Program, NOPR,

Docket Number EE–RM–95–110’’ and

must be received by the date specified

at the beginning of this notice. In the

event any person wishing to submit a

written comment cannot provide eight

copies, alternative arrangements can be

made in advance by calling Andi

Kasarsky at (202) 586–3012.

Additionally, the Department would

appreciate an electronic copy of the

comments to the extent possible. The

Department is currently using

WordPerfect 5.1 for DOS.

All comments received on or before

the date specified at the beginning of

this notice and other relevant

information will be considered by DOE

before final action is taken on the

proposed rule. All comments submitted

will be available for examination in the

Rule Docket File in DOE’s Freedom of

Information Reading Room both before

and after the closing date for comments.

In addition, a transcript of the

proceedings of the public hearings will

be filed in the docket.

Pursuant to the provisions of 10 CFR

1004.11 any person submitting

information or data that is believed to be

confidential, and which may be exempt

by law from public disclosure, should

submit one complete copy, as well as

two copies from which the information

claimed to be confidential has been

deleted. The Department of Energy will

make its own determination of any such

claim and treat it according to its

determination.

C. Public Hearing Procedures

The time and place of the public

hearings are indicated at the beginning

of this notice. The Department invites

any person who has an interest in the

proposed regulation or who is a

representative of a group or class of

persons which has an interest to make

a request for an opportunity to make an

oral presentation at the hearing.

Requests to speak should be sent to the

address or phone number indicated in

the ADDRESSES section of this notice and
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10985

be received by the time specified in the

DATES section of this notice.

The person making the request should

briefly describe his or her interest in the

proceedings and, if appropriate, state

why that person is a proper

representative of the group or class of

persons that has such an interest. The

person also should provide a phone

number where they may be reached

during the day. Each person selected to

speak at a public hearing will be

notified as to the approximate time that

they will be speaking. They should

bring ten copies of their statement to the

hearing. In the event any person

wishing to testify cannot meet this

requirement, alternative arrangements

can be made in advance with Andi

Kasarsky, (202) 586–3012.

The DOE reserves the right to select

persons to be heard at the hearings, to

schedule their presentations, and to

establish procedures governing the

conduct of the hearing. The length of

each presentation will be limited to ten

minutes, or based on the number of

persons requesting to speak.

A Department official will be

designated to preside at the hearing. The

hearing will not be a judicial or an

evidentiary-type hearing, but will be

conducted in accordance with 5 U.S.C.

553 and Section 501 of the Department

of Energy Organization Act. 42 U.S.C.

7191. At the conclusion of all initial oral

statements, each person will be given

the opportunity to make a rebuttal

statement. The rebuttal statements will

be given in the order in which the initial

statements were made.

Any further procedural rules needed

for the proper conduct of the hearing

will be announced by the Presiding

Officer at the hearing.

If DOE must cancel a hearing, DOE

will make every effort to publish an

advance notice of such cancellation in

the Federal Register. Notice of

cancellation will also be given to all

persons scheduled to speak at the

hearing. Hearing dates may be canceled

in the event no public testimony has

been scheduled in advance.

IV. Review Under Executive Order

12612

Executive Order 12612, 52 FR 41685

(October 30, 1987), requires that

regulations, rules, legislation, and any

other policy actions be reviewed for any

substantial direct effect on states, on the

relationship between the National

Government and the States, or in the

distribution of power and

responsibilities among various levels of

government. If there are substantial

effects, then the Executive Order

requires a preparation of a federalism

assessment to be used in all decisions

involved in promulgating and

implementing policy action.

This proposed rule establishes an

Alternative Fueled Vehicle Credit

Program under which states may

generate credits if they obtain

alternative fueled vehicles in excess of

their required quantity or if they obtain

alternative fueled vehicles prior to the

date when they are required and

establishes a mandate for state fleets to

acquire alternative fuel vehicles. The

allocation of credits is based on the

measurable actions of obtaining

alternative fueled vehicles and is

available to fleets, that meet the

requirements, throughout the United

States.

The granting of credits to states will

be handled in the same manner as the

granting of credits to any other fleet

operator. The enforcement of the state

fleet mandate will be handled in the

same manner as other mandate

programs. States can also apply for a

hardship exemption which would

exempt them from acquiring alternative

fuel vehicles in any given year.

The Department has determined that

since states are treated the same as any

other fleet operator in the allocation of

credits and in the administration and

enforcement of the fleet mandate, the

proposed rule will not have a

substantial direct effect on the

institutional interests or traditional

functions of States. In addition, the

provision for hardship exemptions

included in the state fleet mandate

precludes any possible violation in the

authority that the Federal government

has over States. Thus, preparation of a

federalism assessment is therefore

unnecessary.

V. Review Under Executive Order

12778

Section 2 of Executive Order 12778

instructs each agency to adhere to

certain requirements in promulgating

new regulations. These requirements,

set forth in section 2 (a) and (b)(2),

include eliminating drafting errors and

needless ambiguity, drafting the

regulations to minimize litigation

providing clear and certain legal

standards for affected legal conduct, and

promoting simplification and burden

reduction. Agencies are also instructed

to make every reasonable effort to

ensure that the regulation describes any

administrative proceeding to be

available prior to judicial review and

any provisions for the exhaustion of

administrative remedies. DOE certifies

that the proposed rule meets the

requirements of section 2 (a) and (b)(2)

of Executive Order 12778.

VI. Review Under Executive Order

12866

This regulatory action has been

determined to be a significant regulatory

action under Executive order 12866,

Regulatory Planning and Review,

October 4, 1993. Accordingly, today’s

action was subject to review under the

Executive Order by the Office of

Information and Regulatory Affairs

(OIRA). DOE concluded that the

proposed rule would not result in (1) an

annual effect on the economy of $100

million or more or (2) have significant

adverse effects on competition,

employment, investment, productivity,

innovation, or on the ability of the

United States-based enterprises to

compete in domestic export markets.

OIRA requested that DOE prepare a cost

analysis. In this section of the

Supplementary Information, DOE

describes the assumptions and main

conclusions of that cost analysis. A copy

of that cost analysis is available for

public inspection in the administrative

record on file in DOE’s Freedom of

Information Reading Room. DOE has

also placed in that file a copy of the

notice of proposed rulemaking as

transmitted to OIRA, as well as

exchanges of correspondence between

DOE and OIRA showing changes in the

notice agreed to by the two agencies.

The cost analysis spans a 25-year time

frame, from 1995 to 2020, which

included the incremental vehicle

purchase cost and the cost differential

between alternative fuels and gasoline

under five different scenarios. The

analysis examines the effects the

proposed rule will have on the

acquisition of alternative fueled vehicles

by fuel providers and State fleets,

exclusive of the effects of non-mandated

acquisition of vehicles by these and

other fleets. In doing so it assumes that

no alternative fueled vehicles will be

acquired by these fleets prior to model

year 1996. In actuality, these fleets

currently are acquiring alternative

fueled vehicles—either because of

economics, State laws or business

strategies—and will probably continue

to do so in the future. This assumption

focuses the analysis on the estimated

costs to fuel providers and State fleets

in complying with the proposed

regulation without distorting it in any

substantial way. Assumptions about the

number of vehicles acquired, the

operating characteristics of those

vehicles, fleet vehicle replacement rates,

current and future alternative fueled

vehicle incremental costs, and current

and future retail fuel costs were based

on previous analyses undertaken by the

Department.
10986 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

The costs to fuel providers and State

fleets in complying with the proposed

rule varies depending upon vehicle

type, fuel type and fuel consumption,

but in no case are the annual costs

estimated to exceed $61 million per

year. More typically, the estimated

annual costs are approximately $25

million, decreasing to $10 million per

year in later years. In reaching these

conclusions, the Department took into

account the fact that some alternative

fuel providers may not operate vehicles

solely on the fuel they provide and may

have to purchase other alternative fuels

at retail prices. Retail fuel prices for all

alternative fuels were used in the

analysis. These prices have three main

components: (1) The wholesale fuel

cost; (2) the cost of transporting the fuel

from production points to retail outlets;

and (3) the retail outlet mark-ups.

In one scenario, the annual costs to

State fleets decreased to a point where

it is estimated that these fleets would

incur savings as a result of complying

with the proposed rule. This scenario

assumes that the most popular

alternative fueled vehicles will be

flexible-fuel vehicles that can operate on

gasoline and/or methanol. Because the

proposed rule does not impose a fuel

use requirement on State fleets, it is

logical to assume that States will choose

to operate these vehicles on the fuel

which costs less at a certain point in

time; currently that fuel is gasoline. It is

expected that the nominal incremental

cost for these vehicles, together with the

fact that their operation and refueling is

identical to a gasoline-only version,

should make them very attractive to

State fleet managers. The expected

popularity of these vehicles, combined

with estimates that show methanol

prices falling below gasoline by model

year 2001, result in annual cost savings

to State fleets, starting with model year

2005, in the range of $400,000 to $1

million.

In order to provide commenters with

a better understanding of the effects of

this proposal, the Department plans to

make revisions and improvements to its

analysis before the close of the comment

period. To aid in this effort, the

Department seeks comments on all

aspects of its analysis. In particular, the

Department is interested in comment on

the following elements of the analysis:

the retail and net-of-excise-tax future

price projections for gasoline and

alternative fuels; the assumption that

alternative fueled vehicle purchases,

that would result in apparent life-cycle

cost savings, would not occur in the

absence of this rule; and the assumption

that the cost per gallon of gasoline

displaced falls as the amount of gasoline

displaced increases. The Department

would also be interested in data that

would aid in estimating the extra

refueling costs for ‘‘covered persons’’

whose fleets use fuels other than the one

they themselves provide, e.g., a natural

gas pipeline company whose alternative

fueled vehicles operate on methanol or

ethanol.

VII. Review Under the Regulatory

Flexibility Act

The Regulatory Flexibility Act of

1980, 5 U.S.C. 601–612, was enacted by

Congress to ensure that small entities do

not face significant negative economic

impact as a result of Government

regulations. In instances where

significant impacts are possible on a

substantial number of entities, agencies

are required to perform a regulatory

flexibility analysis.

DOE has determined that this

proposed rule will not have a significant

negative impact on a substantial number

of small entities. To be covered by this

rulemaking, an organization must own,

operate or control at least 50 light duty

motor vehicles, of which at least 20 light

duty motor vehicles used primarily

within a single MSA or CMSA must be

capable of being centrally fueled. An

organization that fits this description is

usually not a small organization, but

one of medium size or larger.

VIII. Review Under the Paperwork

Reduction Act

New information collection

requirements subject to the Paperwork

Reduction Act, 44 U.S.C. 3501, et seq.,

and recordkeeping requirements are

proposed by this rulemaking.

Accordingly, this notice has been

submitted to the Office of Management

and Budget for review and approval of

paperwork requirements. The

information DOE proposes to collect as

reporting requirements is necessary to

determine whether an organization is in

compliance with the proposed

regulation and whether they are eligible

for the allocation of alternative fueled

vehicle credits. The frequency of the

information collection is annually and

is due four months after the end of the

compliance period. It is estimated the

number of organizations submitting

reports will be approximately 1000 for

the years 1996 through 1999. The

estimated number of organizations who

will be submitting reports after that date

has not been determined and is subject

to the DOE decision on future

rulemakings.

The public reporting burden is

estimated to average 12 hours per

response, including time for reviewing

instructions, searching existing data

sources, gathering and maintaining the

data needed, and completing and

retrieving the collection of information.

The collection of information contained

in this proposed rule is considered the

least burdensome for the Department of

Energy functions to comply with the

legal requirements and achieve program

objectives. However, comments are

requested concerning the accuracy of

the estimated paperwork reporting

burden.

IX. Review Under the National

Environmental Policy Act

The provisions of this proposed rule

would establish procedures for the

implementation of an Alternative Fuel

Transportation Program to assist in and

monitor the progress of State fleet and

certain alternative fuel providers

compliance activity. The proposed rule

provides for reporting procedures to

demonstrate compliance with the

alternative fueled vehicle acquisition

mandates as specified by Title V of the

Energy Policy Act of 1992, and includes

proposed procedures for interpretive

rulings, exemption, appeals, and the

approval process for State plans.

The proposed rule would also

establish and define the parameters for

who must comply, the parts of a vehicle

inventory which are affected by the

acquisition mandates, the allocation of

credits for voluntary acquisitions, the

investigation and enforcement in the

assessment of civil penalties, and the

contents of a State’s light duty

alternative fueled vehicle plan. Because

of the foregoing non-procedural parts of

the proposed rule, the Department has

determined that preparation of an

Environmental Assessment (EA) is

appropriate. The Department will

complete the EA and any further

analysis found to be required prior to

the issuance of a final rule.

X. Impact on State Governments

Section 1(b)(9) of Executive Order

12866 (‘‘Regulatory Planning and

Review’’), 58 FR 51735 (September 30,

1993) established the following

principle for agencies to follow in

rulemakings: ‘‘Wherever feasible,

agencies shall seek views of appropriate

State, local, and tribal officials before

imposing regulatory requirements that

might significantly or uniquely affect

those governmental entities. Each

agency shall assess the effects of Federal

regulations on State, local, and tribal

governments, including specifically the

availability of resources to carry out

those mandates, and seek to minimize

those burdens that uniquely or

significantly affect such governmental

entities, consistent with achieving
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10987

regulatory objectives. In addition,

agencies shall seek to harmonize

Federal regulatory actions with

regulated state, local and tribal

regulatory and other governmental

functions.’’ Executive Order 12875

(‘‘Enhancing Intergovernmental

Partnership’’), 58 FR 58093 (October 26,

1993) provides for reduction or

mitigation, to the extent allowed by law,

of the burden on State, local, and tribal

governments of unfunded Federal

mandates not required by statute.

Section 507(o) of the Act explicitly

prescribes the alternative fueled vehicle

acquisition mandate which is reflected

in subpart C of today’s proposed

regulations, but does not specifically

authorize appropriation of funds to

defray the costs of compliance.

However, it is important to observe that

the effect of the mandate is mitigated in

terms of its impacts and costs in a

number of respects.

First, section 507(o) authorizes

approval of acceptable alternative State

plans to comply with the acquisition

mandate by enlisting the voluntary

commitments from other fleet operators

with fleets that are not subject to vehicle

acquisition requirements under the

Energy Policy Act of 1992. Second,

section 507(i) authorizes the Department

to grant exemptions from vehicle

acquisition requirements for States in

cases of financial hardship. Third,

Congress has authorized and

appropriated some fiscal year 1994 and

fiscal year 1995 funds for financial

assistance to State alternative fuel

transportation programs some of which

may include plans to fund the

incremental costs of acquiring

alternative fueled vehicles. Section 409

of the Act specifically authorizes

financial assistance to States for this

purpose. However, the funds, even if

exclusively used to pay for such

incremental costs, may not be sufficient

to fund all such costs incurred by each

State annually.

The Department preliminarily

estimates that, in the aggregate, the costs

to States in model year 1996 will be

between $3.3 million and $7.4 million.

The annual aggregate costs should never

exceed $13 million in FY 1995 dollars.

A copy of the analysis which includes

these figures is in the public file in the

DOE Freedom of Information Reading

Room and is available upon request

from the information contact identified

at the outset of this notice. The

Department does not have estimates for

each State. The Department would

welcome comments from State financial

officials knowledgeable about near term

State plans for replacing existing

vehicles so that DOE can refine its

estimates of incremental costs

attributable solely to the section 507(o)

mandate.

In developing today’s notice of

proposed rulemaking, the Department

consulted with a focus group of State

officials from the National Association

of State Energy Officials which

represents energy offices in 53 States,

territories and the District of Columbia.

The principal concern expressed by

some of these officials was conflict

between the DOE program and similar

programs operating under EPA or State

regulations. With respect to EPA, DOE

has attempted to avoid unnecessary

differences between its proposed

regulations and those already

promulgated by EPA. When asked for

comments on a draft of today’s notice,

EPA did not suggest any changes to

eliminate or mitigate unnecessary

differences.

Earlier in this notice, DOE noted that

the overlap between the proposed

regulations and the EPA regulations is

limited because the DOE program would

apply in MSAs and CMSAs with a 1980

Bureau of Census population of 250,000

or more and the EPA program applies

only in non-attainment areas. EPA has

published a table, 59 FR 50043, listing

the 22 non-attainment areas as follows:

STATES AND AREAS AFFECTED BY THE

CLEAN FUEL FLEET PROGRAM

Affected area State(s)

1. Atlanta ........................... Georgia.

2. Baltimore ....................... Maryland.

3. Baton Rouge ................. Louisiana.

4. Beaumont-Port Arthur ... Texas.

5. Boston-LawrenceWorcester (Eastern Massachusetts).Massachusetts,

New Hampshire.

6. Chicago-Gary-Lake

County.

Illinois, Indiana.

7. Denver-Boulder ............. Colorado.

8. El Paso .......................... Texas.

9. Greater Connecticut ...... Connecticut.

10. Houston-GalvestonBrazoria.Texas.

11. Los Angeles-South

Coast Air Basin.

California.

12. Milwaukee-Racine ....... Wisconsin.

13. New York-Northern

New Jersey-Long Island.

Connecticut,

New Jersey,

New York.

14. Philadelphia-Wilmington-Trenton.Delaware, Maryland, New Jersey, Pennsylvania.

15. Providence (All Rhode

Island).

Rhode Island.

16. Sacramento Metro ...... California.

17. San Diego ................... California.

18. San Joaquin Valley ..... California.

19. Southeast Desert

Modified AQMA.

California.

20. Springfield (Western

Massachusetts).

Massachusetts.

STATES AND AREAS AFFECTED BY THE

CLEAN FUEL FLEET PROGRAM—

Continued

Affected area State(s)

21. Ventura County ........... California.

22. Washington (District of

Columbia).

Maryland, Virginia.

As indicated above, 11 of these 22

areas have applications to opt out of the

EPA Clean Fuel Fleet Program which

are still pending as of the date of

publication of this notice.

With respect to the State programs,

DOE is unaware of any that would be in

conflict with the program proposed

today. If DOE has overlooked any such

conflicts, State officials are invited to

submit comments explaining the

conflicts.

List of Subjects in 10 CFR Part 490

Appeal procedures, Energy, Energy

conservation, Fuel, Gasoline, Motor

vehicles, Oil imports, Petroleum,

Recordkeeping and Reporting

requirements, and Utilities.

Issued in Washington, D.C. on February 2,

1995.

Christine A. Ervin,

Assistant Secretary, Energy Efficiency and

Renewable Energy.

For the reasons set forth in the

Preamble, Title 10, Chapter II,

Subchapter D, of the Code of Federal

Regulations is proposed to be amended

by adding a new Part 490 as set forth

below:

PART 490—ALTERNATIVE FUEL

TRANSPORTATION PROGRAM

Subpart A—General Provision

Sec.

§ 490.1 Purpose and Scope.

§ 490.2 Definitions.

§ 490.3 Excluded vehicles.

§ 490.4 General information inquiries.

§ 490.5 Requests for an interpretive ruling.

§ 490.6 Petitions for general applicable

rulemaking.

§ 490.7 Relationship to other law.

Appendix A to Subpart A of Part 490—

Metropolitan Statistical Areas/Consolidated

Metropolitan Statistical Areas with 1980

Populations of 250,000 or More

Subpart B—[Reserved]

Subpart C—Mandatory State Fleet Program

§ 490.200 Purpose and scope.

§ 490.201 Alternative fueled vehicle

acquisition mandate schedule.

§ 490.202 Acquisitions satisfying the

mandate.

§ 490.203 Light Duty Alternative Fueled

Vehicle plan.

§ 490.204 Process for granting exemptions.

§ 490.205 Reporting requirements.

§ 490.206 Violations.
10988 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

Subpart D—Alternative Fuel Provider

Vehicle Acquisition Mandate

§ 490.300 Purpose and scope.

§ 490.301 Definitions.

§ 490.302 Vehicle acquisition mandate

schedule.

§ 490.303 Who must comply.

§ 490.304 Which new light duty motor

vehicles are covered.

§ 490.305 Acquisitions satisfying the

mandate.

§ 490.306 Vehicle operation requirements.

§ 490.307 Option for electric utilities.

§ 490.308 Process for granting exemptions.

§ 490.309 Annual reporting requirements.

§ 490.310 Violations.

Subpart E—[Reserved]

Subpart F—Alternative Fueled Vehicle

Credit Program

§ 490.500 Purpose and scope.

§ 490.501 Applicability.

§ 490.502 Creditable actions.

§ 490.503 Credit allocation.

§ 490.504 Use of alternative fueled vehicle

credits.

§ 490.505 Credit accounts.

§ 490.506 Alternative Fueled Vehicle Credit

transfers.

§ 490.507 Credit activity reporting

requirements.

Subpart G—Investigations and

Enforcement.

§ 490.600 Purpose and scope.

§ 490.601 Powers of the Secretary.

§ 490.602 Special orders.

§ 490.603 Prohibited acts.

§ 490.604 Penalties and fines.

§ 490.605 Statement of enforcement policy.

§ 490.606 Proposed assessments and orders.

§ 490.607 Appeals.

Authority: 42 U.S.C. 7191, 13235, 13251,

13257, 13258, 13260–3.

Subpart A—General Provisions

§ 490.1 Purpose and Scope.

(a) The provisions of this part

implement the alternative fuel

transportation program under titles III,

IV, V, and VI of the Energy Policy Act

of 1992. (Pub. L. 102–486)

(b) The provisions of this subpart

cover the definitions applicable

throughout this part and procedures to

obtain an interpretive ruling and to

petition for a generally applicable rule

to amend this part.

§ 490.2 Definitions.

The following definitions apply to

this part—

Act means the Energy Policy Act of

1992 (Pub. L. 102–486) and any

amendments thereof.

After-Market Converted Vehicle

means an Original Equipment

Manufacturer vehicle that is

reconfigured by a conversion company,

which is not under contract to the

Original Equipment Manufacturer, to

operate on an alternative fuel and whose

conversion kit components are under

warranty of the conversion company.

Alternative Fuel means 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; natural gas;

liquefied petroleum gas; hydrogen; coalderived liquid fuels; fuels (other than

alcohol) derived from biological

materials; and electricity (including

electricity from solar energy).

Alternative Fueled Vehicle means a

dedicated vehicle or a dual fueled

vehicle.

Assistant Secretary means the

Assistant Secretary for Energy Efficiency

and Renewable Energy or any other DOE

official to whom the Assistant

Secretary’s duties under this part may

be redelegated by the Secretary.

Capable of Being Centrally Fueled

means a vehicle can be refueled at least

75 percent of its 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, including

commercial fleet credit card agreements.

Centrally Fueled means that the

vehicle is fueled 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, including

commercial fleet credit card agreements.

Control means—

(1) When it is used in the context

determining whether one person

controls another or whether two persons

are under common control, means any

one or a combination of the following:

(i) A third person or firm has equity

ownership of 51 percent or more in each

of two firms; or

(ii) Two or more firms have common

corporate officers, in whole or in

substantial part, who are responsible for

the day-to-day operation of the

companies; or

(iii) One firm leases, operates,

supervises, or in 51 percent or greater

part owns equipment and/or facilities

used by another person or firm, or has

equity ownership of 51 percent or more

of another firm.

(2) When it is used to refer to the

management of vehicles, means a

person has the authority to decide who

can operate a particular vehicle, and the

purposes for which the vehicle can be

operated.

(3) When it used to refer to the

management of people, means a person

has the authority to direct the activities

of another person or employee in a

precise situation, such as the workplace.

Covered Person means a person that

owns, operates, leases, or otherwise

controls—

(1) A fleet, as defined by this section,

that contains at least 20 light duty motor

vehicles that are centrally fueled or

capable of being centrally fueled, and

are used primarily within a

metropolitan statistical area or a

consolidated metropolitan statistical

area, as established by the Bureau of the

Census, with a 1980 population of

250,000 or more as set forth in

Appendix A to this subpart or in a

Federal Register notice; and

(2) at least 50 light duty motor

vehicles within the United States, as

defined by this section.

Dealer Demonstration Vehicle means

any vehicle that is operated by a motor

vehicle dealer solely for the purpose of

promoting motor vehicle sales, either on

the sales lot or through other marketing

or sales promotions, or for permitting

potential purchasers to drive the vehicle

for pre-purchase or pre-lease evaluation.

Dedicated Vehicle means—

(1) A dedicated automobile as defined

in section 513(h)(1)(C) of the Motor

Vehicle Information and Cost Savings

Act (15 U.S.C. 2013(h)(1)(C)); or

(2) A motor vehicle, other than an

automobile, that operates solely on

alternative fuel.

DOE means the Department of Energy.

Dual Fueled Vehicle means—

(1) A dual fueled automobile which is

capable of operating on alternative fuel

and on gasoline or diesel fuel and as

defined in section 513(h)(1)(D) of the

Motor Vehicle Information and Cost

Savings Act (15 U.S.C. § 2013(h)(1)(D));

or

(2) A motor vehicle, other than an

automobile, that is capable of operating

on alternative fuel and on gasoline or

diesel fuel including flexible-fuel

vehicles that operate on a mixture of an

alternative fuel and a petroleum-based

fuel or bi-fuel vehicles that can be

switched to operate on either an

alternative fuel or a petroleum-based

fuel.

Electric-hybrid Vehicle means a

vehicle primarily powered by an electric

motor that draws current from

rechargeable storage batteries, fuel cells

or other sources of electric current and

also relies on a non-electric source of

power.

Electric Motor Vehicle means a motor

vehicle primarily powered by an electric

motor that draws current from

rechargeable storage batteries, fuel cells,

photovoltaic arrays, or other sources of

electric current and may include an

electric-hybrid vehicle.

Emergency motor vehicle means any

vehicle that is legally authorized by a
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10989

government authority to exceed the

speed limit to transport people and

equipment to and from situations in

which speed is required to save lives or

property, such as a rescue vehicle, fire

truck or ambulance.

Fleet means, except as provided by

§ 490.3, a group of 20 or more light duty

motor vehicles, used primarily in a

metropolitan statistical area or

consolidated metropolitan statistical

area, as established by the Bureau of the

Census as of December 31, 1992, with a

1980 Census population of more than

250,000 (listed in Appendix A to this

Subpart or in an annual notice in the

Federal Register), that are centrally

fueled or capable of being centrally

fueled, and are owned, operated, leased,

or otherwise controlled—

(1) By a person who owns, operates,

leases, or otherwise controls 50 or more

light duty motor vehicles within the

United States and its possessions and

territories;

(2) By any person who controls such

person;

(3) By any person controlled by such

person; and

(4) By any person under common

control with such person.

Law Enforcement Motor Vehicle

means any vehicle which is primarily

operated by a civilian or military police

officer or sheriff, or by personnel of the

Federal Bureau of Investigation, the

Drug Enforcement Administration, or

other agencies of the Federal

government, or by state highway patrols,

municipal law enforcement, or other

similar enforcement agencies, and

which is used for the purpose of law

enforcement activities including, but

not limited to, chase, apprehension,

surveillance, or patrol of people engaged

in or potentially engaged in unlawful

activities.

Lease means the use and control of a

motor vehicle for transportation

purposes pursuant to a rental contract or

similar arrangement with a term of 120

days or more.

Light Duty Motor Vehicle means a

light duty truck or light duty vehicle, as

such terms are defined under section

216(7) of the Clean Air Act (42 U.S.C.

§ 7550(7)), having a gross vehicle weight

rating of 8,500 pounds or less.

Model Year means the period from

September 1 of the previous calendar

year through August 31.

Motor Vehicle has the meaning given

such term under section 216(2) of the

Clean Air Act (42 U.S.C. 7550(2)).

Original Equipment Manufacturer

means a manufacturer that provides the

original design and materials for

assembly and manufacture of its

product.

Original Equipment Manufacturer

Vehicle means a vehicle engineered,

designed and produced by an Original

Equipment Manufacturer.

Person means any individual,

partnership, corporation, voluntary

association, joint stock company,

business trust, Governmental entity, or

other legal entity in the United States

except United States Government

entities.

Public Building means any closed

structure owned, leased, or controlled

by a state, or any instrumentality of a

state.

State means any of the 50 States, the

District of Columbia, the

Commonwealth of Puerto Rico, and any

other territory or possession of the

United States.

§ 490.3 Excluded vehicles.

When counting light duty motor

vehicles for the purpose of determining

under this part whether a person has a

fleet or whether acquisitions are for

addition to a fleet, the following

vehicles are excluded—

(a) Motor vehicles held for lease or

rental to the general public, including

vehicles that are owned or controlled

primarily for the purpose of short-term

rental or extended-term leasing, without

a driver, pursuant to a contract;

(b) Motor vehicles held for sale by

motor vehicle dealers, including

demonstration motor vehicles;

(c) Motor vehicles used for motor

vehicle manufacturer product

evaluations or tests, including but not

limited to, light duty motor vehicles

owned or held by a university research

department, independent testing

laboratory, or other such evaluation

facility, solely for the purpose of

evaluating the performance of such

vehicle for engineering, research and

development or quality control reasons;

(d) Law enforcement vehicles;

(e) Emergency motor vehicles;

(f) Motor vehicles acquired and used

for purposes that the Secretary of

Defense has certified to DOE must be

exempt for national security reasons;

(g) Nonroad vehicles, including farm

and construction motor vehicles; and

(h) Motor vehicles which under

normal operations are garaged at

personal residences at night.

§ 490.4 General information inquiries.

DOE responses to inquiries with

regard to the provisions of this part that

are not filed in compliance with

§§ 490.5 or 490.6 of this part constitute

general information and the responses

provided shall not be binding on DOE.

§ 490.5 Requests for an interpretive ruling.

(a) Right to file. Any person who is or

may be subject to this part shall have

the right to file a request for an

interpretive ruling on a question with

regard to how the regulations apply to

particular facts and circumstances.

(b) How to file. A request for an

interpretive ruling shall be filed—

(1) With the Assistant Secretary;

(2) In an envelope labeled ‘‘Request

for Interpretive Ruling under 10 CFR

Part 490;’’ and

(3) By messenger or mail at the Office

of Energy Efficiency and Renewable

Energy, EE–33, U.S. Department of

Energy, 1000 Independence Avenue,

S.W., Washington, D.C. 20585 or at such

other address as DOE may provide by

notice in the Federal Register.

(c) Content of request for interpretive

ruling. At a minimum, a request under

this section shall—

(1) Be in writing;

(2) Be labeled ‘‘Request for

Interpretive Ruling Under 10 CFR Part

490;’’

(3) Identify the name, address,

telephone number, and any designated

representative of the person requesting

the interpretive ruling;

(4) State the facts and circumstances

relevant to the request;

(5) Be accompanied by copies of

relevant supporting documents, if any;

(6) Specifically identify the pertinent

regulations and the related question on

which an interpretive ruling is sought

with regard to the relevant facts and

circumstances; and

(7) Contain any arguments in support

of the terms of an interpretation the

requester is seeking.

(d) Public comment. DOE may give

public notice of any request for an

interpretive ruling and invite public

comment.

(e) Opportunity to respond to public

comment. DOE may provide an

opportunity for any person who

requested an interpretive ruling to

respond to public comments.

(f) Other sources of information. DOE

may—

(1) Conduct an investigation of any

statement in a request;

(2) Consider any other source of

information in evaluating a request for

an interpretive ruling; and

(3) Rely on previously issued

interpretive rulings dealing with the

same or a related issue.

(g) Informal conference. DOE, on its

own initiative, may convene an informal

conference with the person requesting

an interpretive ruling.

(h) Effect of an interpretive ruling.

The authority of an interpretive ruling

shall be limited to the person requesting
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such ruling and shall depend on the

accuracy and completeness of the facts

and circumstances on which the

interpretive ruling is based. An

interpretive ruling by the Assistant

Secretary shall be final for DOE.

(i) Reliance on an interpretive ruling.

No person who obtains an interpretive

ruling under this section shall be subject

to an enforcement action for civil

penalties or criminal fines for actions

reasonably taken in reliance thereon,

but a person may not act in reliance on

an interpretive ruling that is

administratively rescinded or modified,

judicially invalidated, or its prospective

effect is overruled by statute or

regulation.

(j) Denials of requests for an

interpretive ruling. DOE shall deny a

request for an interpretive ruling if DOE

determines that—

(1) There is insufficient information

upon which to base an interpretive

ruling;

(2) The questions posed should be

treated in a general notice of proposed

rulemaking under 42 U.S.C. 7191 and 5

U.S.C. 553(e);

(3) There is an adequate procedure

elsewhere in this part for addressing the

question posed, such as a petition for

exemption; or

(4) For other good cause.

(k) Public file. From time to time, DOE

may file a copy of an interpretive ruling

in a public file labeled ‘‘Interpretive

Rulings Under 10 CFR Part 490’’ which

shall be available during normal

business hours for public inspection at

the DOE Freedom of Information

Reading Room at 1000 Independence

Avenue, SW, Washington, DC 20585, or

at such other addresses as DOE may

announce in a Federal Register notice.

§ 490.6 Petitions for generally applicable

rulemaking.

(a) Right to file. Pursuant to 42 U.S.C.

7191 and 5 U.S.C. 553(e), any person

may file a petition for generally

applicable rulemaking under titles III,

IV, and V of the Act with the DOE

General Counsel.

(b) How to file. a petition for generally

applicable rulemaking under this

section shall be filed by mail or

messenger in an envelope address to the

Office of General Counsel, GC–1, U.S.

Department of Energy, 1000

Independence Avenue, S.W.,

Washington, D.C. 20585.

(c) Content of rulemaking petitions. A

petition under this section must—

(1) Be labeled ‘‘Petition for

Rulemaking Under 10 CFR Part 490’’;

(2) Describe with particularity the

terms of the rule being sought;

(3) Identify the provisions of law that

direct, authorize, or affect the issuance

of the rules being sought; and

(4) Explain why DOE should not

choose to make policy by precedent

through interpretive rulings, petitions

for exemption, or other adjudications.

(d) Determination upon rulemaking

petitions. After considering the petition

and other information deemed to be

appropriate, DOE may grant the petition

and issue an appropriate rulemaking

notice, or deny the petition because the

rule being sought—

(1) Would be inconsistent with

statutory law;

(2) Would establish a generally

applicable policy that should be left to

case-by-case determinations;

(3) Would establish a policy

inconsistent with the underlying

statutory purposes; or

(4) For other good cause.

§ 490.7 Relationship to other law.

Nothing in this part shall be

construed to require or authorize

acquisition of, or conversion to, light

duty alternative fueled motor vehicles

in violation of applicable regulations of

the U.S. Environmental Protection

Agency, U.S. Department of

Transportation, or any State or local

government agency.

Appendix A To Subpart A of Part 490

Metropolitan Statistical Areas/

Consolidated Metropolitan Statistical Areas

With 1980 Populations of 250,000 or more

Albany-Schenectady-Troy MSA NY

Albuquerque MSA NM

Allentown-Bethlehem-Easton MSA PA

Appleton-Oshkosh-Neenah MSA WI

Atlanta MSA GA

Augusta-Aiken MSA GA-SC

Austin-San Marcos MSA TX

Bakersfield MSA CA

Baton Rouge MSA LA

Beaumont-Port Arthur MSA TX

Binghamton MSA NY

Birmingham MSA AL

Boise City MSA ID

Boston-Worcester-Lawrence CMSA MA-NHME-CT

Buffalo-Niagara Falls MSA NY

Canton-Massillon MSA OH

Charleston MSA SC

Charleston MSA WV

Charlotte-Gastonia-Rock Hill MSA NC-SC

Chattanooga MSA TN-GA

Chicago-Gary-Kenosha CMSA IL-IN-WI

Cincinnati-Hamilton CMSA OH-KY-IN

Cleveland-Akron CMSA OH

Colorado Springs MSA CO

Columbia MSA SC

Columbus MSA OH

Columbus MSA SC-GA-AL

Corpus Christi MSA TX

Dallas-Fort Worth CMSA TX

Davenport-Moline-Rock Island MSA IA-IL

Dayton-Springfield MSA OH

Daytona Beach MSA FL

Denver-Boulder-Greeley CMSA CO

Des Moines MSA IA

Detroit-Ann Arbor-Flint CMSA MI

El Paso MSA TX

Erie MSA PA

Eugene-Springfield MSA OR

Evansville-Henderson MSA IN-KY

Fort Wayne MSA IN

Fresno MSA CA

Grand Rapids-Muskegon-Holland MSA MI

Greensboro-Winston Salem-High Point MSA

NC

Greenville-Spartanburg-Anderson MSA SC

Harrisburg-Lebanon-Carlisle MSA PA

Hartford MSA CT

Hickory-Morganton MSA NC

Honolulu MSA HI

Houston-Galveston-Brazoria CMSA TX

Huntington-Ashland MSA WV-KY-OH

Indianapolis MSA IN

Jackson MSA MS

Jacksonville MSA FL

Johnson City-Kingsport-Bristol MSA TN-VA

Kansas City MSA MO-KS

Knoxville MSA TN

Lakeland-Winter Haven MSA FL

Lancaster MSA PA

Lansing-East Lansing MSA MI

Las Vegas MSA NV-AZ

Lexington MSA KY

Little Rock-N. Little Rock MSA AR

Los Angeles-Riverside-Orange County CMSA

CA

Louisville MSA KY-IN

Macon MSA GA

Madison MSA WI

McAllen-Edinburg-Mission MSA TX

Melbourne-Titusville-Palm Bay MSA FL

Memphis MSA TN-AR-MS

Miami-Fort Lauderdale CMSA FL

Milwaukee-Racine CMSA WI

Minneapolis-St. Paul MSA MN-WI

Mobile MSA AL

Modesto MSA CA

Montgomery MSA AL

Nashville MSA TN

New London-Norwich MSA CT-RI

New Orleans MSA LA

New York-N. New Jersey-Long Island CMSA

NY-NJ-CT-PA

Norfolk-Virginia Beach-Newport News MSA

VA-NC

Oklahoma City MSA OK

Omaha MSA NE-IA

Orlando MSA FL

Pensacola MSA FL

Peoria-Pekin MSA IL

Philadelphia-Wilmington-Atlantic City

CMSA PA-NJ DE-MD

Phoenix-Mesa MSA AZ

Pittsburgh MSA PA

Portland-Salem CMSA OR-WA

Providence-Fall River-Warwick MSA RI-MA

Raleigh-Durham-Chapel Hill MSA NC

Reading MSA PA

Richmond-Petersburg MSA VA

Rochester MSA NY

Rockford MSA IL

Sacramento-Yolo CMSA CA

Saginaw-Bay City-Midland MSA MI

St. Louis MSA MO–IL

Salinas MSA CA

Salt Lake City-Ogden MSA UT

San Antonio MSA TX

San Diego MSA CA

San Francisco-Oakland-San Jose CMSA CA
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10991

San Juan MSA PR

Santa Barbara-Santa Maria-Lompoc MSA CA

Scranton-Wilkes Barre-Hazleton MSA PA

Seattle-Tacoma-Bremerton CMSA WA

Shreveport-Bossier City MSA LA

Spokane MSA WA

Springfield MSA MA

Stockton-Lodi MSA CA

Syracuse MSA NY

Tampa-St. Petersburg-Clearwater MSA FL

Toledo MSA OH

Tucson MSA AZ

Tulsa MSA OK

Utica-Rome MSA NY

Washington-Baltimore CMSA DC–MD–VA–

WV

West Palm Beach-Boca Raton MSA FL

Wichita MSA KS

York MSA PA

Youngstown-Warren MSA OH

Subpart B—[Reserved]

Subpart C—Mandatory State Fleet

Program

§ 490.200 Purpose and scope.

This subpart sets forth rules

implementing the provisions of Section

507(o) of the Act which requires, subject

to some exemptions, that certain

percentages of new light duty motor

vehicles acquired for state fleets be

alternative fueled vehicles.

§ 490.201 Alternative fueled vehicle

acquisition mandate schedule.

(a) Except as otherwise provided in

this subpart, beginning with model year

1996, the following percentages of new

light duty motor vehicles acquired

annually for state government fleets,

including agencies thereof but

excluding municipal fleets, shall be

alternative fueled vehicles;

(1) 10 percent of the vehicles acquired

in model year 1996;

(2) 15 percent of the vehicles acquired

in model year 1997;

(3) 25 percent of the vehicles acquired

in model year 1998;

(4) 50 percent of the vehicles acquired

in model year 1999; and

(5) 75 percent of the vehicles acquired

in model year 2000 and thereafter.

(b) Each State shall calculate its

alternative fueled vehicle acquisition

requirements for the state government

fleets, including agencies thereof, by

applying the alternative fueled vehicle

acquisition percentages for each model

year to the total number of new light

duty motor vehicles to be acquired

during that model year for those fleets.

(c) If, when the mandated acquisition

percentage of alternative fueled vehicles

is applied to the number of light duty

motor vehicles to be acquired by a fleet

subject to this subpart, a number results

that requires the acquisition of a partial

vehicle, an adjustment to the acquisition

number will be made by rounding the

number of vehicles up to the next whole

number.

§ 490.202 Acquisitions satisfying the

mandate.

In addition to the use of alternative

fueled vehicle credits under subpart F of

this part, the following actions within a

model year qualify as acquisitions that

count toward compliance with the new

light duty alternative fueled vehicle

mandates by State fleets:

(a) The purchase or lease of an

Original Equipment Manufacturer

vehicle, (regardless of model year of

manufacture), capable of operating on

alternative fuels that was not previously

in service in the fleet; or

(b) The purchase or lease of an aftermarket converted vehicle (regardless of

model year of manufacture), that was

not previously in service in the fleet; or

(c) The conversion of a newly

purchased Original Equipment

Manufacturer Vehicle (regardless of the

model year of manufacture) to operate

on alternative fuels prior to its first use

in service.

§ 490.203 Light Duty Alternative Fueled

Vehicle Plan.

(a) General provisions. (1) In lieu of

meeting its acquisition requirements

under § 490.201 exclusively through

State-owned vehicles, a State may

follow a Light Duty Alternative Fueled

Vehicle Plan approved by DOE under

this section.

(2) Unless a fleet is exempt under

§ 490.204, a State which does not have

an approved plan in effect under this

section will be subject to the State fleet

acquisition percentage requirements of

§ 490.201.

(3) In the event that a significant

commitment under an approved plan is

not met by a participant of a plan, the

State shall meet its percentage

requirements under § 490.201 or submit

to DOE an amendment to the plan for

DOE approval.

(4) Only voluntary acquisitions or

conversions, or combinations thereof, by

state, local, and private fleets may be

used to meet the State’s alternative fuel

vehicle acquisition requirement under

the plan.

(5) Any acquisitions or conversions of

light duty alternative fueled vehicles by

fleets within the State may be included

within the plan, irrespective of whether

the vehicles are in excluded categories

in the definition of fleet set forth in

§ 490.2 of this part.

(b) Required elements of a plan. Each

plan must include the following

elements:

(1) Certification by the Governor, or

the Governor’s designee, that the plan

meets the requirements of this subpart;

(2) Identification of state, local and

private fleets that will participate in the

plan;

(3) Number of new alternative fueled

vehicles per plan participant, either

through conversion or acquisition;

(4) A written statement from each

plan participant to assure commitment;

(5) A statement of contingency

measures by the State to offset any

failure to fulfill significant

commitments by plan participants, in

order to meet the requirements of

§ 490.201;

(6) A provision by the State to

monitor and verify implementation of

the plan;

(7) A provision certifying that all

acquisitions and conversions under the

plan are voluntary and will meet the

requirements of § 247 of the Clean Air

Act, as amended (42 U.S.C. § 7587) and

all applicable safety requirements.

(c) When to submit plan. Beginning

with model year 1996, any State

wishing to submit a plan under this

section must do so no later than June 1

prior to the model year covered by such

plan.

(d) Review and approval. DOE shall

review and approve a plan which meets

the requirements of this subpart and is

designed to achieve at a minimum, the

same number of alternative fueled

vehicle acquisitions or conversions as

would be required under § 490.201

within 60 days of the date of receipt of

the plan by DOE at the address in

paragraph (h)(1) of this section.

(e) Disapproval of plans. If DOE

disapproves or requests a State to

submit additional information, the State

may revise and resubmit the plan to

DOE within a reasonable time. States,

however, must comply with § 490.201

until such time as the plan is approved.

(f) How a State may modify an

approved plan. If a State determines

that it cannot successfully implement its

plan, it may submit to DOE for approval,

at any time, the proposed modifications

with adequate justifications. Until the

modifications are approved, the State

must comply with § 490.201.

(g) Where to submit plans. (1) A State

shall submit to DOE an original and two

copies of the plan and shall be

addressed to the U.S. Department of

Energy, Office of Energy Efficiency and

Renewable Energy, EE–33, 1000

Independence Ave., SW, Washington,

DC 20585.

(2) Any requests for modifications

shall also be sent to the address in

paragraph (g)(1) of this section.
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§ 490.204 Process for granting

exemptions.

(a) To obtain an exemption, in whole

or in part, from the vehicle mandates of

this subpart, a State shall submit to DOE

a written request for exemption, along

with supporting documentation which

demonstrates that—

(1) Alternative fuels that meet the

normal requirements and practices of

the principal business of the state fleet

are not available in the area where the

vehicles are to be operated; or

(2) Alternative fueled vehicles that

meet the normal requirements and

practices of the principal business of the

state fleet are not reasonably available

for acquisition because they are not

offered for sale or lease commercially on

reasonable terms and conditions in any

of the States; or

(3) The application of such

requirements would pose an

unreasonable financial hardship.

(b) Requests for exemption may be

submitted on an ongoing basis and must

be accompanied with supporting

documentation.

(c) DOE shall grant exemptions for

one model year only, and they may be

renewed annually if supporting

documentation is provided.

(d) If a State is seeking an exemption

under—

(1) Paragraph (a)(1) of this section, the

types of documentation that are to

accompany the request must include,

but are not limited to, maps of vehicle

operation zones and maps of locations

providing alternative fuel; or

(2) Paragraph (a)(2) of this section, the

types of documentation that are to

accompany the request must include,

but are not limited to, alternative fueled

vehicle purchase or lease requests, a

listing of vehicles that meet the normal

practices and requirements of the State

fleet and any other documentation that

exhibits good faith efforts at acquiring

alternative fueled vehicles; or

(3) Paragraph (a)(3) of this section, it

must submit a statement identifying

what portion of the alternative fueled

vehicle acquisition requirement should

be subject to the exemption and

describing the specific nature of the

financial hardship that precludes

compliance.

(e) Requests for exemption shall be

addressed to the U.S. Department of

Energy, Office of Energy Efficiency and

Renewable Energy, EE–33, 1000

Independence Ave., SW, Washington,

DC 20585, or to such other address as

DOE may announce in a Federal

Register notice.

(f) The Assistant Secretary shall

provide to the State within 30 days a

written determination as to whether the

State’s request has been granted or

denied.

(g) If the Assistant Secretary denies an

exemption, in whole or in part, and the

State wishes to exhaust administrative

remedies, the State must appeal within

30 days of the date of the determination,

pursuant to 10 CFR part 205, subpart D,

to the Office of Hearings and Appeals,

U. S. Department of Energy, 1000

Independence Ave., SW, Washington,

DC 20585. The Assistant Secretary’s

determination shall be stayed during the

pendency of an appeal under this

paragraph.

§ 490.205 Reporting requirements.

(a) Any State subject to the

requirements of this subpart must

submit a report on or before the

December 31 after the close of the model

year, beginning with model year 1996.

(b) The report shall include the

following information:

(1) Number of new light duty motor

vehicles acquired by a state during the

model year;

(2) Number of new light duty

alternative fueled vehicles that must be

acquired in the model year;

(3) Number of new light duty

alternative fueled vehicles acquired by a

State during the model year;

(4) Number of alternative fueled

vehicle credits transferred to or from the

State during the model year;

(5) Number of alternative fueled

vehicle credits applied against

acquisition requirements;

(6) For each new light duty alternative

fueled vehicle acquired—

(i) Vehicle make and model;

(ii) Model year; and

(iii) Vehicle identification number;

(7) Number of light duty alternative

fueled vehicles acquired by municipal

and private fleets during the model year

under an approved Light Duty

Alternative Fueled Vehicle Plan (if

applicable).

(c) If credits are applied against

vehicle acquisition requirements, then a

credit activity report, as described in

subpart F of this part, must be submitted

with the report under this section.

(d) Records shall be maintained and

retained for a period of three years from

the start of this program.

(e) All reports, marked ‘‘Annual

Report,’’ shall be sent to the Office of

Energy Efficiency and Renewable

Energy, U.S. Department of Energy, EE–

33, 1000 Independence Ave., SW,

Washington, DC, 20585, or such other

address as DOE may provide by notice

in the Federal Register.

§ 490.206 Violations.

Violations of this subpart are subject

to investigation and enforcement under

subpart G of this part.

Subpart D—Alternative Fuel Provider

Vehicle Acquisition Mandate

§ 490.300 Purpose and Scope.

This subpart implements section 501

of the Act, which requires, subject to

some exemptions, that certain annual

percentages of newly acquired light

duty motor vehicles acquired by

alternative fuel providers must be

alternative fueled vehicles.

§ 490.301 Definitions.

In addition to the definitions found in

§ 490.2, the following definitions apply

to this subpart—

Affiliate means a person that, directly

or indirectly, controls, is controlled by,

or is under common ownership or

control of the subject person.

Alternative Fuels Business means

activities undertaken to derive revenue

from—

(1) Producing, storing, refining,

processing, transporting, distributing,

importing, or selling at wholesale or

retail any alternative fuel other than

electricity; or

(2) Generating, transmitting,

importing, or selling at wholesale or

retail electricity.

Business unit means a semiautonomous major grouping of activities

for administrative purposes and

organizational structure within a

business entity.

Division means a major administrative

unit of an enterprise comprising at least

several enterprise units or constituting a

complete integrated unit for a specific

purpose.

Normal Requirements and Practices

means the operating business practices

and required conditions under which

the principal business of the covered

person operates.

Principal Business means the salesrelated activity that produces the

greatest gross revenue.

Substantial Portion means that at least

2 percent of a covered person’s refinery

yield of petroleum products is

composed of alternative fuels.

Substantially Engaged means that a

covered person, or affiliate, division, or

other business unit thereof, regularly

derives sales-related gross revenue from

an alternative fuels business.

§ 490.302 Vehicle acquisition mandate

schedule.

(a) Except as provided in § 490.304 of

this part, of the light duty motor

vehicles newly acquired by a covered
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10993

person described in § 490.303 of this

part, the following percentages shall be

alternative fueled vehicles for the

following model years:

(1) 30 percent for model year 1996.

(2) 50 percent for model year 1997.

(3) 70 percent for model year 1998.

(4) 90 percent for model year 1999

and thereafter.

(b) Except as provided in § 490.304 of

this part, this acquisition schedule

applies to all light duty motor vehicles

that a covered person newly acquires for

use within the United States.

(c) If, when the mandated acquisition

percentage of alternative fuel vehicles is

applied to the number of new light duty

motor vehicles to be acquired by a

covered person subject to this subpart,

a number results that requires the

acquisition of a partial vehicle, an

adjustment will be made to the required

acquisition number by rounding up the

number of vehicles to the next whole

number.

(d) Only acquisitions satisfying the

mandate, as defined by § 490.305, and

use of alternative fueled vehicle credits

acquired under subpart F of this part

count toward compliance with the

acquisition schedule in paragraph (a) of

this section.

§ 490.303 Who must comply.

(a) Except as provided by paragraph

(b) of this section a covered person must

comply with the requirements of this

subpart if that person is—

(1) A covered person whose principal

business is producing, storing, refining,

processing, transporting, distributing,

importing or selling at wholesale or

retail any alternative fuel other than

electricity;

(2) A covered person whose principal

business is generating, transmitting,

importing, or selling, at wholesale or

retail, electricity; or

(3) A covered person—

(i) Who produces, imports, or

produces and imports in combination,

an average of 50,000 barrels per day or

more of petroleum; and

(ii) A substantial portion of whose

business is producing alternative fuels.

(b) This subpart does not apply to a

covered person whose principal

business is—

(1) transforming alternative fuels into

a product that is not an alternative fuel;

or

(2) consuming alternative fuels as a

feedstock or fuel in the manufacture of

a product that is not an alternative fuel.

§ 490.304 Which new light duty motor

vehicles are covered.

(a) General rule. Except as provided in

paragraph (b) of this section, the vehicle

acquisition mandate schedule in

§ 490.302 of this part applies to all new

light duty motor vehicles acquired by a

covered person described in § 490.303

of this part.

(b) Exception. If a covered person has

more than one affiliate, division, or

other business unit, then § 490.302 of

this part only applies to new light duty

motor vehicles acquired by an affiliate,

division, or other such business unit—

(1) Which is substantially engaged in

the alternative fuels business; but

(2) This subpart does not apply to the

vehicles of an affiliate, division, or other

business unit whose principal business

is either transforming alternative fuels

into a product that is not an alternative

fuel or consumes alternative fuel as a

feedstock or fuel in the manufacture of

a product that is not an alternative fuel.

§ 490.305 Acquisitions satisfying the

mandate.

In addition to the use of alternative

fueled vehicle credits under subpart F of

this part, the following actions within

the model year qualify as acquisitions

for the purpose of compliance with the

requirements of § 490.302 of this part—

(a) The purchase or lease of an

Original Equipment Manufacturer

vehicle (regardless of the model year of

manufacture), capable of operating on

alternative fuels that was not previously

under the control of the covered person;

or

(b) The purchase or lease of an aftermarket converted vehicle (regardless of

the model year of manufacture), that

was not previously under the control of

the covered person; or

(c) The conversion of a newly

acquired Original Equipment

Manufacturer vehicle (regardless of the

model year of manufacture) to operate

on alternative fuels prior to its first use

in service.

§ 490.306 Vehicle operation requirements.

The alternative fueled vehicles

acquired pursuant to § 490.302 of this

part shall be operated solely on

alternative fuels, except when these

vehicles are operating in an area where

the appropriate alternative fuel is

unavailable.

§ 490.307 Option for electric utilities.

(a) A covered person whose principal

business is generating, transmitting,

importing, or selling, at wholesale or

retail, electricity has the option of

delaying the vehicle acquisition

mandate schedule in § 490.302 until

January 1, 1998, if the covered person

intends to comply with this regulation

by acquiring electric motor vehicles.

(b) Notification Date. If an electric

utility intends to use the option under

this section, the electric utility must

notify the Department of its intent to do

so. The notification must be postmarked

no later than December 31, 1995 and

must be sent to the Office of Energy

Efficiency and Renewable Energy, EE–

33, 1000 Independence Avenue, S.W.,

Washington, D.C. 20585 or such other

addresses as DOE may provide in a

Federal Register notice.

(c) If a covered person whose

principal business is generating,

transmitting, importing, or selling at

wholesale or retail electricity has

notified the Department by December

31, 1995, of their intent to acquire

electric motor vehicles, the following

percentages of new light duty motor

vehicles acquired shall be alternative

fueled vehicles for the following model

years:

(1) 30 percent for model year 1998.

(2) 50 percent for model year 1999.

(3) 70 percent for model year 2000.

(4) 90 percent for model year 2001

and thereafter.

§ 490.308 Process for granting

exemptions.

(a) To obtain an exemption from the

vehicle acquisition mandate in

§ 490.302 of this part, a covered person,

or its affiliate, division, or business unit

which is subject to § 490.302 of this

part, shall submit a written request for

exemption to the Office of Energy

Efficiency and Renewable Energy, U.S.

Department of Energy, EE–33, 1000

Independence Ave., SW, Washington,

DC 20585, or such other address as DOE

may publish in the Federal Register,

along with supporting documentation

which demonstrates that—

(1) Alternative fuels that meet the

normal requirements and practices of

the principal business of that person are

not available in the area where the

vehicles are to be operated; or

(2) Alternative fueled vehicles that

meet the normal requirements and

practices of the principal business of

that person are not offered for purchase

or lease commercially on reasonable

terms and conditions in the United

States.

(b) Documentation

(1) If a covered person is seeking an

exemption under paragraph (a)(1) of this

section, the types of documentation that

are to accompany the request include,

but are not limited to, maps of vehicle

operation zones and maps of locations

providing alternative fuel.

(2) If a covered person is seeking an

exemption under paragraph (a)(2) of this

section, the types of documentation that

are to accompany the request include,

but are not limited to, alternative fueled

vehicle purchase requests, a listing of
10994 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules

vehicles that meet the normal practices

and requirements of the covered person

and any other documentation that

exhibits good faith efforts at acquiring

alternative fueled vehicles.

(c) Except as provided by paragraph

(e) of this section, exemption

determination shall be made in a letter

ruling by the Assistant Secretary.

(d) Exemptions are granted for one

model year only and may be renewed,

if supporting documentation is

provided, annually.

(e) Exemption determinations are

binding for the covered person only and

cannot be used to set precedent for other

exemption requests.

(f) If a covered person is denied an

exemption and believes that it meets the

criteria established in paragraph (a) of

this section, that covered person may

file a request for relief with the Office

of Hearings and Appeals, U.S.

Department of Energy, 1000

Independence Ave, SW, Washington,

DC 20585.

(g) Requests for relief will be

processed utilizing the procedures

codified at 10 CFR part 205, Subpart D.

§ 490.309 Annual reporting requirements.

(a) If a person is required to comply

with the vehicle acquisition mandate

schedule in § 490.302 or § 490.307, that

person shall file an annual report under

this section, on a form obtainable from

DOE, with the Office of Energy

Efficiency and Renewable Energy, U.S.

Department of Energy, EE–33, 1000

Independence Ave., SW, Washington,

DC 20585, or such other address as DOE

may publish in the Federal Register, on

or before the December 31 after the close

of the model year beginning with model

year 1996.

(b) This report shall include the

following information—

(1) Number of new light duty motor

vehicles acquired in the United States

during the model year;

(2) Number of new light duty

alternative fueled vehicles that are

required to be acquired;

(3) Number of new light duty

alternative fueled vehicles acquired in

the United States during the model year;

(4) Number of alternative fueled

vehicle credits transferred to or from a

covered person during the model year;

(5) Number of alternative fueled

vehicle credits applied against

acquisition requirements;

(6) For each new light duty alternative

fueled vehicle acquired—

(i) Vehicle make and model;

(ii) Model year; and

(iii) Vehicle Identification Number.

(c) If credits are applied against

alternative fueled vehicle acquisition

requirements, as reported in the annual

report, then a credit activity report, as

described in subpart F, must be

submitted with this report to DOE.

(d) Records shall be maintained and

retained for a period of three years.

§ 490.310 Violations.

Violations of this subpart are subject

to investigation and enforcement under

subpart G of this part.

Subpart E [Reserved]

Subpart F—Alternative Fuel Vehicle

Credit Program

§ 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 who

acquire alternative fueled vehicles in

excess of the number they are required

or obtain alternative fuel vehicles prior

to the date when they are required to do

so under this part.

§ 490.501 Applicability.

This subpart applies to all fleets and

covered persons who are required to

acquire alternative fuel vehicles by this

Part.

§ 490.502 Creditable actions.

A fleet or covered person becomes

entitled to alternative fuel vehicle

credits by—

(a) Acquiring alternative fuel vehicles

that qualify under § 490.305 and

§ 490.202, as applicable, in excess of the

number that fleet or covered person is

required to acquire in a model year

when acquisition requirements apply; or

(b) Acquiring alternative fueled

vehicles in model years prior to the

model year when that fleet or covered

person is first required to acquire

alternative fueled vehicles.

§ 490.503 Credit allocation.

(a) Based on annual credit activity

report information, as described in

§ 490.507 of this part, DOE shall allocate

one credit for each alternative fueled

vehicle a fleet or covered person

acquires that exceeds the number of

alternative fueled vehicles that fleet or

person is required to acquire in a model

year when acquisition requirements

apply; or

(b) In the event that an alternative

fueled vehicle is acquired by a fleet or

covered person in a model year prior to

the model year when acquisition

requirements first apply, 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 paragraphs

(a) or (b) of this section for alternative

fueled vehicles acquired after October

24, 1992.

§ 490.504 Use of alternative fueled vehicle

credits.

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 a light duty alternative

fueled vehicle that is counted in

determining compliance with specific

annual alternative fueled vehicle

acquisition requirements of this part.

§ 490.505 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 or

covered person an annual credit account

balance statement after the receipt of its

credit activity report under § 490.507.

§ 490.506 Alternative fueled vehicle credit

transfers.

(a) Any fleet which is required to

acquire alternative fueled vehicles may

transfer an alternative fueled vehicle

credit to—

(1) Any other fleet which is required

to acquire alternative fueled vehicles.

(2) An alternative fuel provider which

is a covered person, if the fleet provides

certification to the covered person that

the credit represents a vehicle that

operates solely on alternative fuel.

(b) Any alternative fuel provider

which is a covered person required to

acquire alternative fueled vehicles may

transfer its alternative fueled vehicle

credits to any other fleet or covered

person required to acquire alternative

fueled vehicles.

(c) Proof of credit transfer may be on

a form provided by DOE, or otherwise

in writing, including dated signatures of

the transferor and transferee. The proof

should be received by DOE within 7

days of the transfer date to the Office of

Energy Efficiency and Renewable

Energy, U.S. Department of Energy, EE–

33, 1000 Independence Ave, SW,

Washington, DC 20585 or such other

address as may be provided by notice in

the Federal Register.

§ 490.507 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 December 31 after the

close of a model year to the Office of

Energy Efficiency and Renewable
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Proposed Rules 10995

Energy, U.S. Department of Energy, EE–

33, 1000 Independence Ave, SW,

Washington, DC 20585 or other such

address as DOE may publish in the

Federal Register.

(b) Included in this report should be

the following information:

(1) Number of new light duty motor

vehicles acquired;

(2) Number of new light duty

alternative fueled vehicles acquired;

(3) Number of alternative fueled

vehicles that are required to be

acquired;

(4) Number of alternative fueled

vehicle credits requested for:

(i) alternative fueled vehicles acquired

in excess of required acquisition

number; and

(ii) alternative fueled vehicles

acquired in model year prior to model

year in which alternative fueled vehicle

acquisition requirements first apply;

(5) Purchase of alternative fueled

vehicle credits:

(i) Credit source; and

(ii) Date of Purchase;

(6) Sale of alternative fueled vehicle

credits:

(i) Credit purchaser; and

(ii) Date of Sale.

Subpart G—Investigations and

Enforcement

§ 490.600 Purpose and scope.

This subpart sets forth the rules

applicable to investigations under titles

III, IV, V, and VI of the Act and to

enforcement of section 501, 503(b), 507

or 508 of the Act, or any regulation

issued under such sections.

§ 490.601 Powers of the Secretary.

For the purpose of carrying out titles

III, IV, V, and VI of the Act, DOE may

hold such hearings, take such

testimony, sit and act at such times and

places, administer such oaths, and

require by subpena the attendance and

testimony of such witnesses the

production of such books, papers,

correspondence, memoranda, contracts,

agreements, or other records as the

Secretary of Transportation is

authorized to do under section 505(b)(1)

of the Motor Vehicle Information and

Cost Savings Act (15 U.S.C.

§ 2005(b)(1)).

§ 490.602 Special orders.

(a) DOE may require by general or

special orders that any person—

(1) File, in such form as DOE may

prescribe, reports or answers in writing

to specific questions relating to any

function of DOE under this part; and

(2) Provide DOE access to (and for the

purpose of examination, the right to

copy) any documentary evidence of

such person which is relevant to any

function of DOE under this part.

(b) File under oath any reports and

answers provided under this section or

as otherwise prescribed by DOE, and file

such reports and answers with DOE

within such reasonable time and at such

place as DOE may prescribe.

§ 490.603 Prohibited acts.

It is unlawful for any person to violate

any provision of section 501, 503(b), or

507 of the Act, or any regulations issued

under such sections.

§ 490.604 Penalties and Fines.

(a) Civil penalties. Whoever violates

§ 490.603 of this part shall be subject to

a civil penalty of not more than $5,000

for each violation.

(b) Willful violations. Whoever

willfully violates § 490.603 of this part

shall pay a criminal fine of not more

than $10,000 for each violation.

(c) Repeated violations. Any person

who knowingly and willfully violates

§ 490.603 of this part, after having been

subjected to a civil penalty for a prior

violation of § 490.603 shall pay a

criminal fine of not more than $50,000

for each violation.

§ 490.605 Statement of enforcement

policy.

DOE may agree not to commence an

enforcement proceeding, or may agree to

settle an enforcement proceeding, if the

person agrees to come into compliance

in a manner satisfactory to DOE.

§ 490.606 Proposed assessments and

orders.

DOE may issue a proposed assessment

of, and order to pay, a civil penalty in

a written statement setting forth

supporting findings of violation of the

Act or a relevant regulation of this part.

The proposed assessment and order

shall be served on the person named

therein by certified mail, return-receipt

requested, and shall become final for

DOE if not timely appealed pursuant to

§ 490.607 of this part.

§ 490.607 Appeals.

(a) In order to exhaust administrative

remedies, on or before 30 days from the

date of issuance of a proposed

assessment and order to pay, a person

must appeal a proposed assessment and

order to the Office of Hearings and

Appeals, U.S. Department of Energy,

1000 Independence Avenue, SW,

Washington, DC 20585.

(b) Proceedings in the Office of

Hearings and Appeals shall be subject to

subpart H of 10 CFR part 205 except

that—

(1) Appellant shall have the ultimate

burden of persuasion;

(2) Appellant shall have right to a

trial-type hearing on contested issues of

fact only if the hearing officer concludes

that cross examination will materially

assist in determining facts in addition to

evidence available in documentary

form; and

(3) The Office of Hearings and

Appeals may issue such orders as it may

deem appropriate on all other

procedural matters.

(c) The determination of the Office of

Hearings and Appeals shall be final for

DOE.

[FR Doc. 95–4764 Filed 2–27–95; 8:45 am]

BILLING CODE 6450–01–P