[Federal Register Volume 60, Number 54 (Tuesday, March 21, 1995)]
[Proposed Rules]
[Pages 15020-15026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6792]




[[Page 15019]]

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Part III





Department of Energy





_______________________________________________________________________



Office of Energy Efficiency and Renewable Energy



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10 CFR Part 490



Alternative Fuel Transportation Program; Proposed Rule

  Federal Register / Vol. 60, No. 54 / Tuesday, March 21, 1995 / 
Proposed Rules   
[[Page 15020]] 

DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 490

[Docket No. EE-RM-95-110]


Alternative Fuel Transportation Program

AGENCY: Department of Energy (DOE).

ACTION: Notice of proposed rulemaking and public hearings.

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SUMMARY: The Department of Energy (DOE), Office of Energy Efficiency 
and Renewable Energy is proposing rules for implementation of the State 
and Local Incentives Program. Under this Program DOE may grant 
financial assistance to States for projects in DOE approved State plans 
to promote use of alternative fuels and alternative fueled vehicles.

DATES: Written comments (six copies and, if possible, a computer disk) 
on the proposed rule must be received by DOE on or before May 22, 1995. 
Oral views, data, and arguments may be presented at a public hearing 
which is scheduled as follows:

    1. May 1, 1995, 9 a.m., U.S. Department of Energy, Forrestal 
Building, Room 1E-245, 1000 Independence Avenue, SW, Washington, D.C.

    Requests to speak at the hearing should be received by DOE no later 
than 4 p.m. on April 27, 1995. The length of each oral presentation is 
limited to 10 minutes.

ADDRESSES: All written comments (six copies), and requests to speak at 
a public hearing, are to be submitted 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, 
telephone number (202) 586-3012.

    Copies of the hearing transcript 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 comment on this proposed rulemaking, see 
section III of this Notice.

FOR FURTHER INFORMATION CONTACT:

Frank Mallgrave, Office of Alternative Fuels, Office of Transportation 
Technologies, Energy Efficiency and Renewable Energy, Department of 
Energy, Mail Stop EE-33, 5G-086, Forrestal Building, 1000 Independence 
Avenue, SW, Washington, DC 20585, (202) 586-8077.
Vivian Lewis, Office of General Counsel, Energy Efficiency (GC-72), 
Department of Energy, Room 6B-256, Forrestal Building, 1000 
Independence Avenue, SW., Washington, DC 20585 (202) 586-9507.

    For information concerning the public hearings and procedures 
concerning written comments: Ms. 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. Review By Other Federal Agencies
XI. List of Subjects
XII. The Catalog of Federal Domestic Assistance

I. Introduction

    Pursuant to Title IV, section 409 of the Energy Policy Act of 1992 
(the Act) (Pub. L. 102-486), 42 U.S.C. 13235, this proposed rule will 
establish the State and Local Incentives Program, a financial 
assistance program, under which DOE will consider applications to 
support projects included in State plans. The proposed rule sets forth 
guidelines for participating States to follow in developing State 
plans. These plans will show how States intend to meet the Program's 
primary goals of accelerating the introduction and use of alternative 
fuels and substantial numbers of alternative fueled vehicles (AFV) by 
the year 2000. The proposed rule establishes grant application 
procedures and evaluation criteria. Participating States may also 
subaward to local government entities or the private sector to assist 
in the implementation of projects within an approved plan.
    At the beginning of each fiscal year, DOE will publish a notice in 
the Federal Register and send a letter and a copy of the notice to the 
Governor of each State announcing the availability of funds. These 
notices will invite each Governor to submit to DOE a State plan, or an 
amendment to a previously approved plan, and apply for financial 
assistance to carry out the plan.
    Pursuant to the Act, participating States must provide at least 20 
percent of the estimated cost of the activities under their program, 
although the selection criteria will reward proposals with higher 
levels of cost sharing. This minimum cost sharing requirement may be 
met with in-kind services and cost contributions by other public and 
private entities that commit to a State plan. Upon review and approval 
of the plan by DOE, Federal assistance may be provided to the State. 
This assistance may be in the form of grants of up to 80% of the costs 
of implementing a plan's project(s), information, and technical 
assistance.
    DOE will competitively evaluate proposed projects included in 
approved State plans against criteria described in this notice, 
including projected energy-related benefits, as measured by the amount 
of conventional motor fuel that may be displaced by the use of 
alternative fuels, and the projected number of registered alternative 
fueled vehicles as a percentage of all registered vehicles as of 
December 31, 2000. No State will receive more than one grant per year. 
A grant may, however, cover more than one project. No award shall 
exceed 10 percent of the total fiscal year funding for this program. 
All project periods must be consistent with the goals stated in a State 
plan and may not extend beyond the end of the year 2000.
    The Department has, in another notice of proposed rulemaking, 
published on February 28, 1995 (60 FR 10970), proposed to establish 
rules concerning alternative fueled vehicles in part 490 of title 10 of 
the Code of Federal Regulations. This proposed rule would add subpart B 
to the proposed part 490.

II. Section-By-Section Analysis

    This part of the Supplementary Information discusses those 
provisions of the proposed regulations that are not self-explanatory.

Proposed Section 490.101  Definitions

    Some of the terms used in this proposed rule will be defined in a 
general definition section for part 490 to be codified in 10 CFR 490.2. 
Those definitions are proposed in a Federal Register notice dated 
February 28, 1995.
    The proposed definition for ``life cycle'' is based on DOE's 
interpretation of the statutory provision which contains this phrase. 
Section 409(b)(2)(A) of the Act provides that in approving a State plan 
and determining the amount of financial assistance, if any, to be 
awarded, DOE must take into account, among other factors, an estimate 
of energy-related and environment-related impacts, on a life cycle 
basis, of the introduction and use of alternative fueled vehicles 
included in the State plan, compared to conventional motor vehicles. 
DOE is [[Page 15021]] proposing to define the ``life cycle'' of an 
alternative fueled vehicle as the time from the date the vehicle is 
registered by the State's motor vehicle agency as an alternative fueled 
vehicle, and ending when the vehicle is no longer registered as an 
alternative fueled vehicle. Because of the critical nature of a ``life 
cycle basis'' and how it will impact on the evaluation of State plans 
and the projects within the State plans, DOE invites comments on this 
definition.

Proposed Section 490.102  Who May Apply

    The proposed rule would require any application for financial 
assistance and State plan submission to be submitted by the chief 
executive of a State. Such submissions are optional to the States, but 
any submission must comply with the requirements of this subpart.

Proposed Section 490.103  When and Where To Apply

    The deadline date for submission of State plans to DOE may vary 
from year to year, depending upon the availability of funding. Normally 
funding is made available at the beginning of a fiscal year which 
commences October 1 of each year. Each year, after funding has been 
appropriated by Congress, DOE is proposing to announce the submission 
deadline in a Federal Register notice, and a letter to the Governor of 
each State, identifying the amount of funding available, as well as 
providing the address to which submissions may be sent.

Proposed Section 490.104  Content of State Plans

    In paragraph (a) of this section, DOE is proposing to require that 
the State plan include the name and description of the lead 
organization designated to be responsible for implementing the plan and 
administering any grant awarded. DOE needs this information to ensure 
that it will be dealing with the proper State authority.
    Paragraph (c) sets forth the primary goals of the Program which are 
to substantially increase, by the year 2000, the number of alternative 
fueled vehicles registered in the State and the number of alternative 
fuel refueling facilities licensed for operation. Each State plan must 
provide detailed descriptions as to how these goals are to be achieved.
    With the exception of proposed paragraph (d)(11), all of the 
mandatory analyses set forth in paragraph (d) are statutorily required.
    Paragraph (d)(5), which corresponds to section 409(a)(3)(E) of the 
Act, requires a State plan to describe how the State treats the sales 
of alternative fuels for use in alternative fueled vehicles. This 
information will be helpful to DOE in determining whether the State's 
methods of treating the sales of alternative fuels will actually 
increase the use of alternative fuels. If these methods are effective, 
DOE will share this information with all the States in an annual report 
which will be sent both to Congress and the Governor of each State.
    Proposed paragraph (d)(8) requires, consistent with section 
409(a)(3)(I) of the Act, that the plan identify any existing State laws 
or regulations, including traffic safety prohibitions, that would, 
unless amended, impede the implementation of the goals of this Program. 
The plan must describe how the State intends to resolve such 
impediments.
    Paragraph (d)(9), which corresponds to section 409(a)(3)(J) of the 
Act, asks States to describe the services provided by municipal, 
county, and regional transit authorities. This requirement is important 
because DOE is interested in knowing how States will coordinate with 
other governmental entities in carrying out a State plan. To accelerate 
the use of alternative fueled vehicles, there must be adequate 
refueling facilities. Coordination and cooperation among the various 
governmental entities within the States will be of great importance in 
facilitating the availability of alternative fuels in areas where 
alternative fueled vehicles operate.
    Proposed paragraph (d)(11) also provides that each State plan shall 
consider participation in DOE's Clean Cities Program. The Clean Cities 
Program provides an opportunity for States to get more involved in 
coordinating with other States as well as with alternative fuel 
providers, local governments, vehicle manufacturers, and others. The 
Clean Cities' goals are to put into operation 250,000 new alternative 
fueled vehicles and 500 to 1000 refueling stations in 50 cities by 
1996. As of January, 1995, 34 cities in 21 States are participating in 
the Clean Cities Program. For information on the Clean Cities Program, 
please write to Department of Energy, Clean Cities Program, EE-33, 1000 
Independence Avenue, SW., Washington, DC 20585, 202-586-1885.

Proposed Section 490.105  State Plan Amendments

    Subsequent to an initial award under this subpart, a State may, 
with DOE approval, amend a plan with updated information. A State must 
submit an amendment to a proposed plan if any of the previously 
submitted information corresponding to paragraphs (e), (f), and (g) of 
proposed Sec. 490.104 has changed.

Proposed Section 490.106  Review of Assistance Applications

    DOE is proposing in paragraph (e) of section 490.106 to 
competitively evaluate proposed projects in approved plans against 
specified criteria listed in descending order of importance. The most 
important proposed criterion as set forth in paragraph (e)(1) is the 
projected energy-related benefits, per dollar expended, that may be 
achieved through the use of alternative fuels from the start of the 
program through December 31, 2000. DOE is proposing that energy-related 
benefits, be measured on a life cycle basis through the use of 
alternative fueled vehicles, by the amount of conventional motor fuel 
that is displaced by alternative fuels. The calculation of displacement 
may be denominated in gallons, British thermal units (Btus) or any 
other appropriate method. For DOE to evaluate the energy benefits of a 
proposed project, it is important that the State indicate the degree to 
which alternative fuels will actually be used by alternative fueled 
vehicles. For projects that provide for dedicated alternative fueled 
vehicles to be placed into use, alternative fuel use is assumed and no 
further demonstration is needed. For projects that include vehicles 
capable of operating on gasoline or diesel, as well as alternative 
fuel, estimates of the actual alternative fuel use must be specified, 
accompanied by information about measures to realize such levels of 
use. The energy related benefits are proposed to be included in the 
annual report that participating States must submit to DOE as provided 
in proposed section 490.110.
    The energy related benefit is the highest ranked criterion used to 
evaluate proposed projects in State plans. DOE welcomes and encourages 
comments on the proposed measure, or any others that are recommended.
    The second most important criterion as proposed in paragraph (e)(2) 
is the projected number of alternative fueled vehicles as a percentage 
of vehicles registered in the State as of December 31, 2000.
    Proposed Sec. 490.104(g) reflects the statutory requirement that 
DOE shall not approve a State plan unless the State agrees to 
contribute at least 20 percent of the cost of plan projects. In 
addition, DOE is proposing in paragraph (e)(3) that the third most 
important criterion in evaluating proposed projects is the extent of 
cost sharing in excess of the minimum 20 percent cost share and the 
[[Page 15022]] level of actual non-Federal outlays rather than in-kind 
contributions. Cost sharing may come from any non-Federal source, 
private or public. The additional cost sharing will enable DOE to 
stretch scarce appropriations to cover more projects.
    The fourth most important criterion, as proposed in paragraph 
(e)(4), would be the projected environmental benefits derived as of 
December 31, 2000 through the use of alternative fueled vehicles. 
Environmental benefits in this context are most appropriately based on 
reductions of exhaust, evaporative and greenhouse gas emissions. DOE 
believes that this criterion is important because use of alternative 
fueled vehicles has the significant potential for reducing vehicle 
emissions such as hydrocarbons from combustion and fuel evaporation, 
and carbon monoxide, nitrogen oxides, and other pollutants from 
combustion. In addition, there is the potential of reducing vehicle 
emissions of greenhouse gases.
    State plans which request consideration under the environmental 
benefit criterion must provide an estimate of how many alternative 
fueled vehicles under the plan will be certified to each of the 
Environmental Protection Agency (EPA) clean fuel vehicle emission 
standards pursuant to 40 CFR part 88. Benefits claimed will be 
evaluated by the number of alternative fueled vehicles certified to the 
various tiers of EPA clean vehicle standards, such as low emission, 
inherently low emission, ultra-low emission and zero emission vehicles. 
In calculating environmental benefits to be derived from alternative 
fueled vehicles, States may want to refer to EPA's Technical Report 
entitled Lifetime Emissions for Clean Fuel Fleet Vehicles, dated 
October 1993.
    DOE is proposing that a report, entitled Emissions of Greenhouse 
Gases from the Use of Transportation Fuels and Electricity by M. A. 
DeLuchi, dated November 1991 and amended by letter April 22, 1992, 
serve as the basis for the calculation of greenhouse gas emissions. 
This report was prepared for the Center for Transportation Research, 
Energy Systems Division, Argonne National Laboratory. It is available 
to the public from the National Technical Information Service, U.S. 
Department of Commerce, 5825 Port Royal Road, Springfield, Virginia 
22161. This report sets forth the total carbon dioxide equivalent grams 
per mile emissions, by fuel and vehicle type. The method of calculation 
is simply a matter of applying the estimated number of miles traveled 
per year, by vehicle and fuel type, against the carbon dioxide 
equivalent grams per mile. During the hearings and sixty day comment 
period DOE urges suggestions as to the appropriateness of this method 
and recommendations for alternative methods.
    DOE is proposing in paragraph (e)(5) that the fifth most important 
criterion be the number of alternative fuel refueling facilities 
projected to be in operation by December 31, 2000.
    Proposed paragraph (e)(6) addresses interstate coordination. DOE is 
suggesting, as an option, that States consider coordinating the 
development of alternative fuel refueling facilities along interstate 
highways with adjacent States, where applicable. The benefit from such 
coordination would be to increase the potential driving range of 
alternative fueled vehicles and, thereby, make their use more widely 
feasible and attractive.
    Proposed paragraph (e)(7) provides the seventh criterion which is 
participation in DOE's Clean Cities Program. Neither paragraph (e)(6) 
nor (e)(7) of these criteria are set forth in the Act, but both are 
considered very important for the long term effectiveness of the 
program.
    The eighth criterion, as proposed in paragraph (e)(8), deals with 
how well a State has implemented its plan during the previous budget 
period. If a State requests funding for new projects in a subsequent 
budget period, but has failed to implement its previously approved 
projects in a timely fashion, the new plan may not receive favorable 
consideration.
    The ninth and last criterion, as proposed in paragraph (e)(9), 
relates to the innovation and creativity of the proposed projects. DOE 
encourages States to be resourceful in reaching the goals and 
objectives of this proposed regulation beyond the minimum requirements. 
For example, the number of alternative fueled vehicles that are 
registered in a State is a key element within the State and Local 
Incentives Program. Based on information available to DOE, very few 
States, if any, are able to distinguish the fuel system type of 
vehicles registered in the State. As an additional project that may 
receive favorable consideration, States may want to modify their 
registration system so that alternative fueled vehicles can be 
identified. This kind of information would assist DOE in gathering 
information on the distribution of each type of alternative fueled 
vehicle. Other innovative and creative projects might include far-
reaching public relations programs or information exchange activities 
which encourage local governments and the private sector to acquire 
alternative fueled vehicles.
    Although Section 409 of the Act provides for the use of financial 
assistance to acquire alternative fueled vehicles, and States are 
required to acquire a certain percentage of alternative fueled vehicles 
under Section 507(o) of the Act, States are encouraged to develop plans 
that would use grants for broader purposes. State plans will receive 
favorable consideration if they consider resourceful and innovative 
methods of increasing alternative fuel, encouraging acquisition of 
alternative fueled vehicles by local governments and private parties, 
and expanding the alternative fuel infrastructure.
    In paragraph (f), DOE is proposing to limit the amount of funding 
that any State may receive. Based on prior experience, DOE does not 
expect to be able to provide funding for each and every project within 
an approved plan. DOE, however, wants to ensure that as many States as 
possible participate in this Program. Therefore, it is proposed that, 
regardless of the number of proposed projects in an approved plan, each 
State may not receive more than one grant per calendar year. The grant 
may, however, cover more than one project. Additionally, each award may 
not exceed 10 percent of the total fiscal year funding for the State 
and Local Incentives Program.

Proposed Section 490.107   Expenditure Limitations

    DOE is proposing that overhead costs for State programs be limited 
to 10 percent of a financial award. This would include costs related to 
salaries, office equipment, and library materials. This provision is 
directly related to achieving the overall goal of this Program--to 
substantially increase the use of alternative fueled vehicles by the 
year 2000. It will ensure that 90 percent of the funds are expended on 
activities and project costs that produce goal-related results.

Proposed Section 490.108  De-Obligation of Funds

    DOE is proposing to deobligate any funds that a State has failed to 
obligate or expend within a budget period. A budget period is generally 
12 months and may not exceed 24 months. If the funds are not obligated 
or expended by the State within the budget period, DOE is proposing to 
de-obligate the funds which shall become available for award, in the 
same manner as newly appropriated funds, to another financial 
assistance recipient. [[Page 15023]] 

Proposed Section 490.109  Technical Assistance and Information

    DOE is proposing, pursuant to section 409(b)(1)(A) of the Act, to 
provide States with information and technical assistance if requested, 
subject to the availability of resources. One form of such assistance 
could be coordinating the acquisition of alternative fueled vehicles 
with Federal procurement of these vehicles. Such coordinated 
acquisition may decrease the costs of the alternative fueled vehicles 
to the State.

Proposed Section 490.110  Reports

    Each State awarded a grant under this proposed subpart must submit 
an annual report to DOE for the period of time covered by the State 
plan. This report must be submitted not later than 30 days after the 
close of the calendar year. The information required in the State 
report will be used to monitor the implementation of the State plan, 
the projects within an approved plan, and the expenditure of funds. 
Pursuant to section 409(c)(2) of the Act, DOE must report annually to 
the President and Congress. Information in the State reports will also 
be used to compile the DOE report to Congress and the President.

III. Opportunity for Public Comment

A. Written Comment Procedures

    Interested persons are invited to participate in this rulemaking by 
submitting data, views or comments with respect to the matters set 
forth in this notice.
    Written comments (6 copies) should be identified on the outside of 
the envelope, and on the documents themselves, with the designation: 
``State and Local Incentives Program, Notice of Proposed Rulemaking, 
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 six copies, 
alternative arrangements can be made in advance by calling Ms. Andi 
Kasarsky at (202) 586-3012. Additionally, DOE 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 both before and after the closing date for comments. In 
addition, a transcript of the proceedings of the public hearing 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 shall make its 
own determination of any such claim and treat it according to its 
determination.

B. Public Hearing Procedures

    The time and place of the public hearing is indicated at the 
ADDRESSES section of this notice. 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 in it may make a request for an 
opportunity to make an oral presentation at the hearing. A request to 
speak at the hearing should be sent to the address or phone number 
indicated in the ADDRESSES section of this notice and 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 a group. The person should also provide a 
phone number where he/she may be reached during the day. Each person 
selected to speak at the public hearing will be notified as to the 
approximate time their presentation will be given. Six copies of the 
speaker's statement should be brought to the hearing. In the event any 
person wishing to testify cannot meet this requirement, alternative 
arrangements can be made in advance by so indicating in a letter or 
phone call to Ms. Andi Kasarsky ((202)-586-3012) requesting an 
opportunity to make an oral presentation.
    The Department of Energy reserves the right to select persons to be 
heard at the hearing, 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 of Energy official will preside at the hearing. This 
will not be a judicial or evidentiary-type hearing, but will be 
conducted in accordance with 5 U.S.C. 553. 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.
    If DOE must cancel the 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 requires that regulations, rules, 
legislation, and any other policy actions be reviewed for any 
substantial direct effects on States, on the relationship between the 
National Government and the States, or on the distribution of power 
among various levels of government. If there are sufficient substantial 
direct effects, the Executive Order requires preparation of a 
federalism assessment to be used in all decisions involved in 
promulgating and implementing policy action.
    Although today's proposed rule is mandated by the Act, State 
participation in the State and Local Incentives Program is voluntary. 
This proposed rule simply establishes ground rules for implementation 
of the Program. Many States are currently conducting alternative fueled 
vehicle programs and are anticipating that the influx of Federal 
funding through the State and Local Incentives Program will assist them 
in achieving their goals of accelerating the use of alternative fueled 
vehicles.
    Today's proposed rule will have direct effects on those States that 
choose to participate in the Program in that a State must share at 
least 20 percent of the cost of implementing the State plan's projects, 
and must comply with the other requirements of the Program. Most of the 
proposed rule's provisions, including the cost sharing requirement, 
correspond to provisions of the Act. Wherever possible, however, DOE 
has attempted to simplify the implementation of this Program by 
providing as much flexibility as possible to the States.
    DOE has determined that this proposed rule will not have a 
substantial direct effect on the institutional interests or traditional 
functions of States in relationship to the Federal Government. 
Therefore, preparation of a federalism assessment is 
unnecessary. [[Page 15024]] 

V. Review Under Executive Order 12778

    Section 2 of Executive Order 12778 instructs each agency to adhere 
to certain requirements in promulgating new regulations and reviewing 
existing regulations. The requirements in section (2)(a) and (b)(2) of 
this Executive Order include eliminating drafting errors and needless 
ambiguity, drafting the regulations to minimize litigation by providing 
clear and certain legal standards for affected legal conduct, and 
promoting simplification and burden reduction. Agencies are also 
instructed to make all reasonable efforts to ensure that regulations 
specify clearly any preemptive effect on existing Federal law or 
regulation and any retroactive effects. Rulemaking notices must 
describe any administrative proceedings 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

    Today's regulatory action has been determined not to be a 
significant regulatory action under Executive Order 12866, Regulatory 
Planning and Review, October 4, 1993. Accordingly, this action was not 
subject to review under the Executive Order by the Office of 
Information and Regulatory Affairs (OIRA).

VII. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act, Public Law 96-354, 5 U.S.C. 601 et 
seq., requires preparation of a regulatory flexibility analysis for any 
regulation that will have a significant economic impact on a 
substantial number of small entities. This proposed rule will impact 
only those States that decide to initiate or in some instances, 
continue an alternative fuel and alternative fueled vehicle program. 
The Department of Energy, therefore, certifies that there will not be a 
significant economic impact on a substantial number of small entities, 
and that preparation of a regulatory flexibility analysis is not 
warranted.

VIII. Review Under the Paperwork Reduction Act

    New information collection or record keeping requirements are 
subject to the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
Accordingly, this notice has been submitted to the Office of Management 
and Budget for review and approval of paperwork requirements. The 
Energy Policy Act requires DOE to report annually to Congress and the 
President and to furnish copies of the report to each State 
participating in the Program. Most of the information required to be 
included in the report can be collected only from the participating 
States. This information is necessary to determine if the Program is 
being implemented adequately and to determine the effectiveness of the 
Program in accelerating the use of alternative fueled vehicles. DOE 
cannot estimate how many States may participate in the Program.
    The public reporting burden is estimated to average eight hours per 
response, including time for reviewing instructions, gathering and 
maintaining the data needed, and completing and retrieving the 
collection of information. DOE has attempted to require States to 
collect and maintain only those records that are essential in assisting 
DOE to administer the Program in an effective manner and to comply with 
a reporting requirement to the President and Congress.
    Comments on the information collection requirements contained in 
this rule should be submitted both to the U.S. Department of Energy, 
Office of Energy Efficiency and Renewable Energy, Hearings and Dockets, 
Docket Number EE-RM-95-110, at the address given earlier in this 
notice, and to the Office of Information and Regulatory Affairs, Office 
of Management and Budget, Washington, DC 20503.

IX. Review Under the National Environmental Policy Act

    The Department of Energy has concluded that, before the final 
promulgation of this rule and related rules implementing the 
alternative fueled vehicle provisions of the Energy Policy Act of 1992, 
an Environmental Assessment will be completed.

X. Review By Other Federal Agencies

    The Department of Energy has provided a draft copy of this notice 
to the staff of the Administrator of the Environmental Protection 
Agency and the Secretary of the Department of Transportation pursuant 
to Section 409(a)(2) of the Energy Policy Act of 1992. The 
Administrator responded regarding emission criteria and certification 
of vehicles. These responses were incorporated into the Notice of 
Proposed Rule. The Secretary of Transportation had no comment. The 
Department of Energy has also provided a draft copy of this notice to 
the Automotive Commodity Center, Federal Supply Service, General 
Services Administration, pursuant to Section 409(b)(3).

XI. 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.

XII. The Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number for the State 
and Local Incentive Program is 81.111.

    Issued in Washington, D.C., March 10, 1995.
Christine A. Ervin,
Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reason set forth in the preamble, DOE proposes to amend 
part 490 of title 10 of the Code of Federal Regulations as proposed on 
February 28, 1995 and as set forth below:

PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM

    1. The authority citation to part 490 is revised to read as 
follows:

    Authority: 42 U.S.C. 7191; 42 U.S.C. 13235; 42 U.S.C. 13251; 42 
U.S.C. 13257; 42 U.S.C. 13258; 42 U.S.C. 13260-3.

    2. A new subpart B is proposed to be added to part 490 as set forth 
below:

Subpart B--State and Local Incentives Program

490.100  Purpose and scope.
490.101  Definitions.
490.102  Who may apply.
490.103  When and where to apply.
490.104  Content of State plans.
490.105  State plan amendments.
490.106  Review of assistance applications.
490.107  Expenditure limitations.
490.108  De-obligation of funds.
490.109  Technical assistance and information.
490.110  Reports.


Sec. 490.100  Purpose and scope.

    (a) This subpart sets forth the guidelines for implementation of 
the State and Local Incentives Program. Under this program, DOE may 
grant financial assistance to States for projects in DOE-approved State 
plans. This subpart provides guidelines for development of State plans 
to accelerate the introduction and use of alternative fuels and 
alternative fueled vehicles by the year 2000, and for applications for 
financial assistance to carry out projects included in approved State 
plans.
    (b) Except as otherwise provided in this subpart, the provisions of 
10 CFR part 600 apply to financial assistance awards under this part. 
[[Page 15025]] 


Sec. 490.101  Definitions.

    In addition to the definitions found in Sec. 490.2, the following 
definitions apply to this subpart--
    Awardee means the State named in the notice of financial assistance 
award.
    British thermal unit (Btu) is defined as the amount of heat 
required to raise the temperature of one pound of water one degree 
Fahrenheit.
    Clean Cities Program is a voluntary Federal program designed to 
accelerate and expand the use of alternative fueled vehicles in 
communities throughout the country and to provide refueling and 
maintenance facilities for their operation.
    Conventional motor fuel means gasoline or diesel fuel used in a 
motor vehicle.
    Evaporative Emissions are hydrocarbons released into the atmosphere 
as a result of fuel evaporation from a vehicle's fuel system.
    Exhaust Emissions are substances released into the atmosphere 
through motor vehicle tailpipes resulting either from uncombusted fuel 
or from chemical reactions during combustion. They can include carbon 
monoxide, oxides of nitrogen, hydrocarbons, and particulate matter.
    Governor means the chief executive of a State or a person 
designated by the chief executive officer to act upon his or her 
behalf.
    Greenhouse Gas Emissions means emissions of carbon dioxide and 
other gases such as chlorofluorocarbon, methane, ozone, and nitrous 
oxide that contribute to global climate change.
    Life cycle means the period of time beginning with the date on 
which the vehicle is registered as an alternative fueled vehicle by the 
motor vehicle agency of the State and ending on the date the vehicle is 
no longer registered as an alternative fueled vehicle.
    Project means any activity specified in a State plan which is 
undertaken to achieve the goals set forth in the State plan.
    State plan means a State and Local Incentives plan submitted to DOE 
that contains proposed projects and provisions designed to introduce a 
substantial number of alternative fueled vehicles and increase the use 
of alternative fuels by the year 2000.


Sec. 490.102  Who may apply.

    The Governor of any State may submit to DOE a State plan and apply 
for Federal assistance to carry out that plan under this subpart.


Sec. 490.103  When and where to apply.

    For each fiscal year, DOE will publish a notice in the Federal 
Register announcing the availability of funds, specifying the deadline 
for submissions, and providing the address to which a submission may be 
sent. A copy of this notice will be sent to the Governor of each State. 
In order to be eligible for Federal assistance, a State must submit an 
application on standard forms, pursuant to 10 CFR Part 600, and either 
a proposed State plan, or a proposed State plan amendment to a 
previously approved plan. This submission must be made before the 
specified deadline.


Sec. 490.104  Content of State plans.

    (a) Organization. Each State plan must name and describe the 
functions of the State organization designated by the Governor to carry 
out the provisions of the plan.
    (b) Intergovernmental coordination. Each State plan shall describe 
the manner in which the State intends to coordinate with the Federal 
Government, local governments, and the private sector in implementing 
the plan.
    (c) Goals. Each State plan must identify its goals for the number 
of alternative fueled vehicles to be registered within the State, the 
amount of alternative fuel to be used within the State, and the number 
of alternative fuel refueling facilities to be licensed for operation. 
The plan must also provide a detailed description as to how these goals 
can be achieved by the year 2000.
    (d) Mandatory analyses. Each State plan shall include an 
examination of--
    (1) Exemption from State sales tax or other State or local taxes or 
surcharges (other than such taxes or surcharges which are dedicated for 
transportation purposes) with respect to alternative fueled vehicles, 
alternative fuels, or alternative fuel refueling facilities;
    (2) The introduction of alternative fueled vehicles into State-
owned or operated motor vehicle fleets;
    (3) Special parking for alternative fueled vehicles at public 
buildings, as defined by Sec. 490.201 of subpart A, and airport and 
transportation facilities;
    (4) Programs of public education to promote the use of alternative 
fueled vehicles;
    (5) The treatment of sales of alternative fuels for use in 
alternative fueled vehicles;
    (6) Methods by which State and local governments might enhance--
    (i) The availability of alternative fuels; and
    (ii) The ability to recharge electric motor vehicles at public 
locations.
    (7) Allowing public utilities to include in rates the incremental 
cost of--
    (i) New alternative fueled vehicles;
    (ii) Converting conventional vehicles to operate on alternative 
fuels; and
    (iii) Installing alternative fuel refueling facilities; but only to 
the extent that the inclusion of such costs in rates would not create 
competitive disadvantages for other market participants, and taking 
into consideration the effect that inclusion of such costs would have 
on rates, service, and reliability to other utility customers;
    (8) Whether accomplishing any of the goals of the State plan would 
require amendment to State law or regulations, including traffic safety 
prohibitions;
    (9) Services provided by municipal, county, and regional 
transportation authorities;
    (10) Effects of the State plan on programs authorized by the 
Intermodal Surface Transportation Efficiency Act of 1991 and amendments 
made by that Act;
    (11) Participation in the DOE's Clean Cities Program; and
    (12) Such other programs and incentives as a State may describe.
    (e) Projects. Each State plan--
    (1) Shall contain a detailed description of projects designed to 
result in scheduled progress toward, and achievement of, the goals of 
using alternative fuel and introducing substantial numbers of 
alternative fueled vehicles in the State by the year 2000. For each 
project, the plan must specify the project periods and milestones which 
must be consistent with the State plan goals; and
    (2) Shall include estimates of the volumes of alternative fuels to 
be used within each calendar year as a result of each project.
    (f) Requirements. Each State plan shall contain a detailed 
description of the requirements for implementing the plan, including 
the estimated cost and budget for implementation.
    (g) Cost Share. Each State plan shall specify the non-federally 
funded share of each project, which must be at least 20 percent of the 
cost of the project. The plan must identify the amounts to be provided 
in cash and in-kind.


Sec. 490.105  State plan amendments.

    Subsequent to an initial State plan approval and any award under 
this subpart, a State--
    (a) May amend a State plan with the approval of DOE; and
    (b) Must, in the event of any change to the provisions identified 
in paragraphs (e), (f) and (g) of Sec. 490.104, submit a proposed State 
plan amendment with updated information for the approval of DOE.


Sec. 490.106  Review of assistance applications.

    (a) On or before 60 days from an applicable deadline for submission 
of [[Page 15026]] applications for financial assistance, DOE shall 
review State plans or State plan amendments to determine whether they 
meet the requirements of this subpart and represent policies and 
activities reasonably designed to achieve the goals of a substantial 
number of alternative fueled vehicles in operation by the year 2000 and 
increased use of alternative fuel.
    (b) DOE may request further information from States prior to 
completing its review under paragraph (a) of this section.
    (c) DOE may allow a reasonable period of time to revise a proposed 
State plan or State plan amendment, or may condition approval on 
acceptance of revisions deemed necessary by DOE. A grant will not be 
awarded until all conditions are satisfied.
    (d) If DOE finally disapproves a State plan or State plan 
amendment, DOE shall notify the Governor in writing with a statement of 
reasons.
    (e) On the basis of approved State plans or approved State plan 
amendments, DOE shall evaluate proposed projects competitively against 
the following criteria which are listed in descending order of 
importance:
    (1) Projected energy-related benefits, per dollar expended, on a 
life-cycle basis, through the use of alternative fueled vehicles, as 
measured by the amount of conventional motor fuel that is displaced by 
alternative fuels from the start of the project through December 31, 
2000. This displacement may be calculated on the basis of gallons, 
British thermal units (Btus), or any other appropriate method.
    (2) Projected number of alternative fueled vehicles introduced as 
of December 31, 2000, as a result of the project;
    (3) Extent of cost sharing in excess of the minimum required 20 
percent cost share and extent of contribution made in cash rather than 
in-kind;
    (4) Projected environmental benefits, on a life-cycle basis, 
measured in terms of the reduction of exhaust, evaporative, and 
greenhouse gas emissions through December 31, 2000. Projections should 
be based on the number of alternative fueled vehicles that will be 
certified as meeting various EPA clean vehicle emission standards 
pursuant to 40 CFR part 88;
    (5) Projected number of alternative fuel refueling facilities as of 
December 31, 2000;
    (6) Extent of interstate collaboration on refueling infrastructure, 
including collaboration on development of alternative fuel refueling 
facilities along interstate highways with adjacent States;
    (7) Extent of participation in DOE's Clean Cities Program;
    (8) Effectiveness in carrying out State plan in previous budget 
periods; and
    (9) Inclusion of creative and innovative projects.
    (f) A State may not receive more than one grant per calendar year. 
This grant may cover multiple projects or projects expanding for more 
than one year. No award is to exceed 10 percent of the total fiscal 
year funding for the State and Local Incentives Program. In those 
instances where projects in an approved plan are not funded, the State 
may reapply for financial assistance for such projects in subsequent 
years.


Sec. 490.107  Expenditure Limitations.

    A State may not expend more than 10 percent of a financial award 
for indirect costs including, but not limited to, salaries, equipment, 
and library materials.


Sec. 490.108  De-obligation of funds.

    A budget period should typically be 12 months, but may not exceed 
24 months unless an extension is approved by DOE. Any funds, under a 
notice of financial assistance award, which remain unexpended at the 
end of the budget period shall be de-obligated. DOE shall make these 
funds available for award, in the same manner as newly appropriated 
funds.


Sec. 490.109  Technical assistance and information.

    At the request of the Governor of any participating State and 
subject to the availability of personnel and funds, DOE will provide 
technical assistance and information to the State in connection with 
effectuating the purposes of this subpart. Non-financial assistance, 
including coordinating the acquisition of alternative fueled vehicles 
with Federal procurement of alternative fueled vehicles, will be 
provided.


Sec. 490.110  Reports.

    (a) For the period of time covered by a State plan, an awardee 
shall submit to DOE an annual report each calendar year and not later 
than 30 days after the close of the calendar year, which shall include 
at a minimum--
    (1) The estimated number of alternative fueled vehicles in use in 
the State;
    (2) A description of Federal, State and local programs undertaken 
within the State to provide incentives for the introduction of 
alternative fueled vehicles, whether or not these programs are within 
the State plan; and
    (3) The estimated energy and environmental benefits of the State 
plan.
    (b) An awardee shall submit to DOE a financial status report (FSR) 
(OMB No. 0348-0039) within 90 days after completion of each budget 
period. For budget periods exceeding 12 months, an FSR is also required 
within 90 days after the first 12 months, unless waived by the 
contracting officer.

[FR Doc. 95-6792 Filed 3-20-95; 8:45 am]
BILLING CODE 6450-01-P