[Federal Register Volume 63, Number 74 (Friday, April 17, 1998)]
[Proposed Rules]
[Pages 19372-19378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10239]



[[Page 19371]]

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Part IV





Department of Energy





_______________________________________________________________________



Office of Energy Efficiency and Renewable Energy



_______________________________________________________________________



10 CFR Part 490



Alternative Fueled Vehicle Acquisition Requirements for Private and 
Local Government Fleets; Proposed Rule

  Federal Register / Vol. 63, No. 74 / Friday, April 17, 1998 / 
Proposed Rules  

[[Page 19372]]



DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 490

[Docket No. EE-RM-98-507]
RIN 1904-AA98


Alternative Fueled Vehicle Acquisition Requirements for Private 
and Local Government Fleets

AGENCY: Department of Energy (DOE).

ACTION: Advance notice of proposed rulemaking and notice of public 
hearings.

-----------------------------------------------------------------------

SUMMARY: The Department of Energy is today publishing an advance notice 
of proposed rulemaking, as required by the Energy Policy Act of 1992 
(the Act), Pub. L. 102-486, that begins a process to determine whether 
alternative fueled vehicle acquisition requirements for certain private 
and local government automobile fleets should be promulgated under the 
terms of section 507(g) of the Act. The establishment of such an 
acquisition program is reliant on whether this program is necessary for 
achieving the Act's replacement fuel goals and whether this program 
will enable the actual realization of these goals. Thus, this notice 
requests comments on the replacement fuel goals set forth in section 
502(b)(2) of the Act, identifying the problems with achieving the 
goals, assessing the adequacy and practicability of the goals, and 
considering all actions necessary to meet the goals. Additionally, this 
notice requests comments on whether DOE should propose the inclusion of 
alternative fueled urban bus acquisition requirements for private and 
local government fleets in conjunction with a fleet requirement program 
that may be established under section 507(g) of the Act. This notice is 
intended to stimulate comments that will inform DOE's decisions 
concerning future rulemaking actions and non-regulatory initiatives to 
promote alternative fuels and alternative fueled vehicles.

DATES: Written comments (8 copies) must be received by DOE by July 16, 
1998. Where possible, commenters should identify the specific section 
and question number to which they are responding.
    Oral views, data, and arguments may be presented at the public 
hearings, which are scheduled as follows:

1. In Los Angeles, CA, beginning at 9:30 a.m. on May 20, 1998.
2. In Minneapolis, MN, beginning at 9:30 a.m. on May 28, 1998.
3. In Washington, DC, beginning at 9:30 a.m. on June 4, 1998.

    The hearings will end after all persons who have requested an 
opportunity to speak have made oral presentations. Requests to speak at 
any of the hearings should be phoned to Andi Kasarsky, (202) 586-3012, 
and received no later than 4:00 p.m., May 18, 1998, for the Los 
Angeles, CA, hearing; May 26, 1998, for the Minneapolis, MN, hearing; 
and June 2, 1998, for the Washington, DC, hearing. Each oral 
presentation is limited to 10 minutes.

ADDRESSES: The hearings will be held at the following addresses:

1. Los Angeles, CA--Roybal Federal Building, 255 E. Temple Street (at 
Los Angeles Street), 2nd Floor Conference Room, Los Angeles, CA.
2. Minneapolis, MN--U.S. Court House, 300 South 4th Street (at 3rd 
Avenue), Skyway Conference Center (Room 259--2nd level), Minneapolis, 
MN.
3. Washington, DC--U.S. Department of Energy, Room 1E-245, 1000 
Independence Avenue, SW., Washington, DC 20585.

    Written comments should be addressed to: U.S. Department of Energy, 
Office of Transportation Technologies, EE-34, Docket No. EE-RM-98-507, 
1000 Independence Avenue, SW., Washington, DC 20585, telephone (202) 
586-3012. Copies of the public hearing transcripts, written comments 
received, technical reference materials mentioned in the notice, and 
any other docket material received may be read and copied at the DOE 
Freedom of Information Reading Room, U.S. Department of Energy, Room 
1E-190, 1000 Independence Ave., SW., Washington, DC 20585, telephone 
(202) 586-3142, between the hours of 8:30 a.m. and 4:00 p.m., Monday 
through Friday, except Federal holidays. The docket file material will 
be filed under ``EE-RM-98-507.''
    For more information concerning public participation in this 
rulemaking proceeding, see section V of this notice (Public Comment 
Procedures).

FOR FURTHER INFORMATION CONTACT:
Kenneth R. Katz, Office of Energy Efficiency and Renewable Energy, EE-
34, U.S. Department of Energy, 1000 Independence Avenue, SW., 
Washington, DC 20585, [email protected]; or phone (202) 586-
9171.
Vivian S. Lewis, Office of the General Counsel, GC-72, U.S. Department 
of Energy, 1000 Independence Avenue, SW., Washington, DC 20585.

    For information concerning the public hearings, requests to speak 
at a hearing, submission of written comments, and to obtain copies of 
materials referenced in this notice, contact Andi Kasarsky, (202) 586-
3012.

SUPPLEMENTARY INFORMATION:
I. Introduction
    A. Authority
    B. Program Background and Goals
    C. Required Rulemaking
    D. Law Enforcement Vehicle and Urban Bus Optional Rulemakings
II. General Issues Relating to Replacement Fuel Goals
III. Issues Related to Fleet Requirement Determinations
IV. Issues Related to the Inclusion of Urban Buses in a Fleet 
Requirement Program
V. Review and Analysis Requirements
VI. Public Comment Procedures
    a. Participation in Rulemaking
    b. Written Comment Procedures
    c. Public Hearings
    1. Procedure for Submitting Requests to Speak
    2. Conduct of Hearing

I. Introduction

A. Authority

    The Energy Policy Act of 1992 (Pub. L. 104-486) authorizes DOE to 
pursue a rulemaking concerning alternative fueled vehicle acquisition 
requirements for private and local government fleets on two distinct 
schedules. First, section 507(b) provides for an early rulemaking, 
which was to be completed by December 15, 1996. As part of that 
rulemaking, section 507 (a)(3) of the Act required DOE to publish an 
Advance Notice of Proposed Rulemaking (ANOPR) to begin a rulemaking 
process for determining whether alternative fueled vehicle (AFV) 
acquisition requirements for private and local government fleets are 
necessary to achieve the Act's energy security and other goals. 42 
U.S.C. 13256(a)(3). If no rule was promulgated by December 15, 1996, 
then sections 507(b)(3), (c), and (e) require a later rulemaking to 
determine by January 1, 2000, whether vehicle acquisition requirements 
are ``necessary,'' as described in section 507(e). 42 U.S.C. 
13256(b)(3), (c) and (e).
    DOE published an ANOPR for the purposes described in section 507(a) 
and (b) on August 7, 1996. 61 FR 41032. This notice was intended to 
stimulate comments to assist DOE in making decisions concerning future 
rulemaking actions and non-regulatory initiatives to promote 
alternative fuels and alternative fueled vehicles. Three hearings were 
held to receive oral comments on the ANOPR. They were held on September 
17, 1996, in Dallas, Texas; on September 25, 1996, in Sacramento, 
California; and on October 9, 1996, in Washington, DC. A total of 70 
persons spoke at the three

[[Page 19373]]

hearings, and 105 written comments were received by November 5, 1996.
    On April 23, 1997, DOE published a Notice of Termination stating 
that DOE would not promulgate regulations to implement alternative 
fueled vehicle requirements for certain private and local government 
fleets according to the early schedule of section 507(a)(1) of the Act. 
62 FR 19701. As required by sections 507(b)(3), (c), and (e), DOE today 
begins a rulemaking under section 507(g) of the Act to determine, no 
later than January 1, 2000, whether alternative fueled vehicle 
acquisition requirements for private and local government automobile 
fleets under the later schedule of section 507(g) are considered 
``necessary'' to achieve the Act's ``replacement fuel'' goals. (A 
``replacement'' fuel is the non-petroleum portion of an ``alternative 
fuel'' as those terms are defined in section 301 of the Act. (42 U.S.C. 
13211).)
    Section 504(c) of the Act provides additional, albeit limited, 
rulemaking authority to develop and implement programs, other than 
regulatory alternative fueled vehicle acquisition mandates, to meet the 
general program goals set forth in section 502(a) of the Act. (42 
U.S.C. 13254(c).) Section 502(a) describes goals to promote 
availability of domestic replacement fuels to the maximum extent 
practicable in order to have the greatest impact in reducing oil 
imports, improving the Nation's economy, and reducing greenhouse gas 
emission. (42 U.S.C. 13252(a).) The predicate for using the rulemaking 
authority under section 504(c) is a determination that achievement of 
the specific numerical goals in section 502(b)(2) would result in a 
``significant and correctable'' failure to meet the general program 
goals in section 502(a). Section 504(c) precludes DOE from promulgating 
rules that would mandate: production of alternative fueled vehicles; 
vehicle marketing or pricing practices, policies, or strategies; and 
production or delivery of alternative fuels. In preparing a notice of 
proposed rulemaking following evaluation of comments received in 
response to this advance notice, DOE will be considering whether to 
propose rules under section 504(c).
    From prior rulemaking activities under title V of the Act, DOE 
knows that there are diverse interests with strongly held views about 
the general program goals of the Act and the role that Government 
should play in achieving those goals. Broad acceptance of final rules 
setting forth an affirmative program would be desirable and, to that 
end, DOE may use a neutral and experienced convener under the 
Negotiated Rulemaking Act of 1990 to assist DOE in determining whether 
to develop proposed rules using consensus rulemaking procedures. 5 
U.S.C. 563.

B. Program Background and Goals

    The transportation sector currently accounts for approximately two-
thirds of all U.S. petroleum use and roughly one-fourth of total U.S. 
energy consumption. A virtual one-to-one relationship exists between 
additional gasoline and diesel fuel consumption and America's increased 
use of imported oil. The gap between the transportation sector's demand 
for petroleum and our domestic petroleum production continues to widen. 
Today, the U.S. consumes 4 million barrels per day more than it 
produces for transportation purposes alone; that gap is projected to 
rise to 8 million barrels per day by the year 2010. According to the 
latest projections by the Energy Information Administration (EIA), the 
transportation sector will consume 15.8 million barrels per day of 
petroleum in 2010, if no significant changes are made to usage patterns 
and vehicle efficiency. About 8.4 million of these barrels are 
projected to be used by light duty vehicles. The transportation sector 
represents one of the major sources of energy vulnerability for 
American society and the American economy today.
    U.S. dependence on imported petroleum has also grown since the 
Act's enactment. In 1992, 41 percent of total U.S. petroleum 
consumption was derived from foreign sources. By 1996, imports had 
increased to 46 percent. EIA projects U.S. petroleum import dependence 
to reach approximately 52 percent of consumption by 2000 and 60 percent 
of petroleum consumption by 2010. Congress enacted the Act, in part, to 
address these energy security concerns, many of which are more critical 
now than at the time of passage. Titles III, IV, V, and VI of the Act 
contain provisions requiring DOE to establish a variety of programs 
aimed at displacing substantial quantities of oil consumed by motor 
vehicles.
    Title III sets forth mandatory requirements for Federal fleet 
acquisitions of alternative fueled vehicles, which began in fiscal year 
1993. Since that time, approximately 30,000 alternative fueled vehicles 
have been acquired by the Federal fleet. Federal agencies have gained 
considerable experience with many types of alternative fuels and 
alternative fueled vehicles.
    Title IV directs DOE to establish a program to certify alternative 
fuel technicians, acquire data about alternative fuels and alternative 
fueled vehicles, and establish a public information program. DOE has 
established a cooperative program with the auto service industry and 
numerous technical colleges to develop and implement national standards 
for certification of alternative fuel training programs.
    Title IV also includes programs related to demonstrating the 
feasibility of the commercial application of using alternative fuels 
for urban buses and other motor vehicles used for mass transit. Since 
1992, many fleets across the country have begun replacing their buses 
with alternative fueled buses. Currently, alternative fueled transit 
buses are operated in thirty-eight States. According to the American 
Public Transit Association and the Federal Transit Association, more 
than 2,600 alternative fueled buses were in use in 1996. That number is 
estimated to increase to about 4,500 in 1998. Approximately 22 percent 
of new buses on order for the January 1998 through April 1998 time 
frame will be operated on alternative fuels. In comparison, 14 percent 
of new buses ordered in 1996 operated on alternative fuels.
    Over the last several years, DOE has analyzed the costs and 
benefits of alternative fuel and AFV use in the transportation sector. 
A series of technical reports recorded the results of these analyses 
and is entitled ``Assessment of Costs and Benefits of Flexible and 
Alternative Fuel Use in the U.S. Transportation Sector.'' These reports 
will be placed in the public docket for this rulemaking in DOE's 
Freedom of Information Reading Room.
    Section 502 requires DOE to establish a program to promote 
development and use of replacement fuels, especially domestic 
replacement fuels, in light duty motor vehicles. DOE is required to 
focus on those replacement fuels having the most impact in: Reducing 
oil imports, improving the health of the Nation's economy, and reducing 
emissions of greenhouse gases. DOE is in the process of performing 
analytical work to guide the design of this replacement fuel demand and 
supply program. Section 502(b) requires DOE to assess, among other 
things, the feasibility of producing adequate replacement fuels to 
displace 10 percent of U.S. motor fuel by 2000 and 30 percent by 2010. 
DOE has undertaken such a study, the partial results of which have been 
published by DOE's Office of Policy as Technical Report Fourteen: 
Market Potential and Impacts of Alternative Fuel Use in Light-Duty 
Vehicles: A 2000/2010 Analysis. This

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analysis was conducted in 1994 under a set of premises (i.e., estimated 
future oil prices) that were more favorable to alternative fuel use 
than the expectations found in the Annual Energy Outlook 1998 (DOE/EIA-
0383(98)). This report is available by calling the National Alternative 
Fuels Hotline at 1-800-423-1DOE or 703-528-3500. A copy will be placed 
in the docket file for this rulemaking.
    The following key results and conclusions emerged from the analysis 
contained in this report:
     For the year 2000, ten percent replacement of light duty 
motor fuel use with alternative and replacement fuels is feasible and 
appears likely with existing practices and policies.
     Displacing thirty percent of light duty motor fuel use by 
2010 also appears feasible, however, feasibility is based on several 
assumptions that may not be realized without additional alternative 
fuel incentives.
     With a fully established refueling infrastructure and 
sufficient vehicle availability, market forces would continue to 
support 30 percent use of alternative fuels and would sustain even 
higher levels as alternative fueled vehicles assume an increasingly 
larger share of the total light duty vehicle population.
     In long-run equilibrium, making alternative fuels and 
alternative fueled vehicles available would provide an estimated net 
annual economic benefit of up to $10.3 billion in 2010. Much of this 
benefit--$4.2 billion--consists of an increase in consumer satisfaction 
from the availability of new classes of vehicles and less expensive 
fuels; the remaining $6.1 billion reflects dollar cost savings from 
alternative fuel use, mainly through the reduced cost of fuel imports.
     Benefits from reduced emissions of criteria pollutants are 
estimated to be up to $3.7 billion annually.
Although this analysis indicates that a free market could sustain a 
large volume of alternative fuel use, it does not appear at the present 
that the market will move toward such a scenario without Government 
action. The report states that in order to realize any substantial use 
of alternative fuels by 2010, the Federal and/or State governments will 
have to take steps soon to encourage the increased use of alternative 
fuels and vehicles.
    DOE is also required by section 506 to prepare a Technical and 
Policy Analysis of various issues related to replacement fuels and 
alternative fueled vehicles for submission to the President and 
Congress. On October 27, 1997, DOE published a Notice of Availability 
and Request for Comments (62 FR 55622) on a proposed analysis on these 
issues, prior to its final transmission to the President and Congress. 
Comments were due to DOE by January 26, 1998. Copies of the proposed 
Technical and Policy Analysis may be obtained from the National 
Alternative Fuels Hotline, 9300 Lee Highway, Fairfax, VA 22301-1207, 
(800) 423-1DOE, or electronically from the Office of Energy Efficiency 
and Renewable Energy's Transportation Technologies website at: http://
www.ott.doe.gov/office.rules.html. DOE is required by section 506(c) to 
preserve all comments received on the analysis for use in required 
rulemaking proceedings under section 507, including the rulemaking, 
covered in today's notice, for determining whether local government and 
private fleets should be required to acquire alternative fueled 
vehicles. Public comments on the section 506 Technical Analysis can be 
reviewed at DOE's Freedom of Information Reading Room under Docket 
Number EE-NOA-97-506. Currently, twelve written comments have been 
received on the analysis.
    The preliminary partial results of the section 506 Technical 
Analysis indicate that the potential use of replacement fuels 
sustainable by the market could be as high as 30 to 38 percent under 
various scenarios and ultimately could be greater than 50 percent. In 
order to reach these levels of replacement fuel use, major transitional 
impediments would have to be overcome, including changes in the 
relative fuel/vehicle prices to consumers. Changes to the price that 
customers pay for alternative fueled vehicles and alternative fuels may 
require the establishment of additional financial, and non-financial, 
incentives both for the end user and for the vehicle and fuel 
providers.
    For example, the analysis states that the Act's suggested goals of 
displacing 10 percent of transportation fuels in the year 2000 and 30 
percent in the year 2010 would require that AFV sales:
     Grow to between 35 and 40 percent of total new light duty 
vehicle sales by 1999 to meet the 2000 goal; and
     Stay in the range of 30 to 38 percent to build an AFV 
population sufficiently large enough to meet the 2010 goal.
    If the 30 percent goal applied to year 2020, instead of 2010, the 
analysis states that AFV growth would have to:
     Double every year between 1995 and 2000, going from 
approximately 30,000 to 500,000 sales per year;
     Increase by 50 percent per year to 4,000,000 in the 
period from 2001 through 2005; and
     Remain at a constant 32 percent of total light duty 
vehicle sales in the period from 2005 through 2010.
    Under this scenario, the AFV population in 2020 would be large 
enough so that 30 percent of light duty vehicle motor fuel would be 
replacement fuel. This scenario is believed to be more representative 
of new vehicle technology market introduction generally, than the 
growth paths necessary to meet the Act's suggested goals. However, the 
draft analysis indicates that it is unlikely that the estimated growth 
in alternative fueled vehicles and alternative fuel use will occur 
solely due to the Federal, State, local government, and fuel provider 
alternative fueled vehicle acquisition requirements of the Act. The 
draft analysis suggests that new policies may need to be established 
before these projections of alternative fuel and alternative fueled 
vehicle use can be realized. These policies could result in additional 
grant programs, budget increases for existing grant programs, 
additional financial and non-financial incentives, additional excise 
tax changes, and/or the establishment of new programs.
    In addition to the hearings, reports and analyses required by Title 
V, DOE held two stakeholder forums in 1997 for the purpose of 
discussing the replacement fuel goals, the potential private and local 
government fleet acquisition requirements, and the issue of mandates 
versus incentives. These forums took place on June 24, 1997, in Long 
Beach, CA, and on November 19, 1997, in Dallas, TX. Issues discussed at 
these forums included the current availability and use of alternative 
fuels and alternative fueled vehicles; existing governmental 
incentives, both financial and non-financial; taxes on alternative 
fuels; alternative fuel economics; and the need for additional programs 
and incentives that will catalyze the alternative fuels market. In 
preparation for the Dallas forum, DOE produced a ``Fleet Forum White 
Paper'' that summarized the current status of these issues, 
characterized the types of incentives and provided a basis for 
discussion. This document will be placed in the docket for this 
rulemaking and can be reviewed at DOE's Freedom of Information Reading 
Room.
    Pursuant to section 505 of the Act, 42 U.S.C. 13255, DOE is 
promoting voluntary use of alternative fueled vehicles through its 
Clean Cities Program. Under this program, DOE joins with local 
governments and organizations in public/private partnerships aimed at 
developing markets for alternative fueled vehicles.

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The program aims to bring together enough participants in each local 
area to reach the necessary volume of alternative fueled vehicle use to 
justify installation of refueling infrastructure and other joint 
facilities, as well as to promote other forms of cooperation. As of 
March 1998, 61 U.S. communities have signed agreements to participate.
    Title V also contains non-discretionary alternative fueled vehicle 
acquisition requirements. Sections 501 and 507(o) of the Act require 
certain alternative fuel provider and State government fleets to 
include increasing percentages of alternative fueled vehicles in their 
annual acquisitions of new light duty vehicles. DOE published a final 
rule to implement these vehicle acquisition requirements on March 14, 
1996. 61 FR 10621. As a result of these requirements, alternative fuel 
provider and State fleets have reported, to date, the acquisition of 
approximately 5,000 alternative fueled vehicles to DOE. This quantity 
is expected to increase after additional reports are received and 
tabulated.
    The use of alternative fueled vehicles, alternative fuels, and 
replacement fuels has been steadily growing since 1992. According to 
the EIA report entitled, ``Alternatives to Traditional Transportation 
Fuels 1996'' (December 1997), the following estimates apply in respect 
to the use of alternative fueled vehicles, alternative fuels, and 
replacement fuels:
     More than 380,000 alternative fueled vehicles were in use 
in 1997; a 51 percent increase since 1992.
     An additional 50,000 alternative fueled vehicles are 
expected to be in use by the end of 1998.
     From 1992 to 1996, gasoline-equivalent gallon consumption 
of alternative and replacement fuels increased by 76 percent, while 
consumption of traditional fuels increased just 10 percent.
     From 1992 to 1996, alternative and replacement fuel 
consumption increased from 2,106,000 to 3,707,000 billion gasoline-
equivalent gallons, while consumption of traditional fuels increased 
from 134,000,000 to 148,000,000 billion gasoline-equivalent gallons.
     United States consumption of alternative fuels is 
expected to grow by more than 45 million gasoline-equivalent gallons 
from 1996 to 1998.
    The availability of alternative fueled vehicles from Original 
Equipment Manufacturers (OEMs) has been increasing steadily. Several 
types of alternative fueled vehicles, including light-, medium-, and 
heavy-duty vehicles are available from OEMs. Alternative fueled 
vehicles are available from Chrysler, Ford, General Motors, Honda, and 
Toyota. Manufacturers have announced plans for new offerings of 
alternative fueled vehicles in the next few years. Both Chrysler and 
Ford announced that they intend to produce large numbers of flexible-
fuel vehicles (including sedans, minivans, and compact pickup trucks) 
that are capable of operating on E85, a blend of 85 percent ethanol and 
15 percent gasoline, and/or gasoline. Currently, available model types 
include compact and full-size pickup trucks; cargo and passenger vans; 
minivans; compact sport utility vehicles; delivery trucks; and 
subcompact, compact, mid-size, and full-size passenger cars. Available 
fuel types include 85 percent ethanol (E85), 85 percent methanol (M85), 
compressed natural gas (CNG), liquefied natural gas (LNG), propane 
(liquefied petroleum gas or LPG), and electricity.

C. Required Rulemaking

    This advance notice of proposed rulemaking is the first step in a 
required rulemaking under section 507(g) of the Act for determining 
whether local government and private fleets (other than alternative 
fuel providers subject to section 501) should be required to acquire 
alternative fueled vehicles. 42 U.S.C. 13257(g). A DOE decision to 
impose alternative fueled vehicle acquisition requirements on private 
and local government fleets is dependent on a determination that such 
requirements are ``necessary'' to achieve the replacement fuel goals of 
section 502(b)(2)(B), or as modified by DOE under section 504 or 
507(e), and that the requirements would enable the actual realization 
of these goals. If the replacement fuel goals, as modified, cannot be 
met by the imposition of these acquisition requirements, the Act does 
not permit DOE to go forward with such a program.
    Such a fleet mandate would cover local government and private 
fleets (excluding alternative fuel provider fleets covered by section 
501 of the Act) of 20 or more light duty motor vehicles (including 
passenger cars and trucks under 8500 lbs. gross vehicle weight rating), 
which are:
     Centrally fueled or capable of being centrally fueled;
     Operated primarily within a metropolitan statistical area 
with a population of at least 250,000 according to the 1980 census; and
     Owned, leased, operated or otherwise controlled by an 
entity which owns or operates 50 or more such vehicles in the United 
States.
    Various classes of light duty motor vehicles are excluded from the 
basis for determining coverage. Excluded categories are listed in 
section 490.3 of DOE's final rule for State government fleets and 
certain alternative fuel providers. 10 CFR part 490. Appendix A to 
subpart A of 10 CFR part 490 provides a list of the 125 metropolitan 
statistical areas with a population of at least 250,000, according to 
the 1980 Census.
    The statutory authority for the required rulemakings is described 
below. Each may require a separate rulemaking action, or may be 
combined into a single rulemaking. Additionally, a third optional 
rulemaking, as described below in section D, may require a separate 
rulemaking, or may be included in this single rulemaking action.
1. Advance Notice of Proposed Rulemaking
    Section 507(c) of the Act requires DOE to publish an advance notice 
of proposed rulemaking for the purposes of: (a) evaluating progress 
toward the goals of producing replacement fuels to replace, on an 
energy equivalent basis, at least 10 percent of motor fuel consumption 
by the year 2000 and at least 30 percent by the year 2010; (b) 
identifying the problems with achieving those goals; (c) assessing the 
adequacy and practicability of those goals; and (d) considering all 
actions necessary to achieve those goals. Today's notice is issued to 
comply with this statutory requirement.
2. Later Rulemaking
    Sections 507(e) and (g) of the Act require DOE to initiate a 
rulemaking to determine if the statutory conditions for a later 
mandate, beginning in model year 2002 or thereafter, are met. In order 
to determine that a mandate is ``necessary,'' section 507(e) of the 
Act, 42 U.S.C. 13257(e), requires that DOE make the following findings 
by rule:

    (a) The goal of replacement fuel use described in section 
502(b)(2)(B), or as modified by section 504, is not expected to be 
actually achieved by 2010 by voluntary means or pursuant to Title V 
or any other law without such a fleet requirement program, taking 
into consideration the status of the achievement of the interim goal 
described in section 502(b)(2)(A); and
    (b) Such goal is practicable and actually achievable within 
periods specified in section 502(b)(2) (or such other date as is 
established under section 504) through implementation of such a 
fleet requirement program in combination with voluntary means and 
the application of other programs relevant to achieving such goals.


[[Page 19376]]


    Section 507(g) provides the following alternative fueled vehicle 
acquisition schedule for a program established by this later 
rulemaking:

20 percent of the light duty motor vehicles acquired in model year 
2002;
40 percent of those acquired in model year 2003;
60 percent of those acquired in model year 2004; and
70 percent of those acquired in model year 2005 and thereafter.

Under section 507(e)(2), these percentages can be reduced by rule, to 
no less than 10 percent. Additionally, section 507(g)(2) allows DOE the 
option of starting the acquisition schedule later than model year 2002.
    If DOE were eventually to determine under section 507(f) that a 
fleet requirement program is unnecessary, DOE would be required by 
section 509 of the Act to submit to Congress recommendations for 
possible requirements or incentives applying to fuel suppliers, vehicle 
suppliers, and motorists that would achieve the Act's fuel replacement 
goals.

D. Law Enforcement Vehicle and Urban Bus Optional Rulemakings

    Section 507(k)(1) allows the Secretary, by rule, to include fleets 
of law enforcement vehicles in a fleet requirement program established 
under section 507(g), if it is determined that this inclusion would 
contribute to achieving the goal described in section 502(b)(2)(B) (or 
such other date as is established under section 504). 42 U.S.C. 
13257(k)(1). A DOE decision to include law enforcement motor vehicles 
in a fleet requirement program established under section 507(g) is 
dependent upon a determination that this inclusion will not hinder the 
use of motor vehicles for law enforcement purposes. Only one rulemaking 
may be initiated under section 507(k)(1). Under section 507(k)(3), this 
rulemaking may not occur unless a rulemaking is carried out under 
section 507(g).
    Many law enforcement agencies currently are using alternative 
fueled vehicles satisfactorily. In some cases, alternative fuels can 
reduce life-cycle operation costs for high-mileage patrol vehicles. The 
operational characteristics of many administrative law enforcement 
vehicles create a good match with those of alternative fueled vehicles. 
However, DOE recognizes that many law enforcement agencies have unique 
operational practices and requirements that would reduce opportunities 
for alternative fueled vehicles. DOE is interested in receiving 
comments as to whether acquisition requirements for alternative fueled 
law enforcement motor vehicles should be included in a fleet 
requirement program and how this program should be structured, 
including the program start date and acquisition percentages.
    Section 507(k)(2) allows the Secretary, by rule, to include new 
urban buses, as defined by the Environmental Protection Agency (EPA), 
under title II of the Clean Air Act, in a fleet requirement program 
established under section 507(g), if it is determined that this 
inclusion would contribute to achieving the goal described in section 
502(b)(2)(B) (or such other date as is established under section 504). 
42 U.S.C. 13257(k)(2). An urban bus is defined by EPA as:

    A heavy-duty diesel-powered passenger-carrying vehicle with a 
load capacity of fifteen or more passengers and intended primarily 
for intra-city operation, i.e., within the confines of a city or 
greater metropolitan area. Urban bus operation is characterized by 
short rides and frequent stops. To facilitate this type of 
operation, more than one set of quick-operating entrance and exit 
doors would normally be installed. Since fares are usually paid in 
cash or tokens rather than purchased in advance in the form of 
tickets, urban buses would normally have equipment installed for 
collection of fares. Urban buses are also typically characterized by 
the absence of equipment and facilities for long distance travel, 
e.g., rest rooms, large luggage compartments, and facilities for 
stowing carry-on luggage. The useful life for urban buses is the 
same as the useful life for other heavy-duty diesel engines. 40 CFR 
86.091-2.

A DOE decision to include new urban buses in a fleet requirement 
program established under section 507(g) is dependent upon a 
determination that this inclusion will be consistent with energy 
security goals and the needs and objectives of encouraging and 
facilitating the greater use of such urban buses by the public, taking 
into consideration the impact of such application on public transit 
entities. Only one rulemaking may be initiated under section 507(k)(2). 
Under section 507(k)(3), this rulemaking may not occur unless a 
rulemaking is carried out under section 507(g).

II. General Issues Relating to Replacement Fuel Goals

    As explained in Section I of this notice, section 507(c) of the Act 
requires DOE to publish an advance notice of proposed rulemaking for 
the purposes of: Evaluating progress toward the replacement fuel goals 
of producing replacement fuels to replace, on an energy equivalent 
basis, at least 10 percent of motor fuels consumption by the year 2000 
and at least 30 percent by the year 2010 (or as modified under section 
504); identifying the problems with achieving those goals; assessing 
the adequacy and practicability of those goals; and considering all 
actions necessary to achieve those goals.
    Section 502(a) lays out a specific goal for a ``Replacement Fuel 
Supply and Demand Program'': To promote the development and use in 
light duty motor vehicles of domestic replacement fuels to substitute 
for imported petroleum motor fuels to the maximum extent practicable. 
42 U.S.C. 13252.
    In designing the program, DOE is to focus on those replacement 
fuels having the most impact in reducing oil imports, improving the 
health of the Nation's economy, and reducing emissions of greenhouse 
gases. Section 502(b)(2) further requires DOE to assess, among other 
things, the feasibility of producing adequate replacement fuels to 
displace 10 percent of U.S. motor fuel by 2000 and 30 percent by 2010. 
42 U.S.C. 13252(b)(2).
    DOE invites comments on the following general issues related to 
achieving the Act's suggested replacement fuel goals:
    1. Can the goal of replacing 30 percent of motor fuel consumption 
be achieved by 2010? What are the problems with achieving the goal?
    2. If the 30 percent goal cannot be achieved by 2010, then what is 
an achievable goal in terms of percentage and time frame?
    3. What methods or criteria should DOE use to assess the adequacy 
and practicality of specific replacement fuel goals (i.e., the 10 
percent and 30 percent targets) or for determining whether the goals 
should be modified?
    4. What type of a replacement fuels program should DOE establish 
that would maximize usage of alternative fuels, replacement fuels, and 
energy efficient vehicles? How should such a program be structured and 
implemented?
    5. What types of programs could be employed in combination with, or 
in place of, mandated fleet AFV acquisitions to help achieve the 30 
percent replacement fuel goal in 2010?
    6. What specific types of incentives, should be employed to help 
achieve the 30 percent replacement fuel goal in 2010? What form should 
these incentives take (e.g., financial, non-financial)? Who should 
benefit from these incentives (e.g., consumers, fleet operators, 
vehicle manufacturers, fuel providers, equipment suppliers) and how?
    7. How should the potential for dramatic changes in the price and 
availability of petroleum (e.g., due to a sharp curtailment in world 
petroleum

[[Page 19377]]

supplies) be factored into the design of a replacement fuels program?
    8. How should DOE estimate the fuel replacement impacts from other 
Federal or State alternative fueled vehicle mandates, voluntary 
commitments, use of dual fueled vehicles (that operate only part time 
on alternative fuels), and other measures?
    9. What methods are currently being used by fleets for tracking the 
use of alternative fuel in dual fueled vehicles? How should DOE use 
this data to verify alternative fuel use?
    10. How should DOE encourage alternative fuel use in dual fueled 
vehicles?
    11. What factors should DOE take into account when estimating the 
impact of replacement fuels on reducing oil imports, improving the 
health of the Nation's economy, and reducing greenhouse gas and other 
emissions?

III. Issues Related to Fleet Requirement Determinations

    Sections 507(e) and (g) require that DOE publish a rule in the 
Federal Register, no later than January 1, 2000, for the purpose of 
determining whether a fleet requirement for local government and 
private fleets to acquire alternative fueled vehicles is necessary. 
Such a program shall be considered necessary if the Secretary finds 
that:
    (a) the goal of replacement fuel use described in section 
502(b)(2)(B) (or as modified under section 504) is not expected to be 
actually achieved by 2010 (or other such date as established under 
section 504) by voluntary means or pursuant to Title V or any other law 
without such a fleet requirement program; and
    (b) the goal (or as modified under section 504) is practicable and 
actually achievable through implementation of such a fleet requirement 
program in combination with voluntary means and the application of 
other programs relevant to achieving the goal.
    Section 507(e)(2) requires that the rule published under section 
507(g) also must modify the goal described in section 502(b)(2)(B) and 
establish a revised goal pursuant to section 504 if the Secretary 
determines that the 30 percent motor fuel replacement goal by 2010 is 
inadequate or impracticable, and not expected to be achieved. The goal 
as modified and established is applicable in making these findings.
    Under section 507(e)(2), if DOE modifies the suggested 30 percent 
motor fuel replacement by 2010 goal, it also may modify the annual 
fleet acquisition requirements with the minimum percentage being no 
less than 10 percent of new light duty vehicle acquisitions.
    Likewise, section 507(g)(2) provides that DOE may, by rule, 
establish a lesser AFV acquisition requirement for any model year and 
that DOE may establish a fleet requirement program start date later 
than 2002. However, DOE may not establish acquisition percentages 
greater than those in section 507(g)(1).
    Regarding local government entities, section 507(i)(1)(C) provides 
an exemption for a local government entity if it can demonstrate to DOE 
that a fleet requirement program, under section 507(g), would pose an 
unreasonable financial hardship on the entity. The Act does not provide 
a similar exemption for private fleets that may be covered. However, 
for all fleets, sections 507(i)(1)(A) and (B) allow an exemption if the 
fleet demonstrates that alternative fueled vehicles that meet the 
normal requirements and practices of the principal business of the 
fleet owner are not reasonably available for acquisition or the 
alternative fuels that meet the normal requirements and practices of 
the principal business of the fleet owner are not available in the area 
in which the vehicles are to operated.
    DOE seeks comment on the following issues that may be relevant to 
any future DOE decision to propose alternative fueled vehicle 
acquisition requirements for local government and private fleets:
    1. If a fleet requirement program is established, should the 
acquisition percentages be the same as those provided in section 507(g) 
for the acquisition of new light duty motor vehicles or should a 
different acquisition schedule apply? If a different schedule should 
apply, what should the schedule look like (e.g., program start date, 
acquisition percentages)?
    2. If the Act's suggested goal of replacing 30 percent of the motor 
fuel used by 2010 is impracticable and not expected to be achieved, 
what should the modified fuel replacement goal be in terms of 
percentage replacement and the year the goal is expected to be 
achieved?
    3. What methods or criteria should DOE use to determine the 
contribution of a fleet requirement program towards meeting the fuel 
replacement goal as modified?
    4. What types of programs should be established, instead of a fleet 
requirement program, that will result in market penetration of 
alternative fueled vehicles and alternative fuels to the maximum extent 
practicable? And what market penetration(s) would be possible with the 
establishment of these programs?
    5. What types of voluntary and incentive measures should be 
undertaken, either in conjunction with fleet AFV requirements or in 
lieu of such mandates, such as a program that awarded credits for the 
amount of petroleum displaced or replaced, that would encourage 
progress toward the fuel replacement goals?
    6. DOE is required by section 507(l) to take into consideration the 
following factors: energy security, costs, safety, lead time 
requirements, vehicle miles traveled annually, effect on greenhouse 
gases, technological feasibility, energy requirements, economic impacts 
including impacts on fleets, workers, and consumers, such as users of 
the alternative fuels for other (non-transportation) purposes, and the 
availability of alternative fuels and alternative fueled vehicles.
    What bearing or weighting factor, if any, should these factors have 
on a DOE determination as to whether it should impose alternative 
fueled vehicle acquisition requirements on local government and private 
fleets?

IV. Issues Related to the Inclusion of Urban Buses in a Fleet 
Requirement Program

    DOE seeks comment on the following issues that may be relevant to 
any future DOE decision to propose the inclusion of alternative fueled 
urban bus acquisition requirements for local government and private 
fleets under a fleet requirement program that may be established under 
section 507(g) of the Act:
    1. What methods or criteria should DOE use in determining whether 
the inclusion of alternative fueled urban buses in a fleet requirement 
program under section 507(g) would contribute to achieving the goal of 
section 502(b)(2)(B) (or other such goal as modified by section 504)?
    2. What methods or criteria should DOE use in determining whether 
the inclusion of alternative fueled urban buses in a fleet requirement 
program will be consistent with the energy security goals and the needs 
and objectives of encouraging and facilitating the greater use of 
alternative fueled buses by the public?
    3. What factors should DOE take into consideration when estimating 
the impact on public transit entities of a program requiring the 
acquisition of alternative fueled buses?
    4. If a fleet requirement program is established, should 
requirements for the acquisition of alternative fueled urban buses 
apply to both local government and private fleets? Or, should 
requirements only apply to local government fleets?
    5. Should the acquisition percentages be the same as those that 
apply to local

[[Page 19378]]

government and private fleets for new light duty vehicles under section 
507(g) or should a different acquisition schedule apply? If a different 
schedule should apply to the acquisition of alternative fueled urban 
buses, what should the schedule look like (e.g., program start date, 
acquisition percentages)?
    6. What types of exemptions and/or exclusions should be included in 
such a fleet requirement program?

V. Review and Analysis Requirements

    DOE provided to the Office of Information and Regulatory Affairs 
(OIRA) in the Office of Management and Budget a copy of this notice for 
comment. At the proposal stage for this rulemaking, DOE and OIRA will 
determine whether this rulemaking is a significant regulatory action 
under Executive Order 12866, Regulatory Planning and Review, 58 FR 
51735 (Oct. 4, 1993). Were DOE to propose alternative fueled vehicle 
acquisition requirements for local government and private fleets, the 
rulemaking could constitute an economically significant regulatory 
action, and DOE would prepare and submit to OIRA for review the 
assessment of costs and benefits required by section 6(a)(3) of 
Executive Order 12866. Other procedural and analysis requirements in 
other Executive Orders and statutes also may apply to such future 
rulemaking action, including the requirements of the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq.; the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq.; and the Unfunded Mandates Act of 1995, Pub. L. 
104-4; and the National Environmental Policy Act, 42 U.S.C. 4321 et 
seq.

VI . Public Comment Procedures

A. Participation in Rulemaking

    DOE encourages the maximum level of public participation possible 
in this rulemaking. Individual fleet operators; representatives of 
trade groups; local governments; consumers of fleet services; vehicle 
manufacturers; fuel providers, including producers; distributors and 
service station operators; associations; States or other governmental 
entities; and others are urged to submit written comments on the 
proposal. DOE 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.
    DOE has established a period of 90 days following publication of 
this notice for persons and organizations to comment on this advance 
notice of proposed rulemaking. All public comments, public hearing 
transcripts, and other docket material will be available for review and 
copying in the DOE Freedom of Information Reading Room at the address 
shown at the beginning of this notice. The docket file material will be 
filed under ``EE-RM-98-507.''

B. Written Comment Procedures

    Interested persons are invited to participate in this proceeding by 
submitting written data, views or arguments with respect to the 
subjects set forth in this notice. Instructions for submitting written 
comments are set forth at the beginning of this notice and below. Where 
possible, commenters should identify the specific section and question 
number to which they are responding.
    Comments (8 copies) should be labeled both on the envelope and on 
the documents, ``Fleet AFV Acquisition Requirements Rulemaking (Docket 
No. EE-RM-98-507),'' and must be received by the date specified at the 
beginning of this notice. All comments and other relevant information 
received by the date specified at the beginning of this notice will be 
considered by DOE in the subsequent stages of the rulemaking process.
    Pursuant to the provisions of 10 CFR 1004.11, any person submitting 
information or data that is believed to be confidential and exempt by 
law from public disclosure should submit one complete copy of the 
document and 3 copies, if possible, from which the information believed 
to be confidential has been deleted. DOE will make its own 
determination with regard to the confidential status of the information 
or data and treat it according to its determination.

C. Public Hearings

1. Procedure for Submitting Requests to Speak
    The dates, times and places of the public hearings are indicated at 
the beginning of this notice. DOE invites any person who has an 
interest in these proceedings, or who is a representative of a group or 
class of persons having an interest, to make a request for an 
opportunity to make an oral presentation at the public hearings. 
Requests may be telephoned to the telephone number given at the 
beginning of this notice. The person making the request should give a 
telephone number where he or she may be contacted. Persons will be 
notified by DOE as to the approximate time they will be speaking.
    Each person is requested to submit 8 copies of his/her statement at 
the registration desk prior to the beginning of the hearing. In the 
event any person wishing to testify cannot meet this requirement, that 
person may make alternative arrangements by calling (202) 586-3012 in 
advance.
2. Conduct of Hearing
    DOE reserves the right to select the persons to be heard at the 
hearings, to schedule the respective presentations, and to establish 
the procedures governing the conduct of the hearings. Each presentation 
is limited to 10 minutes.
    A DOE official will be designated to preside at the hearings. The 
hearings will not be judicial or evidentiary-type hearings, but will be 
conducted in accordance with the Administrative Procedure Act, 5 U.S.C. 
553, and section 501 of the DOE Organization Act, 42 U.S.C. 7191. At 
the conclusion of all initial oral statements, each person who has made 
an oral statement will be given the opportunity to make a rebuttal or 
clarifying statement, subject to time limitations. Any further 
procedural rules regarding proper conduct of the hearings will be 
announced by the presiding official.
    Transcripts of the hearings will be made and the entire record of 
this rulemaking, including the transcripts, will be retained by DOE and 
made available for inspection at the DOE Freedom of Information Reading 
Room as provided at the beginning of this notice. Any person may 
purchase a copy of the transcripts from the transcribing reporter.

    Issued in Washington, DC, on April 8, 1998.
Dan W. Reicher,
Assistant Secretary, Energy Efficiency and Renewable Energy.
[FR Doc. 98-10239 Filed 4-16-98; 8:45 am]
BILLING CODE 6450-01-P