[Federal Register Volume 64, Number 94 (Monday, May 17, 1999)]
[Rules and Regulations]
[Pages 26822-26829]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12250]



[[Page 26821]]

_______________________________________________________________________

Part II





Department of Energy





_______________________________________________________________________



Office of Energy Efficiency and Renewable Energy



_______________________________________________________________________



10 CFR Part 490



Alternative Fuel Transportation Program; P-series Fuels; Final Rule

  Federal Register / Vol. 64, No. 94 / Monday, May 17, 1999 / Rules and 
Regulations  

[[Page 26822]]



DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 490

[Docket No. EE-RM-98-PURE]
RIN 1904-AA99


Alternative Fuel Transportation Program; P-Series Fuels

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy (DOE).

ACTION: Notice of final rulemaking.

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

SUMMARY: In response to a petition filed by Pure Energy Corporation, 
DOE is amending the rules for the statutory program that requires 
certain alternative fuel providers and State government fleets to 
acquire alternative fueled vehicles. The regulatory amendments add 
three specific blends of methyltetrahydrofuran, ethanol and 
hydrocarbons (known as ``P-series'' fuels) to the definition of 
``alternative fuel.''

EFFECTIVE DATE: June 16, 1999.

FOR FURTHER INFORMATION CONTACT: Kenneth R. Katz, Office of Energy 
Efficiency and Renewable Energy, (EE-34), U.S. Department of Energy, 
1000 Independence Avenue, S.W., Washington, D.C. 20585, (202) 586-9171.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

A. Fuel Characteristics

    On June 30, 1997, Pure Energy Corporation petitioned DOE for a 
rulemaking to add its proprietary fuel products to the definition of 
``alternative fuel'' under the Alternative Fuel Transportation Program 
(Program) regulations (10 CFR part 490). DOE published in the Federal 
Register the proposed rulemaking on July 28, 1998, 63 FR 40202. Pure 
Energy Corporation's P-series fuels are blends of ethanol, 
methyltetrahydrofuran (MTHF), and pentanes plus, with butane added to 
blends that would be used in severe cold-weather conditions to meet 
engine cold start requirements. Pure Energy Corporation has represented 
that both the ethanol and the MTHF will be derived from renewable 
resources, such as cellulosic biomass from waste paper, agricultural 
waste and urban/industrial wood waste. Pure Energy Corporation plans to 
use pentanes plus derived from the processing and production of natural 
gas, as opposed to those derived from petroleum refining processes. 
Pure Energy Corporation holds the exclusive worldwide license to 
manufacture and distribute the P-series fuels, which were developed by 
Dr. Stephen Paul of Princeton University. The P-series fuels were 
awarded Patent number 5,697,987 by the United States Patent and 
Trademark Office on December 16, 1997. DOE's evaluation of Pure Energy 
Corporation's petition is restricted to three of the formulations 
covered under this patent.
    To make the P-series fuels, Pure Energy Corporation will be 
producing ethanol and MTHF through an integrated process. The company 
expects to use commercially proven concentrated acid hydrolysis as its 
base technology for this integrated production process. MTHF is 
currently produced in limited quantities from furfural (derived from 
both biomass and petroleum feedstocks) for use as a specialty chemical 
in consumer products and/or process industries. Pure Energy Corporation 
has developed a thermochemical technology to produce MTHF from 
cellulosic feedstocks through a levulinic acid pathway. Levulinic acid 
is a crystalline keto acid obtained by action of dilute acids on 
hexoses (six-carbon sugars like glucose or fructose) and on substances, 
such as starch or sucrose, that yield hexoses on hydrolysis. The 
company integrates this process with an ethanol production system to 
achieve technical and economic efficiencies. In this process, the 
lignocellulosic feedstock is converted into both five- and six-carbon 
sugars, which are then bifurcated into fermentation and thermochemical 
pathways to produce ethanol and MTHF, respectively.
    Pure Energy Corporation has developed several formulations of the 
P-series fuels. The company proposes to vary the components of its P-
series fuels to meet particular market demands. The three formulations 
described in Table 1 (Pure Regular, Pure Premium and Pure Cold Weather) 
are those for which Pure Energy Corporation, in its petition, provided 
specific energy and emissions data. The company claims that the 
volumetric percentages of each of the components of the P-series fuels 
can range from 10 percent to 50 percent for pentanes plus; from 15 
percent to 55 percent for MTHF; from 25 percent to 55 percent for 
ethanol; and from zero to 15 percent for normal butane. Table 1 
provides the compositions, by volume, of the three specific P-series 
fuel formulations which are the subject of this rulemaking.

                                Table 1--Volume Composition of the P-series Fuels
----------------------------------------------------------------------------------------------------------------
                                                                                      Premium      Cold weather
                           Constituent                                Regular        (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Pentanes plus...................................................            32.5            27.5            16.0
MTHF............................................................            32.5            17.5            26.0
ethanol.........................................................            35.0            55.0            47.0
normal butane...................................................             0.0             0.0            11.0
----------------------------------------------------------------------------------------------------------------

    Based on the data supplied in the petition, the composition of P-
series fuels varies from 60 to 100 percent non-petroleum, on an energy 
basis, depending on the source of the pentanes plus and n-butane 
components of the blends.
    Pure Energy Corporation intends to market the P-series fuels to 
owners of flexible fuel vehicles (FFVs) designed to operate on E-85 (85 
percent ethanol/15 percent gasoline), on gasoline, or on any blend of 
those two fuels. Flexible fuel vehicles are currently available from 
two major domestic auto manufacturers as mid-size sedans, minivans and 
compact pickup trucks.

B. Patent

    On December 16, 1997, the United States Patent and Trademark Office 
issued U.S. Patent No. 5,697,987, titled Alternative Fuel, to Princeton 
University on a new non-petroleum fuel, for spark-ignition engines, 
called the P-series. The United States Patent and Trademark Office's 
abstract for this patent reads:

    A spark ignition motor fuel composition consisting essentially 
of: a hydrocarbon component containing one or more hydrocarbons 
selected from five to eight carbon atoms straight-chained or 
branched alkanes essentially free of olefins, aromatics, benzene and 
sulfur, wherein the hydrocarbon component has a minimum anti-knock 
index of 65 as measured by ASTM D-2699 and D-2700 and a maximum DVPE 
of 15 psi as measured by ASTM D-5191; a fuel grade

[[Page 26823]]

alcohol; and a co-solvent for the hydrocarbon component and the fuel 
grade alcohol; wherein the hydrocarbon component, the fuel grade 
alcohol and the co-solvent are present in amounts selected to 
provide a motor fuel with a minimum anti-knock index of 87 as 
measured by ASTM D-2699 and D-2700, and a maximum DVPE of 15 psi as 
measured by ASTM D-5191. A method for lowering the vapor pressure of 
a hydrocarbon-alcohol blend by adding a co-solvent for the 
hydrocarbon and the alcohol to the blend is also disclosed.

C. Background

    10 CFR part 490 implements, in part, title V of the Energy Policy 
Act of 1992 (EPACT) (Public Law 102-486) which mandates alternative 
fueled vehicle acquisition requirements for certain alternative fuel 
providers and State government fleets. Part 490 is one of a variety of 
EPACT programs to promote alternative and replacement fuels that reduce 
reliance on imported oil, reduce criteria pollutant and greenhouse gas 
emissions, increase energy efficiency, and help displace 10 percent of 
conventional motor fuels by 2000 and 30 percent by 2010.
    Title III of EPACT requires Federal fleet acquisitions of 
alternative fueled vehicles. Title IV includes specific authority for a 
financial incentive program for States, a public information program, 
and a program for certifying alternative fueled vehicle technician 
training programs. In addition to the mandates for the purchase of 
alternative fueled vehicles by certain alternative fuel providers and 
State government fleets, title V provides for a possible similar 
mandate for certain private and municipal fleets. Title VI provides for 
a program to promote electric motor vehicles.
    The types of vehicles that satisfy the alternative fuel provider 
and State government fleet mandates in title V are determined in part 
by the definition of ``alternative fuel'' in section 301(2). That 
definition provides: ``Alternative fuel' means methanol, denatured 
ethanol, and other alcohols; mixtures containing 85 percent or more (or 
such other percentage, but not less than 70 percent, as determined by 
the Secretary, by rule, to provide for requirements relating to cold 
start, safety, or vehicle functions) by volume of methanol, denatured 
ethanol, and other alcohols with gasoline or other fuels; natural gas; 
liquefied petroleum gas; hydrogen; coal-derived liquid fuels; fuels 
(other than alcohol) derived from biological materials; electricity 
(including electricity from solar energy); and any other fuel the 
Secretary determines, by rule, is substantially not petroleum, and 
would yield substantial energy security benefits and substantial 
environmental benefits.'' [Emphasis added.] 42 U.S.C. 13211(2). The 
emphasized phrase in the definition of ``alternative fuel'' states the 
minimum procedural and substantive requirements for adding a new fuel 
blend to the list of fuels enumerated or implicitly covered by the 
provisions of section 301(2).
    For reasons set forth in detail below, DOE determines that the 
three P-series fuels described in Pure Energy Corporation's petition 
(Pure Regular, Pure Premium and Pure Cold Weather) and by United States 
Patent number 5,697,987, which contain at least 60 percent non-
petroleum energy content derived from MTHF, which must be manufactured 
solely from biological materials, and ethanol, which must be 
manufactured solely from biological materials, are substantially not 
petroleum and would yield substantial energy security benefits and 
substantial environmental benefits, and thus are hereby added to the 
definition of ``alternative fuel'' in 10 CFR 490.2.

II. Discussion of Public Comments

A. Pure Energy Corporation Comments

    Pure Energy Corporation, the petitioner, was among those submitting 
comments to DOE in response to the Notice of Proposed Rulemaking (NOPR) 
(63 FR 40202). In the NOPR, DOE noted that neither the Energy Policy 
Act of 1992 (the Act), nor the language of legislative committee 
reports, provides any guidance on how to measure whether a fuel is 
``substantially non-petroleum.'' The word ``substantially,'' DOE 
observed, ``* * * is sometimes used as a synonym for the word `mainly' 
'' and ``* * * at other times as a synonym for the words `considerably' 
or `importantly.' '' Whether to construe ``substantially'' in the 
first, narrower sense or in the latter, broader one, DOE said, was a 
policy question. DOE further said, ``Obviously, a fuel that is more 
than 50 percent non-petroleum in energy-equivalent terms is `mainly' 
and therefore `substantially non-petroleum.' '' ( 63 FR 40204). Fuels 
of less than 50 percent non-petroleum content could still be regarded 
as ``substantially non-petroleum'' if ``substantially'' were construed 
in the broader sense, DOE reasoned, since such fuels could be regarded 
as ``considerably'' or ``importantly'' non-petroleum. Because all three 
of the P-series fuel formulations Pure Energy Corporation described in 
its petition are more than 60 percent non-petroleum in energy terms, 
DOE elected not to address the policy question of whether to construe 
``substantially'' in the narrow or broad sense. DOE proposed to 
designate P-series fuel blends as alternative fuels if, like the three 
P-series blends described in Pure's petition, they are at least 60 
percent non-petroleum in energy terms.
    In its comments, Pure Energy Corporation endorsed DOE's statement 
regarding fuels of 50 percent or greater non-petroleum content. The 
company went on to state its belief that ``* * * 50 percent minimum 
non-petroleum energy content is the right standard as a matter of law 
and public policy * * *'' The company submitted data on a fourth P-
series formulation it claimed meets the standards for ``substantial 
energy security benefits'' and ``substantial environmental benefits,'' 
but which is 52.3 percent non-petroleum in energy content. Pure Energy 
Corporation requested that DOE, in its final rulemaking, set a minimum 
non-petroleum energy content for P-series fuels at 50 percent, rather 
than at the 60 percent level proposed in the NOPR.
    The vehicle emissions test data for the fourth P-series blend 
submitted by Pure Energy Corporation with its comments were 
inconclusive. Therefore, DOE asked the company to submit additional 
data. In order to proceed in an expeditious manner, DOE is electing to 
proceed with the final rule on the three P-series blends described in 
Pure Energy Corporation's original petition, and will address the 
fourth formulation when we receive the additional data.

B. Other Public Comments

    In addition to Pure Energy Corporation, forty-two other firms, 
organizations and individuals submitted comments in response to the 
NOPR. The majority of these spoke in favor of granting Pure Energy 
Corporation's petition, with none of their comments raising a 
significant issue regarding the rule. Three commenters, however, raised 
objections to DOE's granting the petition. Their comments and DOE's 
responses to them are summarized below.
    One commenter raised the possibility that reactions could occur 
between the methyltetrahydrofuran (MTHF) component of P-series fuels 
and metallic engine components containing molybdenum. (For example, 
molybdenum is sometimes used as a ``facing'' material on engine piston 
rings.) The commenter expressed concern that such reactions could 
degrade those components and lead to the formation of hydrogen which 
could in turn lead to hydrogen embrittlement of engine parts. This 
commenter cited work reported in the Bulletin of the

[[Page 26824]]

Korean Chemical Society in which molybdenum atoms were observed to 
break apart the chemical bonds in MTHF, among other compounds.
    DOE's examination of the work cited revealed that the Korean 
researchers had vaporized a molybdenum wire with very high electric 
currents to produce free molybdenum atoms. Molybdenum's melting point 
is over 4750  deg.F. and its boiling point is over 8380  deg.F. These 
temperatures are far higher than any actually experienced by any part 
of an internal combustion engine. Thus, there is little likelihood that 
free molybdenum atoms could be liberated from molybdenum-bearing engine 
parts to react in the gas phase with MTHF. Moreover, hydrogen 
embrittlement is not a problem in current engines, despite the fact 
that free hydrogen may be produced as a combustion intermediate 
whenever any hydrogen-bearing fuel is used. Therefore, there is no 
reason to expect that P-series fuels will engender hydrogen 
embrittlement problems.
    The commenter raised the possibility that molybdenum could also 
lead to similar hydrogen-related problems in fuel storage systems. 
Molybdenum is a key ingredient in hydro treating catalysts. These 
catalysts are used in refining processes which remove sulfur from 
petroleum and natural gas liquids and otherwise improve their 
properties. The commenter suggested that molybdenum would be carried 
over from these catalysts in the pentanes plus and subsequently react 
with other P-series fuel components to generate hydrogen by the same 
reactions the commenter had proposed would occur in engines. This 
problem does not exist with other fuels that have undergone hydro 
treatment, so it is unlikely it will exist with P-series fuels. In 
hydro treating catalyst formulations, molybdenum exists in the form of 
molybdenum disulfide, not as metallic molybdenum. The Korean research 
that the commenter cited indicates that metallic molybdenum and 
extremely high temperatures are needed to promote the reactions the 
commenter fears will lead to hydrogen formation.
    Finally, noting the high ethanol content of P-series fuels, this 
commenter expressed the concern that contamination of the fuels by 
water would lead to fuel phase separation. DOE believes the fuels 
industry has accumulated ample experience in handling and distributing 
fuels containing varying proportions of ethanol over the past 20 or 
more years to prevent this from being a concern.
    A second commenter, citing P-series' ``wide variation in petroleum 
content (the butane and pentanes plus),'' urged DOE to resolve the 
issue of ``* * * whether P-series fuel meets the definition of 
`substantially non-petroleum.' '' As DOE noted in the NOPR, the P-
series fuels that are the subject of this rulemaking are a minimum of 
63.8 percent non-petroleum on an energy basis, and DOE regards this as 
sufficient to qualify them as ``substantially non-petroleum.'' Further, 
the butane and pentanes plus may as easily be derived from natural gas 
processing as from petroleum refining, and hence may also be non-
petroleum. In that case, P-series fuels would be 100 percent non-
petroleum.
    The commenter also pointed out that, ``Fuels must also have tightly 
controlled specifications for proper combustion and vehicle operation. 
It is critical that performance-based fuel specifications be 
established and enforced.'' Lack of such specifications, the commenter 
said, would increase the difficulty vehicle manufacturers would 
encounter in meeting increasingly stringent emissions standards and 
permit wide variations of in-use fuel properties. This in turn would 
``limit vehicle manufacturer and consumer interest in these fuels.'' 
DOE recognizes the validity of this concern, but the establishment of 
practical, detailed fuel specifications lies outside DOE's authority. 
Traditionally, such specifications are arrived at through a consensus 
of fuel producers and users, based on economics and performance. The 
American Society for Testing and Materials (ASTM) provides one example 
of an appropriate forum for achieving such a consensus. DOE will be 
available to assist those organizations with the establishment of 
detailed fuel specifications for the P-series fuels.
    Finally, the commenter pointed out that existing flexible fuel 
vehicle products have not been designed to operate on P-series fuels 
and have not been validated for operation on these fuels, 
notwithstanding the emissions testing carried out by Pure Energy 
Corporation. ``It would be inappropriate to state or imply such a 
capability,'' the commenter said. The commenter added that use of P-
series fuels in existing flexible fuel vehicles or in future vehicles 
not certified with P-series fuels could void the manufacturers' 
warranties. DOE also acknowledges the validity of these comments. DOE 
has not stated or implied, by granting alternative fuel status to P-
series fuels, that available vehicles were manufactured to operate on 
the fuels or that use of the fuels will not void vehicle warranties. 
How and under what circumstances to honor product warranties is the 
responsibility of the vehicle manufacturers, and DOE's decision to 
grant the P-series fuels alternative fuel status in no way limits 
manufacturers' prerogatives in this regard. Ultimately, it will be up 
to vehicle manufacturers to determine the effects of fuels on their 
products and to decide whether they wish to test or certify their 
vehicles on those fuels.
    A third commenter opposed the designation of P-series fuels as 
alternative fuels under the Act. This commenter stated the belief ``* * 
* that a fuel mixture that contains only 60 percent non-petroleum fuel 
should not be classified as an alternative fuel.'' DOE disagrees with 
this statement and stands by the reasoning that led to its initial 
affirmative determination to proceed with a rulemaking, as explained in 
the NOPR. ``Furthermore,'' the commenter went on, ``there is no 
assurance that the fuels under consideration actually will have even 
this level of non-petroleum content, since some of the components of 
the fuels can come from petroleum or non-petroleum feedstocks.'' This 
comment appears to arise from a misreading of the NOPR. In fact, the 
minimum non-petroleum content of the P-series fuels that are the 
subject of this rulemaking is 63.8 percent (on an energy basis). If the 
balance of the blend constituents are from natural gas processing, the 
blend will be wholly (100 percent) from non-petroleum sources.
    In evaluating the P-series fuels, and in light of feedback received 
that expressed concerns similar to those of the above commenter, DOE 
became concerned that Pure Energy Corporation would have the ability to 
utilize ethanol that is not manufactured from biomass or biological 
materials. It is possible to manufacture ethanol from petroleum, for 
example, by the hydration of ethylene. DOE believes that Pure Energy 
Corporation fully intends to manufacture the ethanol included in the P-
series fuels from biological materials. However, because DOE has some 
concerns about the availability of biologically derived ethanol, it was 
decided to limit the ethanol feedstock for the P-series fuels to 
biological materials. Therefore, the parenthetical phrase 
``manufactured solely from biological materials'' has been added to the 
regulatory language as a qualifier for the ethanol feedstock.
    The commenter also raised several procedural objections to DOE's 
proposed granting of alternative fuel status to Pure's P-series fuels. 
The first of these is the commenter's contention that ``DOE must define 
new alternative fuel blends in the same way existing

[[Page 26825]]

blends are defined.'' According to the commenter, ``In attempting to 
expand the list of alternative fuels, DOE has improperly construed the 
statute's requirement that new fuels must be `substantially non-
petroleum.' Moreover, in interpreting the term `substantially,' DOE has 
completely ignored the guidelines established for fuel blends/mixtures 
explicitly recognized in the Act.'' The commenter's reference is to 
section 301(2) of the Act, which says (in part): ``the term 
`alternative fuel' means methanol, denatured ethanol, and other 
alcohols; mixtures containing 85 percent or more (or such other 
percentage, but not less than 70 percent, as determined by the 
Secretary, by rule, to provide for requirements relating to cold start, 
safety, or vehicle functions) by volume of methanol, denatured ethanol, 
and other alcohols with gasoline or other fuels * * *''
    The commenter claims that in identifying specific fuels and fuel 
blends deemed to be alternative fuels, the Act established guidelines 
that DOE must adhere to in making subsequent determinations. In 
particular, the commenter believes section 301(2) of the Act ``* * * 
explicitly forbid[s] the inclusion of ethanol fuel blends where the 
ethanol component of the mixture is less than 85 percent,'' and that, 
``[t]here is no statutory basis for designating as alternative fuels 
blends that contain considerably more petroleum than the blends listed 
in the statute.''
    DOE believes that the commenter has misinterpreted the Act. In 
conferring explicit alternative fuel status on ethanol blends of 85 
volume percent and above, DOE does not believe Congress intended 
implicitly to reject all ethanol blends of less than 85 volume percent. 
Indeed, the Secretary of Energy is granted discretion under certain 
circumstances to approve ethanol blends containing as little as 70 
percent ethanol. Nor does DOE believe that the Congress, by providing a 
list of alternative fuels, was enunciating overarching principles that 
it intended DOE to follow in future determinations. Rather, Congress 
delineated such principles explicitly in section 301(2) when it said 
that the definition of ``alternative fuel'' could include ``* * * any 
other fuel the Secretary determines, by rule, is substantially non-
petroleum and would yield substantial energy security benefits and 
substantial environmental benefits'' [Emphasis added]. The commenter's 
inferences regarding Congressional intent cannot be reconciled with 
this explicit language. Finally, as noted above, the P-series blends do 
not necessarily or always contain any petroleum component.
    The three criteria enumerated in section 301(2), which DOE has used 
in making this determination (and, as directed by Congress, will be 
used in making future determinations) represent a rigorous standard by 
which to measure the efficacy of potential alternative fuels in 
achieving the overall goals of the Energy Policy Act. DOE believes that 
analysis of potential alternative fuels by these criteria is 
appropriate and statutorily required.
    The commenter also expressed the view that DOE erred in making its 
determination of whether a fuel is substantially non-petroleum on the 
basis of the fuel's energy content, rather than on the basis of the 
volume of the fuel that is non-petroleum. The commenter said, ``DOE's 
notice [the NOPR] indicates that, since the energy displacement goals 
contained in EPACT are measured in terms of energy equivalent units, 
DOE also may evaluate a fuel's non-petroleum content based on energy 
displacement rather than volume displacement.'' The commenter went on, 
``Section 301(2) actually dictates that the blended fuels recognized in 
the Act must contain at least 70 percent by volume of ethanol, methanol 
or alcohol. Looking at the statute and the specific section under 
review reveals that Congress intended these fuels to be compared based 
on volume not energy displacement.'' [Emphasis in original] Here again, 
DOE believes the inferences the commenter draws from section 301(2) of 
the Act regarding Congressional intent are incorrect. Nothing in the 
portion of section 301(2) that lists fuels Congress designated as 
alternative fuels at the time of the Act's passage can be read as 
establishing rigorous standards DOE is obliged to apply in future 
alternative fuel determinations. In addition to the neat and blended 
alcohol fuels, Section 301(2) lists natural gas and hydrogen. These 
alternative fuels are gases whose volume depends on the pressure and 
temperature under which they are stored. Energy content (energy 
displacement potential) is the only reasonable basis on which to 
compare them to the liquid fuels. This is also an appropriate basis of 
comparison since all transportation prime movers which might use any of 
these fuels are dependent on fuel energy content, rather than fuel 
volume.

III. Statutory Criteria for Designating Additional Alternative 
Fuels

    Neither section 301(2) nor any other provision of the Act states 
specifically or indicates how to measure whether a new fuel: (1) is 
``substantially not petroleum'' and (2) would yield ``substantial 
energy security benefits;'' and (3) would yield ``substantial 
environmental benefits.'' Moreover, the Act does not state that these 
criteria are exclusive; in appropriate circumstances, DOE could 
consider other criteria related to achievement of the purposes of the 
Program.
    Legislative committee report language likewise does not identify 
specifically what numbers and measures Congress viewed as defining the 
minimums that would qualify as substantially not petroleum, and that 
would satisfy the substantial energy security and substantial 
environmental benefits criteria. However, the report of the House 
Committee on Energy and Commerce described the pertinent language in 
section 301(2) as providing ``* * * the Secretary with the opportunity 
to add alternative and replacement fuels that are not now being 
marketed to those specifically identified in the legislation.'' 
[Emphasis added.] H.R. Rep. No. 474(1), 102nd Cong., 2nd Sess., 182, 
reprinted in 1992 U.S. Code Cong. & Admin. News 2005. The word 
``opportunity'' suggests that the authority to add fuels to the 
definition of ``alternative fuel'' is largely discretionary.
    In evaluating the P-series fuels, DOE asked the National Renewable 
Energy Laboratory and Argonne National Laboratory to review the data 
presented in Pure Energy Corporation's petition against the statutory 
criteria for designating an ``alternative fuel.'' Copies of these 
evaluations, 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-090, 1000 Independence Ave., S.W., 
Washington, DC 20585, telephone (202) 586-3142, between the hours of 
8:30 a.m. and 4:30 p.m., Monday through Friday, except Federal 
holidays. The docket file material will be filed under ``EE-RM-98-
PURE.''

A. Substantially Not Petroleum

    Any standard dictionary or thesaurus indicates that 
``substantially'' is an adverb that can be used to convey a variety of 
subtly different meanings. ``Substantially'' is sometimes used as a 
synonym for the word ``mainly.'' At other times, it is used as a 
synonym for the words ``considerably'' or ``importantly.'' See, e.g., 
Webster's New World Thesaurus 725 (Simon & Schuster, 1985). Since this 
rulemaking does not involve fuels that are less than

[[Page 26826]]

50 percent non-petroleum, in terms of energy content, it is unnecessary 
to address this policy question.
    Section 502(b) of the Act establishes goals for replacing the 
projected consumption of motor fuel in the U.S. on an energy equivalent 
basis. The goals provided by this section are that 10% of the motor 
fuel consumed by 2000 and 30% of the motor fuel consumed by 2010 will 
be replacement fuels. These goals are the driving force for all the 
alternative and replacement fuel provisions in the Act. Because the 
achievement of these goals is to be measured on an energy equivalent 
basis, DOE believes that, when evaluating a fuel, the determination of 
whether it is ``substantially not petroleum'' should be based on an 
analysis of the fuel's non-petroleum energy content, rather than a 
volumetric analysis of the fuel's non-petroleum content.
    Pure Energy Corporation claims that, on an energy basis, its three 
P-series fuels will be at least 60 percent derived, and may be up to 
100 percent derived, from non-petroleum sources, depending on the 
source of the light hydrocarbons in the blends. In its petition, the 
Pure Energy Corporation provided DOE with information and analysis to 
substantiate these claims. DOE confirms the accuracy of Pure Energy 
Corporation's claim regarding the energy-based non-petroleum content of 
the P-series fuels. Table 2 summarizes the worst-case (lowest non-
petroleum) makeup of the three P-series fuel formulations, based on the 
net (lower) heating value of all constituents.

                      Table 2--Verified Non-petroleum Energy Content of the P-series Fuels
----------------------------------------------------------------------------------------------------------------
                                                                                                   Cold weather
                           Constituent                                Regular         Premium        (percent)
----------------------------------------------------------------------------------------------------------------
Pentanes plus...................................................            36.2            33.3            19.1
MTHF............................................................            37.7            22.1            32.3
ethanol.........................................................            26.1            44.6            37.5
normal butane...................................................             0.0             0.0            11.2
Non-petroleum (excluding pentanes plus, butane).................            63.8            66.7            69.8
----------------------------------------------------------------------------------------------------------------

    It is evident to DOE that the MTHF and ethanol components of the P-
series fuels, as described in Pure Energy Corporation's petition, will 
be non-petroleum, because they will be manufactured from biological 
materials. However it is less clear whether the pentanes plus component 
is non-petroleum. DOE's Energy Information Administration (EIA), in its 
publication Annual Energy Review 1996, 386 ((DOE/EIA-0384(96)) defines 
``pentanes plus'' as ``a mixture of hydrocarbons, mostly pentanes and 
heavier, extracted from natural gas. [This] includes isopentane, 
natural gasoline, and plant condensate.'' This same publication also 
defines petroleum products as including ``unfinished oils, liquefied 
petroleum gases, pentanes plus, aviation gasoline, motor gasoline, 
naphtha-type jet fuel, kerosene-type jet fuel, kerosene, distillate 
fuel oil, residual fuel oil, petrochemical feedstocks, special 
naphthas, lubricants, waxes, petroleum coke, asphalt, road oil, still 
gas, and miscellaneous products.'' However, it is unnecessary to 
determine whether to restrict pentanes plus on the basis of source 
because the MTHF and ethanol, which must be manufactured solely from 
biological materials, are present in all three fuel blends, result in a 
non-petroleum energy content for the P-series formulations of at least 
63.8 percent. That percentage is the main or predominant portion of the 
fuel, and even under the narrow definition of ``substantially,'' the 
three fuel blends are ``substantially not petroleum.''
    Because U.S. Patent number 5,697,987 does not specifically define 
the composition of the three P-series fuels, DOE has determined that 
the fuels need to be more specifically described before they can be 
added to the regulatory definition of ``alternative fuel.'' Given that 
the petition shows that the three P-series fuels will be at least 60 
percent derived from non-petroleum sources, and the fact that Pure 
Energy Corporation claims that, on an energy basis, its three P-series 
fuels will be at least 60 percent derived from non-petroleum sources, 
DOE is using that percentage in the rule as a way of more narrowly 
defining the three P-series fuels. DOE believes that the amount of MTHF 
and ethanol in the fuel blends will result in a non-petroleum content 
of at least 60 percent for the three P-series fuels, absent any other 
non-petroleum component, if the MTHF and the ethanol are manufactured 
solely from biological materials. Although, based on our evaluation, 
DOE could have established a non-petroleum content of 63.8 percent for 
the P-series fuels, establishing the minimum percentage of 60 percent 
provides the company with some processing flexibility.
    On the basis of the foregoing, DOE has concluded that the three P-
series fuels, as described by United States Patent number 5,697,987, 
which contain at least 60 percent non-petroleum energy content derived 
from MTHF, which must be manufactured solely from biological materials, 
and ethanol, which must be manufactured solely from biological 
materials, are ``substantially not petroleum'' as that phrase is used 
in section 301(2) of the Act.

B. Substantial Energy Security Benefits

    Pure Energy Corporation claims in its petition that the three P-
series fuels are 100 percent domestic and capable of displacing 
gasoline on essentially a gallon-for-gallon basis. Pure Energy 
Corporation notes that each gallon of the P-series fuel directly 
displaces 0.88 gallons of RFG in vehicle use. Pure Energy Corporation 
also states that the energy required to produce a one-gallon-equivalent 
of the fuel is approximately 13,800 BTU less than that required to 
produce one gallon of RFG.
    The petition provides information to support a claim that 
production of the P-series fuels results in a positive energy balance. 
The process efficiency (BTUs produced per BTU of input) of the P-series 
fuels is approximately 2.25 when the ethanol is produced from renewable 
resources such as biomass. If, however, the ethanol is produced from 
corn, the process efficiency is slightly lower, with a value between 
1.75 and 1.88. Although the process efficiency is slightly lower when 
the ethanol is derived from corn, production of ethanol from either 
feedstock represents a significant energy savings for the life cycle of 
the fuel.
    DOE analyses support Pure Energy Corporation's claim of significant 
petroleum displacement, although the company's claim of 100 percent 
domestic content appears to be slightly high.
    It is estimated that the P-series fuels (regular grade) with 
pentanes plus derived from natural gas would be 96 percent derived from 
domestic resources. It is believed that the

[[Page 26827]]

feedstock for ethanol and MTHF production will almost certainly be 
wholly domestic. Since the feedstock for the pentanes plus and the 
butane will be either natural gas or petroleum, and because a portion 
of these feedstocks is currently and will continue to be imported, it 
is debatable whether the P-series fuels will ever be wholly derived 
from domestic resources. If the pentanes plus were derived from 
refining petroleum, at oil import levels projected by EIA for 2015, the 
regular grade P-series fuel would still be 80 percent derived from 
domestic resources.
    DOE also estimates that the P-series fuels could reduce fossil 
energy use by 49 to 57 percent, relative to RFG, and that the P-series 
fuels could reduce petroleum use by 79 to 81 percent, relative to RFG.
    On the basis of the foregoing, DOE has concluded that the three P-
series fuels, as described by United States Patent number 5,697,987, 
which contain at least 60 percent non-petroleum energy content derived 
from MTHF, which must be manufactured solely from biological materials, 
and ethanol, which must be manufactured solely from biological 
materials, would yield ``substantial energy security benefits'' as that 
phrase is used in section 301(2) of the Act.

C. Substantial Environmental Benefits

    Pure Energy Corporation had vehicle tailpipe and evaporative 
emissions tests conducted by an Environmental Protection Agency (EPA) 
contract automotive test laboratory using both the current Federal Test 
Procedure (FTP) and the US06 test. (A description of the US06 test can 
be found in the NOPR at 63 FR 40205 and in the Code of Federal 
Regulations at 40 CFR part 86.)
    Pure Energy Corporation's test vehicles, two 1997 Ford Taurus E-85 
flexible-fuel vehicles, were operated on eight fuels: three P-series 
fuels (regular, premium and cold weather), E-85, Federal Certification 
gasoline, California Phase II RFG and two commercial gasolines (a 
summer and a winter blend). The results were submitted to DOE as part 
of the company's petition. Pure Energy Corporation also provided an 
analysis of greenhouse gas emissions associated with production, 
distribution and use of the three P-series fuels and compared them to 
those of gasoline and E-85.
    Both the criteria pollutant emissions test results and the 
greenhouse gas analysis support Pure Energy Corporation's claim of 
substantial environmental benefits arising from the use of the P-series 
fuels. Criteria pollutant emissions from the P-series fuels were 
consistently among the lowest of all test fuels, met Federal Tier 1 
standards and statutorily provided Federal Tier 2 standards in every 
case, and compared favorably with those from E-85. The premium P-series 
fuel had better emission characteristics than the regular P-series 
fuel. The P-series fuels reduced emissions of non-methane hydrocarbons 
(NMHC) and total hydrocarbons by almost a third compared to Phase 2 
RFG. It is worth noting that all of the fuels tested had evaporative 
emissions well below the evaporative emissions standard for Federal 
Tier 1. Table 3 summarizes the results of the FTP emissions results 
(all results in grams per mile). The numbers are averages over both 
cars tested and all FTP tests performed, as presented in Pure Energy 
Corporation's petition.

                         Table 3--Comparison of Federal Test Procedure Emission Results
                                                   [gram/mile]
----------------------------------------------------------------------------------------------------------------
                                                                                      Carbon         Nitrogen
                                                                       NMHC          monoxide         oxides
----------------------------------------------------------------------------------------------------------------
Pure Regular....................................................           0.074           1.081           0.064
Pure Premium....................................................           0.064           1.062           0.059
Phase II RFG....................................................           0.115           1.247           0.039
Tier 1 standards................................................           0.250           3.4             0.4
Tier 2 standards................................................           0.125           1.7             0.2
----------------------------------------------------------------------------------------------------------------

The Tier 2 standards referenced in Table 3 are the pending standards 
identified by Congress in section 202(i) of the Clean Air Act (CAA). A 
discussion of the process EPA is undertaking to establish Tier 2 
standards can be found in the NOPR.
    As noted in Table 4, the P-series fuels had reduced ozone-forming 
potential (OFP), carbon monoxide and air toxics emissions. Table 4 
compares the emission results of the P-series fuels, Indolene, Phase II 
RFG and commercial gasoline to EPA's National Ambient Air Quality 
Standards (NAAQS). [40 CFR part 63]
    The OFP is a measure of the performance of the fuel-vehicle 
combination, calculated by multiplying the fraction of each emissions 
compound by its reactivity. The specific reactivity is calculated by 
dividing the OFP by the mass of the non-methane organic gaseous 
emissions. It is considered a better gauge of the reactivity of the 
fuels' emissions profiles. The numbers are averages of both cars tested 
and all FTP and US06 tests performed, as presented in Pure Energy 
Corporation's petition.

                                                Table 4.--Comparison of Emission Results Related to NAAQS
                                                                       [gram/mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    CO                      NOX                     OFP                Spec. React.
                                                         -----------------------------------------------------------------------------------------------
                                                              FTP        USO6         FTP        USO6         FTP        USO6         FTP        USO6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Indol...................................................       1.421       11.99       0.056       0.040       0.488       0.470       3.248       3.092
RFG II..................................................       1.247       10.56       0.039       0.049       0.469       0.379       3.640       3.059
Comm. Gas...............................................       1.427       12.07       0.095       0.077       0.522       0.501       3.334       3.070
E85.....................................................       1.218        5.15       0.056       0.079       0.494       0.087       2.410       3.633
Pure Reg................................................       1.081        6.15       0.064       0.057       0.305       0.161       3.360       3.460
Pure Prem...............................................       1.062        6.23       0.059       0.081       0.282       0.158       2.849       3.568
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 26828]]

    The petition stated that the total emissions resulting from the 
production of a gallon of P-series fuels are 71 percent lower than 
those associated with production of one gallon of Phase II RFG. Of note 
are the claims that emissions are reduced, relative to Phase II RFG, by 
more than 99 percent for methane, by 85 percent for SOX, by 
71 percent for carbon dioxide and by 68 percent for nitrogen oxides.
    The petition claims that the P-series fuels perform better than 
Phase II RFG or Indolene in terms of direct carbon dioxide emissions 
and that P-series fuels will result in significant reductions in carbon 
dioxide emissions when considered on a life-cycle basis. If the P-
series fuels are produced from biomass, as Pure Energy Corporation 
plans to do, it is claimed that a significant percent of the carbon 
emissions associated with the gasoline life-cycle will be avoided. 
Specifically, the company estimates that the P-series regular fuel, on 
a life-cycle basis, will reduce carbon dioxide emissions by at least 63 
percent.
    DOE assessed the emissions test results and analyzed the full fuel 
cycle greenhouse gas emissions of the P-series fuels. DOE confirmed 
that regular and premium formulations of the P-series fuels displayed 
carbon monoxide, nitrogen oxides and non-methane hydrocarbon equivalent 
emissions that met the Tier 1 and statutorily provided Tier 2 
standards, and that their evaporative emissions were well below the 
Tier 1 standards. DOE notes that the emissions of air toxics from the 
P-series fuels were lower than those from all other test fuels, both in 
terms of total mass emissions and in terms of their potency weighted 
toxics (PWT) emissions. The PWT weighs each individual component by a 
factor that represents its relative toxicity.
    DOE's evaluation of the full fuel cycle greenhouse gas emissions of 
the P-series fuels confirmed that, over their entire production, 
distribution and end-use cycle, the P-series fuels will result in 
greenhouse gas emissions 45 to 50 percent below those of reformulated 
gasoline. These reductions in greenhouse gas emissions are possible if 
both the ethanol and the MTHF components of the P-series fuels are made 
from biological materials, which is Pure Energy Corporation's 
intention.
    On the basis of the foregoing, DOE has concluded that the three P-
series fuels, as described in Pure Energy Corporation's petition and by 
United States Patent number 5,697,987, which contain at least 60 
percent non-petroleum energy content derived from MTHF, which must be 
manufactured solely from biological materials, and ethanol, which must 
be manufactured solely from biological materials, would yield 
``substantial environmental'' benefits as that phrase is used in 
section 301(2) of the Act.

IV. Regulatory and Procedural Requirements

A. 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,'' 58 FR 51735 (October 4, 1993). 
Accordingly, this rulemaking has not been reviewed by the Office of 
Information and Regulatory Affairs of the Office of Management and 
Budget (OMB).

B. Review Under Executive Order 12612

    Executive Order 12612, ``Federalism,'' 52 FR 41685 (October 30, 
1987) requires that regulations, rules, legislation and other policy 
actions be reviewed for any substantial direct effect on States, on the 
relationship between the National Government and the States, or in the 
distribution of power and responsibilities among various levels of 
government. If there are substantial effects, the Executive Order 
requires the preparation of a federalism assessment to be used in all 
decisions involved in promulgating and implementing policy action. DOE 
has analyzed this rulemaking in accordance with the principles and 
criteria contained in Executive Order 12612, and has determined there 
are no federalism implications that would warrant the preparation of a 
federalism assessment. The rule promulgated today would simply allow an 
additional fuel to qualify as an alternative fuel for the purposes of 
the Energy Policy Act of 1992. The rule would not have a substantial 
direct effect on States, the relationship between the States and 
Federal Government, or the distribution of power and responsibilities 
among various levels of government.

C. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires 
preparation of an initial regulatory flexibility analysis for every 
rule which by law must be proposed for public comment, unless the 
agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
Today's rule would provide an additional fuel choice for organizations 
which must comply with the requirements of the Alternative Fuel 
Transportation Program (10 CFR part 490) and the requirements for 
Federal fleets under Title III of EPACT. There is no reason to 
anticipate any adverse impact. DOE certified in the notice of proposed 
rulemaking that the rule will not have a significant economic impact on 
a substantial number of small entities. DOE received no comments on 
that certification.

D. Review Under the National Environmental Policy Act

    The rule identifies the P-series fuels as ``alternative fuel'' as 
that term is defined in the Alternative Fuel Transportation Program 
regulations (10 CFR 490.2) and section 301(2) of the Energy Policy Act 
(42 U.S.C. 13211(2)). The rule interprets statutory and regulatory 
definitions and does not change the environmental effect of the 
Alternative Fuel Transportation Program regulations. DOE, therefore, 
has determined that the rule is covered under the Categorical Exclusion 
in paragraph A5 to Subpart D, 10 CFR part 1021. Accordingly, neither an 
environmental assessment nor an environmental impact statement is 
required.

E. Review Under the Paperwork Reduction Act

    No new collection of information will be imposed by this 
rulemaking. Accordingly, no clearance by the Office of Management and 
Budget is required under the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.).

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. Section 3(b) of Executive 
Order 12988 specifically requires that Executive agencies make every 
reasonable effort to ensure that the regulation: (1) Clearly specifies 
the preemptive effect, if any; (2) clearly specifies any effect on 
existing Federal law or regulation; (3) provides a clear legal standard 
for affected conduct while promoting simplification and burden 
reduction; (4) specifies the retroactive effect, if any; (5) adequately 
defines key terms; and (6) addresses

[[Page 26829]]

other important issues affecting clarity and general draftsmanship 
under any guidelines issued by the Attorney General. Section 3(c) of 
Executive Order 12988 requires Executive agencies to review regulations 
in light of applicable standards in section 3(a) and section 3(b) to 
determine whether they are met or it is unreasonable to meet one or 
more of them. DOE has completed the required review and determined 
that, to the extent permitted by law, the rule meets the relevant 
standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to prepare a written assessment of the 
effects of any Federal mandate in a proposed or final agency rule that 
may result in the expenditure by State, local, and tribal governments, 
in the aggregate, or by the private sector, of $100 million in any one 
year. The Act also requires a Federal agency to develop an effective 
process to permit timely input by elected officers of State, local and 
tribal governments on a proposed ``significant intergovernmental 
mandate,'' and requires an agency plan for giving notice and 
opportunity for timely input to potentially affected small governments 
before establishing any requirements that might significantly or 
uniquely affect small governments. The rule published today does not 
contain any Federal mandate, so these requirements do not apply.

H. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress the 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is not a ``major rule'' 
as defined by 5 U.S.C. 801(2).

List of Subjects in 10 CFR Part 490

    Administrative practice and procedure, Energy conservation, Fuel, 
Motor vehicles.

    Issued in Washington, DC on 16 April, 1999.
Dan W. Reicher,
Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the Preamble, Part 490 of Title 10, 
Chapter II, Subchapter D, of the Code of Federal Regulations is amended 
as set forth below:

PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM

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

    Authority: 42 U.S.C. 7191, 13211, 13235, 13251, 13257, 13258, 
13260-3.

    2. Section 490.2, Definitions, is amended by revising the 
definition of ``Alternative Fuel,'' to read as follows:


Sec. 490.2  Definitions.

* * * * *
    Alternative Fuel means methanol, denatured ethanol, and other 
alcohols; mixtures containing 85 percent or more by volume of methanol, 
denatured ethanol, and other alcohols with gasoline or other fuels; 
natural gas; liquefied petroleum gas; hydrogen; coal-derived liquid 
fuels; fuels (other than alcohol) derived from biological materials 
(including neat biodiesel); three P-series fuels (specifically known as 
Pure Regular, Pure Premium and Pure Cold Weather) as described by 
United States Patent number 5,697,987, dated December 16, 1997, and 
containing at least 60 percent non-petroleum energy content derived 
from methyltetrahydrofuran, which must be manufactured solely from 
biological materials, and ethanol, which must be manufactured solely 
from biological materials; and electricity (including electricity from 
solar energy).
* * * * *
[FR Doc. 99-12250 Filed 5-14-99; 8:45 am]
BILLING CODE 6450-01-P