[Federal Register Volume 71, Number 121 (Friday, June 23, 2006)]
[Proposed Rules]
[Pages 36034-36040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-9928]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 71, No. 121 / Friday, June 23, 2006 / 
Proposed Rules  

[[Page 36034]]



DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 490

RIN 1904-AB66


Alternative Fuel Transportation Program; Alternative Compliance

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Notice of proposed rulemaking and opportunity for comment.

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SUMMARY: The Department of Energy (DOE) today publishes a proposed rule 
to implement section 514 of the Energy Policy Act of 1992, as amended 
by section 703 of the Energy Policy Act of 2005, which allows States 
and alternative fuel providers to petition for a waiver of the 
alternative fueled vehicle (AFV) acquisition requirements in 10 CFR 
part 490. The new law requires a State entity or alternative fuel 
provider requesting a waiver to show that in lieu of complying with the 
applicable AFV acquisition requirement for a model year, it will take 
other actions to reduce its annual petroleum motor fuel consumption by 
an amount equal to 100 percent alternative fuel use in all of the 
fleet's AFVs, including AFVs that the State entity or alternative fuel 
provider would have been required to acquire if there was no waiver.

DATES: Public comment on this proposed rule will be accepted until 
August 7, 2006. A public workshop will be held on July 12, 2006, from 9 
a.m. to 4 p.m. Interested persons who wish to speak at the public 
workshop should telephone Ms. Linda Bluestein at (202) 586-6116, by 
4:30 p.m. on July 7, 2006. Each presentation is limited to 20 minutes.

ADDRESSES: You may submit comments, identified by RIN 1904-AB66, by any 
of the following methods:
    1. Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the instructions for submitting comments.
    2. E-mail to [email protected]. Include RIN 1904-AB66 in 
the subject line of the e-mail. Please include the full body of your 
comments in the text of the message or as an attachment.
    3. Mail: Address written comments to Ms. Linda Bluestein, U.S. 
Department of Energy, Office of Energy Efficiency and Renewable Energy, 
FreedomCAR and Vehicle Technologies Program, Mailstop EE-2G, Room 5F-
034, 1000 Independence Avenue, SW., Washington, DC 20585-0121.
    Due to potential delays in DOE's receipt and processing of mail 
sent through the U.S. Postal Service, we encourage respondents to 
submit comments electronically to ensure timely receipt.
    The public workshop for this rulemaking will be held in Washington, 
DC, at the DOE Forrestal Building in Room 1E-245, 1000 Independence 
Avenue, SW., Washington, DC.
    This notice of proposed rulemaking, the public workshop transcript, 
and any comments that DOE receives are being made available on the 
Alternative Fuel Transportation Program Web site at: http://www.eere.energy.gov/vehiclesandfuels/epact/state/state_resources.html. 
You also may obtain copies of comments by contacting Ms. Bluestein.

FOR FURTHER INFORMATION CONTACT: Ms. Linda Bluestein, U.S. Department 
of Energy, Office of Energy Efficiency and Renewable Energy, FreedomCAR 
and Vehicle Technologies Program, Mailstop EE-2G, Room 5F-034, 1000 
Independence Avenue, SW., Washington, DC 20585-0121; (202) 586-6116 or 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Introduction and Background
II. Discussion
III. Public Comment Procedures
IV. Regulatory Review

I. Introduction and Background

    In August 2005, the Energy Policy Act of 2005, Public Law 109-58, 
(EPACT 2005) was signed into law. The law adds new flexibility for 
State and alternative fuel provider fleets subject to AFV acquisition 
requirements under 10 CFR part 490, the Alternative Fuel Transportation 
Program. Specifically, section 703 of EPACT 2005 adds section 514 
(entitled ``Alternative Compliance'') to title V of the Energy Policy 
Act of 1992 (Act) (42 U.S.C. 13251 et seq.). Section 514 authorizes DOE 
to grant to covered alternative fuel providers (hereafter ``covered 
persons'') and States with credits under section 508 of the Act a 
waiver from the AFV acquisition requirements under section 501 (42 
U.S.C. 13251) and section 507(o) (42 U.S.C. 13257(o)), respectively. 
The statute provides that any State or covered person may apply for an 
alternative compliance waiver, and that DOE must grant the waiver if 
the State or covered person demonstrates that its fleet will reduce 
annual petroleum consumption by an amount equal to the amount of 
petroleum it would reduce if the fleet's cumulative inventory of AFVs 
operated 100 percent of the time on alternative fuel (42 U.S.C. 
13264(a) and (b)). The State or covered person requesting a waiver also 
must be in compliance with all applicable vehicle emission standards 
established by the Environmental Protection Agency under the Clean Air 
Act.
    Today's proposed rule would establish procedures for the submission 
of, and action on, applications for alternative compliance waivers 
submitted by States and covered persons subject to AFV acquisition 
requirements under 10 CFR part 490. Proposed new subpart I of part 490 
includes provisions regarding the timing of waiver requests and 
responses by DOE, waiver documentation and submission requirements, 
annual reporting of petroleum reductions, use of credits to offset 
petroleum reduction shortfall, rollover of excess petroleum reduction 
to future years, enforcement for violations, and record retention.

II. Discussion

    Under the proposed rule, a State or covered person must submit a 
waiver application to DOE no later than March 31 of the year before the 
model year for which it requests a waiver. The proposed rule would 
require a waiver application to include a minimum amount of information 
to enable DOE to make a decision about granting the waiver. DOE would 
evaluate applications for waivers on a case-by-case basis. The proposed 
rule provides that DOE would grant or deny a waiver

[[Page 36035]]

within 45 working days from the time a complete application is 
submitted.
    Fleets operating under a waiver would be allowed to choose various 
strategies or actions to reduce petroleum motor fuel consumption. For 
example, some States or covered persons may meet their annual petroleum 
reduction requirement by combining alternative fuel use by existing 
fleet AFVs with petroleum reductions from the use of hybrid vehicles, 
which are not counted towards meeting the AFV acquisition requirements 
because they are not primarily powered by electricity (an alternative 
fuel). A fleet could also meet its petroleum reduction requirement with 
alternative fuel or other replacement fuel use in vehicles of more than 
8,500 lb gross vehicle weight rating (gvwr) or in light-duty vehicles 
that are excluded, by statute and part 490, from covered fleets.

Eligibility for an Alternative Compliance Waiver

    Section 514(a) of the Act provides that any covered person subject 
to the AFV acquisition requirements of section 501 and any State 
subject to the AFV acquisition requirements of section 507(o) may 
petition the Secretary of Energy for a waiver of those requirements. 
Section 514(b) of the Act provides that the Secretary shall grant a 
waiver of the AFV acquisition requirements on a showing that a fleet 
owned, operated, leased or otherwise controlled by a covered person or 
State entity given credit under section 508 will achieve a specified 
reduction in the annual consumption of petroleum fuels and is in 
compliance with all applicable vehicle emission standards established 
by the Environmental Protection Agency under the Clean Air Act. For 
both covered persons and State entities given credit under section 508, 
the statute requires DOE to grant a waiver on a showing that petroleum 
motor fuel consumption will be reduced in an amount equal to the amount 
of petroleum the fleet's cumulative inventory of AFVs would reduce if 
those vehicles operated 100 percent of the time on alternative fuel. 
The term ``fleet'' is defined in title V of the Act to include only 
covered light-duty vehicles (LDVs) (42 U.S.C. 13211(9)).
    While section 514(b) specifies a showing that, if met, requires DOE 
to grant a waiver, there is a gap in the statute because section 
514(b), read in light of the surrounding provisions in section 514 and 
elsewhere in title V of the Act, does not directly address two 
questions. The first question is whether DOE may grant a section 514(a) 
waiver petition if the applicant makes a showing of replacement fuel 
use attributable to medium- or heavy-duty vehicles or other vehicles 
outside of its covered light-duty vehicle fleet. The second question is 
whether DOE may grant a petition by a State that makes the requisite 
showing of replacement fuel substitution even though that State has 
only complied with its minimum AFV acquisition requirements and does 
not have cumulative credits under section 508 of the Act. To fill the 
gap in the statute, DOE proposes to exercise its rulemaking authority 
under title V and section 644 of the DOE Organization Act (42 U.S.C. 
7254) to propose provisions that address these questions.
    First, proposed Sec.  490.802 provides for the grant of a waiver to 
a covered person or State entity that demonstrates it will achieve the 
specified level of petroleum fuel reduction in any of its motor 
vehicles, not just covered LDVs. Thus, under the proposed rule, a State 
or covered person receiving a waiver would be allowed to use 
alternative fuel or other replacement fuels in vehicles that are not 
part of the covered ``fleet,'' such as medium- and heavy-duty vehicles 
and excluded LDVs, to meet its petroleum reduction requirement. DOE 
believes this additional flexibility will make the alternative 
compliance option attractive to more fleets, and this, in turn, is 
likely to lead to somewhat greater petroleum displacement. While State 
entities that meet the minimum AFV acquisition requirements in section 
507(o) are not required by the Act to use alternative fuel in their 
AFVs,\1\ fleets operating under a waiver must reduce petroleum motor 
fuel consumption by an amount equal to the amount of petroleum the 
fleet's cumulative inventory of AFVs would reduce if those AFVs 
operated 100 percent of the time on alternative fuel. Because AFVs in 
State fleets that are flexible or dual-fuel vehicles often operate on 
petroleum fuel, increased use of the waiver option would result in 
greater petroleum displacement.
---------------------------------------------------------------------------

    \1\ The Act does require alternative fuel use in AFVs acquired 
by covered persons. See 42 U.S.C. 13251(a)(4).
---------------------------------------------------------------------------

    Second, proposed Sec.  490.802 provides that States that have not 
been given credits under section 508 of the Act must meet the same 
eligibility criteria as States that have received such credits. While a 
majority of State fleets have complied with AFV acquisition 
requirements using credits earned under section 508 for AFV 
acquisitions in excess of model year requirements, a significant number 
of State fleets have not received section 508 credits. DOE is unable to 
discern any basis for treating State entities that have not earned 
credits differently than State entities that have earned credits, or 
any harm to the apparent goal of the statute that would result from 
subjecting all States to the same eligibility criteria. Thus, all 
States requesting a waiver would be required to demonstrate that they 
will achieve the same amount of annual petroleum reduction, and that 
they are in compliance with applicable Clean Air Act standards.

Petroleum Reduction Calculation

    Section 514(b) provides that for covered persons, the specified 
annual reduction in petroleum consumption is the amount that would 
result from ``100 percent cumulative compliance with the fuel use 
requirements in section 501'' (42 U.S.C. 13264(b)(1)(A)). For States, 
the specified annual reduction in petroleum consumption is the amount 
equal to ``the annual consumption by the State entity of alternative 
fuels if all of the cumulative alternative fuel vehicles of the State 
entity given credit under section 508 were to use alternative fuel 100 
percent of the time'' (42 U.S.C. 13264(b)(1)(B)). The language of these 
provisions differs slightly because, as previously mentioned, there is 
a statutory fuel use requirement for covered persons in the Act, but 
none for State fleets.
    Consistent with the statute, proposed Sec.  490.802 would require 
both covered persons and State entities to reduce petroleum fuel 
consumption by an amount equal to the amount of petroleum the fleet's 
cumulative inventory of AFVs, including required AFV acquisitions in 
waiver years, would reduce if those vehicles operated 100 percent of 
the time on alternative fuel. The inclusion of required AFV 
acquisitions in waiver years is compelled by the statute's apparent 
purpose of providing States and covered persons compliance flexibility 
in exchange for achieving the maximum level of petroleum fuel reduction 
that would occur if the State or covered person were to comply with the 
Act's AFV acquisition requirements. If AFV requirements for waiver 
years were not included in the cumulative AFV count, a State or covered 
person that requests a waiver in successive years would have rapidly 
diminishing petroleum reduction requirements, and that would be 
unreasonable in light of the petroleum replacement goal of the statute.
    The following example is provided to show how the petroleum 
reduction requirement would apply in successive years for which a 
covered person

[[Page 36036]]

requests an alternative compliance waiver:
    In year 1, the covered person has 25 AFVs in its fleet and has an 
AFV acquisition requirement of 9. The AFV requirement is based on the 
number of LDVs that the fleet anticipates acquiring during the waiver 
year. In this example, the covered person anticipates acquiring 10 
LDVs, and has an AFV acquisition requirement of 9 AFVs (10 vehicles x 
90 percent fuel provider requirement). Thus, the cumulative total of 
AFVs in inventory and AFV acquisition requirements is 34. Because the 
covered person's LDVs have an average fuel consumption of 500 gasoline 
gallon equivalents (gge)/year, the total amount of petroleum that the 
covered person must reduce in the first waiver year is 17,000 gge (34 
AFVs and AFV requirements combined, multiplied by 500 gge).
    In year 2, the fleet has retired 10 of the original AFVs from its 
inventory, which leaves a total of 15 of the 25 AFVs originally counted 
in year 1. The fleet again plans to acquire 10 LDVs, thus generating a 
requirement to acquire 9 AFVs in year 2. Since the average number of 
years that this fleet keeps an AFV is 4 years, the 9 AFVs required in 
year 1 are included in the calculation of the year 2 required petroleum 
reduction. This results in a total of 33 AFVs (15 + 9 + 9) and a total 
petroleum reduction requirement of 16,500 gge for year 2 (assuming the 
same average fuel consumption per vehicle).
    In year 3, the fleet has retired 10 more of the original AFVs, 
leaving 5 in its inventory, and it is again required to acquire 9 AFVs. 
The calculation of the year 3 petroleum reduction includes the 9 AFVs 
required for each of years 1 and 2. Therefore, the total AFV count for 
year 3 is 32 (5 + 9 + 9 + 9), and the petroleum reduction requirement 
for year 3 is 16,000 gge.
    In year 4, the fleet has retired the last 5 of the original AFVs 
and plans to acquire 10 LDVs, generating a requirement of 9 AFVs. A 
total of 36 AFVs are included in the baseline calculation (9 + 9 + 9 + 
9), and the petroleum reduction requirement for year 4 is 18,000 gge.
    In year 5, the fleet retires the 9 LDVs represented by the first 
waiver year's AFV requirements (the fleet retires LDVs after 4 years). 
The fleet acquires 10 more LDVs, generating 9 AFV requirements. 
Therefore, the total AFV count for year 5 is 36 and the total petroleum 
requirement for year 5 is 18,000 gge.
    Although simplified, this example shows how DOE proposes to 
implement the cumulative compliance/AFV language in section 514(b) to 
calculate a covered person's petroleum reduction requirement. The same 
approach would be used to determine the reduction for a State entity, 
but the applicable AFV acquisition percentage (75 percent) in section 
507(o) would be used.
    The application for a waiver. Proposed Sec.  490.803 specifies the 
items of information that an applicant for an alternative compliance 
waiver would have to submit to DOE for the model year for which it is 
seeking a waiver. These items of information are:
     The model year for which the State or covered person is 
requesting the waiver;
     The average length of time a LDV stays in the State's or 
covered person's fleet until retirement;
     The number of AFVs that the State or covered person would 
be required to acquire during the waiver year, calculated in the same 
way as AFV requirements are calculated on DOE Form FCVT 101;
     The total number of AFVs in the fleet inventory during the 
waiver year, including AFVs previously reported to DOE on Form FCVT 101 
and AFV requirements for the waiver year and preceding waiver years, 
and excluding AFVs that will be retired before the beginning of the 
waiver year;
     The average annual fuel consumption in gges of the fleet's 
LDVs, which may be an average of previous years' consumption, and an 
estimate of per vehicle consumption;
     The estimated amount of petroleum that the fleet must 
reduce during the waiver year, estimated by multiplying the number of 
fleet AFVs, including AFV requirements accumulated during the current 
and previous waiver years, by the average LDV fuel consumption;
     A detailed plan describing the actions or strategies the 
State or covered person will pursue to reduce petroleum consumption and 
the amount of petroleum reduction anticipated from each action or 
strategy; and
     Documents or a certification by a responsible official of 
the State or covered person showing the fleet is in compliance with all 
applicable Clean Air Act vehicle emission standards.
    The information a State or covered person submits to DOE with its 
alternative compliance plan must be verifiable and from credible 
sources. Sources of fuel economy and efficiency information must be 
documented. Under proposed Sec.  490.809, a State or covered person 
would be required to keep all documents pertaining to its application 
and compliance with a waiver for a minimum of three years following the 
end of the waiver year.
    Use of credits. DOE recognizes that a fleet, despite good faith 
efforts, may fail to achieve the required petroleum reduction in a 
model year because the amount will have been estimated based on 
assumptions about the number of vehicles and the actual amount of fuel 
the fleet would use in the following model year. DOE, therefore, 
provides in proposed Sec.  490.805 that a State or covered person may 
request to use credits purchased or earned pursuant to 10 CFR subpart F 
to offset a shortfall in its reduction of petroleum.
    Rollover of excess petroleum reduction. Proposed Sec.  490.806 
provides that a State or covered person that overcomplies with its 
petroleum reduction requirement under subpart I may request that the 
excess reduction be applied to meet the petroleum reduction requirement 
in one or more future years. For example, if a fleet reduces petroleum 
use by 65,000 gallons, but is only required under the terms of the 
waiver to reduce 60,000 gallons, the excess 5,000 gallons could be 
applied to meet the petroleum reduction required in the next waiver 
year or some future year for which a waiver is requested.
    Annual report. Section 514(c) of the Act requires a State or 
covered person that is granted a waiver to submit a report to DOE not 
later than December 31 following the model year for which the waiver is 
granted (42 U.S.C. 13264(c)). This provision would be implemented by 
proposed Sec.  490.807.
    Sanctions for violations. Section 514(d) of the Act provides that 
DOE shall revoke the waiver of a State or covered person that fails to 
comply with the alternative compliance petroleum reduction or reporting 
requirements, and that DOE may impose a civil penalty for any such 
violation (42 U.S.C. 13264(d)). This section would be implemented by 
proposed Sec.  490.808.
    Exemptions. DOE will not grant exemptions to a State under 10 CFR 
Sec.  490.204 or to a covered person under 10 CFR 490.308 if the State 
or covered person has been granted an alternative compliance waiver. 
Exemptions are based upon lack of alternative fuels and/or AFVs. 
Because a fleet operating under a waiver has the flexibility to 
consider all available technologies for meeting its petroleum 
consumption reduction requirement, it has no need for an exemption.

III. Public Comment Procedures

A. Written Comments

    Interested persons are invited to participate in this proceeding by 
submitting data, views, or arguments. Written comments should be 
submitted

[[Page 36037]]

to the address, and in the form, indicated in the ADDRESSES section of 
this notice of proposed rulemaking. To help DOE review the comments, 
interested persons are asked to refer to specific proposed rule 
provisions, if possible.
    If you submit information that you believe to be exempt by law from 
public disclosure, you should submit one complete copy, as well as one 
copy from which the information claimed to be exempt by law from public 
disclosure has been deleted. DOE is responsible for the final 
determination with regard to disclosure or nondisclosure of the 
information and for treating it accordingly under the DOE Freedom of 
Information Act regulations at 10 CFR 1004.11.

B. Public Workshop

    A public workshop will be held at the time, date, and place 
indicated in the DATES and ADDRESSES sections of this notice of 
proposed rulemaking. Any person who is interested in making an oral 
presentation should make a phone request to the person and telephone 
number in the DATES section by 4:30 p.m. on the date specified for 
making such requests. The person should provide a daytime phone number 
where he or she can be reached. Each oral presentation will be limited 
to 20 minutes. Persons making an oral presentation are requested to 
bring three copies of their prepared statement to the workshop and 
submit them to the registration desk.
    DOE reserves the right to select the persons who will speak. DOE 
also reserves the right to schedule speakers' presentations and to 
establish the procedures for conducting the workshop. A DOE official 
will be designated to preside at the workshop. The workshop will not be 
a judicial or evidentiary-type hearing, but will be conducted in 
accordance with 42 U.S.C. 7191. Any further procedural rules for the 
conduct of the workshop will be announced by the presiding official.
    A transcript of the workshop will be made, and the entire record of 
this rulemaking will be retained by DOE and made available as provided 
in the ADDRESSES section of this notice of proposed rulemaking.

IV. Regulatory Review

A. Executive Order 12866

    Today's proposed rule has been determined to not be a significant 
regulatory action under Executive Order 12866, ``Regulatory Planning 
and Review,'' 58 FR 51735 (October 4, 1993). Accordingly, this action 
was not subject to review under that Executive Order by the Office of 
Information and Regulatory Affairs of the Office of Management and 
Budget.

B. National Environmental Policy Act

    DOE has determined that this proposed rule is covered under the 
Categorical Exclusion found in the DOE's National Environmental Policy 
Act regulations at paragraph A.5 of Appendix A to Subpart D, 10 CFR 
part 1021, which applies to rulemaking that amends an existing rule or 
regulation which does not change the environmental effect of the rule 
or regulation being amended. Under the proposed rule, a State entity or 
alternative fuel provider requesting an alternative compliance waiver 
must show that in lieu of acquiring AFVs for its covered light-duty 
vehicle fleet, it would use alternative fuel and/or other replacement 
fuels in various types of motor vehicles to reduce petroleum fuel 
consumption by an amount that equals 100 percent alternative fuel use 
in the fleet's AFVs, including AFVs that would be required in waiver 
years. The statute, therefore, grants the waiver applicant greater 
compliance flexibility in exchange for achieving the maximum level of 
petroleum reduction that would occur if the State or covered person 
were to comply with the Act's AFV acquisition requirements. Because the 
amount of petroleum displaced would be the same, the proposed rule 
would not change the environmental effect of compliance with 10 CFR 
part 490. Accordingly, neither an environmental assessment nor an 
environmental impact statement is required.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process (68 FR 7990). DOE has made its 
procedures and policies available on the Office of General Counsel's 
Web site: http://www.gc.doe.gov.
    DOE has reviewed today's proposed rule under the provisions of the 
Regulatory Flexibility Act and the procedures and policies published on 
February 19, 2003. The requirements in 10 CFR part 490 apply only to 
alternative fuel providers with fleets containing at least 50 LDVs (20 
of which are centrally fueled or capable of being centrally fueled) and 
to like-size State fleets in metropolitan statistical areas with a 
population of more than 250,000. The owners and operators of fleets of 
this size are not small entities. In addition, the proposed rule 
establishes voluntary procedures for State entities and covered persons 
that wish to receive a waiver from otherwise applicable AFV acquisition 
requirements. Alternative compliance does not impose any additional 
burdens on the entities subject to sections 501 and 507(o) of the 
Energy Policy Act of 1992. On the basis of the foregoing, DOE certifies 
that this proposed rule would not have a significant economic impact on 
a substantial number of small entities. Accordingly, DOE has not 
prepared a regulatory flexibility analysis for this rulemaking. DOE's 
certification and supporting statement of factual basis will be 
provided to the Chief Counsel for Advocacy of the Small Business 
Administration pursuant to 5 U.S.C. 605(b).

D. Paperwork Reduction Act

    Proposed Sec.  490.803 (``Application for wavier''), proposed Sec.  
490.807(c) ('Reporting requirement''), and proposed Sec.  490.809 
(Record retention) contain information collection requirements. DOE has 
submitted this proposed collection of information to the Office of 
Management and Budget for approval pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.) and the procedures implementing 
that Act, 5 CFR 1320.1 et seq. A person is not required to respond to a 
collection of information unless it displays a currently valid OMB 
control number.
    DOE estimates that alternative compliance waivers will be requested 
for 15 State and fuel provider fleets. Part of the information 
specified in Sec.  490.803 that a State or covered person would be 
required to submit with its application for a waiver under proposed 
subpart I is already required for reporting pursuant to 10 CFR 490.205 
and 490.309. DOE estimates the additional burden required to provide 
information pertaining to its required petroleum reduction and plan for 
achieving that reduction to be 21 hours for each model year for which a 
waiver is requested. DOE estimates that a State or covered person would 
expend 20 hours to comply with the reporting requirements

[[Page 36038]]

in Sec.  490.803 (``Application for waiver'') and Sec.  490.807 
(``Reporting requirement'') and 1 hour to comply with the recordkeeping 
requirement in Sec.  490.809. DOE estimates the total annual costs of a 
State or covered person that receives an alternative compliance waiver 
would be $1,134.00 for each fleet subject to the waiver.
    DOE invites public comment on: (1) Whether the proposed information 
collection requirements are necessary for the performance of DOE's 
functions, including whether the information will have practical 
utility; (2) the accuracy of DOE's estimates of the burden of the 
proposed information collection requirements; (3) ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(4) ways to minimize the burden of the information collection 
requirements on respondents. Comments should be addressed to the 
Department of Energy Desk Officer, Office of Information and Regulatory 
Affairs, OMB, 725 17th Street, NW., Washington, DC 20503. Persons 
submitting comments to OMB also are requested to send a copy to the 
contact person at the address given in the ADDRESSES section of this 
notice of proposed rulemaking. Interested persons may obtain a copy of 
the DOE's Paperwork Reduction Act Submission to OMB from the contact 
person named in this notice of proposed rulemaking.

E. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally 
requires Federal agencies to examine closely the impacts of regulatory 
actions on State, local, and tribal governments. Subsection 101(5) of 
title I of that law defines a Federal intergovernmental mandate to 
include any regulation that would impose upon State, local, or tribal 
governments an enforceable duty, except a condition of Federal 
assistance or a duty arising from participating in a voluntary Federal 
program. Title II of that law requires each Federal agency to assess 
the effects of Federal regulatory actions on State, local, and tribal 
governments, in the aggregate, or to the private sector, other than to 
the extent such actions merely incorporate requirements specifically 
set forth in a statute. Section 202 of that title requires a Federal 
agency to perform a detailed assessment of the anticipated costs and 
benefits of any rule that includes a Federal mandate which may result 
in costs to State, local, or tribal governments, or to the private 
sector, of $100 million or more. Section 204 of that title requires 
each agency that proposes a rule containing a significant Federal 
intergovernmental mandate to develop an effective process for obtaining 
meaningful and timely input from elected officers of State, local, and 
tribal governments.
    This proposed rule would provide an alternative compliance option 
for States and alternative fuel providers subject to AFV acquisition 
requirements in 10 CFR part 490. The proposed rule would not result in 
the expenditure by State, local, and tribal governments in the 
aggregate, or by the private sector, of $100 million or more in any one 
year. Accordingly, no assessment or analysis is required under the 
Unfunded Mandates Reform Act of 1995.

F. Treasury and General Government Appropriations Act, 1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any proposed rule that may affect family 
well being. The proposed rule would not have any impact on the autonomy 
or integrity of the family as an institution. Accordingly, DOE has 
concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

G. Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. DOE has examined this proposed rule and has 
determined that it would not preempt State law and would not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

H. 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. With regard to the review 
required by section 3(a), 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 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 proposed rule meets the relevant standards of Executive Order 
12988.

I. Treasury and General Government Appropriations Act, 2001

    The Treasury and General Government Appropriations Act, 2001 (44 
U.S.C. 3516 note) provides for agencies to review most disseminations 
of information to the public under guidelines established by each 
agency pursuant to general guidelines issued by OMB.
    OMB's guidelines were published at 67 FR 8452 (February 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). 
DOE has reviewed today's proposed rule under the OMB and DOE guidelines 
and has concluded that it is consistent with applicable policies in 
those guidelines.

J. Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001) requires Federal agencies to prepare and submit to the 
OMB, a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgated or is expected to lead to promulgation of a 
final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the

[[Page 36039]]

supply, distribution, or use of energy, or (3) is designated by the 
Administrator of OIRA as a significant energy action. For any proposed 
significant energy action, the agency must give a detailed statement of 
any adverse effects on energy supply, distribution, or use should the 
proposal be implemented, and of reasonable alternatives to the action 
and their expected benefits on energy supply, distribution, and use. 
Today's regulatory action would not have a significant adverse effect 
on the supply, distribution, or use of energy and is therefore not a 
significant energy action. Accordingly, DOE has not prepared a 
Statement of Energy Effects.

Approval by the Office of Secretary

    The Secretary of Energy has approved the issuance of this notice of 
proposed rulemaking.

List of Subjects in 10 CFR Part 490

    Energy, Energy conservation, Fuel, Motor vehicles, Petroleum, and 
Recordkeeping and reporting requirements.

    Issued in Washington, DC, on June 19, 2006.
Alexander A. Karsner,
Assistant Secretary, Energy Efficiency and Renewable Energy.

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

PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM

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

    Authority: 42 U.S.C. 7191 et seq.; 42 U.S.C. 13201, 13211, 
13220, 13251 et seq.


Sec.  490.600  [Amended]

    2. Section 490.600 of subpart G is amended by replacing the word 
``or'' after the number ``507'' with a comma and adding the words ``or 
514'' after the number ``508''.


Sec.  490.603  [Amended]

    3. Section 490.603 of subpart G is amended by removing the word 
``or'' after the number ``503(b)'' and adding the words ``or 514'' 
after the number ``507''.
    4. A new subpart I is added to read as follows:

Subpart I--Alternatve Compliance
Sec.
490.801 Purpose and scope.
490.802 Eligibility for alternative compliance waiver.
490.803 Application for waiver.
490.804 Action on an application for waiver.
490.805 Use of credits to offset petroleum reduction shortfall.
490.806 Rollover of excess petroleum reduction.
490.807 Reporting requirement.
490.808 Violations.
490.809 Record retention.

Subpart I--Alternative Compliance


Sec.  490.801  Purpose and scope.

    This subpart implements section 514 of the Act (42 U.S.C. 13264) 
which allows States and alternative fuel providers to petition for 
alternative compliance waivers from the alternative fueled vehicle 
acquisition requirements in subparts C and D of this part, 
respectively.


Sec.  490.802  Eligibility for alternative compliance waiver.

    Any State subject to subpart C of this part and any covered person 
subject to subpart D of this part may apply to DOE for a waiver of the 
applicable alternative fueled vehicle acquisition requirements if the 
fleet owned, operated, leased, or otherwise controlled by the State or 
covered person:
    (a) Will achieve a reduction in the annual consumption of petroleum 
fuels by its motor vehicles equal to the amount of alternative fuel the 
fleet's inventory of alternative fueled vehicles, including alternative 
fueled vehicles that the State or covered person would have been 
required to acquire in model years for which a waiver is received, 
would use if operated 100 percent of the time on alternative fuel; and
    (b) Is in compliance with all applicable vehicle emission standards 
established by the Administrator of the Environmental Protection Agency 
under the Clean Air Act (42 U.S.C. 7401 et seq.).


Sec.  490.803  Application for waiver.

    (a) A State or covered person must apply for an entire fleet for a 
waiver for each full model year for which it requests alternative 
compliance under this subpart. DOE does not grant a waiver for less 
than an entire fleet or a full model year.
    (b) To provide a sufficient amount of time for DOE action on the 
request, a State or covered person must submit its application to DOE 
no later than March 31 prior to the model year for which it seeks a 
waiver.
    (c) A waiver application must include verifiable data that is 
sufficient to enable DOE to determine whether the State's or covered 
person's fleet will achieve the amount of petroleum reduction required 
for alternative compliance and whether the fleet is in compliance with 
Clean Air Act vehicle emission standards. As a minimum, the State 
entity or covered person must provide DOE with the following 
information:
    (1) The model year for which the waiver is requested;
    (2) The anticipated total number of alternative fueled vehicles in 
the fleet for the model year for which a waiver is requested, including 
alternative fueled vehicle acquisition requirements accumulated in 
previous waiver years, and excluding any covered vehicles that are to 
be retired before the beginning of the waiver year;
    (3) The average length of time a light-duty vehicle stays in the 
fleet;
    (4) The number of alternative fueled vehicles that the State or 
covered person would, without a waiver, be required to acquire during 
the model year for which a waiver is requested;
    (5) The anticipated amount of gasoline and diesel and alternative 
fuel (calculated in gasoline gallon equivalents (gge) using the 
conversion table provided on the FreedomCAR and Vehicle Technologies 
Program Web site at: http://www1.eere.energy.gov/vehiclesandfuels/epact/state/state_resources.html) to be used by the light-duty 
vehicles in the fleet for the waiver year including an estimate of per 
vehicle average fuel use in these vehicles;
    (6) A petroleum reduction plan as described in paragraph (d) of 
this section; and
    (7) Documents, or a certification by a responsible official of the 
State or covered person, showing the fleet is in compliance with all 
applicable vehicle emission standards established by the Administrator 
of the Environmental Protection Agency under the Clean Air Act.
    (d) The petroleum reduction plan required by paragraph (c)(7) of 
this section must contain a well-documented explanation as to how the 
State or covered person will meet the reduction in petroleum 
consumption required by Sec.  490.802(a) of this subpart.
    (1) The planned actions must be:
    (i) Verifiable;
    (ii) Involve a reduction in petroleum use by motor vehicles owned, 
operated, leased, or otherwise controlled by the State or covered 
person; and
    (iii) Deliver a net reduction in petroleum consumption equal to the 
amount of alternative fuel the fleet's inventory of alternative fueled 
vehicles, including alternative fueled vehicles that the State or 
covered person would have been required to acquire in waiver

[[Page 36040]]

years, would use if operated 100 percent of the time on alternative 
fuel.
    (2) The plan must provide for the reduction of petroleum motor fuel 
by the State's or covered person's own vehicles and, therefore, may not 
include incentives for third parties to reduce their petroleum use or 
petroleum reductions that are not transportation-related.
    (3) The documentation for the plan may include, but is not limited 
to, published data on fuel efficiency, Government data, letters from 
manufacturers, and data on actual usage.
    (e) If DOE determines that the information provided in the 
application is not sufficient for making a decision, it shall notify 
the State or covered person of the information that must be submitted 
before DOE can act on the application.
    (f) A State or covered person must submit its application for an 
alternative compliance waiver on official company or agency letterhead 
and in triplicate to: Ms. Linda Bluestein, Regulatory Manager, 
FreedomCAR and Vehicle Technologies Program, EE-2G/Forrestal Building, 
U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, 
DC 20585.


Sec.  490.804  Action on an application for waiver.

    (a) DOE shall grant or deny a waiver application within 45 working 
days after it receives a complete application.
    (b) DOE shall grant the State or covered person a waiver if it 
determines that:
    (1) The requirements for eligibility in Sec.  490.803 are met; and
    (2) The State or covered person has complied with all of the 
requirements in this subpart.


Sec.  490.805  Use of credits to offset petroleum reduction shortfall.

    (a) A State or covered person granted a waiver under this subpart 
may submit to DOE a request in writing to use alternative fueled 
vehicle credits purchased or earned pursuant to subpart F of this part 
to offset any shortfall in meeting the petroleum reduction required 
under Sec.  490.802 of this subpart.
    (1) The State or covered person must provide details about the 
particular circumstances that led to the shortfall and demonstrate that 
it did everything under its control to meet its petroleum reduction 
requirement.
    (2) DOE may ask the State or covered person to supply additional 
information about the fleet and its operation if such information is 
considered necessary for a decision on the request.
    (b) If DOE grants the request, it shall notify the State or covered 
person of the credit amount required to offset the shortfall. DOE shall 
derive the credit amount using the fleet's fuel use per vehicle data.
    (c) DOE shall give the State entity or covered person until March 
31 following the model year for which the waiver is granted, to acquire 
the number of credits required for compliance with this subpart.


Sec.  490.806  Rollover of excess petroleum reduction.

    (a) A State or covered person that has achieved petroleum reduction 
in excess of the amount required for alternative compliance in a model 
year may submit to DOE a request that it be allowed to roll over the 
excess petroleum reduction to meet the petroleum reduction requirement 
in a future model year for which it requests a waiver.
    (b) After considering the request and supporting information, DOE 
shall notify the State or covered person of the amount of petroleum 
reduction that it may apply towards meeting a future model year's 
petroleum reduction requirement.


Sec.  490.807  Reporting requirement.

    (a) By December 31 following a model year for which an alternative 
compliance waiver is granted, a State or covered person must submit a 
report to DOE that includes:
    (1) A statement certifying:
    (i) The total number of petroleum gallons and/or alternative fuel 
gge used by the fleet during the waiver year in its covered light-duty 
vehicles; and
    (ii) The amount of petroleum motor fuel reduced by the fleet in the 
waiver year through alternative compliance; and
    (2) A projection of the baseline quantity of the petroleum motor 
fuel reduction of the State or covered person during the following 
model year, if the State or covered person intends to request 
alternative compliance for that model year.
    (b) A State or covered person must send its report to DOE on 
official company or agency letterhead, and the report must be signed by 
a responsible company or agency official.


Sec.  490.808  Violations.

    If a State or covered person that receives a waiver under this 
subpart fails to comply with the petroleum motor fuel reduction or 
reporting requirements of this subpart, DOE shall revoke the waiver. 
DOE also may impose on the State or covered person a penalty under 
subpart G of this part.


Sec.  490.809  Record retention.

    A State or covered person that receives a waiver under this subpart 
must retain documentation pertaining to its waiver application and 
alternative compliance, including petroleum fuel reduction by its 
fleet, for a period of three years after the end of the model year for 
which the waiver is granted.

 [FR Doc. E6-9928 Filed 6-22-06; 8:45 am]
BILLING CODE 6450-01-P