00-18369. Alternative Fuel Transportation Program: Requirements for Local Government and Private Fleets; Intergovernmental Consultation

AGENCY:

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

ACTION:

Notice of public workshops and opportunity for public comment.

SUMMARY:

The Department of Energy (DOE) announces that it will hold three informal public workshops to discuss regulatory options and other issues related to potential alternative fuel transportation requirements for local government and private fleets under the Energy Policy Act of 1992. To meet new government consultation requirements, two of these public workshops will be open only to State and local government officials or their representatives.

DOE also announces that it is pausing its rulemaking efforts regarding whether and what to propose as a regulatory requirement on local government and private fleets with respect to alternative fueled vehicles until after consultations with State and local government officials have occurred. DOE is preserving the option of promulgating a local government and private fleet rulemaking after the State and local government consultation process has concluded.

DATES:

Oral views, data, and recommendations may be presented at the public workshops, which are scheduled as follows:

1. In Chicago, IL, beginning at 9 a.m. on August 1, 2000.

2. In Denver, CO, beginning at 9 a.m. on August 22, 2000.

3. In Washington, DC, beginning at 9:30 a.m. on September 26, 2000.

The public workshops held in Chicago and Denver are open only to those directly employed by State and local governments. The Washington, DC public workshop is open to all. Due to security check-in procedures for visitors, workshop attendees are advised to arrive at the workshop facilities at least one-half hour before the published starting time for each workshop.

ADDRESSES:

The public workshops will be held at the following addresses:

1. Chicago, IL—Argonne National Laboratory, Advanced Photon Source Conference Center, Building 402, 9700 S. Cass Avenue, Argonne, IL 60439.

Directions to Argonne National Laboratory, including maps, can be found at: www.anl.gov/​OPA/​anlil.html. The Advanced Photon Source is designated as APS Facility on the Illinois Site Map (www.anl.gov/​OPA/​ilsitemap.html) and is found in the lower left corner of the map outlined in light blue.

2. Denver, CO—National Renewable Energy Laboratory, Building 17, Fourth Floor Conference Room, 1617 Cole Boulevard, Golden, CO 80401-3393.

Directions to the National Renewable Energy Laboratory, including maps, can be found at: www.nrel.gov/​visiting_​nrel/​centraloffice.html.

3. Washington, DC—U.S. Department of Energy, Room 1E-245, 1000 Independence Avenue, SW., Washington, DC 20585.

To assist DOE in planning for these workshops, we ask that interested parties call the regulatory information line, at [phone], or e-mail Kenneth Katz, Program Manager, Office of Transportation Technologies, at: [e-mail], to reserve a space at one or more of the workshops. When reserving a space please identify yourself, spell your name (if placing a reservation over the phone), whom you are employed by (or whom you represent), and provide your address, phone number and e-mail address (if applicable). Workshop attendees may also send a facsimile, with all the necessary information, to Kenneth Katz at [phone]. DOE will confirm your reservation by phone or e-mail.

Written comments are welcome, including from those who desire to submit their comments following attendance at a workshop. All written comments (eight copies) must be received by DOE by October 16, 2000. Commenters should identify the specific program option and/or issue they are addressing. Written comments should be addressed to: U.S. Department of Energy, Office of Transportation Technologies, EE-34, Docket No. EE-RM-98-507, 1000 Independence Avenue, SW, Washington, DC 20585.

Copies of the public workshop summaries, public comments received, and any other docket material received may be read and copied at the DOE Freedom of Information Reading Room, U.S. Department of Energy, Room 1E-190, 1000 Independence Avenue, SW, Washington, DC 20585; telephone [phone], between the hours of 8:30 a.m. and 4 p.m., Monday through Friday, except Federal holidays. The docket file material will be filed under “EE-RM-98-507.”

FOR FURTHER INFORMATION CONTACT:

Kenneth R. Katz, Office of Energy Efficiency and Renewable Energy, EE-34, U.S. Department of Energy, 1000 Independence Avenue, SW, Washington, DC 20585, [e-mail]; or phone [phone].

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

The Energy Policy Act of 1992 (EPACT) (Pub. L. 104-486) requires Federal government fleets, State government fleets, and alternative fuel providers to acquire alternative fuel vehicles (AFVs) for their light-duty fleets. Section 507(g) of EPACT authorizes DOE to pursue a rulemaking to extend alternative fueled vehicle acquisition requirements to certain local government and private fleets. Fleets would be covered if they are located in one of 125 areas specified by EPACT (see the complete list of the Program's Metropolitan Statistical Areas and its component cities and counties at www.afdc.doe.gov/​pdfs/​msacnty.pdf), and if they meet certain size and operational requirements. If implemented, a requirement for local government and private fleets could start as early as model year 2002 (which runs from September 1, 2001 to August 31, 2002).

In order to implement any section 507(g) requirement, section 507(c) of EPACT requires DOE to publish an Advance Notice of Proposed Rulemaking (ANOPR) to begin a rulemaking process to evaluate and examine EPACT's replacement fuel goals, and to determine whether alternative fueled vehicle (AFV) acquisition requirements for local government and private fleets are necessary to achieve EPACT's energy security and other goals. 42 U.S.C. 13256(c). DOE published an ANOPR for the purposes described in section 507(c) on April 17, 1998. 63 FR 19372. This notice was intended to stimulate comments to assist DOE in making decisions concerning future rulemaking actions and non-regulatory initiatives to promote alternative fuels and alternative fueled vehicles. Three hearings were held to receive oral comments on the ANOPR. They were held on May 20, 1998 in Los Angeles, California; on May 28, 1998 in Minneapolis, Minnesota; and on June 4, 1998, in Washington, DC. A total of 110 persons spoke at the three hearings and/or submitted written comments, which were received by July 16, 1998.

II. Decision To Defer Proposed Rulemaking Until After Consultations Have Occurred

Before any alternative fueled vehicle regulation can be implemented, DOE must propose regulatory requirements, along with accompanying discussion and analysis, in a Notice of Proposed Rulemaking (NOPR). Since late 1998, DOE has been reviewing comments, conducting analytical work, and exploring various approaches to implementing section 507(g) of EPACT.

DOE has undertaken analytical initiatives, and participated in public forums, to gain an understanding of the potential effects a rule would have on fleets, EPACT's replacement fuel goals, the energy security of the Nation, and the environment. The feedback, analyses and data that have been received have resulted in multiple options for promulgating an alternative fueled vehicle requirement for local government and private fleets. Before proceeding with the rulemaking, however, additional work is needed.

Under Executive Order 13132, “Federalism” (64 FR 43255, August 10, 1999), and DOE's recent statement of policy regarding intergovernmental consultation (65 FR 13735, March 14, 2000), DOE must consult with State and local governments before issuing any proposed rule that may have substantial direct effects on the States, on the relationship between the Federal government and the States, or on the distribution of power and responsibilities among the various levels of government. The consultation requirements specified in Executive Order 13132 became effective in November 1999.

Previously, this office had engaged in stakeholder meetings in late 1998 (which are described below) to discuss the possible regulatory options for a local government and private fleet rulemaking. State and local government officials were active participants in these stakeholder meetings. As a result of these new consultation requirements, and because a final rule under section 507(g) of EPACT may have substantial effects on local governments, DOE has decided to hold public workshops to discuss its possible regulatory options for a local government and private fleet rulemaking.

Because DOE must engage in consultation with State and local governments, DOE is pausing its rulemaking efforts regarding whether, and what, to propose as an alternative fueled vehicle or fuel use requirement on local government and private fleets until after consultations with State and local government officials. DOE preserves the option of promulgating a local government and private fleet rulemaking after the State and local government consultation process has concluded.

III. State and Local Government Consultation Requirement

The President issued Executive Order 13132, “Federalism,” on August 4, 1999 (64 FR 43255, Aug.10, 1999). Section 6(a) of the Order requires each covered Federal agency to have “an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” The term “State and local officials” is defined in section 1(d) of the Order to mean “elected officials of State and local governments or their representative national organizations.” “Regulatory policies that have federalism implications” refers to actions that have “substantial direct effects 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.” E.O. 13132, Section 1(a).

On October 28, 1999, the Administrator, Office of Information and Regulatory Affairs, within the Office of Management and Budget (OMB), issued, to heads of executive departments and agencies, guidance for implementing Executive Order 13132. Pursuant to section 6 of the Order, the Administrator requested that each agency federalism official submit a description of the agency's consultation process to OMB by January 31, 2000. In response, DOE published a statement of policy on intergovernmental consultation in the development of regulations that have federalism implications (“Statement of Policy”). 65 FR 13735. Because the intergovernmental consultation procedures required by Executive Order 13132 and by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) are similar, DOE modeled its policy on its final policy statement on intergovernmental consultation under the Unfunded Mandates Reform Act of 1995, which DOE published on March 18, 1997 (62 FR 12820). The Statement of Policy provides for DOE to use the same basic consultation process for development of a regulation that contains a significant Federal intergovernmental mandate and may have federalism implications.

Because a rulemaking requiring local governments to acquire alternative fueled vehicles may have federalism implications, the Secretarial Officer responsible for the rulemaking is tasked, under DOE's Statement of Policy, with providing adequate notice to pertinent State and local officials and engaging in consultation with them concerning regulatory options that DOE is considering. For this specific rulemaking, the responsible Secretarial Officer is the Assistant Secretary for Energy Efficiency and Renewable Energy.

To ensure maximum participation by government officials, DOE's Statement of Policy requires a notice to State and local officials to: (1) Describe the nature and authority for the rulemaking(s); (2) give DOE's estimate of the effects on State and local governments of the regulatory options being considered for proposal; and (3) invite them to participate in the development of the regulation by participating in the public workshops or by presenting their views in writing on the likely effects of regulatory options being considered by DOE staff or legally available policy alternatives that they wish DOE to consider. With respect to State governments, DOE's policy requires that actual notice by letter, using a mailing list maintained by the DOE Office of Intergovernmental and External Affairs, is provided to the National Governors Association, the National Conference of State Legislatures, and the Council of State Governments. With respect to local governments, DOE's policy requires giving notice through the Federal Register and by letter to the Executive Director of the National League of Cities, the National Association of Counties, the U.S. Conference of Mayors, the International City/County Management Association, and any State Municipal League not represented by a national association. Additionally, DOE is giving actual notice by letter to the coordinators of all Clean Cities coalitions.

In consultation with State and local officials, DOE is responsible for seeking comment on: (1) The need for Federal regulation; (2) compliance costs of regulatory options DOE is considering for proposal; (3) legally available policy alternatives; and (4) ways to avoid or minimize conflict between State law and federally protected interests. The Statement of Policy requires that the timing, nature, and detail of the consultation with State and local officials be appropriate to the nature of the regulation involved.

IV. Previous Stakeholder Meetings

In the fall of 1998, DOE held a series of informal meetings with several stakeholder groups. The specific groups included: private fleets, transit bus operators, medium/heavy duty fleets, local government fleets, State government fleets, electric utilities, liquid fuel providers, natural gas fuel providers, and propane fuel providers. Other participants included regulatory agencies, technology research organizations, vehicle fuel systems providers, consulting firms, vehicle manufacturers, and related associations and coalitions.

These meetings were held because DOE desired an opportunity to present several regulatory options under consideration at the time, and to gauge stakeholder reactions. At these meetings, DOE discussed the issues affecting the development of a requirement under section 507(g), including DOE's processes, requirements, and authority. In addition to responding to the options presented, stakeholders were presented with an opportunity to identify key barriers to increased use of alternative fuels, and to suggest possible solutions. No efforts were made during the meetings to achieve a consensus.

In addition, DOE held several informal meetings or discussions with automobile manufacturers with the same purposes and information as the stakeholder meetings discussed above. These included meetings with the following companies: American Honda Motor Company, DaimlerChrysler Corporation, Ford Motor Company, General Motors, and Toyota Motor Corporation.

DOE began each meeting by discussing the EPACT replacement fuel goals, the authority to modify these goals, the possible regulatory options for a fleet requirement rule, and the additional statutory authority related to urban transit buses. At each meeting, DOE presented the following four regulatory options under consideration at the time:

(1) A rule based solely upon the AFV acquisition requirements specified by section 507(g) of the Energy Policy Act;

(2) All the elements of Option #1, but with a requirement that the alternative fueled vehicles must operate on alternative fuels wherever available;

(3) All the elements of Option #1, but with a provision for the allocation of credits for actual use of replacement fuels; and

(4) A replacement fuels program, focused on requiring fleets to reduce their light-duty fleet petroleum consumption through the use of replacement fuels.

V. Consultation Through Public Workshops

As set forth in the DATES section of this notice, DOE is holding three informal public workshops to discuss regulatory options, issues, and stakeholder concerns. DOE will also utilize these workshops to gather information from local government and private fleets about the type and size of fleets they operate, and how flexibility in meeting a possible requirement would affect the operation of their fleets. The workshops will be an opportunity for DOE to listen to concerns of State, local and private stakeholders.

In short, DOE wishes to consult with stakeholders on whether to promulgate a rule requiring local government and private fleets to acquire AFVs, or use replacement fuel, and, if so, what type of rule and which optional rule formulations should be proposed. In particular, DOE would prefer that any proposed rule results in the largest practical number of AFVs acquired; the greatest displacement of oil; and minimal cost to covered fleets. Specifically, DOE requests comment and feedback on several options:

1. No Regulatory Requirement for Local Government and Private Fleets Is Proposed

DOE could elect not to propose any requirements, with respect to alternative fueled vehicles, for local government and private fleets. If DOE were eventually to determine not to propose a local government and private fleet requirement program, section 509 of EPACT requires DOE to submit to Congress recommendations for possible requirements, or incentives, for fuel suppliers, vehicle suppliers, and motorists that would achieve EPACT's replacement fuel goals.

2. The Local Government and Private Fleet AFV Acquisition Program as Provided by Section 507(g) of EPACT

If DOE elects to propose an AFV acquisition requirement, this option would adopt the language provided by section 507(g) of EPACT, and require local government and private fleets to acquire AFVs as a percentage of their light-duty vehicle acquisitions during specific model years. For model year 2002, the requirement would be that 20 percent of the light-duty vehicles acquired by a local government or private fleet would have to be AFVs. The acquisition requirement would then rise to 40 percent in model year 2003; 60 percent in model year 2004; and 70 percent in model year 2005 and thereafter. DOE could propose a regulation that lowered these percentages or extended the time frame. This program would work similar to the existing State and alternative fuel provider program and would not impose an alternative fuel use requirement for the AFVs acquired by local government and private fleets. Like the existing program, fleets could earn AFV credits for the early or excess acquisition of AFVs.

DOE is requesting comment on this approach, specifically on ways to implement the program with minimal cost and reporting burden on covered fleets.

3. The Fleet Rewards Program

If DOE elects to propose AFV acquisition requirements for local government and private fleets, it could propose flexible compliance strategies to increase the use of alternative fuel. For example, DOE could allow fleets that are required to obtain alternative fueled vehicles under section 507(g) to voluntarily opt into a Fleet Rewards Program.

As currently conceptualized, the Fleet Rewards Program would use the number of light-duty vehicles acquired by a fleet in a model year as the basis for determining a fleet's requirements. A fleet's requirement would still be based on acquiring a specific percentage of its light-duty vehicles as AFVs. However, the Fleet Rewards Program would differ by allowing fleets to take specific actions, called AFV-Equivalency actions, to achieve compliance with its AFV acquisition requirements and to encourage the use of alternative fuel. Those actions that would be allowable under the Fleet Rewards Program, and would receive AFV-Equivalency Credits, would be the acquisition of any size and class of alternative fueled vehicle, and the consumption of each 500 gasoline gallon equivalent of alternative fuel.

Each AFV acquired, regardless of size and/or class, would earn an AFV-Equivalency Credit for a fleet. Each discrete use of 500 gasoline gallon equivalents of alternative fuel would earn an AFV-Equivalency Credit for a fleet. Two AFV-Equivalency credits would be allocated for the acquisition of dedicated alternative fueled vehicles. The operation of an existing dedicated alternative fueled vehicle in a fleet would also be eligible for AFV-Equivalency Credit.

DOE is requesting comments on this approach, specifically as to whether the Fleet Rewards Program would provide greater flexibility for fleets and encourage alternative fuel use.

4. The Replacement Fuel Program

If DOE elects to propose requirements on local government and private fleets, it could orient the program away from AFVs and toward replacement fuel utilization. As currently conceived, the Replacement Fuel Program would require local government and private fleets to reduce their light-duty vehicle petroleum usage by increasing the percentage of replacement fuels used in their light-duty vehicles. The current definition of fleet used under the EPACT AFV acquisition programs—Metropolitan Statistical Area (MSA) of more than 250,000 people, 50 vehicles total, 20 vehicles in a single MSA—would apply for determining which local government and private fleets may be covered by the program.

A fleet would calculate the total gasoline gallon equivalents (GGE) used by its light-duty vehicles and then multiply that amount by the applicable percentage required for that model year. Fleets would be allowed to count fuel use from any size-class and type of vehicle they operate, regardless of whether these vehicles are newly acquired or existing vehicles.

The Replacement Fuel Program would provide replacement fuel credits for both early replacement fuel use, as well as replacement fuel use in excess of requirements. These credits would be valued on a gasoline gallon equivalent basis, so they would be easily tradeable.

DOE is requesting comments on this approach, specifically as to whether the Replacement Fuel Program would provide greater flexibility for fleets and encourage replacement and alternative fuel use.

5. Extending Flexibile Options to Other Fleets

DOE is considering whether it is possible to allow State government fleets to participate in the Fleet Rewards and/or the Replacement Fuel Program discussed above. State government fleets are not required by EPACT to use alternative fuels in their AFVs. In spite of this, many State fleets are using alternative fuels, and others have expressed an interest in using alternative fuels. DOE is requesting comments on whether it should propose to allow State fleets to participate in these options, with or without a requirement for local government and private fleets.

DOE is also considering whether it is possible to allow non-covered fleets and private citizens to generate AFV-Equivalency Action credits, or replacement fuel use credits, for the acquisition of AFVs and the use of alternative fuel and replacement fuels. If allowable under law, non-covered fleets and private citizens could be allocated credits, which could be sold to any EPACT mandated fleet that is required to achieve compliance with the Fleet Rewards or Replacement Fuel Program.

These fleets and individuals would be under no reporting requirement, but would have to report their actions to DOE to obtain credits. DOE is requesting comments on this approach, specifically as to whether the benefits of allowing the involvement of non-covered fleets and individuals would outweigh the complexities of enabling these groups to obtain credits.

DOE is also considering ways to reward alternative fuel providers for establishing fueling infrastructure and for supporting the use of AFVs in their local communities. DOE is seeking comments and suggestions as to how this could be accomplished within a regulatory framework.

6. An Alternative Fueled Urban Transit Bus Acquisition Program as Provided by Section 507(k) of EPACT

Section 507(k) of the Energy Policy Act provides DOE with the authority to propose a program requiring the acquisition of alternative fueled urban transit buses if this program would “contribute to achieving the goal described in section 502(b)(2)(B), as modified under section 504.” DOE must determine if such an action would be consistent with energy security goals and the objective of encouraging greater use of urban buses by the public, and how such a program could be implemented in concert with or instead of a local government and private fleet program.

A possible option for a potential urban transit bus program would be one under which transit operators would be required to acquire alternative fuel buses as a portion of their new urban transit bus acquisitions, such as under a 507(g) fleet program.

Another possible option would be allowing urban transit bus operators the opportunity to “opt into” the Fleet Rewards Program as an optional compliance path. Under this program, urban transit bus operators might receive credit either for acquisitions of alternative fuel vehicles or for alternative fuel use. As with the light-duty vehicle program, an AFV-Equivalency would have to be established, which would have to be a fair and appropriate AFV-Equivalency for an urban transit bus.

A third possible option is a Replacement Fuel Program for urban transit bus fleets. DOE is requesting comments on whether urban transit bus operators should have a separate Fleet Rewards or Replacement Fuel Program, or whether it should be a subset of a possible Fleet Rewards or Replacement Fuels Program for local government and private fleets.

DOE also is considering what might be the appropriate minimum fleet size required for an urban transit bus operator to be covered by a section 507(k) requirement. Because EPACT does not explicitly provide guidance on this issue, DOE will be seeking comments as to what the appropriate minimum fleet size could be. DOE is seeking comments on these various approaches to encouraging alternative and replacement fuel use in transit buses.

VI. Conduct of the Workshops

The workshops will be conducted in an informal, conference style. As opposed to hearings, at which speakers make formal oral statements before a panel of DOE officials who can question them, the workshops will have no formal presentations by workshop participants. DOE officials will present the issues to be discussed and then will act as facilitators for the ensuing discussions. Workshop participants will be allowed to speak, offer information and raise issues/questions at any point during a workshop.

The draft agenda described below is subject to modification to ensure that those who attend will have an adequate opportunity to state their views, offer information, raise issues, and interact with other attendees. There will be no discussion of proprietary information, costs or prices, market shares, or other commercial matters regulated by antitrust law. A summary of what is discussed at each workshop will be prepared and made available to participants and the general public, along with a more detailed description of the options on the Office of Transportation Technologies' Website; www.ott.doe.gov/​epact/​private_​fleets.html.

VII. Preliminary Agenda

Purpose of Meeting

Introduction of Attendees

DOE Presentation of Workshop Issues

DOE's Authority

DOE's Process/Requirements

Consultation Requirements

Previous Stakeholder Meetings

Regulatory Options

DOE's Questions

Breakout Sessions

Questions Concerning DOE's Regulatory Options/Deferral Decision

Response to DOE's Regulatory Options/Deferral Decision

Other Possible Regulatory Concepts

Incentives

Non-Financial incentives

Other Issues

Issued in Washington, DC on July 17, 2000.

Dan W. Reicher,

Assistant Secretary, Energy Efficiency and Renewable Energy.