[Federal Register Volume 60, Number 153 (Wednesday, August 9, 1995)]
[Proposed Rules]
[Pages 40539-40540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19688]
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Proposed Rules
Federal Register
________________________________________________________________________
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. 60, No. 153 / Wednesday, August 9, 1995 /
Proposed Rules
[[Page 40539]]
DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 490
[Docket No. EE-RM-95-110A]
RIN 1904-AA64
Alternative Fuel Transportation Program
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy (DOE).
ACTION: Correction to notice of limited reopening of the comment
period.
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SUMMARY: This document contains corrections to the Notice of Limited
Reopening of the Comment Period that was published Monday, July 31,
1995, 60 FR 38974, FR Doc. 95-18737. The notice of limited reopening of
the comment period requests public comment on possible options for
defining the term ``substantial portion,'' which is used to determine
coverage for certain petroleum producers and importers, and on possible
modifications of the proposed definition of ``alternative fuel'' with
respect to alcohol fuels and biodiesel. In addition, this notice
announces DOE's receipt of new information regarding automakers'
alternative fueled vehicle production plans for the near future.
FOR FURTHER INFORMATION CONTACT: Mr. Kenneth R. Katz, Program Manager,
Office of Energy Efficiency and Renewable Energy (EE-33), U.S.
Department of Energy, 1000 Independence Avenue, SW., Washington, DC
20585, (202) 586-6116.
SUPPLEMENTARY INFORMATION:
Need for Correction
As published, the notice of limited reopening of the comment period
contains errors in the sequence of text in Part II which may be
confusing and, therefore, are in need of correction. The substance of
Part II is unchanged.
Correction of Publication
Accordingly, the publication on July 31, 1995, of the Notice of
Limited Reopening of the Comment Period, which was the subject of FR
Doc. 95-18737, is corrected by reprinting Part II, Definition of
``Substantial Portion,'' beginning on page 38975, col. 1, and ending on
page 38976, col. 2, in its entirety:
II. Definition of ``Substantial Portion''
Section 501(a)(2) of the Energy Policy Act of 1992 (the ``Act'')
defines the class of alternative fuel providers potentially subject to
the alternative fueled vehicle acquisition requirements to include
persons who: (1) Qualify as a ``covered person'' under section 301(5)
of the Act, 42 U.S.C. 13211(5), and (2) produce or import an average of
50,000 barrels per day or more of petroleum and ``a substantial portion
of whose business is producing alternative fuels.'' 42 U.S.C.
13251(a)(2)(C). Thus, the term ``substantial portion'' is a key
statutory determinant of whether a covered person that produces or
imports petroleum is an alternative fuel provider required by the Act
to acquire alternative fueled vehicles.
However, even if an entity meets all of the qualifications for a
section 501(a)(2)(C) alternative fuel provider, including the
``substantial portion'' test, it nevertheless may be excepted from the
vehicle acquisition requirements under section 501(a)(3) or exempted by
DOE under section 501(a)(5). Under section 501(a)(3)(A), the vehicle
acquisition requirements only apply to an affiliate, division or
business unit of a covered person who is substantially engaged in the
alternative fuels business. See proposed Sec. 490.304. Moreover, under
section 501(a)(3)(B), the vehicle acquisition requirements do not apply
to any entity whose principal business is transforming alternative fuel
into a product other than alternative fuel or consuming such fuel to
manufacture a product that is not an alternative fuel. Under section
501(a)(5), DOE may exempt alternative fuel providers from the vehicle
acquisition requirements if they can show either that (1) alternative
fuels that meet their normal business requirements and practices are
not available; or (2) that alternative fueled vehicles that meet their
normal business requirements and practices are not offered for purchase
or lease on reasonable terms and conditions. See proposed Sec. 490.308.
In the February 28, 1995 notice of proposed rulemaking, DOE
proposed to define the term ``substantial portion'' to mean that at
least two percent of a covered person's refinery yield of petroleum
products is composed of alternative fuels. See proposed Sec. 490.301.
DOE explained that it chose the two percent of refinery yield threshold
because it represented the average yield for the production of
alternative fuels by petroleum refiners, as reported by the Energy
Information Administration. 60 FR 10978.
The notice of proposed rulemaking also explained that in developing
the proposed definition of ``substantial portion,'' the Department had
considered, as an alternative, basing the definition on the portion of
the gross revenue an entity derives from the production of alternative
fuels. Ultimately, DOE did not propose a gross revenue threshold
because the information needed to support that alternative was more
fragmented than that available to support the two percent of refinery
yield criterion, and DOE believed the percent of refinery yield
criterion would adequately define the class of petroleum producers and
importers who are ``covered persons'' under the Act. 60 FR 10979.
Nevertheless, DOE asked for comment on whether reliable information
exists that would allow establishment of a revenue measure for
determining whether alternative fuels production comprises a
substantial portion of a company's business, and it solicited
suggestions for any other alternative definitions of ``substantial
portion.'' 60 FR 10979.
DOE received many comments on the definition of ``substantial
portion.'' Some commenters supported DOE's proposed definition of
``substantial portion,'' agreeing that if at least two percent of a
refinery's product yield is composed of an alternative fuel, the fuel
provider should have to meet the Act's acquisition requirements.
However, most comments on this issue criticized the two percent of
refinery yield as being too low a threshold. Some commenters stated
that the two percent refinery yield of petroleum products threshold
would impose vehicle acquisition requirements on many refineries that
only produce alternative
[[Page 40540]]
fuels (principally propane) as incidental by-products of the refining
process. Several commenters recommended that DOE modify the rule to
provide that at least 10 percent of a covered person's refinery yield
of petroleum products must be composed of alternative fuels before that
person would be deemed to have a ``substantial portion'' of its
business involved in the production of alternative fuels. Other
commenters urged DOE to adopt a definition of ``substantial portion''
that would be the same as the ``principal business'' criterion used in
section 501(a)(2) for defining other categories of alternative fuel
providers.
A few of the commenters recommended that DOE adopt a percentage of
gross revenue derived from the sale of alternative fuels as the basis
for the definition of ``substantial portion.'' They pointed out that
gross revenue is the measure used for determining whether other
alternative fuel providers are ``covered persons'' because their
``principal business'' is in alternative fuels. In their view, if gross
revenue can be used to determine whether an entity's principal business
involves alternative fuels, it also should be used for determining
whether a petroleum producer or importer has a substantial portion of
its business in the production of alternative fuels.
After carefully reviewing all of the comments received on this
issue, DOE thinks that a percentage of gross revenue derived from the
sale of alternative fuels may be a better measure of an entity's
involvement in the alternative fuels business than is the percentage of
refinery yield of petroleum products included in the proposed rule's
definition of ``substantial portion.'' As pointed out by some
commenters, a gross revenue measure can be applied to all producers and
importers of petroleum, unlike the percent of refinery yield criterion
which focuses solely on refining operations.
Despite the lack of comprehensive, publicly available information
about petroleum producers' and importers' revenue sources on a product-
by-product basis, DOE has been able to collect enough information about
their sales of alternative fuels to frame a possible definition of
``substantial portion'' based on percent of gross revenue derived from
alternative fuels.
One option DOE is considering is whether to define ``substantial
portion'' to mean that at least 30 percent of the annual gross revenue
of a covered person is derived from the sale of alternative fuels. This
percentage of gross revenue appears to be an appropriate gross revenue
threshold for two reasons. First, available information shows that
major U.S. energy producing companies historically derive at least 30
percent of their annual gross revenue from the sale of alternative
fuels.\1\ Major energy producers are typically consolidated or
integrated companies that are involved in oil and gas exploration, oil
and gas production or importing, petroleum refining and marketing,
transportation of products, other energy operations (coal, nuclear and
other energy) and nonenergy businesses (primarily chemicals). Second,
this definition would exclude from the class of covered persons subject
to the vehicle acquisition requirements those refiners who produce
alternative fuels only as an incidental by-product of the refining
process. Refiners are typically involved only in petroleum refining and
marketing operations.
\1\ Sources used were: Energy Information Administration's
Performance Profiles of Major Energy Producers, 1993 (DOE/EIA-0206);
Moody's 1994 Industrial Manual; 1995 U.S.A. Oil Industry Directory;
and Standard & Poor's 1994 Register--Corporations.
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DOE also believes this gross revenue percentage comports with the
terms of section 501(a)(2) of the Act, 42 U.S.C. 13251(a)(2). If the
term ``substantial portion'' were defined to include a percentage of
gross revenue derived from alternative fuels that was higher than 30
percent, the distinction in the Act between ``substantial portion''
which applies to covered petroleum producers and importers (section
501(a)(2)(C)) and ``principal business'' which applies to other
alternative fuel providers (section 501(a)(2) (A) and (B)) would be
rendered meaningless. As noted in the preamble to the notice of
proposed rulemaking, alternative fuels constitute an entity's
``principal business'' if the entity derives a plurality of its gross
revenue from sales of alternative fuels, and a plurality may be less
than 50 percent. 60 FR 10978. Therefore, DOE believes that 30 percent
of gross revenue from alternative fuels may constitute a reasonable
basis for the definition of ``substantial portion.''
This possible interpretation of ``substantial portion'' also
appears to be consistent with the underlying intent of Congress with
regard to petroleum-related entities. That intent was to apply the
alternative fueled vehicle acquisition requirements only to major
energy producers and importers.\2\
\2\ The conference report on the Energy Policy Act of 1992
states that ``the intent of section 501(a)(1) is not to cover all
affiliates or divisions of the many large energy companies which
have some, but not all, of their corporate units engaged in
alternative fuels operations. For example, the oil and gas
production affiliate or division of a major energy company described
in 501(a)(1)(C) would be covered; so might a propane pipeline unit
or a natural gas processing division, if the ``substantially
engaged'' test is met. But an oil tanker division, a gasoline
marketing affiliate, or a petrochemical unit whose major operations
are the production of plastics, for example, would not be covered *
* *.'' H.R. Rep. 1018, 102d Cong., 2d Sess. 387 (1992).
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DOE requests comments from interested members of the public on this
possible option for defining ``substantial portion'' or any alternative
options they would like DOE to consider. DOE is particularly interested
in receiving data or analysis that are relevant to this issue.
Thomas J. Gross,
Deputy Assistant Secretary for Transportation Technologies, Office of
Energy Efficiency and Renewable Energy.
[FR Doc. 95-19688 Filed 8-8-95; 8:45 am]
BILLING CODE 6450-01-P
