Alternative Fueled Vehicle Acquisition Requirements for Private and Local Government Fleets

SUMMARY: The Department of Energy is today publishing an advance notice

of proposed rulemaking, as required by the Energy Policy Act of 1992

(the Act), Pub. L. 102-486, that begins a process to determine whether

alternative fueled vehicle acquisition requirements for certain private

and local government automobile fleets should be promulgated under the

terms of section 507(g) of the Act. The establishment of such an

acquisition program is reliant on whether this program is necessary for

achieving the Act's replacement fuel goals and whether this program

will enable the actual realization of these goals. Thus, this notice

requests comments on the replacement fuel goals set forth in section

502(b)(2) of the Act, identifying the problems with achieving the

goals, assessing the adequacy and practicability of the goals, and

considering all actions necessary to meet the goals. Additionally, this

notice requests comments on whether DOE should propose the inclusion of

alternative fueled urban bus acquisition requirements for private and

local government fleets in conjunction with a fleet requirement program

that may be established under section 507(g) of the Act. This notice is

intended to stimulate comments that will inform DOE's decisions

concerning future rulemaking actions and non-regulatory initiatives to

promote alternative fuels and alternative fueled vehicles.

DATES: Written comments (8 copies) must be received by DOE by July 16,

1998. Where possible, commenters should identify the specific section

and question number to which they are responding.

Oral views, data, and arguments may be presented at the public

hearings, which are scheduled as follows:

1. In Los Angeles, CA, beginning at 9:30 a.m. on May 20, 1998.

2. In Minneapolis, MN, beginning at 9:30 a.m. on May 28, 1998.

3. In Washington, DC, beginning at 9:30 a.m. on June 4, 1998.

The hearings will end after all persons who have requested an

opportunity to speak have made oral presentations. Requests to speak at

any of the hearings should be phoned to Andi Kasarsky, (202) 586-3012,

and received no later than 4:00 p.m., May 18, 1998, for the Los

Angeles, CA, hearing; May 26, 1998, for the Minneapolis, MN, hearing;

and June 2, 1998, for the Washington, DC, hearing. Each oral

presentation is limited to 10 minutes.

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

1. Los Angeles, CA--Roybal Federal Building, 255 E. Temple Street (at

Los Angeles Street), 2nd Floor Conference Room, Los Angeles, CA.

2. Minneapolis, MN--U.S. Court House, 300 South 4th Street (at 3rd

Avenue), Skyway Conference Center (Room 259--2nd level), Minneapolis,

MN.

3. Washington, DC--U.S. Department of Energy, Room 1E-245, 1000

Independence Avenue, SW., Washington, DC 20585.

Written comments should be addressed to: U.S. Department of Energy,

Office of Transportation Technologies, EE-34, Docket No. EE-RM-98-507,

1000 Independence Avenue, SW., Washington, DC 20585, telephone (202)

586-3012. Copies of the public hearing transcripts, written comments

received, technical reference materials mentioned in the notice, and

any other docket material received may be read and copied at the DOE

Freedom of Information Reading Room, U.S. Department of Energy, Room

1E-190, 1000 Independence Ave., SW., Washington, DC 20585, telephone

(202) 586-3142, between the hours of 8:30 a.m. and 4:00 p.m., Monday

through Friday, except Federal holidays. The docket file material will

be filed under ``EE-RM-98-507.''

For more information concerning public participation in this

rulemaking proceeding, see section V of this notice (Public Comment

Procedures).

FOR FURTHER INFORMATION CONTACT:

Kenneth R. Katz, Office of Energy Efficiency and Renewable Energy, EE-

34, U.S. Department of Energy, 1000 Independence Avenue, SW.,

Washington, DC 20585, [email protected]; or phone (202) 586-

9171.

Vivian S. Lewis, Office of the General Counsel, GC-72, U.S. Department

of Energy, 1000 Independence Avenue, SW., Washington, DC 20585.

For information concerning the public hearings, requests to speak

at a hearing, submission of written comments, and to obtain copies of

materials referenced in this notice, contact Andi Kasarsky, (202) 586-

3012.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Authority

B. Program Background and Goals

C. Required Rulemaking

D. Law Enforcement Vehicle and Urban Bus Optional Rulemakings

II. General Issues Relating to Replacement Fuel Goals

III. Issues Related to Fleet Requirement Determinations

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

Requirement Program

V. Review and Analysis Requirements

VI. Public Comment Procedures

a. Participation in Rulemaking

b. Written Comment Procedures

c. Public Hearings

1. Procedure for Submitting Requests to Speak

2. Conduct of Hearing

I. Introduction

A. Authority

The Energy Policy Act of 1992 (Pub. L. 104-486) authorizes DOE to

pursue a rulemaking concerning alternative fueled vehicle acquisition

requirements for private and local government fleets on two distinct

schedules. First, section 507(b) provides for an early rulemaking,

which was to be completed by December 15, 1996. As part of that

rulemaking, section 507 (a)(3) of the Act required DOE to publish an

Advance Notice of Proposed Rulemaking (ANOPR) to begin a rulemaking

process for determining whether alternative fueled vehicle (AFV)

acquisition requirements for private and local government fleets are

necessary to achieve the Act's energy security and other goals. 42

U.S.C. 13256(a)(3). If no rule was promulgated by December 15, 1996,

then sections 507(b)(3), (c), and (e) require a later rulemaking to

determine by January 1, 2000, whether vehicle acquisition requirements

are ``necessary,'' as described in section 507(e). 42 U.S.C.

13256(b)(3), (c) and (e).

DOE published an ANOPR for the purposes described in section 507(a)

and (b) on August 7, 1996. 61 FR 41032. This notice was intended to

stimulate comments to assist DOE in making decisions concerning future

rulemaking actions and non-regulatory initiatives to promote

alternative fuels and alternative fueled vehicles. Three hearings were

held to receive oral comments on the ANOPR. They were held on September

17, 1996, in Dallas, Texas; on September 25, 1996, in Sacramento,

California; and on October 9, 1996, in Washington, DC. A total of 70

persons spoke at the three

[[Page 19373]]

hearings, and 105 written comments were received by November 5, 1996.

On April 23, 1997, DOE published a Notice of Termination stating

that DOE would not promulgate regulations to implement alternative

fueled vehicle requirements for certain private and local government

fleets according to the early schedule of section 507(a)(1) of the Act.

62 FR 19701. As required by sections 507(b)(3), (c), and (e), DOE today

begins a rulemaking under section 507(g) of the Act to determine, no

later than January 1, 2000, whether alternative fueled vehicle

acquisition requirements for private and local government automobile

fleets under the later schedule of section 507(g) are considered

``necessary'' to achieve the Act's ``replacement fuel'' goals. (A

``replacement'' fuel is the non-petroleum portion of an ``alternative

fuel'' as those terms are defined in section 301 of the Act. (42 U.S.C.

13211).)

Section 504(c) of the Act provides additional, albeit limited,

rulemaking authority to develop and implement programs, other than

regulatory alternative fueled vehicle acquisition mandates, to meet the

general program goals set forth in section 502(a) of the Act. (42

U.S.C. 13254(c).) Section 502(a) describes goals to promote

availability of domestic replacement fuels to the maximum extent

practicable in order to have the greatest impact in reducing oil

imports, improving the Nation's economy, and reducing greenhouse gas

emission. (42 U.S.C. 13252(a).) The predicate for using the rulemaking

authority under section 504(c) is a determination that achievement of

the specific numerical goals in section 502(b)(2) would result in a

``significant and correctable'' failure to meet the general program

goals in section 502(a). Section 504(c) precludes DOE from promulgating

rules that would mandate: production of alternative fueled vehicles;

vehicle marketing or pricing practices, policies, or strategies; and

production or delivery of alternative fuels. In preparing a notice of

proposed rulemaking following evaluation of comments received in

response to this advance notice, DOE will be considering whether to

propose rules under section 504(c).

From prior rulemaking activities under title V of the Act, DOE

knows that there are diverse interests with strongly held views about

the general program goals of the Act and the role that Government

should play in achieving those goals. Broad acceptance of final rules

setting forth an affirmative program would be desirable and, to that

end, DOE may use a neutral and experienced convener under the

Negotiated Rulemaking Act of 1990 to assist DOE in determining whether

to develop proposed rules using consensus rulemaking procedures. 5

U.S.C. 563.

B. Program Background and Goals

The transportation sector currently accounts for approximately two-

thirds of all U.S. petroleum use and roughly one-fourth of total U.S.

energy consumption. A virtual one-to-one relationship exists between

additional gasoline and diesel fuel consumption and America's increased

use of imported oil. The gap between the transportation sector's demand

for petroleum and our domestic petroleum production continues to widen.

Today, the U.S. consumes 4 million barrels per day more than it

produces for transportation purposes alone; that gap is projected to

rise to 8 million barrels per day by the year 2010. According to the

latest projections by the Energy Information Administration (EIA), the

transportation sector will consume 15.8 million barrels per day of

petroleum in 2010, if no significant changes are made to usage patterns

and vehicle efficiency. About 8.4 million of these barrels are

projected to be used by light duty vehicles. The transportation sector

represents one of the major sources of energy vulnerability for

American society and the American economy today.

U.S. dependence on imported petroleum has also grown since the

Act's enactment. In 1992, 41 percent of total U.S. petroleum

consumption was derived from foreign sources. By 1996, imports had

increased to 46 percent. EIA projects U.S. petroleum import dependence

to reach approximately 52 percent of consumption by 2000 and 60 percent

of petroleum consumption by 2010. Congress enacted the Act, in part, to

address these energy security concerns, many of which are more critical

now than at the time of passage. Titles III, IV, V, and VI of the Act

contain provisions requiring DOE to establish a variety of programs

aimed at displacing substantial quantities of oil consumed by motor

vehicles.

Title III sets forth mandatory requirements for Federal fleet

acquisitions of alternative fueled vehicles, which began in fiscal year

1993. Since that time, approximately 30,000 alternative fueled vehicles

have been acquired by the Federal fleet. Federal agencies have gained

considerable experience with many types of alternative fuels and

alternative fueled vehicles.

Title IV directs DOE to establish a program to certify alternative

fuel technicians, acquire data about alternative fuels and alternative

fueled vehicles, and establish a public information program. DOE has

established a cooperative program with the auto service industry and

numerous technical colleges to develop and implement national standards

for certification of alternative fuel training programs.

Title IV also includes programs related to demonstrating the

feasibility of the commercial application of using alternative fuels

for urban buses and other motor vehicles used for mass transit. Since

1992, many fleets across the country have begun replacing their buses

with alternative fueled buses. Currently, alternative fueled transit

buses are operated in thirty-eight States. According to the American

Public Transit Association and the Federal Transit Association, more

than 2,600 alternative fueled buses were in use in 1996. That number is

estimated to increase to about 4,500 in 1998. Approximately 22 percent

of new buses on order for the January 1998 through April 1998 time

frame will be operated on alternative fuels. In comparison, 14 percent

of new buses ordered in 1996 operated on alternative fuels.

Over the last several years, DOE has analyzed the costs and

benefits of alternative fuel and AFV use in the transportation sector.

A series of technical reports recorded the results of these analyses

and is entitled ``Assessment of Costs and Benefits of Flexible and

Alternative Fuel Use in the U.S. Transportation Sector.'' These reports

will be placed in the public docket for this rulemaking in DOE's

Freedom of Information Reading Room.

Section 502 requires DOE to establish a program to promote

development and use of replacement fuels, especially domestic

replacement fuels, in light duty motor vehicles. DOE is required to

focus on those replacement fuels having the most impact in: Reducing

oil imports, improving the health of the Nation's economy, and reducing

emissions of greenhouse gases. DOE is in the process of performing

analytical work to guide the design of this replacement fuel demand and

supply program. Section 502(b) requires DOE to assess, among other

things, the feasibility of producing adequate replacement fuels to

displace 10 percent of U.S. motor fuel by 2000 and 30 percent by 2010.

DOE has undertaken such a study, the partial results of which have been

published by DOE's Office of Policy as Technical Report Fourteen:

Market Potential and Impacts of Alternative Fuel Use in Light-Duty

Vehicles: A 2000/2010 Analysis. This

[[Page 19374]]

analysis was conducted in 1994 under a set of premises (i.e., estimated

future oil prices) that were more favorable to alternative fuel use

than the expectations found in the Annual Energy Outlook 1998 (DOE/EIA-

0383(98)). This report is available by calling the National Alternative

Fuels Hotline at 1-800-423-1DOE or 703-528-3500. A copy will be placed

in the docket file for this rulemaking.

The following key results and conclusions emerged from the analysis

contained in this report:

For the year 2000, ten percent replacement of light duty

motor fuel use with alternative and replacement fuels is feasible and

appears likely with existing practices and policies.

Displacing thirty percent of light duty motor fuel use by

2010 also appears feasible, however, feasibility is based on several

assumptions that may not be realized without additional alternative

fuel incentives.

With a fully established refueling infrastructure and

sufficient vehicle availability, market forces would continue to

support 30 percent use of alternative fuels and would sustain even

higher levels as alternative fueled vehicles assume an increasingly

larger share of the total light duty vehicle population.

In long-run equilibrium, making alternative fuels and

alternative fueled vehicles available would provide an estimated net

annual economic benefit of up to $10.3 billion in 2010. Much of this

benefit--$4.2 billion--consists of an increase in consumer satisfaction

from the availability of new classes of vehicles and less expensive

fuels; the remaining $6.1 billion reflects dollar cost savings from

alternative fuel use, mainly through the reduced cost of fuel imports.

Benefits from reduced emissions of criteria pollutants are

estimated to be up to $3.7 billion annually.

Although this analysis indicates that a free market could sustain a

large volume of alternative fuel use, it does not appear at the present

that the market will move toward such a scenario without Government

action. The report states that in order to realize any substantial use

of alternative fuels by 2010, the Federal and/or State governments will

have to take steps soon to encourage the increased use of alternative

fuels and vehicles.

DOE is also required by section 506 to prepare a Technical and

Policy Analysis of various issues related to replacement fuels and

alternative fueled vehicles for submission to the President and

Congress. On October 27, 1997, DOE published a Notice of Availability

and Request for Comments (62 FR 55622) on a proposed analysis on these

issues, prior to its final transmission to the President and Congress.

Comments were due to DOE by January 26, 1998. Copies of the proposed

Technical and Policy Analysis may be obtained from the National

Alternative Fuels Hotline, 9300 Lee Highway, Fairfax, VA 22301-1207,

(800) 423-1DOE, or electronically from the Office of Energy Efficiency

and Renewable Energy's Transportation Technologies website at: http://

www.ott.doe.gov/office.rules.html. DOE is required by section 506(c) to

preserve all comments received on the analysis for use in required

rulemaking proceedings under section 507, including the rulemaking,

covered in today's notice, for determining whether local government and

private fleets should be required to acquire alternative fueled

vehicles. Public comments on the section 506 Technical Analysis can be

reviewed at DOE's Freedom of Information Reading Room under Docket

Number EE-NOA-97-506. Currently, twelve written comments have been

received on the analysis.

The preliminary partial results of the section 506 Technical

Analysis indicate that the potential use of replacement fuels

sustainable by the market could be as high as 30 to 38 percent under

various scenarios and ultimately could be greater than 50 percent. In

order to reach these levels of replacement fuel use, major transitional

impediments would have to be overcome, including changes in the

relative fuel/vehicle prices to consumers. Changes to the price that

customers pay for alternative fueled vehicles and alternative fuels may

require the establishment of additional financial, and non-financial,

incentives both for the end user and for the vehicle and fuel

providers.

For example, the analysis states that the Act's suggested goals of

displacing 10 percent of transportation fuels in the year 2000 and 30

percent in the year 2010 would require that AFV sales:

Grow to between 35 and 40 percent of total new light duty

vehicle sales by 1999 to meet the 2000 goal; and

Stay in the range of 30 to 38 percent to build an AFV

population sufficiently large enough to meet the 2010 goal.

If the 30 percent goal applied to year 2020, instead of 2010, the

analysis states that AFV growth would have to:

Double every year between 1995 and 2000, going from

approximately 30,000 to 500,000 sales per year;

Increase by 50 percent per year to 4,000,000 in the

period from 2001 through 2005; and

Remain at a constant 32 percent of total light duty

vehicle sales in the period from 2005 through 2010.

Under this scenario, the AFV population in 2020 would be large

enough so that 30 percent of light duty vehicle motor fuel would be

replacement fuel. This scenario is believed to be more representative

of new vehicle technology market introduction generally, than the

growth paths necessary to meet the Act's suggested goals. However, the

draft analysis indicates that it is unlikely that the estimated growth

in alternative fueled vehicles and alternative fuel use will occur

solely due to the Federal, State, local government, and fuel provider

alternative fueled vehicle acquisition requirements of the Act. The

draft analysis suggests that new policies may need to be established

before these projections of alternative fuel and alternative fueled

vehicle use can be realized. These policies could result in additional

grant programs, budget increases for existing grant programs,

additional financial and non-financial incentives, additional excise

tax changes, and/or the establishment of new programs.

In addition to the hearings, reports and analyses required by Title

V, DOE held two stakeholder forums in 1997 for the purpose of

discussing the replacement fuel goals, the potential private and local

government fleet acquisition requirements, and the issue of mandates

versus incentives. These forums took place on June 24, 1997, in Long

Beach, CA, and on November 19, 1997, in Dallas, TX. Issues discussed at

these forums included the current availability and use of alternative

fuels and alternative fueled vehicles; existing governmental

incentives, both financial and non-financial; taxes on alternative

fuels; alternative fuel economics; and the need for additional programs

and incentives that will catalyze the alternative fuels market. In

preparation for the Dallas forum, DOE produced a ``Fleet Forum White

Paper'' that summarized the current status of these issues,

characterized the types of incentives and provided a basis for

discussion. This document will be placed in the docket for this

rulemaking and can be reviewed at DOE's Freedom of Information Reading

Room.

Pursuant to section 505 of the Act, 42 U.S.C. 13255, DOE is

promoting voluntary use of alternative fueled vehicles through its

Clean Cities Program. Under this program, DOE joins with local

governments and organizations in public/private partnerships aimed at

developing markets for alternative fueled vehicles.

[[Page 19375]]

The program aims to bring together enough participants in each local

area to reach the necessary volume of alternative fueled vehicle use to

justify installation of refueling infrastructure and other joint

facilities, as well as to promote other forms of cooperation. As of

March 1998, 61 U.S. communities have signed agreements to participate.

Title V also contains non-discretionary alternative fueled vehicle

acquisition requirements. Sections 501 and 507(o) of the Act require

certain alternative fuel provider and State government fleets to

include increasing percentages of alternative fueled vehicles in their

annual acquisitions of new light duty vehicles. DOE published a final

rule to implement these vehicle acquisition requirements on March 14,

1996. 61 FR 10621. As a result of these requirements, alternative fuel

provider and State fleets have reported, to date, the acquisition of

approximately 5,000 alternative fueled vehicles to DOE. This quantity

is expected to increase after additional reports are received and

tabulated.

The use of alternative fueled vehicles, alternative fuels, and

replacement fuels has been steadily growing since 1992. According to

the EIA report entitled, ``Alternatives to Traditional Transportation

Fuels 1996'' (December 1997), the following estimates apply in respect

to the use of alternative fueled vehicles, alternative fuels, and

replacement fuels:

More than 380,000 alternative fueled vehicles were in use

in 1997; a 51 percent increase since 1992.

An additional 50,000 alternative fueled vehicles are

expected to be in use by the end of 1998.

From 1992 to 1996, gasoline-equivalent gallon consumption

of alternative and replacement fuels increased by 76 percent, while

consumption of traditional fuels increased just 10 percent.

From 1992 to 1996, alternative and replacement fuel

consumption increased from 2,106,000 to 3,707,000 billion gasoline-

equivalent gallons, while consumption of traditional fuels increased

from 134,000,000 to 148,000,000 billion gasoline-equivalent gallons.

United States consumption of alternative fuels is

expected to grow by more than 45 million gasoline-equivalent gallons

from 1996 to 1998.

The availability of alternative fueled vehicles from Original

Equipment Manufacturers (OEMs) has been increasing steadily. Several

types of alternative fueled vehicles, including light-, medium-, and

heavy-duty vehicles are available from OEMs. Alternative fueled

vehicles are available from Chrysler, Ford, General Motors, Honda, and

Toyota. Manufacturers have announced plans for new offerings of

alternative fueled vehicles in the next few years. Both Chrysler and

Ford announced that they intend to produce large numbers of flexible-

fuel vehicles (including sedans, minivans, and compact pickup trucks)

that are capable of operating on E85, a blend of 85 percent ethanol and

15 percent gasoline, and/or gasoline. Currently, available model types

include compact and full-size pickup trucks; cargo and passenger vans;

minivans; compact sport utility vehicles; delivery trucks; and

subcompact, compact, mid-size, and full-size passenger cars. Available

fuel types include 85 percent ethanol (E85), 85 percent methanol (M85),

compressed natural gas (CNG), liquefied natural gas (LNG), propane

(liquefied petroleum gas or LPG), and electricity.

C. Required Rulemaking

This advance notice of proposed rulemaking is the first step in a

required rulemaking under section 507(g) of the Act for determining

whether local government and private fleets (other than alternative

fuel providers subject to section 501) should be required to acquire

alternative fueled vehicles. 42 U.S.C. 13257(g). A DOE decision to

impose alternative fueled vehicle acquisition requirements on private

and local government fleets is dependent on a determination that such

requirements are ``necessary'' to achieve the replacement fuel goals of

section 502(b)(2)(B), or as modified by DOE under section 504 or

507(e), and that the requirements would enable the actual realization

of these goals. If the replacement fuel goals, as modified, cannot be

met by the imposition of these acquisition requirements, the Act does

not permit DOE to go forward with such a program.

Such a fleet mandate would cover local government and private

fleets (excluding alternative fuel provider fleets covered by section

501 of the Act) of 20 or more light duty motor vehicles (including

passenger cars and trucks under 8500 lbs. gross vehicle weight rating),

which are:

Centrally fueled or capable of being centrally fueled;

Operated primarily within a metropolitan statistical area

with a population of at least 250,000 according to the 1980 census; and

Owned, leased, operated or otherwise controlled by an

entity which owns or operates 50 or more such vehicles in the United

States.

Various classes of light duty motor vehicles are excluded from the

basis for determining coverage. Excluded categories are listed in

section 490.3 of DOE's final rule for State government fleets and

certain alternative fuel providers. 10 CFR part 490. Appendix A to

subpart A of 10 CFR part 490 provides a list of the 125 metropolitan

statistical areas with a population of at least 250,000, according to

the 1980 Census.

The statutory authority for the required rulemakings is described

below. Each may require a separate rulemaking action, or may be

combined into a single rulemaking. Additionally, a third optional

rulemaking, as described below in section D, may require a separate

rulemaking, or may be included in this single rulemaking action.

1. Advance Notice of Proposed Rulemaking

Section 507(c) of the Act requires DOE to publish an advance notice

of proposed rulemaking for the purposes of: (a) evaluating progress

toward the goals of producing replacement fuels to replace, on an

energy equivalent basis, at least 10 percent of motor fuel consumption

by the year 2000 and at least 30 percent by the year 2010; (b)

identifying the problems with achieving those goals; (c) assessing the

adequacy and practicability of those goals; and (d) considering all

actions necessary to achieve those goals. Today's notice is issued to

comply with this statutory requirement.

2. Later Rulemaking

Sections 507(e) and (g) of the Act require DOE to initiate a

rulemaking to determine if the statutory conditions for a later

mandate, beginning in model year 2002 or thereafter, are met. In order

to determine that a mandate is ``necessary,'' section 507(e) of the

Act, 42 U.S.C. 13257(e), requires that DOE make the following findings

by rule:

(a) The goal of replacement fuel use described in section

502(b)(2)(B), or as modified by section 504, is not expected to be

actually achieved by 2010 by voluntary means or pursuant to Title V

or any other law without such a fleet requirement program, taking

into consideration the status of the achievement of the interim goal

described in section 502(b)(2)(A); and

(b) Such goal is practicable and actually achievable within

periods specified in section 502(b)(2) (or such other date as is

established under section 504) through implementation of such a

fleet requirement program in combination with voluntary means and

the application of other programs relevant to achieving such goals.

[[Page 19376]]

Section 507(g) provides the following alternative fueled vehicle

acquisition schedule for a program established by this later

rulemaking:

20 percent of the light duty motor vehicles acquired in model year

2002;

40 percent of those acquired in model year 2003;

60 percent of those acquired in model year 2004; and

70 percent of those acquired in model year 2005 and thereafter.

Under section 507(e)(2), these percentages can be reduced by rule, to

no less than 10 percent. Additionally, section 507(g)(2) allows DOE the

option of starting the acquisition schedule later than model year 2002.

If DOE were eventually to determine under section 507(f) that a

fleet requirement program is unnecessary, DOE would be required by

section 509 of the Act to submit to Congress recommendations for

possible requirements or incentives applying to fuel suppliers, vehicle

suppliers, and motorists that would achieve the Act's fuel replacement

goals.

D. Law Enforcement Vehicle and Urban Bus Optional Rulemakings

Section 507(k)(1) allows the Secretary, by rule, to include fleets

of law enforcement vehicles in a fleet requirement program established

under section 507(g), if it is determined that this inclusion would

contribute to achieving the goal described in section 502(b)(2)(B) (or

such other date as is established under section 504). 42 U.S.C.

13257(k)(1). A DOE decision to include law enforcement motor vehicles

in a fleet requirement program established under section 507(g) is

dependent upon a determination that this inclusion will not hinder the

use of motor vehicles for law enforcement purposes. Only one rulemaking

may be initiated under section 507(k)(1). Under section 507(k)(3), this

rulemaking may not occur unless a rulemaking is carried out under

section 507(g).

Many law enforcement agencies currently are using alternative

fueled vehicles satisfactorily. In some cases, alternative fuels can

reduce life-cycle operation costs for high-mileage patrol vehicles. The

operational characteristics of many administrative law enforcement

vehicles create a good match with those of alternative fueled vehicles.

However, DOE recognizes that many law enforcement agencies have unique

operational practices and requirements that would reduce opportunities

for alternative fueled vehicles. DOE is interested in receiving

comments as to whether acquisition requirements for alternative fueled

law enforcement motor vehicles should be included in a fleet

requirement program and how this program should be structured,

including the program start date and acquisition percentages.

Section 507(k)(2) allows the Secretary, by rule, to include new

urban buses, as defined by the Environmental Protection Agency (EPA),

under title II of the Clean Air Act, in a fleet requirement program

established under section 507(g), if it is determined that this

inclusion would contribute to achieving the goal described in section

502(b)(2)(B) (or such other date as is established under section 504).

42 U.S.C. 13257(k)(2). An urban bus is defined by EPA as:

A heavy-duty diesel-powered passenger-carrying vehicle with a

load capacity of fifteen or more passengers and intended primarily

for intra-city operation, i.e., within the confines of a city or

greater metropolitan area. Urban bus operation is characterized by

short rides and frequent stops. To facilitate this type of

operation, more than one set of quick-operating entrance and exit

doors would normally be installed. Since fares are usually paid in

cash or tokens rather than purchased in advance in the form of

tickets, urban buses would normally have equipment installed for

collection of fares. Urban buses are also typically characterized by

the absence of equipment and facilities for long distance travel,

e.g., rest rooms, large luggage compartments, and facilities for

stowing carry-on luggage. The useful life for urban buses is the

same as the useful life for other heavy-duty diesel engines. 40 CFR

86.091-2.

A DOE decision to include new urban buses in a fleet requirement

program established under section 507(g) is dependent upon a

determination that this inclusion will be consistent with energy

security goals and the needs and objectives of encouraging and

facilitating the greater use of such urban buses by the public, taking

into consideration the impact of such application on public transit

entities. Only one rulemaking may be initiated under section 507(k)(2).

Under section 507(k)(3), this rulemaking may not occur unless a

rulemaking is carried out under section 507(g).

II. General Issues Relating to Replacement Fuel Goals

As explained in Section I of this notice, section 507(c) of the Act

requires DOE to publish an advance notice of proposed rulemaking for

the purposes of: Evaluating progress toward the replacement fuel goals

of producing replacement fuels to replace, on an energy equivalent

basis, at least 10 percent of motor fuels consumption by the year 2000

and at least 30 percent by the year 2010 (or as modified under section

504); identifying the problems with achieving those goals; assessing

the adequacy and practicability of those goals; and considering all

actions necessary to achieve those goals.

Section 502(a) lays out a specific goal for a ``Replacement Fuel

Supply and Demand Program'': To promote the development and use in

light duty motor vehicles of domestic replacement fuels to substitute

for imported petroleum motor fuels to the maximum extent practicable.

42 U.S.C. 13252.

In designing the program, DOE is to focus on those replacement

fuels having the most impact in reducing oil imports, improving the

health of the Nation's economy, and reducing emissions of greenhouse

gases. Section 502(b)(2) further requires DOE to assess, among other

things, the feasibility of producing adequate replacement fuels to

displace 10 percent of U.S. motor fuel by 2000 and 30 percent by 2010.

42 U.S.C. 13252(b)(2).

DOE invites comments on the following general issues related to

achieving the Act's suggested replacement fuel goals:

1. Can the goal of replacing 30 percent of motor fuel consumption

be achieved by 2010? What are the problems with achieving the goal?

2. If the 30 percent goal cannot be achieved by 2010, then what is

an achievable goal in terms of percentage and time frame?

3. What methods or criteria should DOE use to assess the adequacy

and practicality of specific replacement fuel goals (i.e., the 10

percent and 30 percent targets) or for determining whether the goals

should be modified?

4. What type of a replacement fuels program should DOE establish

that would maximize usage of alternative fuels, replacement fuels, and

energy efficient vehicles? How should such a program be structured and

implemented?

5. What types of programs could be employed in combination with, or

in place of, mandated fleet AFV acquisitions to help achieve the 30

percent replacement fuel goal in 2010?

6. What specific types of incentives, should be employed to help

achieve the 30 percent replacement fuel goal in 2010? What form should

these incentives take (e.g., financial, non-financial)? Who should

benefit from these incentives (e.g., consumers, fleet operators,

vehicle manufacturers, fuel providers, equipment suppliers) and how?

7. How should the potential for dramatic changes in the price and

availability of petroleum (e.g., due to a sharp curtailment in world

petroleum

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supplies) be factored into the design of a replacement fuels program?

8. How should DOE estimate the fuel replacement impacts from other

Federal or State alternative fueled vehicle mandates, voluntary

commitments, use of dual fueled vehicles (that operate only part time

on alternative fuels), and other measures?

9. What methods are currently being used by fleets for tracking the

use of alternative fuel in dual fueled vehicles? How should DOE use

this data to verify alternative fuel use?

10. How should DOE encourage alternative fuel use in dual fueled

vehicles?

11. What factors should DOE take into account when estimating the

impact of replacement fuels on reducing oil imports, improving the

health of the Nation's economy, and reducing greenhouse gas and other

emissions?

III. Issues Related to Fleet Requirement Determinations

Sections 507(e) and (g) require that DOE publish a rule in the

Federal Register, no later than January 1, 2000, for the purpose of

determining whether a fleet requirement for local government and

private fleets to acquire alternative fueled vehicles is necessary.

Such a program shall be considered necessary if the Secretary finds

that:

(a) the goal of replacement fuel use described in section

502(b)(2)(B) (or as modified under section 504) is not expected to be

actually achieved by 2010 (or other such date as established under

section 504) by voluntary means or pursuant to Title V or any other law

without such a fleet requirement program; and

(b) the goal (or as modified under section 504) is practicable and

actually achievable through implementation of such a fleet requirement

program in combination with voluntary means and the application of

other programs relevant to achieving the goal.

Section 507(e)(2) requires that the rule published under section

507(g) also must modify the goal described in section 502(b)(2)(B) and

establish a revised goal pursuant to section 504 if the Secretary

determines that the 30 percent motor fuel replacement goal by 2010 is

inadequate or impracticable, and not expected to be achieved. The goal

as modified and established is applicable in making these findings.

Under section 507(e)(2), if DOE modifies the suggested 30 percent

motor fuel replacement by 2010 goal, it also may modify the annual

fleet acquisition requirements with the minimum percentage being no

less than 10 percent of new light duty vehicle acquisitions.

Likewise, section 507(g)(2) provides that DOE may, by rule,

establish a lesser AFV acquisition requirement for any model year and

that DOE may establish a fleet requirement program start date later

than 2002. However, DOE may not establish acquisition percentages

greater than those in section 507(g)(1).

Regarding local government entities, section 507(i)(1)(C) provides

an exemption for a local government entity if it can demonstrate to DOE

that a fleet requirement program, under section 507(g), would pose an

unreasonable financial hardship on the entity. The Act does not provide

a similar exemption for private fleets that may be covered. However,

for all fleets, sections 507(i)(1)(A) and (B) allow an exemption if the

fleet demonstrates that alternative fueled vehicles that meet the

normal requirements and practices of the principal business of the

fleet owner are not reasonably available for acquisition or the

alternative fuels that meet the normal requirements and practices of

the principal business of the fleet owner are not available in the area

in which the vehicles are to operated.

DOE seeks comment on the following issues that may be relevant to

any future DOE decision to propose alternative fueled vehicle

acquisition requirements for local government and private fleets:

1. If a fleet requirement program is established, should the

acquisition percentages be the same as those provided in section 507(g)

for the acquisition of new light duty motor vehicles or should a

different acquisition schedule apply? If a different schedule should

apply, what should the schedule look like (e.g., program start date,

acquisition percentages)?

2. If the Act's suggested goal of replacing 30 percent of the motor

fuel used by 2010 is impracticable and not expected to be achieved,

what should the modified fuel replacement goal be in terms of

percentage replacement and the year the goal is expected to be

achieved?

3. What methods or criteria should DOE use to determine the

contribution of a fleet requirement program towards meeting the fuel

replacement goal as modified?

4. What types of programs should be established, instead of a fleet

requirement program, that will result in market penetration of

alternative fueled vehicles and alternative fuels to the maximum extent

practicable? And what market penetration(s) would be possible with the

establishment of these programs?

5. What types of voluntary and incentive measures should be

undertaken, either in conjunction with fleet AFV requirements or in

lieu of such mandates, such as a program that awarded credits for the

amount of petroleum displaced or replaced, that would encourage

progress toward the fuel replacement goals?

6. DOE is required by section 507(l) to take into consideration the

following factors: energy security, costs, safety, lead time

requirements, vehicle miles traveled annually, effect on greenhouse

gases, technological feasibility, energy requirements, economic impacts

including impacts on fleets, workers, and consumers, such as users of

the alternative fuels for other (non-transportation) purposes, and the

availability of alternative fuels and alternative fueled vehicles.

What bearing or weighting factor, if any, should these factors have

on a DOE determination as to whether it should impose alternative

fueled vehicle acquisition requirements on local government and private

fleets?

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

Requirement Program

DOE seeks comment on the following issues that may be relevant to

any future DOE decision to propose the inclusion of alternative fueled

urban bus acquisition requirements for local government and private

fleets under a fleet requirement program that may be established under

section 507(g) of the Act:

1. What methods or criteria should DOE use in determining whether

the inclusion of alternative fueled urban buses in a fleet requirement

program under section 507(g) would contribute to achieving the goal of

section 502(b)(2)(B) (or other such goal as modified by section 504)?

2. What methods or criteria should DOE use in determining whether

the inclusion of alternative fueled urban buses in a fleet requirement

program will be consistent with the energy security goals and the needs

and objectives of encouraging and facilitating the greater use of

alternative fueled buses by the public?

3. What factors should DOE take into consideration when estimating

the impact on public transit entities of a program requiring the

acquisition of alternative fueled buses?

4. If a fleet requirement program is established, should

requirements for the acquisition of alternative fueled urban buses

apply to both local government and private fleets? Or, should

requirements only apply to local government fleets?

5. Should the acquisition percentages be the same as those that

apply to local

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government and private fleets for new light duty vehicles under section

507(g) or should a different acquisition schedule apply? If a different

schedule should apply to the acquisition of alternative fueled urban

buses, what should the schedule look like (e.g., program start date,

acquisition percentages)?

6. What types of exemptions and/or exclusions should be included in

such a fleet requirement program?

V. Review and Analysis Requirements

DOE provided to the Office of Information and Regulatory Affairs

(OIRA) in the Office of Management and Budget a copy of this notice for

comment. At the proposal stage for this rulemaking, DOE and OIRA will

determine whether this rulemaking is a significant regulatory action

under Executive Order 12866, Regulatory Planning and Review, 58 FR

51735 (Oct. 4, 1993). Were DOE to propose alternative fueled vehicle

acquisition requirements for local government and private fleets, the

rulemaking could constitute an economically significant regulatory

action, and DOE would prepare and submit to OIRA for review the

assessment of costs and benefits required by section 6(a)(3) of

Executive Order 12866. Other procedural and analysis requirements in

other Executive Orders and statutes also may apply to such future

rulemaking action, including the requirements of the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq.; the Paperwork Reduction Act, 44

U.S.C. 3501 et seq.; and the Unfunded Mandates Act of 1995, Pub. L.

104-4; and the National Environmental Policy Act, 42 U.S.C. 4321 et

seq.

VI . Public Comment Procedures

A. Participation in Rulemaking

DOE encourages the maximum level of public participation possible

in this rulemaking. Individual fleet operators; representatives of

trade groups; local governments; consumers of fleet services; vehicle

manufacturers; fuel providers, including producers; distributors and

service station operators; associations; States or other governmental

entities; and others are urged to submit written comments on the

proposal. DOE also encourages interested persons to participate in the

public hearings to be held at the times and places indicated at the

beginning of this notice.

DOE has established a period of 90 days following publication of

this notice for persons and organizations to comment on this advance

notice of proposed rulemaking. All public comments, public hearing

transcripts, and other docket material will be available for review and

copying in the DOE Freedom of Information Reading Room at the address

shown at the beginning of this notice. The docket file material will be

filed under ``EE-RM-98-507.''

B. Written Comment Procedures

Interested persons are invited to participate in this proceeding by

submitting written data, views or arguments with respect to the

subjects set forth in this notice. Instructions for submitting written

comments are set forth at the beginning of this notice and below. Where

possible, commenters should identify the specific section and question

number to which they are responding.

Comments (8 copies) should be labeled both on the envelope and on

the documents, ``Fleet AFV Acquisition Requirements Rulemaking (Docket

No. EE-RM-98-507),'' and must be received by the date specified at the

beginning of this notice. All comments and other relevant information

received by the date specified at the beginning of this notice will be

considered by DOE in the subsequent stages of the rulemaking process.

Pursuant to the provisions of 10 CFR 1004.11, any person submitting

information or data that is believed to be confidential and exempt by

law from public disclosure should submit one complete copy of the

document and 3 copies, if possible, from which the information believed

to be confidential has been deleted. DOE will make its own

determination with regard to the confidential status of the information

or data and treat it according to its determination.

C. Public Hearings

1. Procedure for Submitting Requests to Speak

The dates, times and places of the public hearings are indicated at

the beginning of this notice. DOE invites any person who has an

interest in these proceedings, or who is a representative of a group or

class of persons having an interest, to make a request for an

opportunity to make an oral presentation at the public hearings.

Requests may be telephoned to the telephone number given at the

beginning of this notice. The person making the request should give a

telephone number where he or she may be contacted. Persons will be

notified by DOE as to the approximate time they will be speaking.

Each person is requested to submit 8 copies of his/her statement at

the registration desk prior to the beginning of the hearing. In the

event any person wishing to testify cannot meet this requirement, that

person may make alternative arrangements by calling (202) 586-3012 in

advance.

2. Conduct of Hearing

DOE reserves the right to select the persons to be heard at the

hearings, to schedule the respective presentations, and to establish

the procedures governing the conduct of the hearings. Each presentation

is limited to 10 minutes.

A DOE official will be designated to preside at the hearings. The

hearings will not be judicial or evidentiary-type hearings, but will be

conducted in accordance with the Administrative Procedure Act, 5 U.S.C.

553, and section 501 of the DOE Organization Act, 42 U.S.C. 7191. At

the conclusion of all initial oral statements, each person who has made

an oral statement will be given the opportunity to make a rebuttal or

clarifying statement, subject to time limitations. Any further

procedural rules regarding proper conduct of the hearings will be

announced by the presiding official.

Transcripts of the hearings will be made and the entire record of

this rulemaking, including the transcripts, will be retained by DOE and

made available for inspection at the DOE Freedom of Information Reading

Room as provided at the beginning of this notice. Any person may

purchase a copy of the transcripts from the transcribing reporter.

Issued in Washington, DC, on April 8, 1998.

Dan W. Reicher,

Assistant Secretary, Energy Efficiency and Renewable Energy.

[FR Doc. 98-10239 Filed 4-16-98; 8:45 am]

BILLING CODE 6450-01-P