Alternative Fuel Transportation Program; P-Series Fuels

SUMMARY: In response to a petition filed by Pure Energy Corporation,

DOE is amending the rules for the statutory program that requires

certain alternative fuel providers and State government fleets to

acquire alternative fueled vehicles. The regulatory amendments add

three specific blends of methyltetrahydrofuran, ethanol and

hydrocarbons (known as ``P-series'' fuels) to the definition of

``alternative fuel.''

EFFECTIVE DATE: June 16, 1999.

FOR FURTHER INFORMATION CONTACT: Kenneth R. Katz, Office of Energy

Efficiency and Renewable Energy, (EE-34), U.S. Department of Energy,

1000 Independence Avenue, S.W., Washington, D.C. 20585, (202) 586-9171.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

A. Fuel Characteristics

On June 30, 1997, Pure Energy Corporation petitioned DOE for a

rulemaking to add its proprietary fuel products to the definition of

``alternative fuel'' under the Alternative Fuel Transportation Program

(Program) regulations (10 CFR part 490). DOE published in the Federal

Register the proposed rulemaking on July 28, 1998, 63 FR 40202. Pure

Energy Corporation's P-series fuels are blends of ethanol,

methyltetrahydrofuran (MTHF), and pentanes plus, with butane added to

blends that would be used in severe cold-weather conditions to meet

engine cold start requirements. Pure Energy Corporation has represented

that both the ethanol and the MTHF will be derived from renewable

resources, such as cellulosic biomass from waste paper, agricultural

waste and urban/industrial wood waste. Pure Energy Corporation plans to

use pentanes plus derived from the processing and production of natural

gas, as opposed to those derived from petroleum refining processes.

Pure Energy Corporation holds the exclusive worldwide license to

manufacture and distribute the P-series fuels, which were developed by

Dr. Stephen Paul of Princeton University. The P-series fuels were

awarded Patent number 5,697,987 by the United States Patent and

Trademark Office on December 16, 1997. DOE's evaluation of Pure Energy

Corporation's petition is restricted to three of the formulations

covered under this patent.

To make the P-series fuels, Pure Energy Corporation will be

producing ethanol and MTHF through an integrated process. The company

expects to use commercially proven concentrated acid hydrolysis as its

base technology for this integrated production process. MTHF is

currently produced in limited quantities from furfural (derived from

both biomass and petroleum feedstocks) for use as a specialty chemical

in consumer products and/or process industries. Pure Energy Corporation

has developed a thermochemical technology to produce MTHF from

cellulosic feedstocks through a levulinic acid pathway. Levulinic acid

is a crystalline keto acid obtained by action of dilute acids on

hexoses (six-carbon sugars like glucose or fructose) and on substances,

such as starch or sucrose, that yield hexoses on hydrolysis. The

company integrates this process with an ethanol production system to

achieve technical and economic efficiencies. In this process, the

lignocellulosic feedstock is converted into both five- and six-carbon

sugars, which are then bifurcated into fermentation and thermochemical

pathways to produce ethanol and MTHF, respectively.

Pure Energy Corporation has developed several formulations of the

P-series fuels. The company proposes to vary the components of its P-

series fuels to meet particular market demands. The three formulations

described in Table 1 (Pure Regular, Pure Premium and Pure Cold Weather)

are those for which Pure Energy Corporation, in its petition, provided

specific energy and emissions data. The company claims that the

volumetric percentages of each of the components of the P-series fuels

can range from 10 percent to 50 percent for pentanes plus; from 15

percent to 55 percent for MTHF; from 25 percent to 55 percent for

ethanol; and from zero to 15 percent for normal butane. Table 1

provides the compositions, by volume, of the three specific P-series

fuel formulations which are the subject of this rulemaking.

Table 1--Volume Composition of the P-series Fuels

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

Premium Cold weather

Constituent Regular (percent) (percent)

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

Pentanes plus................................................... 32.5 27.5 16.0

MTHF............................................................ 32.5 17.5 26.0

ethanol......................................................... 35.0 55.0 47.0

normal butane................................................... 0.0 0.0 11.0

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

Based on the data supplied in the petition, the composition of P-

series fuels varies from 60 to 100 percent non-petroleum, on an energy

basis, depending on the source of the pentanes plus and n-butane

components of the blends.

Pure Energy Corporation intends to market the P-series fuels to

owners of flexible fuel vehicles (FFVs) designed to operate on E-85 (85

percent ethanol/15 percent gasoline), on gasoline, or on any blend of

those two fuels. Flexible fuel vehicles are currently available from

two major domestic auto manufacturers as mid-size sedans, minivans and

compact pickup trucks.

B. Patent

On December 16, 1997, the United States Patent and Trademark Office

issued U.S. Patent No. 5,697,987, titled Alternative Fuel, to Princeton

University on a new non-petroleum fuel, for spark-ignition engines,

called the P-series. The United States Patent and Trademark Office's

abstract for this patent reads:

A spark ignition motor fuel composition consisting essentially

of: a hydrocarbon component containing one or more hydrocarbons

selected from five to eight carbon atoms straight-chained or

branched alkanes essentially free of olefins, aromatics, benzene and

sulfur, wherein the hydrocarbon component has a minimum anti-knock

index of 65 as measured by ASTM D-2699 and D-2700 and a maximum DVPE

of 15 psi as measured by ASTM D-5191; a fuel grade

[[Page 26823]]

alcohol; and a co-solvent for the hydrocarbon component and the fuel

grade alcohol; wherein the hydrocarbon component, the fuel grade

alcohol and the co-solvent are present in amounts selected to

provide a motor fuel with a minimum anti-knock index of 87 as

measured by ASTM D-2699 and D-2700, and a maximum DVPE of 15 psi as

measured by ASTM D-5191. A method for lowering the vapor pressure of

a hydrocarbon-alcohol blend by adding a co-solvent for the

hydrocarbon and the alcohol to the blend is also disclosed.

C. Background

10 CFR part 490 implements, in part, title V of the Energy Policy

Act of 1992 (EPACT) (Public Law 102-486) which mandates alternative

fueled vehicle acquisition requirements for certain alternative fuel

providers and State government fleets. Part 490 is one of a variety of

EPACT programs to promote alternative and replacement fuels that reduce

reliance on imported oil, reduce criteria pollutant and greenhouse gas

emissions, increase energy efficiency, and help displace 10 percent of

conventional motor fuels by 2000 and 30 percent by 2010.

Title III of EPACT requires Federal fleet acquisitions of

alternative fueled vehicles. Title IV includes specific authority for a

financial incentive program for States, a public information program,

and a program for certifying alternative fueled vehicle technician

training programs. In addition to the mandates for the purchase of

alternative fueled vehicles by certain alternative fuel providers and

State government fleets, title V provides for a possible similar

mandate for certain private and municipal fleets. Title VI provides for

a program to promote electric motor vehicles.

The types of vehicles that satisfy the alternative fuel provider

and State government fleet mandates in title V are determined in part

by the definition of ``alternative fuel'' in section 301(2). That

definition provides: ``Alternative fuel' means methanol, denatured

ethanol, and other alcohols; mixtures containing 85 percent or more (or

such other percentage, but not less than 70 percent, as determined by

the Secretary, by rule, to provide for requirements relating to cold

start, safety, or vehicle functions) by volume of methanol, denatured

ethanol, and other alcohols with gasoline or other fuels; natural gas;

liquefied petroleum gas; hydrogen; coal-derived liquid fuels; fuels

(other than alcohol) derived from biological materials; electricity

(including electricity from solar energy); and any other fuel the

Secretary determines, by rule, is substantially not petroleum, and

would yield substantial energy security benefits and substantial

environmental benefits.'' [Emphasis added.] 42 U.S.C. 13211(2). The

emphasized phrase in the definition of ``alternative fuel'' states the

minimum procedural and substantive requirements for adding a new fuel

blend to the list of fuels enumerated or implicitly covered by the

provisions of section 301(2).

For reasons set forth in detail below, DOE determines that the

three P-series fuels described in Pure Energy Corporation's petition

(Pure Regular, Pure Premium and Pure Cold Weather) and by United States

Patent number 5,697,987, which contain at least 60 percent non-

petroleum energy content derived from MTHF, which must be manufactured

solely from biological materials, and ethanol, which must be

manufactured solely from biological materials, are substantially not

petroleum and would yield substantial energy security benefits and

substantial environmental benefits, and thus are hereby added to the

definition of ``alternative fuel'' in 10 CFR 490.2.

II. Discussion of Public Comments

A. Pure Energy Corporation Comments

Pure Energy Corporation, the petitioner, was among those submitting

comments to DOE in response to the Notice of Proposed Rulemaking (NOPR)

(63 FR 40202). In the NOPR, DOE noted that neither the Energy Policy

Act of 1992 (the Act), nor the language of legislative committee

reports, provides any guidance on how to measure whether a fuel is

``substantially non-petroleum.'' The word ``substantially,'' DOE

observed, ``* * * is sometimes used as a synonym for the word `mainly'

'' and ``* * * at other times as a synonym for the words `considerably'

or `importantly.' '' Whether to construe ``substantially'' in the

first, narrower sense or in the latter, broader one, DOE said, was a

policy question. DOE further said, ``Obviously, a fuel that is more

than 50 percent non-petroleum in energy-equivalent terms is `mainly'

and therefore `substantially non-petroleum.' '' ( 63 FR 40204). Fuels

of less than 50 percent non-petroleum content could still be regarded

as ``substantially non-petroleum'' if ``substantially'' were construed

in the broader sense, DOE reasoned, since such fuels could be regarded

as ``considerably'' or ``importantly'' non-petroleum. Because all three

of the P-series fuel formulations Pure Energy Corporation described in

its petition are more than 60 percent non-petroleum in energy terms,

DOE elected not to address the policy question of whether to construe

``substantially'' in the narrow or broad sense. DOE proposed to

designate P-series fuel blends as alternative fuels if, like the three

P-series blends described in Pure's petition, they are at least 60

percent non-petroleum in energy terms.

In its comments, Pure Energy Corporation endorsed DOE's statement

regarding fuels of 50 percent or greater non-petroleum content. The

company went on to state its belief that ``* * * 50 percent minimum

non-petroleum energy content is the right standard as a matter of law

and public policy * * *'' The company submitted data on a fourth P-

series formulation it claimed meets the standards for ``substantial

energy security benefits'' and ``substantial environmental benefits,''

but which is 52.3 percent non-petroleum in energy content. Pure Energy

Corporation requested that DOE, in its final rulemaking, set a minimum

non-petroleum energy content for P-series fuels at 50 percent, rather

than at the 60 percent level proposed in the NOPR.

The vehicle emissions test data for the fourth P-series blend

submitted by Pure Energy Corporation with its comments were

inconclusive. Therefore, DOE asked the company to submit additional

data. In order to proceed in an expeditious manner, DOE is electing to

proceed with the final rule on the three P-series blends described in

Pure Energy Corporation's original petition, and will address the

fourth formulation when we receive the additional data.

B. Other Public Comments

In addition to Pure Energy Corporation, forty-two other firms,

organizations and individuals submitted comments in response to the

NOPR. The majority of these spoke in favor of granting Pure Energy

Corporation's petition, with none of their comments raising a

significant issue regarding the rule. Three commenters, however, raised

objections to DOE's granting the petition. Their comments and DOE's

responses to them are summarized below.

One commenter raised the possibility that reactions could occur

between the methyltetrahydrofuran (MTHF) component of P-series fuels

and metallic engine components containing molybdenum. (For example,

molybdenum is sometimes used as a ``facing'' material on engine piston

rings.) The commenter expressed concern that such reactions could

degrade those components and lead to the formation of hydrogen which

could in turn lead to hydrogen embrittlement of engine parts. This

commenter cited work reported in the Bulletin of the

[[Page 26824]]

Korean Chemical Society in which molybdenum atoms were observed to

break apart the chemical bonds in MTHF, among other compounds.

DOE's examination of the work cited revealed that the Korean

researchers had vaporized a molybdenum wire with very high electric

currents to produce free molybdenum atoms. Molybdenum's melting point

is over 4750 deg.F. and its boiling point is over 8380 deg.F. These

temperatures are far higher than any actually experienced by any part

of an internal combustion engine. Thus, there is little likelihood that

free molybdenum atoms could be liberated from molybdenum-bearing engine

parts to react in the gas phase with MTHF. Moreover, hydrogen

embrittlement is not a problem in current engines, despite the fact

that free hydrogen may be produced as a combustion intermediate

whenever any hydrogen-bearing fuel is used. Therefore, there is no

reason to expect that P-series fuels will engender hydrogen

embrittlement problems.

The commenter raised the possibility that molybdenum could also

lead to similar hydrogen-related problems in fuel storage systems.

Molybdenum is a key ingredient in hydro treating catalysts. These

catalysts are used in refining processes which remove sulfur from

petroleum and natural gas liquids and otherwise improve their

properties. The commenter suggested that molybdenum would be carried

over from these catalysts in the pentanes plus and subsequently react

with other P-series fuel components to generate hydrogen by the same

reactions the commenter had proposed would occur in engines. This

problem does not exist with other fuels that have undergone hydro

treatment, so it is unlikely it will exist with P-series fuels. In

hydro treating catalyst formulations, molybdenum exists in the form of

molybdenum disulfide, not as metallic molybdenum. The Korean research

that the commenter cited indicates that metallic molybdenum and

extremely high temperatures are needed to promote the reactions the

commenter fears will lead to hydrogen formation.

Finally, noting the high ethanol content of P-series fuels, this

commenter expressed the concern that contamination of the fuels by

water would lead to fuel phase separation. DOE believes the fuels

industry has accumulated ample experience in handling and distributing

fuels containing varying proportions of ethanol over the past 20 or

more years to prevent this from being a concern.

A second commenter, citing P-series' ``wide variation in petroleum

content (the butane and pentanes plus),'' urged DOE to resolve the

issue of ``* * * whether P-series fuel meets the definition of

`substantially non-petroleum.' '' As DOE noted in the NOPR, the P-

series fuels that are the subject of this rulemaking are a minimum of

63.8 percent non-petroleum on an energy basis, and DOE regards this as

sufficient to qualify them as ``substantially non-petroleum.'' Further,

the butane and pentanes plus may as easily be derived from natural gas

processing as from petroleum refining, and hence may also be non-

petroleum. In that case, P-series fuels would be 100 percent non-

petroleum.

The commenter also pointed out that, ``Fuels must also have tightly

controlled specifications for proper combustion and vehicle operation.

It is critical that performance-based fuel specifications be

established and enforced.'' Lack of such specifications, the commenter

said, would increase the difficulty vehicle manufacturers would

encounter in meeting increasingly stringent emissions standards and

permit wide variations of in-use fuel properties. This in turn would

``limit vehicle manufacturer and consumer interest in these fuels.''

DOE recognizes the validity of this concern, but the establishment of

practical, detailed fuel specifications lies outside DOE's authority.

Traditionally, such specifications are arrived at through a consensus

of fuel producers and users, based on economics and performance. The

American Society for Testing and Materials (ASTM) provides one example

of an appropriate forum for achieving such a consensus. DOE will be

available to assist those organizations with the establishment of

detailed fuel specifications for the P-series fuels.

Finally, the commenter pointed out that existing flexible fuel

vehicle products have not been designed to operate on P-series fuels

and have not been validated for operation on these fuels,

notwithstanding the emissions testing carried out by Pure Energy

Corporation. ``It would be inappropriate to state or imply such a

capability,'' the commenter said. The commenter added that use of P-

series fuels in existing flexible fuel vehicles or in future vehicles

not certified with P-series fuels could void the manufacturers'

warranties. DOE also acknowledges the validity of these comments. DOE

has not stated or implied, by granting alternative fuel status to P-

series fuels, that available vehicles were manufactured to operate on

the fuels or that use of the fuels will not void vehicle warranties.

How and under what circumstances to honor product warranties is the

responsibility of the vehicle manufacturers, and DOE's decision to

grant the P-series fuels alternative fuel status in no way limits

manufacturers' prerogatives in this regard. Ultimately, it will be up

to vehicle manufacturers to determine the effects of fuels on their

products and to decide whether they wish to test or certify their

vehicles on those fuels.

A third commenter opposed the designation of P-series fuels as

alternative fuels under the Act. This commenter stated the belief ``* *

* that a fuel mixture that contains only 60 percent non-petroleum fuel

should not be classified as an alternative fuel.'' DOE disagrees with

this statement and stands by the reasoning that led to its initial

affirmative determination to proceed with a rulemaking, as explained in

the NOPR. ``Furthermore,'' the commenter went on, ``there is no

assurance that the fuels under consideration actually will have even

this level of non-petroleum content, since some of the components of

the fuels can come from petroleum or non-petroleum feedstocks.'' This

comment appears to arise from a misreading of the NOPR. In fact, the

minimum non-petroleum content of the P-series fuels that are the

subject of this rulemaking is 63.8 percent (on an energy basis). If the

balance of the blend constituents are from natural gas processing, the

blend will be wholly (100 percent) from non-petroleum sources.

In evaluating the P-series fuels, and in light of feedback received

that expressed concerns similar to those of the above commenter, DOE

became concerned that Pure Energy Corporation would have the ability to

utilize ethanol that is not manufactured from biomass or biological

materials. It is possible to manufacture ethanol from petroleum, for

example, by the hydration of ethylene. DOE believes that Pure Energy

Corporation fully intends to manufacture the ethanol included in the P-

series fuels from biological materials. However, because DOE has some

concerns about the availability of biologically derived ethanol, it was

decided to limit the ethanol feedstock for the P-series fuels to

biological materials. Therefore, the parenthetical phrase

``manufactured solely from biological materials'' has been added to the

regulatory language as a qualifier for the ethanol feedstock.

The commenter also raised several procedural objections to DOE's

proposed granting of alternative fuel status to Pure's P-series fuels.

The first of these is the commenter's contention that ``DOE must define

new alternative fuel blends in the same way existing

[[Page 26825]]

blends are defined.'' According to the commenter, ``In attempting to

expand the list of alternative fuels, DOE has improperly construed the

statute's requirement that new fuels must be `substantially non-

petroleum.' Moreover, in interpreting the term `substantially,' DOE has

completely ignored the guidelines established for fuel blends/mixtures

explicitly recognized in the Act.'' The commenter's reference is to

section 301(2) of the Act, which says (in part): ``the term

`alternative fuel' means methanol, denatured ethanol, and other

alcohols; mixtures containing 85 percent or more (or such other

percentage, but not less than 70 percent, as determined by the

Secretary, by rule, to provide for requirements relating to cold start,

safety, or vehicle functions) by volume of methanol, denatured ethanol,

and other alcohols with gasoline or other fuels * * *''

The commenter claims that in identifying specific fuels and fuel

blends deemed to be alternative fuels, the Act established guidelines

that DOE must adhere to in making subsequent determinations. In

particular, the commenter believes section 301(2) of the Act ``* * *

explicitly forbid[s] the inclusion of ethanol fuel blends where the

ethanol component of the mixture is less than 85 percent,'' and that,

``[t]here is no statutory basis for designating as alternative fuels

blends that contain considerably more petroleum than the blends listed

in the statute.''

DOE believes that the commenter has misinterpreted the Act. In

conferring explicit alternative fuel status on ethanol blends of 85

volume percent and above, DOE does not believe Congress intended

implicitly to reject all ethanol blends of less than 85 volume percent.

Indeed, the Secretary of Energy is granted discretion under certain

circumstances to approve ethanol blends containing as little as 70

percent ethanol. Nor does DOE believe that the Congress, by providing a

list of alternative fuels, was enunciating overarching principles that

it intended DOE to follow in future determinations. Rather, Congress

delineated such principles explicitly in section 301(2) when it said

that the definition of ``alternative fuel'' could include ``* * * any

other fuel the Secretary determines, by rule, is substantially non-

petroleum and would yield substantial energy security benefits and

substantial environmental benefits'' [Emphasis added]. The commenter's

inferences regarding Congressional intent cannot be reconciled with

this explicit language. Finally, as noted above, the P-series blends do

not necessarily or always contain any petroleum component.

The three criteria enumerated in section 301(2), which DOE has used

in making this determination (and, as directed by Congress, will be

used in making future determinations) represent a rigorous standard by

which to measure the efficacy of potential alternative fuels in

achieving the overall goals of the Energy Policy Act. DOE believes that

analysis of potential alternative fuels by these criteria is

appropriate and statutorily required.

The commenter also expressed the view that DOE erred in making its

determination of whether a fuel is substantially non-petroleum on the

basis of the fuel's energy content, rather than on the basis of the

volume of the fuel that is non-petroleum. The commenter said, ``DOE's

notice [the NOPR] indicates that, since the energy displacement goals

contained in EPACT are measured in terms of energy equivalent units,

DOE also may evaluate a fuel's non-petroleum content based on energy

displacement rather than volume displacement.'' The commenter went on,

``Section 301(2) actually dictates that the blended fuels recognized in

the Act must contain at least 70 percent by volume of ethanol, methanol

or alcohol. Looking at the statute and the specific section under

review reveals that Congress intended these fuels to be compared based

on volume not energy displacement.'' [Emphasis in original] Here again,

DOE believes the inferences the commenter draws from section 301(2) of

the Act regarding Congressional intent are incorrect. Nothing in the

portion of section 301(2) that lists fuels Congress designated as

alternative fuels at the time of the Act's passage can be read as

establishing rigorous standards DOE is obliged to apply in future

alternative fuel determinations. In addition to the neat and blended

alcohol fuels, Section 301(2) lists natural gas and hydrogen. These

alternative fuels are gases whose volume depends on the pressure and

temperature under which they are stored. Energy content (energy

displacement potential) is the only reasonable basis on which to

compare them to the liquid fuels. This is also an appropriate basis of

comparison since all transportation prime movers which might use any of

these fuels are dependent on fuel energy content, rather than fuel

volume.

III. Statutory Criteria for Designating Additional Alternative

Fuels

Neither section 301(2) nor any other provision of the Act states

specifically or indicates how to measure whether a new fuel: (1) is

``substantially not petroleum'' and (2) would yield ``substantial

energy security benefits;'' and (3) would yield ``substantial

environmental benefits.'' Moreover, the Act does not state that these

criteria are exclusive; in appropriate circumstances, DOE could

consider other criteria related to achievement of the purposes of the

Program.

Legislative committee report language likewise does not identify

specifically what numbers and measures Congress viewed as defining the

minimums that would qualify as substantially not petroleum, and that

would satisfy the substantial energy security and substantial

environmental benefits criteria. However, the report of the House

Committee on Energy and Commerce described the pertinent language in

section 301(2) as providing ``* * * the Secretary with the opportunity

to add alternative and replacement fuels that are not now being

marketed to those specifically identified in the legislation.''

[Emphasis added.] H.R. Rep. No. 474(1), 102nd Cong., 2nd Sess., 182,

reprinted in 1992 U.S. Code Cong. & Admin. News 2005. The word

``opportunity'' suggests that the authority to add fuels to the

definition of ``alternative fuel'' is largely discretionary.

In evaluating the P-series fuels, DOE asked the National Renewable

Energy Laboratory and Argonne National Laboratory to review the data

presented in Pure Energy Corporation's petition against the statutory

criteria for designating an ``alternative fuel.'' Copies of these

evaluations, written comments received, technical reference materials

mentioned in the notice, and any other docket material received may be

read and copied at the DOE Freedom of Information Reading Room, U.S.

Department of Energy, Room 1E-090, 1000 Independence Ave., S.W.,

Washington, DC 20585, telephone (202) 586-3142, between the hours of

8:30 a.m. and 4:30 p.m., Monday through Friday, except Federal

holidays. The docket file material will be filed under ``EE-RM-98-

PURE.''

A. Substantially Not Petroleum

Any standard dictionary or thesaurus indicates that

``substantially'' is an adverb that can be used to convey a variety of

subtly different meanings. ``Substantially'' is sometimes used as a

synonym for the word ``mainly.'' At other times, it is used as a

synonym for the words ``considerably'' or ``importantly.'' See, e.g.,

Webster's New World Thesaurus 725 (Simon & Schuster, 1985). Since this

rulemaking does not involve fuels that are less than

[[Page 26826]]

50 percent non-petroleum, in terms of energy content, it is unnecessary

to address this policy question.

Section 502(b) of the Act establishes goals for replacing the

projected consumption of motor fuel in the U.S. on an energy equivalent

basis. The goals provided by this section are that 10% of the motor

fuel consumed by 2000 and 30% of the motor fuel consumed by 2010 will

be replacement fuels. These goals are the driving force for all the

alternative and replacement fuel provisions in the Act. Because the

achievement of these goals is to be measured on an energy equivalent

basis, DOE believes that, when evaluating a fuel, the determination of

whether it is ``substantially not petroleum'' should be based on an

analysis of the fuel's non-petroleum energy content, rather than a

volumetric analysis of the fuel's non-petroleum content.

Pure Energy Corporation claims that, on an energy basis, its three

P-series fuels will be at least 60 percent derived, and may be up to

100 percent derived, from non-petroleum sources, depending on the

source of the light hydrocarbons in the blends. In its petition, the

Pure Energy Corporation provided DOE with information and analysis to

substantiate these claims. DOE confirms the accuracy of Pure Energy

Corporation's claim regarding the energy-based non-petroleum content of

the P-series fuels. Table 2 summarizes the worst-case (lowest non-

petroleum) makeup of the three P-series fuel formulations, based on the

net (lower) heating value of all constituents.

Table 2--Verified Non-petroleum Energy Content of the P-series Fuels

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

Cold weather

Constituent Regular Premium (percent)

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

Pentanes plus................................................... 36.2 33.3 19.1

MTHF............................................................ 37.7 22.1 32.3

ethanol......................................................... 26.1 44.6 37.5

normal butane................................................... 0.0 0.0 11.2

Non-petroleum (excluding pentanes plus, butane)................. 63.8 66.7 69.8

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

It is evident to DOE that the MTHF and ethanol components of the P-

series fuels, as described in Pure Energy Corporation's petition, will

be non-petroleum, because they will be manufactured from biological

materials. However it is less clear whether the pentanes plus component

is non-petroleum. DOE's Energy Information Administration (EIA), in its

publication Annual Energy Review 1996, 386 ((DOE/EIA-0384(96)) defines

``pentanes plus'' as ``a mixture of hydrocarbons, mostly pentanes and

heavier, extracted from natural gas. [This] includes isopentane,

natural gasoline, and plant condensate.'' This same publication also

defines petroleum products as including ``unfinished oils, liquefied

petroleum gases, pentanes plus, aviation gasoline, motor gasoline,

naphtha-type jet fuel, kerosene-type jet fuel, kerosene, distillate

fuel oil, residual fuel oil, petrochemical feedstocks, special

naphthas, lubricants, waxes, petroleum coke, asphalt, road oil, still

gas, and miscellaneous products.'' However, it is unnecessary to

determine whether to restrict pentanes plus on the basis of source

because the MTHF and ethanol, which must be manufactured solely from

biological materials, are present in all three fuel blends, result in a

non-petroleum energy content for the P-series formulations of at least

63.8 percent. That percentage is the main or predominant portion of the

fuel, and even under the narrow definition of ``substantially,'' the

three fuel blends are ``substantially not petroleum.''

Because U.S. Patent number 5,697,987 does not specifically define

the composition of the three P-series fuels, DOE has determined that

the fuels need to be more specifically described before they can be

added to the regulatory definition of ``alternative fuel.'' Given that

the petition shows that the three P-series fuels will be at least 60

percent derived from non-petroleum sources, and the fact that Pure

Energy Corporation claims that, on an energy basis, its three P-series

fuels will be at least 60 percent derived from non-petroleum sources,

DOE is using that percentage in the rule as a way of more narrowly

defining the three P-series fuels. DOE believes that the amount of MTHF

and ethanol in the fuel blends will result in a non-petroleum content

of at least 60 percent for the three P-series fuels, absent any other

non-petroleum component, if the MTHF and the ethanol are manufactured

solely from biological materials. Although, based on our evaluation,

DOE could have established a non-petroleum content of 63.8 percent for

the P-series fuels, establishing the minimum percentage of 60 percent

provides the company with some processing flexibility.

On the basis of the foregoing, DOE has concluded that the three P-

series fuels, as described by United States Patent number 5,697,987,

which contain at least 60 percent non-petroleum energy content derived

from MTHF, which must be manufactured solely from biological materials,

and ethanol, which must be manufactured solely from biological

materials, are ``substantially not petroleum'' as that phrase is used

in section 301(2) of the Act.

B. Substantial Energy Security Benefits

Pure Energy Corporation claims in its petition that the three P-

series fuels are 100 percent domestic and capable of displacing

gasoline on essentially a gallon-for-gallon basis. Pure Energy

Corporation notes that each gallon of the P-series fuel directly

displaces 0.88 gallons of RFG in vehicle use. Pure Energy Corporation

also states that the energy required to produce a one-gallon-equivalent

of the fuel is approximately 13,800 BTU less than that required to

produce one gallon of RFG.

The petition provides information to support a claim that

production of the P-series fuels results in a positive energy balance.

The process efficiency (BTUs produced per BTU of input) of the P-series

fuels is approximately 2.25 when the ethanol is produced from renewable

resources such as biomass. If, however, the ethanol is produced from

corn, the process efficiency is slightly lower, with a value between

1.75 and 1.88. Although the process efficiency is slightly lower when

the ethanol is derived from corn, production of ethanol from either

feedstock represents a significant energy savings for the life cycle of

the fuel.

DOE analyses support Pure Energy Corporation's claim of significant

petroleum displacement, although the company's claim of 100 percent

domestic content appears to be slightly high.

It is estimated that the P-series fuels (regular grade) with

pentanes plus derived from natural gas would be 96 percent derived from

domestic resources. It is believed that the

[[Page 26827]]

feedstock for ethanol and MTHF production will almost certainly be

wholly domestic. Since the feedstock for the pentanes plus and the

butane will be either natural gas or petroleum, and because a portion

of these feedstocks is currently and will continue to be imported, it

is debatable whether the P-series fuels will ever be wholly derived

from domestic resources. If the pentanes plus were derived from

refining petroleum, at oil import levels projected by EIA for 2015, the

regular grade P-series fuel would still be 80 percent derived from

domestic resources.

DOE also estimates that the P-series fuels could reduce fossil

energy use by 49 to 57 percent, relative to RFG, and that the P-series

fuels could reduce petroleum use by 79 to 81 percent, relative to RFG.

On the basis of the foregoing, DOE has concluded that the three P-

series fuels, as described by United States Patent number 5,697,987,

which contain at least 60 percent non-petroleum energy content derived

from MTHF, which must be manufactured solely from biological materials,

and ethanol, which must be manufactured solely from biological

materials, would yield ``substantial energy security benefits'' as that

phrase is used in section 301(2) of the Act.

C. Substantial Environmental Benefits

Pure Energy Corporation had vehicle tailpipe and evaporative

emissions tests conducted by an Environmental Protection Agency (EPA)

contract automotive test laboratory using both the current Federal Test

Procedure (FTP) and the US06 test. (A description of the US06 test can

be found in the NOPR at 63 FR 40205 and in the Code of Federal

Regulations at 40 CFR part 86.)

Pure Energy Corporation's test vehicles, two 1997 Ford Taurus E-85

flexible-fuel vehicles, were operated on eight fuels: three P-series

fuels (regular, premium and cold weather), E-85, Federal Certification

gasoline, California Phase II RFG and two commercial gasolines (a

summer and a winter blend). The results were submitted to DOE as part

of the company's petition. Pure Energy Corporation also provided an

analysis of greenhouse gas emissions associated with production,

distribution and use of the three P-series fuels and compared them to

those of gasoline and E-85.

Both the criteria pollutant emissions test results and the

greenhouse gas analysis support Pure Energy Corporation's claim of

substantial environmental benefits arising from the use of the P-series

fuels. Criteria pollutant emissions from the P-series fuels were

consistently among the lowest of all test fuels, met Federal Tier 1

standards and statutorily provided Federal Tier 2 standards in every

case, and compared favorably with those from E-85. The premium P-series

fuel had better emission characteristics than the regular P-series

fuel. The P-series fuels reduced emissions of non-methane hydrocarbons

(NMHC) and total hydrocarbons by almost a third compared to Phase 2

RFG. It is worth noting that all of the fuels tested had evaporative

emissions well below the evaporative emissions standard for Federal

Tier 1. Table 3 summarizes the results of the FTP emissions results

(all results in grams per mile). The numbers are averages over both

cars tested and all FTP tests performed, as presented in Pure Energy

Corporation's petition.

Table 3--Comparison of Federal Test Procedure Emission Results

[gram/mile]

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

Carbon Nitrogen

NMHC monoxide oxides

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

Pure Regular.................................................... 0.074 1.081 0.064

Pure Premium.................................................... 0.064 1.062 0.059

Phase II RFG.................................................... 0.115 1.247 0.039

Tier 1 standards................................................ 0.250 3.4 0.4

Tier 2 standards................................................ 0.125 1.7 0.2

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

The Tier 2 standards referenced in Table 3 are the pending standards

identified by Congress in section 202(i) of the Clean Air Act (CAA). A

discussion of the process EPA is undertaking to establish Tier 2

standards can be found in the NOPR.

As noted in Table 4, the P-series fuels had reduced ozone-forming

potential (OFP), carbon monoxide and air toxics emissions. Table 4

compares the emission results of the P-series fuels, Indolene, Phase II

RFG and commercial gasoline to EPA's National Ambient Air Quality

Standards (NAAQS). [40 CFR part 63]

The OFP is a measure of the performance of the fuel-vehicle

combination, calculated by multiplying the fraction of each emissions

compound by its reactivity. The specific reactivity is calculated by

dividing the OFP by the mass of the non-methane organic gaseous

emissions. It is considered a better gauge of the reactivity of the

fuels' emissions profiles. The numbers are averages of both cars tested

and all FTP and US06 tests performed, as presented in Pure Energy

Corporation's petition.

Table 4.--Comparison of Emission Results Related to NAAQS

[gram/mile]

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

CO NOX OFP Spec. React.

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

FTP USO6 FTP USO6 FTP USO6 FTP USO6

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

Indol................................................... 1.421 11.99 0.056 0.040 0.488 0.470 3.248 3.092

RFG II.................................................. 1.247 10.56 0.039 0.049 0.469 0.379 3.640 3.059

Comm. Gas............................................... 1.427 12.07 0.095 0.077 0.522 0.501 3.334 3.070

E85..................................................... 1.218 5.15 0.056 0.079 0.494 0.087 2.410 3.633

Pure Reg................................................ 1.081 6.15 0.064 0.057 0.305 0.161 3.360 3.460

Pure Prem............................................... 1.062 6.23 0.059 0.081 0.282 0.158 2.849 3.568

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

[[Page 26828]]

The petition stated that the total emissions resulting from the

production of a gallon of P-series fuels are 71 percent lower than

those associated with production of one gallon of Phase II RFG. Of note

are the claims that emissions are reduced, relative to Phase II RFG, by

more than 99 percent for methane, by 85 percent for SOX, by

71 percent for carbon dioxide and by 68 percent for nitrogen oxides.

The petition claims that the P-series fuels perform better than

Phase II RFG or Indolene in terms of direct carbon dioxide emissions

and that P-series fuels will result in significant reductions in carbon

dioxide emissions when considered on a life-cycle basis. If the P-

series fuels are produced from biomass, as Pure Energy Corporation

plans to do, it is claimed that a significant percent of the carbon

emissions associated with the gasoline life-cycle will be avoided.

Specifically, the company estimates that the P-series regular fuel, on

a life-cycle basis, will reduce carbon dioxide emissions by at least 63

percent.

DOE assessed the emissions test results and analyzed the full fuel

cycle greenhouse gas emissions of the P-series fuels. DOE confirmed

that regular and premium formulations of the P-series fuels displayed

carbon monoxide, nitrogen oxides and non-methane hydrocarbon equivalent

emissions that met the Tier 1 and statutorily provided Tier 2

standards, and that their evaporative emissions were well below the

Tier 1 standards. DOE notes that the emissions of air toxics from the

P-series fuels were lower than those from all other test fuels, both in

terms of total mass emissions and in terms of their potency weighted

toxics (PWT) emissions. The PWT weighs each individual component by a

factor that represents its relative toxicity.

DOE's evaluation of the full fuel cycle greenhouse gas emissions of

the P-series fuels confirmed that, over their entire production,

distribution and end-use cycle, the P-series fuels will result in

greenhouse gas emissions 45 to 50 percent below those of reformulated

gasoline. These reductions in greenhouse gas emissions are possible if

both the ethanol and the MTHF components of the P-series fuels are made

from biological materials, which is Pure Energy Corporation's

intention.

On the basis of the foregoing, DOE has concluded that the three P-

series fuels, as described in Pure Energy Corporation's petition and by

United States Patent number 5,697,987, which contain at least 60

percent non-petroleum energy content derived from MTHF, which must be

manufactured solely from biological materials, and ethanol, which must

be manufactured solely from biological materials, would yield

``substantial environmental'' benefits as that phrase is used in

section 301(2) of the Act.

IV. Regulatory and Procedural Requirements

A. Review Under Executive Order 12866

Today's regulatory action has been determined not to be a

``significant regulatory action'' under Executive Order 12866,

``Regulatory Planning and Review,'' 58 FR 51735 (October 4, 1993).

Accordingly, this rulemaking has not been reviewed by the Office of

Information and Regulatory Affairs of the Office of Management and

Budget (OMB).

B. Review Under Executive Order 12612

Executive Order 12612, ``Federalism,'' 52 FR 41685 (October 30,

1987) requires that regulations, rules, legislation and other policy

actions be reviewed for any substantial direct effect on States, on the

relationship between the National Government and the States, or in the

distribution of power and responsibilities among various levels of

government. If there are substantial effects, the Executive Order

requires the preparation of a federalism assessment to be used in all

decisions involved in promulgating and implementing policy action. DOE

has analyzed this rulemaking in accordance with the principles and

criteria contained in Executive Order 12612, and has determined there

are no federalism implications that would warrant the preparation of a

federalism assessment. The rule promulgated today would simply allow an

additional fuel to qualify as an alternative fuel for the purposes of

the Energy Policy Act of 1992. The rule would not have a substantial

direct effect on States, the relationship between the States and

Federal Government, or the distribution of power and responsibilities

among various levels of government.

C. Review Under the Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires

preparation of an initial regulatory flexibility analysis for every

rule which by law must be proposed for public comment, unless the

agency certifies that the rule, if promulgated, will not have a

significant economic impact on a substantial number of small entities.

Today's rule would provide an additional fuel choice for organizations

which must comply with the requirements of the Alternative Fuel

Transportation Program (10 CFR part 490) and the requirements for

Federal fleets under Title III of EPACT. There is no reason to

anticipate any adverse impact. DOE certified in the notice of proposed

rulemaking that the rule will not have a significant economic impact on

a substantial number of small entities. DOE received no comments on

that certification.

D. Review Under the National Environmental Policy Act

The rule identifies the P-series fuels as ``alternative fuel'' as

that term is defined in the Alternative Fuel Transportation Program

regulations (10 CFR 490.2) and section 301(2) of the Energy Policy Act

(42 U.S.C. 13211(2)). The rule interprets statutory and regulatory

definitions and does not change the environmental effect of the

Alternative Fuel Transportation Program regulations. DOE, therefore,

has determined that the rule is covered under the Categorical Exclusion

in paragraph A5 to Subpart D, 10 CFR part 1021. Accordingly, neither an

environmental assessment nor an environmental impact statement is

required.

E. Review Under the Paperwork Reduction Act

No new collection of information will be imposed by this

rulemaking. Accordingly, no clearance by the Office of Management and

Budget is required under the Paperwork Reduction Act (44 U.S.C. 3501 et

seq.).

F. Review Under Executive Order 12988

With respect to the review of existing regulations and the

promulgation of new regulations, section 3(a) of Executive Order 12988,

``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on

Executive agencies the general duty to adhere to the following

requirements: (1) Eliminate drafting errors and ambiguity; (2) write

regulations to minimize litigation; and (3) provide a clear legal

standard for affected conduct rather than a general standard and

promote simplification and burden reduction. Section 3(b) of Executive

Order 12988 specifically requires that Executive agencies make every

reasonable effort to ensure that the regulation: (1) Clearly specifies

the preemptive effect, if any; (2) clearly specifies any effect on

existing Federal law or regulation; (3) provides a clear legal standard

for affected conduct while promoting simplification and burden

reduction; (4) specifies the retroactive effect, if any; (5) adequately

defines key terms; and (6) addresses

[[Page 26829]]

other important issues affecting clarity and general draftsmanship

under any guidelines issued by the Attorney General. Section 3(c) of

Executive Order 12988 requires Executive agencies to review regulations

in light of applicable standards in section 3(a) and section 3(b) to

determine whether they are met or it is unreasonable to meet one or

more of them. DOE has completed the required review and determined

that, to the extent permitted by law, the rule meets the relevant

standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-

4) requires each Federal agency to prepare a written assessment of the

effects of any Federal mandate in a proposed or final agency rule that

may result in the expenditure by State, local, and tribal governments,

in the aggregate, or by the private sector, of $100 million in any one

year. The Act also requires a Federal agency to develop an effective

process to permit timely input by elected officers of State, local and

tribal governments on a proposed ``significant intergovernmental

mandate,'' and requires an agency plan for giving notice and

opportunity for timely input to potentially affected small governments

before establishing any requirements that might significantly or

uniquely affect small governments. The rule published today does not

contain any Federal mandate, so these requirements do not apply.

H. Congressional Notification

As required by 5 U.S.C. 801, DOE will report to Congress the

promulgation of this rule prior to its effective date. The report will

state that it has been determined that the rule is not a ``major rule''

as defined by 5 U.S.C. 801(2).

List of Subjects in 10 CFR Part 490

Administrative practice and procedure, Energy conservation, Fuel,

Motor vehicles.

Issued in Washington, DC on 16 April, 1999.

Dan W. Reicher,

Assistant Secretary, Energy Efficiency and Renewable Energy.

For the reasons set forth in the Preamble, Part 490 of Title 10,

Chapter II, Subchapter D, of the Code of Federal Regulations is amended

as set forth below:

PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM

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

follows:

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

13260-3.

2. Section 490.2, Definitions, is amended by revising the

definition of ``Alternative Fuel,'' to read as follows:

Sec. 490.2 Definitions.

* * * * *

Alternative Fuel means methanol, denatured ethanol, and other

alcohols; mixtures containing 85 percent or more by volume of methanol,

denatured ethanol, and other alcohols with gasoline or other fuels;

natural gas; liquefied petroleum gas; hydrogen; coal-derived liquid

fuels; fuels (other than alcohol) derived from biological materials

(including neat biodiesel); three P-series fuels (specifically known as

Pure Regular, Pure Premium and Pure Cold Weather) as described by

United States Patent number 5,697,987, dated December 16, 1997, and

containing at least 60 percent non-petroleum energy content derived

from methyltetrahydrofuran, which must be manufactured solely from

biological materials, and ethanol, which must be manufactured solely

from biological materials; and electricity (including electricity from

solar energy).

* * * * *

[FR Doc. 99-12250 Filed 5-14-99; 8:45 am]

BILLING CODE 6450-01-P