Alternative Fuel Transportation Program; Biodiesel Fuel Use Credit

DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 490

RIN 1904-AB-00

[Docket No. EE-RM-99-BIOD]

Alternative Fuel Transportation Program; Biodiesel Fuel Use

Credit

AGENCY: Department of Energy.

ACTION: Interim final rule and opportunity for public comment.

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SUMMARY: The Department of Energy (DOE) is today publishing an interim

final rule required by the Energy Conservation Reauthorization Act of

1998 (ECRA), which amended Title III of the Energy Policy Act of 1992

(EPACT) to allow fleets that are required to purchase alternative

fueled vehicles under Titles III, IV and V of EPACT to meet these

requirements, in part, through the use of biodiesel fuel use credits.

The rule establishes procedures for fleets and covered persons to

request credits for specified biodiesel fuel use and implements ECRA's

credit eligibility and allocation provisions. By publishing this rule,

DOE is giving fleets and covered persons, who are otherwise required

under EPACT to purchase an alternative fueled vehicle, the option of

purchasing and using 450 gallons of biodiesel in vehicles in excess of

8,500 lbs. gross vehicle weight instead of acquiring an alternative

fueled vehicle.

DATES: This interim final rule is effective June 18, 1999. DOE will

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consider any public comments that are received on or before July 19,

1999.

ADDRESSES: Written comments (5 copies) should be sent to: Paul McArdle,

U.S. Department of Energy, EE-34, Docket No. EE-RM-99-BIOD, 1000

Independence Ave., SW, Washington, DC 20585. Comments will be available

for public inspection at DOE's Freedom of Information Reading Room,

Room 1E-190, 1000 Independence Avenue, SW, Washington, DC between the

hours of 9:00 a.m. and 4:00 p.m. Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Paul McArdle, Office of Energy

Efficiency and Renewable Energy, EE-34, U.S. Department of Energy, 1000

Independence Avenue, SW, Washington, DC 20585, (202) 586-9171.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Overview of DOE's Alternative Fuel Transportation Program

B. Prior Administrative Action on Biodiesel

II. Section-by-Section Discussion of Interim Final Rule

III. Public Comment

IV. Regulatory and Procedural Requirements

A. Review Under Executive Order 12866

B. Review Under Executive Order 12612

C. Review Under the Regulatory Flexibility Act

D. Review Under the National Environmental Policy Act

E. Review Under the Paperwork Reduction Act

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

H. Congressional Notification

I. Introduction

Section 7 of the Energy Conservation Reauthorization Act of 1998

(ECRA), Pub. L. 105-388, adds section 312 to Title III of the Energy

Policy Act of 1992 (EPACT), 42 U.S.C. 13211-13219. Section 312 allows

Titles III and V fleets and covered persons, which are required to

acquire certain annual percentages of alternative fueled vehicles, to

use biodiesel fuel use credits to meet, in part, these acquisition

requirements (although Title IV is included as one of the Titles that

is covered in ECRA, this inclusion appears to be a drafting error since

Title IV has no mandated acquisition requirements for fleets and

covered persons). DOE is required to allocate one credit to fleets and

covered persons for using in certain vehicles 450 gallons (or

``qualifying volume'') of the biodiesel component of a motor fuel

containing at least 20 percent biodiesel by volume.

Although the ``qualifying volume'' is denominated in gallons of

neat biodiesel (B-100), which is a fuel composed of 100 percent

biodiesel by volume, a fleet or covered person can also be allocated a

biodiesel fuel use credit through the use of motor fuels containing at

least 20 percent biodiesel by volume. So for example, if a fleet wished

to qualify for the credit using B-100, it would need to purchase and

use 450 gallons of B-100 to receive one biodiesel fuel use credit.

Alternatively, if a fleet wanted to qualify for the credit using B-20

(a motor fuel containing 20 percent biodiesel and 80 percent petroleum

diesel by volume) it would need to purchase and use 2,250 gallons of B-

20, since each gallon of B-20 contains one-fifth of a gallon of

biodiesel ((2,250 gallons of B-20) * (\1/5\) = 450 gallons of B-100).

The allocation of each biodiesel fuel use credit requires the full

purchase and use of 450 gallons of biodiesel. No rounding of the

biodiesel fuel use credit upward is allowed. For example, if a fleet or

covered person purchased and used 1,200 gallons of biodiesel, an

initial credit calculation would indicate 2.67 credits. However, since

ECRA requires that 450 gallons are needed to achieve each biodiesel

fuel use credit, the fleet or covered person could only be allocated

two biodiesel fuel use credits, using this example. The use of the

biodiesel fuel use credit as the equivalent of acquiring one

alternative fueled vehicle is also restricted to the model year in

which it is generated and cannot be carried forward like alternative

fueled vehicle acquisition credits generated under Subpart F.

The legislation, however, authorizes the Secretary to collect data

which could support a determination to increase the qualifying volume

of biodiesel required to allocate a biodiesel fuel use credit. Any

increase in the qualifying volume would be set equal to the average

annual alternative fuel use in light duty vehicles by fleets and

covered persons. If the data support an increase, the Secretary is to

issue a rulemaking to determine if the qualifying volume should be

increased.

Additionally, the vehicles in which the fuel is used must weigh

more than 8,500 pounds gross vehicle weight rating. Fleets and covered

persons must own or operate these vehicles. Credits will be allocated

only for the biodiesel fuel purchased after the enactment of ECRA,

i.e., November 13, 1998.

The legislation prohibits the allocation of biodiesel fuel use

credits for the purchase of biodiesel when the biodiesel is used in

alternative fueled vehicles that are utilized to satisfy the EPACT

alternative fueled vehicle purchase requirements, or when biodiesel

fuel use is required by Federal or State law. With the exception of

biodiesel fuel providers, allocated credits can be used to satisfy up

to 50 percent of a fleet's or covered person's alternative fueled

vehicles requirements. For example, if a fleet's, or covered person's,

alternative fueled vehicle acquisition requirements for a given model

year were 20 alternative fueled vehicles, that fleet would only be able

to use up to 10 biodiesel fuel use credits as a contribution to its

acquisition requirements. To achieve the 10 biodiesel fuel use credits

the fleet or covered person could purchase and use 4,500 gallons of B-

100 (10 credits). In this example, any biodiesel purchases beyond 4,500

gallons would not generate any additional credits. Alternatively, the

fleet could also be granted the 10 credits through the purchase and use

of 22,500 gallons of B-20, since each gallon of B-20 has one-fifth of a

gallon of biodiesel ((22,500 gallons of B-20) * (\1/5\) = 4,500 gallons

of B-100).

Today's rule adds a new Subpart H to DOE's Alternative Fuel

Transportation Program rules at 10 CFR part 490. Some of the provisions

in current Part 490, such as definitions of fleet and covered persons,

are also applicable to Subpart H. However, the biodiesel credits

provisions under Subpart H cannot be considered a credit under Subpart

F. Because of the relationship of Subpart H to the overall Alternative

Fuel Transportation Program, a brief overall summary of 10 CFR part 490

is discussed.

A. Overview of DOE's Alternative Fuel Transportation Program

10 CFR part 490 sets forth regulations that implement title V of

EPACT, 42 U.S.C. 13251-13264. The regulations mandate alternative

fueled vehicle acquisition requirements for certain alternative fuel

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

EPACT programs designed to promote alternative and replacement fuels

that reduce reliance on imported oil, decrease greenhouse gas

emissions, lessen pollutant emissions and help realize EPACT's 10

percent and 30 percent petroleum replacement fuels goals in the years

2000 and 2010, respectively.

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 fuel technician training

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

fueled vehicles that apply to certain alternative

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fuel providers and State government fleets, Title V provides for a

possible similar mandate for certain private and municipal fleets. DOE

issued an Advanced Notice of Proposed Rulemaking in the Federal

Register on April 17, 1998, to solicit comments on whether alternative

fueled vehicle acquisition requirements for certain private and local

government fleets should be promulgated under the terms of section

507(g) of EPACT (63 FR 19732). 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 Title III, 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; 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.'' 42 U.S.C. 13211(2).

EPACT also defines the term ``replacement fuel.'' Section 301(14)

provides: ``the term `replacement fuel' means the portion of any motor

fuel that is methanol, ethanol, or other alcohols, natural gas,

liquefied petroleum gas, hydrogen, coal derived liquid fuels, fuels

(other than alcohol) derived from biological materials, electricity

(including electricity from solar energy), ethers, or any other fuel

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

would yield substantial energy security benefits and substantial

environmental benefits.'' 42 U.S.C. 13211(14).

B. Prior Administrative Action on Biodiesel

DOE considered the allocation of credits for use of biodiesel fuel

in the rulemaking that implemented the alternative fuel provider and

State government fleet mandates. After considering public comments on

the issue of whether biodiesel was an alternative fuel, DOE concluded

that neat biodiesel (B-100), a fuel that is 100 percent biodiesel by

volume, is included in the definition of ``alternative fuel.'' Section

301(2) of EPACT expressly refers to fuels derived from biological

materials. With respect to the credit program under section 508 of

EPACT (Subpart F of 10 CFR part 490), DOE concluded that credits could

be given in certain circumstances for the purchase of medium- and

heavy-duty alternative fueled vehicles, as provided in Subpart F, but

multiple credits based on the amount of fuel consumed were not

allowable.

During the rulemaking to implement the alternative fuel provider

and State government fleet mandates, proponents of biodiesel fuel also

requested DOE to include B-20, a fuel that is 20 percent biodiesel and

80 percent petroleum diesel by volume, in the list of alternative

fuels. DOE declined on the grounds that the comments did not provide

sufficient supporting information to warrant including this issue

within the scope of the rulemaking. The final rule was published on

March 14, 1996 (61 FR 10653).

On September 10, 1996, the National Biodiesel Board (NBB) and a

number of co-petitioners submitted to DOE a petition requesting DOE to

initiate a rulemaking to amend the definition of ``alternative fuel''

in the regulations by adding, without limitation, B-20. In response to

the NBB petition, DOE, on July 15, 1997, issued a notice in the Federal

Register (62 FR 37897) inviting interested members of the public to

comment on the petition and to attend a public workshop on July 31 and

August 1, 1997 at which the petition and related policy issues were

discussed. On November 16, 1999, NBB and the co-petitioners withdrew

their petition.

II. Section-by-Section Discussion of Interim Final Rule

This section of the Supplementary Information contains explanatory

material for some of the ECRA and interim final rule provisions, in

order to provide interpretive guidance to States and persons that must

comply with this part.

The biodiesel fuel use credit is also available to Federal fleets

that are required under Title III, Section 303 of the Energy Policy Act

of 1992, to purchase certain percentages of alternative fueled

vehicles. Federal fleet purchase requirements are also stipulated in

Executive Order 13031 (61 FR 66529). Under Executive Order 13031,

Federal agencies, as part of their annual budget submission to the

Office of Management and Budget, are required to submit a report on

their compliance with section 303 of EPACT. A copy of the report is

also submitted to DOE and the General Services Administration (GSA).

DOE and GSA cooperatively analyze the agency alternative fueled vehicle

reports and acquisition plans, and jointly submit a summary report to

the OMB. Section 8 of ECRA also amended section 310 of EPACT to require

each Federal agency to report annually to the Congress on compliance

with the alternative fuel purchasing requirements for Federal fleets,

including a plan with specific dates for achieving compliance. Federal

agencies will also be required to publicly disseminate such reports in

the Federal Register and on the Internet.

Federal agency alternative fueled vehicle acquisition compliance

data are currently submitted to DOE under the Federal Energy Management

Program (FEMP). DOE plans on amending the FEMP reporting form to allow

for the allocation of biodiesel fuel use credits for Federal fleets.

Like State and alternative fuel provider fleets, Federal fleets will be

required to report the quantity of biodiesel purchased for use in

vehicles weighing in excess of 8,500 lbs. gross vehicle weight. Federal

fleets seeking to utilize the biodiesel fuel use credit should follow

the requirements laid out below in 10 CFR Part 490 Subpart H, as well

as any other guidance issued by DOE. The only difference for the

Federal fleets will be that their reporting year is for the fiscal

year, October 1 through September 30, as opposed to a model year,

September 1 through August 31, which applies to State and alternative

fuel provider fleets, as well as private and municipal government

fleets if DOE determines that such fleets should be covered under the

Alternative Fuel Transportation Program.

Section 490.702 Definitions. This section contains definitions of

biodiesel and qualifying volume that are in section 312(f) of ECRA. The

term `biodiesel' is defined as a diesel fuel substitute produced from

nonpetroleum renewable resources that meets the registration

requirements for fuels and fuel additives established by the

Environmental Protection Agency under section 211 of the Clean Air Act.

The term ``qualifying volume'' is set equal to 450 gallons. If DOE

determines, after the rulemaking, that the average annual alternative

fuel use in light duty vehicles by fleets and covered persons exceeds

450 gallons or gallon equivalents, DOE may set a qualifying volume that

is equal to the average annual alternative fuel use determined by its

collection of data under section 490.703.

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Section 490.703 Biodiesel Fuel Use Credit Allocation. This section

prescribes the conditions and exceptions under which DOE may allocate

an alternative fueled vehicle acquisition credit to a fleet or covered

person for each ``qualifying volume'' of the biodiesel component of a

fuel containing at least 20 percent biodiesel by volume. The allocation

of such a credit is restricted to vehicles owned or operated by the

fleet or covered person that have a gross vehicle weight rating of more

than 8,500 lbs.

Paragraph (b) of this section states the statutory exceptions to

allocation of biodiesel fuel credits. No credits may be allocated when

the biodiesel purchased is for use in an alternative fueled vehicle, as

defined in Section 490.2. This exception is designed to prevent fleets

and covered persons from utilizing the biodiesel fuel use credit to

claim an additional alternative fueled vehicle acquisition credit on an

alternative fueled vehicle which has already received credit by virtue

of its acquisition for use in a covered fleet. Additionally, no

alternative fueled vehicle acquisition credit shall be awarded if the

biodiesel purchased is required by Federal or State law.

Section 490.704 Procedures and Documentation. Paragraph (a) of this

section specifies the office within DOE that will receive requests for

biodiesel fuel credits, and paragraph (b) covers the documentation that

must accompany a request. To ensure proper credit allocation, a fleet

or covered person under this section must provide written documentation

to DOE supporting the allocation of a biodiesel fuel use credit. The

written documentation must be submitted by the December 31 after the

applicable model year. The initial model year for use of the biodiesel

fuel use credit began on November 14, 1998, the enactment of ECRA, and

will close on August 31, 1999 for State and alternative fuel provider

fleets and September 30, 1999 for Federal fleets. Future model years,

beginning with the 2000 model year, for use of the biodiesel fuel use

credit, however, will be complete 12-month years.

Such documentation must include meeting the annual reporting

requirements of section 490.704, as well as section 490.205 for State

fleets and section 490.309 for alternative fuel provider fleets. The

form referenced in paragraph (a) is the annual reporting form DOE/OTT/

101, Annual Alternative Fueled Vehicle Acquisition Report for State

Government and Alternative Fuel Provider Fleets. It will be amended to

include the documentation requirements of section 490.704.

Documentation requirements include listing the quantity of biodiesel

purchased for use in vehicles weighing in excess of 8,500 lbs. gross

vehicle weight for the model year covered in the report.

Section 490.705 Use of Credits. Section 490.705 delineates the use

and limits of the biodiesel fuel use credit. At the request of a fleet

or covered person, DOE shall, for the model year in which the purchase

of a qualifying volume is made, treat that purchase as the acquisition

of one alternative fueled vehicle the fleet or covered person is

required to acquire under Subpart C (State fleets), Subpart D

(alternative fuel provider fleets), and Title III of EPACT (Federal

fleets). The use of the biodiesel fuel use credit to serve as the

acquisition of one alternative fueled vehicle is restricted to the

model year, or the fiscal year in the case of Federal fleets, in which

the biodiesel is purchased and cannot be carried forward like

alternative fueled vehicle acquisition credits generated under Subpart

F. The House of Representatives Commerce Committee Report addressed

these restrictions, stating that biodiesel fuel use credits ``may only

be used by the fleet or covered person that earned the credits and only

in the year the credit is issued, so they cannot be traded or banked.''

1

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\1\ H.R. Rep. No. 105-727, Pt. 3, at 33 (1998).

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Credits allocated under subsection 490.703 may not be used to

satisfy more than 50 percent of the alternative fueled vehicle

requirements of a fleet or covered person under Subpart C (State

fleets), Subpart D (alternative fuel provider fleets), and Title III of

EPACT (Federal fleets). This limitation would also apply to private and

municipal government fleets if DOE determines that such fleets should

be included in the Alternative Fuel Transportation Program. The 50

percent limitation in section 490.705 does not apply to a fleet or

covered person that is a biodiesel alternative fuel provider described

in sections 490.301 and 490.303. Biodiesel alternative fuel providers

may satisfy up to 100 percent of their alternative fueled vehicle

acquisition requirements through the use of biodiesel fuel use credits.

Section 490.706 Procedure for Modifying the Biodiesel Component

Percentage. This section includes a cross-reference to the procedures a

person may use to request DOE to exercise the authority provided in

section 312(a)(3) of ECRA to lower the minimum 20 percent biodiesel

volume requirement for reasons related to cold start, safety, or

vehicle function considerations. DOE expects petitions to change the

percentage requirement to be supported by data demonstrating the need

for lowering the percentage.

Section 490.707 Increasing the Qualifying Volume of the Biodiesel

Component. This section allows DOE to collect the data required to make

a determination that the average annual alternative fuel use in light

duty vehicles by fleets and covered persons exceeds 450 gallons or

gallon equivalents. Such a data collection effort would be used by DOE

to propose an increase in the 450 gallon qualifying volume necessary to

generate credits under the Section 490.701 biodiesel fuel use credit. A

DOE proposal to increase the qualifying volume would have to be done

through a rulemaking that provides public notice and opportunity for

comment. DOE does not, at this time, plan on proposing an increase in

the qualifying volume. If the data that become available on alternative

fuel use by EPACT alternative fueled vehicles indicate that average

alternative fuel use is higher than 450 gallons, DOE will consider

proposing an increase in the qualifying volume level.

III. Public Comment

This rule prescribes procedures and contains interpretive guidance

for implementing the biodiesel fuel use credit provisions of ECRA,

section 7. An opportunity for prior public comment is not required by

the Administrative Procedure Act, 5 U.S.C. 553, or any other law for

this type of rule, nor does DOE see any need for prior public comment

as a matter of policy. The rule contains straightforward procedures for

requesting credits, necessary cross-references to other provisions in

the Part 490 Alternative Fuel Transportation Program, and implementing

provisions that closely track the statute.

Although DOE is making this rule effective 30 days after

publication, it is nevertheless interested in any written data, views,

or comments that interested persons may have with respect to the rule.

DOE will take appropriate action after considering the comments. DOE

invites public comments by the deadline in the DATES section at the

beginning of this notice. Written comments (5 copies) should be

identified on the outside of the envelope, and on the comments

themselves, with the designation: ``Biodiesel Fuel Use Credit Interim

Final Rule, Docket Number EE-RM-99-BIOD''. In the event any person

wishing to submit a written comment cannot provide five copies,

alternative arrangements may be made in advance

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by calling Ms. Andi Kasarsky at (202) 586-3012. All comments submitted

will be available for examination in the Rule Docket File (EE-RM-99-

BIOD) in DOE's Freedom of Information Reading Room at the address

indicated at the beginning of this notice.

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

information or data that are believed to be confidential, and which may

be exempt by law from public disclosure, should submit one complete

copy, as well as two copies from which the information claimed to be

confidential has been deleted. The DOE will make its own determination

of any such claim.

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, then the Executive Order

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

decisions involved in promulgating and implementing policy action. The

Department 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 interim final rule will 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 for which the law requires publication of a general notice of

proposed rulemaking 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 interim final rule is not

subject to a legal requirement for a general notice of proposed

rulemaking. Accordingly, DOE did not prepare a regulatory flexibility

analysis for this rule.

D. Review Under the National Environmental Policy Act

The Department has determined that this rule is covered by

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

This interim final rule contains a collection of information that

is subject to review by the Office of Management and Budget (OMB) under

the Paperwork Reduction Act of 1995. More specifically, DOE plans to

obtain documentation to support allocation of credits by use of the

annual reporting form DOE/OTT/101, Annual Alternative Fueled Vehicle

Acquisition Report for State Government and Alternative Fuel Provider

Fleets. DOE proposes to amend that form to include the documentation

requirements of Sec. 490.704. Fleets claiming credits must, for the

model year in which the biodiesel fuel is purchased, report the

quantity of biodiesel purchased for use in vehicles weighing in excess

of 8,500 lbs. gross vehicle weight.

The title, description, and respondent description of the

collection of information for the existing Alternative Fuel

Transportation Program are shown as follows with an estimate of the

annual reporting and record keeping burden. Included in the estimate

are the time for reviewing instructions, searching existing data

sources, gathering and maintaining the data needed, and providing the

information. DOE does not expect any change in the existing burden with

the addition of the availability of the biodiesel fuel use credit to

affected fleets. Should fleets utilize the biodiesel fuel use credit,

DOE believes that the increased burden of reporting biodiesel fuel use

credits would be counterbalanced by a reduced burden of reporting the

number of alternative fueled vehicles acquired.

Collection Title: Annual Alternative Fueled Vehicle Acquisition

Report for State Government and Alternative Fuel Provider Fleets.

Type of Review: Revised collection.

OMB Number: 1910-5101.

Type of Respondents: States and alternative fuel provider firms.

Estimated Number of Respondents: 1,000.

Estimated Total Burden Hours: 12,000.

Frequency of Responses: Annually.

DOE invites comments on: (1) The need for the proposed collection

of information; (2) the accuracy of DOE's burden estimates, including

the validity of the methodology and assumptions used; (3) ways to

enhance the quality, utility, and clarity of the information to be

collected; and (4) ways to minimize the burden of the collection of

information on respondents.

As provided in 5 CFR 1320.5(c)(1), collections of information

addressed in an interim final rule are subject to the procedures in 5

CFR 1320.10. Interested persons and organizations may submit comments

on the information collection in this rule by July 19, 1999 to Paul

McArdle, Office of Energy Efficiency and Renewable Energy, (EE-34), U.

S. Department of Energy, 1000 Independence Avenue, SW, Washington, DC

20585 and to the DOE Desk Officer, OMB, NRD, Room 10202, 725 17th

Street, NW, Washington, DC 20503.

At the close of the 60-day comment period, DOE will review the

comments received, revise the information collection as necessary, and

submit these provisions to OMB for review. DOE will publish a notice in

the Federal Register when the information collection provisions are

submitted to OMB, and an opportunity for public comment to OMB will be

provided at that time. DOE will publish a notice in the Federal

Register of OMB's decision to approve, modify, or disapprove the

collection of information. An agency may not conduct or sponsor, and a

person is not required to respond to, a collection of information

unless it displays a current, valid OMB control number.

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

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Executive Order 12988 specifically requires that Executive agencies

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

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

effect on existing Federal law or regulation; (3) provides a clear

legal standard for affected conduct while promoting simplification and

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

adequately defines key terms; and (6) addresses other important issues

affecting clarity and general draftsmanship under any guidelines issued

by the Attorney General. Section 3(c) of Executive Order 12988 requires

Executive agencies to review regulations in light of applicable

standards in section 3(a) and section 3(b) to determine whether they

are met or it is unreasonable to meet one or more of them. DOE has

completed the required review and determined that, to the extent

permitted by law, this interim final rule meets the relevant standards

of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

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 interim final 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 April 28, 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 follows:

PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM

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

Authority: 42 U.S.C. 7191, 13211-13212, 13235, 13251, 13257,

12260-12263.

2. Subpart H--Biodiesel Fuel Use Credit is added to read as

follows:

Subpart H--Biodiesel Fuel Use Credit

Sec.

490.701 Purpose and scope.

490.702 Definitions.

490.703 Biodiesel fuel use credit allocation.

490.704 Procedures and documentation.

490.705 Use of credits.

490.706 Procedure for modifying the biodiesel component percentage.

490.707 Increasing the qualifying volume of the biodiesel

component.

490.708 Violations.

Sec. 490.701 Purpose and scope.

(a) This subpart implements provisions of the Energy Conservation

Reauthorization Act of 1998 (Pub. L. 105-388) that require, subject to

some limitations, the allocation of credit to a fleet or covered person

under Titles III and V of the Energy Policy Act of 1992 for the

purchase of a qualifying volume of the biodiesel component of a fuel

containing at least 20 percent biodiesel by volume.

(b) Fleets and covered persons may use these credits to meet, in

part, their mandated alternative fueled vehicle acquisition

requirements.

Sec. 490.702 Definitions.

In addition to the definitions found in Sec. 490.2, the following

definitions apply to this subpart--

Biodiesel means a diesel fuel substitute produced from nonpetroleum

renewable resources that meets the registration requirements for fuels

and fuel additives established by the Environmental Protection Agency

under section 211 of the Clean Air Act; and

Qualifying volume means--

(1) 450 gallons; or

(2) If DOE determines by rule that the average annual alternative

fuel use in light duty vehicles by fleets and covered persons exceeds

450 gallons or gallon equivalents, the amount of such average annual

alternative fuel use.

Sec. 490.703 Biodiesel fuel use credit allocation.

(a) DOE shall allocate to a fleet or covered person one credit for

each qualifying volume of the biodiesel component of a fuel that

contains at least 20 percent biodiesel by volume if:

(1) Each qualifying volume of the biodiesel component of a fuel was

purchased after November 13, 1998;

(2) The biodiesel component of fuel is used in vehicles owned or

operated by the fleet or covered person; and

(3) The biodiesel component of the fuel is used in vehicles

weighing more than 8,500 pounds gross vehicle weight rating.

(b) No credit shall be allocated under this subpart for a purchase

of the biodiesel component of a fuel if the fuel is:

(1) For use in alternative fueled vehicles; or

(2) Required by Federal or State law.

Sec. 490.704 Procedures and documentation.

(a) To receive a credit under this subpart, the fleet or covered

person shall submit its request, on a form obtained from DOE, to the

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

Energy, EE-34, 1000 Independence Ave. SW., Washington, DC 20585, or

such other address as DOE may publish in the Federal Register, along

with the documentation required by paragraph (b) of this section.

(b) Each request for a credit under this subpart must be submitted

on or before the December 31 after the close of the applicable model

year and must include written documentation stating the quantity of

biodiesel purchased, for the given model year, for use in vehicles

weighing in excess of 8,500 lbs. gross vehicle weight;

(c) A fleet or covered person submitting a request for a credit

under this subpart must maintain and retain purchase records verifying

information in the request for a period of three years from December 31

immediately after the close of the model year for which the request is

submitted.

Sec. 490.705 Use of credits.

(a) At the request of a fleet or covered person allocated a credit

under this subpart, DOE shall, for the model year in which the purchase

of a qualifying volume is made, treat that purchase as the acquisition

of one alternative fueled vehicle the fleet or covered person is

required to acquire under sections 490.201, 490.302 and 490.307, and

Title III of the Energy Policy Act of 1992.

(b) Except as provided in paragraph (c) of this section, credits

allocated

[[Page 27175]]

under this subpart may not be used to satisfy more than 50 percent of

the alternative fueled vehicle requirements of a fleet or covered

person under sections 490.201, 490.302 and 490.307, and Title III of

the Energy Policy Act of 1992.

(c) A fleet or covered person that is a biodiesel alternative fuel

provider described in section 490.303 of this part may use its credits

allocated under this subpart to satisfy all of its alternative fueled

vehicle requirements under section 490.302.

Sec. 490.706 Procedure for modifying the biodiesel component

percentage.

(a) DOE may, by rule, lower the 20 percent biodiesel volume

requirement of this subpart for reasons related to cold start, safety,

or vehicle function considerations.

(b) Any person may use the procedures in section 490.6 of this part

to petition DOE for a rulemaking to lower the biodiesel volume

percentage. A petitioner should include any data or information that it

wants DOE to consider in deciding whether or not to begin a rulemaking.

Sec. 490.707 Increasing the qualifying volume of the biodiesel

component.

DOE may increase the qualifying volume of the biodiesel component

of fuel for purposes of allocation of credits under this subpart only

after it:

(a) Collects data establishing that the average annual alternative

fuel use in light duty vehicles by fleets and covered persons exceeds

450 gallons or gallon equivalents; and

(b) Conducts a rulemaking to amend the provisions of this subpart

to change the qualifying volume to the average annual alternative fuel

use.

Sec. 490.708 Violations.

Violations of this subpart are subject to investigation and

enforcement under subpart G of this part.

[FR Doc. 99-12571 Filed 5-18-99; 8:45 am]

BILLING CODE 6560-50-P