Alternative Fuel Transportation Program; Replacement Fuel Goal Modification, 12041-12060 [E7-4324]

Agencies

• DEPARTMENT OF ENERGY
• Office of Energy Efficiency and Renewable Energy
• Energy Efficiency and Renewable Energy Office

[Federal Register Volume 72, Number 50 (Thursday, March 15, 2007)]
[Rules and Regulations]
[Pages 12041-12060]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4324]



[[Page 12041]]

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DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 490

RIN 1904-AB67


Alternative Fuel Transportation Program; Replacement Fuel Goal 
Modification

AGENCY: Office of Energy Efficiency and Renewable Energy (EERE), 
Department of Energy (DOE).

ACTION: Final rule.

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SUMMARY: DOE is publishing this final rule pursuant to the Energy 
Policy Act of 1992 (EPAct 1992). DOE is extending the EPAct 1992 goal 
of achieving a production capacity for replacement fuels sufficient to 
replace 30 percent of the projected U.S. motor fuel consumption 
(Replacement Fuel Goal) to 2030. DOE determined through its analysis 
that the 30 percent Replacement Fuel Goal cannot be met by 2010, as 
established in section 502(b)(2)(B). DOE has determined that the 30 
percent goal can be achieved by 2030.

DATES: Effective Date: This rule is effective June 1, 2007.

FOR FURTHER INFORMATION CONTACT: To request a copy of this Final Rule 
notice or arrange on-site access to paper copies of other information 
in the docket, or for further information, contact Mr. Dana V. O'Hara, 
Office of Energy Efficiency and Renewable Energy (EE-2G), U.S. 
Department of Energy, 1000 Independence Avenue, SW., Washington, DC 
20585-0121; (202) 586-9171; regulatory_info@afdc.nrel.gov; or Mr. 
Chris Calamita, Office of the General Counsel, U.S. Department of 
Energy, 1000 Independence Avenue, SW., Washington, DC 20585-0121; (202) 
586-9507. Copies of this final rule and supporting documentation for 
this rulemaking will be placed at the following Web site address: 
https://www1.eere.energy.gov/vehiclesandfuels/epact/private/. 
Interested persons may also access these documents using a computer in 
DOE's Freedom of Information (FOI) Reading Room, U.S. Department of 
Energy, Forrestal Building, Room 1E-190, 1000 Independence Avenue, SW., 
Washington, DC 20585-0121, (202) 586-3142, between the hours of 9 a.m. 
and 4 p.m., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

I. Introduction
II. Background
    A. Replacement Fuel Program
    B. Replacement Fuel Goals
    C. Definitions
    D. Previous Review of Goals
    E. Previous Rulemakings and Court Order
    F. Notice of Proposed Rule (NOPR) for the Replacement Fuel Goal
III. Comments
    A. Comments Received
    B. Discussion of Comments
    C. Assessment of Comments
IV. Determination that the Congressional Goals are Unachievable
V. Goal Modification Analysis
    A. Approach
    B. Building Blocks
    C. Replacement Fuel Scenarios
    D. DOE's VISION Model Analysis
    E. Annual Energy Outlook (AEO) 2007 Results
    F. Additional Reports
    G. Other Issues
VI. Modified Goal
    A. 30 Percent by 2030
    B. Interim Goal
VII. Regulatory Review
    A. Review under Executive Order 12866
    B. Review under Regulatory Flexibility Act
    C. Review under the Paperwork Reduction Act
    D. Review Under the National Policy Act of 1969 (NEPA)
    E. Review Under Executive Order 12988
    F. Review Under Executive Order 13132
    G. Review of Impact on State Governments--Economic Impact on 
States
    H. Review of Unfunded Mandates Reform Act of 1995
    I. Review of Treasury and General Appropriations Act, 1999
    J. Review of Treasury and General Appropriations Act, 2001
    K. Review Under Executive Order 13175
    L. Review Under Executive Order 13211
    M. Congressional Notification
VIII. Approval by the Office of the Secretary

I. Introduction

    On September 19, 2006, DOE published a notice of proposed 
rulemaking (NOPR) announcing its proposed determination that the EPAct 
1992 (Pub. L. 102-486) Replacement Fuel Goal of 30 percent by 2010 is 
not achievable and announcing its proposal to extend the time for 
achieving the 30 percent replacement fuel production capacity goal to 
2030. 71 FR 54771, Sept. 19, 2006.
    EPAct 1992, section 502(a) directed DOE to establish a replacement 
fuel program. (42 U.S.C. 13252(a)) The purpose of this program is to 
``promote the replacement of petroleum motor fuels with replacement 
fuels to the maximum extent practicable.'' (Id., emphasis added.) The 
focus of this program, as indicated in section 502(b)(2), is on 
expanding replacement fuels production capacity. (42 U.S.C. 
13252(b)(2)) Further, section 502(b)(2) specifies an interim 
Replacement Fuel Goal of producing sufficient replacement fuels to 
replace 10 percent by 2000 of the projected consumption of motor fuels 
in the United States and a final goal of 30 percent by 2010. (42 U.S.C. 
13252(b)(2)(A) and (B)) Under section 504, DOE was tasked with 
evaluating these goals and if DOE finds the goals to be unachievable, 
then DOE is directed to modify the goals so that they are achievable. 
(42 U.S.C. 13254(a) and (b)) In modifying the goals DOE can either 
modify the goal percentage or timeframe or both. (42 U.S.C. 13254(b))
    In evaluating and modifying the goals, DOE must balance 
considerations in order to establish goals that are ``achievable.'' (42 
U.S.C. 13254(b)) The Replacement Fuel Goals must promote replacement 
fuels to the ``maximum extent possible'' while remaining 
technologically and economically feasible. (42 U.S.C. 13254(a) and 
(b)(2)) The revised goal adopted today meets these requirements, for 
several reasons. First, DOE based its analysis on the best information 
available, from published and peer-reviewed sources. In particular, 
much of DOE's analysis was based on the Energy Information 
Administration's (EIA) Annual Energy Outlook (AEO) 2005 through 2007. 
Second, DOE's analysis generally was based on the current budget and 
policy framework, under which many technologies show reasonable 
potential for success and market penetration. Thus, the analysis 
assumed virtually no major new policies or funding initiatives beyond 
those already in place. Third and last, the modified goal balances the 
minimum and maximum projected replacement fuel production capacities 
from several reasonable scenarios.
    In the NOPR, DOE evaluated four scenarios, which identified 
projected replacement fuel capacities of 8.65 percent, 17.84 percent, 
35.25 percent, and 47.06 percent, by 2030. (Updated analyses conducted 
in this final rule resulted in the first and third of these becoming 
7.38 percent and 33.13 percent, respectively.) These projections 
reflect considerations of numerous variables including oil prices, 
technological breakthroughs, and market acceptance. The goal proposed 
by DOE fell in the mid-range among these scenarios. Also, the proposed 
goal did not rest upon a single technology, but instead relied on a 
portfolio of options. Explicit in this approach is the assumption that 
not all of the technologies will achieve the same measure of success; 
some will be more successful than others. Similarly, the proposed goal 
did not rely on the most advantageous market conditions.

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Therefore, DOE determined that the proposed goal would meet the 
requirement to balance the objective of section 502(a) to promote 
replacement fuels to the ``maximum extent practicable'' and the section 
504(b) requirement that the Replacement Fuel Goal be ``achievable.'' 
(42 U.S.C. 13252(a) and 13254(b))
    In today's Final Rule, DOE determines that the EPAct 1992 goal of 
establishing sufficient replacement fuel production capacity to replace 
30 percent on an energy equivalent basis of all U.S. motor fuel by 2010 
is not achievable. This determination is based on a similar evaluation 
of the projected U.S. production capacity of replacement fuels as was 
presented in the NOPR. 71 FR 54711. Further, today's Final Rule extends 
the 30 percent Replacement Fuel Goal out to 2030 based on an analysis 
similar to that presented in the NOPR and discussed further below. 
Today's Final Rule complies with DOE's obligation under section 504(b) 
of EPAct 1992 to ``establish goals that are achievable, for the 
purposes of this title.'' (42 U.S.C. 13254(b))
    Today's final rule also implements the March 6, 2006 order of the 
U.S. District Court for Northern District of California to prepare and 
publish a final rule to modify EPAct 1992's replacement fuel production 
goal for 2010. See Center for Biological Diversity v. U.S. Department 
of Energy et. al., 419 F.Supp. 2d 1166 (N.D. Cal. 2006).
    DOE reminds interested parties that the Replacement Fuel Goal is an 
administrative goal guiding the replacement fuel program, including 
administering the EPAct 1992 title V fleet mandates. It is not a 
program plan, implementation plan, national policy, or any other type 
of major program for achievement of the Replacement Fuel Goal. In 
addition, the statutory requirement for the Replacement Fuel Goal is 
potential production capacity. This does not require the fuel 
quantities implied by this goal actually be produced or used.

II. Background

A. Replacement Fuel Program

    Section 502(a) of EPAct 1992 requires the Secretary of Energy 
(Secretary) to establish a program to promote the development and use 
of ``domestic replacement fuels'' and to ``promote the replacement of 
petroleum fuels with replacement fuels to the maximum extent 
practicable'' (42 U.S.C. 13252(a)). Section 502(a) states:

    The Secretary shall establish a program to promote the 
development and use in light duty motor vehicles of domestic 
replacement fuels. Such a program shall promote the replacement of 
petroleum fuels to the maximum extent practicable. Such program 
shall, to the extent practicable, ensure the availability of those 
replacement fuels that will have the greatest impact in reducing oil 
imports, improving the health of our Nation's economy and reducing 
greenhouse gas emissions.

(42 U.S.C. 13252(a))

    Since 1992, DOE has taken a number of steps to implement EPAct 
1992's replacement fuel programs, under the authority provided in 
titles III, IV and V of the Act. DOE coordinates various aspects of the 
Federal fleet's efforts to comply with the vehicle acquisition 
requirements established under section 303 of EPAct 1992. (42 U.S.C. 
13212). DOE has also promulgated and implemented regulations and 
guidance for alternative fuel providers and State government fleets, 
which are subject to the fleet provisions contained in sections 501 and 
507(o) (42 U.S.C. 13251 and 13257(o), respectively). 10 CFR Part 490. 
DOE also established the Clean Cities initiative, which supports public 
and private partnerships that deploy alternative fueled vehicles (AFVs) 
and build supporting infrastructure. Clean Cities works closely with 
both voluntary and regulated fleets in specific geographic areas, to 
bring together the necessary ``critical mass'' of demand for 
alternative fuels to support expansion of the refueling infrastructure. 
In addition, DOE conducts research and development on replacement fuels 
production and utilization technologies in conjunction with other 
Federal agencies (such as the U.S. Department of Agriculture (USDA)), 
States, private industry, and universities. All of these programs work 
together to increase the production and utilization of replacement 
fuels and improve the efficiency of vehicles.
    In particular, the regulatory fleet programs have been successful 
in moving fleets covered under EPAct 1992 toward the use of AFVs and 
alternative fuels and reducing the use of petroleum fuels. The 
regulatory fleet programs established under EPAct 1992 have seen 
extremely high levels of compliance. Nearly all individual Federal 
agencies have met their AFV acquisition requirements, and the Federal 
fleet as a whole has exceeded the required 75 percent acquisition level 
for the last four years. Among State and alternative fuel provider 
fleets, compliance has also been high and DOE has been able to work out 
nearly all the relatively few instances of deficient acquisitions with 
the involved fleets, either through the fleets purchasing credits or 
agreeing to acquire additional AFVs in future years.
    Original equipment manufacturers (OEMs) have expanded the number 
and type of AFV models offered, mostly due to the demand from EPAct 
regulated fleet programs, regulatory incentives (Corporate Average Fuel 
Economy (CAFE) credits), and coordinated voluntary activities (Clean 
Cities). In model year 1993, OEMs were only offering a handful of 
different AFVs models. The availability of models and fuel types has 
increased substantially over the past decade. During model year 2006, 
there were over 20 light-duty fuel/vehicle model combinations available 
(with more models promised over the next several years). Virtually all 
of these were E85 flexible fuel vehicles (FFVs). Overall, there are now 
on the order of one million FFVs manufactured annually in the U.S., 
largely to take advantage of the CAFE benefits. At the same time, the 
regulated fleets do acquire many of these vehicles each year.
    The Replacement Fuel Program efforts have also assisted in 
expanding the infrastructure for alternative fuels. In 1992 when EPAct 
was passed, there were not that many alternative fuel refueling 
stations in operation (approximately 3,600) and nearly all were for 
propane. Today, there are approximately 5,400 alternative fuel 
refueling stations in the U.S., including over 1,000 E85 stations in 
operation, with several hundred coming on-line each year over past few 
years. There are also many more compressed natural gas (CNG) stations 
than in 1992, although this number has begun to decrease slightly in 
the last few years as OEM offerings have dwindled. (For the current 
number and location of alternative fuel refueling stations, visit the 
Alternative Fuel Data Center (AFDC) station locator, https://
www.eere.energy.gov/afdc/infrastructure/refueling.html.) This overall 
growth in stations has been primarily through the demand generated 
through the regulated fleets and related voluntary efforts under Clean 
Cities. The number of alternative fuel refueling stations remains small 
when compared to the 180,000 total refueling stations Nationwide, but 
is projected to continue increasing.
    In the State of the Union address in January 2006, the President 
announced the Advanced Energy Initiative (AEI), which focuses on 
increasing the use of non-conventional fuels like replacement fuels in 
all sectors of the U.S. economy, with a central focus on the 
transportation sector. AEI sets out an aggressive course for reducing 
the

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Nation's dependence on foreign petroleum, setting a national goal of 
replacing more than 75 percent of the U.S. imports from foreign sources 
by 2025. AEI emphasizes technology developments as the key to reducing 
energy dependence, including several of the same technologies such as 
efficiency improvements, biofuels, and hydrogen. These appear under the 
portion of the Initiative focused on ``Changing the way we fuel our 
vehicles.'' AEI is available on the White House Web site at the 
following location: https://www.whitehouse.gov/stateoftheunion/2006/
energy/.
    On January 23, 2007, the President, in the State of the Union 
Address, proposed replacing 20 percent of the projected gasoline usage 
in 10 years (``Twenty in Ten'' initiative). Twenty in Ten builds on the 
foundation established by the AEI from the previous year's State of the 
Union Address with two major elements relevant to today's final rule. 
The first element is to increase the use of alternative fuels to 35 
billion gallons in 2017, reducing projected gasoline consumption by 15 
percent, through advancements in many fields including cellulosic 
ethanol, butanol, and biodiesel. In the second element of Twenty in 
Ten, the President has asked Congress to give the Administration 
authority to reform the fuel efficiency system for passenger cars, as 
was recently done for light trucks and sport utility vehicles (SUVs). 
It is estimated that the projected gains in mileage for passenger cars 
could save another 5 percent of our projected gasoline usage in 2017.
    The Twenty in Ten initiative, which sets a goal for 2017, is 
consistent with the Replacement Fuel Goal adopted today. However, there 
are several notable differences. First, DOE notes that the Twenty in 
Ten initiative relates to projected gasoline consumption, whereas 
today's final goal relates to projected gasoline and diesel fuel 
consumption. Second, the Replacement Fuel Goal is established in terms 
of energy equivalency, where as the Twenty in Ten initiative is in 
terms of absolute volume. Third, while the Twenty in Ten initiative 
emphasizes the same elements as the Replacement Fuel Goal, the Twenty 
in Ten initiative is more aggressive than the revised goal in terms of 
assumptions of increased fuel efficiency of light trucks and passenger 
cars and increased use of renewable and alternative fuels to replace a 
significant portion petroleum usage.\1\
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    \1\ The President's initiative notes that given the changing 
nature of the marketplace for both cars and light trucks, the 
Secretary of Transportation would determine in a flexible rulemaking 
process the actual fuel economy standard and accompanying fuel 
savings. Additionally, under the Twenty in Ten initiative the EPA 
Administrator and the Secretaries of Agriculture and Energy will 
have authority to waive or modify the required levels of alternative 
and renewable fuel use if they deem it necessary, and the new fuel 
standard will include an automatic ``safety valve'' to protect 
against unforeseen increases in the prices of alternative fuels or 
their feedstocks.
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    The more aggressive components of the Twenty in Ten initiative are 
based on policy and legislative actions proposed by the President that 
were not considered in today's final rule. The final rule generally 
considered only policies and programs currently in place, and therefore 
the policies proposed in the Twenty in Ten initiative were not 
considered in today's final rule. DOE intends to continue monitoring 
the Twenty in Ten initiative as policies and programs begin to develop, 
and will determine if the Replacement Fuel Goal requires additional 
modification. The Twenty in Ten initiative is available on the White 
House Web site at: https://www.whitehouse.gov/stateoftheunion/2007/
initiatives/energy.html.

B. Replacement Fuel Goals

    As previously discussed, section 502(a) requires DOE to implement a 
replacement fuel program. Under such program the Secretary is required 
to review appropriate information and estimate the production capacity 
for replacement fuels and AFVs. The Secretary also has to determine the 
technical and economical feasibility of achieving the capacity to 
produce on an energy equivalent basis, 10 percent of the projected 
motor fuel in the U.S. in 2000 and 30 percent in 2010. Section 502(b) 
established production goals for replacement fuels, and states:

    (b) Development Plan and Production Goals--[T]he Secretary * * * 
shall review appropriate information and--
* * * * *
    (2) Determine the technical and economic feasibility of 
achieving the goals of producing sufficient replacement fuels to 
replace, on an energy equivalent basis--
    (A) At least 10 percent by the year 2000; and
    (B) At least 30 percent by the year 2010, of the projected 
consumption of motor fuel in the United States for each such year, 
with at least one half of such replacement fuels being domestic 
fuels[.]

(42 U.S.C. 13252(b)(2)) (Emphasis added.) Thus section 502(b) sets two 
goals, an interim goal of developing sufficient U.S. domestic 
replacement fuel production capacity to replace 10 percent of projected 
total motor fuel use by the year 2000, and a final goal of 30 percent 
by the year 2010, with at least one half of such replacement fuels 
being domestic fuels. (42 U.S.C. 13252(b)(2)(A) and (B))

    While the goals in section 502(b) and the programs established 
under section 502(a) are related, the goals are not mandates for the 
programs. Today's review of the Congressional goals is in the context 
of the section 502(a) programs. Section 502(b) states that, ``under the 
programs established under subsection (a), the [DOE] * * * shall review 
appropriate information and'' evaluate the achievability of the goals. 
(42 U.S.C. 13252(b)) Further, in the context of the section 502(a) 
programs, DOE must ``determine the most suitable means and methods of 
developing and encouraging the production, distribution, and use of 
replacement fuels and alternative fueled vehicles[.]'' (42 U.S.C. 
13252(b)(3)) As discussed above, DOE has established various programs 
to implement the goals of sections 502(a) and (b). However, no where in 
the text of section 502 are the goals established as mandates for the 
section 502(a) programs.
    Pursuant to section 504 of EPAct 1992, DOE is required to review 
these goals periodically and publish the results and provide 
opportunities for public comments. (42 U.S.C. 13254(a)) If DOE 
determines that the goals are not achievable, section 504(b) directs 
DOE to modify, by rule, the percentage requirements and/or dates, so 
that the goals are achievable. (42 U.S.C. 13254(b)) DOE has determined 
that in order for a goal to be achievable, there must be a reasonable 
expectation that the desired level of replacement fuels production 
capacity will develop within the relevant timeframe.
    While DOE has authority to modify the section 502(b) goals, DOE's 
authority to establish requirements under the replacement fuel and 
alternative fuel programs is limited. Section 504(c) provides DOE the 
authority to issue regulations if the achievement of the Replacement 
Fuel Goals contained in section 502(b) are likely to lead to ``a 
significant and correctable failure'' to meet the overall program goals 
established by section 502(a). (42 U.S.C 13254(c)) However, EPAct 1992 
does not provide DOE the authority ``to mandate marketing or pricing 
practices, policies or strategies for alternative fuel, or to mandate 
the production or delivery of such fuels.'' (42 U.S.C. 13254(c)) 
Further, DOE's authority to

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require the use of alternative fuels is limited.\2\
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    \2\ Fleets are not required to use alternative or replacement 
fuel in their AFVs (except for alternative fuel providers and 
Federal Fleet, which are required by section 501(a)(4) and 303 of 
EPAct, respectively).
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C. Definitions

    The term ``replacement fuel'' is defined by EPAct 1992 to mean 
``the portion of any motor fuel that is methanol, ethanol, or other 
alcohols, natural gas, liquefied petroleum gas, hydrogen, coal derived 
liquids, fuels (other than alcohols) derived from biological materials, 
electricity (including electricity from solar energy), ethers,'' or any 
other fuel that the Secretary determines meets certain statutory 
requirements. (42 U.S.C. 13211(14)) (Emphasis added.)
    The term ``alternative fuel'' is defined to include many of the 
same types of fuels (such as ethanol, natural gas, hydrogen, and 
electricity), but also includes certain ``mixtures'' of petroleum-based 
fuels and other fuels as long as the ``mixture'' is ``substantially not 
petroleum.'' (42 U.S.C. 13211(2) and 10 CFR 490.2) Thus, a certain 
mixture might constitute an ``alternative fuel,'' but only the portion 
of the fuel that falls within the definition of ``replacement fuel'' 
would actually constitute a ``replacement fuel.'' For example, M85, a 
mixture of 85 percent methanol and 15 percent gasoline, would, in its 
entirety, constitute an ``alternative fuel,'' but only the 85 percent 
that was methanol would constitute ``replacement fuel.'' Also by way of 
example, gasohol (a fuel blend typically consisting of approximately 10 
percent ethanol and 90 percent gasoline) would not qualify as an 
``alternative fuel'' because it is not ``substantially not petroleum,'' 
but the 10 percent that is ethanol would qualify as ``replacement 
fuel.''
    Section 301(12) of EPAct 1992 defines ``motor fuel'' as ``any 
substance suitable as fuel for a motor vehicle.'' (42 U.S.C. 13211(12)) 
Moreover, the term motor vehicle is defined in EPAct 1992 section 
301(13), through reference to 42 U.S.C. 7550(2), as a self-propelled 
vehicle that is designed for transporting persons or property on a 
street or highway. (42 U.S.C. 13261(13)) The goals established in 
section 502(b)(2) require that DOE evaluate the capacity of producing 
sufficient replacement fuels to offset a certain percentage of U.S. 
``motor fuel'' consumption. Therefore, DOE, for the purposes of Title V 
of EPAct 1992, has interpreted the term motor fuel to include all fuels 
that are used in motor vehicles. This includes fuels used in light-, 
medium-, and heavy-duty on-road vehicles. 71 FR 54771 (September 19, 
2006).

D. Previous Review of the Goals

    Section 504(a) of EPAct 1992 requires DOE to periodically 
``examine'' the goals established in section 502(b)(2) and determine 
whether they should be modified. (42 U.S.C. 13254(a)) The examination 
of the goals is to be made taking into account the program goals stated 
under section 502(a), namely to promote the development and use of 
``domestic replacement fuels'' and to ``promote the replacement of 
petroleum fuels with replacement fuels to the maximum extent 
practicable.'' (42 U.S.C. 13254(a))
    As an initial matter, DOE notes that it is unaware of any analysis 
or technical data that was used by Congress in 1992 as a basis for 
setting the 10 percent and 30 percent Replacement Fuel Goals set forth 
in EPAct 1992. DOE is also not aware of any affirmative determination 
by Congress or by any agency that, at the time they were set, the 
statutory goals were explicitly considered achievable. Thus, DOE has 
treated these replacement fuel production capacity levels as the 
starting point for future goal analyses. Regardless of the original 
rationale for the goals, and as described and discussed below, DOE 
periodically has evaluated the feasibility of the goals as provided by 
Congress in EPAct 1992.
    Several previous efforts were made by DOE to analyze the 
Replacement Fuel Goal. The first effort was in 1996, as part of the 
Assessment of Costs and Benefits of Flexible and Alternative Fuel Use 
in the U.S. Transportation Sector, Technical Report Fourteen: Market 
Potential and Impacts of Alternative Fuel Use in Light-Duty Vehicles: a 
2000/2010 Analysis (U.S. Department of Energy, Office of Policy and 
Office of Energy Efficiency and Renewable Energy, January 1996, report 
number DOE/PO-0042), to be referred to as Technical Report 14.
    The second major attempt by DOE to evaluate the replacement fuel 
picture was made at the end of the last decade, in the report 
Replacement Fuel and Alternative Fuel Vehicle Analysis Technical and 
Policy Analysis, Pursuant to Section 506 of the Energy Policy Act of 
1992 (U.S. Department of Energy, Energy Efficiency and Renewable 
Energy, Office of Transportation Technologies, December 1999 with 
amendments September 2000), hereinafter section 506 report. The report 
is available at https://www.eere.energy.gov/vehiclesandfuels/epact/pdfs/
plf_docket/section506.pdf.
    The next report to consider the achievability of the Replacement 
Fuel Goals was the Transitional Alternative Fuels and Vehicles (TAFV) 
Model Report. See The Alternative Fuel Transition: Results from the 
TAFV Model of Alternative Fuel Use in Light-Duty Vehicles 1996-2000 
(ORNL.TM2000/168) (September 17, 2000). This report was completed 
shortly after the section 506 report. It examined multiple pathways 
toward increased replacement and alternative fuel use. The major 
difference between the TAFV report and earlier reports is that it used 
a dynamic transitional model to analyze potential replacement fuel 
pathways. Many of the earlier studies and analyses used single-period 
equilibrium models and also assumed no transitional barriers to 
increased alternative fuel and replacement fuel use. The TAFV report 
includes a number of scenarios that assume no transitional barriers but 
it also includes multiple pathways that do include analysis of 
transitional barriers. The report is available for review at: http: //
www.eere.energy.gov/vehiclesandfuels/epact/pdfs/plf_docket/
tafv99report31a_ornltm.pdf.
    In summary, Technical Report 14, prepared only three years after 
EPAct 1992's passage, did indicate that the 2010 goal could be 
achieved, albeit only under several scenarios relying upon extensive 
policy additions. The section 506 report and TAFV Report both concluded 
that it would be difficult and unlikely, but not impossible, to achieve 
the 30 percent EPAct 1992 Replacement Fuel Goal by 2010. In neither of 
the latter reports, issued in mid to late 2000, did DOE make a 
determination under EPAct 1992 section 504(b) that the statutory 
Replacement Fuel Goals were not achievable. If DOE had made such a 
determination, it would have triggered a statutory obligation to set a 
new, achievable, Replacement Fuel Goal. Instead, DOE chose to take a 
``wait and see'' approach regarding the need to revise the 2010 goal. A 
much more detailed discussion on each of the three reports and their 
conclusions was provided in section III. of the NOPR. 71 FR 54773, 
Sept. 19, 2006.

E. Previous Rulemakings and Court Order

    Section 507(c) directed DOE to issue an Advanced Notice of Proposed 
Rulemaking (ANOPR) that, in part, would evaluate the progress toward 
achieving the Replacement Fuel Goal and assess the adequacy and 
practicability of the goal. (42 U.S.C. 13257(c)) In response to that 
directive, DOE issued an ANOPR on April 17, 1998, 63 FR 19372. DOE 
conducted three public hearings (Minneapolis,

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Minnesota; Los Angeles, California; and Washington, DC) and solicited 
written comments from the public on the ANOPR. More than 110 interested 
parties responded by providing written and oral comments. Comments were 
received through July 16, 1998.
    In the ANOPR, DOE requested comments on 23 specific questions 
covering three broad areas: replacement fuels, fleet requirements, and 
urban transit buses. Only the first set of questions is relevant to 
today's rulemaking. A detailed discussion of these comments was 
previously provided in the NOPR for the Private and Local Government 
Fleet Determination (68 FR 10320, 10326-10328; March 3, 2003) and a 
summary of those comments was provided in the Replacement Fuel Goal 
NOPR. 71 FR 54771, Sept. 19, 2006.
    Additionally, DOE previously addressed the issue of whether to 
revise the replacement fuel production goal for 2010 in the context of 
its determination that an AFV acquisition mandate for private and local 
government fleets was not necessary. 69 FR 4219 (January 29, 2004). 
Section 507(e) directs DOE to consider whether a fleet requirement 
program for private and local fleets is ``necessary'' for the 
achievement of the Replacement Fuel Goals. (42 U.S.C. 13257(e)) As part 
of DOE's decision under that directive, DOE stated in its notice of 
final rulemaking that a private and local government fleet rule would 
``not appreciably increase the percentage of alternative fuel and 
replacement fuel used by motor vehicles.'' 69 FR 4220, Jan. 29, 2004. 
DOE further concluded that ``adoption of a revised goal would not 
impact its determination that a private and local government rule * * * 
would not provide any appreciable increase in replacement fuel use.'' 
69 FR 4221, Jan. 29, 2004. DOE, therefore, did not revise the 
Replacement Fuel Goal at the time but indicated that it would continue 
to evaluate the need to revise the statutory goal in the future.
    Subsequent to the publication of the January 29, 2004 final rule, 
DOE was sued in Federal court by the Center for Biological Diversity 
(CBD) and Friends of the Earth for failing to impose a private and 
local government fleet acquisition mandate and for not revising the 
replacement fuel production goal for 2010 as part of its determination. 
On March 6, 2006, the U.S. District Court for the Northern District of 
California vacated DOE's final determination regarding the private and 
local government fleet mandate and ordered DOE to revise the 
replacement fuel production goal for 2010. (See Center for Biological 
Diversity, 419 F.Supp. 2d 1166.) In its order, the Court directed DOE 
to prepare notices of proposed rulemaking and final rules on both the 
Replacement Fuel Goal for 2010 and the private and local government 
fleets determination. (Id. at 1171.)

F. NOPR for the Replacement Fuel Goal

    DOE proposed to revise the 30 percent by 2010 goal by extending the 
goal date to 2030. 71 FR 54771, Sept. 19, 2006. DOE based the proposed 
revised goal on an analysis which focused on projected production 
capacity for replacement fuels through 2030. DOE based the proposal on 
four reference cases, which were based on three building blocks. The 
three building blocks are: (1) The reference case projected by EIA in 
AEO 2006; (2) the high price case presented in AEO 2006; and (3) 
projections from the DOE programs conducting research and development 
on replacement fuel and vehicle technologies. These building blocks 
provide the basis for the reference cases which project varying levels 
of potential replacement fuel production capacity.
    The four scenarios relied upon in the NOPR analysis were: (1) The 
reference case projected by EIA in AEO 2006; (2) the high price 
scenario presented in AEO 2006; (3) a combination of the AEO 2006 
reference case with achievement of program goals (designated as program 
developments); and (4) a combination of the AEO 2006 high price case 
with program developments. The different scenarios represent the 
potential bounds for proposing a revised replacement fuel production 
goal under sections 502 and 504 of EPAct 1992. Under a 2030 timeframe, 
these scenarios projected a replacement fuel production capacity as a 
percent of on-road fuel use of 8.65 percent, 17.84 percent, 35.25 
percent, and 47.06 percent, respectively. 71 FR 54782-3, Sept. 19, 
2006.
    As presented in the NOPR, DOE proposed to maintain the 30 percent 
goal and move the goal date out 20 years, to 2030. 71 FR 54785, Sept. 
19, 2006. Given the uncertainties inherent in projecting fuel prices 
and technology achievements, DOE tentatively determined that a goal 
slightly above the midpoint of the projections of the four reference 
cases represented an ``achievable'' goal as required by section 504(b). 
(42 U.S.C. 13254(b))
    A detailed discussion of the building blocks and the reference 
cases is provided in section V. of the NOPR. 71 FR 54776, Sept. 19, 
2006. Today's final rule relies on essentially the same analysis 
framework, with updated projections by the EIA. The analysis framework 
and results are summarized below.

III. Comments

A. Comments Received

    The NOPR solicited comments on the proposed Replacement Fuel Goal 
modification. Written comments were received from a total of sixteen 
organizations. This included the following four specific organizations 
providing substantive comments:
     The American Automotive Leasing Association (AALA),
     The CBD/Friends of the Earth,
     The National Association of Fleet Administrators (NAFA), 
and
     NGVAmerica.
    The other twelve sets of comments were from Clean Cities 
coordinators or stakeholders, or were organizations that were not 
identified specifically as related to Clean Cities, but which provided 
similar type or level of comments to those received from the Clean 
Cities organizations. Thus, for most of the discussion below, these 
Clean Cities and related comments were grouped together. These 
organizations included:
     Central Texas Clean Cities.
     City of Victoria.
     DieselGreen/Austin Biodiesel Cooperative.
     Granite State Clean Cities.
     Greater New Haven Clean Cities Coalition, Inc.
     Greater New Orleans Regional Planning Commission.
     Kansas City Clean Cities.
     Maine Clean Communities.
     Norwich Clean Cities.
     Public Solutions Group, Ltd./Central Texas Clean Cities.
     St. Louis Clean Cities.
     Synetek Research Co.
    It should be noted that within these comments, most Clean Cities 
organizations utilized a common framework for their comments, relying 
upon shared key points. Within these organizations, however, two 
(Granite State Clean Cities and Maine Clean Communities) provided 
somewhat more expansive and detailed comments.
    On October 3, 2006, DOE held a hearing at DOE headquarters in 
Washington, DC. Approximately one dozen people attended, including 
representatives from AALA, NGVAmerica, several media organizations, and 
DOE program staff and related personnel. In addition, one member of the 
general public also attended. A list of attendees is available at 
https://www1.eere.energy.gov/vehiclesandfuels/epact/pdfs/plg_docket/
hearing_attendee_list.pdf.

[[Page 12046]]

Program technical staff presented a short overview of the rulemaking 
process (available at https://www1.eere.energy.gov/vehiclesandfuels/
epact/pdfs/plg_docket/ohara_presentation.pdf). No entities prepared 
or delivered detailed testimony at this hearing. Discussions during the 
hearing were relatively short and of a much more general nature with 
all points raised also included within the written comments received. 
Therefore, no separate discussion of the comments from the hearing is 
necessary. The transcript from this hearing is available at https://
www1.eere.energy.gov/vehiclesandfuels/epact/pdfs/plg_docket/hearing_
transcript.pdf.
    Due to technical difficulties in receiving comments on the NOPR 
electronically, on January 18, 2007, DOE published a limited re-opening 
of the comment period; 72 FR 2212, Jan. 18, 2007. This notice re-opened 
the comment period until January 31, 2007. During this additional 
period, one additional set of comments was received from the National 
Propane Gas Association (NPGA).

B. Discussion of Comments

    In order to address the comments in a clear manner, they were split 
out into several basic categories. These include:
     Approach--comments concerning DOE's approach to addressing 
its requirements concerning evaluating and modifying the Replacement 
Fuel Goal;
     Goal--comments concerning the level and time-frame for the 
proposed modified goal, schedule for review of the modified goal, and 
whether an interim goal was necessary;
     Assumptions--comments concerning the detailed assumptions 
made by DOE in its analysis; and
     Programmatic/DOE's Role--comments concerning possible 
programs or DOE's overall role concerning achievement of the 
Replacement Fuel Goal.
    In addition to identifying the comments in each section below, the 
discussion of the final analysis further addresses, where appropriate, 
specific issues raised by commenters.
Approach
    One commenter indicated that DOE's interpretation of ``achievable'' 
was reasonable, and that the current goal needed to be modified. This 
commenter also indicated that DOE was correct to focus on more than 
just a single technology, and on the entire fuel supply chain. Another 
commenter also indicated that DOE should base the revised goal upon 
reductions across the entire transportation sector, and not just 
regulated fleets. In response, DOE reiterates that it did base its 
approach upon a number of technologies and fuels, and did look at fuel 
savings and substitution within the entire on-road transportation 
sector. As indicated in the NOPR, DOE looked at the entire highway 
transportation sector in determining the Replacement Fuel Goal. DOE 
also looked at technologies such as hybrids, fuel cell vehicles, 
advanced energy efficient vehicles, and dual-fuel/FFVs. The fuels used 
in the analysis included ethanol, biodiesel, natural gas, coal to 
liquids, gas to liquids, and hydrogen. 71 FR 54771, Sept. 19, 2006.
    Different opinions were expressed concerning DOE's approach with 
respect to determining if the Private and Local Government Fleets Rule 
is necessary. One commenter specifically indicated its satisfaction 
with the approach taken by DOE, while another specifically indicated 
its objection. A third commenter simply cautioned DOE to resist the 
urge to set a new Replacement Fuel Goal level solely for the purpose of 
justifying a Private and Local Government Fleet Rule. This same 
commenter spent the majority of its comments stating why such a fleet 
rule is wrong.
    In response, DOE is focused only on the development of an 
achievable goal that meets the requirements of sections 502(a) and 
504(b) of EPAct 1992 in this rule. DOE is not predisposed to any 
outcome beyond setting the goal. The Private and Local Government Fleet 
Rule determination is a separate rulemaking process from the 
Replacement Fuel Goal modification, and DOE is continuing to treat 
these as separate processes. The fleet rule determination will not be 
commenced until the revised Replacement Fuel Goal is set, and the 
determination process will specifically include an opportunity for 
comment on a proposed determination prior to development of the final 
determination.
Goal/Schedule/Interim Goal
    Two specific commenters plus a number of the Clean Cities and 
related organizations objected to what they stated is a 20-year delay 
in the goal, from 2010 to 2030. They indicated that a more progressive 
goal is needed, and one that has a stronger focus upon program 
development and implementation. Similarly, one of the individual 
commenters indicated that it did not understand why the inability to 
meet the goal in 2010 permits a 20-year delay. While a number of these 
commenters indicated that they wanted to see DOE set a ``higher goal,'' 
few offered concrete proposals as to what that goal should be and how 
it would be achievable. Two Clean Cities coordinators did specifically 
suggest that DOE select one of the more accelerated paths included 
within its NOPR analysis, such as utilizing one of the ``program 
development'' cases. At the same time, one commenter felt that DOE's 
proposed goal was reasonable, based upon comparison to similar actions 
of States and several foreign governments.
    In response to commenters requesting a more aggressive goal than 
what was proposed, DOE notes that it has a statutory obligation to 
balance certain considerations in order to establish goals that are 
``achievable.'' (42 U.S.C. 13254(b)) The replacement fuel production 
capacity goals must promote replacement fuels to the ``maximum extent 
possible'' while at the same time remaining technologically and 
economically feasible. (42 U.S.C. 13254(a) and (b)(2)) DOE interprets 
``achievable'' to mean that there is a reasonable expectation of 
reaching the goal in the time period specified. DOE considered the 
various options within the current budgetary and policy framework and 
selected what DOE determined is a goal which is set at the ``maximum 
extent practical'' and still ``achievable.'' The current EIA baseline 
projection for replacement fuels by 2030 is only 7.38 percent. Today's 
analysis indicated that if all DOE's technical programs were as 
successful as predicted and the technologies were fully adopted in the 
marketplace, the maximum replacement fuel that could be achieved is 33 
to 47 percent. To expect DOE to be 100 percent successful in its 
development programs is unreasonable. By their very nature, many of the 
research programs are high risk.
    One individual commenter and several Clean Cities and related 
organizations generally claimed that there are significant 
environmental, energy security, and economic impacts in delaying the 
goal. However, the commenters did not provide specific estimates of 
these potential impacts or how moving the goal to 2030 would result in 
such impacts.
    One individual commenter and two Clean Cities coordinators 
specifically called for DOE to set an interim goal. DOE notes that in 
the Court's order directing DOE to revise the Replacement Fuel Goal, 
the Court focused almost entirely upon the 2010 goal. (Center for 
Biological Diversity, 419 F.Supp. 2d 1166.) Further, the Court clearly 
directed DOE to revise the ``goal.'' (Center for Biological Diversity 
v. U.S.

[[Page 12047]]

Dept. of Energy et. al., No. 05-cv-01526-WHA Document 54 p. 2 (N.D. 
Cal. March 30, 2006) (Order re Timing of Relief)) The Court's use of 
``goal'' in the singular provides direction to revise the 2010 goal, 
and DOE developed the NOPR accordingly.
    To the extent that an ``interim goal'' allows the public to 
understand the trajectory of the replacement fuel production necessary 
to meet the 2030 goal, DOE's analysis developed data points at 2020, 
2025 and 2030 for all four scenarios evaluated. The charts provided 
below indicate a range of percentages which provide benchmarks for 
evaluating progress towards the achieving the goal. Moreover, the 
annual publication of EIA analyses of replacement fuel contributions in 
the Annual Energy Review (AER) and AEO provides an indication of 
progress. For example, the replacement fuel production capacity levels 
were estimated in the range between approximately 6 and 17 percent in 
the NOPR for 2020. As updated in the analysis for this final rule, the 
two 2020 reference case-based scenarios project a replacement fuel 
capacity between 5 and 14 percent. DOE and the public will be able to 
compare the AEO projections and AER data to the Replacement Fuel Goal 
analysis presented in today's final rule and the NOPR.
    Two commenters specifically requested that DOE provide a specific 
schedule for reviewing the Replacement Fuel Goal in the future. These 
commenters stated that the information resulting from such reviews 
should be published more frequently. The statutory requirement in 
section 504(a) is for periodic review. As discussed above, EIA 
publishes the AEO report annually, which estimates the replacement fuel 
production capacity of the U.S. DOE will review the annual AEO reports 
and based in part on these reports determine whether a more 
comprehensive review of the Replacement Fuel Goal is warranted.
    Finally, a commenter specifically indicated that ``DOE should note 
that future reviews may also result in modifying the goal to reduce the 
timeframe or increase the replacement fuel percentage if achievable in 
order to effectuate the intent of the Act and the Replacement Fuel 
Program.'' DOE acknowledges that if future reviews show results more or 
less favorable to achievement of the goal, then DOE could increase/
decrease the level or accelerate/push out the date. DOE has no pre-
conceived concepts as to what any future reviews of progress toward the 
goal will show. The statutory requirement of the periodic review is for 
DOE to evaluate the goal and determine if the goal is practical and 
achievable. If the goal is not achievable, DOE has the responsibility 
to develop an achievable goal that is ``technically and economically 
feasible'' and promotes replacement fuels to the ``maximum extent 
practicable'' in a specific timeframe, whatever that may be.
Analysis Assumptions
    One individual commenter and two Clean Cities coordinators stated 
that the future oil prices upon which DOE based its analyses should 
have been much higher. Therefore, these commenters asserted, the 
decision on replacement fuel penetration levels should have been closer 
to the EIA high price case, or even based on prices higher than EIA's 
high price case. In response, DOE determined that it was inappropriate 
to assume significantly higher fuel prices than those presented in the 
AEO reports without a sufficient basis upon which to determine such 
prices. A case in point: there has been a significant drop in the cost 
of crude oil since the publication of the NOPR on September 19, 2006. 
Last summer crude prices were over $70 per barrel, but prices had 
fallen below $50 per barrel by late January, 2007. (EIA Petroleum 
Navigator at https://tonto.eia.doe.gov/dnav/pet/pet_pri_wco_k_w.htm) 
In addition, EIA analysis from AEO Reports indicates that higher oil 
prices do encourage more replacement fuel usage and increased energy 
efficiency. However, higher oil prices also cause drivers to use less 
petroleum overall. This coupled with the increased use of replacement 
fuels and increased energy efficiency can cause oil prices to fall.
    DOE is required to develop a goal that is achievable. Commenters 
did not provide any data to justify reliance on abnormally high oil 
prices for a sustained period or years. Therefore, DOE based its 
analysis upon EIA analyses. If projections for future prices increase 
significantly, DOE will review the annual AEO and based in part on 
these reports determine whether further review of the Replacement Fuel 
Goal is warranted.
    One commenter indicated that it felt DOE underestimated the 
contribution of conservation in the overall analysis. In response, DOE 
did address conservation, and believes that conservation was given a 
sizable role in both of the program development cases. The program 
development cases included energy efficiency gains from hybrids, 
advanced diesels, and fuel cell vehicles. The EIA data only takes into 
account the annual energy efficiency gains that vehicles have gained 
historically, typically around 1.2 percent. As presented in the NOPR, 
DOE analyzed two cases that incorporated savings of approximately 3 
million barrels per day in 2030, above and beyond any conservation 
efforts already taken into account in EIA data.
    One commenter stated that DOE's assertion that research and 
development programs will accomplish their goals is unrealistic, and 
thus contradicts DOE's approach to ``achievable.'' DOE notes that it 
used approximately a 50 percent, not 100 percent, success rate for all 
of DOE's programs in arriving at the final Replacement Fuel Goal. As 
reflected in the NOPR, estimates for the maximum contributions from 
successful commercialization of technologies resulting from DOE 
research and development to the overall goal by 2030 were no more than 
30 percent replacement fuel. The two EIA base cases (reference and high 
price (NOPR Tables 1 and 2)) projected levels of approximately 9 to 18 
percent replacement fuel. Adding approximately half of the DOE research 
and development technologies to the EIA base cases results in projected 
levels of approximately 24 to 33 percent replacement fuel. Therefore, 
DOE proposed in the NOPR a goal within the range of the identified 
scenarios, and did not rely upon DOE research and development programs 
achieving all of their goals.
    One commenter plus a number of Clean Cities-related organizations 
specifically questioned the Department's exclusion of plug-in hybrid 
electric vehicles (PHEVs) as inadequate, and disagreed with projections 
showing that the contribution from electricity would not grow 
significantly during the period of the analysis. No commenter submitted 
any data supporting a more concrete role for these vehicles, or what 
their overall effect would be. As stated in the NOPR, DOE has 
determined that it is premature to specifically evaluate this new 
technology, especially to the level of detail of the analysis done for 
this action. DOE recognizes that PHEVs offer a significant potential 
for reducing petroleum use in the U.S. transportation sector. As such, 
PHEVs were evaluated as part of the total hybrid vehicle market 
analysis. Modeling used for this analysis indicates that conventional, 
flex-fuel, and PHEVs as well as fuel-cell hybrids will be vying for the 
same market segments by 2030. The entire market segment was evaluated 
and significant gains in fuel efficiency and replacement fuels were 
indicated. However, DOE does not have sufficient data to evaluate the 
specific contributions to petroleum

[[Page 12048]]

reduction attributable to PHEVs. Furthermore, DOE notes that its 
analysis is based upon replacement fuels competing in the marketplace. 
Nothing in the 30 percent goal prevents PHEVs from capturing a larger 
share of the replacement fuel market than is indicated by DOE's 
analysis. If PHEVs develop quickly and impact the relative 
contributions of electricity and energy efficiency relied upon in the 
current analysis, DOE will take notice and determine if the Replacement 
Fuel Goal requires additional modification.
    Considerable analysis was done in the NOPR scenario 3 to determine 
what the vehicle sales would have to be in order to generate a demand 
for replacement fuel commensurate with a 35 percent Replacement Fuel 
Goal by 2030. 71 FR 54783. The VISION results are in Figures 5 and 6 in 
the NOPR. 71 FR 54784. For a level of replacement fuel demand that 
would be equivalent to the replacement fuel production capacity under a 
35 percent by 2030 Replacement Fuel Goal, the VISION model projected 
that non-conventional light-duty vehicles would comprise 99 percent of 
new LDV sales in that model year. The breakdown of the LDVs were FFVs--
24 percent of new vehicle sales; Hybrids--37 percent of new vehicle 
sales; Diesels--22 percent of new vehicle sales; Fuel Cell Vehicles--15 
percent of new vehicle sales; and other AFVs--1 percent of new vehicle 
sales.
    Similarly, two commenters and several Clean Cities-related 
organizations indicated that they felt the potential from natural gas 
and gas-to-liquids (GTL) was underestimated. One of these commenters 
also raised environmental concerns about GTL. Thus it was unclear 
whether this particular commenter wanted a greater role shown for this 
technology or not. In response to the overall concerns about potential 
for any particular technology, DOE relied upon the best information it 
had available, relying primarily upon the EIA AEO data. Neither 
commenter nor the Clean Cities-related organizations submitted specific 
data on these or other technologies.
    In general, however, even if the contribution of a particular 
technology (whether natural gas, GTL, PHEVs, or others) were increased, 
DOE would anticipate that much of this change might be at the expense 
of another included technology. As presented above, the total level of 
replacement fuel usage is relatively fixed. Thus, the gains for one 
technology will likely be offset by reductions in another technology, 
as opposed to increasing the number of non-conventionally fueled motor 
vehicles. Therefore, given that other replacement fuels may have a 
larger share of the market than our analysis might otherwise indicate, 
the overall results for replacement fuel production capacity will 
remain the same. Should better data become available DOE will review it 
and revise the goal as necessary.
    One commenter also questioned EIA's projections about coal-to-
liquids (CTL), since current oil prices already appear above the level 
needed for economic parity, but plants have not been built. As 
discussed in the NOPR, having economic parity now or achieving it only 
recently does not mean that the plants would already be in place. As 
DOE indicated in the NOPR, financial investors often need to see 
current and projected conditions that appear favorable for several 
years before they are moved to act. Once investment begins, it can be a 
number of years before any plants are on-line. Today, some of this 
initial investment appears to be happening, since conditions now appear 
favorable, but it may be many years before significant contributions 
are anticipated from this technology. In addition, as shown in section 
V.E. below, under the updated analysis based upon the AEO 2007, the 
projected contribution from CTL decreased significantly.
    One commenter indicated that it was unclear if DOE used Government 
Performance and Results Act (GPRA) analyses, or if not, why not. DOE 
did use GPRA analyses for a number of the program developments 
technologies, as indicated in the NOPR. 71 FR 54777, 54778, 54781. Two 
such examples are the energy efficiency gains from the FreedomCAR and 
Vehicle Technologies (FCVT) program and in the Hydrogen Fuel Cell and 
Infrastructure Technologies (HFCIT) Program (commonly referred to as 
the ``Hydrogen Program'') in the building blocks section (V.B.3) of the 
NOPR. 71 FR 54777. Where current analyses existed for technology 
programs, they were used. Item D11 in the electronic docket (available 
at https://www1.eere.energy.gov/vehiclesandfuels/epact/private/plg_
docket.html) specifically provides a link to EERE's GPRA analyses for 
all relevant technology programs.
    One commenter questioned whether DOE's analysis assumed new Federal 
incentives for certain fuels, but not for others (particularly natural 
gas). This commenter also indicated that DOE needed to explain how 
different fuels react differently to higher prices. Generally, DOE did 
not assume new incentives or policies that would promote a specific 
alternative fuel. In the limited instances in which a new policy was 
assumed, DOE identified its assumptions, which were based upon 
information received from EIA or the relevant technology programs.
    One instance in which policies beyond those existing were assumed 
was for the hydrogen and fuel cell technologies. These technologies 
were identified as an exception because DOE recognizes that they will 
need additional support later in getting the technology into the 
market. Most of the other replacement fuels and technologies are viable 
in the market or they have or are getting tax breaks, subsidies, or 
other price supports until they become market viable. In order for fuel 
cell technologies to have the same opportunities in the market they may 
require similar types of support as previous technologies as well as 
potentially new types of assistance.
    One commenter indicated that DOE did not adequately address the 
benefits of other Federal, State, local, and private efforts, including 
other EERE, FCVT, and USDA activities. In particular, this commenter 
indicated that DOE should include a discussion of other efforts and 
indicate how the President's AEI fits in. The commenter did not 
indicate specific programs that should be included in DOE's analysis 
that would contribute significantly to the Replacement Fuel Goal. It 
should be noted that DOE did much of what this commenter claims it did 
not. In particular, the ``program developments'' scenarios were 
specifically based upon EERE and FCVT efforts, and DOE did discuss the 
AEI in section VI.B. of the NOPR. 71 FR 54786. DOE also is working with 
USDA in development of biofuels especially in the area of cellulosic 
ethanol. In preparing this final rule, DOE has taken into account the 
Renewable Fuel Standard (RFS) from EPAct 2005 and also considered the 
Twenty in Ten initiative.
    The same commenter indicated that DOE did not address the 
utilization side of the equation sufficiently. Again, the Replacement 
Fuel Goal is a production capacity goal, not a utilization goal. 
However, DOE recognizes that production and use are related. DOE did 
look at utilization in the VISION modeling, provided in tables 5 and 6 
of the NOPR. 71 FR 54784. Moreover, the commenter failed to provide 
data for a revised analysis to reflect the commenter's concern.
    One commenter pointed out perceived discrepancies between the EIA 
and VISION model analyses concerning the makeup of the LDV market. 
While DOE acknowledges that these two analyses differ somewhat in

[[Page 12049]]

their pathways, they are in relative agreement on the overall 
destination points. DOE analysis looked at the potential capacity to 
produce replacement fuels as required by section 502(a) and (b). In 
order to validate that data, a second analysis was performed using a 
fuel usage model. The VISION model looked at what replacement fuels 
could be used in what type of vehicles based on available knowledge of 
the different vehicle technologies. The total replacement fuel figures 
were very similar even though there were slight variations of the fuel 
mix and vehicle technologies. These simply show two different paths to 
the same result, based upon the particular assumptions of their 
analysts and the mechanisms within the models. DOE is not stating any 
one specific fuel or technology advancement, or specific set of 
advancements, has to occur for the Replacement Fuel Goal to be 
achieved. DOE believes that a portfolio of technologies, some indicated 
here, as well as possibly some that were not included, are required to 
achieve any goal.
    Finally, one commenter took particular issue with DOE's approach to 
its greenhouse gas (GHG) analysis. This commenter stated that DOE used 
the wrong baseline for assessing GHG emissions. The commenter indicated 
that DOE should have used the levels ``the U.S. would have achieved if 
DOE had implemented Congress's original fuel replacement goals.''
    In response, DOE believes that the commenter's assertion is 
incorrect on several counts. First, DOE does not have authority to 
mandate achievement of the goal. DOE has authority to conduct programs 
in accordance with the goals, to review the goals, and modify the 
goals. The commenter's implication that DOE could have mandated 
achievement of the 30 percent goal by 2010 is therefore incorrect. 
Second, a GHG analysis as suggested by the commenter would require the 
establishment of a fictitious baseline based upon a completely 
fabricated fuel mix that possibly could be used to meet the goal in 
2010 whether or not a 2010 goal was ever achievable. Since DOE has 
found that the goal is unachievable, it does not know what the fuel mix 
would have been in 2010 if the 30 percent goal had been achieved, which 
is critical to determining the baseline contribution of GHGs. Without 
such a breakdown, no such estimate can be made.
    This commenter further asserted that DOE was required to perform an 
environmental assessment as part of this rulemaking. As discussed below 
in section VII, Regulatory Review, DOE has not conducted an 
environmental assessment, which is consistent with the Court's holding 
in Center for Biological Diversity. (419 F. Supp 2d at 1173.)
Programmatic/DOE's Role
    Three commenters and several Clean Cities-related organizations 
specifically called for DOE to promote programs or incentives and make 
recommendations to further the goals of the Replacement Fuel Programs. 
This Final Rule requires DOE to select a specific goal that is 
achievable. DOE notes that the Administration is making proposals and 
recommendations relevant to alternative fuel production and use. The 
President's 2007 State of the Union Address on January 23, 2007, made 
two clear and strong recommendations. Twenty in Ten proposed increasing 
the RFS to 35 billion gallons of renewable and alternative fuel in 2017 
and giving Department of Transportation (DOT) authority to set CAFE 
standards for passenger vehicles based on vehicle attributes consistent 
with DOT's recent rule for light-duty trucks. Thus, the President's 
``Twenty in Ten'' initiative contains replacement fuel and energy 
efficiency as its main elements, which is the same approach employed by 
the Replacement Fuel Goal established today.
    In addition, one o