Alternative Fuel Transportation Program; Alternative Compliance, 12958-12966 [E7-5021]

Agencies

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

[Federal Register Volume 72, Number 53 (Tuesday, March 20, 2007)]
[Rules and Regulations]
[Pages 12958-12966]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-5021]


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DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 490

RIN 1904-AB66


Alternative Fuel Transportation Program; Alternative Compliance

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Final rule.

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SUMMARY: The Department of Energy (DOE) today publishes a final rule to 
implement section 514 of the Energy Policy Act of 1992, as amended by 
section 703 of the Energy Policy Act of 2005, which allows States and 
alternative fuel providers to petition for a waiver of the alternative 
fueled vehicle (AFV) acquisition requirements. Today's final rule 
requires that for a State or alternative fuel provider to be granted a 
waiver, the State entity or alternative fuel provider must request a 
waiver to demonstrate that in lieu of complying with the applicable AFV 
acquisition requirement for a model year, it will take other actions to 
reduce its annual petroleum motor fuel consumption by an amount equal 
to 100 percent alternative fuel use in all of the fleet's AFVs, 
including AFVs that the State entity or alternative fuel provider would 
have been required to acquire if there was no waiver.

DATES: Effective Date: The final rule is effective April 19, 2007.

FOR FURTHER INFORMATION CONTACT: Ms. Linda Bluestein, U.S. Department 
of Energy, Office of Energy Efficiency and Renewable Energy, FreedomCAR 
and Vehicle Technologies Program, Mailstop EE-2G, Room 5F-034, 1000 
Independence Avenue, SW., Washington, DC 20585-0121; (202) 586-6116 or 
linda.bluestein@ee.doe.gov, or Mr. Chris Calamita, U.S. Department of 
Energy, Office of General Counsel, GC-72, Room 6B-256, 1000 
Independence Avenue, SW., Washington, DC 20585-0121; (202) 586-9507 or 
Christopher.calamita@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background
II. Public Comments
III. Discussion of the Final Rule
    A. Eligibility for alternative compliance waiver
    B. Petroleum reduction calculation
    1. Cumulative inventory
    2. Calculation procedure
    C. Eligible reductions in petroleum consumption
    1. Light-duty vehicles
    2. Medium- and heavy-duty vehicles
    3. Nonroad vehicles
    4. Rollover of excess petroleum reduction
    D. Waiver applications
    E. Application deadlines
    F. Use of credits
    G. Reporting requirement
    H. Sanctions for violations
    I. Exemptions
    J. Record retention
    K. Other comments
IV. Regulatory Review
    A. Executive Order 12866
    B. National Environmental Policy Act
    C. Regulatory Flexibility Act
    D. Paperwork Reduction Act
    E. Unfunded Mandates Reform Act of 1995
    F. Treasury and General Government Appropriations Act, 1999
    G. Executive Order 13132
    H. Executive Order 12988
    I. Treasury and General Government Appropriations Act, 2001
    J. Executive Order 13211
    K. Congressional Notification
V. Approval by the Office of the Secretary

I. Introduction and Background

    Title V of the Energy Policy Act of 1992 (Pub. L. 102-486; the Act) 
established requirements for covered alternative fuel providers 
(``covered persons'') and States to acquire set percentages of AFVs. 
(42 U.S.C. 13251(a) and 13257(o)) As of 1999, 90 percent of light-duty 
motor vehicles acquired by a covered person must be AFVs. As of 2000, 
75 percent of light-duty motor vehicles acquired for a State fleet \1\ 
must be AFVs. Section 508 provides for the use of credits in complying 
with the AFV requirements. (42 U.S.C. 13258) Title V also provides for 
an exemption process from the AFV requirements. (42 U.S.C. 13251(a)(5) 
and 13257(i)) As directed by the Act, DOE issued regulations, 10 CFR 
part 490--Alternative Fuel Transportation Program, to implement the AFV 
provisions. (61 FR 10622; March 14, 1996).
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    \1\ Section 301 of the Act defines ``fleet'' as ``a group of 20 
or more light-duty motor vehicles, used primarily in a metropolitan 
statistical area or consolidated metropolitan statistical area, as 
established by the Bureau of the Census, with a 1980 population of 
more than 250,000, that are centrally fueled or capable of being 
centrally fueled and are owned, operated, leased, or otherwise 
controlled by a governmental entity or other person who owns, 
operates, leases, or otherwise controls 50 or more such vehicles, by 
any person who controls such person, by any person controlled by 
such person, and by any person under common control with such 
person, except that such term does not include--
    (A) motor vehicles held for lease or rental to the general 
public;
    (B) motor vehicles held for sale by motor vehicle dealers, 
including demonstration motor vehicles;
    (C) motor vehicles used for motor vehicle manufacturer product 
evaluations or tests;
    (D) law enforcement motor vehicles;
    (E) emergency motor vehicles;
    (F) motor vehicles acquired and used for military purposes that 
the Secretary of Defense has certified to the Secretary must be 
exempt for national security reasons;
    (G) nonroad vehicles, including farm and construction motor 
vehicles; or
    (H) motor vehicles which under normal operations are garaged at 
personal residences at night[.]
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    On August 8, 2005, the Energy Policy Act of 2005, (Pub. L. 109-58; 
EPACT 2005) was signed into law. In part, EPACT 2005 provides 
additional flexibility for States and covered persons subject to AFV 
acquisition requirements under 10 CFR part 490. Specifically, section 
703 of EPACT 2005 adds an alternative compliance program (entitled 
``Alternative Compliance'') under section 514 of title V of the Act. 
(42 U.S.C. 13263a) Section 514 authorizes DOE to grant to covered 
persons and States a waiver from the AFV acquisition requirements under 
section 501 (42 U.S.C. 13251) and section 507(o) (42 U.S.C. 13257(o)), 
respectively. The statute provides that any State or covered person may 
apply for an alternative compliance waiver, and that DOE must grant the 
waiver if the State or covered person demonstrates that its fleet will 
reduce annual petroleum consumption by an amount equal to the amount of 
petroleum it would reduce if the fleet's cumulative inventory of AFVs 
operated 100 percent of the time on alternative fuel (42 U.S.C. 
13263a(a) and (b)). (Under the AFV requirements, States are not 
required to operate AFVs on alternative fuel and covered persons are 
required to operate their AFVs on alternative fuel only when it is 
available. (42 U.S.C. 13251(a)(4)) In addition, the State or covered 
person requesting a waiver must be in compliance with all applicable 
vehicle emission standards established by the Environmental Protection 
Agency under the Clean Air Act.
    On June 23, 2006, DOE issued a notice of proposed rulemaking (NOPR) 
to establish procedures for the submission of, and action on, 
applications for alternative compliance waivers submitted by States and 
covered persons subject to AFV acquisition requirements under part 490, 
71 FR 36034, June 23, 2006. In the NOPR, DOE proposed to add a new 
subpart I to part 490, which would include provisions

[[Page 12959]]

regarding the timing of waiver requests and responses by DOE, waiver 
documentation and application requirements, annual reporting of 
petroleum reductions, use of credits to offset petroleum reduction 
shortfalls, rollover of excess petroleum reduction to future years, 
enforcement for violations, and record retention.
    In addition, using its rulemaking authority under title V and 
section 644 of the DOE Organization Act (42 U.SC. 7254), DOE proposed 
that States or covered persons may use vehicles that are not part of 
the ``fleet,'' such as medium- and heavy-duty vehicles, and excluded 
light-duty motor vehicles (LDVs), to meet their petroleum reduction 
requirement. Under the same authority, DOE sought to address a 
discrepancy in the statutory language between the treatment of States 
that have section 508 credits versus those that do not. As such, DOE 
proposed that both States that have section 508 credits and States that 
do not have section 508 credits would be required to achieve comparable 
annual petroleum reduction.

II. Public Comments

    DOE received nine sets of written comments from the public. DOE 
also held a public hearing at DOE headquarters in Washington, DC on 
July 12, 2006, where the NOPR was discussed and oral comments were 
received from four industry associations and two fuel provider utility 
companies subject to 10 CFR Part 490.
    Written comments were received from the National Rural Electric 
Cooperative Association; the California Electric Transportation 
Coalition; the National Biodiesel Board; Florida Power and Light, a 
covered fuel provider utility; Southern California Edison, a covered 
fuel provider utility; the California Natural Gas Vehicle Coalition; 
NGV America, a natural gas vehicle association; the National 
Association of Fleet Administrators; and El Paso Electric, a covered 
fuel provider utility.
    Generally, the oral and written comments were supportive of the 
proposed rulemaking because of the increased flexibility for covered 
fleets and increased emphasis on petroleum reduction. Commenters, 
however, provided a variety of suggestions for incorporation into the 
final rule including comments on how to determine a State's or covered 
person's cumulative inventory of AFVs, the petroleum reductions 
eligible for consideration under the alternative compliance program, 
and the information required for a complete waiver application. The 
specific issues raised by commenters are addressed in the discussion 
below.

III. Discussion of the Final Rule

A. Eligibility for Alternative Compliance Waiver

    Under section 514(a) of the Act, any covered person subject to AFV 
acquisition requirements of section 501 and any State subject to AFV 
acquisition requirements in 507(o) may petition the Secretary of Energy 
for a waiver from those requirements. (42 U.S.C. 13263a(a)) Section 
514(b)(1)(A) of the Act provides DOE shall grant a waiver for a covered 
person if the covered person demonstrates a reduction in petroleum 
consumption equal to the reduction that would result under 100 percent 
cumulative compliance with the fuel use required in section 501 of the 
Act. (42 U.S.C. 13263a(b)(1)(A)) Section 514(b)(1)(B) of the Act 
provides that DOE shall grant a waiver for a State entity granted 
credits under section 508, if that State demonstrates a reduction in 
petroleum motor fuel consumption equal to the amount of petroleum the 
fleet's \2\ cumulative inventory of AFVs would reduce if the AFVs 
operated 100 percent of the time on alternative fuel. (42 U.S.C. 
13263(b)(1)(B)) In addition, the party seeking a waiver must be in 
compliance with all applicable vehicle emission standards established 
by the Environmental Protection Agency under the Clean Air Act.
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    \2\ The term ``fleet'' is defined in title V of the Act to 
include only covered LDVs (42 U.S.C. 13211(9)).
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    Relying on rulemaking authority under title V of the Act and 
section 644 of the DOE Organization Act (42 U.S.C. 7254), DOE proposed 
that State fleets, regardless of whether they earned section 508 
credits, would be eligible for a waiver if they demonstrated a 
reduction in petroleum motor fuel consumption equal to the amount of 
petroleum the fleet's cumulative inventory of required AFV acquisitions 
would reduce if those required acquisitions operated 100 percent of the 
time on alternative fuel. The proposed regulation would treat States 
equally regardless of whether a State was granted credits.
    DOE did not receive any comments regarding which entities would be 
eligible to apply for a waiver. As such, today's final rule permits 
covered persons, States that have been issued credits, and States that 
have not been issued credits to apply for a waiver and meet the same 
requirements.

B. Petroleum Reduction Calculation

1. Cumulative Inventory
    Consistent with section 514, the proposed rule required both 
covered persons and State entities to reduce petroleum fuel consumption 
by an amount equal to the petroleum the fleet's cumulative inventory of 
AFVs, including required AFV acquisitions in waiver years, would reduce 
if those vehicles operated 100 percent of the time on alternative fuel. 
Under the proposal, a fleet's cumulative inventory is equal to the 
number of previously required AFVs actually in the current fleet, plus 
the number of AFVs acquisitions that would be required if a waiver were 
not granted. The inclusion of AFV acquisitions in waiver years when 
calculating the necessary petroleum reduction is consistent with the 
statute's purpose of providing States and covered persons compliance 
flexibility in exchange for achieving the maximum level of petroleum 
fuel reduction.
    If AFV requirements for waiver years were not included in the 
cumulative AFV count, a waiver in successive years would have rapidly 
diminishing petroleum reduction requirements, because a fleet granted 
successive waivers would have fewer and fewer AFVs in its fleet as 
vehicles are retired. Fewer AFVs in the fleet would result in a lower 
required petroleum reduction. This result would be unreasonable in 
light of the petroleum replacement goal of the statute.
    DOE received two sets of supportive comments on its interpretation 
of ``cumulative.'' A fuel provider association, however, objected to 
the proposed rule with regard to what is counted toward a State or 
covered person's baseline for petroleum reduction. The commenter 
recommended that ``cumulative'' should mean all the AFVs that a covered 
person or State would have had in its fleet if it had purchased all the 
AFVs it was required to purchase--without consideration of previously 
used vehicle credits or exemptions granted. Otherwise, the commenter 
stated, a covered person or State that has not previously relied on 
credits or exemptions would be required to achieve a fuel reduction 
greater than a comparable covered person or State that previously 
relied on credits or exemptions.
    Consideration of all AFVs, including those requirements addressed 
through credits and exemptions, is overly restrictive. In employing 
credits and exemptions, States and covered persons were relying upon 
part 490. States and

[[Page 12960]]

covered persons typically rely on credits or exemptions because it is 
extremely difficult or impossible for them to comply through AFV 
purchases. If AFV requirements that were previously satisfied through 
credits or exemptions were included in the waiver calculation, the 
waiver option would likely be prohibitive for these States and covered 
persons. The advantage of compliance under the waiver program is that 
States and covered persons are typically required to reduce petroleum 
consumption by a greater amount then would occur through compliance 
with credits or exemptions. Additionally, going forward the alternative 
compliance option should lead to greater petroleum reduction in fleets 
that previously relied on exemptions and credits because alternative 
compliance takes into account AFV purchase requirements waived under 
the program. Moreover, under a waiver, fleets will not be eligible for 
exemptions and credits are limited. DOE, therefore, is adopting the 
eligibility provisions and baseline calculation provision as proposed.
    One fleet association requested DOE be more specific about the AFVs 
required to be used in calculating a fleet's petroleum reduction 
baseline. Specifically, it requested wording that specifies that the 
AFVs to be counted are those ``acquired for EPAct compliance and 
included in a prior Annual AFV Acquisition Report for State and 
Alternative Fuel Provider Fleets (Form DOE/FCVT/101).'' DOE recognizes 
that some fleets may have purchased AFVs outside of the AFV 
requirements. To address this issue the final rule specifies inclusion 
of previously required AFVs in a fleet's inventory during the model 
year for which a waiver is being requested (section 490.803(a)(1)), and 
AFVs that would have been required in the model year for which a waiver 
is requested and in previous model years in which a waiver was granted 
(section 490.803(a)(2)).
2. Calculation Procedure
    As proposed, and as adopted today, calculation of the necessary 
petroleum reduction is essentially a three step procedure. To calculate 
the petroleum reduction necessary to obtain a waiver, the State or 
covered person first calculates the amount of alternative fuel 
necessary to operate existing required AFVs in a fleet's inventory, 
assuming operation on alternative fuel 100 percent of the time. Second, 
the State or covered person calculates the additional amount of fuel 
that would have been used by AFVs under the requirements for which a 
waiver is currently being requested plus, calculate any additional 
amount that would have been used if any previous waivers were not 
granted. The State or covered person then adds the first and second 
calculations together. Third, the State or covered person subtracts the 
fuel use attributed to any existing required AFVs and LDVs acquired in 
lieu of AFVs under a waiver that are being retired. Again, all 
calculations are based on alternative fuel use 100 percent of the time. 
A detailed example of how this works is provided below.

    In year 1, a covered person has 25 AFVs in its fleet and has an 
AFV acquisition requirement of 9. The AFV requirement is based on 
the number of LDVs that the fleet anticipates acquiring during the 
waiver year. In this example, the covered person anticipates 
acquiring 10 LDVs, and has an AFV acquisition requirement of 9 AFVs 
(10 vehicles x 90 percent fuel provider requirement). Thus, the 
cumulative total of AFVs for the purpose of the waiver request is 
34. If the covered person's LDVs have an average fuel consumption of 
500 gasoline gallon equivalents \3\ (gge)/year, the total amount of 
petroleum that the covered person must reduce in the first waiver 
year is 17,000 gge (34 AFVs and AFV requirements combined, 
multiplied by 500 gge).
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    \3\ ``Gasoline gallon equivalent'' equates the energy content, 
in British thermal units (BTUs), in a gallon of an alternative fuel 
to that of a gallon of gasoline.
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    In year 2, the fleet has retired 10 of the original required 
AFVs from its inventory, which leaves a total of 15 of the 25 AFVs 
originally counted in year 1. The fleet again plans to acquire 10 
LDVs, thus generating a requirement to acquire 9 AFVs in year 2. 
Since the average number of years that this fleet keeps an AFV is 4 
years, the 9 AFVs for which a waiver was granted in year 1 are 
included in the calculation of the year 2 required petroleum 
reduction. This results in a total of 33 AFVs (15 + 9 + 9) and a 
total petroleum reduction requirement of 16,500 gge for year 2 
(assuming the same average fuel consumption of 500 gge per vehicle).
    In year 3, the fleet has retired 10 more of the original 
required AFVs, leaving 5 in its inventory, and it is again required 
to acquire 9 AFVs. The calculation of the year 3 petroleum reduction 
includes the 9 AFVs required for each of years 1 and 2. Therefore, 
the total AFV count for year 3 is 32 (5 + 9 + 9 + 9), and the 
petroleum reduction requirement for year 3 is 16,000 gge (assuming 
the same average fuel consumption of 500 gge per vehicle).
    In year 4, the fleet has retired the last 5 of the original 
required AFVs and plans to acquire 10 LDVs, generating a requirement 
of 9 AFVs. A total of 36 AFVs are included in the calculation (9 + 9 
+ 9 + 9), and the petroleum reduction requirement for year 4 is 
18,000 gge (assuming the same average fuel consumption of 500 gge 
per vehicle).
    In year 5, the fleet retires the 9 LDVs that were acquired in 
lieu of AFVs under the first year's waiver (the fleet retires LDVs 
after 4 years). The fleet acquires 10 more LDVs, generating 9 AFV 
requirements. Therefore, the total AFV count for year 5 is 36 (9 + 9 
+ 9 + 9) and the total petroleum requirement for year 5 is 18,000 
gge (assuming the same average fuel consumption of 500 gge per 
vehicle).

The same approach is used to determine the reduction for a State 
entity, but the applicable AFV acquisition percentage (75 percent) in 
section 507(o) would be used.

C. Eligible Reductions in Petroleum Consumption

1. Light-Duty Vehicles
    Section 514(b) of the Act states that DOE shall grant a waiver of 
the AFV acquisition requirements on a showing that a fleet owned, 
operated, leased or otherwise controlled by a covered person or State 
entity will achieve a specified petroleum reduction. The term ``fleet'' 
is defined to include only covered LDVs. (42 U.S.C. 13211).) However, 
consistent with the petroleum fuel reduction goals of title V of the 
Act, DOE also proposed to include petroleum reductions in previously 
excluded LDVs listed in section 490.3 toward a State's or covered 
person's annual petroleum reduction target. This provision of the 
proposal was based on DOE's rulemaking authority under title V and 
section 644 of the DOE Organization Act (42 U.S.C. 7254). No comments 
were received with regard to this, and DOE in today's final rule 
permits covered persons and States to consider reductions in petroleum 
consumption from LDVs excluded for purposes of calculating a fleet 
requirement under 10 CFR 490.3.
2. Medium- and Heavy-Duty Vehicles
    DOE also proposed to exercise its rulemaking authority under title 
V and section 644 of the DOE Authorization Act to permit consideration 
of reductions in fuel consumption from vehicles with a gross vehicle 
weight rating (gvwr) greater than 8,500 lb, for the purpose of 
complying with a waiver. DOE received a comment from an industry 
association saying that adding medium- and heavy-duty vehicles was 
desirable, while another industry association argued that allowing 
consideration of petroleum reductions from larger vehicles reduces the 
momentum of replacing petroleum use in LDVs.
    DOE believes that because of limited availability of original 
equipment manufacturer (OEM) light-duty models for some alternative 
fuels, particularly gaseous fuels, flexibility provided through the 
consideration of medium- and heavy-duty vehicles will make the

[[Page 12961]]

alternative compliance option attractive to more fleets. This, in turn, 
is likely to lead to somewhat greater petroleum displacement and 
support of infrastructure for replacement fuels.
    For example, in model year 2007 OEM light-duty gaseous fuel 
offerings are currently limited to just one dedicated natural gas 
compact sedan. No propane LDVs currently are being offered by an OEM. 
There are, however, medium- and heavy-duty propane and natural gas OEM 
offerings and certified conversions from several manufacturers. 
Encouraging the use of gaseous fuel in medium- and heavy-duty vehicles 
potentially will also facilitate the use of gaseous fuel in the LDV 
fleet.
3. Nonroad Vehicles
    In the NOPR, DOE explained its intent to allow use of reductions in 
petroleum consumption from excluded vehicles listed in section 490.3 to 
achieve the requirement, but inclusion of nonroad vehicles was not 
specifically proposed by DOE. Several of the organizations that 
participated in DOE's public hearing asked to specifically include 
petroleum reductions attributable to nonroad vehicles.
    Five of the written comments urged DOE to allow the inclusion of 
nonroad vehicles. One fleet association stated that nonroad vehicles 
share infrastructure with AFVs and that consideration of nonroad 
vehicles would further promote replacement fuels. One commenter pointed 
out that nonroad vehicles can reduce much more petroleum over a 
vehicle's lifetime than a typical light-duty AFV in a utility fleet. 
Two other commenters stated that the expansion to nonroad vehicles 
would be consistent with the regulatory language in part 490 that 
permits States and covered persons to obtain credits using medium- and 
heavy-duty vehicles once LDV requirements are met.
    Two fuel provider groups were opposed to the consideration of 
nonroad vehicles. These commenters stated that inclusion of such 
vehicles would not promote increased use of replacement fuels in on-
road motor vehicles, as was the original intent of the statute.
    Limited consideration of nonroad vehicles presents an opportunity 
to reduce petroleum and provide States and covered persons additional 
compliance flexibility, while also contributing to the development of 
infrastructure for replacement fuels used by LDVs. In the final rule, 
DOE is permitting limited consideration of replacement fuels in nonroad 
vehicles towards petroleum reduction requirements.
    Section 490.804(b) of the final rule permits consideration of 
reductions in petroleum consumption of nonroad vehicles acquired during 
a waiver year in instances in which the refueling infrastructure 
established or upgraded during a waiver year that provides replacement 
fuel for nonroad vehicles also serves to increase the use of 
replacement fuels in a fleet's light-duty vehicles. For example, during 
a waiver year if a State or covered person adds new or upgrades 
existing refueling infrastructure for nonroad vehicles and shows DOE 
that existing or planned LDV acquisitions will also use the upgraded or 
new infrastructure, then the petroleum reductions from nonroad vehicles 
acquired as a result of those additions and upgrades may be used for 
meeting petroleum reduction requirements.
    Generally, DOE views petroleum reductions from nonroad vehicles as 
a supplemental way for a State or covered person to expand its use of 
replacement fuel in on-road vehicles, particularly its LDVs. DOE does 
not view replacement fuel use in nonroad vehicles as a complete or even 
substantial substitution for a State's or covered person's annual 
petroleum reduction in its on-road vehicles. As provided in section 
490.804(b)(2), DOE will recognize reductions attributable to nonroad 
vehicles in instances in which a State or covered person has taken 
reasonable steps to comply with the waiver requirement through 
reductions of petroleum in on-road motor vehicles.
4. Rollover of Excess Petroleum Reduction
    One fuel provider association and one fuel provider wrote comments 
supportive of language in the proposed rule that permits applying 
petroleum reductions achieved in excess of the requirement in one model 
year to the requirement in a later model year. One fuel association, 
however, commented that while agreeing with the provision, excess 
petroleum reduction amounts should not be tradable. It was not DOE's 
intention to make excess petroleum reductions tradable but rather to 
provide a fleet further flexibility under the waiver program. To 
clarify its intent, DOE has added language to the final rule stating 
that petroleum reduction gallons are not tradable.
    Section 490.804 in the final rule requires application by the State 
or covered person prior to receiving the benefit of rolling over 
petroleum reductions to satisfy annual requirements. DOE does not 
intend for a State's or covered person's entire petroleum reduction, or 
even a substantial amount of annual petroleum reduction, to be met by 
petroleum reduction rollovers alone. The rollover provision is intended 
to add compliance flexibility to States or covered persons, 
particularly those that may have difficulty meeting their annual 
requirements because of unusual circumstances or circumstances beyond 
their control. For example, a State or covered person asking for a 
substantial petroleum rollover would have to show DOE it was subject to 
technology failures, delivery delays by manufacturers, weather-related 
disasters, emergencies or other such unusual circumstances that led or 
may lead to the need for a substantial petroleum reduction rollover. 
Other reasons for using the petroleum reduction rollovers to meet a 
substantial percentage of annual petroleum reduction requirements will 
be considered on a case-by-case basis.

D. Waiver Applications

    Proposed section 490.803 set forth the minimum information that a 
State or covered person must provide DOE as part of a waiver 
application. A reasonable amount of information is needed for DOE to 
understand the calculation of an applicant's annual petroleum reduction 
target and the methods that will be used to reduce petroleum. A waiver 
application must include verifiable data that is sufficient to enable 
DOE to determine whether a State's or covered person's fleet will 
achieve the amount of petroleum reduction required for alternative 
compliance. Information required as proposed includes the model year 
for the waiver required; numbers of required AFVs existing in the fleet 
and number of acquisition requirements for the waiver year and previous 
waiver years; amount of petroleum and non-petroleum fuel, calculated in 
gges to be used in covered LDVs in the fleet for the waiver year 
including average fuel use per vehicle; and certification that Clean 
Air Act requirements are met.
    In addition, DOE proposed that an application must include a plan 
with sufficient information to demonstrate that planned actions are 
verifiable, involve a reduction in petroleum in the fleet's vehicles, 
and show a net petroleum reduction equal to the required annual 
petroleum reduction. Today's final rule adopts the proposed application 
requirements in Sec.  490.805.
    One fuel provider and one fleet association argued that a State or 
covered person applying for a waiver should not be required to include 
the amount of fuel used by all of the light-duty vehicles in the fleet 
because it is

[[Page 12962]]

overly burdensome and is not a statutory requirement. In response to 
these commenters, DOE provides in the final rule that States and 
covered persons need only report fuel used by ``covered light-duty 
vehicles.'' A State or covered person need only report fuel use in the 
vehicles that have been used to calculate the baseline amounts in 
waiver applications or in AFVs that the fleet acquired for meeting 
requirements under part 490 previous to the waiver. It should be noted, 
however, that if DOE needs to verify information or use its enforcement 
authority, DOE does have the authority to require a fleet to submit 
such information to obtain an overall perspective on the activities of 
the fleet related to compliance with subpart I.
    DOE also intended by its proposal that a plan provide for petroleum 
reduction in a State's or covered person's vehicles and not include 
incentives for third parties. A fleet association and a fuel provider 
both commented that in proposed section 490.803(d)(2), which would 
exclude consideration of third party incentives in a reduction plan, 
use of the phrase ``State's or covered person's own vehicles'' could be 
interpreted to preclude leased vehicles. DOE agrees with these 
commenters. Today's final rule adopts Sec.  490.804 to clarify the 
reductions of petroleum consumption that are eligible and ineligible 
for consideration under the waiver program.

E. Application Deadlines

    As proposed, waiver applications would be required to be submitted 
to DOE by March 31 in the model year prior to which a waiver is 
requested. One fleet association and two fuel provider associations 
stated that the proposed deadline was not sufficient to prepare a 
waiver request because typically OEMs do not announce availability of 
new model year vehicles until late summer. Without knowing what vehicle 
models will be available, States and covered persons cannot project 
fuel consumption and potential fuel savings. In response to this 
concern the final rule establishes a March 31 deadline for a State or 
covered person to register its intent to submit a waiver application to 
DOE. Fleets that need the new model information may submit their 
applications to DOE no later than July 31 prior to the model year for 
which a waiver is sought. If the waiver is not dependent on such OEM 
information, DOE requires the State or covered person to submit a 
preliminary intent to apply for a waiver by March 31 and its 
application for a waiver no later than June 30 prior to the model year 
for which it seeks a waiver.
    Given the timing of today's final rule DOE will consider 
registrations of intent to submit a waiver received before May 31, 
2007. This extension of the registration of intent deadline applies 
only to applications for MY 2008.

F. Use of Credits

    One fuel provider and one fuel provider association commented that 
the proposed language regarding the use of credits was too restrictive 
and would prevent use of subpart F credits to offset a shortfall in 
meeting the petroleum reduction required for a waiver. After carefully 
considering this issue, DOE has amended the wording in section 490.808 
of the final rule to require that a State or covered person ``provide 
documentation that shows a good faith effort to meet the 
requirements.'' DOE has determined that this language provides States 
and covered persons a reasonable bar for applying for credits to offset 
a petroleum reduction shortfall, while still promoting the goals of the 
program.

G. Reporting Requirement

    Consistent with section 514(c) of the Act, DOE proposed a reporting 
requirement by December 31 following a model year for which a waiver is 
granted. A State or covered person would meet this requirement by 
providing DOE a statement certifying the number of petroleum gallons 
and alternative fuel in gges used by its covered light-duty vehicles 
and the amount of petroleum reduced in the waiver year due to 
alternative compliance. In the final rule, DOE eliminates the proposed 
requirement to report ``a baseline quantity of the petroleum motor fuel 
reduction of the State or covered person during the following model 
year, if the State or covered person intends to request alternative 
compliance for that model year.'' DOE determined that this information 
would be redundant with previously collected information. No comments 
were received on the other aspects of the proposed reporting 
requirements.

H. Sanctions for Violations

    The proposed sanctions for violating a granted waiver reflected the 
statutory language of section 514(d) of the Act that states that DOE 
shall revoke the waiver of a State or covered person that fails to 
comply with the alternative compliance petroleum reduction or reporting 
requirements. DOE may also impose a civil penalty for any such 
violation (42 U.S.C. 13264(d)). No comments were received on this, and 
no changes were made in corresponding provisions in the final rule 
regarding sanctions.

I. Exemptions

    DOE proposed that it would not grant exemptions to a State under 
Sec.  490.204 or to a covered person under Sec.  490.308 if the State 
or covered person has been granted an alternative compliance waiver. 
Exemptions are based upon lack of alternative fuels and AFVs. The 
waivers provide sufficient flexibility by allowing States and covered 
persons to consider a wider range of options for meeting their 
petroleum reduction requirements. If a State or covered person is 
granted a waiver, the flexibility provided should alleviate any need 
for an exemption. DOE did receive a supportive comment on this issue 
from one industry association but no comments from any others. DOE is 
not making a change in its position on exemptions in the final rule.

J. Record Retention

    Under proposed Sec.  490.809, a State or covered person would be 
required to keep all documents pertaining to its application and 
compliance with a waiver for a minimum of three years following the end 
of the waiver year. No comments were received on this section and the 
proposed record retention provision is adopted in the final rule Sec.  
490.810.

K. Other Comments

    DOE focused its response to comments on those that are directly 
relevant to the proposed rule. Other comments included areas that may 
be covered in future guidance such as a request that DOE standardize 
inputs and outputs to help with the application process. Yet other 
comments were clearly outside the scope of this rule and/or DOE's 
authority, including providing extra credits for light-duty zero 
emission vehicles; requiring OEMs to make more alternative fuel vehicle 
products available; and applying petroleum reduction in lieu of the 
vehicle acquisition requirements in part 490.

IV. Regulatory Review

A. Executive Order 12866

    Today's final rule has been determined to not be a significant 
regulatory action under Executive Order 12866, ``Regulatory Planning 
and Review,'' 58 FR 51735 (October 4, 1993). Accordingly, this action 
was not subject to review under that Executive Order by the Office of 
Information and Regulatory

[[Page 12963]]

Affairs of the Office of Management and Budget.

B. National Environmental Policy Act

    DOE has determined that this final rule is covered under the 
Categorical Exclusion found in the DOE's National Environmental Policy 
Act regulations at paragraph A.5 of Appendix A to subpart D, 10 CFR 
part 1021, which applies to rulemaking that amends an existing rule or 
regulation which does not change the environmental effect of the rule 
or regulation being amended. Under the final rule, a State entity or 
alternative fuel provider requesting an alternative compliance waiver 
must show that in lieu of acquiring AFVs for its covered light-duty 
vehicle fleet, it would use alternative fuel and/or other replacement 
fuels in various types of motor vehicles to reduce petroleum fuel 
consumption by an amount that equals 100 percent alternative fuel use 
in the fleet's AFVs, including AFVs that would be required in waiver 
years. The final rule, as authorized by the statute, grants the waiver 
applicant greater compliance flexibility in exchange for achieving the 
maximum level of petroleum reduction that would occur if the State or 
covered person were to comply with the Act's AFV acquisition 
requirements. Because the amount of petroleum displaced would be the 
same, the final rule would not change the environmental effect of 
compliance with part 490. Accordingly, neither an environmental 
assessment nor an environmental impact statement is required.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process (68 FR 7990). DOE has made its 
procedures and policies available on the Office of General Counsel's 
Web site: https://www.gc.doe.gov.
    DOE has reviewed today's final rule under the provisions of the 
Regulatory Flexibility Act and the procedures and policies published on 
February 19, 2003. The requirements in 10 CFR part 490 apply only to 
alternative fuel providers with fleets containing at least 50 LDVs (20 
of which are centrally fueled or capable of being centrally fueled) and 
to like-size State fleets in metropolitan statistical areas with a 
population of more than 250,000. The owners and operators of fleets of 
this size are not small entities. In addition, the final rule 
establishes optional procedures for State entities and covered persons 
that wish to receive a waiver from otherwise applicable AFV acquisition 
requirements. Alternative compliance does not impose any additional 
burdens on the entities subject to sections 501 and 507(o) of the 
Energy Policy Act of 1992. On the basis of the foregoing, DOE certifies 
that this final rule will not have a significant economic impact on a 
substantial number of small entities. Accordingly, DOE has not prepared 
a regulatory flexibility analysis for this rulemaking. DOE's 
certification and supporting statement of factual basis will be 
provided to the Chief Counsel for Advocacy of the Small Business 
Administration pursuant to 5 U.S.C. 605(b).

D. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) 
and the procedures implementing that Act, 5 CFR 1320.1 et seq., a 
person is not required to respond to a collection of information unless 
it displays a currently valid OMB control number. Section 490.805 
(``Application for wavier''), section 490.807 (``Reporting 
requirement''), and Sec.  490.810 (Record retention) contain 
information collection requirements. DOE did not receive any comments 
on the information collection requirements of this final rule.
    OMB Control Number 1910-5101 is assigned to the alternative fuel 
transportation program.

E. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally 
requires Federal agencies to examine closely the impacts of regulatory 
actions on State, local, and tribal governments. Subsection 101(5) of 
title I of that law defines a Federal intergovernmental mandate to 
include any regulation that would impose upon State, local, or tribal 
governments an enforceable duty, except a condition of Federal 
assistance or a duty arising from participating in a voluntary Federal 
program. Title II of that law requires each Federal agency to assess 
the effects of Federal regulatory actions on State, local, and tribal 
governments, in the aggregate, or to the private sector, other than to 
the extent such actions merely incorporate requirements specifically 
set forth in a statute. Section 202 of that title requires a Federal 
agency to perform a detailed assessment of the anticipated costs and 
benefits of any rule that includes a Federal mandate which may result 
in costs to State, local, or tribal governments, or to the private 
sector, of $100 million or more. Section 204 of that title requires 
each agency that proposes a rule containing a significant Federal 
intergovernmental mandate to develop an effective process for obtaining 
meaningful and timely input from elected officers of State, local, and 
tribal governments.
    This final rule provides an alternative compliance option for 
States and alternative fuel providers subject to AFV acquisition 
requirements in 10 CFR part 490. The final rule will not result in the 
expenditure by State, local, and tribal governments in the aggregate, 
or by the private sector, of $100 million or more in any one year. 
Accordingly, no assessment or analysis is required under the Unfunded 
Mandates Reform Act of 1995.

F. Treasury and General Government Appropriations Act, 1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any proposed rule that may affect family 
well being. The final rule will not impact the autonomy or integrity of 
the family as an institution. Accordingly, DOE has concluded that it is 
not necessary to prepare a Family Policymaking Assessment.

G. Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have Federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. DOE has examined this final rule and has 
determined that it will not preempt State law and will not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

[[Page 12964]]

H. 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. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires Executive 
agencies to review regulations in light of applicable standards in 
section 3(a) and section 3(b) to determine whether they are met or it 
is unreasonable to meet one or more of them. DOE has completed the 
required review and determined that, to the extent permitted by law, 
the final rule meets the relevant standards of Executive Order 12988.

I. Treasury and General Government Appropriations Act, 2001

    The Treasury and General Government Appropriations Act, 2001 (44 
U.S.C. 3516 note) provides for agencies to review most disseminations 
of information to the public under guidelines established by each 
agency pursuant to general guidelines issued by the Office of 
Management and Budget (OMB).
    OMB's guidelines were published at 67 FR 8452 (February 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). 
DOE has reviewed today's final rule under the OMB and DOE guidelines 
and has concluded that it is consistent with applicable policies in 
those guidelines.

J. Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001) requires Federal agencies to prepare and submit to the 
OMB, a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgated or is expected to lead to promulgation of a 
final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use. Today's final 
regulatory action will not have a significant adverse effect on the 
supply, distribution, or use of energy and is therefore not a 
significant energy action. Accordingly, DOE has not prepared a 
Statement of Energy Effects.

K. Congressional Notification

    As required by 5 U.S.C. 801, DOE will submit to Congress a report 
regarding the issuance of today's final rule prior to the effective 
date set forth at the outset of this notice. 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).

V. Approval by the Office of Secretary

    The Secretary of Energy has approved the issuance of this final 
rule.

List of Subjects in 10 CFR Part 490

    Energy, Energy conservation, Fuel, Motor vehicles, Petroleum, and 
Recordkeeping and reporting requirements.

    Issued in Washington, DC, on March 12, 2007.
Alexander A. Karsner,
Assistant Secretary, Energy Efficiency and Renewable Energy.

0
For the reasons set forth in the preamble, the Department of Energy is 
amending chapter II of title 10 of the Code of Federal Regulations as 
set forth below:

PART 490--ALTERNATIVE FUEL TRANSPORTATION PROGRAM

0
1. The authority citation for part 490 is revised to read as follows:

    Authority: 42 U.S.C. 7191 et seq.; 42 U.S.C. 13201, 13211, 
13220, 13251 et seq.

0
2. Section 490.600 is revised to read as follows:


Sec.  490.600  Purpose and scope.

    This subpart sets forth the rules applicable to investigations 
under titles III, IV, V, and VI of the Act and to enforcement of 
sections 501, 503(b), 507, 508, or 514 of the Act, or any regulation 
issued under such sections.

0
3. Section 490.603 is revised to read as follows:


Sec.  490.603  Prohibited acts.

    It is unlawful for any person to violate any provision of sections 
501, 503(b), 507, 514 of the Act, or any regulations issued under such 
sections.

0
4. A new subpart I is added to read as follows:
Subpart I--Alternative Compliance
Sec.
490.801 Purpose and scope.
490.802 Eligibility for alternative compliance waiver.
490.803 Waiver requirements.
490.804 Eligible reductions in petroleum consumption.
490.805 Application for waiver.
490.806 Action on an application for waiver.
490.807 Reporting requirement.
490.808 Use of credits to offset petroleum reduction shortfall.
490.809 Violations.
490.810 Record retention.

Subpart I--Alternative Compliance


Sec.  490.801  Purpose and scope.

    This subpart implements section 514 of the Act (42 U.S.C. 13263a) 
which permits States and alternative fuel providers to petition for 
alternative compliance waivers from the alternative fueled vehicle 
acquisition requirements in subparts C and D of this part, 
respectively.


Sec.  490.802  Eligibility for alternative compliance waiver.

    Any State subject to subpart C of this part and any covered person 
subject to subpart D of this part may apply to DOE for a waiver from 
the applicable alternative fueled vehicle acquisition requirements.


Sec.  490.803  Waiver requirements.

    DOE grants a State or covered person a waiver:
    (a) If DOE determines that the State or covered person will achieve 
a reduction in petroleum consumption, through eligible reductions as 
specified in Sec.  490.804 of this subpart, equal to the amount of 
alternative fuel used if the following vehicles were operated 100 
percent of the time on alternative fuel during the model year for which 
a waiver is requested:

[[Page 12965]]

    (1) Previously required alternative fueled vehicles in the fleet's 
inventory at the start of the model year for which a waiver is 
requested;
    (2) Alternative fueled vehicles that the State or covered person 
would have been required to acquire in the model year for which a 
waiver is requested, and in previous model years in which a waiver was 
granted, absent any waivers;
    (b) The State or covered person is in compliance with all 
applicable vehicle emission standards established by the Administrator 
of the Environmental Protection Agency under the Clean Air Act (42 
U.S.C. 7401 et seq.); and
    (c) The State or covered person is in compliance with all 
applicable requirements of this subpart.


Sec.  490.804  Eligible reductions in petroleum consumption.

    (a) Motor vehicles. Demonstrated reductions in petroleum 
consumption during the model year for which a waiver is requested that 
are attributable to motor vehicles owned, operated, leased or otherwise 
under the control of a State or covered person are applicable towards 
the petroleum fuel reduction required in Sec.  490.803(a) of this 
subpart.
    (b) Qualified nonroad vehicles. Demonstrated reductions in 
petroleum consumption during the model year for which a waiver is 
requested that are attributable to nonroad vehicles owned, operated, 
leased or otherwise under the control of a State or covered person 
acquired during waiver years are applicable towards the petroleum fuel 
reduction required in Sec.  490.803(a) of this subpart:
    (1) If acquisition of the nonroad vehicles leads directly to the 
establishment or upgrading of refueling or recharging infrastructure 
during a waiver year that would also allow for increased petroleum 
replacement by serving the fleet's on-road light-duty vehicles; and
    (2) To the extent that additional reductions attributable to motor 
vehicles are not reasonably available.
    (c) Rollover of excess petroleum reductions. (1) Petroleum 
reductions achieved by a fleet in excess of the amount required for 
alternative compliance in a previous model year are applicable towards 
the petroleum fuel reduction requirements for that fleet under Sec.  
490.803(a) of this subpart upon approval by DOE.
    (2) Requests for approval to apply rollover reductions to future 
model years for which a waiver is requested must be made to DOE in 
writing as part of the reporting requirement specified in Sec.  490.807 
of this subpart.
    (3) DOE will apply approved rollover reductions to a model year for 
which a waiver was granted but the required reduction in petroleum use 
was not achieved only to the extent that additional reductions 
attributable to motor vehicles were not reasonably available.
    (4) Following receipt of a request to roll over excess petroleum 
reduction, DOE notifies the State or covered person of the amount of 
petroleum reduction that may be applied to a future model year's 
petroleum reduction requirement.
    (5) Excess petroleum reductions are not tradable.
    (d) Ineligible reductions. The petroleum reduction plan required by 
paragraph (c)(4) of this section must not include reductions in 
petroleum attributable to incentives for third parties to reduce their 
petroleum use, petroleum reductions that are not transportation-
related, or petroleum reductions attributable to non-qualified nonroad 
vehicles.


Sec.  490.805  Application for waiver.

    (a) A State or covered person must apply for a waiver applicable to 
an entire fleet for a full model year in accordance with the deadlines 
specified in paragraph (b) of this section. DOE will not grant a waiver 
for less than an entire fleet or less than a full model year.
    (b)(1) A State or covered person must register a preliminary intent 
to apply for a waiver by March 31 prior to the model year for which a 
waiver is sought.
    (2) If a complete waiver application is dependent on information 
regarding the availability of motor vehicle models to be released by 
motor vehicle manufacturers, the waiver application must be received by 
DOE no later than July 31 prior to the model year for which a waiver is 
sought.
    (3) If a complete waiver application is not dependent on 
information regarding the availability of motor vehicle models to be 
released by motor vehicle manufacturers, the waiver application must be 
received by DOE no later than June 30 prior to the model year for which 
a waiver is sought.
    (c) A waiver application must include verifiable data that is 
sufficient to enable DOE to determine whether the State or covered 
person is likely to achieve the amount of petroleum reduction required 
for alternative compliance and whether the fleet is in compliance with 
Clean Air Act vehicle emission standards. At a minimum, the State 
entity or covered person must provide DOE with the following 
information:
    (1) The model year for which the waiver is requested;
    (2) The total number of required alternative fueled vehicle 
acquisitions in the fleet including:
    (i) The number of alternative fueled vehicle acquisitions that the 
State or covered person would, without a waiver, be required to acquire 
during the model year for which the waiver is requested;
    (ii) The number of alternative fueled vehicle acquisitions that the 
State or covered person would, without a waiver, have been required to 
acquire during the model years for which waivers were previously 
granted;
    (iii) The number of required alternative fueled vehicles existing 
in the fleet that were acquired during years in which no waiver was in 
force; and excluding
    (iv) Any required alternative fuel vehicles acquired during a 
waiver or non-waiver year or light-duty vehicles acquired in lieu of 
alternative fuels vehicles during a waiver year that are to be retired 
before the beginning of the waiver year;
    (3) The anticipated amount of gasoline and diesel and alternative 
fuel (calculated in gasoline gallon equivalents (gge)) to be used by 
the covered light-duty vehicles in the fleet for the waiver year 
including an estimate of per vehicle average fuel use in these 
vehicles;
    (4) A petroleum reduction plan as described in paragraph (d) of 
this section; and
    (5) Documents, or a certification by a responsible official of the 
State or covered person, demonstrating that the fleet is in compliance 
with all applicable vehicle emission standards established by the 
Administrator of the Environmental Protection Agency under the Clean 
Air Act.
    (d) The petroleum reduction plan required by paragraph (c)(4) of 
this section must contain a documented explanation as to how the State 
or covered person will meet the reduction in petroleum consumption 
required by Sec.  490.803(a) of this subpart.
    (1) The planned actions must:
    (i) Be verifiable;
    (ii) Demonstrate a reduction in petroleum use by motor vehicles or 
qualified nonroad vehicles owned, operated, leased or otherwise 
controlled by the State or covered person;
    (iii) Provide for a net reduction in petroleum consumption as 
specified in Sec.  490.803(a) of this subpart.
    (2) The documentation for the plan may include, but is not limited 
to, published data on fuel efficiency, Government data, letters from

[[Page 12966]]

manufacturers, and data on actual usage.
    (e) A State or covered person must send its report, and two copies, 
to DOE on official company or agency letterhead, and the report must be 
signed by a responsible company or agency official. Send to: Regulatory 
Manager, Alternative Fuel Transportation Program, FreedomCAR and 
Vehicle Technologies Program, EE-2G/Forrestal Building, U.S. Department 
of Energy, 1000 Independence Avenue, SW., Washington, DC 20585.


Sec.  490.806  Action on an application for waiver.

    (a) DOE grants or denies a complete waiver application within 45 
business days after receipt of a complete application.
    (b) If DOE determines that an application is not complete in that 
sufficient information is not provided for DOE to make a determination, 
DOE notifies the State or covered person of the information that must 
be submitted to complete the application.
    (c) If DOE denies a waiver, and the State or covered person wishes 
to exhaust administrative remedies, the State or covered person must 
appeal within 30 days of the date of the determination, pursuant to 10 
CFR part 1003, subpart C, to the Office of Hearings and Appeals, U.S. 
Department of Energy, 1000 Independence Ave., SW., Washington, DC 
20585. DOE's determination shall be stayed during the pendency of an 
appeal under this paragraph.


Sec.  490.807  Reporting requirement.

    (a) By December 31 following a model year for which an alternative 
compliance waiver is granted, a State or covered person must submit a 
report to DOE that includes:
    (1) A statement certifying:
    (i) The total number of petroleum gallons and/or alternative fuel 
gge used by the fleet during the waiver year in its covered light-duty 
vehicles; and
    (ii) The amount of petroleum motor fuel reduced by the fleet in the 
waiver year through alternative compliance.
    (b) A State or covered person must send its report to DOE on 
official company or agency letterhead, and the report must be signed by 
a responsible company or agency official. Send to: Regulatory Manager, 
Alternative Fuel Transportation Program, FreedomCAR and Vehicle 
Technologies Program, EE-2G/Forrestal Building, U.S. Department of 
Energy, 1000 Independence Avenue, SW., Washington, DC 20585.


Sec.  490.808  Use of credits to offset petroleum reduction shortfall.

    (a) If a State or covered person granted a waiver under this 
subpart wants to use alternative fueled vehicle credits purchased or 
earned pursuant to subpart F of this part to offset any shortfall in 
meeting the petroleum reduction required under Sec.  490.803(a) of this 
subpart, it must make a written request to DOE.
    (1) The State or covered person must provide details about the 
particular circumstances that led to the shortfall and provide 
documentation that shows a good faith effort to meet the requirements.
    (2) DOE may request that a State or covered person supply 
additional information about the fleet and its operations if DOE deems 
such information necessary for a decision on the request.
    (b) If DOE grants the request, it notifies the State or covered 
person of the credit amount required to offset the shortfall. DOE 
derives the credit amount using the fleet's fuel use per vehicle data.
    (c) DOE gives the State entity or covered person until March 31 
following the model year for which the waiver is granted, to acquire 
the number of credits required for compliance with this subpart.


Sec.  490.809  Violations.

    If a State or covered person that receives a waiver under this 
subpart fails to comply with the petroleum motor fuel reduction or 
reporting requirements of this subpart, DOE will revoke the waiver. DOE 
may impose on the State or covered person a penalty under subpart G of 
this part.


Sec.  490.810  Record retention.

    A State or covered person that receives a waiver under this subpart 
must retain documentation pertaining to its waiver application and 
alternative compliance, including petroleum fuel reduction by its 
fleet, for a period of three years following the model year for which 
the waiver is granted.

[FR Doc. E7-5021 Filed 3-19-07; 8:45 am]
BILLING CODE 6450-01-P