Alternative Fuel Transportation Program; Private and Local Government Fleet Determination, 13729-13740 [E8-5143]

Agencies

• DEPARTMENT OF ENERGY

[Federal Register Volume 73, Number 51 (Friday, March 14, 2008)]
[Rules and Regulations]
[Pages 13729-13740]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-5143]



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Federal Register / Vol. 73, No. 51 / Friday, March 14, 2008 / Rules 
and Regulations

[[Page 13729]]



DEPARTMENT OF ENERGY

10 CFR Part 490

RIN 1904-AB69


Alternative Fuel Transportation Program; Private and Local 
Government Fleet Determination

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

ACTION: Final determination.

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

SUMMARY: Pursuant to the Energy Policy Act of 1992 (EPAct 1992), the 
Department of Energy (DOE) has determined that a regulatory requirement 
for the owners and operators of certain private and local government 
fleets to acquire alternative fueled vehicles (AFVs) is not necessary 
to achieve the recently modified EPAct 1992 Replacement Fuel Goal. DOE 
therefore has determined that it cannot issue a requirement for certain 
private and local government fleets to acquire alternative fueled 
vehicles.

DATES: Effective Date: This determination is effective April 1, 2008.

FOR FURTHER INFORMATION CONTACT: For information concerning this final 
determination, 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.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Background
III. Discussion of Public Comments
    A. Comments on Proposed Determination
    B. Comments on Analysis for the Potential Impact of the Rule
    C. Comments on What Fleets and Other Organizations Are Doing To 
Reduce Petroleum Use
    D. Comments Providing Suggestions for DOE, Other Agencies, or 
Congress
IV. Definitions and Statutory Requirements
    A. Definitions
    B. Key Statutory Requirements
    C. Other Relevant Requirements
    D. No Fuel Use Requirement Authority
V. Analysis for Private and Local Fleets Rule Determination
    A. Achievability of the Replacement Fuel Goal
    B. Potential Contribution of a Private and Local Government 
Fleet Requirement to the Production Capacity of Alternative Fuel
VI. Determination
VII. Regulatory Review
VIII. Approval By the Office of the Secretary

I. Introduction

    Under the Energy Policy Act of 1992 (EPAct 1992; Pub. L. 102-486), 
DOE is required to determine if a requirement for certain private and 
local government vehicle fleets to acquire alternative fueled vehicles 
(AFVs) is necessary, as specified in EPAct 1992. (42 U.S.C. 13257(e)) 
If DOE determines that the Private and Local Government Fleet 
Requirement is ``necessary,'' then DOE must issue regulations requiring 
certain fleets to acquire light-duty AFVs annually. (42 U.S.C. 
13257(g)) Fleets subject to such a mandate would include all fleets 
that have at least 50 light duty motor vehicles, and would exclude 
Federal fleets, State fleets, and fleets covered under the Alternative 
Fuel Provider mandate. (42 U.S.C. 13257(g)(1)) If DOE determines that 
the Private and Local Government Fleet Requirement is not necessary 
then DOE must publish such determination in the Federal Register as a 
final agency action, including an explanation of the findings on which 
such a determination is made and the basis for the determination. (42 
U.S.C. 13257(f))
    Relevant to the evaluation of a Private and Local Government Fleet 
Requirement is the replacement fuel goal established in section 502(b) 
of EPAct 1992. (42 U.S.C. 13252(b)) Section 502(b)(2) establishes goals 
of producing sufficient replacement fuels to replace:

    at least ten percent by the year 2000, and
    at least thirty percent by the year 2010

of the projected consumption of motor fuel in the United States for 
each such year, with at least half of such replacement fuels being 
domestic fuels. (Replacement Fuel Goal; 42 U.S.C. 13252(b)(2)) Under 
section 504(b) of EPAct 1992, if DOE determines that the section 502 
goals are unachievable, DOE must establish achievable goals. (42 U.S.C. 
13254(b))
    In determining whether to establish a Private and Local Government 
Fleet Requirement, DOE is directed to determine if such a requirement 
is ``necessary.'' (42 U.S.C. 13257(e)(1)) The ``necessity'' 
determination is a two part test. First, DOE must determine if the 
Replacement Fuel Goal established under section 502, or as modified 
under section 504 of EPAct 1992, is achievable absent a Private and 
Local Government Fleet Requirement. (42 U.S.C. 13257(e)(1)(A)) Next, 
the ``necessity'' determination requires DOE to determine if such a 
goal is practicable and actually achievable through implementation of a 
Private and Local Government Fleet Requirement in combination with 
voluntary means and other relevant programs. (42 U.S.C. 13257(e)(1)(B)) 
If DOE determines that the Replacement Fuel Goal is not achievable 
absent the Private and Local Fleet Requirement, and that such goal 
would be practicable and actually achievable through implementation of 
such a requirement, DOE must then establish the Private and Local Fleet 
Requirement under section 507(g). (42 U.S.C. 13257(e)(1)) If either of 
these findings cannot be made, then DOE is precluded from establishing 
the Private and Local Fleet Requirement under section 507(g).
    Under the Private and Local Government Fleet provisions, if DOE 
initiates a rulemaking under section 507(g), DOE is again directed to 
determine whether to modify the Replacement Fuel Goal. (42 U.S.C. 
13257(e)(2)) If the Replacement Fuel Goal is not achievable, DOE has to 
set a Replacement Fuel Goal that is achievable. (42 U.S.C. 13257(e)(2))
    In a previous rulemaking, DOE has already determined that the 
original Replacement Fuel Goal of 30 percent in 2010 is not achievable 
and a modified Replacement Fuel Goal of 30 percent by 2030 was 
published March 15, 2007. 72 FR 12042. The purpose of today's document 
is to determine whether or

[[Page 13730]]

not the Private and Local Government Fleet Requirement is necessary to 
achieve the modified Replacement Fuel Goal.
    DOE has determined that it is not ``necessary'' to promulgate a 
regulation requiring private and local government fleets to acquire 
AFVs. DOE has determined that establishment of a Private and Local 
Government Fleet Requirement is not required for achievement of the 
Replacement Fuel Goal of 30 percent of U.S. motor fuels by 2030, as 
modified by DOE in March 2007. 72 FR 12041. As discussed below, this 
determination is based on DOE's analysis in revising the Replacement 
Fuel Goal, under which DOE demonstrated a pathway to achieve the 
modified Replacement Fuel Goal without establishment of a Private and 
Local Government Fleet Requirement. 72 FR 12041. Additionally, DOE also 
provides an analysis demonstrating that were a Private and Local 
Government Fleet Requirement established, the number of fleets 
potentially covered by such a requirement, the number of AFVs likely to 
be acquired, and the amount of U.S. motor fuel likely displaced would 
not make an appreciable contribution towards achieving the modified 
Replacement Fuel Goal.
    Today's document implements the March 6, 2006, order of the U.S. 
District Court for Northern District of California to prepare and 
publish a determination on the Private and Local Government Fleets 
rule. See Center for Biological Diversity v. U.S. Department of Energy 
et al., C 05-01526 WHA (N.D. Cal. 2006) (Order Re Timing of Relief).

II. Background

    On January 2, 2002, EarthJustice, on behalf of the Center for 
Biological Diversity, Bluewater Network, and Sierra Club, filed a 
lawsuit in the U.S. District Court for the Northern District of 
California that, in part, sought to compel DOE to ``issue a proposed 
rule and final determination on the necessity of a private and 
municipal fleet program.'' (Plaintiffs Complaint for Injunctive and 
Declaratory Relief, pg 55, paragraph 171, dated January 2, 2002). On 
July 26, 2002, the Court granted plaintiffs' motion for summary 
judgment on the issue of whether DOE had missed the deadline set forth 
in EPAct 1992 section 507(e) for completing the rulemaking. See Center 
for Biological Diversity v. Abraham, et al., (218 F.Supp.2d 1143 (N.D. 
Cal., 2002)). On September 27, 2002, the District Court ordered DOE to 
complete its proposed rulemaking by January 27, 2003, and its final 
rule by November 27, 2003.See Center for Biological Diversity v. 
Abraham, et al., No. C 02-00027 (N.D. Cal., 2002). On January 17, 2003, 
the Court subsequently granted a 30-day extension (to February 26, 
2003) of the deadline for DOE to complete work on the notice of 
proposed rulemaking. (Center for Biological Diversity v. Abraham, et 
al., No. C 02-00027 (N.D. Cal., 2002), Order No. 55 (Entered 01/23/
2003)).
    On March 4, 2003, as required by section 507 of EPAct 1992 and in 
accordance with the Court order under Center for Biological Diversity 
v. Abraham, et al., DOE issued a notice of a proposed determination 
regarding the Private and Local Fleet Requirement, in which DOE 
tentatively determined that a requirement was not ``necessary,'' and 
therefore should not be imposed. 68 FR 10320. DOE finalized the 
proposed determination that a regulation requiring private and local 
government fleets to acquire AFVs is not ``necessary'' and, therefore, 
cannot be promulgated, which was published January 29, 2004. 69 FR 
4219. The necessity determination was based on DOE's findings that a 
private and local government fleet vehicle acquisition mandate would 
not appreciably increase the percentage of alternative fuel or 
replacement fuel used in motor vehicles in the United States and thus 
would make no more than a negligible contribution to the achievement of 
EPAct 1992's existing 2010 Replacement Fuel Goal of 30 percent, or of a 
revised Replacement Fuel Goal were one adopted.
    Subsequent to the publication of the January 29, 2004, final rule, 
DOE was sued in Federal court by the Center for Biological Diversity 
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. See Center for Biological Diversity v. 
U.S. Department of Energy et al., 419 F.Supp. 2d 1166 (N.D. Cal 2006). 
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 fleet determination. See Center for Biological 
Diversity v. U.S. Department of Energy et al., C 05-01526 WHA (N.D. 
Cal. 2006) (Order Re Timing of Relief).
    On September 19, 2006, DOE published a notice announcing its 
proposed determination that the EPAct 1992 Replacement Fuel Goal of 30 
percent by 2010 was not achievable and announced its proposal to extend 
the time for achieving the 30 percent replacement fuel production 
capacity goal to 2030. 71 FR 54771. In that notice, DOE evaluated four 
scenarios that identified projected replacement fuel capacities of 8.65 
percent, 17.84 percent, 35.25 percent, and 47.06 percent, by 2030. 
(Updated analyses conducted for the final rule resulted in the first 
and third of these becoming 7.38 percent and 33.13 percent, 
respectively.) These projections reflected considerations of numerous 
variables including oil prices, technological breakthroughs, and market 
acceptance. The modified goal proposed by DOE fell in the mid-range 
among these scenarios.
    On January 23, 2007, the President, in his State of the Union 
Address, proposed replacing 20 percent of the projected gasoline usage 
in 10 years (``Twenty in Ten'' initiative). The first element was 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 
asked Congress to give the Administration authority to reform the fuel 
efficiency standards for passenger cars, which could save another 5 
percent of U.S. projected gasoline usage in 2017.
    On March 15, 2007, DOE published a final rule for the Replacement 
Fuel Goal. 72 FR 12041. In the final rule, DOE determined 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 was not achievable. This determination was 
based on a similar evaluation of the projected U.S. production capacity 
of replacement fuels as was presented in the notice of proposed 
rulemaking. The Replacement Fuel Goal final rule extended the 30 
percent Replacement Fuel Goal out to 2030 based on an analysis similar 
to that presented in the notice of proposed rulemaking. The Replacement 
Fuel Goal final rule complied 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))
    On September 14, 2007, DOE published a proposed determination in 
which DOE preliminarily determined that a Private and Local Government 
Fleet Rule was not necessary to meet the revised Replacement Fuel Goal. 
72 FR

[[Page 13731]]

52496. DOE requested comment on the proposed determination and held a 
public meeting. The comments received are discussed below.
    Following publication of the proposed notice of a determination, 
and partially in response to the President's Twenty in Ten initiative, 
Congress passed and on December 19, 2007, President Bush signed into 
law the Energy Independence and Security Act of 2007 (Pub. L. 110-140; 
EISA 2007). The most significant elements of EISA 2007 in the context 
of the EPAct 1992 fleet programs follow the framework of Twenty in Ten, 
by calling for greater use of non-petroleum fuels and increases in 
light-duty vehicle fuel economy. Specifically, EISA 2007 calls for:
     An increase in the Renewable Fuel Standard required under 
Clean Air Act to 36 billion gallons per year by 2022 (42 U.S.C. 
7545(o)(2));
     An increase in Corporate Average Fuel Economy (CAFE) to 35 
miles per gallon by 2020 (42 U.S.C. 32902(b));
     Extending CAFE credits for flexible fuel vehicle 
manufacturing through 2019 (fully through 2014, and ramping down in 
amount of credit through 2019);
     Federal fleets to reduce petroleum consumption, increase 
alternative fuel use, and install renewable fuel infrastructure; and
     The inclusion of certain vehicle types and activities 
(e.g., hybrids, neighborhood electric vehicles, alternative fuel 
refueling infrastructure, and investments in technology development) to 
the list of vehicles and activities that can qualify for acquisition 
credit for certain EPAct fleets.
    Each of these elements, but in particular the significant expansion 
of the Renewable Fuel Standard and the revised CAFE requirements, will 
greatly increase the achievability of the revised Replacement Fuel 
Goal, thus strengthening DOE's preliminary determination that a Private 
and Local Government Fleet Rule would not be necessary to meet the 
revised Replacement Fuel Goal. For this reason, DOE concluded that the 
provisions of EISA 2007 did not materially affect the analysis or 
conclusions described in the September 2007 NOPR or in this final 
determination.

III. Discussion of Public Comments

    In response to DOE's September 2007 NOPR, four statements were 
provided at the public hearing, and twelve written comments were 
submitted. The following organizations provided statements at the 
hearing: American Automotive Leasing Association (AALA), Donlen 
Corporation, the National Association of Fleet Administrators (NAFA), 
and PHH/Arval. AALA; Associated Builders and Contractors, Inc.; the 
Automotive Fleet and Leasing Association (AFLA); Automotive Resources 
International (ARI); General Electric; LeasePlan USA; Mohawk 
Industries, Inc.; Natural Gas Vehicle America (NGVAmerica); PHH Arval; 
ServiceMaster; Small Business and Entrepreneurship Council; and Wheels, 
Inc. submitted written statements. It should be noted that the Mohawk 
Industries, Inc. comments were submitted three days after the deadline. 
While DOE chose to review Mohawk's comments, they were in line with 
virtually all the other comments submitted, and therefore did not 
materially impact DOE's decision in this final determination.
    All statements and comments submitted agreed with the Department's 
preliminary determination that a Private and Local Government Fleet 
Requirement is not ``necessary'' and that a fleet rule is not to be 
promulgated. It should be noted, however, that six of the written 
submissions appeared to largely be form letters with slight variations, 
based upon the rationale provided by AALA. These included: AFLA; 
LeasePlan USA; Mohawk Industries, Inc; PHH/Arval; ServiceMaster; and 
Wheels, Inc.

A. Comments on Proposed Determination

    In general, all of the comments received, both through the public 
meeting and the comment period, supported DOE's proposed determination 
not to promulgate a Private and Local Government Fleet Rule. All but 
one commenter agreed that a Private and Local Government Fleet Rule was 
not necessary to meet the Replacement Fuel Goal (as modified to 30 
percent by 2030, 72 FR 12041), and that this goal was achievable. One 
commenter, NGVAmerica, did not comment directly on whether such a rule 
would be necessary, and instead focused solely on the potential impact 
of a Private and Local Government Fleet Rule. NGVAmerica agreed with 
DOE's initial conclusion that such a rule would result in a small 
amount of additional replacement or alternative fuel use. NGVAmerica 
stated that ``such a rule, by itself, would not appreciably increase 
levels of alternative fuel use.'' [See NGVAmerica comments, page 3.] 
NGVAmerica went on to discuss the many limitations on the overall scope 
of and DOE's authority under the Private and Local Government Fleet 
Rule (only light-duty vehicles are covered, take-home vehicles are 
excluded, alternative fuel use cannot be required, etc.).
    Of the other commenters that addressed the potential impact of the 
rule in replacement and alternative fuel use, all of these commenters 
also agreed with DOE's initial conclusion. No commenters expressed 
support for promulgating a fleet rule.

B. Comments on Analysis for the Potential Impact of the Rule

    In preparing the NOPR, DOE updated the analysis of the potential 
impact of a Private and Local Government Fleet Rule originally 
presented as part of a previous determination in 2003, discussed later 
in this document. The result of this analysis compared closely with 
previously conducted analyses, indicating an expected replacement fuel 
contribution of 0.1-0.7 percent. 72 FR 52503.
    Three of the four statements provided at the public meeting and 
eight of the twelve written comments submitted specifically referred to 
this analysis. All but one stated that the analysis is reasonable 
without detailed comment. AALA, in more detailed written comments, 
conducted a more thorough review of the analysis. While AALA expressed 
its general agreement with the approach taken in the analysis, AALA 
stated that it believes that the lowest (10 percent) alternative fuel 
use rate in the analysis was the most likely scenario given the lack of 
DOE's ability to mandate alternative fuel use instead of the modest 25 
percent. It then cited a General Accountability Office (GAO) report 
(U.S. Postal Service: Vulnerability to Fluctuating Fuel Prices Requires 
Improved Tracking and Monitoring of Consumption Information, GAO-07-
244, February 16, 2007) on alternative fuel use by the United States 
Postal Service (USPS), pointing out that given USPS' alternative fuel 
usage rate of 1.5%, even the 10% utilization rate in the NOPR might be 
optimistic. [See AALA written comments, pages 3-10.]
    All statements and comments indicated that there was a probable 
additional impact from a potential rule, which was not explicitly taken 
into account in the analysis provided in the NOPR. This was the 
potential of fleets disbanding and changing over to employee 
reimbursement programs in the event of a fleet rule. NGVAmerica also 
pointed out that it might be expected that some fleets would simply 
acquire larger vehicles (above the 8,500 pound Gross Vehicle Weight 
Rating cut-off) to avoid acquisition requirements. AALA indicated that 
decisions whether to continue fleet operations are highly cost-
sensitive, and thus any change to

[[Page 13732]]

the economics (such as from a rule) could drive fleets to employee 
reimbursement. In general, the vast majority of the comments and 
statements (including all of those from fleets or fleet management/
leasing organizations) more or less agreed with the rationale provided 
for not imposing a rule, AALA contended that fleets would continue to 
be able to make the decisions concerning operating fleets and 
incorporating AFVs that make sense based upon their particular 
circumstances.
    AALA also stated that energy and environmental impacts are 
typically much less under a managed fleet than under employee 
reimbursement programs, because under reimbursement there is no control 
over vehicle types utilized or frequency of maintenance. Because 
managed fleets have a specific interest in keeping costs down, they are 
more likely to acquire the most cost-effective vehicle necessary to 
complete a job, and maintain it in a responsible manner. AALA contended 
that better maintained vehicles are generally more efficient and have 
lower tailpipe emissions.

C. Comments on What Fleets and Other Organizations are Doing To Reduce 
Petroleum Use

    While all of the fleet organizations who commented on the NOPR 
agreed with the proposed determination to not promulgate a rule, they 
expressed support for efforts to reduce petroleum use or minimize 
environmental impacts emissions from fleet operations. Many indicated 
in their comments that they have initiated voluntary efforts within 
their organizations to accomplish these objectives.
    For example, PHH noted that it is voluntarily implementing a 
Greenfleet program (that it established with Environmental Defense). As 
described by PHH, it works with fleets to identify ways to reduce 
emissions without increasing costs (which actually often results in 
lower costs), and focuses on overall outcomes rather than specific 
technologies. The key component of the program is the creation of a 
greenhouse gas baseline, along with recommendations for reducing or 
offsetting emissions through vehicle choice or operation. PHH further 
stated that it makes information on the most fuel efficient or cleanest 
vehicles easily available to fleets, to help decision-making.
    Similarly, Donlen noted that it has already implemented a fuel 
management program for customers that monitors fuel economy and can 
reduce consumption by up to 15 percent per year. Donlen stated that it 
maintains a call center to ensure that vehicles are maintained properly 
to reduce consumption, and is collaborating with the Sierra Club on 
voluntary measuring and reducing CO2.
    GE indicated in its comments that it has developed programs to help 
customers reduce energy consumption. ARI indicated that some of its 
clients are already reducing carbon emissions, both voluntarily and to 
meet government-set goals. LeasePlan has launched GreenPlan, in 
partnership with American Forests, which is focused on ``carbon 
neutralizing'' its corporate fleet and planting trees in Atlanta and 
Chicago. ServiceMaster noted that it is already testing and evaluating 
electric lawn care equipment, mild hybrids, and idle reduction 
technologies; has already started introducing smaller vehicles; and 
will continue to evaluate alternative fuel and advanced technologies. 
Mohawk Industries, Inc. noted that it has established programs to 
reduce energy and water consumption, and is promoting recycling.

D. Comments Providing Suggestions for DOE, Other Agencies, or Congress

    In addition to discussing existing voluntary efforts to reduce 
petroleum use or environmental impacts, several organizations provided 
suggestions to DOE, other agencies, or Congress to encourage the use of 
alternative fuels and to reduce petroleum consumption.
    AALA ended its written comments with several recommendations and 
statements of principles. First, it indicated that government policies 
concerning fleets need to be consistent, which AALA believes they have 
not been. AALA indicated that more intergovernmental coordination is 
required. Second, AALA stated that future programs should build upon 
successful efforts, like EPA's SmartWay program. AALA stated that it 
simply does not believe that mandates have been successful. Third, AALA 
stated that lack of access to alternative fuel is the current ``choke 
point'', and efforts are underway to improve this. Fourth, AALA 
expressed a preference for broad-based solutions that include the 
general public, not a focus on a narrow band of the market that fleets 
represent. Fifth, AALA stated that transitional approaches must be 
selected to lessen disruptions. It indicated that a desired path would 
be if cost-effective after-market devices were available to allow 
retrofitting existing vehicles.
    ARI suggested that to encourage petroleum reduction in fleets, the 
Federal Government should focus on incentives for deployment of new 
vehicle technologies and fuels.
    The most extensive list of recommendations was provided by 
NGVAmerica, which indicated that such recommendations should be 
reported to Congress. In general, NGVAmerica recommended the 
development of further support for natural gas as an alternative fuel. 
NGVAmerica also recommended that DOE carefully review the recent 
California Energy Commission (CEC) report list of policy measures and 
regulatory actions. [See State Alternative Fuels Plan--FINAL Committee 
Report, publication number CEC-600-2007-011-CTF, October 2007, 
available at https://www.energy.ca.gov/2007publications/CEC-600-2007-
011/CEC-600-2007-011-CTF.PDF. In particular, NGVAmerica expressed its 
support for CEC's assessment concerning continued needs for incentives, 
the benefits of focusing on medium- and heavy-duty vehicles, the need 
for R&D, the need for incentives for utilities to increase involvement, 
and the need for dedicated funding for infrastructure. All of 
NGVAmerica's recommendations are provided in its comment, which can be 
viewed at https://www1.eere.energy.gov/vehiclesandfuels/epact/private/
plg-ab69_docket.html.
    The suggestions provided by commenters on possible efforts to 
reduce petroleum consumption and increase alternative fuel use are 
outside the scope of this determination. However, DOE will consider all 
of the recommendations under the alternative fuel programs, as 
appropriate. DOE will take notice of this information, and review it 
and include it as relevant when preparing the report to Congress under 
section 509 of EPAct 1992 (42 U.S.C. 13259).

IV. Definitions and Statutory Requirements

A. Definitions

    Under EPAct 1992, an ``alternative fuel vehicle'' is a ``dedicated 
vehicle or a dual fueled vehicle.'' (42 U.S.C. 13211(3))
    A ``dedicated vehicle'' means ``a dedicated automobile, such as the 
term is defined in section 513(h)(1)(D) of the Motor Vehicle 
Information and Cost Savings Act or a motor vehicle other than an 
automobile, that operates solely on alternative fuels.'' (42 U.S.C. 
13211(6))
    A ``dual fuel vehicle'' is one ``capable of operating on 
alternative fuel and on gasoline or diesel fuel.'' (42 U.S.C. 
13211(8)(A)) DOE notes that because a dual fueled vehicle can be 
operated on

[[Page 13733]]

gasoline or diesel, the purchase of a dual fueled vehicle does not 
assure that ``alternative'' or ``replacement'' fuel will be used to 
operate the vehicle.
    ``Replacement fuel'' is defined by EPAct 1992 under section 301(14) 
to mean ``the portion of any motor fuel that is methanol, ethanol, or 
other alcohols, natural gas, liquefied petroleum gas, hydrogen, coal 
derived liquefied fuels, fuels (other than alcohol) 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)
    ``Alternative fuel'' is defined to include many of the same types 
of fuels as ``replacement fuel'' (such as methanol, natural gas, 
hydrogen and electricity), but also includes certain ``mixtures'' of 
petroleum-based fuel and other fuels. (10 CFR 490.2 (2002) \1\) Thus, a 
certain mixture might constitute an ``alternative fuel,'' but only the 
portion of the fuel that is within the definition of ``replacement 
fuel'' would actually constitute ``replacement fuel.'' For example, a 
mixture of 85 percent methanol and 15 percent gasoline would, in its 
entirety, constitute ``alternative fuel,'' but only the 85 percent that 
was methanol would constitute ``replacement fuel.'' Also by way of 
example, B20 (a fuel blend typically consisting of approximately 20 
percent biodiesel and 80 percent diesel), considered as a total fuel 
blend, would not qualify as an ``alternative fuel,'' but the 20 percent 
that is biodiesel would qualify as ``replacement fuel.''
---------------------------------------------------------------------------

    \1\ EPAct defines ``alternative fuel'' (see 42 U.S.C. 13211(2)), 
but DOE has exercised its authority to modify, by regulation, this 
definition. Therefore, the currently effective definition of 
``alternative fuel'' is set forth at 10 CFR 490.2 (2006).
---------------------------------------------------------------------------

    For the purpose of considering a Private and Local Government Fleet 
Requirement, the term ``covered fleet'' is a ``fleet, other than 
Federal fleet, State fleet, or fleet owned, operated, leased, or 
otherwise controlled by a covered person under section 501 [of EPAct 
1992].'' (42 U.S.C. 13257(g)) This is interpreted to mean all private 
and local government fleets not already covered under the existing 
fleet requirements program.
    A ``fleet'' is defined in section 301(9) of EPAct 1992 as follows:

[T]he term ``fleet'' means 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.

(42 U.S.C. 13211(9))

    EPAct 1992 defines the Replacement Fuel Goal in terms of producing 
sufficient replacement fuels to replace, on an energy equivalent basis, 
a specified percentage 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))
    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 section 301(13) of EPAct 
1992, 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)) As DOE is required to evaluate 
the Replacement Fuel Goals established in section 502(b)(2) in terms of 
the capacity of producing sufficient replacement fuels to offset a 
certain percentage of U.S. ``motor fuel'' consumption, 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 9, 2006)

B. Key Statutory Requirements

    The issue DOE addresses in this final determination is whether a 
Private and Local Government Fleet Requirement is ``necessary'' under 
section 507(e) of EPAct 1992. (42 U.S.C. 13257(e)(1)) Under section 
507(e)(1) a Private and Local Government Fleet shall be promulgated if 
DOE determines such a program is ``necessary.'' (42 U.S.C. 13257(e)(1)) 
A Private and Local Government Fleet Requirement ``shall be considered 
necessary'' only if (1) DOE finds that ``the goal of replacement fuel 
use * * * is not expected to be actually achieved * * * without such a 
fleet requirement program;'' and (2) ``such goal is practicable and 
actually achievable * * * through implementation of such a fleet 
requirement program in combination with voluntary means and the 
application of other programs relevant to achieving such goals.'' (42 
U.S.C. 13257(e)(1)(A) and (B))
    EPAct 1992 authorizes DOE to conduct two separate rulemakings to 
determine whether to promulgate a Private and Local Government Fleet 
Requirement. First, section 507(b) directs DOE to conduct an early 
rulemaking, to be completed by December 15, 1996. (42 U.S.C. 13257(b)) 
The deadline for the ``early rulemaking'' passed without final action 
and has no continuing relevance. The second rulemaking provision is 
under section 507(e), which directs DOE to make a ``necessity'' 
determination by January 1, 2000. (42 U.S.C. 13257(e)(1)) It is under 
section 507(e) that DOE issues today's final determination.

C. Other Relevant Requirements

    There are a number of other sections of EPAct 1992 that must be 
weighed in considering a potential Private and Local Government Fleet 
Requirement, primarily under the second prong of the ``necessity'' 
determination. These considerations include how such a requirement 
would be limited in application and practice, and other considerations 
and steps related to the determination process.
    Under section 507(i), a promulgated Private and Local Government 
Fleet Requirement must provide for an exemption of a fleet from the 
applicable requirements on grounds of: (1) Non-availability of 
appropriate AFVs and alternative fuels; (2) non-availability of 
appropriate alternative fuels; and (3) with respect to local government 
entities, financial hardship. (42 U.S.C. 13527(i))
    EPAct 1992 furthermore contains a petition provision in section 
507(n). That section provides that:

    As part of the rule promulgated * * * pursuant to subsection * * 
* (g) of this section, the Secretary shall establish procedures for 
any fleet owner or operator or motor vehicle manufacturer to request 
that the Secretary modify or suspend a fleet requirement program * * 
* nationally, by region, or in an applicable fleet area because, as 
demonstrated by the petitioner, the infrastructure or fuel supply or 
distribution system for an applicable alternative fuel is inadequate 
to meet the needs of a fleet.


[[Page 13734]]


(42 U.S.C. 13527(n)) As a result, even to the extent a fleet 
constitutes a ``fleet'' under the narrow EPAct 1992 definition, and 
does not otherwise qualify for one of the statutory exemptions, it 
could petition for relief or suspension of a fleet mandate for any one 
of several different reasons.
    Section 507(m) of EPAct 1992 requires DOE to consult with the 
Secretary of Transportation (DOT), Administrator of the Environmental 
Protection Agency (EPA), and other appropriate agencies in carrying out 
the requirements of section 507. DOE provided a pre-publication draft 
of the proposed determination to DOT, EPA, and the Office of Management 
and Budget (OMB) for their review. The analysis presented in today's 
final determination is essentially the same as that previously provided 
to DOT, EPA, and OMB.

D. No Fuel Use Requirement Authority

    It is important to note that the ability of a Private and Local 
Government Fleet Requirement to affect petroleum consumption also 
depends, in significant part, on whether DOE can require covered fleets 
to use alternative or replacement fuels in addition to requiring that 
they acquire AFVs. The only explicit requirements for fuel use in EPAct 
1992 are contained in section 501(a)(4), which applies only to 
alternative fuel provider fleets, and section 302(a)(2) (amending 
section 400AA of the Energy Policy and Conservation Act), which applies 
only to Federal fleets. (42 U.S.C. 13251(a)(4) and 6374(a)) While not 
modifying the specific alternative fuel use requirement for Federal 
Fleets under EPAct 1992 Section 302(a)(2) (as modified by EPAct 2005 
Section 701), EISA 2007 did include a related provision. Section 141 of 
EISA 2007 appears to incorporate into legislation the primary elements 
of Executive Order 13423, which required Federal Fleets to reduce 
petroleum consumption by 20 percent (2015 vs. 2005), while increasing 
use of alternative fuels by 10 percent per year. Thus, while not 
specifically going beyond the existing Federal alternative fuel use 
requirement from EPAct 1992 and 2005, EISA 2007 did add an additional 
overall metric for Federal fleets based upon alternative fuel use. 
Section 507 of EPAct 1992, which concerns private and local government 
fleets, does not contain any similar provision, nor does it contain a 
provision either authorizing DOE to mandate fuel use or explicitly 
prohibiting DOE from mandating fuel use.
    DOE believes that because Congress specifically required use of 
alternative fuel in sections 501(a)(4) and 302(a)(2) of EPAct 1992, but 
not in section 507, the omission was deliberate. As a result, DOE 
believes that Congress did not intend for DOE, when acting under 
section 507, to have authority to promulgate regulations containing a 
requirement that fleet vehicles use particular types of fuel.
    This interpretation is consistent with Congressman Philip Sharp's 
remarks when he called up the conference report on EPAct 1992 for U.S. 
House of Representatives approval. Congressman Sharp was one of the key 
architects of EPAct 1992, and the floor manager for the bill in the 
House of Representatives. Congressman Sharp said:

    Under section 501, covered persons must actually run their 
alternative fueled vehicles on alternative fuels when the vehicle is 
operating in an area where the fuel is available. This requirement 
was not included in the fleet requirement program under section 507, 
because the conferees were concerned that the alternative fuel 
providers might charge unreasonable fuel prices to the fleets that 
are not alternative fuel providers if such fleets were required to 
use the alternative fuel.

    138 Cong. Rec. H11399 at H11400 (October 5, 1992).

V. Analysis for Private and Local Fleets Rule Determination

    As stated above, DOE must issue a Private and Local Government 
Fleet Requirement if DOE determines that such a requirement is 
``necessary.'' (42 U.S.C. 13257(e)(1)) For the purpose of this 
determination, a Private and Local Government Fleet Requirement is 
necessary if:

    i. The Replacement Fuel Goal under section 502(b)(2)(B), or as 
modified under section 504, is not actually expected to be achieved 
by 2010, or the date established under section 504, without such a 
fleet requirement; and
    ii. Such a goal is practicable and actually achievable within 
the appropriate period, through implementation of such a fleet 
requirement in combination with voluntary means and the application 
of other programs relevant to achieving such goals.

(42 U.S.C. 13257(e)(1)(A) and (B))

A. Achievability of the Replacement Fuel Goal

    As stated above, DOE recently determined that the Replacement Fuel 
Goal of 30 percent by 2010 established under section 502(b)(2)(B) is 
not achievable. 72 FR 12041. Pursuant to its statutory authority to do 
so, DOE established a modified goal by extending the goal date to 2030, 
i.e., establishing a Replacement Fuel Goal of 30 percent by 2030. 72 FR 
12041. In establishing the modified Replacement Fuel Goal, DOE 
determined that such a goal is achievable.
    In evaluating and modifying the goal, DOE was directed to balance 
considerations to establish goals that are ``achievable.'' (42 U.S.C. 
13254(b)) The Replacement Fuel Goal must promote replacement fuels to 
the ``maximum extent possible'' while remaining technologically and 
economically feasible. (42 U.S.C. 13254(a) and (b)(2)) DOE determined 
that the modified goal 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. A complete discussion of the analysis relied on in the final 
rule for the modified Replacement Fuel Goal and the supporting 
documents can be reviewed at https://www1.eere.energy.gov/
vehiclesandfuels/epact/private/plg_docket.html.
    In evaluating a modification to the Replacement Fuel Goal, DOE 
analyzed four scenarios to generate a range of potential replacement 
fuel production capacities. In none of these scenarios did DOE include 
potential increases in alternative fuel production as a result of a 
Private and Local Government Fleet Requirement. As such, DOE determined 
that the modified Replacement Fuel Goal of 30 percent by 2030 is 
expected to be achieved without establishing a Private and Local 
Government Fleet Requirement.
    Given the determination in the modified Replacement Fuel Goal final 
rule that the modified goal is expected to be achieved by 2030 without 
a Private and Local Government Fleet Requirement, DOE has determined 
that the first prong of the ``necessity'' determination has not been 
met.
    With the enactment of EISA 2007, the Renewable Fuel Standard has 
been significantly expanded to 36B gallons by 2022. In addition, 
consumption of petroleum fuels will decrease through the increased CAFE 
requirements as a

[[Page 13735]]

result of the Act. Thus, the probability of achieving the revised 
Replacement Fuel Goal has been greatly increased, further negating the 
need for a Private and Local Government Fleet Rule to meet the Goal.

B. Potential Contribution of a Private and Local Government Fleet 
Requirement to the Production Capacity of Alternative Fuel

    The second prong of the ``necessity'' determination requires DOE to 
determine whether the Replacement Fuel Goal is actually achievable were 
a Private and Local Fleet Requirement established. (42 U.S.C. 
13257(e)(1)(B)) As stated above, DOE has determined that the modified 
Replacement Fuel Goal is achievable. Although DOE has determined that 
the Private and Local Government Fleet Requirement is not necessary to 
achieve the modified Replacement Fuel Goal, DOE also performed an 
initial analysis to estimate the contribution that such a requirement 
would make to the Replacement Fuel Goal, if such a requirement were 
established. This analysis was revised with the latest information 
available for the Final determination.
    In the mid-1990s, DOE initially estimated that between 1.7 and 7.3 
million AFVs would be acquired over 19 years if a possible Private and 
Local Government Fleet Requirement was implemented. The purchases of 
AFVs under such a fleet program level out at approximately 400,000 to 
500,000 AFVs annually starting in 2010. As discussed below, however, 
more detailed analyses showed DOE's initial estimates were probably too 
high.
    Several follow-up analyses were conducted by DOE from 1996 to 2000 
to attempt to determine not just how many AFVs would be required to be 
acquired, but more importantly, what the potential contribution of a 
Private and Local Government Fleet Requirement would be to replacing 
U.S. motor fuel. The limitations on the potential contribution of a 
private and local government fleet program to the Replacement Fuel Goal 
are discussed in section II above. In brief, however, one DOE report 
issued in 1996 estimated that total fuel use from all fleets, including 
private and local government fleets, potentially covered by EPAct 1992 
fleet programs to be approximately 1.2 percent of U.S. gasoline use. 
See 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 (DOE/PO-0042) (January 1996) 
[hereinafter Technical Report 14].
    DOE's Section 506 Report \2\ was only slightly more optimistic, 
indicating that ``[a]lternative fuel use by EPAct [1992] covered 
fleets, even with the contingent mandates for private and local 
government fleets, is unlikely to provide more than about 1.5 percent 
replacement fuel use[.]'' Section 506 Report at p. 35. In either case, 
subtracting the portion of replacement fuel use represented by the 
existing (Federal, State, and alternative fuel provider) fleet programs 
would leave the potential private and local government fleet program 
contribution closer to a maximum of 1 percent.
---------------------------------------------------------------------------

    \2\ See Energy Efficiency and Renewable Energy, DOE, Replacement 
Fuel and Alternative Fuel Vehicle--Technical and Policy Analysis p. 
viii-ix (Dec. 1999--Amendments Sept. 2000); https://
www1.eere.energy.gov/vehiclesandfuels/epact/pdfs/plf_docket/
section506.pdf.
---------------------------------------------------------------------------

    However, both these earlier reports included calculations based 
only upon the percentage of light-duty gasoline fuel use. For purposes 
of the goal contained in section 502 of EPAct 1992, DOE has repeatedly 
asserted that fuel replacement should be considered in the context of 
all on-highway motor fuel use, including heavy-duty vehicle fuel use, 
because the goal is to be considered in the context of the ``projected 
consumption of motor fuel in the United States.'' (42 U.S.C. 
13252(b)(2)) Therefore, the figures provided in these earlier reports, 
when adjusted to reflect the impact on all on-highway motor fuel use, 
show that a Private and Local Government Fleet Rule--even with a fuel 
use requirement, which as noted above, DOE does not have the authority 
to impose--would provide at most on the order of 0.7-0.8 percent motor 
fuel replacement, assuming virtually complete use of alternative fuel 
in the AFVs required.
    Both the analyses in Technical Report 14 and the Section 506 Report 
were conducted before DOE had much experience with implementation and 
operation of the EPAct 1992 fleet programs. DOE's experience with those 
programs now has shown that the number of fleets originally envisioned 
to be covered was far larger than the number of fleets covered in 
actual practice, and that these fleets could not, in the absence of a 
specific mandate, be assumed to use alternative fuel in their AFVs 100 
percent of the time. Thus, DOE believes that the figures in these 
reports probably overstated the potential impact of a Private and Local 
Government Fleet Rule. This view was supported by analyses contained in 
a later DOE-supported report, The Alternative Fuel Transition: Results 
from the TAFV Model of Alternative Fuel Use in Light-Duty Vehicles 
1996-2000 \3\ (TAFV Model Report), which incorporated more realistic 
assumptions regarding these fleet programs. The TAFV Model Report 
stated that,

    \3\ ORNL.TM2000/168) (September 17, 2000) https://
pzl1.ed.ornl.gov/tafv99report31a_ornltm.pdf.

    In particular, over all of the price scenarios, we find that the 
[private and local government fleet] rule increases the alternative 
fuel penetration in 2010 from 0.12% (without the private and local 
government rule) to, at most, 0.37% [with a private and local 
---------------------------------------------------------------------------
government rule] of total fuel sales.

    TAFV Model Report at p. 28. Thus, the analysis in the TAFV Model 
Report placed contributions from the Private and Local Government Fleet 
Rule at 0.25 percent. As with Technical Report 14 and the Section 506 
Report, these percentages were calculated based on the total fuel sales 
of the fuel used by light-duty vehicles only. Thus, the projected 
contribution from a potential rule dropped to below 0.2 percent when 
evaluated as part of all on-highway motor fuel use and can be 
reconciled somewhat with those found by the earlier reports. As 
indicated in section II above, DOE does not have authority to mandate 
that AFVs acquired actually operate on alternative fuels. Experience 
with the existing State Fleet Program, where fleets are similarly not 
required to use alternative fuel, has shown that alternative fuel use 
rates are typically in the ten to twenty-five percent range. Thus, when 
adjusting the levels found in Technical Report 14 and the Section 506 
Report by such utilization levels, the overall projected impacts likely 
end up in about the 0.2 percent range.
    It also should be noted that during earlier rulemaking processes, 
no commenter presented any persuasive analysis or data to counter or 
dispute the data and conclusions in Technical Report 14, the Section 
506 Report, or the TAFV Model Report. Therefore, DOE concluded from 
these reports that a Private and Local Government Fleet Requirement 
under authority provided to DOE by EPAct 1992 section 507 would be 
expected to contribute, at best, an extremely small amount toward 
achievement of the Replacement Fuel Goal (below 1 percent and likely 
below 0.2 percent of all on-highway motor fuel use). Even without the 
additional statutory limitations described above, which EPAct 1992 
places on such a Private and Local Government Fleet Requirement, the 
contribution from such a mandate to the EPAct 1992

[[Page 13736]]

Replacement Fuel Goal would be very small.
    When the prior private and local fleets determination was conducted 
in 2003 through 2004, the analyses relied upon by DOE were the most 
recent, relevant analyses that it had. As such, these were all dated 
2000 or earlier. With the passage of several more years between that 
determination and this rulemaking, DOE believed it was important to 
conduct an updated analysis to determine if circumstances had changed 
sufficiently to warrant imposition of acquisition requirements upon 
fleets. The approach taken was to first conduct a somewhat more 
simplified analysis than the previous ones, and if this analysis 
indicated significantly different results, than a more detailed and 
lengthy analysis would be commissioned. (Note that at the end of this 
section, the discussion of the analysis is included which was updated 
for today's final action.)
    To conduct the current analysis, the Department relied, in large 
part, upon fleet industry data developed by Automotive Fleet, a leading 
publisher in the field. Each year, Automotive Fleet publishes an annual 
Fact Book, which includes detailed data on a number of fleet subjects. 
Unfortunately, Automotive Fleet does not provide the specific data 
necessary to support today's draft determination (namely the likely 
number of AFVs that would need to be acquired by fleets meeting EPAct 
1992's coverage criteria). Therefore the Fact Book data was used as a 
starting point, with other information (such as from the EIA Annual 
Energy Outlook) and various assumptions used to further refine the data 
to move closer to the specific types of numbers required for today's 
action.
    For the purpose of today's final determination, two analyses were 
conducted to determine what portion of U.S. motor fuel use might be 
replaced with replacement fuels by vehicle acquisitions resulting from 
a potential fleet rule. The first method compares annual acquisitions 
under a potential rule to the total annual U.S. acquisitions. The 
second method of analysis compares vehicles in operation due to a 
potential rule to all vehicles in operation. Both methods were used as 
analogs to determine the overall percentage replacement of U.S. motor 
fuel.
    According to the 2005 Fact Book (which reports data for 2004), 
fleets in the United States acquired 2,849,837 light-duty vehicles 
(cars and light trucks), of which 1,944,581 (68.2 percent) were 
acquired for rental fleets. Because rental vehicles are specifically 
excluded from coverage under EPAct 1992 section 301(9) (42 U.S.C. 
13211(9)), the remaining potentially covered vehicle acquisitions drop 
to 905,256 vehicles. Note that this does not exclude any leased 
vehicles, of which the Fact Book indicates there were another 326,832 
acquired in 2004. Many of these may ultimately be excluded as perhaps 
either shorter term leases or vehicles specifically held for lease to 
others (another excluded class). Because there is no way to determine 
which portion of these leased vehicles would most likely be excluded, 
DOE chose to rely on the 905,256 value as the number of vehicles 
purchased by fleets that would potentially be subject to a Private and 
Local Government Fleet Requirement.
    Next, the current annual acquisitions of vehicles already subject 
to EPAct 1992 fleet requirements needed to be subtracted. Data was 
obtained from the Department's EPAct 1992 Web sites, at https://
www1.eere.energy.gov/vehiclesandfuels/epact/. For Federal Fleets, there 
were 18,426 covered light-duty vehicles acquired in 2004. For State and 
Alternative Fuel Provider Fleets, there were 13,374 covered light-duty 
vehicles acquired. Thus, the remaining number of potentially covered 
acquisitions drops to 873,456.
    In 2004, a total of 16,537,440 light-duty vehicles were acquired 
throughout the United States. This means that the maximum potential 
pool of covered light-duty vehicles under a Private and Local Fleet 
Requirement would represent 5.3 percent of total acquisitions for the 
year. Because the maximum acquisition requirement percentage under the 
potential Private and Local Government Fleet Rule is 70 percent (42 
U.S.C. 13257(g)), the maximum potential number of AFVs that would need 
to be acquired on an annual basis would be 611,419. This number 
represents approximately 3.7 percent of all light-duty vehicles 
acquired in the United States.
    DOE's experience, however, is that the maximum potential number of 
required acquisitions is quite different from the actual number of 
required acquisitions. This is because section 301(9) includes several 
basic requirements for coverage of a fleet's acquisitions. (42 U.S.C. 
13211(9)) The fleet must be owned or controlled by an entity that owns 
at least 50 light-duty vehicles nationwide, of which 20 must reside in 
one of the 125 covered Metropolitan Statistical Areas (MSAs, with 1980 
population of more than 250,000) and are centrally fueled or capable of 
being centrally fueled. (42 U.S.C. 13211(9))
    In arriving at the 50 and 20 light-duty vehicle minimums, several 
classes of vehicles are excluded from consideration, including 
emergency and law enforcement vehicles (42 U.S.C. 13211(9)(D) and (E)), 
vehicles taken home at night by employees (42 U.S.C. 13211(9)(H)), and 
non-road vehicles (42 U.S.C. 13211(9)(G)). With these exclusions the 
number of potentially required AFV acquisitions drops even further. For 
example, if just the 2004 acquisitions of Ford Crown Victorias and 
Chevy Impalas are reviewed, the non-rental numbers acquired for 
commercial and government fleets totals nearly 90,000 vehicles 
(according to the 2005 Fact Book). These two vehicles are often 
acquired for use as police vehicles, or else taxicabs (a class of 
vehicles whose status under the program is undetermined for this 
analysis and for which many might not ultimately be covered due to 
fleet size, location, or other reasons).
    Based on DOE's experience with the Federal, State, and Alternative 
Fuel Provider Fleet requirements and the vehicle classes excluded from 
consideration by EPAct 1992, DOE considered two scenarios for this 
analysis, one where 50 percent of the maximum potential annual 
acquisitions are required (305,710 AFVs), and one (considered much more 
likely) where 25 percent of the maximum potential annual acquisitions 
are required (152,855 AFVs). These two scenarios thus represent 1.8 and 
0.9 percent, respectively, of overall annual light-duty acquisitions.
    So the net result of this portion of the analysis is that a fleet 
rule could result in requirements to acquire between 150,000 and just 
over 600,000 AFVs each year, representing between approximately 1 to 
3.7 percent of total annual light-duty vehicle acquisitions, based on 
2004 data. This portion of the annual acquisition analysis is 
summarized below in Figure 1.

    Figure 1.--Summary of Annual Acquisition Analysis, Fleet Vehicles
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total New Cars and Trucks Registered by Fleets in 2004..       2,849,837
Total New Cars and Trucks Registered by Rental Fleets in       1,944,581
 2004...................................................

[[Page 13737]]

 
Percentage in Rental Fleets.............................           68.2%
Remainder of New Cars and Trucks, not in Rental Fleets           905,256
 2004...................................................
New Covered LDV acquisitions in 2004, Federal Fleet.....          18,426
New Covered LDV acquisitions in 2004, State and Fuel              13,374
 Provider Fleets........................................
Net New Cars/Truck Registered, not in Fleets Already             873,456
 Covered................................................
Total New LDV Registrations, 2004.......................      16,537,440
Max Potential Portion of 2004 Fleet acquisitions covered            5.3%
 out of total registrations.............................
EPAct 1992 Maximum Acquisition Requirement..............             70%
Max Potential AFV Acquisitions per year, numbers of AFVs         611,419
 required...............................................
Max Potential AFV Acquisitions per year, percentage of              3.7%
 total acquisitions.....................................
If 50% of maximum potential actually covered, number of          305,710
 AFVs required..........................................
If 50% of maximum potential actually covered, percentage            1.8%
 of total acquisitions..................................
If 25% of maximum potential actually covered, number of          152,855
 AFVs required..........................................
If 25% of maximum potential actually covered, percentage            0.9%
 of total acquisitions..................................
------------------------------------------------------------------------

    The analysis above is in the context of light-duty vehicles and 
would represent between one and 3.7 percent of motor fuel consumption 
by light-duty vehicles. For the purpose of section 507(e)(1)(B), DOE 
must evaluate the potential contribution of a Private and Local 
Government Fleet Requirement to the Replacement Fuel Goal. (42 U.S.C. 
13257(e)(1)(B)) The Replacement Fuel Goal is in terms of motor fuel 
consumption, including consumption from medium- and heavy-duty 
vehicles. As indicated in the Energy Information Administration's 
Annual Energy Outlook 2007 (AEO 2007), light-duty vehicles only account 
for 75.22 percent of on-road motor fuel use in the United States, with 
the remainder consumed by medium- and heavy-duty classes, neither of 
which is covered by the Private and Local Government Fleet Requirement. 
In terms of total motor fuel consumption, the contribution of the 
potential AFV acquisitions under a Private and Local Government Fleet 
Requirement must be adjusted down to 0.7 to 2.8 percent.
    The expected contribution of AFVs acquired under a Private and 
Local Government Fleet to alternative fuel consumption must be further 
adjusted. As explained above, EPAct 1992 does not allow DOE to require 
alternative fuel use in the required AFVs, the potential consumption 
values represent the portion of petroleum consumption replaced at an 
alternative fuel use level of 100 percent. Experience with programs for 
which fuel use is not required (such as the State Fleet Program) 
indicates that the assumption of 100 percent alternative fuel use is 
not realistic. DOE has seen alternative fuel usage levels as low as 10 
percent.
    For the purposes of this analysis, DOE looked at cases where 
alternative fuels were used 50, 25, and 10 percent of the time in the 
potentially required AFVs. These results yielded percentages of overall 
motor fuel consumption replaced of 0.1 to 1.4 percent, with the high 
value represented by the maximum potential case (already identified as 
overly optimistic) with a 50 percent alternative fuel use level. Thus, 
the likely range of consumption replaced is better represented by the 
25 and 50 percent of maximum potential acquisition cases, which ranged 
from 0.1 to 0.7 percent.
    The summary for this portion of the analysis is shown in Figure 2, 
where the shaded zone represents the more likely range of results.

          Figure 2.--Summary of Annual Acquisition Analysis, Portion of Overall Motor Fuel Consumption
                                                  [In Percent]
----------------------------------------------------------------------------------------------------------------
                                                                   Maximum      50% of  maximum  25% of  maximum
                                                                  potential        potential        potential