June Question of the Month

Question of the Month: What are the requirements for state and alternative fuel provider fleets under the Energy Policy Act of 1992 (EPAct 1992) and subsequent regulations and directives?

Answer:

EPAct 1992 mandates that certain state government and alternative fuel provider fleets in the United States acquire specified percentages of alternative fuel vehicles (AFVs) on an annual basis as they add light-duty vehicles (LDVs) to their fleets. Below we have described a number of means  beyond simply acquiring AFVs  by which these fleets may achieve compliance.

The U.S. Department of Energy (DOE) is responsible for overseeing compliance with these requirements, which were promulgated and published at 10 CFR Part 490 as the Alternative Fuel Transportation Program. Information about state and alternative fuel provider “covered fleets” (fleets subject to EPAct 1992 requirements) and the requirements associated with this compliance program are outlined below for each fleet type.

State Fleets

Covered Fleets

State government (including state agency and state university) fleets are considered covered fleets if all of the following conditions are met:

·         They own, operate, lease, or otherwise control 50 or more light-duty vehicles (LDVs; vehicles with a gross vehicle weight rating of 8,500 pounds or less) within the United States and are not on the list of excluded vehicles. Excluded vehicles include emergency, law enforcement, and non-road vehicles;

·         At least 20 of those vehicles are used primarily within a single metropolitan statistical area (MSA)/consolidated MSA (CMSA), based on 1980 census data. A list of covered MSA/CMSAs can be found online: https://www.afdc.energy.gov/vehiclesandfuels/epact/state/progs/dyn_msa.cgi; and

·         Those same 20 vehicles are centrally fueled or capable of being centrally fueled, meaning they are capable of being fueled at least 75% of the time at a location that is owned, operated, or controlled by the fleet or is under contract with that fleet for fueling purposes. 

The following resources may be used to determine whether a state fleet is covered:

·         Decision Tree for State Government Fleets: http://www1.eere.energy.gov/vehiclesandfuels/epact/state_decision_tree.html

·         State Government Fleet Compliance with the Energy Policy Act of 1992: Self-Audit Procedures: http://www1.eere.energy.gov/vehiclesandfuels/epact/pdfs/selfaudit_procedures.pdf

Requirement

Like federal fleets regulated under EPAct 1992, a covered state fleet must acquire in a model year the number of AFVs that is equal to at least 75% of the fleet’s non-excluded LDV acquisitions.

Compliance Methods

Covered state fleets may meet their requirements using multiple means through one of two compliance methods:

·         Standard Compliance: Fleets can acquire the requisite number of new or used AFVs, convert conventional vehicles to run on an alternative fuel within four months of acquisition, or obtain AFV credits from other covered fleets. Covered fleets earn one credit for each light-duty AFV that is acquired beyond the fleet’s annual requirement for the model year. Credits earned by going beyond compliance are banked for future use. Credits may also be traded with other fleets. Covered fleets may also meet up to 50% of their AFV-acquisition requirements by purchasing biodiesel blends of at least B20 for use in medium- and heavy-duty vehicles. One credit toward compliance is earned for every 450 gallons of neat biodiesel (B100) or every 2,250 gallons of B20 purchased for use. Credits earned for biodiesel purchase for use may not be banked. In addition, a fleet may earn credits for its medium- and heavy-duty AFV acquisitions, but only after the fleet has met its light-duty AFV acquisition requirements.

·         Alternative Compliance: Covered fleets may obtain a waiver from the AFV acquisition requirements of Standard Compliance by submitting and then implementing a DOE- approved plan to reduce the fleet’s annual petroleum consumption. The plan must result in petroleum reductions equal to what the fleet would have achieved if all its AFVs were running on alternative fuel all the time. The plan must also include a sufficient level of data and information to support the fleet’s compliance requirements, particularly information on fuel use. Alternative Compliance petroleum reduction methods include, among others, hybrid electric vehicle (HEV) use, alternative fuel use, reduction in vehicle miles traveled, idle-time reduction, and truck stop electrification.

For a summary of compliance methods, visit the following website: http://www1.eere.energy.gov/vehiclesandfuels/epact/compliance_methods.html.

Inclusion of Hybrid Electric and Plug-in Electric Vehicles
Currently, all-electric vehicles (EVs) and some plug-in hybrid electric vehicles (PHEVs) qualify as AFVs under Standard Compliance. DOE published a notice of proposed rulemaking in October 2011, pursuant to Section 133 of the Energy Independence and Security Act of 2007, that would allocate AFV credits for covered fleet acquisitions of the following vehicles:

·         HEVs would receive one-half credit

·         PHEVs (those that do not already meet the definition of an AFV) would receive one-half credit

·         Fuel cell electric vehicles (those that do not already meet the definition of an AFV) would receive one-half credit

·         Neighborhood electric vehicles would receive one-fourth credit

For more information on this proposed rulemaking, please see the proposed rule fact sheet (http://www1.eere.energy.gov/vehiclesandfuels/epact/pdfs/section_133_proposed_rule.pdf) and the full notice (http://www.gpo.gov/fdsys/pkg/FR-2011-10-31/pdf/2011-26761.pdf).

Alternative Fuel Provider Fleets

Covered Fleets

A covered alternative fuel provider is any entity that meets one of the following conditions:

·         The entity’s principle business involves producing, storing, refining, processing, transporting, distributing, importing, or selling any alternative fuel (other than electricity);

·         The entity’s principle business involves generating, transmitting, importing, or selling electricity at wholesale or retail; or

·         The entity produces, imports, or produces and imports in combination, an average of 50,000 barrels per day or more of petroleum, and 30% or more of its gross annual revenues are derived from producing alternative fuels.

An alternative fuel provider is not covered if its principal business involves:

• Transforming alternative fuels into products that are not alternative fuels; or
• Using alternative fuel as a feedstock, or fuel, in the manufacturing of products that are not alternative fuels.

In addition to meeting this definition, alternative fuel provider fleets are also subject to the same conditions for inclusion as state fleets (see above). For example, if a fleet does not own, operate, lease, or otherwise control at least 50 non-excluded LDVs, then it is not considered a covered fleet.

The Decision Tree for Alternative Fuel Provider Fleets (http://www1.eere.energy.gov/vehiclesandfuels/epact/alt_decision_tree.html) may be used to determine whether an alternative fuel provider fleet is covered.

Requirement

A covered alternative fuel provider fleet must acquire in a model year the number of AFVs that is equal to at least 90% of the fleet’s non-excluded LDV acquisitions.

Compliance Methods

Covered alternative fuel provider fleets have the same options for achieving compliance as state fleets.

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Additional information on state and alternative fuel provider requirements and compliance options, as well the annual reporting requirements, may be found on DOE’s EPAct Transportation Regulatory Activities website (http://www1.eere.energy.gov/vehiclesandfuels/epact/index.html). In addition, the online Clean Cities University course on Understanding EPAct-Regulated Fleets (http://www1.eere.energy.gov/cleancities/toolbox/university.html) provides an overview of state and alternative fuel provider requirements.